SentinelOne Q1 2026 Earnings Report

SentinelOne EPS Results

• Actual EPS: $0.02
• Consensus EPS: $0.02
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A

SentinelOne Revenue Results

• Actual Revenue: $229.03 million
• Expected Revenue: $228.39 million
• Beat/Miss: Beat by +$636.00 thousand
• YoY Revenue Growth: +22.90%

SentinelOne Announcement Details

• Quarter: Q1 2026
• Date: 5/28/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, May 28, 2025
• Conference Call Time: 4:30PM ET

SentinelOne (NYSE:S) operates as a cybersecurity provider in the United States and internationally. Its Singularity Platform delivers an artificial intelligence-powered autonomous threat prevention, detection, and response capabilities across an organization's endpoints, cloud workloads, and identify credentials, which enables seamless and autonomous protection against a spectrum of cyber threats. In addition, it offers endpoint protection, endpoint detection and response, cloud and identity security, attack surface management, mobile endpoint security, xdr power tools, watchtower, and vigilance MDR. The company was formerly known as Sentinel Labs, Inc. and changed its name to SentinelOne, Inc. in March 2021. SentinelOne, Inc. was incorporated in 2013 and is headquartered in Mountain View, California.

SentinelOne Q1 2026 Earnings Call Transcript

Key Takeaways

• Revenue grew 23% YoY to $229 million in Q1 with ARR up 24% YoY to $948 million, and a record free cash flow margin of 20%.
• Launched a unified cloud security suite and saw Purple AI achieve triple-digit bookings growth, while data solutions ARR surpassed $100 million in Q1.
• Macro uncertainty in April led to elongated sales cycles and materially lower net new ARR, prompting a slight downward revision of FY ’26 revenue guidance to $996 million–$1 billion (22% growth).
• Maintained a strong non-GAAP gross margin of 79% and a positive operating margin of –2% in Q1, with FY ’26 operating margin expected to turn positive 3–4% and a $200 million share repurchase authorization announced.
• Achieved FedRAMP High authorization across the Singularity platform—including agentic Purple AI—becoming the first AI cybersecurity solution approved for US government organizations.

Presentation

[Operator]

Hello, and welcome to the SentinelOne q one f y twenty twenty six earnings conference call. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instructions for the question and answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I will now turn the call over to Doug Clark, Vice President, Investor Relations.

[Doug Clark, Vice President, Investor Relations at SentinelOne]

Good afternoon, everyone, and welcome to SentinelOne's earnings call for the first quarter of fiscal year twenty twenty six, which ended 04/30/2025. With us today are Tomer Weingarten, CEO and Barbara Larson, CFO. Our press release and an earnings presentation were issued earlier today and are posted on the Investor Relations section of our website. This call and accompanying slides are being broadcast live via webcast, and a replay will be available on our website after the

[Doug Clark, Vice President, Investor Relations at SentinelOne]

call

[Doug Clark, Vice President, Investor Relations at SentinelOne]

concludes. Before we begin, I would like to remind you that during today's call, we'll be making forward looking statements about future events and financial performance, including our guidance for the second fiscal quarter and full fiscal year 2026 as well as long term financial targets. We caution you that such statements reflect our best judgment based on factors currently known to us and that our actual events or results could differ materially. Please refer to the documents we file from time to time with the SEC, in particular, our annual report on Form 10 ks and our quarterly reports on Form 10 Q. These documents contain and identify important risk factors and other information that may cause our actual results to differ materially from those contained in our forward looking statements.

[Doug Clark, Vice President, Investor Relations at SentinelOne]

Any forward looking statements made during this call are being made as of today. If this call is replayed or reviewed after today, the information presented during that call may not reflect current or accurate information. Except as required by law, we assume no obligation to update these forward looking statements publicly or to update the reasons actual results could differ materially from those anticipated in the forward looking statements even if new information becomes available in the future. During this call, we will discuss non GAAP financial measures unless otherwise stated. These non GAAP financial measures are not prepared in accordance with generally accepted accounting principles.

[Doug Clark, Vice President, Investor Relations at SentinelOne]

A reconciliation of the GAAP and non GAAP results other than with respect to our non GAAP financial outlook is provided in today's press release and in our earnings presentation. These non GAAP measures are not intended to be a substitute for our GAAP results. Our financial outlook excludes stock based compensation expense, employer payroll tax on employee stock transactions, amortization expense of acquired intangible assets, acquisition related compensation costs, restructuring charges, gains on strategic investments and income tax provision, which cannot be determined at this time and are therefore not reconciled in today's press release. And with that, let me turn the call over to Tomer Weingarten, CEO of SentinelOne.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Good afternoon, everyone, and thank you for joining our fiscal first quarter earnings call. Our Q1 performance exceeded our revenue growth expectations, and we continue to deliver strong year over year margin improvement and cash generation. We delivered revenue growth of 23% alongside record free cash flow margin of 20%, demonstrating top tier growth in operating leverage as we approach $1,000,000,000 in scale and sustained profitability, an incredible milestone. We continue to solidify our position as a technology leader across key growth categories of AI, cloud, data, and endpoint. Our Singularity platform is setting new benchmarks across the industry for AI powered cybersecurity, delivering industry leading performance and operational resilience.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Let's first turn the discussion to our latest platform innovations and customer momentum. With our land and expand platform strategy, we're protecting more enterprises than ever before. In Q1, we continued to expand our customer base and drove platform adoption across AI, cloud, data and endpoint. We're increasing our market share in each of these categories. For instance, Purple AI achieved triple digit year over year growth in quarterly bookings, underscoring strong market demand and momentum.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

