# SentinelOne Reports Strong Q4 2025 Results and Future Growth Plans

# SentinelOne’s Advancements in AI Cybersecurity Set New Industry Standards

## Growing Threat Landscape

As we approach 2024, cybersecurity breaches have escalated in severity and frequency. A vast amount of sensitive information—ranging from personal and financial data to healthcare records—has been compromised. In today’s digital world, these security breaches challenge the very foundations of our connected lives. The advent of artificial intelligence (AI) has transformed from a theoretical concept to a potent weapon in the hands of cybercriminals, intensifying the risks faced by businesses and individuals alike.

## Need for Modernized Security Solutions

The scale and speed of cyberattacks have progressed, prompting a critical need to redefine the security landscape. Organizations can no longer depend on outdated strategies that have dominated the last two decades; those methods have proven ineffectual against new threats. It is essential to adopt a contemporary approach to cybersecurity that can adapt to evolving challenges.

## Innovating with AI at the Core

SentinelOne stands at the forefront of this transformation, integrating AI-native autonomous security solutions into its offerings. The Singularity platform underpins its strategy with three core pillars: enterprise-wide security, unified data, and AI as foundational elements. Notably, SentinelOne has become the first company to incorporate generative AI capabilities into all aspects of its security solutions—covering endpoints, cloud environments, data security, and more. Maintaining a decade-long commitment to innovation, SentinelOne is pioneering generative and agentic AI applications, enabling more effective human empowerment and defense automation.

## Distinctive Features of Singularity

The Singularity platform distinguishes itself with unified defenses, offering an open AI security framework that integrates crucial elements such as data, endpoint, cloud, identity protection, and third-party solutions. This comprehensive approach delivers expansive coverage against diverse threat vectors. Autonomous security solutions, combined with an industry-leading signal-to-noise ratio, offer real-time protection and actionable insights to stay ahead of emerging threats.

Key findings from the latest MITRE ATT&CK evaluations illustrate its efficacy. For the fifth consecutive year, Singularity scored 100% in detection, outperforming competitors not only in effectiveness but also with significantly fewer alerts. Competing solutions generated vast numbers of alerts, requiring up to 9,000 times more than Singularity, which experienced zero detection delays.

## Comprehensive Solution Set

SentinelOne’s offerings span seven critical categories, including AI and automation, endpoint protection, cloud security, and threat services, addressing more than 30 specific use cases. The company’s cloud security solutions, among the most extensive in the industry, cover diverse areas from workload protection to cloud data security. Enhanced by the unified Singularity data lake, the platform efficiently leverages AI and hyperautomation, driving increased adoption rates. In the past two years, SentinelOne has tripled its customer base with multiple solution categories, underscoring the platform’s resonance in the market.

## Market Momentum and Future Growth

The enterprise landscape indicates robust growth potential, particularly within the expansive $100 billion cybersecurity market. In the fourth quarter, SentinelOne recorded record bookings, revealing a strong upward trajectory in demand for its data, cloud, and AI security solutions. The noteworthy rise in the popularity of the AI-based security information and event management (SIEM) reflects this trend, enhancing security data management through improved visibility and quicker incident response times.

Several substantial wins highlight this momentum, including a significant customer switch from Splunk to the AI SIEM, increasing their security coverage substantially while lowering costs. These case studies illustrate the growing trend of enterprises migrating from traditional SIEM solutions to modernized infrastructures.

## Building Long-Term Relationships

SentinelOne continues to foster relationships with key customers, adapting to their specific security and data needs. Recent engagements include a notable partnership with one of the world’s largest airlines, demonstrating SentinelOne’s capability to replace incumbent vendors with its innovative solutions. The results illustrate not just competitive strength but also the importance of thoughtful engagement in making large-scale security decisions.

As market interest and customer engagement remain strong, it is clear that SentinelOne is well-positioned to capitalize on new opportunities in the evolving cybersecurity landscape.

SentinelOne Reports Strong Growth and Innovations in Cybersecurity

As we engage with our partners, we’re witnessing a growing interest from managed security service providers (MSSPs), incident response teams, and insurance organizations seeking our comprehensive platform solutions. In the fourth quarter of this fiscal year, over a dozen significant partners began adopting our advanced offerings, including AI SIEM, Purple AI, and Cloud-Native Application Protection Platform (CNAPP).

