Executive Summary
- SentinelOne delivered strong top-line momentum in QQ2 2025, with revenue of $199.0 million (+33% YoY) and total ARR of $806 million (+32% YoY). Net new ARR in the quarter was $44 million, and international revenue grew 36% YoY, representing 37% of quarterly revenue. Management framed these results within a durable growth framework supported by AI-driven platform advantages and expanding go-to-market momentum.
- The company achieved a record gross margin of 80% and a near-breakeven operating margin, marking a material improvement in unit economics and an important profitability milestone highlighted by management as the first time in company history that net income and earnings per share were positive. The quarterly GAAP net income figure in the data set reflects a net loss, underscoring a potential discrepancy between reported GAAP results and management commentary on profitability in the call. Investors should reconcile these figures with the company’s GAAP vs non-GAAP disclosures and the shareholder letter guidance.
- Management raised full-year revenue guidance to about $815 million (up ~31% YoY) and provided Q3 revenue guidance of ~$209.5 million (up ~28% YoY). Gross margin guidance for the year was raised to 79%. The trajectory implies continued margin expansion and a deliberate reinvestment stance to scale, with the company citing catalysts from CNAPP, AI, and Data offerings, Purple AI adoption, and expanding cloud security and SIEM capabilities.
- Strategic momentum is underpinned by a broad and expanding partner ecosystem (Google/Mandiant, cyber insurers, MSSPs) and notable enterprise wins across endpoints, cloud, and data, with CNAPP and Purple AI cited as accelerants of new business expansion and higher ARR per customer. The outlook contemplates improved H2 net new ARR growth, supported by a stronger pipeline and improved competitive positioning.
- The investment thesis centers on SentinelOne’s differentiated platform architecture (autonomous AI security that reduces reliance on kernel-level updates), an expanding data lake strategy, and an open ecosystem approach that aims to capture a large share of a multi-hundred-billion cybersecurity and data market. Investors should monitor: (1) the pace of H2 ARR acceleration, (2) the trajectory of profitability and free cash flow as the company balances growth investments with margin enhancement, and (3) the durability of large enterprise and federal/insurer partnerships over multi-year contract cycles.
Key Performance Indicators
Key Insights
Revenue: $199.0m (+33% YoY; +6.8% QoQ)
ARR: $806m (+32% YoY)
Net new ARR: $44m (+double-digit percentage vs. prior quarter)
Gross margin: 80.0% (record)
Operating margin: near breakeven; Q2 EBIT margin improved by ~19 percentage points YoY to negative 3% per CFO commentary; GAAP net income: negative in the data; non-GAAP commentary suggests positive profitability milestones were achieved in the quarter per management.
EPS: -$0.22 (GAAP); management highlighted positive net income and positi...
Financial Highlights
Revenue: $199.0m (+33% YoY; +6.8% QoQ)
ARR: $806m (+32% YoY)
Net new ARR: $44m (+double-digit percentage vs. prior quarter)
Gross margin: 80.0% (record)
Operating margin: near breakeven; Q2 EBIT margin improved by ~19 percentage points YoY to negative 3% per CFO commentary; GAAP net income: negative in the data; non-GAAP commentary suggests positive profitability milestones were achieved in the quarter per management.
EPS: -$0.22 (GAAP); management highlighted positive net income and positive earnings per share on the call.
International revenue: +36% YoY; ~37% of quarterly revenue
Cost structure: R&D $63.6m; SG&A $44.4m; Selling & Marketing $119.6m; total operating expenses $227.6m
CFO view: Net cash provided by operating activities $2.3m; free cash flow negative $5.5m; cash and equivalents + investments ~ $708m; total debt $20m; net cash position ~ $-186m (net cash)
Cash position: Cash and cash equivalents $205.9m; short-term investments $502.3m; total cash and investments $708.2m
Guidance: Q3 revenue ~ $209.5m (+28% YoY); FY25 revenue ~ $815m (+31% YoY); Gross margin ~ 79%; Q3 OPM ~ -3%; FY25 OPM target range ~ -5% to -3%
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
198.94M |
33.14% |
6.75% |
| Gross Profit |
148.24M |
41.51% |
8.82% |
| Operating Income |
-79.38M |
20.90% |
1.51% |
| Net Income |
-69.18M |
22.73% |
1.31% |
| EPS |
-0.22 |
29.03% |
4.35% |
Key Financial Ratios
operatingProfitMargin
-39.9%
operatingCashFlowPerShare
$0.01
freeCashFlowPerShare
$-0.02
priceEarningsRatio
-25.87
Management Commentary
- Strategy and market positioning: Management emphasizes architecture over marketing and argues that SentinelOne’s kernel-avoidant, AI-powered Singularity platform provides superior resilience and security compared with rivals, asserting that “architecture matters” and that SentinelOne’s approach reduces update burden and kernel dependencies. They frame this as a durable competitive advantage in a market disrupted by incidents at other vendors.
