Revenue increased 128%
year-over-year
ARR up 131% year-over-year
SentinelOne, Inc. (NYSE: S) today announced financial results
for the third quarter of fiscal year 2022 ended October 31,
2021.
“Customers continue to choose Singularity XDR because of our
protection, detection, response, and automation capabilities. Our
business is performing extremely well. Q3 marks the third
consecutive quarter of triple digit ARR growth,” said Tomer
Weingarten, CEO of SentinelOne. “We continued to make progress
across all aspects of our growth strategy outlined during the
IPO.”
“Our ARR growth accelerated to 131% year-over-year as we
delivered ARR of $237 million,” said Dave Bernhardt, CFO of
SentinelOne. “The strength was broad based, including new and
existing customers as well as large and mid-sized enterprises.”
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 third
quarter of fiscal year 2022 as well as our full fiscal year 2022
financial outlook.
Third Quarter Fiscal 2022 Highlights
- Total revenue was $56.0 million in the third quarter of
fiscal year 2022, a 128% increase compared to $24.6 million for the
same period of fiscal 2021.
- Annualized recurring revenue (ARR) increased 131%
year-over-year to $237 million as of October 31, 2021.
- Total customer count grew more than 75% year-over-year
to over 6,000 customers as of October 31, 2021. Customers with ARR
over $100K grew 140% year-over-year to 416 as of October 31, 2021.
Dollar-based net revenue retention rate reached a new high of
130%.
- Gross margin: GAAP gross margin was 64% in the third
quarter of fiscal year 2022, compared to 58% for the same period of
fiscal 2021. Non-GAAP gross margin was 67%, compared to 58% for the
same period of fiscal 2021.
- Loss from operations: GAAP loss from operations was
$67.4 million in the third quarter of fiscal year 2022 compared to
$29.7 million for the same period of fiscal year 2021. Non-GAAP
loss from operations was $38.7 million in the third quarter of
fiscal year 2022, compared to $25.1 million for the same period of
fiscal year 2021.
- Cash, cash equivalents and short-term investments were
$1.7 billion as of October 31, 2021, which includes approximately
$1.4 billion of net proceeds from our initial public offering and
the concurrent private placement after deducting underwriting
discounts and commissions.
Financial Outlook
We are providing the following guidance for the fourth quarter
of fiscal 2022, ending January 31, 2022, and for the full fiscal
year 2022, ending January 31, 2022:
Q4 FY22
Guidance
Full Year FY22
Guidance
Revenue
$60-61 million
$199-200 million
Non-GAAP gross margin
62-63%
61-62%
Non-GAAP operating margin
(83)-(80)%
(91)-(90)%
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, employer payroll tax on employee stock transactions,
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 third quarter of fiscal 2022
and outlook for the fourth quarter of fiscal 2022 and full fiscal
year 2022 today, December 7, 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 fourth 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; our ability to successfully integrate any
acquisitions and strategic investments; 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; 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; risks
of securities class action litigation; 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, our Quarterly Report on Form 10-Q for our second
fiscal quarter of 2022, dated September 10, 2021, our Quarterly
Report on Form 10-Q that will be filed for our third fiscal quarter
of 2022, and other filings and reports that we may file from time
to time with the SEC, 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. 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 below. 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.
As presented in the “Reconciliation of GAAP to Non-GAAP
Financial Information” table below, each of the non-GAAP financial
measures excludes one or more of the following items:
Stock-based compensation expense
Stock-based compensation expense is a non-cash expense that
varies in amount from period to period and is dependent on market
forces that are often beyond our control. As a result, management
excludes this item from our internal operating forecasts and
models. Management believes that non-GAAP measures adjusted for
stock-based compensation expense provide investors with a basis to
measure our core performance against the performance of other
companies without the variability created by stock-based
compensation as a result of the variety of equity awards used by
other companies and the varying methodologies and assumptions
used.
