SentinelOne(S) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported revenue of $229 million for Q1 2026, representing a 23% year-over-year growth [25] - Total Annual Recurring Revenue (ARR) grew 24% to$ 948 million [26] - The gross margin maintained at 79%, with an operating margin improvement to negative 2% [28] - Free cash flow margin reached a record 20% for the quarter, with cash and investments increasing to $1.2 billion [35][36] Business Line Data and Key Metrics Changes - The data solutions segment surpassed$ 100 million in ARR during Q1 [9] - The attach rate for AI solutions exceeded 25% across subscriptions sold in the quarter, indicating strong customer adoption [8][85] - Customers with ARR of $100,000 or more grew 22% to 1,459 [27] Market Data and Key Metrics Changes - Revenue from international markets grew 27%, accounting for 38% of total quarterly revenue [26] - Remaining performance obligations increased by 33% to$ 1.2 billion, indicating strong future revenue visibility [27] Company Strategy and Development Direction - The company is focusing on a platform sales strategy rather than a product-centric approach, aiming to enhance customer engagement and adoption [21][72] - Recent innovations include the unified cloud security suite and advancements in AI capabilities, which are expected to drive future growth [8][20] - The company aims to simplify security through AI, positioning itself as a leader in the evolving cybersecurity landscape [19][20] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic uncertainty impacted Q1 net new ARR, but trends improved in May, leading to expectations of better performance in Q2 [18][42] - The company remains confident in its growth trajectory, expecting revenue of approximately $242 million for Q2, reflecting a 22% growth [30] - Management emphasized the importance of operational discipline and efficiency to navigate market challenges while continuing to invest in innovation [32][81] Other Important Information - The company achieved FedRAMP high authorization for several products, enhancing its competitive position in the public sector [12][13] - A$ 200 million open-ended share repurchase authorization was announced, reflecting confidence in the company's long-term prospects [36] Q&A Session Summary Question: Can you discuss the incremental ARR in the quarter? - Management indicated that improved trends were observed in May and expects year-over-year net ARR growth in Q2 to improve relative to Q1, attributing Q1 challenges to slip deals rather than elevated churn [40][41] Question: What are the guidance assumptions for the year? - Management acknowledged that the guidance reflects underlying new business growth and noted improved trends in May, while also being cautious about potential external disruptions [45][46] Question: What impact did the macro environment have on existing versus new customers? - Management clarified that the macro dynamics were more pronounced with new logos, while existing customer upsell and cross-sell remained strong [97] Question: How is the company approaching hiring plans for fiscal 2026? - Management stated that hiring is primarily focused on R&D, with adjustments made based on market needs and growth areas [102] Question: What is the outlook for the federal side of the business? - Management expressed optimism about growth opportunities in the federal sector, despite longer sales cycles and evolving procurement processes [107]