Revenue increased 121%
year-over-year
ARR up 127% year-over-year
SentinelOne, Inc. (NYSE: S) today announced financial results
for the second quarter of fiscal year 2022 ended July 31, 2021.
“We’re devoted to protecting our customers and our way of life
from cyberattacks in an increasingly digital society. Cybersecurity
must be autonomous - that’s what we’ve built. It must perform at a
faster speed, greater scale, and higher accuracy than what exists
today,” said Tomer Weingarten, Co-Founder and CEO of SentinelOne.
“Our IPO was a significant milestone and is only the beginning of
the opportunity in front of us. I’m pleased with the success and
growth we delivered in Q2.”
“SentinelOne executed extremely well in Q2. Our annualized
recurring revenue reached $198 million, with growth accelerating to
127% year-over-year,” said Dave Bernhardt, CFO. “It’s especially
encouraging to see the broad based strength of our business, with
record customer additions, large customer transactions, and net
retention rates.”
Letter to Shareholders
We have also published a letter to shareholders on the Investor
Relations section of our website at investors.sentinelone.com. The
letter provides further discussion of our results for the second
quarter of fiscal year 2022 as well as our full fiscal year 2022
financial outlook.
Second Quarter Fiscal 2022 Highlights
- Total revenue was $45.8 million in the second quarter of
fiscal year 2022, a 121% increase compared to $20.7 million for the
same period of fiscal 2021.
- Annualized recurring revenue (ARR) increased 127%
year-over-year and grew to $198.0 million as of July 31, 2021.
- Total customer count grew more than 75% year-over-year
to over 5,400 customers as of July 31, 2021. Customers with ARR
over $100K grew 140% year-over-year to over 345 as of July 31,
2021. Dollar-based net revenue retention rate reached a new high
and exceeded 125%.
- Gross margin: GAAP gross margin was 59% in the second
quarter of fiscal year 2022, compared to 64% for the same period of
fiscal 2021. Non-GAAP gross margin was 62%, compared to 64% for the
same period of fiscal 2021.
- Loss from operations: GAAP loss from operations was
$67.2 million in the second quarter of fiscal year 2022 compared to
$22.6 million for the same period of fiscal year 2021. Non-GAAP
loss from operations was $45.0 million in the second quarter of
fiscal year 2022, compared to $21.0 million for the same period of
fiscal year 2021.
- Cash, cash equivalents and short-term investments were
$1.7 billion as of July 31, 2021, which now includes $1.4 billion
of net proceeds from our initial public offering and the concurrent
private placement.
Financial Outlook
We are providing the following guidance for the third quarter of
fiscal 2022, ending October 31, 2021, and for the full fiscal year
2022, ending January 31, 2022:
Q3 FY22 Guidance
Full Year FY22
Guidance
Revenue
$49-50 million
$188-190 million
Non-GAAP gross margin
58-59%
58-60%
Non-GAAP operating margin
(99)-(96)%
(104)-(99)%
These statements are forward-looking and actual results may
differ materially as a result of many factors. Refer to the
Forward-Looking Statements safe harbor below for information on the
factors that could cause our actual results to differ materially
from these forward-looking statements.
Guidance for non-GAAP financial measures excludes stock-based
compensation expense and amortization expense of acquired
intangible assets. We have not provided the most directly
comparable GAAP measures because certain items are out of our
control or cannot be reasonably predicted. Accordingly, a
reconciliation of non-GAAP gross margin and non-GAAP operating
margin is not available without unreasonable effort.
Webcast information
We will host a live audio webcast for analysts and investors to
discuss our earnings results for the second quarter of fiscal 2022
and outlook for the third quarter of fiscal 2022 and full fiscal
year 2022 today, September 8, 2021, at 2:00 p.m. Pacific time (5:00
p.m. Eastern time). The live webcast and a recording of the event
will be available on the Investor Relations section of our website
at investors.sentinelone.com.
We have used, and intend to continue to use, the Investor
Relations section of our website at investors.sentinelone.com as a
means of disclosing material nonpublic information and for
complying with our disclosure obligations under Regulation FD.
