EPS of $-0.25 decreased by 4.2% from previous year
Gross margin of 74.7%
Net income of -78.36M
"'In Q3, total ARR grew 29% and revenue grew 28% year-over-year. Net new ARR of $54 million increased over 20% sequentially, well above our historical third quarter seasonality.'" - Tomer Weingarten
SentinelOne Inc (S) QQ3 2025 Results Analysis: AI-Driven Platform Momentum Drives ARR Growth and Margin Stabilization Amid a Challenging Macro
Executive Summary
SentinelOne delivered robust top-line growth in QQ3 2025, underscored by a resilient ARR expansion and the rapid adoption of next-generation platform solutions. Revenue rose 28% YoY to $210.6 million, while total ARR reached $860 million, up 29% YoY, with net new ARR of $54 million (up 22% sequentially; up 4% YoY). The company achieved an 80% gross margin, and while GAAP operating margin remained negative at -5% (Driven in part by a few million dollars of one-time legal costs), management noted that ex one-time items the margin would be approximately -3%, in line with prior guidance. For the first time in trailing history, SentinelOne reported positive free cash flow on a trailing 12-month basis and maintained a strong liquidity position with over $1 billion in cash, cash equivalents and investments and no debt. Management raised full-year revenue guidance to approximately $818 million (+32% YoY) and provided Q4 revenue guidance of about $222 million (+27% YoY). Management emphasized expanding platform adoption (Purple AI, AI-SIEM), growing ARR per customer, and larger platform deals as the core drivers of sustainable growth, even as macro headwinds persist. The QQ3 performance reflects a combination of ongoing enterprise displacement from legacy incumbents, stronger demand for AI-powered autonomous security, and strategic partnerships (e.g., Lenovo, AWS, FedRAMP) that broaden market reach. This analysis synthesizes the financials with management commentary, assesses strategic positioning, benchmarks against peers, and provides an investment outlook with key risk factors.â ,
Key Performance Indicators
Revenue
210.65M
QoQ: 5.89% | YoY:28.31%
Gross Profit
157.39M
74.72% margin
QoQ: 6.17% | YoY:30.72%
Operating Income
-89.12M
QoQ: -12.27% | YoY:-9.39%
Net Income
-78.36M
QoQ: -13.27% | YoY:-11.46%
EPS
-0.25
QoQ: -13.64% | YoY:-4.17%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $210.65 million, up 28% YoY; QoQ not disclosed in quarter-by-quarter detail.
ARR: $860 million, up 29% YoY; net new ARR $54 million, up 22% sequentially and +4% YoY.
Gross margin: 80% (strong unit economics for the Singularity platform).
Operating income: GAAP operating loss of $89.12 million; EBITDA: -$66.09 million; both reflecting ongoing investments and onetime costs. Excluding the onetime legal settlement/fees, Q3 operating margin would be approximately -3%.
Net income: GAAP net income of -$78.36 million; EPS -$0.25. Management highlighted a returning path to profitability on a trailing non-GAAP basis and noted positive net income in prior quarter(s).
Financial Highlights
- Revenue: $210.65 million, up 28% YoY; QoQ not disclosed in quarter-by-quarter detail.
- ARR: $860 million, up 29% YoY; net new ARR $54 million, up 22% sequentially and +4% YoY.
- Gross margin: 80% (strong unit economics for the Singularity platform).
- Operating income: GAAP operating loss of $89.12 million; EBITDA: -$66.09 million; both reflecting ongoing investments and onetime costs. Excluding the onetime legal settlement/fees, Q3 operating margin would be approximately -3%.
- Net income: GAAP net income of -$78.36 million; EPS -$0.25. Management highlighted a returning path to profitability on a trailing non-GAAP basis and noted positive net income in prior quarter(s).
- Free cash flow (FCF): Positive on a trailing-12-month basis for the first time, with FCF guidance to be positive for FY25.
- Cash & investments: >$1 billion with no debt; cash end of period $304.98 million; total cash and short-term investments ~$660.26 million.
- Customer concentration: Record number of customers with ARR >= $100k; ARR per customer at a record high, driven by larger platform deals and cross-sell.