It also achieved an attach rate that exceeded 25% across subscriptions sold in the quarter, demonstrating a strong start to the year and accelerating customer adoption of our AI security solution. In q one, we also introduced the unified cloud security suite, bringing together cloud workload and runtime protection, cloud security posture management, cloud detection and response, cloud data security, cloud identity, and AI security posture management into a single, fully integrated solution powered by AI and our modern data analytics back end. We're delivering cloud security that is designed for real time defense and operations, in this most recent launch makes it more accessible and easier to deploy than ever before. We're seeing strong traction. Among cloud security opportunities, a Fortune 500 industrial leader was seeking to modernize its cloud security posture.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

This customer wanted to eliminate coverage gaps left by the incumbent solution and looked at seven zero one CNAP for a robust AI driven approach. Our Singularity cloud security suite seamlessly met their complex requirements and exceeded product performance expectations. What set us apart was the strength of our cloud security offering as well as the value of our unified platform that delivers comprehensive protection. I'm also pleased to share that our data solutions surpassed $100,000,000 of ARR in Q1, And among AI sim opportunities, a large Fortune 500 retailer faced significant challenges around soaring Splunk costs, operational inefficiencies and the complexity of managing multiple logging platforms. Singularity directly addressed these challenges by simplifying operations, lowering costs, and providing a unified intelligence security experience.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

This win underscores the momentum of our AI SIM offering and the increasing preference for our modern AI driven cloud native data solution. Among endpoint opportunities, a leading Fortune 500 financial institution consolidated multiple security vendors by switching to SentinelOne, reducing overhead and improving performance. Our unified platform and autonomous security were clear differentiators. Overall, our success with large enterprises and platform adoption continues to drive higher ARR per customer, which reached a new record in Q1. In addition to growing our presence with the largest enterprises in the world, we continue to see strong growth in the mid market.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

We maintained healthy expansion rates with our existing customer base. Turning to our partner ecosystem, we're constantly deepening engagements, amongst our strategic relationships. As AI driven threads grow more sophisticated, both our partners and our customers are increasingly turning to autonomous security solutions that reduce response time while delivering real time machine speed protection. To further support this shift, we're making it easier for our partners and customers to access our platform. In q one, we launched PartnerOne, an entirely reimagined program for MSSPs, incident responders, VARs, and technology partners.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

It features a streamlined tiering structure, performance based incentives, and customized enablement resources. The launch of PartnerOne will enable us to reach more customers, increase flexibility, and reinforce our role in the broader cybersecurity ecosystem. In the public sector, we're demonstrating technology leadership and opening new opportunities. Last year, we achieved FedRAMP high authorization for endpoint and AI SIEM. I'm pleased to say that earlier this month, we achieved FedRAMP high authorization for PRPL, CNAP, and HyperAutomation across the Singularity platform.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Purple AI is now the first and only cybersecurity agentic AI solution approved for US government organizations. This milestone is an important competitive differentiator and reflects our deep strategic commitment to safeguarding the US government's most sensitive environments. Cybersecurity is national security. While near term uncertainty around federal budget allocation and spending persists, our broader pipeline and opportunity set remains strong. In fact, we closed a 7 figure renewal and expansion deal with a large federal agency in early q two.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

We continue to grow our presence in the federal space, though deal timelines may vary in the near term. We're actively partnering with federal, state, and local agencies, many of which depend on federal funding and engaging with them at the pace aligned to their considerations. We're proud to support our government institutions and improve the country's cyber defenses. All of this success stems from our focused innovation strategy and technology leadership. Most recently, we earned prominent recognitions across the industry.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

In April, Frost and Sullivan named SentinelOne the top performing vendor in both growth and innovation in their 2025 radar for endpoint security. We're also honored to be recognized at the SC Media Awards as both the best endpoint security and the best cloud security. These accolades clearly reflect the strength of our Singularity platform and the innovation our teams are delivering. At RSA, we announced Athena, the next evolution of Purple AI, showcasing our vision to deliver the industry's first true end to end agentic AI platform for cybersecurity. It's time to combine the two most powerful forces in the world, humans and AI.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Purple AI understands context, draws connections, and acts autonomously with speed and precision. We're enabling customers to seamlessly connect to third party data sources, unlocking the full potential of Purple AI for enterprises regardless of where they are in their data migration journey. Security teams can get faster response times, broader coverage, and scalable intelligent SecOps. With our latest innovations, Purple AI leverages trillions of security relevant events resulting in a unique dataset that is continuously tuned, refined, and optimized in partnership with our elite MDR team and extensive MDR partner network. Purple AI's Auto Triage, now generally available, helps investigate threats, orchestrate multistep responses, and remediate incidents in seconds.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Also generally available is Singularity Hyperautomation. Combined with Purple AI, this allows enterprises to harness no code automated workflow capabilities to execute novel detection rules autonomously. For organizations overwhelmed by thousands of daily alerts and manual operations, our autonomous security innovations empower teams to focus on the most critical threats. Let's shift to the broader demand environment and trends we're seeing in the market. Demand for cybersecurity remains strong and resilient.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Given the heightened macro uncertainty in April, we observed elongated sales cycles as certain customers paused their spending decisions, impacting our Q1 net new ARR. As a result, we're taking a more measured stance on our full year growth assumptions. Importantly, we haven't seen project cancellations or lost deals, and our win rates remain strong. We're focused on execution and staying nimble. In parallel, cybersecurity is undergoing a fundamental transformation.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Everything from how software is developed or how security is deployed to how outcomes are measured is evolving rapidly. The software model as we know it is undergoing an AI driven transformation. In a world where threats move at machine speed, legacy siloed tools or complex platform built around static features are no longer effective. Going forward, cybersecurity also requires a new standard, one where software adapts to the need of the business, not the other way around. In our view, the future of cybersecurity will be powered by integrated data visibility and AI based protection.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

