EPS of $-0.22 increased by 8.3% from previous year
Gross margin of 74.7%
Net income of -70.79M
"Fiscal year '25 was a transformative year for SentinelOne, ending with a strong Q4 that exceeded our expectations across all guided metrics." - Tomer Weingarten
SentinelOne Inc (S) QQ4 2025 Earnings Analysis: AI-Native Singularity Platform Extends Lead in Enterprise Cybersecurity
Executive Summary
SentinelOne delivered a strong finish to FY25 with notable top-line momentum and a strategic pivot toward a comprehensive AI-native cybersecurity platform. For the quarter, revenue reached $226 million, up 29% year over year, with full-year revenue of $821 million (+32% YoY). ARR finished the year at $920 million, and net new ARR in Q4 totaled $60 million, lifting ARR growth to 27% for the year. Management emphasized accelerating platform adoption (data, cloud, AI) and expanding non-endpoint bookings, now representing over 50% of FY25 bookings and 40% of enterprise customers using three or more platform solutions. In non-GAAP terms, SentinelOne achieved positive operating income and positive net income margin (2%) and positive free cash flow margin (1%) for the full year, underscoring a material margin expansion driven by scale and disciplined investments. The company projects FY26 revenue of $1.07–$1.12 billion and approximately $200 million in net new ARR (about mid- to high-single-digit growth ex-deception churn). Operating margins are guided to 3–4% with gross margins in the 78.5–79.5% range, and the company aims to generate meaningful free cash flow improvements as it continues to invest in AI-native data and cloud capabilities. The outlook reflects both strong workflow and GTM execution, and risks include macro volatility, the impact of ending older deception offerings, and integration/timing of Lenovo-related contributions. Investment thesis remains favorable for investors who expect accelerating AI-driven platform adoption, meaningful non-endpoint growth, and a path to profitability at scale, supported by a robust balance sheet and a diversified customer base.
Key Performance Indicators
Revenue
225.52M
QoQ: 7.06% | YoY:29.48%
Gross Profit
168.51M
74.72% margin
QoQ: 7.07% | YoY:36.17%
Operating Income
-80.26M
QoQ: 9.94% | YoY:1.18%
Net Income
-70.79M
QoQ: 9.67% | YoY:1.66%
EPS
-0.22
QoQ: 12.00% | YoY:8.33%
Revenue Trend
Margin Analysis
Key Insights
Q4 revenue: $226.0m, up 29% YoY; FY25 revenue: $821m, up 32% YoY.
Q4 gross margin: 74.7% (gross profit: $168.5m); FY25 gross margin described as a full-year high by management (non-GAAP margin improvement not disclosed in GAAP table).
Operating performance and profitability (GAAP vs non-GAAP): GAAP Q4 operating income: -$80.3m; GAAP net income: -$70.8m. Management highlighted non-GAAP profitability milestones: positive net income margin of 2% and positive free cash flow margin of 1% for FY25. Note: GAAP figures show a loss, while non-GAAP measures were positive on management commentary.
FY25 net new ARR: +$60m in Q4; total ARR: $920m, +27% YoY. Net new ARR re-accelerated in H2 2025, +2% YoY in H2 vs H1, per management.
14,000+ direct customers at year-end; >1,411 customers with ARR ≥ $100k, up 25% YoY in Q4; 40% of FY25 bookings from non-endpoint solutions; 50%+ of bookings from non-endpoint solutions in FY25, indicating platform mix acceleration.
Financial Highlights
Revenue and gross margin
- Q4 revenue: $226.0m, up 29% YoY; FY25 revenue: $821m, up 32% YoY.
- Q4 gross margin: 74.7% (gross profit: $168.5m); FY25 gross margin described as a full-year high by management (non-GAAP margin improvement not disclosed in GAAP table).
- Operating performance and profitability (GAAP vs non-GAAP): GAAP Q4 operating income: -$80.3m; GAAP net income: -$70.8m. Management highlighted non-GAAP profitability milestones: positive net income margin of 2% and positive free cash flow margin of 1% for FY25. Note: GAAP figures show a loss, while non-GAAP measures were positive on management commentary.
Growth and mix
- FY25 net new ARR: +$60m in Q4; total ARR: $920m, +27% YoY. Net new ARR re-accelerated in H2 2025, +2% YoY in H2 vs H1, per management.
- 14,000+ direct customers at year-end; >1,411 customers with ARR ≥ $100k, up 25% YoY in Q4; 40% of FY25 bookings from non-endpoint solutions; 50%+ of bookings from non-endpoint solutions in FY25, indicating platform mix acceleration.
