Summary
SentinelOne closed the fiscal 2024 third quarter with revenue of $164.2 million, up 42.4% from $115.3 million a year earlier. Nine-month revenue reached $447.0 million, up 51.0% from $296.1 million. The company sells subscriptions to its Singularity Platform, and annualized recurring revenue ended the quarter at $663.9 million, up 43% from $463 million. Net new ARR of $52 million grew 11% year over year. Management credited demand for endpoint protection plus the newer Cloud, Data, and Identity modules.
Margins improved sharply. GAAP gross profit was $120.4 million for the quarter, up 62.0% from $74.3 million, and GAAP gross margin rose to 73.3% from 64.4%. Non-GAAP gross margin was 79%, against 71%, which management placed at the high end of its long-term target range of 75% to 80%. The GAAP operating loss narrowed to $81.5 million from $104.1 million, and operating margin improved to negative 49.6% from negative 90.2%. GAAP net loss narrowed to $70.3 million from $98.9 million. Diluted EPS was -$0.24, compared with -$0.35. Stock-based compensation remains the largest reconciling item between the GAAP and non-GAAP presentations.
Cash trends also improved. Operating cash flow was negative $22.2 million for the quarter, against negative $59.7 million a year earlier. Capital expenditures were $0.62 million. Free cash flow, a separate non-GAAP measure, was negative $26 million compared with negative $65 million a year earlier. The company held $1.1 billion in cash, cash equivalents, and investments at October 31, 2023. Deferred revenue rose 19.2% to $422.6 million, and remaining performance obligations rose 50.0% to $776.0 million, a signal of contracted work still to be recognized.
The customer base passed 11,500 accounts. Customers with ARR of $100,000 or more grew 33% to 1,060, and dollar-based net retention exceeded 115%, compared with 130%-plus a year earlier. Singularity Cloud and Singularity Data were the fastest-growing solutions and together accounted for more than 20% of quarterly bookings, with triple-digit growth. International revenue was 37% of the total and grew 46%. The roadmap includes Purple AI general availability in the first quarter of fiscal 2025, a full cloud-native application protection platform within the next 12 months, and deeper commitments with managed security service providers.
Guidance for the fiscal fourth quarter calls for revenue growth of 34% year over year, a non-GAAP gross margin of 77.5%, and a non-GAAP operating margin of negative 14%. For the full fiscal year 2024, management guided to growth of 46%, a non-GAAP gross margin of about 77%, and a non-GAAP operating margin of about negative 20%, which is 5 percentage points better than prior guidance and about 29 percentage points better than fiscal 2023. The long-term target is an EBIT margin of 20% or more.
The risks are familiar and real: volatile macroeconomic conditions, longer sales cycles, deal downsizing by larger enterprises, and intense competition. About 14% of personnel are in Israel, where the conflict that began in October 2023 is being watched. The company has also committed to spend at least $860.0 million with a cloud infrastructure vendor between March 2023 and February 2029, and securities class action litigation is listed among its risk factors.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $164.2M | $149.4M | +9.9% | $115.3M | +42.4% |
| Gross profit | $120.4M | $104.8M | +14.9% | $74.3M | +62.0% |
| Gross margin | 73.3% | 70.1% | +3.2 pp | 64.4% | +8.9 pp |
| Research & development | $52.3M | $54.2M | -3.4% | $52.2M | +0.1% |
| Sales & marketing | $98.2M | $98.3M | -0.0% | $84.0M | +17.0% |
| General & administrative | $51.2M | $48.4M | +5.8% | $42.2M | +21.5% |
| Total operating expenses | $201.9M | $205.1M | -1.6% | $178.4M | +13.2% |
| Operating income (loss) | -$81.5M | -$100.4M | +18.8% | -$104.1M | +21.7% |
| Operating margin | -49.6% | -67.2% | +17.5 pp | -90.2% | +40.6 pp |
| Net income (loss) | -$70.3M | -$89.5M | +21.5% | -$98.9M | +28.9% |
| Net margin | -42.8% | -59.9% | +17.1 pp | -85.7% | +42.9 pp |
| Diluted EPS | -$0.24 | -$0.31 | +$0.07 | -$0.35 | +$0.11 |
| Net retention rate | 115.0% | 115.0% | ±0.0 pp | 134.0% | -19.0 pp |
Risks
Adverse global macroeconomic conditions and reduced information technology spending have caused longer sales cycles, deal downsizing, and a decline in usage and consumption patterns from certain larger enterprise customers. MD&A states these macroeconomic impacts on demand are expected to persist in the near term.
