Summary
SentinelOne closed FY2023 Q4 with revenue of $126.1 million, up 92.1% year over year. Full-year revenue was $422.2 million, up 106.1%. Annualized recurring revenue reached $548.7 million, up 88% from a year earlier, crossing the half-billion-dollar mark. The customer base exceeded 10,000, up about 50% year over year, and the company added about 750 customers in the quarter. Customers with ARR over $100,000 rose 74% to 905. Dollar-based net retention rate was 132%, above the long-term target of over 120%. Cloud security contributed about 15% of quarterly ACV and more than doubled quarter over quarter. Management said the pipeline nearly doubled year over year and pointed to the Wiz partnership that extends the cloud portfolio into cloud security posture management.
GAAP gross profit was $86.3 million in the quarter, up 108.6% year over year. GAAP gross margin was 68.5%, up 5.4 percentage points from the prior-year quarter. For the full year, GAAP gross margin was 65.8%, up 5.7 percentage points. The quarter's GAAP operating loss was $100.0 million, and the loss widened. GAAP operating margin was negative 79.3%, up 29.0 percentage points from the prior-year quarter. Full-year GAAP operating margin was negative 95.4%, up 35.1 percentage points. GAAP net loss was $93.7 million in the quarter, and the loss widened. Full-year GAAP net loss was $378.7 million, and the loss widened. Full-year diluted EPS was negative $1.36, and the loss narrowed. Non-GAAP gross margin was 75%, compared with 66% a year earlier, and non-GAAP operating margin was negative 35%, compared with negative 66%.
Operating cash flow was negative $22.1 million in the quarter, down 295.1% year over year. Full-year operating cash flow was negative $193.3 million, down 102.2%. Free cash flow was negative $25 million in the quarter, compared with negative $7 million a year earlier. Capital expenditures were $0.13 million in the quarter, down 67.3%. Full-year capital expenditures were $4.95 million, up 35.6%. Deferred revenue was $406.3 million, up 55.1% year over year, and remaining performance obligations were $609.4 million, up 76.4%. Cash, cash equivalents, and investments were $1.2 billion as of January 31, 2023.
Guidance for the first quarter of fiscal 2024 calls for revenue growth of 75% year over year. Full fiscal year 2024 revenue guidance is $631 million to $640 million, growth of 51% at the midpoint. Non-GAAP gross margin guidance is 73.5% for the first quarter and 73.5% to 74.5% for the full fiscal year. Non-GAAP operating margin guidance is (41)% for the first quarter and (29)% to (25)% for the full fiscal year. The company also cited a long-term EBIT margin target of 20% or more.
Risks centre on the demand environment. Management said customers remain cost-conscious and prudent with IT budgets, which has led to longer sales cycles and deal right-sizing, and it expects those dynamics to persist. SentinelOne listed intense competition, a limited operating history, a history of losses, network or security incidents against the company, platform defects, and risks tied to managing rapid growth and integrating acquisitions. It also flagged declining macroeconomic conditions, rising interest rates, supply chain disruptions, inflation, recent banking sector issues, COVID-19, and geopolitical uncertainty, including the conflict in Ukraine and proposed judicial reform in Israel. Retention, platform interoperability, sales cycle length, and securities class action litigation round out the list. Purchase obligations were $871.5 million as of January 31, 2023, with $81.9 million expected within 12 months, and a February 2023 cloud infrastructure commitment carried a total net value of $860.0 million over six years.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $126.1M | $115.3M | +9.3% | $65.6M | +92.1% |
| Gross profit | $86.3M | $74.3M | +16.2% | $41.4M | +108.6% |
| Gross margin | 68.5% | 64.4% | +4.0 pp | 63.1% | +5.4 pp |
| Research & development | $53.9M | $52.2M | +3.2% | $42.6M | +26.4% |
| Sales & marketing | $87.3M | $84.0M | +3.9% | $42.1M | +107.2% |
| General & administrative | $45.2M | $42.2M | +7.1% | $27.7M | +63.1% |
| Total operating expenses | $186.4M | $178.4M | +4.5% | $112.5M | +65.7% |
| Operating income (loss) | -$100.0M | -$104.1M | +3.9% | -$71.1M | -40.7% |
| Operating margin | -79.3% | -90.2% | +10.9 pp | -108.3% | +29.0 pp |
| Net income (loss) | -$93.7M | -$98.9M | +5.2% | -$71.7M | -30.6% |
| Net margin | -74.3% | -85.7% | +11.4 pp | -109.3% | +35.0 pp |
| Diluted EPS | -$0.34 | -$0.35 | +$0.01 | -$0.41 | +$0.07 |
| Customers | 10,000 | — | — | 6,700 | +49.3% |
| Net retention rate | 132.0% | 134.0% | -2.0 pp | 129.0% | +3.0 pp |
Risks
Weak global and regional economic conditions, inflation, rising interest rates, and instability in the banking system, including the March 2023 closure of Silicon Valley Bank, could reduce IT spending and customers' ability to pay. MD&A states the company has observed a lengthening of the sales cycle for some prospective customers that it attributes to higher cost-consciousness around IT budgets and expects those macroeconomic conditions to persist in the near term.
