Summary
SentinelOne's fiscal 2026 second quarter delivered strong top-line growth alongside a wider GAAP loss. Revenue rose 21.7% to $242.2 million. Gross profit rose 22.6% to $181.7 million, and GAAP gross margin came in at 75.0%, up 0.5 percentage points from the prior-year quarter. Those gains did not carry down to the bottom line. The operating loss widened to $80.6 million, and GAAP operating margin was negative 33.3%. The net loss widened to $72.0 million, and diluted EPS was negative $0.22, flat with the prior-year quarter. For the first six months of the fiscal year, revenue rose 22.3% to $471.2 million while the net loss widened 101.2% to $280.2 million. That year-to-date swing came largely from an uncertain tax position tied to the company's advance pricing agreement negotiations, not from operations.
Strip out stock-based compensation, acquisition-related costs, restructuring charges and other items, and the picture changes. Non-GAAP operating income was $5.4 million against a non-GAAP operating loss of $6.4 million a year earlier, and non-GAAP operating margin was 2%, compared with negative 3%. Non-GAAP net income was $13.2 million, up from $3.5 million. Cash generation was lumpier. Operating cash flow was negative $1.0 million for the quarter, down from the prior-year quarter, but $51.2 million for the six months to date. Free cash flow, which also deducts property purchases and capitalized internal-use software, was negative $7.1 million for the quarter, compared with negative $5.4 million a year earlier, and $38.3 million for the six months to date.
Contracted work kept building. Deferred revenue was $546.8 million, up 8.8% year over year, and remaining performance obligations were $1.20 billion, up 27.1%. Annualized recurring revenue reached $1.0 billion, up 24%, and customers spending $100,000 or more in ARR grew 23% to 1,513. Management highlighted record net new ARR for a second quarter and said emerging products, spanning data, AI, cloud and others, contributed roughly 50% of quarterly bookings. The company launched SentinelOne Flex, a licensing model that lets customers shift usage quarter by quarter, and announced the acquisition of Prompt Security for AI runtime security. It also bought back 3.0 million shares for $52.7 million, at an average price of $17.78, leaving $147.3 million available under the 2025 repurchase program.
Guidance points to similar growth with a modest non-GAAP profit. For the third quarter of fiscal 2026 the company guided to 22% year-over-year revenue growth and a 4% non-GAAP operating margin. For the full fiscal year 2026 it guided to 22% revenue growth and a 3% non-GAAP operating margin. The full-year operating margin outlook absorbs roughly 100 basis points of anticipated foreign exchange headwind and roughly 80 basis points from the Prompt Security acquisition. The full-year revenue outlook also includes an estimated 1% impact from the end of sale of the Hologram deception solution.
Risks are not hard to find. The business is still unprofitable on a GAAP basis, and the advance pricing agreement talks with the IRS and the Israel Tax Authority could require significant payments to the Israeli government. Restructuring plans are expected to add charges, and the Prompt Security deal will use cash. Management also flagged intense competition, macroeconomic and geopolitical uncertainty, longer sales cycles, deal downsizing among large customers, foreign exchange swings, and the risk of securities class action litigation.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $242.2M | $229.0M | +5.7% | $198.9M | +21.7% |
| Gross profit | $181.7M | $172.5M | +5.3% | $148.2M | +22.6% |
| Gross margin | 75.0% | 75.3% | -0.3 pp | 74.5% | +0.5 pp |
| Research & development | $79.1M | $72.3M | +9.5% | $63.6M | +24.4% |
| Sales & marketing | $127.9M | $133.9M | -4.5% | $119.6M | +6.9% |
| General & administrative | $51.5M | $48.7M | +5.7% | $44.4M | +15.9% |
| Total operating expenses | $262.3M | $260.0M | +0.9% | $227.6M | +15.2% |
| Operating income (loss) | -$80.6M | -$87.5M | +7.8% | -$79.4M | -1.6% |
| Operating margin | -33.3% | -38.2% | +4.9 pp | -39.9% | +6.6 pp |
| Net income (loss) | -$72.0M | -$208.2M | +65.4% | -$69.2M | -4.1% |
| Net margin | -29.7% | -90.9% | +61.2 pp | -34.8% | +5.0 pp |
| Diluted EPS | -$0.22 | -$0.63 | +$0.41 | -$0.22 | ±$0.00 |
| Customers | 1,513 | 1,459 | +3.7% | — | — |
Risks
During the six months ended July 31, 2025, SentinelOne recorded a $136.0 million unrecognized tax benefit related to its bilateral Advance Pricing Agreement matter with the IRS and Israel Tax Authority, and provision for income taxes increased $133.1 million to $136.8 million. If an APA or settlement is reached, the company may be required to make significant payments to the Israeli government, and net loss for the six months ended July 31, 2025 was $280.2 million, with the loss widened $140.9 million, or 101.2%, versus the prior-year YTD.
MD&A and risk factors state that current macroeconomic conditions have led to a decline in usage and consumption patterns from certain customers, especially larger enterprise customers, longer sales cycles, and deal downsizing by new customers and renewals by existing customers. The company expects these global macroeconomic conditions to persist in the near term, which could pressure revenue growth.
The filing expands on competition risks tied to generative and agentic AI, including the possibility that competitors incorporate AI more quickly or successfully, reliance on third-party foundation models that may change availability or commercial terms, and AI-related litigation or regulatory uncertainty. SentinelOne has made and expects to continue significant investments in Purple AI and other AI technology, but success is not assured.
In August 2025, SentinelOne announced the acquisition of Prompt Security and expects approximately $144.0 million of cash outflow in connection with the acquisition. The company also cites integration risks from prior acquisitions such as PingSafe and Stride, including diversion of management attention, retention of key employees, and failure to achieve expected benefits.
Substantially all sales are fulfilled through channel partners, including resellers, distributors, MSPs, MSSPs, MDRs, OEMs, and IR firms, and several large MSSP, OEM, and reseller partnerships have multi-year purchasing commitments. If partners fail to meet purchasing commitments, pay timely, or consolidate, the company's ability to market and sell its platform and its forecast metrics could be harmed.
Restructuring charges were $9.1 million for the six months ended July 31, 2025 under the March 2025 and July 2025 plans, and the company expects approximately $3.1 million of additional charges in August 2025. The filing also cites reliance on management and key employees and the need to hire, integrate, and retain qualified personnel to grow the business.
SentinelOne has an office in Tel Aviv and approximately 11% of its personnel in Israel as of July 31, 2025, and the filing states it is monitoring the armed conflict in Israel. If continuity measures fail or the conflict worsens, business interruptions could adversely affect operations.
Future growth depends partly on increasing sales to government organizations, which are subject to unpredictable budgets, FedRAMP compliance, audits, and new Department of Government Efficiency efforts. Pressures on the U.S. federal budget and potential changes in budgetary priorities could reduce funding for purchases of the platform.
SaaS KPIs
All quarters →Non-GAAP gross margin
Customers with ARR of $100,000 or more
Non-GAAP operating margin
Non-GAAP net income margin
Summary, forecast, risks and KPIs are extracted from SentinelOne, Inc.'s SEC filings for Q2 FY2026 (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 6, 2026.