"“Q2 was a landmark quarter for SentinelOne. Our total ARR grew 24% and crossed $1 billion, a significant milestone in our growth journey.”" - Tomer Weingarten
SentinelOne Inc (S) QQ2 2026 Results – AI-native Singularity platform accelerates growth as ARR crosses $1B, with Flex and Prompt Security expanding the TAM
Executive Summary
SentinelOne delivered a landmark QQ2 2026, highlighted by total ARR surpassing $1 billion and a 24% YoY ARR growth, underscoring the mass adoption of an AI-native cybersecurity platform. Revenue rose 22% YoY to $242.2 million, with gross margins of 79% and operating profitability expanding to 2% for the quarter, marking a meaningful step toward durable profitability. The quarter featured broad-based demand across endpoints, data, cloud, and Purple AI, with non-endpoint bookings contributing roughly half of total bookings. SentinelOne’s go-to-market evolution, anchored by SentinelOne Flex and the Prompt Security acquisition, is accelerating multi-product land-and-expand dynamics and enabling faster deployment and higher TAM capture. Management raised full-year revenue guidance to approximately $1.0 billion, signaling confidence in sustained platform momentum despite a dynamic macro backdrop.
The combination of an asset-light, cash-rich balance sheet (net cash position of about $-266.5 million with $1.2B in cash/cash equivalents and investments) and a diversified product lineup positions SentinelOne to capitalize on AI-driven security demands, including GenAI governance with Prompt Security and cloud-native protection with Singularity Cloud and CNAPP. Short-term profitability is improving (Q2 operating margin ~2%), with the company guiding to ~3-4% full-year operating margin and positive free cash flow, even as it absorbs the modest near-term impact of the Prompt acquisition (roughly 80 bps on full-year margin). The stock trades with high growth multiples, reflecting the market’s expectation of continued acceleration in multi-product bookings and enterprise traction, supported by AWS marketplace integration and MSSP partnerships.
Key near-term catalysts include the growing uptake of SentinelOne Flex, the 8-figure Flex-driven deals, continued Purple AI/data/CNAPP momentum, and the integration and execution of Prompt Security to extend AI-enabled governance at the endpoint and across AI runtimes. Investors should monitor deal timing variability, FX headwinds, integration milestones for Prompt, and the pace of non-endpoint bookings as measures of the platform’s stickiness and ARR durability.
Net income: -$72.019 million; net income margin -29.74% (GAAP); management notes a fifth consecutive quarter of positive net income margin on a non-GAAP basis at 5% in Q2.
EBITDA: -$64.466 million; EBITDA margin -26.62%.
Financial Highlights
Quarterly pace and composition:
- Revenue: $242.183 million, up 22% YoY; QoQ growth 5.74% (per earnings metrics).
- Gross profit: $181.709 million; gross margin 75.03% (0.7503).
- Operating income: -$80.618 million; operating margin -33.29%.
- Net income: -$72.019 million; net income margin -29.74% (GAAP); management notes a fifth consecutive quarter of positive net income margin on a non-GAAP basis at 5% in Q2.
- EBITDA: -$64.466 million; EBITDA margin -26.62%.
- ARR and bookings: Total ARR > $1.0 billion; ARR growth 24% YoY; net new ARR of $53 million in the quarter.
- Customer metrics: Customers with ARR ≥ $100k grew 23% to 1,513; international revenue accounted for 38% of total revenue (international growth of 27% YoY).
- Cash and liquidity: $1.2 billion in cash, cash equivalents and investments; no debt; net debt of -$266.5 million (net cash position).
- Operating cash flow: -$1.043 million; capex: -$6.184 million; free cash flow: -$7.227 million (quarter).
- RPO: Remaining performance obligations up 26% to $1.2B (duration relatively stable QoQ).
- Share count: Weighted average shares outstanding ~330.94 million.
Guidance highlights:
- Q3 revenue guidance of approximately $256 million (+22% YoY).
- FY26 revenue guidance: $998 million to $1.02 billion (midpoint ~$1.00B), +22% YoY.
- Gross margin guidance: 78.5% to 79% for full year; Q3 margin ~78.5%.
- Operating margin guidance: ~4% in Q3; ~3% for full year (FX headwinds and Prompt acquisition effect included).
- Free cash flow: expected to be positive for the full year, modestly above operating margin.
