Cyber security company SentinelOne (NYSE: S) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 22.9% year on year to $229 million. Its non-GAAP profit of $0.02 per share was in line with analysts’ consensus estimates.
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SentinelOne (S) Q1 CY2025 Highlights:
- Revenue: $229 million (22.9% year-on-year growth)
- Adjusted EPS: $0.02 vs analyst estimates of $0.02 (in line)
- Adjusted Operating Income: -$3.93 million vs analyst estimates of -$3.76 million (-1.7% margin, relatively in line)
- Revenue Guidance for Q2 CY2025 is $242 million at the midpoint, below analyst estimates of $244.8 million
- Operating Margin: -38.2%, up from -43.3% in the same quarter last year
- Customers: 1,459 customers paying more than $100,000 annually
- Annual Recurring Revenue: $948.1 million at quarter end, up 24.4% year on year
- Market Capitalization: $6.65 billion
StockStory’s Take
SentinelOne’s first quarter performance was shaped by increased adoption of its AI-driven security platform across large enterprises and mid-market customers, as well as ongoing customer expansion in cloud and data security. CEO Tomer Weingarten highlighted triple-digit bookings growth for Purple AI and a milestone of over $100 million in annual recurring revenue (ARR) for the company’s data solutions. Management acknowledged that elongated sales cycles, especially for larger enterprise deals, impacted net new ARR growth. Weingarten attributed these delays chiefly to customers pausing spending decisions in response to wider economic uncertainty, emphasizing, “We have not seen project cancellations or lost deals, and our win rates remain strong.”
Looking ahead, SentinelOne’s guidance incorporates a cautious view of the macroeconomic environment, with management noting a measured outlook due to unpredictable customer purchasing behavior. CFO Barbara Larson explained that the company’s revenue forecast accounts for recent volatility and the possibility of further disruption, but also pointed to improved sales trends in May and a robust pipeline for the rest of the year. Management expects ongoing growth in platform adoption and continued momentum in AI and cloud security to support revenue expansion, while investments in automation and operational efficiency are projected to yield further margin improvements. Larson stated, “We remain focused on instilling operational discipline and enhancing efficiency across the business.”
Key Insights from Management’s Remarks
Management cited platform innovation and expanded AI capabilities as key drivers of customer adoption, while also noting that delayed purchasing decisions in April contributed to lower net new ARR.
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AI-powered product traction: SentinelOne’s Purple AI solution saw triple-digit year-over-year bookings growth, with an attach rate exceeding 25% of subscriptions sold in the quarter, indicating strong customer demand for AI-based threat detection and response.
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Cloud and data suite expansion: The company launched its unified cloud security suite, integrating workload, posture, detection, and AI security into a single platform, which management says makes deployments simpler and broadens market appeal. Data solutions surpassed $100 million in ARR, driven by customers seeking modern alternatives to legacy SIEM (Security Information and Event Management) products.
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Enterprise and mid-market momentum: Large enterprise customer wins included displacements of incumbent vendors and consolidation of security tools, while the mid-market segment maintained healthy expansion rates. Management highlighted higher ARR per customer and longer contract durations as evidence of increasing platform adoption.
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Partner ecosystem development: SentinelOne introduced the Partner One program to strengthen relationships with managed service providers, incident responders, value-added resellers, and technology partners. The company believes this initiative will expand its reach and make its platform more accessible.
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Public sector opportunities and challenges: Achieving FedRAMP High authorization for multiple products positions SentinelOne to compete for sensitive U.S. government contracts. However, management noted that ongoing federal budget uncertainty is elongating sales cycles in the public sector.
Drivers of Future Performance
SentinelOne’s outlook is driven by expectations for continued adoption of its AI and cloud security solutions, balanced by ongoing caution regarding customer purchasing behavior and macroeconomic headwinds.
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AI and platform expansion: Management expects further growth from new and existing customers adopting AI-powered modules and broader platform offerings, with ongoing product enhancements aiming to increase deal sizes and customer retention.
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Operational efficiency focus: Investments in automation and cost discipline are projected to drive margin improvements, with management reiterating a target for full-year operating margin to improve by over 650 basis points. The company plans to reinvest in innovation while maintaining a careful approach to headcount and resource allocation.
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Macro and sector risks: SentinelOne’s guidance reflects uncertainty surrounding customer budgets, especially for larger deals and federal contracts. Management is monitoring for potential delays or further disruptions in purchasing cycles, while highlighting that no major deal cancellations have occurred.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace of recovery in net new ARR and whether delayed deals convert as macro conditions stabilize, (2) adoption rates of the newly launched unified cloud security suite and further expansion of AI-driven solutions, and (3) progress in federal sector contracts following recent FedRAMP High authorizations. Execution on operational efficiency initiatives and the impact of the new Partner One program will also be key factors to monitor.
SentinelOne currently trades at a forward price-to-sales ratio of 6.1×. In the wake of earnings, is it a buy or sell? The answer lies in our full research report (it’s free).
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