Date: 2026-04-03 Quarter: Q4 FY25 (company Q4 FY2026, ended January 31, 2026; reported March 12, 2026) Market cap: 4.53B|EV: 3.76B | EV/TTM Rev: 3.8x | Revenue growth: 20.3% YoY
SentinelOne delivered a clean execution quarter — $271.2M revenue in line with guide, record $64M net new ARR, record $100K+ customer adds, and the first full fiscal year crossing $1B with non-GAAP operating profitability. The numbers are fine. But "fine" at 20% growth does not earn a premium. The interesting signal is beneath the surface: ARR bookings are accelerating while revenue decelerates, platform adoption is inflecting non-linearly (5+ solutions at 22% of enterprise base, up from 9%), and non-endpoint crossed 50% of bookings for the first time. These are leading indicators of a company transitioning from endpoint vendor to platform, and if they hold, the current 3.8x EV/revenue valuation is mispricing the optionality significantly. The gross margin compression (-2.7pp GAAP over four quarters) is the primary concern — moving in the wrong direction for a software company scaling to profitability. Conviction: 3/5 — the valuation provides margin of safety, but I need to see growth stabilize at 20%+ and gross margins stop deteriorating before raising conviction.
| Criterion | Threshold | S Result | Pass/Fail |
|---|---|---|---|
| Revenue YoY growth | >30% (>40% pref) | 20.3% (Q4) / 21.9% (FY) | FAIL |
| Gross margin | >60% (>70% pref) | 72.6% GAAP / 78.0% non-GAAP | PASS |
| Revenue per quarter | >$50M | $271.2M | PASS |
| Data availability | 4+ quarters | 16 quarters | PASS |
| Share dilution | <10% annual | ~2.7% net (post-buyback, 12.2M shares repurchased FY26) | PASS |
| GAAP profitability trajectory | Improving or positive | Improving (GAAP OM: -40.1% FY to -32.1% FY) | PASS |
Gate result: FAIL on revenue growth. At ~20% YoY, S does not qualify as hypergrowth. Analysis proceeds as a value-plus-growth opportunity given extreme peer valuation discount and margin inflection.
| Factor | Rating | Detail |
|---|---|---|
| Growth | Weak | 20.3% YoY Q4, 21.9% FY. FY27 guided ~20%. Below 30% threshold. |
| Trajectory | Mixed | Revenue YoY: 70% -> 38% -> 29% -> 20% over 3 years — persistent deceleration. But NNA accelerated to $64M record and $100K+ adds surged to 95. Divergence signal. |
| Margins | Mid-High | Non-GAAP GM 78% (compressing -1pp YoY). Non-GAAP OM 5.7% Q4 / 3.5% FY (first profitable year). Guided 10% FY27. GAAP still -32% OM. |
| Dominance | Contested | #3 in endpoint: 10.6% share vs CRWD 22.5%, MSFT 12.6%. Gartner Leader 5 consecutive years. Not closing gap. Platform breadth is differentiator. |
| Valuation | Cheap | EV/TTM Rev 3.8x vs CRWD 18.7x, PANW ~12x. PEG ~0.19. Forward P/E ~38x non-GAAP. Net cash 17% of mkt cap. |
| Special | Present | (1) 5x peer discount on EV/Rev. (2) Platform inflection — non-endpoint >50% of bookings first time. (3) Purple AI >50% attach, Prompt Security doubling sequentially. (4) Share buyback initiated — 12.2M shares FY26. |
| | Q1 FY22 | Q2 FY22 | Q3 FY22 | Q4 FY22 | Q1 FY23 | Q2 FY23 | Q3 FY23 | Q4 FY23 | Q1 FY24 | Q2 FY24 | Q3 FY24 | Q4 FY24 | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | | | Mar-22 | Jun-22 | Sep-22 | Dec-22 | Mar-23 | Jun-23 | Sep-23 | Dec-23 | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 | Dec-25 | |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| | Revenue ($M) | 78.3 | 102.5 | 115.3 | 126.1 | 133.4 | 149.4 | 164.2 | 174.2 | 186.4 | 198.9 | 210.6 | 225.5 | 229.0 | 242.2 | 258.9 | **271.2** | | YoY % | — | — | — | — | 70.4% | 45.8% | 42.4% | 