And that's what we're building at SentinelOne, a source agnostic, unified security platform powered by the industry's most advanced security AI. Our goal is to simplify security significantly using AI. As the industry advances, we believe our platform and innovation approach will become increasingly critical for any customer in any deployment model across any environment. For years, we've been at the forefront to lead this shift. We too have undergone a significant shift through platform evolution in recent years, now with a platform wide AI centric approach.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

As a primary example, non endpoint solutions represent approximately half of our quarterly bookings. Going forward, we're making our offerings more flexible and even easier to access, adopt, and deploy. We believe this will increase velocity, drive broader platform adoption, and unlock more value for our customers over time. As our offerings evolve, so is our go to market, going from a product centric sales approach to a platform sales strategy. We've made good progress over the past year, and as we look ahead, our training, enablement and partnerships will continue to evolve.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

We are confident these changes will support high growth for years to come. In closing, I want to recognize the incredible teams at SentralOne. Through this dynamic environment, their drive, resilience, and commitment power everything we do. In particular, our teams are working tirelessly every day with prospects and customers to deliver leading security across the world. I'm also grateful to our customers and partners for the trust they place in us every day.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

We started the new fiscal year delivering top tier growth and improving profitability. The future for AI powered security is approaching, our opportunity is vast and our differentiation is becoming stronger. With that, would like to turn the call over to Barbara Larson, our Chief Financial Officer.

[Barbara Larson, CFO at SentinelOne]

Thank you, Tomer, and thanks to everyone for joining us today. Let's review the details of our Q1 financial performance and our guidance for Q2 and the full fiscal year 'twenty six. As a reminder, all comparisons are year over year, and financial measures discussed here are non GAAP, unless otherwise noted. We continue to deliver industry leading growth and strong margin expansion. Our revenue of $229,000,000 exceeded expectations and grew 23%.

[Barbara Larson, CFO at SentinelOne]

Revenue from international markets grew 27% and represented 38% of our quarterly revenue as we continue to deliver balanced growth across geographies. Our total ARR grew 24% to $948,000,000. As Tomer mentioned, macro uncertainty was pronounced in April and impacted our q one net new ARR. This is a dynamic time, but we believe we're well positioned to navigate evolving market conditions. We continue to gain market share, and we're seeing continued success with platform solutions across endpoint, cloud, data, and AI.

[Barbara Larson, CFO at SentinelOne]

Customers with ARR of 100,000 or more grew 22% to fourteen fifty nine. Our average deal size, or ARR per customer, expanded double digits year over year, highlighting our platform momentum across all segments of the market. Remaining performance obligations continued to reaccelerate and grew 33% to 1,200,000,000.0. In addition to larger deal sizes, we're also seeing customers commit to longer term agreements with SentinelOne. Contract duration for both new and existing customers expanded year over year in q one.

[Barbara Larson, CFO at SentinelOne]

This is a testament to the trust we've established with our customers and our commitment to future innovation. Turning to margins. We continue to deliver margin expansion and free cash flow improvement. In Q1, we maintained an industry leading gross margin of 79%, and our operating margin expanded over four percentage points year over year to negative 2%. We also achieved our fourth consecutive quarter of positive net income.

[Barbara Larson, CFO at SentinelOne]

This performance was driven by scale, cost discipline, and our focused investment strategy. I'm especially pleased with our cash generation, producing a record 20% free cash flow margin for the quarter. On a trailing twelve month basis, our free cash flow margin expanded five percentage points. Turning to our guidance for Q2 and fiscal year 'twenty six. Our full year outlook reflects Q1 results and the potential impact of heightened macro uncertainty.

[Barbara Larson, CFO at SentinelOne]

That said, we remain encouraged by the continued adoption of our new solutions, the shift towards larger, more strategic platform deals, our leadership in AI, and the strength of our competitive position. We believe we are well positioned to continue to outpace market growth and create significant long term value. For Q2, we expect revenue of approximately $242,000,000 and growth of 22%, driven by sequential net new ARR growth that exceeds typical Q2 seasonality. For the full year, we now expect revenue of $996,000,000 to $1,000,000,000.01, representing 22% growth, top tier performance, especially against a backdrop of ongoing macro volatility. Turning to our outlook for margins.

[Barbara Larson, CFO at SentinelOne]

We expect Q2 gross margin to remain at approximately 79%. We expect full year gross margin to be between 78.579.5% as we grow our customer and platform base. For operating margin, we expect Q2 to be breakeven, implying a year over year improvement of approximately 300 basis points. For the full year, we are reiterating our expectation for operating margin to be between positive 34%, an improvement of over six fifty basis points at the midpoint compared to fiscal year 'twenty five. In addition, we still expect free cash flow margin to exceed operating margin for the full year by several percentage points.