Employer payroll tax on employee stock transactions
Employer payroll tax expense related to employee stock
transactions are tied to the vesting or exercise of underlying
equity awards and the price of our common stock at the time of
vesting, which varies in amount from period to period and is
dependent on market forces that are often beyond our control. As a
result, management excludes this item from our internal operating
forecasts and models. Management believes that non-GAAP measures
adjusted for employer payroll taxes on employee stock transactions
provide investors with a basis to measure our core performance
against the performance of other companies without the variability
created by employer payroll taxes on employee stock transactions as
a result of the stock price at the time of employee exercise.
Amortization of acquired intangible assets
Amortization of acquired intangible assets expense are tied to
the intangible assets that were acquired in conjunction with
acquisitions, which results in non‑cash expenses that may not
otherwise have been incurred. Management excludes the expense
associated with intangible assets from non-GAAP measures to allow
for a more accurate assessment of our ongoing operations and
provides investors with a better comparison of period-over-period
operating results.
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 the expenses referenced above. 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)
October 31,
January 31,
2021
2021
Assets
Current assets:
Cash and cash equivalents
$
1,664,866
$
395,472
Short-term investments
378
364
Accounts receivable, net
68,913
39,315
Deferred contract acquisition costs,
current
20,451
14,733
Prepaid expenses and other current
assets
18,286
14,173
Total current assets
1,772,894
464,057
Property and equipment, net
23,686
13,373
Operating lease right-of-use assets
24,337
18,026
Deferred contract acquisition costs,
non-current
30,107
21,940
Intangible assets, net
16,376
470
Goodwill
108,193
—
Other assets
5,401
2,694
Total assets
$
1,980,994
$
520,560
Liabilities, Redeemable Convertible
Preferred Stock, and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable
$
7,486
$
11,822
Accrued liabilities
14,477
3,671
Accrued payroll and benefits
39,472
20,134
Operating lease liabilities, current
4,384
3,634
Deferred revenue, current
139,393
89,645
Total current liabilities
205,212
128,906
Deferred revenue, non-current
67,520
52,190
Long-term debt
—
19,621
Operating lease liabilities,
non-current
25,246
18,839
Other liabilities
4,070
401
Total liabilities
302,048
219,957
Redeemable convertible preferred stock
—
621,139
Stockholders’ equity (deficit):
Preferred stock
—
—
Class A common stock
11
—
Class B common stock
6
2
Additional paid-in capital
2,228,438
29,869
Accumulated other comprehensive income
455
165
Accumulated deficit
(549,964
)
(350,572
)
Total stockholders’ equity (deficit)
1,678,946
(320,536
)
Total liabilities, redeemable convertible
preferred stock, and stockholders’ equity (deficit)
$
1,980,994
$
520,560
SENTINELONE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except share
and per share data)
(unaudited)
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Revenue
$
56,018
$
24,557
$
139,163
$
63,188
Cost of revenue
20,357
10,341
57,428
25,497
Gross profit
35,661
14,216
81,735
37,691
Operating expenses:
Research and development
34,773
14,925
93,630
42,266
Sales and marketing
41,311
19,974
118,461
54,027
General and administrative
26,951
9,003
65,785
19,874
Total operating expenses
103,035
43,902
277,876
116,167
Loss from operations
(67,374
)
(29,686
)
(196,141
)
(78,476
)
Interest income
99
10
143
206
Interest expense
(3
)
(312
