Revenue increased 40% year-over-year
ARR up 35% year-over-year
SentinelOne, Inc. (NYSE: S) today announced financial results
for the first quarter of fiscal year 2025 ended April 30, 2024.
“We delivered an extraordinary 40% revenue growth and our first
ever quarter of positive free cash flow, a significant milestone in
our growth journey,” said Tomer Weingarten, CEO of SentinelOne.
“Our advancements in AI are redefining cybersecurity and setting
new industry standards of superior security, simplicity, and
savings for enterprises.”
“Once again, our quarterly performance exceeded our top and
bottom-line expectations. In Q1, we marked our 11th consecutive
quarter with over 25 points of operating margin expansion, and we
achieved substantial positive free cash flow well ahead of our
prior target,” said Dave Bernhardt, CFO of SentinelOne. “With our
industry-leading technology and vast market opportunities, we
anticipate delivering best-in-class growth again this year.”
Letter to Shareholders
We have published a letter to shareholders on the Investor
Relations section of our website at investors.sentinelone.com. The
letter provides further discussion of our results for the first
quarter of fiscal year 2025 as well as the financial outlook for
our fiscal second quarter and full fiscal year 2025.
First Quarter Fiscal Year 2025 Highlights
(All metrics are compared to the first quarter of fiscal year
2024 unless otherwise noted)
- Total revenue increased 40% to $186.4 million, compared
to $133.4 million.
- Annualized recurring revenue (ARR) increased 35% to $762
million as of April 30, 2024.
- Customers with ARR of $100,000 or more grew 30% to 1,193 as of
April 30, 2024.
- Gross margin: GAAP gross margin was 73%, compared to
68%. Non-GAAP gross margin was 79%, compared to 75%.
- Operating margin: GAAP operating margin was (43)%,
compared to (86)%. Non-GAAP operating margin was (6)%, compared to
(38)%.
- Cash flow margin: Operating cash flow margin was 23%,
compared to (21)%. Free cash flow margin was 18%, 42 percentage
points higher compared to (24)%.
- Cash, cash equivalents, and investments were $1.1
billion as of April 30, 2024.
Financial Outlook
We are providing the following guidance for the second quarter
of fiscal year 2025, and for fiscal year 2025 (ending January 31,
2025).
Q2FY25
Guidance
Full FY2025
Guidance
Revenue
$197 million
$808 - 815 million
Non-GAAP gross margin
79%
78 - 79%
Non-GAAP operating margin
(6)%
(6)-(2)%
These statements are forward-looking and actual results may
differ materially as a result of many factors. Refer to the below
for information on the factors that could cause our actual results
to differ materially from these forward-looking statements.
Guidance for non-GAAP financial measures excludes stock-based
compensation expense, employer payroll tax on employee stock
transactions, amortization expense of acquired intangible assets,
and acquisition-related compensation costs. We have not provided
the most directly comparable GAAP measures because certain items
are out of our control or cannot be reasonably predicted.
Accordingly, a reconciliation of non-GAAP gross margin and non-GAAP
operating margin is not available without unreasonable effort.
Webcast Information
We will host a live audio webcast for analysts and investors to
discuss our earnings results for the first quarter of fiscal year
2025 and outlook for second quarter of fiscal year 2025 and full
fiscal year 2025 today, May 30, 2024, at 2:00 p.m. Pacific Time
(5:00 p.m. Eastern Time). The live webcast and a recording of the
event will be available on the Investor Relations section of our
website at investors.sentinelone.com.
We have used, and intend to continue to use, the Investor
Relations section of our website at investors.sentinelone.com as a
means of disclosing material nonpublic information and for
complying with our disclosure obligations under Regulation FD.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which statements involve risks and uncertainties,
including but not limited to statements regarding our future
growth, execution, competitive position, and future financial and
operating performance, including our financial outlook for the
second quarter of fiscal year 2025 and our full fiscal year 2025,
including non-GAAP gross margin and non-GAAP operating margin;
progress towards our long-term profitability targets; and general
market trends. The words “believe,” “may,” “will,” “potentially,”
“estimate,” “continue,” “anticipate,” “intend,” “could,” “would,”
“project,” “target,” “plan,” “expect,” or the negative of these
terms and similar expressions are intended to identify
forward-looking statements. However, not all forward-looking
statements contain these identifying words.
