Summary
SentinelOne reported revenue of $291.98 million for the second quarter of fiscal 2027, up 20.6% from $242.18 million in the same quarter last year. The company said revenue grew 21% and that it raised its revenue and operating income outlook for fiscal year 2027. Annualized recurring revenue rose 22% to $1,218 million as of July 31, 2026. Customers with ARR of $100,000 or more grew 13% to 1,715, up from 1,513 a year ago. Net new ARR was $56 million, up 4%. More than half of total ARR now comes from non-Endpoint solutions, and ARR for the AI security portfolio nearly tripled.
Margins tell a more mixed story. GAAP gross profit was $210.42 million, up 15.8% from a year ago, but gross margin fell 3.0 percentage points to 72.1% as cloud hosting, customer support, and intangible amortization costs grew faster than revenue. GAAP operating loss widened 12.6% to $90.76 million, although operating margin moved up 2.2 percentage points to -31.1%. GAAP net loss widened 29.7% to $93.40 million, and diluted loss per share was $0.27, compared with $0.22 in the prior-year quarter. The first-half comparison is friendlier: net loss narrowed 39.5% to $169.56 million, and diluted loss per share was $0.50, against $0.85 a year earlier.
Non-GAAP results frame the quarter differently. Excluding stock-based compensation, amortization of acquired intangibles, acquisition-related compensation, restructuring, and related tax effects, non-GAAP operating income was $30.5 million and non-GAAP operating margin was 10%, versus 2% a year ago. Non-GAAP net income reached $28.5 million, up from $13.2 million, and non-GAAP diluted earnings per share was $0.08, compared with $0.04. Non-GAAP gross margin was 77%, down from 79%. The GAAP-to-non-GAAP gap is wide. Stock-based compensation expense was $92.1 million in the quarter, and restructuring charges tied to the May 2026 plan were $24.4 million, including $13.6 million of severance and related benefits and $10.8 million from accelerated and modified equity awards.
Cash generation softened. Operating cash flow was -$6.54 million for the quarter, compared with -$1.04 million a year earlier. For the six months, operating cash flow was $31.95 million, down 37.6% from $51.23 million. Capital expenditures were $0.07 million in the quarter. Free cash flow, which subtracts property and equipment purchases and capitalized internal-use software from operating cash flow, was -$13.24 million for the quarter, and adjusted free cash flow for the six months was $48.1 million. Deferred revenue ended at $577.60 million, up 5.6% year over year, and remaining performance obligations were $1.70 billion, up 41.7% from $1.20 billion. Cash, cash equivalents, and investments totaled $813.2 million as of July 31, 2026, and the accumulated deficit stands at $2.2 billion.
The outlook points to further expansion of profitability. Guidance for the third quarter of fiscal 2027 calls for non-GAAP operating income of $38 million to $40 million and non-GAAP earnings per share of $0.08 to $0.09. For the full fiscal year ending January 31, 2027, management guided to non-GAAP operating income of $124 million to $128 million, non-GAAP earnings per share of $0.30 to $0.32, and a non-GAAP tax rate of 17%. Diluted weighted average shares outstanding are expected to be roughly 370 million in the third quarter and 361 million for the full year. The press release states that the company is raising its revenue and operating income outlook for fiscal year 2027, and revenue guidance was also provided for the third quarter.