Partnerships and Growth Opportunities

MSSPs have emerged as a vital driver of growth for SentinelOne. They are intensifying their collaboration with us by embracing more aspects of our platform and securing long-term contracts. This strategy provides enhanced visibility and predictability for future growth opportunities. Our enduring partnerships with managed service providers focus on collaboration, leveraging multi-tenancy, automated response tools, and rollback capabilities, all of which enrich their services.

With the integration of AI SIEM, Purple AI, and CNAPP, we are elevating that collaboration further. This advancement enables MSSPs to consolidate security coverage into a single console that benefits from our leading AI technologies, which excel in data ingestion and analytics. Furthermore, our commitment to innovations is evident as we expand discussions on our expanded suite of solutions, particularly Purple AI.

Innovating with Purple AI

We believe that every customer should harness the foundational capabilities of generative AIs for security applications. After a year of adoption and usage, it’s clear that Purple AI can effectively scale and automate tasks that typically consume valuable human resources. We are proud to be the first security company to natively offer essential generative AI features like natural language querying and auto-generated summaries across our platform.

This marks the beginning of transforming categories like Endpoint Detection and Response (EDR), cloud security, and SIEM into AI-driven solutions, instantly making advanced capabilities accessible to thousands of enterprises. The incorporation of Purple AI technologies throughout the Singularity platform establishes a baseline for AI utilization, enhancing engagement and encouraging the adoption of additional platform services. More sophisticated agentic AI functionalities are available in Purple, designed to improve operational speed and efficiency.

Broadening Purple AI’s Reach

We are also enhancing Purple AI’s capabilities by ensuring it supports a wider array of security data. This includes third-party tools like Zscaler, Okta, Palo Alto Networks, and Microsoft, among others. By dismantling data silos, we empower customers to leverage the full potential of Purple AI throughout their security infrastructure. Our commitment remains towards creating an open platform that can seamlessly integrate and orchestrate a diverse ecosystem of security solutions.

Cloud Security Gains Momentum

Purple AI stands out as the only scaled agentic AI for the cybersecurity sector, with hyperautomation forming the foundation for future autonomous security. Our cloud security offerings are gaining traction as more enterprises adopt our CNAPP capabilities. In Q4, we celebrated our largest CNAPP deal since acquiring PingSafe, where a distinguished software company integrated several platform solutions—including workload security—after a thorough evaluation process. Singularity’s selection was based on its superior performance, comprehensive capabilities, and cost-effectiveness compared to standalone solutions.

Validation of Customer Satisfaction

The success of our cloud security platform is further reinforced by customer feedback and third-party recognition. In the most recent quarter, SentinelOne earned the 2024 Gartner Peer Insights Customer Choice award for CNAPP, achieving a remarkable 98% recommendation rate from respondents in our Voice of the Customer survey. Additionally, we were honored with the title of best overall cloud and application security offering by CRN’s 2024 Product of the Year awards.

Strategic Outlook for the Future

As we transition into a new fiscal year, it’s essential to examine broader market dynamics and our strategic objectives moving forward. Our technological capabilities and industry footprint have never been stronger. Throughout the year, we have consistently improved customer growth, retention, and platform adoption. Moreover, the increasing interest from partners and customers in our offerings underscores the growing impact of AI on decision-making and technology implementation.

Technology and software landscapes are shifting rapidly, and we are evolving alongside these changes as we strive to lead in the realm of AI-powered cybersecurity. This necessitates aligning our resources and teams with key growth areas and sharpening our focus on AI-driven data and security solutions.

While we innovate, we must remain cognizant of the macroeconomic environment. Ongoing economic and political uncertainties continue to affect budgets and decision-making for many organizations. As we embark on fiscal year ’26, our product, sales, and marketing teams are synchronized to amplify the reach and scale of our platform through new customer acquisitions and expansions. Our emphasis on effective execution and deeper engagement with our partner ecosystem positions us favorably for premium growth and superior margins.

Reflecting on the past year, we have accomplished significant milestones, from demonstrating industry-leading growth and improved margins to introducing groundbreaking innovations, all while ensuring customer security. I commend our dedicated Sentinels for their contributions and commitment, and I greatly appreciate the trust bestowed upon us by our customers and partners.

Congratulations to all Sentinels for their relentless efforts, which help secure businesses globally. We are also grateful to our shareholders for their continued support, reinforcing our mission to remain a force for good.

Now, I would like to turn the call over to Barbara Larson, our chief financial officer.

