SentinelOne Shares Climb After Strong Q2 Revenue and Raised Outlook
Cybersecurity firm surpasses $1 billion in recurring revenue, signaling strong demand despite mixed earnings results.
SentinelOne shares rose in after-hours trading Thursday after the cybersecurity company reported second-quarter revenue that met analyst expectations and raised its full-year forecast, signaling robust demand for its AI-powered security platform. The company's stock jumped over 5% after it announced it had surpassed $1 billion in annualized recurring revenue (ARR), a key metric for subscription-based software companies.
For the second quarter ending July 31, SentinelOne reported revenue of $242.2 million, a 22% increase from the same period last year, aligning with analyst estimates. While the company posted a GAAP net loss per share of $0.22, its non-GAAP earnings per share of $0.04 beat the consensus estimate of $0.03. The positive market reaction was largely driven by the company's optimistic outlook. SentinelOne raised its full-year revenue guidance to a range of $998 million to $1.002 billion, suggesting confidence in its growth trajectory amid a competitive cybersecurity landscape.
The milestone of exceeding $1 billion in ARR, a 24% year-over-year increase, underscores the company's success in expanding its customer base. SentinelOne reported that its number of customers with ARR of $100,000 or more grew by 23% to 1,513, indicating strong adoption from large enterprises. Operationally, the company showed progress toward profitability, with its non-GAAP operating margin turning positive at 2%, a notable improvement from -3% in the prior year.
Following the report, Wall Street analysts reaffirmed their positive stance on the company. The consensus among 39 brokerage firms remains an 'Outperform,' with an average one-year price target of $22.90. Analysts pointed to the strong platform adoption across AI, data, and cloud security as a primary driver of growth. However, some cautioned that the company still faces a challenging path to GAAP profitability, with its net loss margin standing at -30% for the quarter. Despite the mixed bottom-line results, the strong revenue growth and raised guidance provided investors with enough positive news to fuel a rally in the stock.