[Barbara Larson, CFO at SentinelOne]

We remain focused on instilling operational discipline and enhancing efficiency across the business. We believe these efforts position us to deliver stronger year over year margin improvement in the second half of fiscal year 'twenty six while also continuing to reinvest in the business. Our investment approach strikes a thoughtful balance between maximizing long term growth opportunities and maintaining a strong, responsible, and profitable financial profile. First, we continue to invest in transformative innovation. We're committed to advancing the technologies that are redefining the industry, AI, data, cloud, and automation.

[Barbara Larson, CFO at SentinelOne]

Recent launches like Purple AI Athena, hyperautomation, and our cloud security suite represent a glimpse of what's possible. We're still early in helping our existing customers unlock more value from our platform, and we're focused on driving deeper adoption. Second, we're driving profitability and operational efficiency. Our investments in AI and automation will continue to drive operational efficiencies. We've also made solid progress on margin expansion and are taking deliberate steps to build on that momentum.

[Barbara Larson, CFO at SentinelOne]

We've been actively aligning teams and resources, enforcing greater discipline, and reinvesting in the highest impact opportunities. We're optimizing our facility footprints and personnel needs and remain focused on sustainable and profitable growth. Bringing this all together, we're beginning to generate more meaningful positive free cash flow. And in Q1, our cash, cash equivalents and investments increased to $1,200,000,000 This strong financial position provides us with flexibility to allocate capital in ways that support both growth and shareholder value. In that context, we're announcing a $200,000,000 open ended share repurchase authorization.

[Barbara Larson, CFO at SentinelOne]

This decision reflects our confidence in the long term trajectory of the business and our view that our current stock price does not fully reflect our underlying fundamentals or future potential. This program gives us the ability to act opportunistically in the market, reduce dilution over time, and continue investing in innovation and strategic priorities, all while maintaining a strong balance sheet. We continue to scale the company on a foundation of strong fundamentals, expanding margins, and significant long term growth potential. Thank you all for joining us today. We'll now take questions.

[Barbara Larson, CFO at SentinelOne]

Operator, please open up the line.

[Operator]

Thank you. At this time, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then you will hear your name called. Please accept, unmute your audio, and ask your question. As a reminder, we are allowing analysts one question today.

[Operator]

We will wait one moment to allow the queue to form. Our first question comes from Joe Gallo with Jefferies. You may now unmute your audio and ask your question.

[Joseph Gallo, Senior Vice President at Jefferies & Company Inc]

Hey, guys. Thanks for the question. Can you just talk a little bit more about incremental ARR in the quarter? You were expecting net new ARR to grow this year, and it was down materially in 1Q. I mean, was there more churn than expected from Deception?

[Joseph Gallo, Senior Vice President at Jefferies & Company Inc]

Was this a few large deals that slipped, or churned? Maybe just what gives you confidence that this is macro and not competitive? Thank you.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Thank you for the question. First of all, think we're already seeing improved trends in May, and we totally expect the year over year net ARR growth in Q2 to improve relative to Q1. And it will imply well above seasonal growth in Q2 compared to last year. So we believe that this was mostly isolated to kind of a Q1 dynamic, if you may. It is more around slip deals than anything else.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

We've not seen any type of elevated churn. So a lot of what we've seen and observed in q one goes back to just more macro volatility than I think anybody expected. If if we kind of think about the second half, I think, in a more holistic way, the opportunities, the engagement we see, demand is still strong and pipeline is still strong. So all of that just points us, again, to fundamentals being intact.

[Barbara Larson, CFO at SentinelOne]

And I'll just add, in terms of deception and your question there, I'm sure that that came in in line with our expectation.

[Operator]

Our next question comes from Brad Zelnick with Deutsche Bank. You please go ahead with your question.

[Brad Zelnick, Managing Director at Deutsche Bank]

Great. Thank you so much. Barbara, my question is for you. I just wanted to better understand your guidance assumptions. And does the incremental conservatism assume the April trends persist throughout the year?

[Brad Zelnick, Managing Director at Deutsche Bank]

And just related to that, you know, what did you see in May? And I don't believe in your in your guidance you've given us any update for ARR. But but with the revenue cut on the full year, should we also assume that the 200,000,000 plus or minus ARR target no longer stands? Thanks.

[Barbara Larson, CFO at SentinelOne]

Yeah. Thanks, Brad. Appreciate the question. So, just in terms of the broader piece, I would say our outlook is reflecting underlying kind of new business growth as we move throughout the year. We definitely are seeing improved trends in May compared to what we saw in April, but we're also trying to be thoughtful about the environment and the potential that there might be further unexpected external disruption.

[Barbara Larson, CFO at SentinelOne]

So trying to capture that all in our expectations for for FY '26. As you noted, our revenue guide, we did decrease that by one by 1%, and you can assume that that that means our internal expectations around net new ARR came down a slight bit as well.

[Operator]

Our next question comes from Gabriella Borges with Goldman Sachs. Please go ahead with your question.

[Gabriela Borges, Analyst at Goldman Sachs]

Hi. Good afternoon. Thank you. Tamara and Barbara, I was hoping you can give us some more specific commentary on what customers were telling you with the slip deals. We understand the general macro uncertainty, but a customer is saying, for example, that they expect to have more certainty later in the year.

