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01/10 19:40
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance with 22% revenue growth, record free cash flow margin, and a high gross margin. Strategic initiatives, such as AI innovations and the PartnerOne program, coupled with a significant share repurchase plan, bolster investor confidence. The Q&A section reveals positive analyst sentiment and potential growth from new offerings like Flex and Prompt AI. Despite some prudence in guidance, the overall outlook remains optimistic with continued growth and strategic partnerships, justifying a positive sentiment rating.
Total ARR Grew 24% year-over-year and crossed $1 billion. This growth was attributed to strong new business generation and platform adoption.
Net New ARR Added $53 million in the quarter, reflecting over 20% year-over-year growth. This was driven by broad-based momentum in new customer acquisition and platform adoption.
Revenue Grew 22% year-over-year to $242 million. International markets grew 27% and represented 38% of total revenue, highlighting balanced growth and an expanding global footprint.
Customers with ARR of $100,000 or more Grew 23% to 1,513. This reflects broader platform adoption and increased average deal size.
Gross Margin Maintained at 79%, showcasing healthy pricing and platform unit economics.
Operating Margin Achieved 2% in the quarter, improving by more than 500 basis points year-over-year. This reflects strong operating leverage.
Net Income Margin Increased to 5%, marking the fifth consecutive quarter of positive net income margin.
Free Cash Flow Margin Achieved 2% on a trailing 12-month basis, with expectations for further improvement in the second half of the year.
Remaining Performance Obligations Grew 26% to $1.2 billion, indicating strong customer trust and commitment.
Cash, Cash Equivalents, and Investments Ended the quarter with $1.2 billion and no debt, providing financial flexibility for growth initiatives.
SentinelOne Flex: A unified flexible licensing model that allows organizations to manage entitlements, deploy new platform capabilities, and enhance security investments. It has received positive reception with an 8-figure total deal value.
Purple AI: Achieved record momentum with triple-digit growth and attach rates surpassing 30%. It is helping enterprises operate with greater speed and efficiency, reducing security team workloads.
AI SIEM: Redefines security data management with enhanced visibility, real-time detection, and autonomous response. It is now listed in the AWS marketplace.
Prompt Security Acquisition: A $180 million acquisition to secure generative AI at runtime, prevent data leakage, and govern AI usage. It positions SentinelOne in the DLP space and enhances the Singularity platform.
Global Expansion: International markets grew 27% and now represent 38% of total revenue, reflecting a balanced growth and expanding global footprint.
Partnerships: Deepened engagements with hyperscalers like AWS and MSSP ecosystem. SentinelOne was named Pax8's most valuable vendor in Q2.
ARR Growth: Total ARR grew 24% year-over-year, surpassing $1 billion. Net new ARR of $53 million exceeded expectations.
Revenue Growth: Revenue grew 22% year-over-year to $242 million, with international markets contributing significantly.
Profitability: Achieved operating profitability of 2% and a net income margin of 5%. Free cash flow margin reached 2% on a trailing 12-month basis.
AI and Data Integration: Focused on unifying AI, data, and security into a single platform to address modern real-time security needs.
Generative AI Security: Acquisition of Prompt Security to address risks in GenAI adoption and enhance AI-native cybersecurity capabilities.
Dynamic macroeconomic environment: The company acknowledges the potential for variability in deal timing and sales cycles due to evolving macroeconomic conditions, which could impact revenue and growth projections.
Acquisition of Prompt Security: The acquisition is expected to have an 80 basis point impact on the full-year operating margin, with minimal ARR and revenue contribution in fiscal year 2026, potentially affecting profitability in the short term.
Foreign exchange headwinds: A weaker U.S. dollar is anticipated to create foreign exchange headwinds, which could negatively impact operating margins.
Competitive pressures: The company operates in a highly competitive cybersecurity market, which requires continuous innovation and investment to maintain its leadership position.
Customer deal timing: Larger deals may experience variability in timing, which could influence quarterly revenue and financial performance.
Supply chain and operational risks: Although not explicitly mentioned, the company's reliance on technology and cloud infrastructure could expose it to supply chain disruptions or operational challenges.
Revenue Outlook for Q3 FY 2026: Expected revenue of approximately $256 million, reflecting 22% year-over-year growth.
Full Year Revenue Outlook for FY 2026: Raised revenue outlook to a range of $998 million to $1.02 billion, representing 22% year-over-year growth.
Gross Margin Outlook for Q3 FY 2026: Expected gross margin of approximately 78.5%.
Full Year Gross Margin Outlook for FY 2026: Expected gross margin to be between 78.5% and 79%.
Operating Margin Outlook for Q3 FY 2026: Expected operating margin to be about 4%, representing a year-over-year improvement of approximately 900 basis points.
Full Year Operating Margin Outlook for FY 2026: Expected operating margin of about 3%, an improvement of approximately 600 basis points compared to fiscal year '25.
Free Cash Flow Outlook for FY 2026: Expected to be a few points higher than operating margin, reaffirming commitment to positive free cash flow for the full year.
Impact of Prompt Security Acquisition: Estimated 80 basis point impact to full year operating margin, with minimal top-line financial impact in FY 2026.
The selected topic was not discussed during the call.
The earnings call highlights strong financial performance with 22% revenue growth, improved margins, and a raised full-year revenue outlook. Positive developments include strategic investments, robust AI and data solutions growth, and promising Flex deals. Despite lighter guidance due to macroeconomic factors, the overall sentiment is optimistic with stable net retention rates, strategic M&A plans, and no significant disruptions from competitors. These factors suggest a likely positive stock price movement.
The earnings call highlights strong financial performance with 22% revenue growth, record free cash flow margin, and a high gross margin. Strategic initiatives, such as AI innovations and the PartnerOne program, coupled with a significant share repurchase plan, bolster investor confidence. The Q&A section reveals positive analyst sentiment and potential growth from new offerings like Flex and Prompt AI. Despite some prudence in guidance, the overall outlook remains optimistic with continued growth and strategic partnerships, justifying a positive sentiment rating.
The earnings call summary reflects strong financial performance with 23% revenue growth and robust international expansion. The company shows promising AI integration and platform adoption, with a positive outlook for ARR and operating margins. The $200 million share repurchase authorization indicates confidence in the business. While Q&A reveals concerns about longer sales cycles, management expects improved trends and highlights competitive advantages in AI and cloud-native solutions. Overall, the positive financial metrics, strategic initiatives, and shareholder returns suggest a positive stock price movement.
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