Forward-looking statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which statements involve risks and uncertainties,
including statements regarding our future growth, and future
financial and operating performance, including our financial
outlook for the third quarter of fiscal 2022 and full year fiscal
2022, including non-GAAP gross profit and non-GAAP operating
margin, business strategy, the COVID-19 pandemic, our reputation
and performance in the market, general market trends, and our
objectives are forward-looking statements. The words “believe,”
“may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,”
“intend,” “could,” “would,” “project,” “target,” “plan,” “expect,”
or the negative of these terms and similar expressions are intended
to identify forward-looking statements. However, not all
forward-looking statements contain these identifying words.
There are a significant number of factors that could cause our
actual results to differ materially from statements made in this
press release, including: our limited operating history; our
history of losses; intense competition in the market we compete in;
fluctuations in our operating results; network or security
incidents against us; defects, errors or vulnerabilities in our
platform; risks associated with managing our rapid growth; the
continuing impact of the COVID-19 pandemic on our and our
customers’ business; our ability to attract new and retain existing
customers, or renew and expand our relationships with them; the
ability of our platform to effectively interoperate within our
customers IT infrastructure; our ability to successfully integrate
any acquisitions; disruptions or other business interruptions that
affect the availability of our platform; the failure to timely
develop and achieve market acceptance of new products and
subscriptions as well as existing products, subscriptions and
support offerings; rapidly evolving technological developments in
the market for security products and subscription and support
offerings; length of sales cycles; general market, political,
economic, and business conditions, including those related to the
continuing impact of COVID-19.
Additional risks and uncertainties that could affect our
financial results are included under the captions “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” set forth in our filings and reports
with the Securities and Exchange Commission (“SEC”), including our
final prospectus filed with the SEC pursuant to Rule 424(b), dated
June 29, 2021, copies of which are available on our website at
investors.sentinelone.com and on the SEC’s website at
www.sec.gov.
You should not rely on these forward-looking statements, as
actual outcomes and results may differ materially from those
contemplated by these forward-looking statements as a result of
such risks and uncertainties. All forward-looking statements in
this press release are based on information available to us as of
the date hereof, and we do not assume any obligation to update the
forward-looking statements provided to reflect events that occur or
circumstances that exist after the date of this press release or to
reflect new information or the occurrence of unexpected events,
except as required by law. We may not actually achieve the plans,
intentions, or expectations disclosed in our forward-looking
statements, and you should not place undue reliance on our
forward-looking statements.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP,
we believe the following non-GAAP measures are useful in evaluating
our operating performance. We use the following non-GAAP financial
information to evaluate our ongoing operations and for internal
planning and forecasting purposes. Non-GAAP financial information
excludes stock-based compensation expense, employer payroll tax
expense related to employee equity transactions and amortization of
acquired intangible assets. We believe that non-GAAP financial
information, when taken collectively, with the financial
information presented in accordance with GAAP, may be helpful to
investors because it provides consistency and comparability with
past financial performance. However, non-GAAP financial information
is presented for supplemental informational purposes only, has
limitations as an analytical tool, and should not be considered in
isolation or as a substitute for financial information presented in
accordance with GAAP.
Other companies, including companies in our industry, may
calculate similarly titled non-GAAP measures differently or may use
other measures to evaluate their performance, all of which could
reduce the usefulness of our non-GAAP financial measures as tools
for comparison. In addition, the utility of free cash flow as a
measure of our liquidity is limited as it does not represent the
total increase or decrease in our cash balance for a given
period.
Reconciliations between non-GAAP financial measures to the most
directly comparable financial measure stated in accordance with
GAAP are contained at the end of this press release following the
accompanying financial data. Investors are encouraged to review the
related GAAP financial measures and the reconciliation of these
non-GAAP financial measures to their most directly comparable GAAP
financial measures and not rely on any single financial measure to
evaluate our business.
Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Loss
from Operations, Non-GAAP Operating Margin, Non-GAAP Net Loss and
Non-GAAP Net Loss Per Share
We define these non-GAAP financial measures as their respective
GAAP measures, excluding expenses related to stock-based
compensation expense and amortization of acquired intangible
assets. We use these non-GAAP financial measures as part of our
overall assessment of our performance, including the preparation of
our annual operating budget and quarterly forecasts, to evaluate
the effectiveness of our business strategies, and to communicate
with our board of directors concerning our financial
performance.