- Guidance: FY25 revenue guidance raised to ~$818 million (+32% YoY); Q4 revenue guidance ~$222 million (+27% YoY); FY25 gross margin ~79%; FY25 operating margin ~-4% (Q4 ~-3%).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
210.65M
28.31%
5.89%
Gross Profit
157.39M
30.72%
6.17%
Operating Income
-89.12M
-9.39%
-12.27%
Net Income
-78.36M
-11.46%
-13.27%
EPS
-0.25
-4.17%
-13.64%
Key Financial Ratios
currentRatio
1.63
grossProfitMargin
74.7%
operatingProfitMargin
-42.3%
netProfitMargin
-37.2%
returnOnAssets
-3.31%
returnOnEquity
-4.78%
debtEquityRatio
0.01
operatingCashFlowPerShare
$-0.02
freeCashFlowPerShare
$-0.04
priceToBookRatio
4.99
priceEarningsRatio
-26.08
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Strategy & AI-forward product roadmap: Management emphasized Singularity as a unified AI-powered platform (endpoint, cloud identity, data lake) and highlighted Purple AI as a fast-growing solution driving higher ARR per customer. Also introduced AI-SIEM as a real-time autonomous cybersecurity platform and CNAPP-related capabilities to MSSPs. Tomer Weingarten described Singularity as a foundational pillar for the future of cybersecurity with real-time autonomous outcomes. Quote: 'Singularity is a comprehensive cybersecurity platform... real-time autonomous security that adapts to the modern threat landscape while simplifying operations.' (Tomor Weingarten)
- Upmarket momentum and large deals: Management cited a record number of $100k+ ARR customers and multi-year, multi-million-dollar platform deals, including entries with Fortune 50 and large technology/government customers. Tomer noted acceleration in enterprise displacement and increased engagement with the Fortune 500. Quote: 'In Q3, we added a record number of $100,000 plus ARR customers, which grew 24% YoY... record wins against our closest competitor.' (Tomer Weingarten)
- Partnerships & ecosystem expansion: Lenovo multiyear OEM bundling initiative, FedRAMP High certification for endpoint security and AI-SIEM, expanded AWS integration (Purple AI on Bedrock), and MSSP enhancements (CNAPP assets, data lake, Purple AI). Quote: 'Partnering with OEMs like Lenovo can drastically increase the reach and scale of Singularity.' (Tomer Weingarten)
- Financial performance & margins: Gross margin remained best-in-class at 80%; operating margin improved by 6pp YoY but remained negative; CFO Barbara Larson quantified onetime legal settlement costs impacting the quarter and suggested ex-onetime margins around -3%. Quote: 'In Q3, our operating margin was negative 5%, reflecting a six percentage point improvement... Excluding these onetime expenses, our operating margin would have been approximately negative 3%.' (Barbara Larson)
- Outlook & macro considerations: Management acknowledged a challenging macro environment but stressed robust pipeline, stronger data, cloud, and AI solution momentum, and continued progress toward profitability with a longer-term target of 20% operating margin. They also highlighted ongoing positive ARR reacceleration into the second half of FY25. Quote: 'We now expect full year revenue of approximately $818 million... 32% growth' and 'the road is open' for long-term platform expansion. (Tomer Weingarten)
'In Q3, total ARR grew 29% and revenue grew 28% year-over-year. Net new ARR of $54 million increased over 20% sequentially, well above our historical third quarter seasonality.'
â Tomer Weingarten
'Purple AI was a must have... attach rate across all eligible endpoints doubled versus Q2. Purple is one of the fastest-growing solutions in SentinelOne's history and will continue to drive meaningful growth into the future.'
â Tomer Weingarten
Forward Guidance
- Near-term: Q4 FY25 revenue around $222 million, up 27% YoY; gross margin ~79% for Q4 and FY25; operating margin around -3% in Q4, improving about 6 percentage points YoY; ongoing investment to expand market presence with a focus on data, cloud, and AI solutions.
- Full-year FY25: Revenue guidance raised to ~$818 million, representing 32% growth YoY; gross margin ~79%; operating margin ~-4% with progress toward profitability and a long-term target of achieving 20% operating margin.
- Structural drivers: Continued adoption of Purple AI and AI-SIEM, expansion of CNAPP capabilities for MSSPs, and OEM partnerships (e.g., Lenovo) to broaden market reach. AWS Bedrock integration augments cloud data capabilities and accelerates cloud security adoption.
- Outlook assessment: The pipeline is described as record-high with improved win rates and continued large-deal activity. The primary risks to achieving FY25 targets include a sustained macro slowdown, pricing pressure from peers, and potential delays in large enterprise sales cycles. Monitoring metrics should include: net new ARR growth trajectory in H2 FY25, ARR per customer, platform attach rate (Purple AI, AI-SIEM), customer churn/expansion within MSSP channels, and progress/impact of Lenovo and AWS initiatives.