- Acquisition impact: Prompt Security purchase price about $180 million; top-line impact minimal in FY26; ~80 bps drag to full-year operating margin; expected to close in Q3 FY26.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
242.18M
21.74%
5.74%
Gross Profit
181.71M
22.58%
5.34%
Operating Income
-80.62M
-1.56%
7.85%
Net Income
-72.02M
-4.10%
65.41%
EPS
-0.22
0.00%
65.08%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management themes and quotes:
- Growth and platform momentum: Tomer Weingarten, CEO, on Q2 as a landmark quarter with ARR crossing $1B and 24% ARR growth, highlighting AI-powered cybersecurity as a differentiator. Quote: “Q2 was a landmark quarter for SentinelOne. Our total ARR grew 24% and crossed $1 billion, a significant milestone in our growth journey.”
- Flex and multi-product adoption: Tomer described SentinelOne Flex as a major leap in how customers adopt the Singularity platform, enabling broader consumption and higher renewal efficiency. Quote: “Flex provides customers with full access to the entire Singularity platform, enhancing our opportunity to expand our footprint across customer environments.”
- Purple AI and data momentum: Tomer cited Purple AI as a key driver with triple-digit growth and >30% attach rate, plus data solutions contributing to record bookings. Quote: “Purple AI continues to outperform our expectations, emerging as a key driver of our quarterly results… attach rates surpassing 30% of licenses sold during the quarter.”
- Acquisition rationale and GenAI risk management: Tomer discussed Prompt Security as a strategic extension to secure GenAI at run time, enabling governance of AI usage. Quote: “Prompt Security enhances the Singularity platform with the ability to monitor, govern and control GenAI usage across the enterprise.”
- Financial discipline and outlook: Barbara Larson, CFO, highlighted margin expansion and the plan to deliver positive free cash flow for FY26, while acknowledging macro variability and integration costs from Prompt. Quote: “We continued to deliver top-tier growth alongside strong margin expansion… gross margin 79%… fifth consecutive quarter of positive net income margin.”
“Q2 was a landmark quarter for SentinelOne. Our total ARR grew 24% and crossed $1 billion, a significant milestone in our growth journey.”
— Tomer Weingarten
“Prompt's technology is highly complementary to our AI strategy and our Singularity platform. It creates a unique integrated layer for securing AI in the enterprise.”
— Tomer Weingarten
Forward Guidance
Outlook discussion:
- Near-term: Q3 revenue guidance of ~$256 million implies continued momentum following the strong Q2 performance. The 22% YoY growth rate is consistent with SentinelOne’s multi-product acceleration and expanding cross-sell opportunities via Flex and non-endpoint solutions.
- Full-year: Revenue guidance of $998 million to $1.02 billion, mid-point around $1.0 billion, representing roughly 22% YoY growth. The company cites a robust pipeline and ongoing contributions from emerging products (AI, data, CNAPP) while acknowledging the potential variability in the timing of larger deals. Gross margin guidance sits at 78.5%–79%; Q3 gross margin around 78.5%.
- Margin trajectory: Target operating margin of ~3% for FY26, with Q3 at ~4%. The improvement is supported by operating leverage and higher mix of higher-margin platform solutions, offset by FX headwinds and the incremental margin impact from Prompt.
- Cash generation and capital allocation: Positive free cash flow expected for the year; strong balance sheet provides capacity to fund acquisitions and strategic investments (e.g., Prompt) while pursuing growth in AI-native cybersecurity.
Assessment and monitored factors for investors:
- Pace of Flex adoption and cross-sell into existing accounts; potential for larger average deal sizes and faster renewal cycles.
- Integration and contribution of Prompt Security to ARR, revenue, and margin over the next 4–8 quarters.
- Macro environment and deal timing; international expansion and partner-driven bookings (AWS, MSSP, Lenovo, etc.).