[Gabriela Borges, Analyst at Goldman Sachs]

Are you expecting the slip deals to close in the July quarter? Is it perhaps going to take longer? Help us marry the broad economic commentary to the specific seven zero one commentary.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Sure. Let's maybe start a bit more high level. The macro backdrop changed in q one. I think for a lot of folks, that was fairly unexpected, especially in April, which is our largest month of the smallest quarter. So we observed longer sales cycle, and I think customers basically paused their spending decisions for a few weeks.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

We have not seen any deal cancellations. I think as we look ahead, unknowns around federal purchasing, global trade, all of that is still present. So we're trying to be mindful and reflect that in our outlook. Second, and positively, we do expect 22% growth this year. It's a top tier growth rate, especially in a challenging environment.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

So our success with large enterprises, the platform adoption continued to drive higher ARR per customer. That actually reached a new record in Q1. So we're seeing many positive factors, but at the same time, it's really clear that we're trying to create some more room to be able to digest better any potential further disruption. You know, this environment has is proving to be very unpredictable on almost a daily or weekly basis. So we're just trying to take a more tapered approach as to our growth expectations.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

As we mentioned a couple of times, trends have definitely improved in May. We're starting to see more and more progression in the enterprise and in federal sales. So that's definitely encouraging. Again, the demand overall is still strong. Win rates are strong.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

And as you see more platform adoption, think that what gives us the confidence that most of the drivers are there, disruption is the part that we cannot just predict on our own accord.

[Operator]

Our next question comes from Ittai Kidron with Oppenheimer and Co. Please go ahead with your question.

[Ittai Kidron, MD & Senior Analyst - Analytics, Data, Security & Infrastructure Software at Oppenheimer & Co. Inc.]

Thanks. I appreciate it. Tomer, maybe you could talk about the the progression of the productivity and the the the bundle sale. How's that moving along? Where would you like to see

[Ittai Kidron, MD & Senior Analyst - Analytics, Data, Security & Infrastructure Software at Oppenheimer & Co. Inc.]

some more

[Ittai Kidron, MD & Senior Analyst - Analytics, Data, Security & Infrastructure Software at Oppenheimer & Co. Inc.]

improvement? And also with respect to the allocated sales cycles, can you be a little bit more specific with respect to region? Was this just North America or globally? And also by vertical, was this a little bit more pronounced in some verticals versus others?

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

I'll start with the with the latter question. I think we've seen it all around in different different pockets. Definitely more pronounced, I think, in larger deals than in the enterprise, but definitely globally. Mid market was was still very strong for us in the quarter. As to, you know, what what we're seeing out there, you know, there's there's no question that when we talk to customers today, the the breadth and depth of our platform is significant, and we're working to actually make it more flexible and easier for customers to consume more parts of our platform.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

One example of that could be, you know, our Purple AI Purple AI offering. Once we've introduced that into our foundation package, it immediately drove more and more adoption and a price uplift. So as we progress to the second half of the year, our ability to deploy complete flexible procurement for our entire platform, we believe, is gonna drive more adoption of the modules that we have. Our data business, crossing $100,000,000 in ARR, that's a great milestone for us. Both of these parts of our business, AI plus data, you know, are growing significantly.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

They are the major drivers of the business at this point in time, and we we believe that will fuel growth for for years to come. So when you couple all of that and you allow customers to consume any part of your platform, I think this is where we're gonna start seeing some meaningful accretion just by changing our bundling structure, moving away from a product centric approach and into a platform wide approach.

[Operator]

Our next question comes from Saket Kalia with Barclays. Please go ahead with your question.

[Saket Kalia, Managing Director at Barclays Capital]

Okay. Great. Hey, guys. Thanks for taking my questions here. Tomer, maybe for you, maybe just hitting on that on that data point that you that you made, can you just talk a little bit about the SIEM market right now?

[Saket Kalia, Managing Director at Barclays Capital]

It just seems like the velocity of competitive displacements are picking up there for you as well as competitors. So how do you sort of think about that and maybe the pipeline of those types of displacements going forward?

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Sure. First, I would say it's not only displacements. I think in many cases, see augmentation. In many cases, you see net new data where people are looking to store in in more effective automated and AI driven solutions. So you're seeing a lot of different dynamics play out.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

I think one of the things that, you know, we we kind of mentioned throughout the prepared remarks is our ability, which we launched at RSA, to actually tap into existing SIEM providers and and allow them to really enjoy or allow customers to really enjoy our AI capabilities without the need to move data at the point of deployment. And I think what we're seeing more and more is that for especially the larger customers, they have data in many different stores. Rarely do you see, you know, one place with all the data, and I think allowing customers to unify the data, whether with migrating it or in a migration free mode, I think really opens up how you think about applying AI to enterprise data. There's definitely more and more interest in cloud native SIM solutions or or data lakes, both because of the cost benefit, but I think more importantly, because of the need to start addressing threats and issues in real time, which if you look at the legacy providers, I think that's that's the point where they're struggling significantly. None of these systems were designed to run-in real time.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Most of these systems have very significant latency, and these are deep architectural issues that they have. They're not gonna be solved overnight or maybe at all, and I think that's what's driving a lot of the desire for customers to look at new solutions. And I think as customers are doing that, especially in this new brave AI agentic world, they want these new solutions, the new data solutions to already be embedded with AI, and that's exactly what our AI sim is able to provide out of the box.