- RPO: $1.2b, +30% YoY, a new record; customer expansion and upmarket movements evident via larger deals and higher ARR per customer.
Liquidity and cash flow
- Net cash provided by operating activities: -$3.4m (GAAP); free cash flow for FY25: -$8.9m (GAAP). Management asserts non-GAAP free cash flow margin improved and expects higher free cash flow margin in FY26; cash position remains robust with excess liquidity (cash and equivalents ~$186.6m and total cash + investments ~$721.9m).
- Ending cash position: $193.3m; cash runway supported by >$1.1b in cash and equivalents implied by management commentary (through non-GAAP adjustments).
Efficiency and profitability trajectory
- FY25 gross margin described as a full-year high; FY26 gross margin guide 78.5–79.5%; Q1 gross margin guide ~79%; Operating margin guide for FY26: 3–4% (vs Q4 FY25 negative margin) with improving profitability and free cash flow margins outpacing operating margin growth.
- Management Commentary: 1) AI-native platform expansion; 2) platform-based cross-sell and upsell; 3) discipline in cost structure; 4) investments focused on data, cloud, AI to drive margin expansion over time.
Thematic takeaways
- Non-endpoint growth and AI-first strategy are core to the revenue trajectory; SentinelOne emphasizes “data, cloud and AI” as key growth engines and positioned the Purple AI and AI SIEM stack as growth accelerants.
- The deception end-of-life decision is a near-term headwind to ARR churn and Q1 guidance, but management frames it as a strategic realignment toward higher-margin, AI-native capabilities.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
225.52M
29.48%
7.06%
Gross Profit
168.51M
36.17%
7.07%
Operating Income
-80.26M
1.18%
9.94%
Net Income
-70.79M
1.66%
9.67%
EPS
-0.22
8.33%
12.00%
Key Financial Ratios
currentRatio
1.74
grossProfitMargin
74.7%
operatingProfitMargin
-35.6%
netProfitMargin
-31.4%
returnOnAssets
-2.94%
returnOnEquity
-4.24%
operatingCashFlowPerShare
$-0.01
freeCashFlowPerShare
$-0.03
priceToBookRatio
4.61
priceEarningsRatio
-27.19
Net Income vs. Revenue
Expense Breakdown
Management Commentary
The earnings call underscored three core themes driving SentinelOne’s ongoing growth:
- Strategy and AI leadership: Management emphasized embedding foundational generative AI capabilities across the Singularity platform, focusing on AI-native data and security, and expanding cross-sell opportunities through Purple AI and AI SIEM. Tomer Weingarten stated, “Fiscal year '25 was a transformative year... strong Q4 that exceeded our expectations across all guided metrics,” and highlighted the AI-first platform evolution and MITRE performance advantages.
- Platform momentum and go-to-market evolution: The company highlighted that over 50% of bookings came from non-endpoint solutions in FY25, and that 40% of enterprise customers adopted three or more platform solutions, with ~20% adopting four or more. Barbara Larson noted gross margin expansion and that the company delivered “record profit margins in Q4,” with positive operating income on a non-GAAP basis in FY25 and a path to positive operating margins in FY26.
- Customer, partner, and market momentum: The call highlighted large platform wins (e.g., AI SIEM replacing legacy SIEM, CNAPP deals, cloud security expansion) and a robust MSSP ecosystem, with more than a dozen large partners adopting AI SIEM, Purple AI and CNAPP in Q4. The company also cited a significant marquee win (Fortune 100 airline) and continued government/federal demand, while acknowledging macro uncertainty and the delayed ramp from Lenovo collaboration.
Fiscal year '25 was a transformative year for SentinelOne, ending with a strong Q4 that exceeded our expectations across all guided metrics.
— Tomer Weingarten
Revenue grew 32% to $821 million, while gross margin reached a new full year high and operating margin improved by 16 percentage points year-over-year. In addition, we crossed two important profitability milestones this year, delivering a positive net income margin of 2% and a positive free cash flow margin of 1% for the full year.
— Barbara Larson
Forward Guidance
Management guidance for FY26 implies a durable growth trajectory built on AI-native platform expansion and higher mix of non-endpoint solutions. Key targets include:
- Revenue: $1.07–$1.12 billion, representing ~23% growth.
- Net new ARR: approximately $200 million, up about mid-to-high single digits excluding the $10 million upfront churn from deprecation of deception in FY26; excluding deception churn, net new ARR is expected to be up mid-to-high single digits year-over-year.
- Gross margin: 78.5%–79.5% for FY26; Q1 gross margin around 79%.
- Operating margin: 3%–4% for FY26, an improvement of about 300–400 basis points at the midpoint versus FY25; free cash flow margin to be higher than operating margin, with continued emphasis on profitability and cash generation.