- Competitive landscape with ZS, CRWD, PANW, OKTA; SentinelOne’s ability to sustain premium gross margins while growing non-endpoint bookings will be a key differentiator.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
S Focus
75.03%
N/A
N/A
N/A
ZS
77.10%
-6.20%
-0.48%
-1,007.65%
NET
77.80%
-8.61%
-1.71%
-474.16%
CRWD
75.40%
1.42%
1.65%
301.08%
PATH
80.00%
-32.70%
-4.70%
-20.07%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Base-case thesis: SentinelOne is transitioning from a high-growth, loss-making phase to durable profitability while expanding platform adoption and ARR momentum. The QQ2 2026 results demonstrate substantial platform breadth and a strong, diversified revenue mix beyond endpoints, with Purple AI and data driving record bookings. The Flex licensing model and the Prompt Security acquisition are strategically important, enhancing cross-sell opportunities and fortifying the company’s leadership in AI-native cybersecurity. The ARR milestone (> $1B) and a robust pipeline support a multi-year revenue trajectory in the 20–25% range, with margin expansion ongoing as the product mix shifts toward higher-margin platform solutions. The balance sheet remains a significant asset, enabling disciplined investments in growth and potential acquisitions.
Risks to elevation: The company’s GAAP profitability remains negative and near-term margin compression could occur from acquisitions and FX headwinds. Large deals and their timing can introduce revenue variability, and macro conditions could dampen near-term deal velocity. Competitive dynamics in cybersecurity remain intense, requiring continuous differentiation through product innovation and go-to-market execution.
Investment stance: Moderately positive. Given the combination of durable ARR growth, expanding non-endpoint bookings, meaningful platform breadth, and a cash-rich balance sheet, SentinelOne is well-positioned to extend its leadership in AI-powered cybersecurity. Investors should monitor Prompt integration progress, Flex adoption velocity, macro-driven deal timing, and the sustainability of non-endpoint demand as the key near-term inputs to modeling the next 2–3 quarters.
Key Investment Factors
Growth Potential
Strong long-term growth potential driven by a broad AI-native platform (EndPoint, Data, Cloud, CNAPP, Purple AI) and the ability to monetize via a flexible licensing model (Flex). The Purple AI and data solutions are delivering triple-digit growth, and non-endpoint bookings constitute about half of quarterly bookings, indicating a diversified growth engine beyond endpoints. The Prompt Security acquisition expands the addressable TAM into GenAI governance and DLP for the endpoint, positioning SentinelOne to capitalize on GenAI risk-management spend.
Profitability Risk
GAAP profitability remains negative (Q2 net income -$72.0M) as SentinelOne invests in platform expansion and strategic acquisitions. Execution risk around large deals and macro-driven deal timing. Integration risk and near-term margin dilution from Prompt. Competitive intensity from incumbents (CRWD, PANW, ZS) and potential slower-than-expected adoption of Flex and data/CNAPP offerings. FX headwinds are acknowledged in the outlook.
Financial Position
Solid liquidity with roughly $1.2B in cash, cash equivalents and investments and no net debt (net debt about -$266.5M). Track record of margin expansion (gross margin ~79%, Q2 operating margin ~2%) and positive free cash flow guidance for the year. Balance sheet provides flexibility for M&A and strategic investments while funding growth initiatives.
SWOT Analysis
Strengths
ARR > $1B with 24% YoY growth and record net new ARR of $53M in Q2 2026
Broadly expanding platform adoption across endpoints, data, cloud, and Purple AI
SentinelOne Flex enables larger deals, faster time-to-value, and cross-sell across multiple platform solutions
Purple AI delivers triple-digit growth with 30%+ attach rates; 7-figure ARR wins for Purple AI
No debt and a strong balance sheet with ~ $1.2B in cash and investments; net cash position
Strategic AWS partnership and marketplace presence; MSSP ecosystem momentum
Gartner MQ leader in Endpoint Protection Platforms; Frost Radar leader in endpoint security
Weaknesses
GAAP net loss in QQ2 2026; profitability improving but not yet near peers with positive GAAP margins
Near-term dilution from acquisitions (Prompt) and FX headwinds impacting margins
Reliance on larger enterprise deals and potential deal-timing variability
Early-stage monetization of Prompt with immaterial ARR impact in FY26
Opportunities
Growth of AI-native security platform with multi-product cross-sell via Flex
GenAI governance and data leakage protection via Prompt Security expanding DLP/DGA use-cases
CNAPP, AI SIEM, Purple AI expansion, and AWS-enabled go-to-market motions
Non-endpoint bookings as a material portion of quarterly bookings extending TAM
Global expansion through international markets and partner ecosystems (MSSP, AWS, Lenovo)
Threats
Macro uncertainties affecting deal velocity and timing
Intense competitive landscape from established security vendors and rising new entrants
Integration risks and potential margin headwinds from acquisitions
Security spending cycles can be event-driven and lumpy