- Investment thesis: The combination of a scaled, AI-powered security platform with expanding channels and OEM partnerships positions SentinelOne to deliver durable growth and margin improvement over time, albeit with near-term profitability headwinds due to aggressive investment and a softer macro backdrop.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
S Focus
74.72%
-42.30%
-4.78%
-26.08%
ZS
78.50%
-0.80%
1.75%
339.77%
NET
77.70%
-7.16%
-1.58%
-451.59%
CRWD
74.70%
-5.52%
-0.55%
-1,083.29%
PATH
82.00%
-12.20%
-0.62%
-163.26%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
SentinelOne's QQ3 2025 results highlight a transitional phase where the company leverages a differentiated AI-driven platform to accelerate ARR growth and move toward sustained profitability. The acceleration in net new ARR, a record number of $100k+ ARR customers, a doubling of Purple AI attach rates, and the expansion of cloud/data/AI solutions position SentinelOne favorably against incumbents. The raised FY25 revenue guidance to ~$818 million and the path to positive trailing free cash flow support a constructive long-term thesis, albeit with near-term profitability headwinds due to investments and a challenging macro backdrop. Key factors to monitor include progress on Lenovo OEM contributions, AWS Bedrock integration impact, MSSP CNAPP adoption, gross margin trajectory, and the velocity of large enterprise deals. Given the solid balance sheet, expanding platform reach, and improving operating leverage, the stock could benefit from continued execution on product-led growth and channel expansion, with downside risk mainly tied to macro conditions and competitive dynamics.
Key Investment Factors
Growth Potential
The enterprise displacement trend and large deal velocity, coupled with ongoing platform expansion (Purple AI, AI-SIEM, CNAPP for MSSPs) and OEM partnerships (Lenovo), provide a meaningful runway for ARR growth above initial expectations. The company is nearing $1B in ARR and has multiple high-growth levers (cloud/data AI, MSSP offerings) that could sustain double-digit ARR growth and improving net retention as cross-sell opportunities mature.
Profitability Risk
Key risks include a prolonged macroeconomic downturn affecting enterprise IT budgets; potential pricing pressure in a highly competitive cybersecurity market; longer sales cycles for large enterprises; execution risk in expanding MSSP channels and OEM co-sell programs; dependence on AI-centric adoption which could be delayed by customer governance or security concerns; regulatory/compliance developments that could impact cloud and data strategies.
Financial Position
Strong liquidity with >$1B in cash and investments and no debt; net cash position; solid gross margins (~80%) and a path toward profitability with FY25 guidance of negative but narrowing operating losses; positive FCF on a trailing 12-month basis indicating improved cash generation capability despite ongoing investments.
SWOT Analysis
Strengths
Best-in-class gross margins (~80%) and a scalable cloud-native AI-enabled security platform (Singularity) across endpoints, cloud, identity, and data lake.
Rapid adoption of Purple AI with a doubling of attach rate in Q3 and a growing AI-enabled cloud/data/security ecosystem (AI-SIEM, CNAPP, AI-SPM).
Strong balance sheet with >$1B cash/investments and no debt; positive trailing FCF trajectory; improving operating margins offset by strategic investments.
Large enterprise traction with a record number of $100k+ ARR customers and multiyear, multidepartment platform deals.
Strategic partnerships and OEM/Channel expansion (Lenovo, AWS Bedrock, FedRAMP High) expanding market reach and security footprint.
Weaknesses
GAAP profitability remains negative in the near term; quarterly GAAP net income negative due to onetime costs and ongoing investments.
Sales cycles for large enterprise deals can be lengthy; near-term emphasis on new logo acquisition over cross-sell/upsell may slow some monetization within existing base.
Valuation multiple remains high given growth expectations; sensitivity to macro headwinds could impact deployment of new capabilities.
Opportunities
Expansion of CNAPP and AI-SIEM for MSSPs expanding addressable market; growth in cloud workload protection and CNAPP across providers (AWS, Bedrock integration).
Lenovo OEM bundling could materially lift incremental ARR in late 2024/2025 and beyond; FedRAMP High opens federal sector opportunities.
AI-driven security capabilities (Purple AI, auto triage, threat hunting) improving analyst productivity and security outcomes, potentially driving higher pricing power and ARR per customer.
Threats
Intense competition from CRWD, PANW, OKTA and peers, with potential price competition or discounts in a crowded market.
Macro volatility could delay enterprise IT decisions and capex; budget tightening could impact new ARR generation and cross-sell opportunities.
Regulatory/privacy concerns and data sovereignty requirements could complicate data lake/AI deployments across regions.