38.1% | 39.7% | 33.1% | 28.3% | 29.4% | 22.9% | 21.8% | 22.9% | **20.3%** | | QoQ % | — | 30.9% | 12.5% | 9.4% | 5.8% | 12.0% | 9.9% | 6.1% | 7.0% | 6.7% | 5.9% | 7.1% | 1.6% | 5.8% | 6.9% | **4.8%** | | GM% [GAAP] | 65.3% | 64.6% | 64.4% | 68.4% | 68.1% | 70.1% | 73.3% | 72.3% | 73.1% | 74.5% | 74.7% | 74.7% | 75.3% | 75.0% | 73.8% | **72.6%** | | GM% [Non-GAAP] | — | — | — | — | — | — | — | — | — | — | — | 79.0% | 79.0% | 79.0% | 79.0% | **78.0%** | | OM% [GAAP] | -115% | -106% | -90% | -79% | -87% | -67% | -50% | -47% | -43% | -40% | -42% | -36% | -38% | -33% | -28% | **-30%** | | OM% [Non-GAAP] | — | — | — | — | — | — | — | — | — | — | — | 1.2% | -1.7% | 2.2% | 6.8% | **5.7%** | | EPS [GAAP] | -0.33 | -0.35 | -0.35 | -0.33 | -0.37 | -0.31 | -0.24 | -0.23 | -0.23 | -0.22 | -0.25 | -0.22 | -0.63 | -0.22 | -0.18 | **-0.34** | | EPS [Non-GAAP] | — | — | — | — | — | — | — | — | — | — | — | 0.04 | 0.02 | 0.04 | 0.07 | **0.07** | | FCF ($M) | -52.2 | — | — | — | -28.6 | — | — | — | 41.1 | — | — | — | 45.4 | -7.1 | 15.9 | -2.3 | | SBC ($M) | 31.6 | 41.0 | 45.7 | 46.1 | 55.5 | 52.8 | 54.9 | 53.6 | 58.6 | 64.7 | 70.2 | 74.1 | 68.7 | 73.9 | 75.3 | 79.7 | | SBC/Rev% | 40.4% | 40.0% | 39.6% | 36.6% | 41.6% | 35.3% | 33.4% | 30.8% | 31.4% | 32.5% | 33.3% | 32.9% | 30.0% | 30.5% | 29.1% | 29.4% |
| FY22 | FY23 | FY24 | FY25 | |
|---|---|---|---|---|
| Revenue ($M) | 422 | 621 | 822 | 1,001 |
| YoY % | — | 47.2% | 32.3% | 21.9% |
| Non-GAAP OM% | — | — | — | 3.5% |
| GAAP OM% | ~-97% | ~-62% | ~-40% | -32.1% |
| FCF ($M) | -52 | -29 | 41 | 52 |
| SBC ($M) | 164 | 217 | 268 | 298 |
| SBC/Rev% | 38.9% | 34.9% | 32.6% | 29.7% |
Context: Prior stock analysis (Atlas, 2026-04-02) established baseline expectations. This earnings review validates or revises those priors against Q4 FY26 actuals and full-year results.
| Metric | Prior Belief | Actual | Verdict |
|---|---|---|---|
| Q4 Revenue | $271M (guide) | $271.2M (+0.1% beat) | In line — trivial beat, consistent with zero-cushion guidance |
| Q4 Non-GAAP OM | 4-6% (est.) | 5.7% | In line — mid-range of trajectory |
| FY26 Revenue | ~$1,001M | $1,001.3M | In line — hit the number precisely |
| FY26 Non-GAAP OM | ~3% (guide) | 3.5% | Slight beat — 50bp above guide |
| FY26 FCF | ~$40-50M (est.) | $51.9M (5.2% margin) | In line — healthy progression from $6.7M |
| Q4 Net New ARR | ~$55-58M (est.) | $64M (company record) | Positive surprise — the standout metric |
| Q4 $100K+ adds | ~60-65 (est.) | 95 (record) | Significant positive surprise — 61% accel |
| GAAP Gross Margin | ~73-74% (stable) | 72.6% (-2.1pp YoY) | Negative surprise — compression accelerating |
| Non-GAAP GM | 79% (stable) | 78.0% (-1.0pp YoY) | Negative surprise — first break below 79% |
| Platform adoption 5+ | ~15-18% | 22% (from 9% YoY) | Positive surprise — non-linear inflection |
| FY27 Revenue Guide | ~$1.15-1.20B | 1, 195M−1,205M (~20%) | In line |
| FY27 OM Guide | ~8% (est.) | ~10% ($110-120M) | Positive surprise — 650bp jump, bolder than expected |
Three things that matter:
ARR bookings acceleration is real and broad-based. Net new ARR of $64M (vs $53-54M prior quarters) and 95 new $100K+ customers (vs 54-59 prior quarters) are unambiguous acceleration in the bookings engine. This was not a single-deal aberration — it was driven by AI product attach (Purple AI >50%, Prompt Security doubling), enterprise expansion (1,667 $100K+ customers), and platform consolidation (eight-figure TVC deal). The ARR/revenue divergence (ARR 22% YoY vs revenue 20.3%) is a leading indicator I will track going forward.