[Operator]

Our next question comes from Tal Liani with Bank of America. Please go ahead with your question.

[Tal Liani, Analyst at Bank of America]

Hi. Hi, Tomer. I have a strategic question. I think I asked you the same question two years ago, and I'm gonna ask the same question again because on one hand, the pipeline is strong, but and and your space is extremely attractive. But you are one fifth of the size of your biggest competitor, and you're growing at the same rate.

[Tal Liani, Analyst at Bank of America]

And with all these new products and new activities and things you're successful at, what needs to happen for the company to outgrow this just because of your small size? And what areas do you think can drive up this this growth acceleration in the future?

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Thanks for the question, Tal. Yes. I remember it from two years ago. I think we're in a different revenue scale nowadays. At the same time, you know, I think the biggest difference that you're seeing with us versus pretty much every other incumbent in cybersecurity is the amount of actual new logo that we're adding versus, I think, the motions of of others.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

I also fully suspect that for us, in what you're seeing today in cybersecurity, the different solutions that are out there, I'm I'm almost certain that in a year time, two year time, the requirements for cybersecurity are gonna be changing dramatically. And I think that we already have been leading with our AI offerings. We'll continue to expand that lead into the future. You know, we're still running at a top tier growth rate across every software vendor out there pretty much, not just our competitors. So all in all, again, we're one of the biggest cybersecurity providers in the world today, and we're gonna continue to grow.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

So to us, it's only about putting the right types of products and solutions into the hands of customers. This market is incredibly big, and we're focused on our own path.

[Operator]

Our next question comes from John DiFucci with Guggenheim. Please go ahead with your question.

[John DiFucci, Senior Managing Director at Guggenheim Partners]

Thank you. My question is for Tomer. Tomer, you talked about the macro backdrop, which we understand is something you can't control. But you also spoke about go to market moving from product centric to a platform strategy, which is something that is under your control. I know this has been happening, but can you talk further about what this means and the likely impact on sales timing?

[John DiFucci, Senior Managing Director at Guggenheim Partners]

Did this also come into play at all this quarters with this quarter's results and your slight lowering for the year, or was it just all macro driven? And and by the way, nice job on the free cash flow, Barbara. And the the buyback says a lot, so thanks.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Yep. Thank you for the question. Look, I think as we called in the in the script, the go to market evolution, you know, part of our journey is is continuous. So there wasn't anything specific in in q one. It's very clear that as we put forward more of our AI based offerings, and we're expanding the suite of AI capabilities that we have, that changes the way that we talk to customers.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

It changes the way that we build customers. It changes the way that we lead our conversations, especially if you couple that with what I mentioned earlier, the move towards more flexible, you know, structures for customers, the ability to consume the entire platform. These things don't happen overnight, but I do believe, you know, we're getting better and better because of these things. So if anything, as we deploy more capabilities to customers to consume more of our platform, that should allow us to actually improve on our efficiency and our ability to really drive further gains as we think about our sales force and what each and every seller can potentially sell or talk to a customer about. So all in all, you know, go to market is a ever going evolution, I would say, especially in a market that's changing, especially when technologies are changing.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

I think that we're looking today at our platform as one of the preeminent platforms in the in the space. The amount of offerings we have is significant. You know, our data and AI leadership is significant. So for us, it's really about honing in on these areas of our business and shifting away from what was a very product centric, you know, type of go to market function for us. It it always had some complexities with, you know, enablement and training, and we called that out also in the prepared remarks.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

But outside of that, I mean, these would be net positives for the business going forward.

[Operator]

Our next question comes from Brian Essex with JPMorgan. Please go ahead with your question.

[Brian Essex, Executive Director at JP Morgan]

Hi. Can you hear me okay?

[Barbara Larson, CFO at SentinelOne]

We can hear you.

[Brian Essex, Executive Director at JP Morgan]

Oh, great. Thank you. Thank you for taking the question. I guess, you know, Barbara, this one's for you. You know, prior to your joining, I think the company had talked about being growth constrained because of the focus on margins.

[Brian Essex, Executive Director at JP Morgan]

And now we've kind of approached breakeven levels, and the outlook, you know, for profitability and cash flow looks a little bit better. But what what I'd like to understand is, you know, where are you seeing incremental cost savings within the company? And then on the other side of that, where are you investing incremental leverage? Where are you seeing the greatest return, and how can we think about the way that those initiatives can drive better growth ahead?

[Barbara Larson, CFO at SentinelOne]

Thanks for the question, Brian. In terms of growth versus profitability, I would just say, you know, we remain focused on investing for efficient growth. We've been driving meaningful efficiencies across the business, so realigning teams, and also making more targeted investment in key, growth areas as well as away from growth areas that aren't key to us. So that included deception last quarter. So all trying to, you know, focus on efficiency as well as growth and continue to scale the company.

[Barbara Larson, CFO at SentinelOne]

From an investment focused area, we are continuing to invest in AI based innovations across, you know, all of our solutions, Endpoint Cloud Data and Purple. And just really given the market environment, we're really leaning into strengthening our go to market presence, both sales and marketing. So continue to take proactive steps to drive efficiency and drive margin improvement, and you can see that reflected in our op margin guidance for over six fifty basis points of improvement in FY '26.