Free Cash Flow
We define free cash flow as cash used in operating activities
less purchases of property and equipment and capitalized
internal-use software costs. We believe free cash flow is a useful
indicator of liquidity that provides our management, board of
directors, and investors with information about our future ability
to generate or use cash to enhance the strength of our balance
sheet and further invest in our business and pursue potential
strategic initiatives.
Key Business Metrics
We monitor the following key metrics to help us evaluate our
business, identify trends affecting our business, formulate
business plans, and make strategic decisions.
Annualized Recurring Revenue
We believe that ARR is a key operating metric to measure our
business because it is driven by our ability to acquire new
subscription customers and to maintain and expand our relationship
with existing subscription customers. ARR represents the annualized
revenue run rate of our subscription contracts at the end of a
reporting period, assuming contracts are renewed on their existing
terms for customers that are under subscription contracts with
us.
Customers with ARR of $100,000 or More
We believe that our ability to increase the number of customers
with ARR of $100,000 or more is an indicator of our market
penetration and strategic demand for our platform. We define a
customer as an entity that has an active subscription for access to
our platform. We count MSPs, MSSPs, MDRs, and OEMs, who may
purchase our products on behalf of multiple companies, as a single
customer. We do not count our reseller or distributor channel
partners as customers.
Dollar-Based Net Retention Rate
We believe that our ability to retain and expand our revenue
generated from our existing customers is an indicator of the
long-term value of our customer relationships and our potential
future business opportunities. Dollar-based net retention rate
measures the percentage change in our ARR derived from our customer
base at a point in time. To calculate these metrics, we first
determine Prior Period ARR, which is ARR from the population of our
customers as of 12 months prior to the end of a particular
reporting period. We calculate Net Retention ARR as the total ARR
at the end of a particular reporting period from the set of
customers that is used to determine Prior Period ARR. Net Retention
ARR includes any expansion, and is net of contraction and attrition
associated with that set of customers. NRR is the quotient obtained
by dividing Net Retention ARR by Prior Period ARR.
SENTINELONE, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
(unaudited)
July 31,
January 31,
2021
2021
Assets
Current assets:
Cash and cash equivalents
$
1,684,702
$
395,472
Short-term investments
370
364
Accounts receivable, net
53,318
39,315
Deferred contract acquisition costs,
current
17,564
14,733
Prepaid expenses and other current
assets
26,145
14,173
Total current assets
1,782,099
464,057
Property and equipment, net
18,892
13,373
Operating lease right-of-use assets
21,453
18,026
Deferred contract acquisition costs,
non-current
26,500
21,940
Restricted cash, non-current
2,722
2,694
Intangible assets, net
16,705
470
Goodwill
108,193
—
Total assets
$
1,976,564
$
520,560
Liabilities, Redeemable Convertible
Preferred Stock, and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable
9,615
11,822
Accrued liabilities
11,141
3,671
Accrued payroll and benefits
26,583
20,134
Operating lease liabilities, current
3,976
3,634
Deferred revenue, current
121,883
89,645
Total current liabilities
173,198
128,906
Deferred revenue, non-current
62,701
52,190
Long-term debt
—
19,621
Operating lease liabilities,
non-current
21,448
18,839
Other liabilities
3,249
401
Total liabilities
260,596
219,957
Redeemable convertible preferred stock
—
621,139
Stockholders’ equity (deficit):
Preferred Stock
—
—
Class A common stock
4
—
Class B common stock
13
2
Additional paid-in capital
2,196,865
29,869
Accumulated other comprehensive income
455
165
Accumulated deficit
(481,369
)
(350,572
)
Total stockholders’ equity (deficit)
1,715,968
(320,536
)
Total liabilities, redeemable convertible
preferred stock, and stockholders’ equity (deficit)
$
1,976,564
$
520,560
