SentinelOne Q2 2025 Earnings Analysis
Dive into $S SentinelOne’s Q2 2025 earnings with review of financial performance, key metrics, operating expenses, dilution, customer growth, future outlook
Financial Results:
↗️$242M rev (+21.8% YoY, +5.8% QoQ) beat est by 0.1%
↘️GM* (79.1%, -0.5 PPs YoY)🟡
↗️Operating Margin* (2.2%, +5.4 PPs YoY)🟢
↘️FCF Margin (-2.9%, -0.2 PPs YoY)🟡
↗️Net Margin (-29.7%, +5.0 PPs YoY)🟢
↗️EPS* $0.04 beat est by 33.3%🟢
*non-GAAP
Key Metrics
↗️RPO $1.20B (+27.1% YoY)
➡️Billings $244M (+16.9% YoY)🟡
↗️ARR $1.00B (+24.2% YoY, +53 net new ARR)🟢
Customers
↗️1,513 $100k+ customers (+22.7% YoY, +54)
Operating expenses
↘️S&M*/Revenue 42.9% (-6.5 PPs YoY)
↗️R&D*/Revenue 22.3% (+1.2 PPs YoY)
↘️G&A*/Revenue 11.7% (-0.7 PPs YoY)
Quarterly Performance Highlights
↗️Net New ARR $53M (+21.1% YoY)
↘️CAC* Payback Period 30.7 Months (-2.0 YoY)🟢
↘️R&D* Index (RDI) 1.00 (-0.12 YoY)🟡
Dilution
↗️SBC/rev 31%, +0.5 PPs QoQ
↘️Basic shares up 5.9% YoY, -0.1 PPs QoQ🔴
↘️Diluted shares up 3.6% YoY, -6.0 PPs QoQ
Guidance
↗️Q3'25 $256.0M guide (+21.6% YoY) beat est by 0.2%
➡️$998.0 - $1,002.0M FY guide (+21.7% YoY) raised by 0.1% in line with est
Key points from SentinelOne’s Second Quarter 2025 Earnings Call:
Financial Performance
SentinelOne reported another strong quarter with total Annual Recurring Revenue (ARR) surpassing $1 billion, up 24% year over year. Net new ARR reached $53 million, about 40% above internal targets. Revenue grew 22% to $242 million, supported by both new customer additions and multiproduct expansion. International revenue increased 27%, now representing 38% of total revenue.
Gross margin held at 79%, with operating margin positive at 2%, more than 500 basis points higher than last year. Net income margin reached 5%, marking the fifth straight quarter of profitability. Free cash flow margin was 2% on a trailing twelve-month basis and is expected to improve in the second half. Remaining performance obligations grew 26% to $1.2 billion. The company ended the quarter with $1.2 billion in cash and no debt.
Barbara Larson, Chief Financial Officer
“We expect to sustain quarterly operating profitability and remain on track to deliver our first full year of operating profit this fiscal year.”
Singularity Platform
The platform expanded further with the launch of Singularity Flex, a flexible licensing model designed to accelerate adoption and scale. Flex secured an eight-figure deal with a multinational conglomerate covering endpoint, cloud, AI SIEM, Purple AI, and hyperautomation.
Customer traction highlights included a global media company consolidating endpoint, data, and cloud security with Singularity and a luxury brand centralizing data and security operations through AI SIEM. Large deal cycles remain extended, particularly in federal and global accounts, creating variability in timing.
Tomer Weingarten, Chief Executive Officer
“Flex provides customers with full access to the entire Singularity platform, enhancing our opportunity to expand our footprint across customer environments.”
Purple AI
Purple AI recorded triple-digit growth in Q2, with attach rates above 30% of licenses sold, the highest since launch. SentinelOne closed seven-figure ARR deals with Purple as a stand-alone solution. An IDC study showed Purple enabled 55% faster remediation, 60% lower likelihood of major incidents, and 338% ROI over three years.
Adoption is broad-based across industries, with strong pull from both new and existing customers. The challenge is sustaining the current growth trajectory as customer expectations for continuous innovation increase.