)
(785
)
(1,089
)
Other income (expense), net
(1,055
)
(111
)
(2,021
)
(122
)
Loss before provision for income taxes
(68,333
)
(30,099
)
(198,804
)
(79,481
)
Provision for income taxes
262
57
588
251
Net loss
$
(68,595
)
$
(30,156
)
$
(199,392
)
$
(79,732
)
Net loss per share attributable to Class A
and Class B common stockholders, basic and diluted
$
(0.26
)
$
(0.85
)
$
(1.39
)
$
(2.30
)
Weighted-average shares used in computing
net loss per share attributable to Class A and Class B common
stockholders, basic and diluted
262,999,535
35,646,513
143,199,215
34,705,426
(1) Includes stock-based compensation
expense as follows:
Cost of revenue
$
1,202
$
66
$
2,425
$
201
Research and development
9,035
443
24,997
3,467
Sales and marketing
4,848
985
10,800
2,052
General and administrative
12,277
3,101
23,970
4,114
Total stock-based compensation expense
$
27,362
$
4,595
$
62,192
$
9,834
SENTINELONE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended October
31,
2021
2020
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss
$
(199,392
)
$
(79,732
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
5,862
2,026
Amortization of deferred contract
acquisition costs
14,551
7,703
Non-cash operating lease costs
2,180
2,391
Stock-based compensation expense
62,193
9,834
Other
849
235
Changes in operating assets and
liabilities, net of effects of acquisition
Accounts receivable
(26,322
)
4,302
Prepaid expenses and other assets
(6,916
)
(1,802
)
Deferred contract acquisition costs
(28,436
)
(13,710
)
Accounts payable
(5,658
)
2,743
Accrued liabilities
9,900
1,704
Accrued payroll and benefits
19,774
1,827
Operating lease liabilities
(2,288
)
(2,713
)
Deferred revenue
60,037
21,916
Other liabilities
3,663
—
Net cash used in operating activities
(90,003
)
(43,276
)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment
(3,268
)
(1,634
)
Purchases of intangible assets
(520
)
(182
)
Capitalization of internal-use
software
(4,733
)
(2,130
)
Cash paid for acquisition, net of cash and
restricted cash acquired
(3,449
)
—
Net cash used in investing activities
(11,970
)
(3,946
)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from initial public offering and
private placements, net of underwriting discounts and
commissions
1,388,562
—
Proceeds from issuance of Series E
redeemable convertible preferred stock, net of issuance costs
—
152,539
Proceeds from issuance of Series F
redeemable convertible preferred stock, net of issuance costs
—
266,774
Payments of deferred offering costs
(7,416
)
—
Proceeds from revolving line of credit
—
19,857
Repayment of debt
(20,000
)
(20,000
)
Proceeds from exercise of stock
options
8,630
2,996
Net cash provided by financing
activities
1,369,776
422,166
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS
1,146
(18
)
NET INCREASE IN CASH, CASH EQUIVALENTS,
AND RESTRICTED CASH
1,268,949
374,926
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH–Beginning of period
399,112
47,680
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH–End of period
$
1,668,061
$
422,606
SENTINELONE, INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL INFORMATION
(in thousands, except
percentages and per share data)
(unaudited)
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Cost of revenue reconciliation:
GAAP cost of revenue
$
20,357
$
10,341
$
57,428
$
25,497
Stock-based compensation
(1,202
)
(66
)
(2,425
)
(201
)
Amortization of acquired intangible
assets
(558
)
—
(1,607
)
—
Non-GAAP cost of revenue
$
18,597
$
10,275
$
53,396
$
25,296
Gross profit reconciliation:
GAAP gross profit
$
35,661
$
14,216
$
81,735
$
37,691
Stock-based compensation
1,202
66
2,425
201
Amortization of acquired intangible
assets
