SentinelOne, Inc. (S) Q4 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial guidance, with expected revenue growth and improved margins. The Q&A reveals management's focus on durable growth, AI security, and strategic partnerships, like the 7-figure deal with Cloudflare. Despite some concerns about profit margins, the overall sentiment is positive due to the company's strategic initiatives and market opportunities in cybersecurity.
Key Financial Performance
Revenue for fiscal year '26 $1 billion, growing 22% year-over-year. Growth attributed to achieving scale and operational profitability.
Q4 Revenue $271 million, growing 20% year-over-year. Growth driven by strong international demand and a growing global footprint.
Total ARR (Annual Recurring Revenue) in Q4 Grew 22%, with $64 million in net new ARR added, a company record. Growth driven by balanced new logo acquisition and platform adoption by existing customers.
ARR per customer Reached a new company record, driven by strategic shift upmarket and strong momentum at the top end of the market.
Customers with ARR of $1 million or more 153 customers in Q4, growing 20% year-over-year. Growth attributed to adoption of broader platform solutions.
Customers with ARR of $100,000 or more 1,667 customers in Q4, growing 18% year-over-year. Growth driven by large organizations adopting multiple products.
Gross Retention Rate for customers with $100,000 or more in ARR 96% in Q4, indicating strong retention of large customers.
Dollar-Based Net Retention Rate for customers with $100,000 or more in ARR 109%, driven by large organizations adopting broader platform solutions.
Gross Margin in Q4 78%, highlighting healthy platform unit economics and scale efficiencies.
Operating Margin in Q4 6%, representing an improvement of 450 basis points year-over-year.
Net Income Margin in Q4 9%, reflecting profitability improvements.
Free Cash Flow Margin (Trailing 12 months) 5%, marking the second full year of positive free cash flow.
Cash, Cash Equivalents, and Investments $770 million at the end of fiscal year '26, with no debt.
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Operating Highlights
Singularity platform: Unified AI-native security platform with 7 core solution categories and over 40 modules. Non-endpoint solutions surpassed half of total annual bookings. Increased adoption of 3 or more solutions by enterprises from 39% to 65%.
Purple AI: Achieved over 50% attach rate on licenses sold in Q4. IDC study shows 338% ROI over 3 years and 55% faster threat remediation.
Prompt Security: ARR doubled sequentially in Q4. Won standalone AI security deals with Fortune 500 companies. Example: Fortune 100 financial services company deployed nearly 100,000 licenses.
Claw Security: Launched as the first open-source security suite for autonomous agents.
AI SIEM and DSPM: Surpassed $130 million in ARR. Launched AI-native data security posture management solution.
AI security market: Fastest-growing segment in cybersecurity, expanding over 70%. SentinelOne positioned as a leader in AI-native security.
Cloud security: Surpassed $160 million in ARR. Strong expansion in runtime workload capabilities for on-prem and cloud environments.
Public sector: Achieved GovRAMP authorization at the high impact level, opening federal and SLED opportunities.
Revenue growth: Achieved $1 billion revenue scale, growing 22% YoY. Q4 revenue grew 20% YoY to $271 million.
Profitability: Achieved full-year operating profitability with a 3.5% margin. Q4 operating margin improved to 6%.
Customer retention: Gross retention rate of 96% for customers with $100,000+ ARR. Dollar-based net retention rate of 109%.
Strategic partnerships: Signed multiyear infrastructure partnership with a global hyperscaler. Expanded alliances with hyperscalers and MSSP partners.
Wayfinder Threat Services: Crossed $100 million in ARR. Provides AI-augmented services for generative AI adoption.
Flex model: Simplified purchasing process driving larger deal sizes and multi-solution deployments.
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Risk or Challenges
Macroeconomic Environment and Geopolitical Uncertainties: The company acknowledges that evolving macroeconomic conditions and geopolitical uncertainties could influence deal timing and sales cycles across the industry, potentially impacting revenue growth and operational stability.
Competitive Pressures: The company faces competition from legacy incumbents and next-generation peers, which could impact market share and customer acquisition.
Regulatory Compliance: Strict regulatory requirements, such as GDPR compliance in Europe, pose challenges for the company in ensuring its solutions meet these standards, particularly in AI security and governance.
Supply Chain and Infrastructure Dependencies: The company relies on partnerships with global hyperscalers and other infrastructure providers, which could pose risks if these partnerships face disruptions or fail to deliver as expected.