Sales cycles are long and unpredictable, particularly for large organizations and government entities. MD&A reports that current macroeconomic conditions have lengthened the sales cycle for some prospective customers due to higher cost-consciousness around IT budgets.
Dollar-based net retention rate was 115%+ as of October 31, 2023 compared with 130%+ as of October 31, 2022. Risk factors state that inability to retain customers, renew and expand relationships, and add new customers could prevent sustained revenue growth.
The company is investing significantly in generative AI, including Purple AI, but risk factors say competitors may incorporate AI more successfully, AI models may provide flawed results, and AI use may create intellectual property, privacy, and reputational litigation exposure. The October 2023 U.S. Executive Order adds evolving AI regulation.
The cybersecurity market is intensely competitive, with named competitors including CrowdStrike, VMware, Trellix, Symantec, Microsoft, and Palo Alto Networks. Larger competitors may bundle competing products or lower prices, potentially reducing revenue and gross margin.
Exclusive Networks, the largest channel partner, generated 19% and 18% of revenue for the three months ended October 31, 2023 and 2022, respectively. The agreement is non-exclusive, has no set term, and may be terminated at any time, creating distribution concentration risk.
The company had approximately 14% of personnel in Israel as of October 31, 2023 and is monitoring the armed conflict in Israel that began in October 2023. Although the conflict has not had an adverse impact to date, worsening or spillover effects could disrupt operations.
As a cybersecurity provider, the company's platform has highly privileged access and faces intense attack efforts, including state-supported cyberattacks linked to conflicts such as Israel and Ukraine and bad actors using AI-based tools. A breach could harm reputation, create liability, and affect customers.
The company is currently subject to securities class action litigation. General and administrative expenses increased by $9.1 million for the three months ended October 31, 2023 partly due to a $5.8 million increase in litigation expenses due to settlements made during the period.
The company acquired KSG in November 2023 and previously acquired Scalyr and Attivo. Risk factors warn that acquisitions may be difficult to integrate, divert key management, dilute stockholders, or fail to achieve expected benefits.
Future growth depends in part on increasing sales to government organizations, which are subject to budgetary uncertainty, FedRAMP compliance costs, audits, and risks such as government shutdowns or defaults.
The company relies on its management team and key employees. Headcount grew from over 1,900 employees as of October 31, 2022 to over 2,300 as of October 31, 2023, increasing the need to hire, integrate, train, manage, and retain qualified personnel.
The company is subject to privacy and data protection laws including CCPA/CPRA and GDPR, with potential GDPR fines of up to €20 million or 4% of annual global turnover, and new SEC cybersecurity disclosure rules.
The June 2023 restructuring plan incurred approximately $5.0 million in charges in the nine months ended October 31, 2023 and is expected to be fully complete by the end of fiscal 2025. Risk factors state cost-reduction efforts may not be successful or may be followed by re-accelerated spending.
SaaS KPIs
All quarters →Non-GAAP gross margin
Annualized recurring revenue (ARR)
Customers with ARR of $100,000 or more
Free cash flow
Net New ARR
Total customers
Free cash flow margin
Operating cash flow margin
Summary, forecast, risks and KPIs are extracted from SentinelOne, Inc.'s SEC filings for Q3 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.