SentinelOne Reports Mixed Performance Amidst Industry Challenges
SentinelOne’s shares have experienced an 11.7% decline over the past year. This performance lags behind both the Zacks Computers IT Services industry, which saw a slight rise of 11.8%, and the broader Zacks Computer & Technology sector’s impressive 25.8% increase.
Annual Revenue Growth Highlights Resilience
Despite facing tough economic conditions, SentinelOne reported a 29% year-over-year growth in Annualized Recurring Revenue (ARR), totaling $859.7 million in the third quarter of fiscal 2024. Notably, the number of customers contributing an ARR of $100,000 or more grew by 24%, reaching 1,310 by October 31, 2024. This growth reflects increased adoption of SentinelOne’s platform, particularly among larger businesses.
In response to this positive trend, the company has raised its fiscal 2025 revenue growth forecast. SentinelOne now anticipates revenues of $818 million, which indicates a 32% year-over-year growth, slightly higher than the previous outlook of 31%. For the fourth quarter of fiscal 2025, the expected revenue is projected to be $222 million.
SentinelOne Stock Performance
Image Source: Zacks Investment Research
Innovative Solutions Drive Future Growth
Looking ahead, SentinelOne’s long-term prospects remain strong, thanks to its innovative product offerings. The Singularity platform integrates data and AI-powered security across various domains, including endpoint cloud identity and third-party integrations—all within a single user interface.
The company’s solutions—including Singularity Endpoint, Singularity Cloud Security, Singularity Data, and Purple AI—target a market exceeding $100 billion. The current total Addressable Market for Endpoint Security, Data Analytics, Cloud Security, and Generative AI Security is valued at $17 billion, $31 billion, $12 billion, and $3 billion, respectively, providing substantial growth potential for SentinelOne.
An exciting aspect of the Singularity platform is its incorporation of Purple AI, an advanced Generative AI security analyst. This tool enhances threat detection capabilities, speeds up investigations, and lowers response times while offering comprehensive security for enterprises. Notably, Purple AI is now the fastest-growing solution in SentinelOne’s lineup.
Recently, SentinelOne’s innovations have gained recognition, achieving a 100% detection rate without delays in the 2024 MITRE ATT&CK Evaluations: Enterprise. Out of 80 simulated attacks, the Singularity platform successfully detected all incidents across various stages. Additionally, the Gartner’s 2024 Magic Quadrant for Endpoint Protection Platforms lists SentinelOne among the Leaders Quadrant alongside CrowdStrike (CRWD) and Microsoft (MSFT).
Strength in Partnerships and Financial Position
Strong partnerships play a critical role in SentinelOne’s success. Collaborations with major players like Alphabet, Lenovo, Amazon (AMZN), and ServiceNow have increased customer acquisition efforts. Notably, the Singularity Cloud Workload Security for Serverless Containers is designed to provide AI-powered protection for workloads on Amazon Web Services Fargate while enhancing integration capabilities with platforms like Amazon Bedrock.
In the third quarter of fiscal 2025, SentinelOne advanced its partnership with Lenovo by pre-installing the Singularity platform and Purple AI on enterprise PC shipments, significantly broadening its market outreach. Their new application integrates seamlessly with ServiceNow Incident Response, facilitating improved security operations.
As of October 31, 2024, SentinelOne holds a strong liquidity position with $1.1 billion in cash and no debts, providing it with financial stability for continued growth.
Consistent Earnings Estimates
The Zacks Consensus Estimate for SentinelOne’s fiscal 2025 earnings sits at 2 cents per share, unchanged over the last two months, indicating a robust growth of 107.14% year-over-year. For revenues, the consensus estimate is pegged at $817.96 million, marking a considerable year-over-year increase of 31.68%.
The consensus for the fourth quarter of fiscal 2025 earnings also stands at 1 cent per share, projecting a strong 150% growth compared to the previous year.
SentinelOne, Inc. Price and Consensus
SentinelOne, Inc. price-consensus-chart | SentinelOne, Inc. Quote
Additionally, the consensus revenue estimate for the upcoming quarter stands at $222.01 million, indicating a year-over-year growth of 27.46%.
Investment Outlook: What Should You Consider?
While SentinelOne’s robust product offerings and strategic partnerships are encouraging, it currently carries a Value Score of F, suggesting that its valuation may be stretched. The stock trades at a forward 12-month P/S ratio of 7.65X, compared to the broader sector’s 6.97X.
Price/Sales (F12M)
Image Source: Zacks Investment Research
Currently, SentinelOne holds a Zacks Rank #3 (Hold), indicating that it might be prudent for investors to wait for a more favorable opportunity to accumulate the stock.
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SentinelOne, Inc. (S)
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