Tomer Weingarten, Chief Executive Officer
“Purple’s growth is being driven by strong adoption from both new and existing customers. It’s helping enterprises operate with greater speed and efficiency, reducing the workload on security teams by orders of magnitude.”
Cloud Security Suite
The Cloud Suite remains among the fastest-growing lines. A Fortune 50 enterprise replaced its incumbent vendor with Singularity Cloud, securing tens of thousands of workloads and citing hybrid visibility and automation as differentiators.
The company’s runtime-first approach is resonating with enterprises, and recognition from Gartner Peer Insights rated Singularity CNAP as a strong performer. Competition from hyperscalers remains a challenge, addressed through partnerships such as its launch in AWS Security Hub.
Tomer Weingarten, Chief Executive Officer
“As cloud environments grow in scale and complexity, we're delivering cloud native security that keeps pace with infrastructure growth while enabling customers to simplify operations through a unified AI powered platform.”
AI SIEM and Data
Data solutions contributed a record share of bookings. SentinelOne highlighted its position as the only AI-native SIEM, delivering real-time detection, streaming ingestion, automated investigations, and autonomous response. Listing in the AWS Marketplace has expanded reach.
A luxury brand adopted AI SIEM to unify fragmented operations into a single platform, reducing complexity and strengthening security. Growth opportunities are significant, but competition with established SIEM vendors requires continuous proof of lower cost and real-time performance.
Tomer Weingarten, Chief Executive Officer
“According to IDC’s latest study, AI SIEM users experienced faster investigations, lower risk of incidents, and measurable efficiency gains—clear evidence that this innovation is redefining security data management.”
Endpoint
Endpoint remained the most mature offering with accelerated bookings growth, the highest in the past year. IDC ranked SentinelOne the fastest-growing standalone vendor, Gartner recognized it as a Leader in Endpoint Protection Platforms for the fifth consecutive year, and Frost & Sullivan named it top performing vendor in 2025.
Large customers continue to expand deployments. The largest Flex deal included hundreds of thousands of endpoints, confirming endpoint’s role as a foundation for broader platform adoption. The key challenge is maintaining competitive differentiation in a crowded market.
Tomer Weingarten, Chief Executive Officer
“For the fifth consecutive year, we were recognized as a leader in the Gartner Magic Quadrant for endpoint protection platforms. Our innovations, industry accolades and customer adoption continue to highlight the breadth and growth potential of our business.”
Product Innovations
Half of new bookings came from outside endpoint categories, reflecting broad adoption of newer solutions such as Purple AI and data. Investments remain focused on scaling AI-native infrastructure to unify security, data, and automation across enterprise environments.
Tomer Weingarten, Chief Executive Officer
“From day one, we architected the Singularity platform with AI at its core, well before AI became table stakes in the industry. That early conviction continues to differentiate us.”
Prompt Security Acquisition
SentinelOne acquired Prompt Security for $180 million, adding generative AI protection and DLP to the platform. Prompt provides real-time monitoring and governance of AI usage across endpoints, browsers, and APIs.
The acquisition is expected to have minimal revenue contribution in FY26 but will reduce operating margin by about 80 basis points. Longer term, Prompt is positioned as a growth driver as enterprises adopt GenAI at scale.
Tomer Weingarten, Chief Executive Officer
“Prompt Security stands out as the only technology available today that enables enterprises to safely adopt GenAI at scale.”
Partnerships
Partnership momentum remains strong. SentinelOne was named Pax8’s most valuable vendor in Q2, and Purple AI, AI SIEM, and Singularity Cloud are now listed in the AWS marketplace. Integration with AWS Security Hub strengthens positioning in cloud-native environments. The partnership with Lenovo continues to progress, contributing to ARR growth.
Tomer Weingarten, Chief Executive Officer
“We were also a launch partner for the AWS Security Hub, reinforcing our position as a key security player for cloud native environments.”