Barbara Larson — Chief Financial Officer

Thank you, Tomer, and thank you all for joining us today. I’ll now provide an overview of our Q4 and fiscal year ’25 financial performance, along with our guidance for Q1 and fiscal year ’26. Please note that all comparisons are year-over-year, and the financial metrics discussed here are non-GAAP unless stated otherwise. We have continued to demonstrate industry-leading growth and margin expansion in fiscal year ’25.

Our revenue surged 32% to $821 million, with gross margins reaching a record high. Operating margins saw an improvement of 16 percentage points year-over-year. We also celebrated crossing two important profitability milestones this year, achieving a positive net income margin of 2% and a positive free cash flow margin of 1% for the entire year. These profit enhancements are attributed to increased scale, operational efficiencies, and a disciplined investment strategy. We intend to build on these successes and further bolster profit margins in fiscal year ’26.

Looking at our fourth-quarter results, it’s clear that we have a robust competitive positioning and heightened demand for SentinelOne’s premier cybersecurity solutions. We are capturing market share from both established players and next-generation vendors. Our Q4 revenue, which reached $226 million, grew 29% year-over-year and surpassed our expectations.

This strong performance was propelled by substantial new business growth and consistent revenue flow throughout the quarter. International markets contributed significantly, with revenue growth of 36%, making up 37% of our total quarterly revenue. In Q4, we also added net new annual recurring revenue (ARR) of $60 million.

SentinelOne Reports 27% ARR Growth and Positive Operating Margins

Total annual recurring revenue (ARR) climbed 27% to $920 million. We successfully met our goal of boosting net new ARR growth in the second half of the year, achieving 2% growth, which marks a 12 percentage point improvement compared to the first half.

Drivers of Performance Improvement

This uptick in performance stemmed from improved execution, enhanced market position, and strong demand for our platform solutions, particularly in cloud, data, and AI. Our competitive win rates in the fourth quarter were also notably stronger than in previous quarters. As we closed fiscal year ’25, we were protecting over 14,000 direct customers, excluding thousands more served through our strategic partners such as Managed Security Service Providers (MSSPs).

Strengthening MSSP Partnerships

In Q4, we reinforced our leadership role among MSSPs. We’ve deepened relationships and secured long-term growth commitments with major MSSP partners. These collaborations not only enhance our mutual growth but also contributed to a significant rise in remaining performance obligations (RPO), which grew 30% year-over-year, reaching a new high of $1.2 billion.

Customer Growth and Expansion

We observed success with both new and existing customers during the quarter. Specifically, the number of customers generating $100,000 or more in ARR increased by 25% year-over-year to 1,411, marking the largest net customer additions for the year. Additionally, our average deal size and ARR per customer rose, demonstrating solid momentum as we continue to target higher-value markets.

Financial Highlights and Future Guidance

Our expansion rates remain robust, with a dollar-based net retention rate of 110% for the year. Despite the challenging macro environment, enterprises continue to leverage more of the Singularity platform. Notably, we recorded positive operating margins in Q4, exceeding our previous guidance by over 400 basis points, thanks to strict cost management and focused investments.

Looking ahead to Q1 and fiscal year ’26, we anticipate exceeding $1 billion in both ARR and revenue. We expect revenue between $1.07 billion and $1.12 billion, reflecting a 23% growth. Although we typically refrain from discussing ARR projections, we believe context is important this quarter. For fiscal year ’26, we project approximately $200 million in net new ARR, reflecting about 2% year-over-year growth.

Addressing Challenges and Strategies

This positive trajectory builds on our recent quarter acceleration while remaining diligent about market conditions and uncertainties, especially regarding federal spending. We’re concentrating on operational efficiencies, prioritizing investments in data, cloud, and particularly AI. Consequently, we’ve decided to phase out our legacy deception solution.

Our outlook accounts for an expected churn of up to $10 million from the retirement of this product, with almost half affecting Q1. Excluding this impact, we forecast mid to high single-digit percentage growth for full-year net new ARR. For Q1, we expect revenue around $228 million, demonstrating growth of 22% or 24% when adjusting for the leap year benefit from the previous Q1.

Margin Expectations and Cash Flow

We expect our Q1 gross margin to remain at around 79%, with full-year gross margin projected between 78.5% and 79.5%. Operating margin for Q1 is estimated at about negative 2%, showing a year-over-year improvement of approximately 400 basis points. For the full year, we foresee an operating margin between positive 3% and 4%, reflecting over 650 basis points improvement at the midpoint relative to fiscal year ’25.