There are a significant number of factors that could cause our
actual results to differ materially from statements made in this
press release, including but not limited to: our limited operating
history; our history of losses; intense competition in the market
we compete in; fluctuations in our operating results; actual or
perceived network or security incidents against us; our ability to
successfully integrate any acquisitions and strategic investments;
actual or perceived defects, errors or vulnerabilities in our
platform; risks associated with managing our rapid growth; general
global market, political, economic, and business conditions,
including those related to declining global macroeconomic
conditions, interest rate volatility, supply chain disruptions and
inflation, actual or perceive instability in the banking sector,
potential uncertainty with respect to the federal debt ceiling and
budget and potential government shutdowns related thereto, and
geopolitical uncertainty, including the effects of the conflicts in
the Middle East and Ukraine and the judicial reform in Israel; our
ability to attract new and retain existing customers, or renew and
expand our relationships with them; the ability of our platform to
effectively interoperate within our customers' IT infrastructure;
disruptions or other business interruptions that affect the
availability of our platform including cybersecurity incidents; the
failure to timely develop and achieve market acceptance of new
products and subscriptions as well as existing products,
subscriptions and support offerings; rapidly evolving technological
developments in the market for security products and subscription
and support offerings; length of sales cycles; and risks of
securities class action litigation.
Additional risks and uncertainties that could affect our
financial results are included under the captions “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” set forth in our filings and reports
with the Securities and Exchange Commission (“SEC”), including our
most recently filed Annual Report on Form 10-K, dated March 27,
2024, subsequent Quarterly Reports on Form 10-Q and other filings
and reports that we may file from time to time with the SEC, copies
of which are available on our website at investors.sentinelone.com
and on the SEC’s website at www.sec.gov.
You should not rely on these forward-looking statements, as
actual outcomes and results may differ materially from those
contemplated by these forward-looking statements as a result of
such risks and uncertainties. All forward-looking statements in
this press release are based on information and estimates available
to us as of the date hereof, and were based on current
expectations, estimates, forecasts, and projections as well as the
beliefs and assumptions of management. We do not assume any
obligation to update the forward-looking statements provided to
reflect events that occur or circumstances that exist after the
date of this press release or to reflect new information or the
occurrence of unexpected events, except as required by law. We may
not actually achieve the plans, intentions, or expectations
disclosed in our forward-looking statements, and you should not
place undue reliance on our forward-looking statements.
Non-GAAP Financial Measures
In addition to our results being determined in accordance with
GAAP, we believe the following non-GAAP measures are useful in
evaluating our operating performance. We use the following non-GAAP
financial information to evaluate our ongoing operations and for
internal planning and forecasting purposes. We believe that
non-GAAP financial information, when taken collectively, with the
financial information presented in accordance with GAAP, may be
helpful to investors because it provides consistency and
comparability with past financial performance. However, non-GAAP
financial information is presented for supplemental informational
purposes only, has limitations as an analytical tool, and should
not be considered in isolation or as a substitute for financial
information presented in accordance with GAAP.
Other companies, including companies in our industry, may
calculate similarly titled non-GAAP measures differently or may use
other measures to evaluate their performance, all of which could
reduce the usefulness of our non-GAAP financial measures as tools
for comparison. In addition, the utility of free cash flow as a
measure of our liquidity is limited as it does not represent the
total increase or decrease in our cash balance for a given
period.
Reconciliations between non-GAAP financial measures to the most
directly comparable financial measure stated in accordance with
GAAP are contained below. Investors are encouraged to review the
related GAAP financial measures and the reconciliation of these
non-GAAP financial measures to their most directly comparable GAAP
financial measures and not rely on any single financial measure to
evaluate our business.
As presented in the “Reconciliation of GAAP to Non-GAAP
Financial Information” table below, each of the non-GAAP financial
measures excludes one or more of the following items:
Stock-based compensation expense
Stock-based compensation expense is a non-cash expense that
varies in amount from period to period and is dependent on market
forces that are often beyond our control. As a result, management
excludes this item from our internal operating forecasts and
models. Management believes that non-GAAP measures adjusted for
stock-based compensation expense provide investors with a basis to
measure our core performance against the performance of other
companies without the variability created by stock-based
compensation as a result of the variety of equity awards used by
other companies and the varying methodologies and assumptions
used.
Employer payroll tax on employee stock transactions
Employer payroll tax expenses related to employee stock
transactions are tied to the vesting or exercise of underlying
equity awards and the price of our common stock at the time of
vesting, which varies in amount from period to period and is
dependent on market forces that are often beyond our control. As a
result, management excludes this item from our internal operating
forecasts and models. Management believes that non-GAAP measures
adjusted for employer payroll taxes on employee stock transactions
provide investors with a basis to measure our core performance
against the performance of other companies without the variability
created by employer payroll taxes on employee stock transactions as
a result of the stock price at the time of employee exercise.