Gross margin compression is the red flag. GAAP GM declined from 75.3% (Q1 FY25) to 72.6% (Q4 FY25) — 2.7pp in four quarters. Non-GAAP GM broke below 79% for the first time. This is the wrong direction for a software company claiming platform transformation and operating leverage. Possible drivers: product mix shift toward lower-margin managed services (Wayfinder, Data Solutions), cloud infrastructure cost increases, or competitive pricing pressure. This directly undermines the FY27 10% OM guide — if GM continues compressing 1pp/quarter, operating leverage gets absorbed. Management did not address this proactively, and it was not raised in Q&A. This is a gap.
The non-endpoint >50% of bookings milestone is structurally significant. This means SentinelOne's growth engine has diversified away from core EDR dependency. Combined with 65% of enterprises on 3+ solutions (from 39%) and 22% on 5+ solutions (from 9%), this is the kind of platform adoption inflection the IOT multi-product pattern describes: once enterprise deal inclusion crosses ~70-80% on secondary products, the blended ACV mix step-changes. SentinelOne may be at that threshold now, with the Q4 NNA acceleration as the visible signal.
| Quarter | Revenue YoY | ARR YoY | Net New ARR ($M) | $100K+ Net Adds |
|---|---|---|---|---|
| Q1 FY25 | 22.9% | ~24% | — | — |
| Q2 FY25 | 21.8% | ~24% | +$53M | +54 |
| Q3 FY25 | 22.9% | ~23% | +$54M | +59 |
| Q4 FY25 | 20.3% | ~22% | +$64M (record) | +95 (record) |
Assessment: The ARR vs revenue divergence is sustained over 4 quarters. In Q4, NNA jumped 18% QoQ while sequential revenue growth slowed. If NNA sustains at $60M+/quarter, revenue growth should stabilize or modestly re-accelerate from the current 20% trough. Counterpoint: ARR YoY itself is decelerating (24% to 22%), so the divergence could be a lagging metric artifact. Q1 FY26 NNA is the critical confirmation point.
NRR at 109% is below cybersecurity best-in-class (CRWD historically 120%+). Gross retention at 96% is solid — the weakness is in expansion (only +13pp net). The enterprise platform adoption data (65% on 3+ solutions) suggests expansion should improve, but 109% tells me the installed base is not self-accelerating enough to drive revenue growth without continued heavy new-logo acquisition.
Total deferred revenue of $633.1M = 63% of TTM revenue. Significant forward revenue cushion. No prior-period deferred revenue data available for trend analysis, but the absolute level is healthy.
| Metric | S (Current) | S (1Y Ago Est.) | CrowdStrike | Assessment |
|---|---|---|---|---|
| Market Cap | $4.53B | ~$5-6B | $101B | S is 22x smaller than CRWD |
| EV/TTM Revenue | 3.8x | ~6-7x | 18.7x | Massively cheap vs peers |
| EV/Forward Revenue | ~3.1x | — | ~15x | 5x discount to CRWD |
| EV/TTM Gross Profit | 5.1x | — | ~25x | |
| Forward P/E (Non-GAAP) | ~38x | N/A | ~91x | Cheap on forward earnings |
| Revenue Growth | 20% | ~29% | ~24% | Similar growth, 5x cheaper |
| Non-GAAP OM | 3.5% FY / 5.7% Q4 | -3% | ~25% est. | Early-stage profitability |
| Net Cash / Mkt Cap | 17% | — | — | Meaningful floor |
| PEG (EV/Rev / Growth) | 0.19 | — | 0.85 | Cheapest in peer group |
Rule of 40: 20% growth + 5.2% FCF margin = 25.2%. Below 40 but improving. FY27 target: 20% + 10% = 30%.
Relative valuation: S is 5x cheaper than CRWD on EV/Revenue for a company growing 4pp slower. The discount reflects real concerns — lower NRR, weaker competitive position, GAAP losses, compressing margins. But a modest re-rating to 6x forward revenue would imply ~$8.7B market cap (incl. net cash) — 92% upside.
Secular tailwinds: Cybersecurity spending non-discretionary, growing 12-15% annually. AI threats expanding attack surface. Regulatory tightening globally.
Platform assessment: Genuine platform transformation confirmed by metrics: non-endpoint >50% of bookings, 4 product lines above $100M ARR, enterprise 5+ solution adoption at 22% (from 9%), AI SIEM with native data lake, Purple AI as cross-product layer. The question is whether this is a winning platform or a distant #3 platform.
TAM: Endpoint ~15B; XDR/SIEM 30-40B; AI Security ~$5-10B by 2028. Current $1.1B ARR = ~2-3% of combined TAM.
Analysis by Atlas | 2026-04-03 | No position held