Customer Retention and Expansion: While retention rates are strong, the company’s growth strategy heavily depends on expanding within existing customers and acquiring new logos, which could be impacted by market conditions or competitive dynamics.
Technological Advancements and AI Integration: The rapid pace of technological advancements, particularly in AI, requires continuous innovation to maintain a competitive edge. Failure to do so could result in loss of market relevance.
Public Sector Opportunities: While achieving GovRAMP authorization opens new opportunities, the public sector's stringent requirements and long sales cycles could pose challenges.
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Guidance & Outlook
Revenue Growth for Fiscal Year 2027: Expected revenue to be between $1.195 billion and $1.205 billion, representing 20% year-over-year growth at the midpoint.
Revenue Growth for Q1 Fiscal Year 2027: Expected revenue to be between $276 million and $278 million, representing 21% year-over-year growth at the midpoint.
Net New ARR for Fiscal Year 2027: Fiscal year 2027 revenue outlook implies a year-over-year improvement in net new ARR.
Operating Income for Fiscal Year 2027: Expected operating income to be between $110 million and $120 million, representing an operating margin of 10% at the midpoint.
Operating Income for Q1 Fiscal Year 2027: Expected operating income to be between $4 million and $6 million, representing an operating margin of 2% at the midpoint.
Earnings Per Share for Fiscal Year 2027: Expected fully diluted earnings per share to be between $0.32 and $0.38 per share, representing $0.35 at the midpoint.
Earnings Per Share for Q1 Fiscal Year 2027: Expected earnings per share to be between $0.01 and $0.02.
Non-GAAP Tax Rate for Fiscal Year 2027: Expected to be approximately 17%.
Weighted Average Diluted Share Count: Expected to be approximately 345 million for Q1 and 352 million for the full year.
Adjusted Free Cash Flow Margin for Fiscal Year 2027: Expected to closely track the operating margin outlook for fiscal year 2027, adjusting for scheduled tax settlement payments of $40 million.
Adjusted Free Cash Flow Margin for Q1 Fiscal Year 2027: Expected to be in the low teens, reflecting standard historical seasonality and strong underlying cash generation.
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Shareholder Return Plan
Share Repurchase Program: SentinelOne repurchased 6.5 million shares in Q4 FY 2026, bringing the total shares repurchased to 12.2 million for the fiscal year. This was described as an opportunistic move, reflecting confidence in the company's long-term trajectory. The company emphasized a balanced capital allocation strategy, prioritizing organic investments while also returning capital to shareholders.
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Key Q&A
Q:What percentage of the deals were partner-led or partner influenced, and what are the plans for hiring and expectations for productivity in fiscal '27?
A:Tomer Weingarten stated that there wasn't any significant change between their business with partners and end customers. They are doing larger deals, with Flex playing a more pronounced role in bookings. For fiscal '27, the company plans to optimize rather than significantly grow headcount, aiming for improved sales productivity and focusing on upmarket trajectory and partner base growth. MSSP partners grew 75% year-over-year.
Q:Why are profit margins lower in the quarter and first quarter compared to expectations, but great for the year?
A:Barry Padgett explained that cash collection has improved over the years but can be lumpy due to larger deals falling into specific quarters and rolling out over months rather than days.
Q:How is the company thinking about adding new products or further adoption of new products into the base, given the success of 65% of customers having 3 or more solutions?
A:Tomer Weingarten emphasized that the company is stable on the NRR front and is focusing on new logo business while continuing to drive adoption within the customer base. The customer base is still underpenetrated, offering future expansion opportunities.
Q:Can you provide an update on how endpoint security progressed in the quarter and any changes in the competitive landscape?
A:Tomer Weingarten reported double-digit growth in endpoint security, gaining market share despite market challenges. Endpoint remains a strong growth driver, especially with its role in AI security deployment and control points for generative AI.
Q:What are the top priorities for Sonalee as she steps into her role, and how should investors think about the next phase of the model under her?
A:Tomer Weingarten stated that Sonalee's focus will be on durable growth and acceleration in go-to-market strategies. She will balance growth opportunities like AI security, on-premise, and infrastructure deals with optimizing sales and marketing expenses. The company aims to realign resources to address changing customer needs and improve profitability and cash flow.
Q:Can you provide more color on the reacceleration in new ARR this quarter and expectations for fiscal '27?
