Key Highlights
- SentinelOne shares dropped 4% premarket following Q2 results, then surged over 10% during Thursday trading
- Second quarter revenue climbed 21% annually to $292 million, surpassing Wall Street projections
- Adjusted EPS of $0.08 exceeded the anticipated $0.07 consensus estimate
- Annual recurring revenue expanded 22% to $1.218 billion, with non-endpoint offerings comprising over half of total ARR
- UBS increased its price objective to $24, while both Citizens and Baird established $25 targets
SentinelOne delivered second quarter fiscal 2027 earnings that topped Wall Street projections, though the market expressed concerns about insufficient transparency on critical growth indicators.
Shares initially declined 4% in premarket activity following Wednesday evening’s report. The cybersecurity stock subsequently rebounded dramatically, climbing more than 10% by Thursday’s trading session.
Quarterly revenue reached $292 million, representing a 21% year-over-year increase and exceeding the $290.15 million analyst consensus. Adjusted earnings per share of $0.08 outperformed the $0.07 expectation.
Annual recurring revenue increased 22% to $1.218 billion. The cybersecurity firm added $56 million in net new ARR, surpassing market projections.
Adjusted operating margin expanded to 10%, compared to 2% in the year-ago quarter. GAAP net loss margin widened slightly to 32% from the previous year’s 30%.
Cash, cash equivalents, and investments totaled $813 million at quarter end. Free cash flow disappointed somewhat, with severance expenses contributing to the shortfall.
Q3 Earnings Outlook Disappoints
For the third quarter, SentinelOne projected revenue between $309 million and $311 million with adjusted EPS ranging from $0.08 to $0.09. Wall Street had anticipated $309.5 million in revenue and $0.11 in EPS, creating a notable earnings guidance shortfall.
The company raised full-year revenue guidance to $1.202 billion to $1.207 billion from a previous range of $1.2 billion to $1.21 billion. Full-year adjusted EPS guidance of $0.30 to $0.32 trailed the $0.35 analyst consensus.
J.P. Morgan analyst Brian Essex maintained his Neutral rating with a $22 price target, characterizing the results as a “healthy beat and raise” while highlighting concerns about limited transparency. The absence of current remaining performance obligations reporting or ARR guidance complicates short-term momentum assessment, Essex noted.
Remaining performance obligations increased 45% year-over-year, though the lack of current portion disclosure prevents investors from accurately estimating near-term revenue conversion.
Wall Street Raises Price Targets
UBS elevated its price target to $24 from $16 while maintaining a Neutral stance. The investment bank highlighted the Q2 outperformance and the company’s 5.3 times calendar year 2027 enterprise value-to-sales multiple as attractive relative to sector peers. UBS cited the absence of clearer ARR guidance improvement as justification for restraint.
Citizens upgraded its target to $25 from $23 with a Market Outperform rating. Baird maintained its Outperform rating with a $25 target, emphasizing net new ARR expansion and the 45% surge in remaining performance obligations.
Non-endpoint solutions, encompassing cloud, data, and AI security offerings, now represent more than half of total ARR. Company leadership highlighted shortened sales cycles and record pipeline levels entering the second half of the fiscal year.
Shares currently trade at $22.71, approaching the 52-week high of $23.95. The stock has rallied 73% over the preceding six months.
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