The cybersecurity market is intensely competitive, and the filing highlights increased advancements and proliferation in the use of open artificial intelligence applications as a factor that could change the market rapidly. Larger competitors such as CrowdStrike, VMware, Trellix, Symantec, Microsoft, and Palo Alto Networks may offer broader portfolios, lower pricing, or bundling that pressures SentinelOne's market share and gross margin.
Sales cycles can be long and unpredictable, particularly with large organizations and government entities, and the company spends substantial time and resources without assurance of a sale. Current macroeconomic conditions have lengthened the sales cycle for some prospective customers, which could delay revenue recognition and increase sales costs.
Substantially all sales are fulfilled through channel partners, which generated 90% of revenue for fiscal 2023. Exclusive Networks alone generated 18% of revenue for fiscal 2023, and the agreements are non-exclusive, have no set term, and may be terminated by either party at any time.
As a security provider, SentinelOne faces particularly intense attack efforts, and an actual, alleged, or perceived breach of its systems or customer data could damage reputation, create regulatory exposure under laws such as CCPA and GDPR, and lead to customer loss. The filing notes state-supported and geopolitical cyberattacks may increase in connection with Russia's invasion of Ukraine.
MD&A discloses a non-cancellable purchase commitment entered in February 2023 with a cloud infrastructure vendor for a total net value of $860.0 million over the next six years, with total purchase obligations of approximately $871.5 million as of January 31, 2023. If revenue growth slows, this fixed obligation could strain liquidity and operating results.
The company has a history of losses, and net loss was $378.7 million for fiscal 2023 while operating cash flow was negative $193.3 million for fiscal 2023. Continued losses and cash use could require additional financing or force reduced investment.
Customers have no obligation to renew subscriptions after their one-to-three-year terms, and some have elected not to renew in the normal course. Retention and expansion could decline due to customer satisfaction, pricing, competition, or macroeconomic conditions, which would harm revenue growth.
SentinelOne relies on CEO Tomer Weingarten and other key employees, and competition for highly skilled personnel is intense in the San Francisco Bay Area and Israel. The company has experienced difficulty hiring and retaining cybersecurity talent, and increased remote work expands the pool of competitors for employees.
SentinelOne has acquired Scalyr and Attivo and may continue acquisitions or strategic investments. Integration may divert management attention, disrupt operations, dilute stockholders, or introduce unanticipated liabilities, and the company may fail to realize expected benefits.
Revenue outside the United States represented 35% for fiscal 2023, and international operations expose SentinelOne to foreign currency, privacy and data protection laws, sanctions, tariffs, and local compliance risks. Government certifications such as FedRAMP are costly to maintain, and losing them would restrict sales to government customers.
SaaS KPIs
All quarters →Non-GAAP gross margin
Annualized recurring revenue (ARR)
Non-GAAP operating margin
Free cash flow
Net New ARR
Total customers
Dollar-Based Net Retention Rate (NRR)
Customers Added
Customers with ARR over $100,000
Summary, forecast, risks and KPIs are extracted from SentinelOne, Inc.'s SEC filings for Q4 FY2023 (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.