Our full-year free cash flow margin is projected to be several percentage points higher than our operating margin as we strive for improved profitability and cash flow. With over $1.1 billion in cash and cash equivalents, we have significant flexibility to invest and scale our operations. Overall, our momentum, technological leadership, and market position remain strong, as we aim to deliver ongoing leverage and execute our growth strategy. By balancing long-term growth opportunities with strong financial responsibility, we intend to scale SentinelOne into a multi-billion dollar enterprise.

Operational discipline is critical; we are continuously optimizing our resources and facility footprint while directing investments toward AI, data, and cloud. These measures enhance our agility and further contribute to margin expansion.

Our primary goal is to achieve substantial growth while progressively improving our operating and free cash flow margins over time. Thank you all for your attendance today. We will now open the floor for questions. Operator, please proceed.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Adam Tindle with Raymond James. Adam, your line is now open.

Adam Tindle — Analyst

Thank you. I have a multi-part question regarding the recent net new ARR performance. It’s encouraging to see the positive growth in the second half, but in Q4, it seemed relatively stable despite easier comparisons. Can you explain the rationale behind this? Looking to fiscal year ’26, if I adjust for the legacy product’s retirement and note the low single-digit growth target for the year, what gives you confidence in overcoming tougher comparisons as the year progresses?

Tomer Weingarten — Chief Executive Officer

Thank you, Adam. Let me start with an overview of fiscal year ’25: we reported over 30% revenue growth with full profitability. Our win rates remain excellent, the pipeline is expanding, and there is increasing interest from larger enterprises.

SentinelOne’s Growth Strategy Focuses on Strong ARR for FY ’26

SentinelOne sees increased awareness and strong adoption of its platform capabilities as it aims to reaccelerate net new Annual Recurring Revenue (ARR) growth in the second half of the current fiscal year. For FY ’26, the company expects significant growth in adjusted net new ARR, which could reach mid to high single digits once accounting for the planned end-of-sale decision concerning certain legacy products. Company leaders express confidence in both the opportunity and trajectory, despite the challenges posed by adjusting their offerings.

Barbara Larson — Chief Financial Officer

Addressing recent performance, Larson noted that Q4 ’25 showed some churn related to the end-of-life decision that impacted overall net new ARR. Excluding this factor, growth would have been in the mid single digits range.

Operator

Next, we hear from Brian Essex with JPMorgan. Brian, your line is open.

Brian Essex — Analyst

Thank you for taking my question. I’m curious about the role of Lenovo in your ARR contributions. Are we seeing traction in that area? Are they actively selling devices? You previously mentioned a potential increase in the second half of the year.

Tomer Weingarten — Chief Executive Officer

We are collaborating closely with the Lenovo team, and all go-to-market elements are being implemented. We anticipate a back-end loaded impact primarily in the next fiscal year as shipments begin to gain momentum. This multiyear relationship has a ramp-up built into it, with a more substantial impact expected in the coming years rather than this immediate fiscal year.

Brian Essex — Analyst

Great, thank you. I will follow up later.

Operator

Next, we have Gray Powell with BTIG. Your line is now open.

Gray Powell — Analyst

Thanks for having me. Barbara, since you’re new to leading the guidance for SentinelOne this year, are there any significant changes you plan to implement? Also, will you be looking at different KPIs or employ a new guidance philosophy compared to your predecessor?

Barbara Larson — Chief Financial Officer

I appreciate your question, Gray. Our guidance serves as a solid foundation for the year. We’re focused on setting realistic expectations based on various factors including pipeline activity, new product contributions, and anticipated conversion rates. Although market conditions remain volatile, we are adapting to this ‘new normal’ without deviating significantly from recent trends. We believe this approach is the best starting point for now.

Gray Powell — Analyst

Understood. Thank you for the clarity.

Operator

Next, we have Joseph Gallo with Jefferies. Joseph, your line is open.

Annick Baumann — Jefferies – Analyst

Hello, this is Annick Baumann standing in for Joe Gallo. Tomer, you’ve made significant strides in your go-to-market strategy. Can you provide insights on any further adjustments as you move into FY ’26? Additionally, how do you view capacity and hiring as you aim for over $1 billion in ARR this year?