Amortization of acquired intangible assets
Amortization of acquired intangible asset expense is tied to the
intangible assets that were acquired in conjunction with
acquisitions, which results in non‑cash expenses that may not
otherwise have been incurred. Management believes excluding the
expense associated with intangible assets from non-GAAP measures
allows for a more accurate assessment of our ongoing operations and
provides investors with a better comparison of period-over-period
operating results.
Acquisition-related compensation costs
Acquisition-related compensation costs include cash-based
compensation expenses resulting from the employment retention of
certain employees established in accordance with the terms of each
acquisition. Acquisition-related cash-based compensation costs have
been excluded as they were specifically negotiated as part of the
acquisitions in order to retain such employees and relate to cash
compensation that was made either in lieu of stock-based
compensation or where the grant of stock-based compensation awards
was not practicable. In most cases, these acquisition-related
compensation costs are not factored into management's evaluation of
potential acquisitions or our performance after completion of
acquisitions, because they are not related to our core operating
performance. In addition, the frequency and amount of such charges
can vary significantly based on the size and timing of acquisitions
and the maturities of the businesses being acquired. Excluding
acquisition-related compensation costs from non-GAAP measures
provides investors with a basis to compare our results against
those of other companies without the variability caused by purchase
accounting.
Non-GAAP Cost of Revenue, Non-GAAP Gross Profit, Non-GAAP
Gross Margin, Non-GAAP Loss from Operations, Non-GAAP Operating
Margin, Non-GAAP Net Loss and Non-GAAP Net Loss Per Share
We define these non-GAAP financial measures as their respective
GAAP measures, excluding the expenses referenced above. We use
these non-GAAP financial measures as part of our overall assessment
of our performance, including the preparation of our annual
operating budget and quarterly forecasts, to evaluate the
effectiveness of our business strategies, and to communicate with
our board of directors concerning our financial performance.
Free Cash Flow
We define free cash flow as cash provided by (used in) operating
activities less purchases of property and equipment and capitalized
internal-use software costs. We believe free cash flow is a useful
indicator of liquidity that provides our management, board of
directors, and investors with information about our future ability
to generate or use cash to enhance the strength of our balance
sheet and further invest in our business and pursue potential
strategic initiatives.
Key Business Metrics
We monitor the following key metrics to help us evaluate our
business, identify trends affecting our business, formulate
business plans, and make strategic decisions.
Annualized Recurring Revenue (ARR)
We believe that ARR is a key operating metric to measure our
business because it is driven by our ability to acquire new
subscription and consumption and usage-based customers, and to
maintain and expand our relationship with existing customers. ARR
represents the annualized revenue run rate of our subscription and
consumption and usage-based agreements at the end of a reporting
period, assuming contracts are renewed on their existing terms for
customers that are under contracts with us. ARR is not a forecast
of future revenue, which can be impacted by contract start and end
dates, usage, renewal rates, and other contractual terms.
Customers with ARR of $100,000 or More
We believe that our ability to increase the number of customers
with ARR of $100,000 or more is an indicator of our market
penetration and strategic demand for our platform. We define a
customer as an entity that has an active subscription for access to
our platform. We count Managed Service Providers, Managed Security
Service Providers, Managed Detection & Response firms, and
Original Equipment Manufacturers, who may purchase our products on
behalf of multiple companies, as a single customer. We do not count
our reseller or distributor channel partners as customers.