SENTINELONE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except share
and per share data)
(unaudited)
Three Months Ended July
31,
Six Months Ended July
31,
2021
2020
2021
2020
Revenue
$
45,750
$
20,674
$
83,145
$
38,631
Cost of revenue
18,788
7,543
37,071
15,156
Gross profit
26,962
13,131
46,074
23,475
Operating expenses:
Research and development
31,037
13,476
58,857
27,341
Sales and marketing
40,970
16,302
77,150
34,053
General and administrative
22,110
5,914
38,834
10,871
Total operating expenses
94,117
35,692
174,841
72,265
Loss from operations
(67,155
)
(22,561
)
(128,767
)
(48,790
)
Interest income
21
46
44
196
Interest expense
(479
)
(477
)
(782
)
(777
)
Other income (expense), net
(373
)
182
(966
)
(11
)
Loss before provision for income taxes
(67,986
)
(22,810
)
(130,471
)
(49,382
)
Provision for income taxes
177
128
326
194
Net loss
$
(68,163
)
$
(22,938
)
$
(130,797
)
$
(49,576
)
Net loss per share attributable to common
stockholders, basic and diluted
$
(0.57
)
$
(0.67
)
$
(1.59
)
$
(1.45
)
Weighted-average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted
120,520,061
34,480,356
82,394,440
34,229,843
SENTINELONE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended July
31,
2021
2020
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss
$
(130,797
)
$
(49,576
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
3,637
1,298
Amortization of deferred contract
acquisition costs
9,087
4,758
Non-cash operating lease costs
1,408
1,855
Stock-based compensation expense
34,830
5,239
Other
105
206
Changes in operating assets and
liabilities, net of effects of acquisition
Accounts receivable
(10,339
)
8,696
Prepaid expenses and other current
assets
(11,190
)
(248
)
Deferred contract acquisition costs
(16,477
)
(6,749
)
Accounts payable
(5,108
)
643
Accrued liabilities
6,559
419
Accrued payroll and benefits
6,864
124
Operating lease liabilities
(1,919
)
(1,955
)
Deferred revenue
37,707
9,783
Other liabilities
2,842
—
Net cash used in operating activities
(72,791
)
(25,507
)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment
(1,685
)
(401
)
Purchases of intangible assets
—
(126
)
Capitalization of internal-use
software
(2,852
)
(1,292
)
Cash paid for acquisition, net of cash and
restricted cash acquired
(3,449
)
—
Net cash used in investing activities
(7,986
)
(1,819
)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from initial public offering and
private placements, net of underwriting discounts and
commissions
1,388,563
—
Proceeds from issuance of Series E
redeemable convertible preferred stock, net of issuance costs
—
152,539
Payments of deferred offering costs
(5,068
)
—
Proceeds from revolving line of credit
—
19,857
Repayment of term loan
(20,000
)
(20,000
)
Proceeds from exercise of stock
options
5,827
900
Net cash provided by financing
activities
1,369,322
153,296
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS
1,146
8
NET INCREASE IN CASH, CASH EQUIVALENTS,
AND RESTRICTED CASH
1,289,691
125,978
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH–Beginning of period
399,112
47,680
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH–End of period
$
1,688,803
$
173,658
SENTINELONE, INC.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(in thousands, except
percentages, share and per share data)
(unaudited)
Three Months Ended July
31,
Six Months Ended July
31,
2021
2020
2021
2020
(in thousands)
Stock-based compensation by
function:
Cost of revenue
$
840
$
65
$
1,223
$
135
Research and development
8,823
261
15,962
3,024
Sales and marketing
3,905
606
5,952
1,067
General and administrative
7,825
656
11,693
1,013
Total stock-based compensation expense
$
21,393
$
1,588
$
34,830
$
5,239
Amortization of acquired intangible
assets by function:
Cost of revenue
$
558
$
—
$
1,049
$
—
Sales and marketing
189
—
355
—
General and administrative
19
—
36
—
Total amortization of acquired intangible
assets
$
766
$
—
$
1,440
$
—
Reconciliation of gross profit and gross margin
Three Months Ended July
31,
Six Months Ended July
31,
2021
2020
2021
2020
GAAP revenue
$
45,750
$
20,674
$
83,145
$
38,631
GAAP gross profit
$
26,962
$
13,131
$
46,074
$
23,475
Add: Stock-based compensation expense
840
65
1,223
135
Add: Amortization of acquired intangible
