Summary
SentinelOne reported first quarter fiscal 2024 results for the period ended April 30, 2023. Revenue rose 70.5% to $133.39 million from $78.26 million in the prior-year quarter. Gross profit climbed 77.7% to $90.81 million, and gross margin expanded to 68.1% from 65.3%. The company still posted steep losses. Operating loss widened to $115.38 million from $90.30 million. Net loss widened to $106.87 million from $89.83 million. Diluted loss per share was $0.37, compared with $0.33. Operating cash flow was negative $28.06 million, an improvement from negative $49.35 million. Capital expenditures fell to $0.46 million from $2.81 million. Deferred revenue increased 48.2% to $408.50 million. Remaining performance obligations increased 62.0% to $603.70 million.
Annualized recurring revenue increased 75% to $563.6 million as of April 30, 2023, or about $564 million. The company made a one-time adjustment to ARR of $27.0 million, roughly 5% of total ARR. That change reflected a new methodology for consumption and usage-based agreements and a correction of historical upsell and renewal recording inaccuracies. The adjustment did not affect historical revenue or total bookings. Customer count grew about 43% to more than 10,680. Customers with ARR over $100,000 grew 61% to 917. Dollar-based net retention rate was above 125%, and MD&A reports 128% as of April 30, 2023. Management pointed to macroeconomic pressure on deal sizes, sales cycles, and pipeline conversion, plus lower usage and consumption from some large customers. The revenue increase came from sales to new customers and additional endpoints and modules sold to existing customers.
Margin improvement was a bright spot. GAAP operating margin improved to negative 86.5% from negative 115.4%. Non-GAAP operating margin improved to (38)% from (73)%. Non-GAAP gross margin was 75%, compared with 68% a year earlier. Free cash flow was $(31) million, compared with $(55) million. The company said this was its seventh consecutive quarter with more than 25 percentage points of year-over-year improvement in non-GAAP operating margin. Non-GAAP operating expenses were $151 million, or 114% of revenue, compared with $111 million, or 142% of revenue. To protect profitability, SentinelOne announced a workforce reduction of about 5% of employees, along with cuts to facilities, travel, and other noncritical spending. Management expects these actions to align costs with the current outlook while preserving investments in AI, cloud, the security data lake, and the platform.
Guidance points to slower growth ahead. For the second quarter of fiscal 2024, management guided revenue of about $141 million, which it said reflects 38% year-over-year growth. Non-GAAP gross margin is expected at 74.5%, and non-GAAP operating margin at (36)%. For the full fiscal year 2024, revenue guidance is $590 million to $600 million, reflecting growth of 41% at the midpoint. Full-year non-GAAP gross margin guidance is 74% to 75%, and full-year non-GAAP operating margin guidance is (29)% to (25)%. The company also kept a long-term target of 20%+ EBIT margin. Risks include macroeconomic uncertainty, longer sales cycles, deal downsizing, competition, potential security incidents, integration of acquisitions, and litigation risk. The quarter showed strong retention and scale, but the path to profitability still depends on cost discipline and a rebound in large-deal activity.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $133.4M | $126.1M | +5.8% | $78.3M | +70.5% |
| Gross profit | $90.8M | $86.3M | +5.2% | $51.1M | +77.7% |
| Gross margin | 68.1% | 68.5% | -0.4 pp | 65.3% | +2.8 pp |
| Research & development | $55.3M | $53.9M | +2.5% | $45.9M | +20.4% |
| Sales & marketing | $99.2M | $87.3M | +13.7% | $60.6M | +63.5% |
| General & administrative | $51.8M | $45.2M | +14.5% | $34.9M | +48.3% |
| Total operating expenses | $206.2M | $186.4M | +10.6% | $141.4M | +45.8% |
| Operating income (loss) | -$115.4M | -$100.0M | -15.3% | -$90.3M | -27.8% |
| Operating margin | -86.5% | -79.3% | -7.2 pp | -115.4% | +28.9 pp |
| Net income (loss) | -$106.9M | -$93.7M | -14.1% | -$89.8M | -19.0% |
| Net margin | -80.1% | -74.3% | -5.8 pp | -114.8% | +34.7 pp |
| Diluted EPS | -$0.37 | -$0.34 | -$0.03 | -$0.33 | -$0.04 |
| Net retention rate | 128.0% | 132.0% | -4.0 pp | 131.0% | -3.0 pp |
Risks
MD&A states the current macroeconomic environment contributed to a decline in usage and consumption from certain customers, especially larger enterprise customers, longer sales cycles, and deal downsizing by new customers and renewals, especially larger enterprises, and expects these conditions to persist in the near term.
Risk factors newly emphasize generative AI, including Purple AI for threat hunting, and warn that competitors may incorporate AI more successfully, algorithms may be flawed or biased, and AI may create intellectual property or privacy litigation, ethical controversy, reputational harm, and gross margin pressure.
Channel partners generated 93% and 91% of revenue for the three months ended April 30, 2023 and 2022, respectively, and largest channel partner Exclusive Networks generated 19% and 18% of revenue for those periods; partner agreements are non-exclusive and may be terminated at any time.
MD&A discloses a one-time $27.0 million adjustment, approximately 5% of total ARR, to ARR as of April 30, 2023, due to a change in methodology for consumption and usage-based agreements and correction of historical upsell and renewal recording inaccuracies; prior periods were adjusted using the same rate.
Net loss was $106.9 million for the three months ended April 30, 2023, and accumulated deficit was $1,107.2 million as of April 30, 2023; the company expects operating expenses to increase as it invests in growth, and cannot predict when or whether it will reach profitability.
As a cybersecurity provider, SentinelOne faces intense attack efforts; risk factors note bad actors are beginning to use AI-based tools, state-supported cyberattacks may increase with Russia's invasion of Ukraine, and generative AI exacerbates security risks, with GDPR breaches potentially resulting in fines up to €20 million or 4% of annual global turnover.
The market is intensely competitive and fragmented, with named competitors including CrowdStrike, VMware, Trellix, Symantec, Microsoft, and Palo Alto Networks; larger competitors may bundle competing products at lower prices, potentially causing price reductions, fewer orders, reduced revenue and gross margin, and loss of market share.
Dollar-based net retention rate was 128% as of April 30, 2023, down from 131% as of April 30, 2022, and the company notes customers have no obligation to renew after subscription terms of generally one to three years, with some electing not to renew or renewing for shorter terms.
In June 2023 the company approved a restructuring plan to improve operational efficiencies and align its workforce with current business needs, priorities, and near-term growth expectations, while noting it cannot guarantee these efforts will succeed or that operating expenditures will not re-accelerate.
The platform is primarily hosted on AWS; AWS has discretion to change terms, increase pricing, compete with the company, or terminate its relationship, and a transition to alternative providers could cause platform interruptions, delays, and additional expenses.
SaaS KPIs
All quarters →Non-GAAP gross margin
Annualized recurring revenue (ARR)
Non-GAAP operating margin
Free cash flow
Total customers
Dollar-Based Net Retention Rate (NRR)
Customers with ARR over $100,000
Summary, forecast, risks and KPIs are extracted from SentinelOne, Inc.'s SEC filings for Q1 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.