- Near-term headwinds: Deception end-of-life churn estimated up to $10 million in FY26 (roughly half in Q1). Lenovo contributions are expected to weigh more meaningfully into later fiscal years as hardware shipments ramp and channel programs mature.
- Strategic pivots: Continued investment in data, cloud, and AI; optimization of facilities and resources to sustain margin expansion, and deeper engagement with MSSPs and managed services partners to improve visibility and predictability of growth.
- Monitoring should focus on: contribution from Lenovo and large enterprise deployments, progression of AI-driven platform modules (AI SIEM, Purple AI, CNAPP), ARR retention and expansion by cohort, and the trajectory of non-GAAP profitability versus GAAP results.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
S Focus
74.72%
-35.60%
-4.24%
-27.19%
ZS
78.00%
-4.55%
-1.17%
-450.80%
NET
76.40%
-7.55%
-1.23%
-720.78%
CRWD
74.10%
-8.06%
-2.81%
-266.29%
PATH
84.80%
7.93%
2.81%
37.82%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
SentinelOne is transitioning from an endpoint-centric model to a broad, AI-native cybersecurity platform. The company demonstrates solid top-line growth, strong ARR expansion, and a pathway to profitability in FY26 through scale, efficiency, and higher-margin mix. Key catalysts include continued AI-driven platform adoption (notably AI SIEM and Purple AI), larger cross-sell opportunities across data, cloud, and CNAPP, and deeper MSSP collaboration. The Lenovo relationship represents a potential upside, albeit with a longer runway. However, investors should monitor the near-term deception churn headwind, macro-driven deal timing risk, and the sustainability of non-GAAP profitability after the deception wind-down. Relative to peers, SentinelOne trades at a lower price-to-sales multiple than CRWD and PANW but remains highly valued given rapid AI-led product expansion and a multi-product platform strategy. Overall, the investment thesis favors those priced for continued growth and margin improvement, with downside risk largely tied to execution, churn, and macro conditions.
Key Investment Factors
Growth Potential
Large addressable market for AI-native cybersecurity (est. ~$100B opportunity for platform-enabled security). SentinelOne’s multi-module Singularity platform (endpoint, data, cloud, CNAPP, AI security, and threat services) positions it well to capture multi-year, upmarket deals with cross-sell potential, evidenced by >50% of bookings from non-endpoint solutions and ~40% of customers adopting three or more platform solutions.
Profitability Risk
Near-term churn from the retirement of the deception solution (~$10m in FY26); macroeconomic volatility affecting deal timing and budgets; execution risk around Lenovo ramp and channel-driven growth; competition from CRWD, ZS, PANW, OKTA; reliance on large/enterprise migrations and multi-year contracting; non-GAAP profitability depends on achieving scale and mix mix improvements.
Financial Position
Healthy liquidity with substantial cash and investments (cash/equivalents >$186m; total cash and investments >$720m). The company is transitioning to higher-margin, AI-native offerings with a focus on operating efficiency and free cash flow generation; guidance indicates margin expansion and improving profitability in FY26, alongside ongoing investment in AI data and cloud capabilities.
SWOT Analysis
Strengths
AI-native Singularity platform with integrated data, endpoint, cloud, identity, and third-party solutions.
Strong MITRE ATT&CK performance (100% detection with zero detection delays and 88% fewer alerts).
RPO growth to $1.2B and ARR of $920M; net retention 110%; 14k+ direct customers; high cross-sell across platform modules.
Robust ecosystem with MSSPs and partners; Purple AI and AI SIEM driving large, multi-year deals.
Market leadership in CNAPP, AI, and cloud security, with awards and third-party validations (Gartner Peer Insights CNAPP; CRN Product of the Year).
Weaknesses
GAAP profitability remained negative in FY25 (operating and net income losses), despite non-GAAP profitability milestones cited by management.
Near-term churn headwind from deprecation of deception technology (~$10m in FY26).
High valuation multiples relative to peers may heighten sensitivity to execution or macro shocks.
Opportunities
Large total addressable market (~$100B) and accelerating adoption of AI-native security across data, cloud, and CNAPP.
Lenovo partnership could unlock meaningful incremental ARR in later years; ramp considerations already baked into guidance.
Growing MSSP and managed security services demand for end-to-end platform coverage and integrated AI workflows.
Threats
Macro uncertainty affecting customer budgets and deal timing.
Intense competitive landscape from CrowdStrike, Palo Alto Networks, Zscaler, Okta, and others.
Dependence on large enterprise migrations and successful cross-sell execution to sustain growth.