SentinelOne Stock Plummets Following Q3 Bottom-Line Miss But Retail Positive

SentinelOne, Inc. ($S) stock fell sharply in Thursday’s premarket trading after the artificial intelligence-powered cybersecurity platform provider reported a bottom-line miss and slower growth for one of the key operational metrics for the fiscal year 2025 third quarter.

The Mountain View, California-based company reported breakeven bottom-line result for the third quarter on a non-GAAP basis, compared to a loss per share of $0.03 for the year-ago quarter. However, it missed the $0.01 per share consensus estimate.

Revenue climbed 28% year-over-year (YoY) to $210.6 million, exceeding the $209.73 million consensus

Among operational metrics, annualized recurring revenue (ARR) climbed 29% YoY to $859.7 million as of Oct. 31, 2024, slower than the 33% growth in the second quarter. Customers with ARR of $100,000 or more rose 24% to 1,310.

Non-GAAP gross margin improved slightly from 79% in the year-ago quarter to 80%, and non-GAAP operating margin was a negative 5%, better than the negative 11% number for the year-ago quarter.

The company said it delivered positive free cash flow on a trailing twelve-month basis, a key milestone toward sustained profitability.

SentinelOne had cash, cash equivalents, and investments of $1.1 billion at the end of the quarter.

Tomer Weingarten, CEO of SentinelOne, said, “Our Q3 results demonstrate strong execution and business momentum. We exceeded our topline growth expectations and re-accelerated new business growth.”

“Enterprises are increasingly selecting Singularity Platform for real-time, autonomous security. With our industry-leading innovations and broadening platform capabilities, Singularity is setting the standard for the future of AI-powered cybersecurity.”

Looking ahead, the company expects fourth-quarter revenue of $222 million and non-GAAP gross margin of 79%. 

The company expects full-year 2025 revenue of $818 million, up from its previous guidance of $815 million, and a non-GAAP gross margin of 79%.

The consensus estimates call for revenue of $220.75 million for the fourth quarter and $816.37 million for the full year. 

S sentiment and message volume December 5, 2024, premarket as of 6:57 am ET | Source: Stocktwits

On Stocktwits, sentiment toward the stock improved to ‘extremely bullish’ (95/100), the highest level this year, from bearish a day ago, with message volume remaining ‘extremely high.’

A Stocktwits user said there was nothing bad with the earnings report and the stock could turn green by next week.

Another said they were buying more for long-term positioning.

In premarket trading, as of 6:57 a.m. ET, SentinelOne shares slumped 15.17% to $24.33. The stock has underperformed the broader market this year, having gained merely 4.5%.

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