[Operator]

Our next question comes from Rob Owens with Piper Sandler. Please go ahead with your question.

[Rob Owens, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Great. Thank you for taking my question. I think, Tomer, during your prepared remarks, you talked about, 25% of subscriptions sold during the quarter had an AI attached to it. Curious what that's doing to overall deal sizes, if you can give some color. Thank you.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Of course. I think we we talked about it a few times in the past, and and that hadn't really changed. I mean, the inclusion of AI is about a 25 uplift to to the average deal size. I would say that that is a starting point for us. This includes only our foundation AI capabilities, and we're now expanding our capabilities, you know, to to introduce multiple agentic solutions that can really build on top of it and create even more accretion, you know, into the future.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

So all in all, it it is not only that uplift for us, but it's also a great differentiation point. If you think about it today, we don't really sell or don't think it's wise to sell even an EDR solution without AI capabilities. So we bundle these two together, and we're the only, call it, AI EDR solution on the market today. I think that's already positioning us in a very different way for both our customers and our partners. And as we go forward, you know, obviously, those AgenTic add ons are gonna continue and fuel growth for customers.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

I mean, the outcomes, obviously, that we're able to deliver with AgenTi capabilities, I think, are just staggering, both in terms of time saving, in terms of speed, in terms of automation. You know, we got amazing components in the platform that if you put together, you know, starting with our endpoint capability, but all the way to agentic capabilities and to hyper automation, which is also generally available for us, customers trying to get a picture of what they can do with this end to end platform and connecting all these pieces together. So that initial uplift, we believe, is really just the starting point for us, and and it is just very promising to see people opt to get it as part of our base offering.

[Operator]

Our next question comes from Trevor Walsh with Citizens. Please go ahead with your question.

[Trevor Walsh, Director - Equity Research at JMP Securities LLC]

Great. Thanks for taking my question. Barbara, maybe for you. I appreciate the color that you gave around free cash flow outlook for the year and that trending just kind of ahead of the operating margin. Could you maybe just give us a sense of how that'll kind of flow over the next couple of quarters, like, if that'll just look kind of similar to the seasonality that we saw last year?

[Trevor Walsh, Director - Equity Research at JMP Securities LLC]

And then relatedly, does the share repurchase program kind of change your point of view just overall strategically around doing M and A transactions at all? Thanks.

[Barbara Larson, CFO at SentinelOne]

Thanks for the question. So you're right. We continue to expect free cash flow margin to exceed operating margin for the full year by several points. Think from a seasonality trend, Q1 typically tends to be our biggest free cash flow quarter. You'll see that trend down in q three and q two and q three and then trend back up in in q four.

[Barbara Larson, CFO at SentinelOne]

So pretty typical seasonality from a cash flow perspective. And then on, share repurchase, you know, I would just say, you know, overall, in terms of, you know, the timing why now, we've started to generate more meaningful positive free cash flow. And in q one, our cash cash flow equivalents and investments increased to $1,200,000,000 So we really felt like with that strong liquidity position, it gave us some financial flexibility for for capital allocation as we continue to scale the business. So opportunistically with share repurchase, but still ample cash for any potential m and a.

[Operator]

Our next question comes from Adam Tindle with Raymond James. Please go ahead with your question.

[Adam Tindle, Managing Director at Raymond James Financial]

Okay. Thanks. Good afternoon. Barbara, I just wanna kinda get this out there. Guidance has been a little bit cryptic, and it's creating some issues where we miss model.

[Adam Tindle, Managing Director at Raymond James Financial]

So if I could just run through a couple things for clarification for everybody. When you say net new ARR in q two to be above seasonal, if I look at the last couple of years, it's up 6 to $7,000,000 sequentially. Does that mean up 10,000,000 in high thirties for net new ARR? So just put some parameters around that. And as you think about kind of throwing out a guide like that for q two, this above seasonal, If we look at, you know, q four, q '1 on ARR, they've been, you know, in line to to misses.

[Adam Tindle, Managing Director at Raymond James Financial]

Why set that expectation for q two? What gives you confidence to do this above seasonal? And just trying to avoid, you know, rolling into a similar situation where expectations are too high and the stock's down double digits in the after hours? Thanks.

[Barbara Larson, CFO at SentinelOne]

Thanks for thanks for the question. So in terms of q two, outperforming, I would think of that in terms of our sequential growth rate in If you look at that last year, it was about 16% in the prior year as well. So expectation for this q two is roughly roughly double that sequential growth rate. What gives us confidence is really we've seen we've seen the environment improve in May, so we're encouraged by the activity that we're seeing in the first month of the quarter as well as as well as the pipeline we have for q two.

[Operator]

Our next question comes from Peter Weed with Bernstein. Please go ahead with your question.

[Peter Weed, Analyst at Bernstein]

I appreciate your candor and and detail, associated with, you know, the activities that went on this quarter and how you've rolled that through the year. But, you know, one thing that, I realized, I didn't feel like I had clarity on is when you talked about the impact this quarter and some deals pushing, was that, you know, a bigger effect on existing customers and renewals and expansion, or was that more of an issue associated with new customers? And what maybe can we take away from, you know, the customer profile on kind of new versus existing and the strength of the business?