Tomer Weingarten — Chief Executive Officer

Thank you for the question, Annick. We’re always evolving our go-to-market strategy. This year, we’ve focused on improving productivity and are adjusting pricing structures to offer more flexibility to our customers. As a result, every indicator we track is looking positive—this includes win rates and channel contributions. We seek to integrate more automation across our operations, which will contribute to our growth. While we expect some benefits this fiscal year, the majority of our efforts are positioning us for stronger long-term growth.

Doug Clark — Vice President, Investor Relations

I’d like to interject for a moment. We understand there were issues with the initial webcast questions. Tomer, could you please reiterate your expectations surrounding ARR growth for fiscal ’26 and Q4 fiscal ’25?

Tomer Weingarten — Chief Executive Officer

Certainly. In FY ’25, we sustained over 30% revenue growth, maintaining strong win rates and expanding our pipeline. There’s heightened interest from larger enterprises, indicating increased awareness of SentinelOne. We’ve seen a substantial uptick in platform solution usage, with quadrupling of enterprise customers engaging with multiple modules. We successfully reaccelerated net new ARR growth in the latter half of FY ’25 and anticipate continued growth for FY ’26. Adjusting for the end-of-sale decision, we project mid to high single-digit growth rates. The long-term strategy remains vital as we adapt to software industry changes, emphasizing data and AI while transitioning away from legacy solutions.

Barbara Larson — Chief Financial Officer

To add on Q4 ’25, we reached flat year-over-year net new ARR as projected, despite some churn related to our strategy in transition.

SentinelOne’s Optimistic Outlook Amid Deception Solution Transition

In the recent earnings call, executives discussed the ongoing transition away from SentinelOne’s legacy deception solution, indicating that without this adjustment, the company would have experienced mid-single-digit growth in net new Annual Recurring Revenue (ARR) for Q4 of fiscal year 2025.

Doug Clark — Vice President, Investor Relations

Thank you, operator. We can go to the next question, please.

Operator

Our next question comes from John DiFucci with Guggenheim Securities. John, your line is now open.

John Difucci — Analyst

Thank you. This quarter, even with the adjustments for the deception product and despite some customer attrition, I noticed that new ARR saw slight growth. This contrasts with other companies, where only about half have shown growth in new ARR. Barbara, your insights on guidance were helpful, but I would like to explore further.

You mentioned expectations regarding the demand environment and referred to a ‘new normal.’ It seems that your guidance suggests SentinelOne is poised to perform slightly better this year compared to the last. Could you elaborate on why you believe new ARR will improve this year?

Barbara Larson — Chief Financial Officer

Thank you, John. To provide context, we saw an improvement in new business growth in the latter half of fiscal 2025, and we anticipate this trend will continue into fiscal 2026. We forecast full-year net new ARR growth of 2% year-over-year, which translates to approximately $200 million. This projection accounts for around $10 million in churn associated with the deception product. Notably, this churn will impact Q1 more significantly, but we expect sequential improvement in net new ARR growth afterward.

Tomer Weingarten — Chief Executive Officer

To add further context, John, the adoption of our platform modules is a significant factor. The ramped sales force strengthens our market position as we enter this year. Artificial Intelligence (AI) has emerged as a considerable growth driver; we completed over 300 AI deals in Q4, likely outpacing other security vendors. This showcases our increasing success with these solutions.

While we are making some necessary adjustments, we believe momentum is favoring our business. Sales pipelines are robust, bolstered by a mature sales force, providing a solid foundation for our expectations this year.

John Difucci — Analyst

Thank you for the clarification. It all makes sense and I appreciate the insights.

Operator

Our next question comes from Jonathan Ho with William Blair. Jonathan, your line is now open.

Jonathan Ho — William Blair and Company — Analyst

Good afternoon. Could you provide more details regarding your federal government engagements and what insights you’re gathering from customers and your sales team in this sector?

Tomer Weingarten — Chief Executive Officer

There are certainly some uncertainties, but we’ve also experienced an expansion in our federal pipeline, indicating solid demand. Our offerings, particularly those that can operate in a FedRAMP High environment, allow us to create cost efficiencies for federal agencies. By enhancing their data ingestion and operational costs, we have positioned ourselves favorably in a climate that increasingly calls for fiscal prudence. Overall, while there may be uncertainties regarding deal timelines and budgets, demand from the federal sector remains strong.

Operator

Our next question comes from Shaul Eyal with TD Cowen. Shaul, your line is now open.