Source: SentinelOne NYSE: S Category: Investors
SENTINELONE, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
(unaudited)
April 30,
January 31,
2024
2024
Assets
Current assets:
Cash and cash equivalents
$
198,716
$
256,651
Short-term investments
574,488
669,305
Accounts receivable, net
133,773
214,322
Deferred contract acquisition costs,
current
55,385
54,158
Prepaid expenses and other current
assets
103,577
102,895
Total current assets
1,065,939
1,297,331
Property and equipment, net
57,052
48,817
Operating lease right-of-use assets
17,516
18,474
Long-term investments
336,469
204,798
Deferred contract acquisition costs,
non-current
70,335
71,640
Intangible assets, net
126,842
122,903
Goodwill
629,636
549,411
Other assets
5,941
8,033
Total assets
$
2,309,730
$
2,321,407
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
9,202
$
6,759
Accrued liabilities
105,481
104,671
Accrued payroll and benefits
55,429
74,345
Operating lease liabilities, current
4,682
4,689
Deferred revenue, current
391,254
399,603
Total current liabilities
566,048
590,067
Deferred revenue, non-current
101,843
114,930
Operating lease liabilities,
non-current
16,764
18,239
Other liabilities
9,455
4,128
Total liabilities
694,110
727,364
Stockholders’ equity:
Class A common stock
29
27
Class B common stock
3
3
Additional paid-in capital
3,027,530
2,934,607
Accumulated other comprehensive loss
(2,793
)
(1,550
)
Accumulated deficit
(1,409,149
)
(1,339,044
)
Total stockholders’ equity
1,615,620
1,594,043
Total liabilities and stockholders’
equity
$
2,309,730
$
2,321,407
SENTINELONE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except share
and per share data)
(unaudited)
Three Months Ended April
30,
2024
2023
Revenue
$
186,355
$
133,393
Cost of revenue(1)
50,137
42,583
Gross profit
136,218
90,810
Operating expenses:
Research and development(1)
58,321
55,263
Sales and marketing(1)
115,830
99,171
General and administrative(1)
42,667
51,753
Total operating expenses
216,818
206,187
Loss from operations
(80,600
)
(115,377
)
Interest income
12,082
10,535
Interest expense
(36
)
(607
)
Other expense, net
(39
)
(359
)
Loss before income taxes
(68,593
)
(105,808
)
Provision for income taxes
1,512
1,061
Net loss
$
(70,105
)
$
(106,869
)
Net loss per share attributable to Class A
and Class B common stockholders, basic and diluted
$
(0.23
)
$
(0.37
)
Weighted-average shares used in computing
net loss per share attributable to Class A and Class B common
stockholders, basic and diluted
309,547,693
288,300,705
(1) Includes stock-based compensation
expense as follows:
Cost of revenue
$
4,869
$
4,173
Research and development
17,465
14,790
Sales and marketing
18,074
12,596
General and administrative
18,145
23,990
Total stock-based compensation expense
$
58,553
$
55,549
SENTINELONE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended April
30,
2024
2023
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss
$
(70,105
)
$
(106,869
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
10,691
9,115
Amortization of deferred contract
acquisition costs
15,284
10,740
Non-cash operating lease costs
957
943
Stock-based compensation expense
58,553
55,549
Accretion of discounts, and amortization
of premiums on investments, net
(3,628
)
(5,167
)
Other
1,551
939
Changes in operating assets and
liabilities, net of effects of acquisition
Accounts receivable
80,911
23,583
Prepaid expenses and other assets
3,904
3,237
Deferred contract acquisition costs
(15,207
)
(12,091
)
Accounts payable
2,368
1,127
Accrued liabilities
(2,515
)
1,392
Accrued payroll and benefits
(18,897
)
(10,917
)
Operating lease liabilities
(1,481
)
(1,110
)
Deferred revenue
(22,108
)
2,237
Other liabilities
1,725
(767
)
Net cash provided by (used in) operating
activities
42,003
(28,059
)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment
(886
)
(462
)
Purchases of intangible assets
(73
)
(173
)
Capitalization of internal-use
software
(7,361
)
(2,912
)
Purchases of investments
(246,965
)
(150,639
)
Sales and maturities of investments
210,574
185,296
Cash paid for acquisition, net of cash
acquired
(61,553
)
—
Net cash (used in) provided by investing
activities
(106,264
)
31,110
CASH FLOW FROM FINANCING ACTIVITIES:
Repurchase of early exercised stock
options
(21
)
—
Proceeds from exercise of stock
options
6,554
9,762
Net cash provided by financing
activities
6,533
9,762
NET CHANGE IN CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH
(57,728
)
12,813
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH–Beginning of period
