S Q2 2026 Earnings

{ "callDetails": { "callTitle": "SentinelOne Q2 2026 Earnings Call", "dateTime": "August 28, 2025 at 8:30 PM UTC", "managementTeam": [ { "name": "Tomer Weingarten", "title": "Chief Executive Officer" }, { "name": "Barbara Larson", "title": "Chief Financial Officer" }, { "name": "Saad Nazir", "title": "Head of Investor Relations" } ] }, "callSummary": { "sections": [ { "title": "Financial Performance", "importance": "major", "bullets": [ "Total ARR grew 24% year-over-year and crossed $1.0B for the first time in the quarter.", "Net new ARR in the quarter was $53M, which materially exceeded the company's internal expectations.", "Revenue grew 22% year-over-year to $242M on a non-GAAP basis.", "International revenue grew 27% year-over-year and represented 38% of total revenue for the quarter.", "Remaining performance obligations (RPO) grew 26% to $1.2B, and trailing 12-month free cash flow margin was 2% on a non-GAAP basis.", "The company ended the quarter with $1.2B in cash, cash equivalents and investments, and reported no debt on the balance sheet.", "Customers with ARR of $100K+ grew 23% year-over-year to 1,513, and the company reported a record ARR per customer.", "All financial measures discussed on the call were presented on a non-GAAP basis unless otherwise noted by the speakers." ] }, { "title": "Guidance", "importance": "major", "bullets": [ "The company expects Q3 revenue of approximately $256M, representing 22% year-over-year growth.", "Full-year fiscal 2026 revenue guidance was raised to a range of $998M to $1.002B with a $1.0B midpoint.", "Q3 gross margin is expected to be approximately 78.5% on a non-GAAP basis.", "Full-year gross margin is expected to be between 78.5% and 79% on a non-GAAP basis.", "Q3 operating margin is expected to be about 4% and full-year operating margin is expected to be about 3% on a non-GAAP basis.", "The company reaffirmed its expectation to deliver positive free cash flow for the full year, which management expects to be a few points higher than operating margin.", "The expected operating margin outlook incorporates foreign exchange headwinds and an estimated ~80 basis point drag from the Prompt Security acquisition." ] }, { "title": "Capital Allocation", "importance": "minor", "bullets": [ "The company has $1.2B of cash, cash equivalents and investments and no debt, providing flexibility for strategic allocation.", "SentinelOne announced the acquisition of Prompt Security for approximately $180M, which is expected to close in Q3.", "The company stated the Prompt acquisition will have minimal top-line impact in fiscal 2026 with immaterial ARR and revenue contribution in the year of acquisition.", "Management quantified the near-term margin impact of Prompt as roughly an 80 basis point reduction to full-year operating margin.", "The company said it will continue investing in product, go-to-market, and partnerships while remaining focused on achieving positive free cash flow." ] }, { "title": "ARR / Recurring Revenue Growth", "importance": "major", "bullets": [ "Total ARR grew 24% year-over-year and exceeded $1.0B, marking a significant company milestone.", "Net new ARR in the quarter was $53M, described as a record quarter of net new ARR for the company.", "Remaining performance obligations grew 26% to $1.2B, and the company noted RPO duration was relatively stable in the quarter.", "Approximately half of quarterly bookings again came from non-endpoint solutions, reflecting diversification of ARR sources.", "The company reported a company-record ARR per customer in the quarter, driven by multi-product expansion.", "Management said Flex deals are treated under existing ARR mechanics (TCV divided by duration) and recognized ratably over contract life." ] }, { "title": "Retention & Expansion", "importance": "major", "bullets": [ "The company stated net retention remains strong and 'well into expansionary territory,' but did not disclose a specific net dollar retention percentage.", "Expansion within existing accounts meaningfully contributed to net new ARR, alongside new logo acquisition, and management characterized the mix as roughly an even split between new and expansion.", "Purple AI and data solutions were highlighted as primary expansion drivers, with Purple AI growing 'triple digits' and attach rates surpassing 30% of licenses sold in the quarter.", "The company reported landing seven-figure ARR wins with Purple AI as a standalone solution, demonstrating standalone monetization and expansion potential.", "Platform adoption (non-endpoint) contributed a record share of bookings in the quarter, supporting multi-product expansion dynamics.", "While management emphasized strong expansion, they did not disclose explicit churn, gross retention, or a detailed cohort-level renewal performance metric on the call." ] }, { "title": "AI Strategy & Monetization", "importance": "minor", "bullets": [ "Purple AI was cited as a key growth engine, with triple-digit growth and attach rates above 30% in the quarter.", "The company claimed IDC study results for Purple AI users of 55% faster threat remediation, 60% lower likelihood of major incidents, and a 338% three-year ROI.", "AI SIEM and data solutions delivered a company-record contribution to bookings, and AI SIEM is now listed in the AWS marketplace enabling new sales motions.", "Prompt Security acquisition is intended to secure GenAI runtime, prevent data leakage, and is positioned as complementary to endpoint DLP