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

It's a it's a great point. I mean, we're we're one of these, you know, singular vendors out there that if you kind of look on average, 50% of the business that we do every quarter is actually with new customers, net new customers. So when we're looking at some of these dynamics, I mean, they're definitely more prevalent, and I would say almost all prevalent with with new logos, which is why we believe, again, we're we're trying to just create a more digestible mode for us should any further disruption in the macro environment happen. So to us, again, one of our strategic pillars is to continue and grow new logos, which which we're doing, I think, in a in a great way and have been doing in previous years. And that dynamic where customers are choosing to sometimes wait or just, you know, kind of observe what's happening with the environment before they commit to to a deal is definitely more of a net new customer dynamic.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

With that, you know, our existing upsell and cross sell motion is also incredibly strong, and we're making adjustments again to just be able and to be in a place where, at our scale, we can digest any of these, you know, humps towards towards any point of the year in a in a slightly more predictable way.

[Operator]

Our next question comes from Shaw Al with TD Cowen. Please go ahead with your question.

[Shaul Eyal, Managing Director - Equity Research at TD Cowen]

Thank you. Hi. Good afternoon. Thank you for taking my questions. I wanna try and build on Brian Essex's question maybe a little differently.

[Shaul Eyal, Managing Director - Equity Research at TD Cowen]

Your hiring plans for fiscal twenty six, if if we look at it from a % perspective, how would you break it between r and d and and sales and marketing? And I don't know if you wanna also provide us with with hard absolute numbers.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

I would say, first of all, you know, we're we're constantly kind of adjusting, you know, plans as as we see fit. Generally, I would say that a lot of the hiring we're doing is in r and d. We started the year, you know, with a close to fully ramped Salesforce, which I think gives us kind of a tenured amount of salespeople on the street. But with that, you know, we're we're constantly shifting. Sometimes we're pruning in certain areas and then reinvesting in other areas.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

But as a whole, I would say, you know, r and d is definitely a source where, you know, the products that we generate today and for the future are so incredibly important that you're gonna see us continue and invest. And as it comes to sales and marketing, I think it really is very commensurate with with growth in the areas where we want to make sure we're successful.

[Operator]

Our next question comes from Srinivkathari with Baird. Please go ahead with your question.

[Shrenik Kothari, Senior Research Analyst at Robert W. Baird & Co]

Yeah. Thanks for taking my question. On on the federal side, of course, you have the broader FedRAMP authorization now adding to existing endpoint and SIEM. Just curious, why what are you seeing there? Are budget constraints including the recent CISA dynamic where they've had success in the recent past with larger deals?

[Shrenik Kothari, Senior Research Analyst at Robert W. Baird & Co]

Are you seeing delays or are you expecting to see more delays around expansions? Also on the new agency logos, are you engaging at the same levels on RFP basis? Just curious if you can comment on the federal side. Thanks.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Sure. Look, we're we're in a great position to partner across the federal ecosystem. We we have a number of growth opportunities, and we just announced, to your point, that we're now pretty much the first and only cybersecurity agentic AI solution approved for government organizations, which joins all of our key platform offerings across endpoint, AI, SIEM, cloud security, hyper automation, all of them are FedRAMP high. The pipeline looks promising as well. I think you can definitely cite longer sales cycles, more approval needed.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

I think there's a at this point, a constant change in how federal agencies are treating procurement. With that, there's some also fast track capabilities that have been available to them. So all in all, I mean, it's still in flux, but obviously, the need is still there. So the timing of deals can vary, and I think that's also something we reflect in our guidance and and saw some of that in q one as well. So all in all, it's been encouraging to see some of those deals closed in May, and that's showing there's progress, and that's just the beginning.

[Operator]

We have no further questions at this time. I will now turn the call back over to Thoma Weingata for closing remarks.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Thank you all for joining us today. The cybersecurity landscape is changing rapidly, and Central One is leading that change. We're innovating with the purpose to redefine what cybersecurity in the AI era is, and our teams are executing with discipline. We believe we are well positioned to serve the needs of customers today and into the future. A unified SecuD AI platform, that's what people need.

[Tomer Weingarten, Co-Founder, Chairman, President & CEO at SentinelOne]

Thank you again for to our employees, customers, partners, and shareholders for your continued trust and support.

Participants

Executives

• Doug Clark, Vice President, Investor Relations
• Tomer Weingarten, Co-Founder, Chairman, President & CEO
• Barbara Larson, CFO

Analysts

• Joseph Gallo, Senior Vice President at Jefferies & Company Inc
• Brad Zelnick, Managing Director at Deutsche Bank
• Gabriela Borges, Analyst at Goldman Sachs
• Ittai Kidron, MD & Senior Analyst - Analytics, Data, Security & Infrastructure Software at Oppenheimer & Co. Inc.
• Saket Kalia, Managing Director at Barclays Capital
• Tal Liani, Analyst at Bank of America
• John DiFucci, Senior Managing Director at Guggenheim Partners
• Brian Essex, Executive Director at JP Morgan
• Rob Owens, Managing Director & Senior Research Analyst at Piper Sandler Companies
• Trevor Walsh, Director - Equity Research at JMP Securities LLC
• Adam Tindle, Managing Director at Raymond James Financial
• Peter Weed, Analyst at Bernstein
• Shaul Eyal, Managing Director - Equity Research at TD Cowen
• Shrenik Kothari, Senior Research Analyst at Robert W. Baird & Co