The filing lists intense competition, a limited operating history, a history of losses, and an uncertain macroeconomic and geopolitical backdrop as pressure points. The largest quantified exposure is the agreement with the Israeli Tax Authority. Total tax expense related to it, including interest, reached $186.3 million through July 31, 2026; installments run through fiscal 2031 at a 7.0% annual interest rate; and a change in control would accelerate $259.7 million of unpaid amounts. The May 2026 restructuring plan, expected to be complete by the end of fiscal 2027, shows management is trying to hold the line on costs while still funding AI-related growth.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2027 | Q1 FY2027 | QoQ | Q2 FY2026 | YoY |
|---|---|---|---|---|---|
| Revenue | $292.0M | $276.7M | +5.5% | $242.2M | +20.6% |
| Gross profit | $210.4M | $198.7M | +5.9% | $181.7M | +15.8% |
| Gross margin | 72.1% | 71.8% | +0.3 pp | 75.0% | -3.0 pp |
| Research & development | $96.9M | $95.8M | +1.2% | $79.1M | +22.5% |
| Sales & marketing | $123.5M | $132.1M | -6.5% | $127.9M | -3.4% |
| General & administrative | $56.3M | $50.5M | +11.5% | $51.5M | +9.4% |
| Total operating expenses | $301.2M | $278.4M | +8.2% | $262.3M | +14.8% |
| Operating income (loss) | -$90.8M | -$79.7M | -13.9% | -$80.6M | -12.6% |
| Operating margin | -31.1% | -28.8% | -2.3 pp | -33.3% | +2.2 pp |
| Net income (loss) | -$93.4M | -$76.2M | -22.6% | -$72.0M | -29.7% |
| Net margin | -32.0% | -27.5% | -4.5 pp | -29.7% | -2.3 pp |
| Diluted EPS | -$0.27 | -$0.23 | -$0.04 | -$0.22 | -$0.05 |
| Customers | 1,715 | 1,702 | +0.8% | 1,513 | +13.4% |
Risks
SentinelOne may fail to compete effectively if rivals incorporate generative or agentic AI more successfully; its Purple AI and Wayfinder offerings depend on third-party foundation models whose availability or commercial terms may change, and AI investments may pressure gross margins.
Adverse global macroeconomic conditions and reduced IT spending have continued to cause a decline in usage and consumption from certain customers, especially larger enterprises, longer sales cycles, and deal downsizing by new customers and renewals by existing customers; the company expects these impacts to persist near term.
Gross margin declined to 72% in the three months ended July 31, 2026 from 75% in the prior-year period, driven by higher cloud hosting usage charges, customer support costs, and amortization of acquired intangibles; AI-related investments may further pressure gross margins.
Substantially all sales are fulfilled through channel partners, and recent multi-year purchasing commitments from large MSSP, OEM and reseller partners create execution and credit risk; partner failure to meet commitments, partner consolidation, or termination of a significant partner relationship would harm revenue.
Customers have no obligation to renew after terms of generally one to three years, and retention and expansion may decline due to satisfaction, pricing, spending levels, or competition; failure to retain and expand existing customers would materially harm growth and profitability.
Under the January 2026 ITA agreement, SentinelOne recorded $186.3 million of tax expense inclusive of interest through July 31, 2026, must make installments through fiscal 2031 with 7.0% interest, and a change in control would accelerate unpaid amounts of $259.7 million, adversely affecting cash flows.
As a cybersecurity provider with highly privileged customer access, SentinelOne faces intense and increasing attacks from nation-state and AI-enhanced threat actors; an actual or perceived breach could harm reputation, create liability, and cause customer loss.
The fiscal 2026 acquisitions of Prompt and Observo and any future acquisitions may be difficult to integrate and may divert management attention; acquired intangible amortization and acquisition-related compensation increased cost of revenue and operating expenses in the quarter.
Sales to government organizations are subject to unpredictable budgets, FedRAMP and other certification requirements, audits, and changes in U.S. federal spending; budgetary uncertainty and government shutdowns or restructuring could reduce purchases.
SentinelOne relies on its management team and key employees, and it has undertaken restructuring plans in March 2025, July 2025 and May 2026 while headcount grew from over 2,700 to over 2,800 employees as of July 31, 2026; failure to hire, integrate, and retain personnel could harm execution.
Evolving AI regulations, including the EU AI Act and U.S. federal preemption uncertainty, impose compliance, testing, documentation and reporting costs and could restrict SentinelOne's ability to offer AI-powered products or expose it to fines and enforcement.
Restructuring charges increased by $20.5 million in the quarter, primarily due to $24.4 million of charges related to the May 2026 Plan; the company cannot guarantee these cost-reduction efforts will succeed or that it will not re-accelerate operating expenditures.
SaaS KPIs
All quarters →Non-GAAP gross margin
Customers with ARR of $100,000 or more
Non-GAAP operating margin
Free cash flow
Net New ARR
Non-GAAP net income margin
ARR
Summary, forecast, risks and KPIs are extracted from SentinelOne, Inc.'s SEC filings for Q2 FY2027 (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.