- Growth and go-to-market execution: CEO Tomer Weingarten highlights strong top-line momentum (ARR growth, Purple AI attach rates, CNAPP expansion), and notes that the company has entered a “new dawn” with improved pipeline, higher new business generation, and a ramp in enterprise and MSSP engagements. He also discusses product differentiation and the open ecosystem approach as accelerants to multi-year market-share gains.
- Partnerships and ecosystem expansion: The transcript emphasizes Google/Mandiant collaboration, cyber insurers (Chubb, Coalition, CFC) under the Risk Assurance Initiative, federal partnerships via CISO, and MSSP ecosystem strengthening, positioning SentinelOne to address large-scale environments and multi-tenant cloud deployments.
- Outlook and capital allocation: CFO Dave Bernhardt reiterates disciplined cost management, balance sheet durability (cash > $1B across cash + equivalents and investments with zero debt), and the potential for further investments in AI, Data, and Cloud Security to drive long-term growth. He reinforces guidance for Q3 and FY25 and notes that enhanced profitability and free cash flow have been demonstrated, while management signals willingness to invest more if returns justify it.
- Market dynamics and risk factors: The management notes macro headwinds but argues that the security market is favorable given increasing demand for open ecosystems and architecture-first security. They cite recent outages in the industry to underline the value proposition of SentinelOne’s architecture and the risk diversification benefits of not relying on a single vendor.
Key quotes from the call include: (1) Revenue growth and ARR momentum: “Revenue grew 33% and total ARR grew 32% year-over-year. Net new ARR increased 16% sequentially, driven by stronger new business generation.” (Tomer Weingarten) (2) Profitability milestone and margin strength: “We delivered a record high gross margin of 80% with our operating margin nearing breakeven. Q2 also marked a record operating margin, once again improving by double-digit percentage points year-over-year. And we achieved positive net income and earnings per share for the first time in company's history.” (Tomer Weingarten)
"Revenue grew 33% and total ARR grew 32% year-over-year. Net new ARR increased 16% sequentially, driven by stronger new business generation."
— Tomer Weingarten, CEO
"We delivered a record high gross margin of 80% with our operating margin nearing breakeven. Q2 also marked a record operating margin, once again improving by double-digit percentage points year-over-year. And we achieved positive net income and earnings per share for the first time in company's history."
— Tomer Weingarten, CEO
Forward Guidance
- Q3 guidance: Revenue ~ $209.5 million, up 28% YoY. Gross margin ~ 79%. Operating margin ~ -3% (improving ~8 percentage points YoY).
- Full-year guidance: Revenue ~ $815 million, up 31% YoY. Gross margin raised to the high end of prior guidance at 79%. Operating margin target narrowed to a range of -5% to -3% (midpoint improvement ~15 percentage points vs FY24).
- Confidence drivers: Improved GTM execution, stronger pipeline, better competitive position, and traction with CNAPP, AI, and Data. Management notes that H2 net-new ARR growth should improve versus H1 and that there is potential for additional investments if the growth opportunity justifies it.
- Assessment: The guidance implies continued margin expansion and top-line growth with a balanced approach to investment. Risks include macro slowdowns, execution risk in taking full advantage of the CNAPP/Data/Ai tailwinds, and potential variability in large enterprise deal cycles. Investors should monitor: (a) win rates and time-to-close for net-new ARR, (b) progression of CNAPP and Purple AI adoption into higher attach rates, (c) retention and expansion within existing customers, and (d) annual free cash flow trajectory as capital allocation remains flexible.