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SentinelOne (S) Q2 Earnings Beat Estimates, Revenues Up Y/Y

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SentinelOne (S - Free Report) reported second-quarter fiscal 2023 adjusted loss of 20 cents per share, beating the Zacks Consensus Estimate by 23.08%. The company had reported a loss of 38 cents in the year-ago quarter.

SentinelOne reported revenues of $102.5 million, which surged 124.1% year over year, beating the consensus mark by 6.98%.

International revenues accounted for 323% of total revenues, reflecting growth of 135% year over year. SentinelOne’s go-to-market expansion initiatives in Europe, the Middle East, Africa, and Asia Pacific, as well as its growing brand awareness, contributed to strong growth across all major international geographies.

SentinelOne shares were down 2.01% in pre-market trading. Shares of the company have underperformed the Zacks Computer and Technology sector as well as its competitor CrowdStrike (CRWD - Free Report) year to date.

SentinelOne, Inc. Price, Consensus and EPS Surprise

SentinelOne, Inc. Price, Consensus and EPS Surprise

SentinelOne, Inc. price-consensus-eps-surprise-chart | SentinelOne, Inc. Quote

While SentinelOne shares declined 45.9%, the Computer and Technology sector has been down 27.8%. CrowdStrike shares have declined 10.8% on a year-to-date basis.

Top-Line Details   

In fiscal second-quarter 2023, SentinelOne’s annualized recurring revenues (“ARR”) increased 122% year over year to $439 million. The strong performance was driven by robust demand for SentinelOne’s offerings from new and existing customers as well as contributions from Attivo.

SentinelOne’s top-line growth benefited from an expanding customer base. Customer count grew 60% year over year to over 8,600 customers at the end of the second quarter of fiscal 2023.

Customers with ARR over $100K grew 117% year over year to 755. Dollar-based net revenue retention rate was 137% at the end of the fiscal second quarter.

Non-GAAP gross margin was 72.2%, significantly up from 62% reported in the year-ago quarter.

Research & development expenses, as a percentage of revenues, plunged 850 basis points (bps) on a year-over-year basis to 40%.

General & administrative expenses, as a percentage of revenues, were 23.9%, down 720 bps year over year.

Sales and marketing expenses, as a percentage of revenues, were 64.9%, significantly down from 80.6% reported in the year-ago quarter.

Total operating expenses were up 80% year over year to $132.1 million.

SentinelOne reported an operating loss of $58.1 million in the reported quarter compared with an operating loss of $45 million in the year-ago quarter.

Balance Sheet & Cash Flow

As of Jul 31, 2022, SentinelOne had cash, cash equivalents and short-term investments of $1.2 billion.

Free cash outflow was $66.8 million in the reported quarter.

Guidance

For third-quarter fiscal 2023, SentinelOne expects revenues to be $111 million.

Non-GAAP gross margin is expected to be 71%.

For fiscal 2023, SentinelOne expects total revenues in the band of $415-$417 million.

Non-GAAP gross margin is expected within 70.5-71%.

Zacks Rank & Stocks to Consider

SentinelOne currently has a Zacks Rank #3 (Hold).

A couple of better-ranked stocks in the Computer & Technology sector are Audioeye (AEYE - Free Report) and Airbnb (ABNB - Free Report) . Both stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Audioeye and Airbnb are down 7.4% and 33.6%, respectively, on a year-to-date basis.


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