SentinelOne’s third quarter was marked by solid top-line growth and improving profitability, but the market responded negatively to the results. Management attributed the company’s performance to strong customer adoption of its emerging AI, data, and cloud security offerings, as well as greater expansion among existing clients. CEO Tomer Weingarten emphasized the rapid uptake of the Purple AI and data solutions, which contributed to a record average recurring revenue per customer and demonstrated the platform’s differentiation. The quarter also featured continued strength in international markets and meaningful progress in operational efficiency.
Is now the time to buy S? Find out in our full research report (it’s free for active Edge members).
SentinelOne (S) Q3 CY2025 Highlights:
- Revenue: $258.9 million vs analyst estimates of $256.1 million (22.9% year-on-year growth, 1.1% beat)
- Adjusted EPS: $0.07 vs analyst estimates of $0.05 (31.5% beat)
- Adjusted Operating Income: $17.67 million vs analyst estimates of $10.2 million (6.8% margin, 73.2% beat)
- Revenue Guidance for Q4 CY2025 is $271 million at the midpoint, below analyst estimates of $273.2 million
- Operating Margin: -28.3%, up from -42.3% in the same quarter last year
- Customers: 1,572 customers paying more than $100,000 annually
- Annual Recurring Revenue: $1.06 billion vs analyst estimates of $1.05 billion (22.8% year-on-year growth, in line)
- Billings: $281.6 million at quarter end, up 36.6% year on year
- Market Capitalization: $5.18 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From SentinelOne’s Q3 Earnings Call
- Saket Kalia (Barclays) asked which non-endpoint products are driving new business. CEO Tomer Weingarten identified data solutions and Purple AI as leading contributors, with Flex licensing enabling broader adoption.
- John DiFucci (Guggenheim) questioned the cautious revenue guidance. CFO Barbara Larson explained it was due to prudent assumptions on deal timing and macroeconomic uncertainty, affirming commitment to steady execution.
- Brian Essex (JPMorgan) inquired about factors behind gross margin compression. Larson cited investments in cloud infrastructure and global expansion as drivers, with margins expected to remain in the high 70s.
- Meta Marshall (Morgan Stanley) sought details on Flex deal momentum. Weingarten described Flex as key to landing larger, multi-solution deals and improving ARR per customer.
- Adam Tindle (RJF) referenced a competitor’s claims of partner displacements. Weingarten countered that SentinelOne’s partner ecosystem remains robust, with significant multi-year commitments and no meaningful disruption observed.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be tracking (1) adoption rates and revenue contributions from emerging AI, data, and cloud security products, (2) the effectiveness of the Flex licensing model in driving larger multi-product deals, and (3) the impact of ongoing investments in cloud infrastructure and recent acquisitions on both growth and operating margins. Leadership continuity and successful execution through the CFO transition will also be closely monitored.
SentinelOne currently trades at $15.19, down from $17.10 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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