558
—
1,607
—
Non-GAAP gross profit
$
37,421
$
14,282
$
85,767
$
37,892
Gross margin reconciliation:
GAAP gross margin
63.7
%
57.9
%
58.7
%
59.6
%
Stock-based compensation
2.1
%
0.3
%
1.7
%
0.3
%
Amortization of acquired intangible
assets
1.0
%
—
%
1.2
%
—
%
Non-GAAP gross margin
66.8
%
58.2
%
61.6
%
60.0
%
Research and development expenses
reconciliation:
GAAP research and development expenses
$
34,773
$
14,925
$
93,630
$
42,266
Stock-based compensation
(9,035
)
(443
)
(24,997
)
(3,467
)
Employer payroll tax on employee stock
transactions
(47
)
—
(47
)
—
Non-GAAP research and development
expenses
$
25,691
$
14,482
$
68,586
$
38,799
Sales and marketing expenses
reconciliation:
GAAP sales and marketing expenses
$
41,311
$
19,974
$
118,461
$
54,027
Stock-based compensation
(4,848
)
(985
)
(10,800
)
(2,052
)
Employer payroll tax on employee stock
transactions
(285
)
—
(285
)
—
Amortization of acquired intangible
assets
(190
)
—
(545
)
—
Non-GAAP sales and marketing expenses
$
35,988
$
18,989
$
106,831
$
51,975
General and administrative expenses
reconciliation:
GAAP general and administrative
expenses
$
26,951
$
9,003
$
65,785
$
19,874
Stock-based compensation
(12,277
)
(3,101
)
(23,970
)
(4,114
)
Employer payroll tax on employee stock
transactions
(187
)
—
(187
)
—
Amortization of acquired intangible
assets
(18
)
—
(54
)
—
Non-GAAP general and administrative
expenses
$
14,469
$
5,902
$
41,574
$
15,760
Operating loss reconciliation:
GAAP operating loss
$
(67,374
)
$
(29,686
)
$
(196,141
)
$
(78,476
)
Stock-based compensation
27,362
4,595
62,192
9,834
Employer payroll tax on employee stock
transactions
519
—
519
—
Amortization of acquired intangible
assets
766
—
2,206
—
Non-GAAP operating loss
$
(38,727
)
$
(25,091
)
$
(131,224
)
$
(68,642
)
Operating margin
reconciliation:
GAAP operating margin
(120.3
)%
(120.9
)%
(140.9
)%
(124.2
)%
Stock-based compensation
48.8
%
18.7
%
44.7
%
15.6
%
Employer payroll tax on employee stock
transactions
0.9
%
—
%
0.4
%
—
%
Amortization of acquired intangible
assets
1.4
%
—
%
1.6
%
—
%
Non-GAAP operating margin
(69.1
)%
(102.2
)%
(94.3
)%
(108.6
)%
Net loss reconciliation:
GAAP net loss
$
(68,595
)
$
(30,156
)
$
(199,392
)
$
(79,732
)
Stock-based compensation
27,362
4,595
62,192
9,834
Employer payroll tax on employee stock
transactions
519
—
519
—
Amortization of acquired intangible
assets
766
—
2,206
—
Non-GAAP net loss
$
(39,948
)
$
(25,561
)
$
(134,475
)
$
(69,898
)
Basic and diluted EPS
reconciliation:
GAAP loss per share, basic and diluted
$
(0.26
)
$
(0.85
)
$
(1.39
)
$
(2.30
)
Stock-based compensation
0.10
0.13
0.43
0.28
Employer payroll tax on employee stock
transactions
—
—
—
—
Amortization of acquired intangible
assets
—
—
0.02
—
Non-GAAP loss per share basic and
diluted
$
(0.15
)
$
(0.72
)
$
(0.94
)
$
(2.01
)
SENTINELONE, INC.
SELECTED CASH FLOW
INFORMATION
(in thousands)
(unaudited)
Reconciliation of cash used in
operating activities to free cash flow
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
GAAP net cash used in operating
activities
$
(17,212
)
$
(17,769
)
$
(90,003
)
$
(43,276
)
Less: Purchases of property and
equipment
(1,583
)
(1,233
)
(3,268
)
(1,634
)
Less: Capitalized internal-use
software
(1,881
)
(838
)
(4,733
)
(2,130
)
Free cash flow
$
(20,676
)
$
(19,840
)
$
(98,004
)
$
(47,040
)
Net cash used in investing activities
$
(3,984
)
$
(2,127
)
$
(11,970
)
$
(3,946
)
Net cash provided by financing
activities
$
454
$
268,870
$
1,369,776
$
422,166
Source String: SentinelOne Category: Investors
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211207006024/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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