capabilities.", "Management emphasized that AI, data, and security together are central to the Singularity platform monetization strategy and that AI-enabled modules are driving higher deal sizes and platform consumption." ] }, { "title": "Margins & Operating Leverage", "importance": "minor", "bullets": [ "The company reported a non-GAAP gross margin of 79% for the quarter, which management described as industry-leading.", "Operating profitability was 2% in the quarter on a non-GAAP basis, representing greater than a 500 basis point year-over-year improvement.", "The company reported its fifth consecutive quarter of positive net income margin, which increased to 5% in Q2 on a non-GAAP basis.", "Trailing 12-month free cash flow margin was 2% and management expects free cash flow margin to improve through the second half of the fiscal year.", "Management reiterated a disciplined investment posture while pursuing operating leverage and sustained positive operating margins for the year." ] } ] }, "notableQuotes": [ { "quote": "Our total ARR grew 24% and crossed a billion dollars.", "speakerName": "Tomer Weingarten" }, { "quote": "We achieved a record second quarter net new ARR, reflecting positive year-over-year growth of over 20%.", "speakerName": "Tomer Weingarten" }, { "quote": "Purple AI achieved record momentum in Q2, growing triple digits with attach rates surpassing 30% of licenses sold during the quarter.", "speakerName": "Tomer Weingarten" }, { "quote": "In Q2, revenue grew 22% year-over-year to $242M.", "speakerName": "Barbara Larson" }, { "quote": "Our net retention rate remains strong and well into expansionary territory.", "speakerName": "Barbara Larson" }, { "quote": "We maintained an industry-leading gross margin of 79%.", "speakerName": "Barbara Larson" }, { "quote": "We achieved operating profitability of 2% in the quarter, with operating margin improving by more than 500 basis points year-over-year.", "speakerName": "Barbara Larson" }, { "quote": "We ended the quarter with $1.2B in cash, cash equivalents and investments, and no debt.", "speakerName": "Barbara Larson" }, { "quote": "The purchase price for Prompt Security is approximately $180M.", "speakerName": "Barbara Larson" }, { "quote": "For the third quarter, we expect revenue of approximately $256M, reflecting 22% year-over-year growth.", "speakerName": "Barbara Larson" } ], "qaSummary": [ { "question": { "analystName": "John DiFucci", "firm": "Guggenheim", "summary": "Clarification on whether growth was driven more by new logos or expansion and whether the Singularity platform is driving expansion within existing customers." }, "answers": [ { "executiveName": "Tomer Weingarten", "executiveTitle": "Chief Executive Officer", "quality": "Direct", "newInfo": "Partial", "guidance": "No", "summary": "The quarter was described as broad-based with an even split between new logos and expansion, and both endpoint and non-endpoint solutions contributed. The executive reiterated that Purple AI and data are the fastest-growing solutions and that Flex improves the ability to expand at renewal and with net new customers. No specific incremental metrics beyond previously disclosed ARR, net new ARR, and attach-rate commentary were provided." } ] }, { "question": { "analystName": "Rob Owens", "firm": "Piper Sandler", "summary": "Asked for guardrails around Q3 and commentary on net new ARR trajectory into the back half." }, "answers": [ { "executiveName": "Barbara Larson", "executiveTitle": "Chief Financial Officer", "quality": "Direct", "newInfo": "Partial", "guidance": "Yes", "summary": "The company does not provide formal ARR guidance but said Q2 results and the updated revenue outlook imply an improved view on net new ARR for the full year. Investors are directed to approximate ARR from the provided revenue outlook and business model assumptions. No explicit net new ARR forecast was provided for Q3." } ] }, { "question": { "analystName": "Brad Zelnick", "firm": "Deutsche Bank", "summary": "Asked whether Flex formalizes prior practices and how Flex flows through ARR and revenue recognition." }, "answers": [ { "executiveName": "Tomer Weingarten", "executiveTitle": "Chief Executive Officer", "quality": "Direct", "newInfo": "Partial", "guidance": "No", "summary": "Tomer said Flex is an evolution in licensing that targets renewing and mid-to-large customers and accelerates sampling and consumption across ~30 capabilities. He said Flex drives larger deals and sales velocity but is still early in adoption.", { "executiveName": "Barbara Larson", "executiveTitle": "Chief Financial Officer", "quality": "Direct", "newInfo": "Yes", "guidance": "No", "summary": "Barbara explained that Flex deals are treated like other ARR contracts: ARR is calculated as TCV divided by duration and revenue is recognized ratably over the contract term." } ] }, { "question": { "analystName": "Joe Gallo", "firm": "Jefferies", "summary": "Asked how Prompt Security will ramp revenue and when AI security will convert to material cyber revenue." }, "answers": [ { "executiveName": "Tomer Weingarten", "executiveTitle": "Chief Executive Officer", "quality": "Partial", "newInfo": "Partial", "guidance": "No", "summary": "Tomer positioned Prompt as addressing an urgent market need for GenAI runtime control and DLP-like endpoint protection, and he said early customer traction is strong. He described Prompt as expected to be a significant contributor over years, but noted ARR from Prompt is immaterial in the current fiscal