322,086
202,406
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH–End of period
$
264,358
$
215,219
SENTINELONE, INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL INFORMATION
(in thousands, except
percentages and per share data)
(unaudited)
Three Months Ended April
30,
2024
2023
Cost of revenue reconciliation:
GAAP cost of revenue
$
50,137
$
42,583
Stock-based compensation expense
(4,869
)
(4,173
)
Employer payroll tax on employee stock
transactions
(207
)
(50
)
Amortization of acquired intangible
assets
(5,471
)
(4,972
)
Acquisition-related compensation
(273
)
(123
)
Non-GAAP cost of revenue
$
39,317
$
33,265
Gross profit reconciliation:
GAAP gross profit
$
136,218
$
90,810
Stock-based compensation expense
4,869
4,173
Employer payroll tax on employee stock
transactions
207
50
Amortization of acquired intangible
assets
5,471
4,972
Acquisition-related compensation
273
123
Non-GAAP gross profit
$
147,038
$
100,128
Gross margin reconciliation:
GAAP gross margin
73
%
68
%
Stock-based compensation expense
3
%
3
%
Employer payroll tax on employee stock
transactions
—
%
—
%
Amortization of acquired intangible
assets
3
%
4
%
Acquisition-related compensation
—
%
—
%
Non-GAAP gross margin
79
%
75
%
Research and development expense
reconciliation:
GAAP research and development expense
$
58,321
$
55,263
Stock-based compensation expense
(17,465
)
(14,790
)
Employer payroll tax on employee stock
transactions
(413
)
(202
)
Acquisition-related compensation
(787
)
(325
)
Non-GAAP research and development
expense
$
39,656
$
39,946
Sales and marketing expense
reconciliation:
GAAP sales and marketing expense
$
115,830
$
99,171
Stock-based compensation expense
(18,074
)
(12,596
)
Employer payroll tax on employee stock
transactions
(923
)
(320
)
Amortization of acquired intangible
assets
(2,204
)
(1,907
)
Acquisition-related compensation
(44
)
(249
)
Non-GAAP sales and marketing expense
$
94,585
$
84,099
General and administrative expense
reconciliation:
GAAP general and administrative
expense
$
42,667
$
51,753
Stock-based compensation expense
(18,145
)
(23,990
)
Employer payroll tax on employee stock
transactions
(642
)
(552
)
Amortization of acquired intangible
assets
—
(1
)
Acquisition-related compensation
(1
)
(368
)
Non-GAAP general and administrative
expense
$
23,879
$
26,842
Operating loss reconciliation:
GAAP operating loss
$
(80,600
)
$
(115,377
)
Stock-based compensation expense
58,553
55,549
Employer payroll tax on employee stock
transactions
2,188
1,124
Amortization of acquired intangible
assets
7,675
6,880
Acquisition-related compensation
1,103
1,065
Non-GAAP operating loss
$
(11,081
)
$
(50,759
)
Operating margin
reconciliation:
GAAP operating margin
(43
)%
(86
)%
Stock-based compensation expense
31
%
42
%
Employer payroll tax on employee stock
transactions
1
%
1
%
Amortization of acquired intangible
assets
4
%
5
%
Acquisition-related compensation
1
%
1
%
Non-GAAP operating margin*
(6
)%
(38
)%
Net loss reconciliation:
GAAP net loss
$
(70,105
)
$
(106,869
)
Stock-based compensation expense
58,553
55,549
Employer payroll tax on employee stock
transactions
2,188
1,124
Amortization of acquired intangible
assets
7,675
6,880
Acquisition-related compensation
1,103
1,065
Non-GAAP net loss
$
(586
)
$
(42,251
)
Basic and diluted EPS
reconciliation:
GAAP net loss per share, basic and
diluted
$
(0.23
)
$
(0.37
)
Stock-based compensation expense
0.19
0.19
Employer payroll tax on employee stock
transactions
0.01
—
Amortization of acquired intangible
assets
0.02
0.03
Acquisition-related compensation
—
—
Non-GAAP net loss per share, basic and
diluted*
$
—
$
(0.15
)
*Certain figures may not sum due to
rounding.
SENTINELONE, INC.
SELECTED CASH FLOW
INFORMATION
(in thousands)
(unaudited)
Reconciliation of cash used in
operating activities to free cash flow
Three Months Ended April
30,
2024
2023
GAAP net cash provided (used in) by
operating activities
$
42,003
$
(28,059
)
Less: Purchases of property and
equipment
(886
)
(462
)
Less: Capitalized internal-use
software
(7,361
)
(2,912
)
Free cash flow
$
33,756
$
(31,433
)
Net cash (used in) provided by investing
activities
$
(106,264
)
$
31,110
Net cash provided by financing
activities
$
6,533
$
9,762
Operating cash flow margin
23
%
(21
)%
Free cash flow margin
18
%
(24
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240530750554/en/
Investor Relations: Doug Clark investors@sentinelone.com
Press: Karen Master karen.master@sentinelone.com +1 (440)
862-0676
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