Shaul Eyal — Analyst

Thank you. Good afternoon. Tomer, could you share your thoughts on the decision surrounding the deception capabilities? Are they being phased out in favor of the new AI-driven capabilities?

Tomer Weingarten — Chief Executive Officer

Thanks for the question, Shaul. The decision to move away from deception stems from its legacy code base, initially acquired with Attivo, which includes hardware components. Maintaining this product is increasingly costly, while the return on investment isn’t materializing. Thus, we decided to redirect resources toward higher-yield areas of our business. AI certainly serves as a consolidator of capabilities, and deception is among the technologies being integrated into our broader AI-driven offerings.

We believe that incorporating AI capabilities across our security platform will become a standard expectation. Those without such offerings will struggle to remain competitive. In the upcoming fiscal year, we aim to acclimate customers to these innovations while expanding our tiers and AI capabilities. Most of the current changes relate to deception, alongside a few other minor offerings, highlighting our shift from legacy products to advanced AI solutions that we anticipate will gain traction across the industry.

Operator

Our next question comes from Shrenik Kothari with Baird. Shrenik, your line is now open.

Zach Schneider — Robert W. Baird and Company — Analyst

Thank you for the opportunity. This is Zach Schneider standing in for Shrenik. What I would like to know is…

SentinelOne Execs Discuss Growth Drivers and Future Guidance

During a Q&A session, analysts raised questions about SentinelOne’s product portfolio and future revenue forecasts. The discussion focused on the adoption rates of emerging technologies and the company’s performance in the cloud security market.

Tomer Weingarten — Chief Executive Officer

Weingarten noted that artificial intelligence is key to driving growth, highlighting the successful launch of Purple AI, which secured over 300 deals in the last quarter alone. He also emphasized that AI-based Security Information and Event Management (SIEM) is a strong contributor to overall company performance. Together, these innovations position SentinelOne as a more strategic choice for its customer base.

In addition, Weingarten stressed the importance of their comprehensive unified cloud security suite, which recorded record deals in the fourth quarter. This solidifies their ongoing progress in this area, shaping strong connections with clients.

Zach Schneider — Robert W. Baird and Company — Analyst

Schneider thanked Weingarten for the insights.

Operator

The next question came from Rudy Kessinger with D.A. Davidson. Kessinger inquired about SentinelOne’s net new Annual Recurring Revenue (ARR) for the second half of the year, particularly how it improved compared to the first half.

Rudy Kessinger — Analyst

He asked if the improvement was influenced by CrowdStrike’s service outage, which led to an uptick in customer displacement.

Tomer Weingarten — Chief Executive Officer

Weingarten responded by indicating that it’s difficult to isolate the impact of CrowdStrike’s outage on their ARR. He reiterated that customer consideration has shifted significantly. Many clients, while still remaining with their current providers, are evaluating their options. Weingarten believes this trend indicates a structural change within the market that ultimately favors SentinelOne.

He acknowledged that the growth appears more gradual than expected and not a sudden spike, suggesting a steady trajectory moving forward.

Operator

The next question was from Tal Liani at Bank of America. Liani asked about SentinelOne’s lowered financial guidance in comparison to Street estimates.

Tal Liani — Analyst

Liani requested clarity on the impact of customer churn on revenue guidance and the rationale behind guiding below the consensus.

Barbara Larson — Chief Financial Officer

Larson disclosed that the churn resulting from the customer displacement would be approximately $10 million for fiscal year 2026, with half of that occurring in the first quarter. She added that this churn creates a headwind of about one point on revenue for the same fiscal year.

Tal Liani — Analyst

Liani pressed for further details regarding the factors leading to weaker guidance despite a strong performance message from the company.

Tomer Weingarten — Chief Executive Officer

Weingarten explained that the team is being cautious in their projections due to various market uncertainties. These factors prompt a need for responsible decision-making moving forward. Both he and Larson aim to exceed the targets set, even if that means starting with conservative estimates.

Operator

Eric Heath from KeyBanc posed the next question, clarifying the details around customer churn and the significant decisions impacting financial guidance.

Eric Heath — Analyst

Heath then asked Weingarten about potential pricing adjustments the company might consider to boost customer adoption across its platform.

Barbara Larson — Chief Financial Officer

Larson confirmed that the impact of customer churn was accounted for in their guidance, specifically mentioning some churn observed in the fourth quarter.

Tomer Weingarten — Chief Executive Officer

Weingarten clarified that while pricing has remained stable, there is an increasing demand for flexible procurement options from customers. He indicated that the company is exploring pricing models that will allow clients to access a broad range of services, which could ultimately drive greater adoption of their platform.