assets
558
—
1,049
—
Non-GAAP gross profit
$
28,360
$
13,196
$
48,346
$
23,610
GAAP gross margin
59
%
64
%
55
%
61
%
Non-GAAP gross margin
62
%
64
%
58
%
61
%
Reconciliation of operating expenses
Three Months Ended July
31,
Six Months Ended July
31,
2021
2020
2021
2020
(in thousands)
GAAP revenue
$
45,750
$
20,674
$
83,145
$
38,631
GAAP operating expenses
$
94,117
$
35,692
$
174,841
$
72,265
Less: Stock-based compensation expense
20,553
1,523
33,607
5,104
Less: Amortization of acquired intangible
assets
208
—
391
—
Non-GAAP operating expenses
$
73,356
$
34,169
$
140,843
$
67,161
GAAP % of revenue
206
%
173
%
210
%
187
%
Non-GAAP % of revenue
160
%
165
%
169
%
174
%
Reconciliation of loss from operations and operating
margin
Three Months Ended July
31,
Six Months Ended July
31,
2021
2020
2021
2020
GAAP revenue
$
45,750
$
20,674
$
83,145
$
38,631
GAAP loss from operations
$
(67,155
)
$
(22,561
)
$
(128,767
)
$
(48,790
)
Add: Stock-based compensation expense
21,393
1,588
34,830
5,239
Add: Amortization of acquired intangible
assets
766
—
1,440
—
Non-GAAP loss from operations
$
(44,996
)
$
(20,973
)
$
(92,497
)
$
(43,551
)
GAAP operating margin
(147
)%
(109
)%
(155
)%
(126
)%
Non-GAAP operating margin
(98
)%
(101
)%
(111
)%
(113
)%
Reconciliation of net loss and net loss per share
Three Months Ended July
31,
Six Months Ended July
31,
2021
2020
2021
2020
GAAP net loss
$
(68,163
)
$
(22,938
)
$
(130,797
)
$
(49,576
)
Add: Stock-based compensation expense
21,393
1,588
34,830
5,239
Add: Amortization of acquired intangible
assets
766
—
1,440
—
Non-GAAP net loss
$
(46,004
)
$
(21,350
)
$
(94,527
)
$
(44,337
)
Weighted-average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted
120,520,061
34,480,356
82,394,440
34,229,843
GAAP net loss per share attributable to
common stockholders, basic and diluted
$
(0.57
)
$
(0.67
)
$
(1.59
)
$
(1.45
)
Non-GAAP net loss per share attributable
to common stockholders, basic and diluted
$
(0.38
)
$
(0.62
)
$
(1.15
)
$
(1.30
)
Reconciliation of proforma net loss per share
The following table sets forth the computation of pro forma
basic and diluted non-GAAP net loss per share attributable to
common stockholders to provide a supplemental bridge between our
actual results and proforma amounts as presented in our final
prospectus:
Three Months Ended July
31,
Six Months Ended July
31,
2021
2021
Non-GAAP net loss
$
(46,004
)
$
(94,527
)
Weighted-average shares used in computing
pro forma net loss per share(1) :
Weighted-average shares used in computing
net loss per share
65,154,671
54,252,916
Pro forma adjustment to reflect conversion
of redeemable convertible preferred stock into common stock
169,787,200
169,787,200
Weighted-average shares used in computing
pro forma net loss per share attributable to common stockholders,
basic and diluted
234,941,871
224,040,116
Pro forma net loss per share attributable
to common stockholders, basic and diluted (1)
$
(0.20
)
$
(0.42
)
(1)
Basic and diluted pro forma non-GAAP net
loss per share attributable to common stockholders for the three
months and six months ended July 31, 2021 gives effect to the
conversion of redeemable convertible preferred stock into common
stock as though the conversion had occurred as of the beginning of
the period.
Reconciliation of cash used in operating activities to free
cash flow
Three Months Ended July
31,
Six Months Ended July
31,
2021
2020
2021
2020
GAAP net cash used in operating
activities
$
(41,993
)
$
(13,712
)
$
(72,791
)
$
(25,507
)
Less: Purchases of property and
equipment
(905
)
(123
)
(1,685
)
(401
)
Less: Capitalized internal-use
software
(1,839
)
(645
)
(2,852
)
(1,292
)
Free cash flow
$
(44,737
)
$
(14,480
)
$
(77,328
)
$
(27,200
)
Net cash used in investing activities
$
(2,744
)
$
(894
)
$
(7,986
)
$
(1,819
)
Net cash provided by financing
activities
$
1,367,405
$
117
$
1,369,322
$
153,296
Source String: SentinelOne Category: Investors
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version on businesswire.com: https://www.businesswire.com/news/home/20210908006060/en/
Investor relations: Doug Clark E: investors@sentinelone.com
Press: Jake Schuster fama PR for SentinelOne P: 617-986-5000 E:
S1@famapr.com
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