SentinelOne Q4 2023 Earnings Review
$S Q4'23 Results:
Financial Results:
↗️$174M rev (+38.1% YoY, +42.4% LQ) beat est by 2.7%
↗️GM* (78.0%, +3.0%pp YoY)
↗️Operating Margin* (-9.1%, +25.6%pp YoY)🟢
↗️FCF Margin -6.1%, +14.0%pp YoY)🟢
↘️EPS* -$0.02 missed est by -50.0%🟢
*non-GAAP
Key Metrics
➡️DBNR 115% (115% LQ)
↗️RPO $0.89B (+47.0% YoY)
↗️Billings $266M (+50.0% YoY)🟢
↗️ARR $0.72B (+39.0% YoY, +61 net new ARR)🟢
Customers
➡️1,133 $100k+ customers (+30.0% YoY, +73)
Operating expenses
↘️S&M*/Revenue 47.9% (49.9% LQ)
↗️R&D*/Revenue 23.2% (22.1% LQ)
↘️G&A*/Revenue 16.0% (18.3% LQ)
↗️Net New ARR $61M ($52 LQ)
↘️CAC* Payback Period 20.5 Months (24.8 LQ)
Dilution
↘️SBC/rev 31%, -2.7%pp QoQ
↗️Dilution at 6.3% YoY, +0.6%pp QoQ🔴
Guidance
↗️Q1'24 $181.0M guide (+35.7% YoY) beat est by 0.1%
↗️$818M FY guide (+31.7% YoY) beat est by 0.3%
Key points from SentinelOne Fourth Quarter 2023 Earnings Call:
Financial Performance:
SentinelOne surpassed its fourth quarter expectations with an EPS of -$0.02, beating estimates by $0.02, and revenue of $174.18M, marking a 38.13% year-over-year increase and surpassing estimates by $4.80M.
Product Innovations and AI:
SentinelOne continues to innovate, particularly with AI and cybersecurity technologies.
They've introduced new products like Purple AI, which enhances their platform's autonomy and efficiency.
Acquisitions such as PingSafe and STRIDE aim to bolster their cloud security offerings and hyper-automation capabilities, respectively.
PingSafe:
This acquisition enables SentinelOne to offer comprehensive Cloud-Native Application Protection Platform (CNAPP) capabilities, combining agent-based and agentless security. PingSafe excels in providing actionable insights, compared to other CSPM and CNAPP solutions, and features a unique offensive attack mapping engine that predicts and identifies potential attack paths for better protection and compliance verification.
STRIDE:
SentinelOne acquired STRIDE to bolster its Singularity platform with next-generation security orchestration and automated response (SOAR) capabilities. STRIDE's innovative, no-code security orchestration platform is designed to simplify and streamline security operations, circumventing the complexities and cost burdens associated with legacy SOAR solutions.
Purple AI:
SentinelOne's Purple AI is set to transform enterprise security and efficiency by integrating across the Singularity platform, offering unparalleled speed and performance for autonomous security operations.
Market Position:
SentinelOne was recognized as a leader in various industry evaluations, including Gartner's Magic Quadrant for Endpoint Protection Platforms.
Customers:
The company has seen strong customer growth, including a record number of million-dollar-plus ARR customers in Q4.
Competitors:
Despite the challenging market, SentinelOne has successfully competed against both traditional and next-gen cybersecurity vendors, owing to their AI-driven solutions and comprehensive platform.
Macroenvironment:
Despite global economic uncertainties, SentinelOne has managed to surpass expectations, demonstrating resilience and adaptability.
The cyber threat landscape continues to evolve, with AI-based attacks increasing, underscoring the need for modern, comprehensive cybersecurity solutions.
Guidance:
For fiscal year 2025, SentinelOne expects over 30% revenue growth and aims to achieve positive free cash flow and operating income by year-end.
The company sees significant growth opportunities in endpoint security, cloud security, and data analytics, with plans to further penetrate these markets.
SentinelOne expects to achieve over 30% revenue growth in fiscal year 2025, along with positive free cash flow and operating income by the end of the year.
Challenges:
SentinelOne faces the challenge of navigating a competitive landscape and evolving cyber threats.
Economic uncertainties and the need for cost efficiencies among customers also pose potential hurdles.
Management comments on the earnings call.
PingSafe & STRIDE:
"PingSafe accelerates our time to market and ushers in full CNAPP at SentinelOne. We are combining our best-in-class cloud workload protection with PingSafe's CSPM, secret scanning and offensive attack engine, all fully unified by AI and our data lake. We've also acquired STRIDE that adds hyperautomation across the Singularity platform." - Tomer Weingarten, CEO
Purple AI:
"Purple AI is the next chapter of this journey. It will become generally available in just a few weeks, laying the foundation for a transformative step forward in enterprise security and efficiency." - Tomer Weingarten, CEO
Product Innovations and AI:
"Our AI-based security leadership stems from a decade of machine learning, real-time protection, and automation. Our innovations are focused on key growth areas of cloud, AI, data, and endpoint." - Tomer Weingarten, CEO
Competitors and Customers:
"Our pace of innovation and technology leadership remains strong...Customers' preference for SentinelOne's AI-powered security is evident by our top-tier ratings...we continue to win a significant majority of competitive evaluations." - Tomer Weingarten, CEO
Leadership in Macroenvironment:
"Despite challenging global economic conditions over the past year, SentinelOne once again achieved leading growth among public software companies...The macroeconomic environment remains demanding yet we returned to positive net new ARR growth in the second half of fiscal year 2024." - Tomer Weingarten, CEO
Challenges:
"The broader demand environment remains similar to the trends that we discussed in prior quarters. Organizations continue to focus on cost and efficiency, amid macroeconomic conditions. And, we expect these dynamics to persist." - Tomer Weingarten, CEO