year and did not provide a specific ramp timeline or near-term revenue contribution estimates." } ] }, { "question": { "analystName": "Rudy Kessinger", "firm": "DA Davidson", "summary": "Asked why the company did not increase full-year revenue guidance more given the strong Q2 beat and raised ARR assumptions." }, "answers": [ { "executiveName": "Barbara Larson", "executiveTitle": "Chief Financial Officer", "quality": "Direct", "newInfo": "No", "guidance": "Yes", "summary": "Barbara reiterated that the company improved its second-half revenue outlook but is being prudent due to potential variability in timing of larger deals and macroeconomic considerations. She did not provide additional quantitative offsetting factors beyond the general statement about deal timing and macro uncertainty." } ] }, { "question": { "analystName": "Ittai Kidron", "firm": "Oppenheimer", "summary": "Requested U.S. versus international mix and whether RPO duration changed as RPO grew 26%." }, "answers": [ { "executiveName": "Barbara Larson", "executiveTitle": "Chief Financial Officer", "quality": "Direct", "newInfo": "Yes", "guidance": "No", "summary": "Barbara disclosed that international represented 38% of total revenue this quarter and that RPO grew 26% year-over-year to $1.2B. She confirmed that RPO duration was relatively stable in the quarter and that no material change in duration should be called out." } ] }, { "question": { "analystName": "Shaul Eyal", "firm": "TD Cowen", "summary": "Asked about long-term revenue uplift potential from Flex and whether pipeline is at record levels." }, "answers": [ { "executiveName": "Barbara Larson", "executiveTitle": "Chief Financial Officer", "quality": "Partial", "newInfo": "Partial", "guidance": "No", "summary": "Barbara described Flex as early stage but expected to be positive for deal sizes, contract duration, and platform adoption over time. She also characterized the pipeline as very healthy and growing, but did not provide quantitative pipeline metrics." } ] }, { "question": { "analystName": "Roger Boyd", "firm": "UBS", "summary": "Asked for an update on the Lenovo partnership and its momentum and ARR/revenue assumptions from that channel." }, "answers": [ { "executiveName": "Tomer Weingarten", "executiveTitle": "Chief Executive Officer", "quality": "Evasive", "newInfo": "No", "guidance": "No", "summary": "Tomer said the Lenovo partnership is on track and a contributor relative to expectations but declined to provide deal-level detail or ARR/revenue assumptions for the partnership. He characterized it as one of many partner contributors." } ] }, { "question": { "analystName": "Yun Kim", "firm": "Loop Capital", "summary": "Asked whether Flex pricing improves visibility on large deals and whether it prompts early renewals as customers sample new products." }, "answers": [ { "executiveName": "Tomer Weingarten", "executiveTitle": "Chief Executive Officer", "quality": "Direct", "newInfo": "Partial", "guidance": "No", "summary": "Tomer said Flex streamlines procurement and can unlock sales velocity by simplifying negotiations, but the company will not force early renewals and will continue to work at customer pace. He characterized Flex as an enabler of visibility and velocity but provided no quantified change to renewal timing." } ] }, { "question": { "analystName": "Trevor Walsh", "firm": "JMP", "summary": "Asked which buyer personas will purchase Prompt Security (SOC, cloud, endpoint teams) and whether these are existing contacts or new relationships." }, "answers": [ { "executiveName": "Tomer Weingarten", "executiveTitle": "Chief Executive Officer", "quality": "Direct", "newInfo": "Yes", "guidance": "No", "summary": "Tomer identified two primary buying centers: endpoint/DLP teams for employee GenAI use cases and cloud/security teams for model/runtime securement, stating that the company already has interfaces into both constituencies. He said Prompt is adjacent to existing endpoint deployments while also addressing cloud-oriented runtime security needs." } ] } ], "redFlagsWatchItems": [ "Company repeatedly references 'net retention rate remains strong' without disclosing a specific net dollar retention percentage, creating a visibility gap on expansion durability.", "Full-year revenue guidance increase is modest relative to a materially stronger Q2, and management repeatedly cites prudence due to deal timing and macro, which could limit upside from the Q2 beat.", "Prompt Security acquisition ($180M) is expected to have immaterial ARR in FY26 yet an estimated ~80 basis point drag to operating margin, creating short-term profit dilution without near-term revenue offset.", "Flex licensing is early in adoption and could change contract duration, pricing dynamics, or comparability of ARR metrics over time; risk exists around mixing Flex ARR with standard ARR if disclosures are not granular.", "Management presents most metrics on a non-GAAP basis and excludes multiple items from guidance, which increases reliance on non-GAAP adjustments for performance assessment.", "International growth was 27% and now represents 38% of revenue, but management cited foreign exchange headwinds and provided no regional breakdown, creating potential FX and regional execution exposure.", "The company highlights that ~50% of bookings were non-endpoint, but detailed bookings-to-revenue timing and potential mismatches between bookings/RPO and revenue recognition were not resolved and could affect near-term revenue visibility." ] }