Operator

The final question was from Trevor Walsh at Citizens, who expressed appreciation for the recent updates on module and solution adoption over their various capabilities.

Cybersecurity Conference Call Highlights Flexible Solutions and Future Growth

It’s great to see this engagement.

In considering our sales strategy, I wonder if this call reflects more reporting or if it aligns with your focus on solution selling within your team. Are you utilizing playbooks that group your products? Additionally, one of your competitors has mentioned a trend toward detection response within cloud security, where Security Information and Event Management (SIEM) and Security Operations Centers (SOC) play larger roles. This shift may benefit them compared to those with runtime agent-based approaches. Can you share your perspective on the direction of cloud security and how your strategy aligns with selling multiple solutions across your platform? Thank you.

Tomer Weingarten — Chief Executive Officer

Our primary goal is to offer flexibility to our customers. Unlike some vendors, we do not push customers to adopt an all-or-nothing approach. For example, we can provide a robust cloud security suite that includes all Cloud Native Application Protection Platform (CNAPP) capabilities alongside superior runtime workload protection.

We are also open to integrating our best-of-breed worker protection solutions alongside those of another CNAPP provider. Flexibility remains essential. We notice that customers are increasingly adopting our capabilities once they experiment with at least one feature. It’s worth noting that our offerings consistently receive recognition for best-in-class performance.

Our accolades include being recognized by Gartner as a customer choice for endpoint protection, cloud security, and managed detection and response (MDR), along with receiving the product of the year award for AI. This demonstrates our leadership across these segments. We have comprehensive capabilities similar to other leading platforms today, but we emphasize tailoring our offerings to meet our customers’ immediate needs rather than focusing solely on future developments.

The data illustrates a growing trend, validating our shift toward more flexible pricing structures that enable customers to gradually engage with a broader range of our capabilities.

Operator

Our last question comes from Andrew Nowinski with Wells Fargo. Andrew, your line is now open.

Andrew Nowinski — Analyst

Thank you for taking my question. I have two quick questions. First, did the deception products contribute to the decline in your Net Revenue Retention (NRR) when it dropped to 110 this quarter? Secondly, back in Q2, you reported cloud and data analytics Annual Recurring Revenue (ARR) of 170 million. Given its importance for your investments, can you break those figures out again for Q4 or indicate their expected contribution to the projected 200 million in new ARR for Fiscal Year 2026? Thank you.

Tomer Weingarten — Chief Executive Officer

Currently, we will not be disclosing ARR by product. We may provide an update later this year. Regarding NRR, the decline in Q4 was not materially impacted by our deception products. However, we anticipate that this segment may pose challenges to NRR in Q1. Once we move past this issue, we trust that NRR will improve significantly.

Operator

Now, I would like to turn the call back over to Tomer Weingarten for closing remarks. Tomer, please proceed.

Tomer Weingarten — Chief Executive Officer

Thank you. We concluded fiscal year 2025 strongly and see promising opportunities for fiscal year 2026. Our leadership in the industry stems from our best-in-class technology. I am particularly pleased with our AI innovations, which we believe will redefine cybersecurity in the upcoming years.

As we spearhead the AI revolution, we drive the next wave of security advancements. Our product and market strategy are well-aligned to deliver premier AI cybersecurity solutions, leading to broader adoption across our platform among both new and existing customers. We are achieving substantial revenue growth and margin expansion while reaching new profitability milestones, with expectations for continued progress.

Thank you once again to our customers, partners, shareholders, and Sentinels around the world.

Operator

This concludes today’s conference call. Thank you for your participation. [Operator signoff]

Duration: 0 minutes

Call Participants:

Doug Clark — Vice President, Investor Relations

Tomer Weingarten — Chief Executive Officer

Barbara Larson — Chief Financial Officer

Adam Tindle — Analyst

Brian Essex — Analyst

Gray Powell — Analyst

Annick Baumann — Jefferies — Analyst

John Difucci — Analyst

John DiFucci — Analyst

Jonathan Ho — William Blair and Company — Analyst

Shaul Eyal — Analyst

Zach Schneider — Robert W. Baird and Company — Analyst

Rudy Kessinger — Analyst

Tal Liani — Analyst

Eric Heath — Analyst

Trevor Walsh — Analyst

Andrew Nowinski — Analyst

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