A:Tomer Weingarten explained that the company expects year-over-year improvement in new ARR for fiscal '27, with a shift from a 40-60 first-half/second-half dynamic to a more balanced 50-50. Growth is driven by endpoint traction and emerging products crossing $100 million ARR.
Q:Could gross margins stabilize or tick up next year?
A:Tomer Weingarten stated that gross margins are stable, at the high end of long-term targets, and are expected to remain stable.
Q:Can you discuss the 7-figure deal with Cloudflare and how it came together?
A:Tomer Weingarten highlighted that Cloudflare chose their technology for its efficacy, ease of deployment, and coverage across operating systems. The deal was driven by the need for scalable, proven AI security solutions and a like-minded partner for AI advancements.
Q:What are the sources of operating leverage and margin for fiscal '27?
A:Barry Padgett mentioned focusing on high-yielding go-to-market opportunities and integrating AI across business operations for productivity gains. Tomer Weingarten added that the company is narrowing its focus on high-yield areas, leveraging AI for R&D and operations, and maintaining stable headcount.
Q:What is the attach rate of Purple with new customers, and how is it influencing new customer wins?
A:Tomer Weingarten noted balanced uptake of Purple from both existing and new customers. The introduction of a complete AI bundle has driven differentiation and adoption. Purple's seamless integration and ROI benefits are key drivers for its success.
Q:What is the sustainability of growth in the data business, and how does the SIEM market evolve in an LLM-based world?
A:Tomer Weingarten stated that the data business is expected to grow as customers expand their use of the data lake. SIEM may become less mandatory as autonomous operations and LLMs integrated with data lakes gain traction, though both approaches are currently supported.
Q:Can you speak to the linearity in the quarter and the impact on DSOs and revenue?
A:Tomer Weingarten mentioned that Q4 was back-end loaded, with some collections delayed but expected to normalize in Q2. Changing seasonality dynamics are expected to positively impact the year.
Q:Can you elaborate on net new ARR and seasonality expectations for fiscal '27?
A:Tomer Weingarten confirmed expectations for $200 million or more in net new ARR, with a balanced 50-50 seasonality between the first and second halves of the year. The company has a solid start to the year, supporting these expectations.
Q:How do enhancements like human plus AI capabilities in Wayfinder reimagine modern MDR solutions?
A:Tomer Weingarten explained that Wayfinder shifts MDR from manual work to a supervision layer, enabling scalable, autonomous operations with human oversight. This approach builds trust and ensures guardrails for autonomous agents.
Q:How are salespeople incentivized given the broad portfolio, and what is the guidance philosophy for fiscal '27?
A:Tomer Weingarten stated that comp plans include an emerging products component, adjusted to reflect market demand. Barry Padgett emphasized that the fiscal '27 guidance is based on a solid pipeline, strategic partnerships, and rising contributions from emerging solutions.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the question about why profit margins were lower in the quarter and first quarter compared to expectations, providing only a general explanation about cash collection variability without specific details.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ACV partner
AI cloud
AI model
AI security
AI usage
Internet
Padgett
Prompt Security
Singularity platform
acquisition expansion
advantage
alternative
builder
cloud platform
company
design
efficacy
employee AI
enterprise logo
enterprise solution
expert
frontier AI
gain AI
giant
innovator
layer
million asset
mission infrastructure
pioneer today
platform AI
platform architecture
premise
reality
security deal
security ecosystem
security infrastructure
service
strategy
threat intelligence
use
S Transcript
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The earnings call reveals strong financial performance, including a 30% growth in RPO and a robust balance sheet with no debt. Despite some concerns about workforce reductions and weaker seasonality in deferred revenue, management's optimistic guidance on operating margin improvements, AI-driven growth opportunities, and a strategic capital allocation plan suggest positive sentiment. The positive outlook on AI innovation and strategic partnerships further supports a positive stock price movement over the next two weeks.
SentinelOne, Inc. (S) Q4 2026 Earnings Call Transcript
Positive3-12
The earnings call highlights strong financial guidance, with expected revenue growth and improved margins. The Q&A reveals management's focus on durable growth, AI security, and strategic partnerships, like the 7-figure deal with Cloudflare. Despite some concerns about profit margins, the overall sentiment is positive due to the company's strategic initiatives and market opportunities in cybersecurity.
SentinelOne, Inc. (S) Q3 2026 Earnings Call Transcript
Positive12-4
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.
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Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