Customers
Large customer count grew to 1,513, up 23% year over year. International markets expanded 27% and accounted for 38% of total revenue. Average ARR per customer reached a new record, reflecting successful multiproduct adoption. Expansion accounted for nearly half of net new ARR.
Tomer Weingarten, Chief Executive Officer
“Our average deal size or ARR per customer reached a new company record, highlighting our broader platform adoption.”
Customer Success
A global media conglomerate consolidated endpoint, data, and cloud under Singularity. A luxury brand expanded with AI SIEM, unifying data and security operations. A Fortune 50 enterprise replaced its incumbent vendor with Singularity Cloud to secure tens of thousands of workloads.
Tomer Weingarten, Chief Executive Officer
“This enterprise cited Singularity’s AI-based security end user experience as key factors for choosing us.”
Large Wins
The most notable win was an eight-figure Flex deal with a multinational conglomerate covering endpoint, cloud, AI SIEM, Purple AI, and hyperautomation. Enterprise traction continues to be broad-based, with Purple and data emerging as leading drivers of multiproduct transactions.
Tomer Weingarten, Chief Executive Officer
“Flex enables our team to land bigger deals with higher efficiency and expand with greater velocity.”
Macro and Challenges
Management highlighted deal timing variability, elongated cycles, federal sector uncertainty, and FX headwinds from a weaker dollar. Despite strong Q2 performance, guidance reflects conservative assumptions on larger deal timing.
Barbara Larson, Chief Financial Officer
“We are reaffirming our commitment to delivering positive free cash flow for the full year, which we expect to be a few points higher than operating margin.”
Outlook
For Q3, revenue is guided to $256 million (+22% YoY), gross margin around 78.5%, and operating margin near 4%. For FY26, revenue is projected at $998 million to $1.02 billion, with gross margins between 78.5% and 79% and operating margin of about 3%.
Future growth is centered on the convergence of AI, data, and security. Purple AI, AI SIEM, and the integration of Prompt Security are positioned as catalysts to extend leadership in AI-native cybersecurity.
Barbara Larson, Chief Financial Officer
“Our momentum, technology leadership and competitive position remain strong, and we are delivering top tier growth at scale with continued operating leverage.”
Thoughts on SentinelOne Earnings Report $S:
🟢 Positive
Revenue $242M (+22% YoY) and ARR $1.0B (+24% YoY) with $53M net new ARR (+21% YoY).
Operating margin 2.2% (+5.4 pps YoY), fifth straight quarter of profitability.
EPS $0.04 beat by 33%; net margin improved +5.0 pps YoY.
RPO $1.20B (+27% YoY), billings $244M (+17% YoY).
1,513 large customers (+23% YoY, +54 net adds).
S&M/Revenue down to 42.9% (-6.5 pps YoY).
Major eight-figure Flex deal, Purple AI attach above 30%, triple-digit growth.
Cloud and AI SIEM achieved record enterprise traction with Fortune 50 and luxury brand wins.
🟡 Neutral
Gross margin 79.1%, slightly down -0.5 pps YoY.
Free cash flow margin -2.9%, down slightly -0.2 pps YoY, though expected to improve.
Guidance: Q3 revenue $256M (+22% YoY) and FY revenue $998M–$1.02B (+22% YoY), in line with estimates.
R&D/Revenue increased to 22.3% (+1.2 pps YoY), reflecting investment in platform expansion.
Billings growth (+17% YoY) lags ARR growth (+24% YoY).
🔴 Negative
Stock-based comp/revenue at 31%, +0.5 pps QoQ.
Basic shares up 5.9% YoY, diluted shares up 3.6% YoY.
Deal cycles remain elongated in federal and global accounts, creating timing uncertainty.
FX headwinds and federal sector softness factored into conservative outlook.
Thank you for reading!
Follow me for more frequent updates on X/Twitter and Threads, and on LinkedIn. For visual infographics, check out Instagram, and for portfolio changes, follow me on SavvyTrader.
Disclaimer: This earnings review is for informational purposes only and does not constitute financial, investment, or trading advice.