SentinelOne more than doubles revenue, optimistic about outlook
SentinelOne more than doubles revenue, optimistic about outlook
The cybersecurity company reported quarterly revenues of $102.5 million and an increase of 122% in ARR
The cybersecurity industry is immune to the global slowdown, at least according to the financial reports of SentinelOne. The company, which deals with the detection and prevention of cyber attacks, performed better than expected and also raised its forecasts.
SentinelOne's revenue more than doubled to $102.5 million in the second fiscal quarter. The annualized recurring revenue (ARR) also jumped 122% to $438.6 million. The company also improved its GAAP gross margin from 59% of revenue to 65% last quarter, but operationally it is still losing money.
Operating loss amounted to $108 million, however, this is an improvement in the rate of loss out of the revenues compared to the corresponding period in 2021 - when revenues were $46 million and operating loss was $68 million.
Following a strong quarter, SentinelOne anticipates that the positive momentum will continue and raised revenue forecasts for the third quarter to $111 million with a Non-GAAP gross margin of 71%. On an annual level, it estimates that it will reach revenues of $415-$417 million, an amount that will reflect a 103% growth compared to 2021. This is compared to the previous forecast for annual growth of 98%.
“We delivered hyper growth and outperformance across all aspects of our business in Q2 - ARR, revenue, customer growth, net retention, and margins,” said Tomer Weingarten, CEO of SentinelOne. "We have also seen that there is more cost awareness among customers and a rethinking of IT budgets, which has led to lengthier sales cycles."
Weingarten also added that in light of the performance and hyper growth that creates an advantage in size, the company has made significant progress towards reaching profitability. SentinelOne's customer retention rate was 137%, which means that it is not only retaining customers, but its revenue from them is growing at a rapid rate. In a conversation with analysts, the CEO noted that the company is expanding among large customers and has even replaced Microsoft's security solutions at one of the largest retail chains in the U.S.
SentinelOne is meeting expectations of even the most optimistic investors, showing triple-digit growth in each of the quarters since becoming a public company in July 2021. The performance also explains the fact that the company is trading at a value of $7.6 billion, relatively close to its IPO valuation of $9 billion.
During the quarter, SentinelOne also began to consolidate the American company Ativo in its reports, which was acquired in March for $600 million in cash and shares. The acquisition brought SentinelOne into the enterprise identity management market, one of the hottest markets in cyberspace today. Post acquisition, SentinelOne is competing head-on not only with Crowdstrike, but also with Okta, another cyber giant that is considered the strongest player in the identity management market. Even after the purchase, SentinelOne still had $1.2 billion left in its bank account.
With the acquisition, SentinelOne added 300 new employees to its team, and its total workforce is almost double what it was a year ago. Weingarten addressed the issue and noted that the company plans to continue recruiting employees in the coming year as well: "It is not possible to grow over 100% without increasing the workforce, we are taking into account the uncertainty in the markets, but we will continue to recruit employees because we are seeing a return on the investment."
