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SentinelOne (S) Q3 Earnings Miss Estimates, Revenues Improve

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SentinelOne S reported a non-GAAP loss of 15 cents per share in third-quarter fiscal 2022, missing the Zacks Consensus Estimate by 21.05%. The company had reported a loss of 72 cents in the year-ago quarter.

SentinelOne reported revenues of $56 million, beating the Zacks Consensus Estimate by 12.71% and increasing 128% year over year.

Quarter Details

As of Oct 31, 2021, SentinelOne’s annualized recurring revenue (ARR) increased 131% year over year to $237 million.

In the reported quarter, SentinelOne announced the integration of the new Network Detection and Response solutions with Arista Networks, Fidelis Cybersecurity and Vectra AI, thus expanding its partner ecosystem.

SentinelOne, Inc. Price, Consensus and EPS Surprise

SentinelOne, Inc. Price, Consensus and EPS Surprise
SentinelOne, Inc. Price, Consensus and EPS Surprise

SentinelOne, Inc. price-consensus-eps-surprise-chart | SentinelOne, Inc. Quote

In the third quarter, SentinelOne entered into a strategic partnership with Kroll. The partnership is anticipated to help the company develop solutions to accelerate investigations and respond to advanced cyber threats and ransomware attacks.

Non-GAAP gross profit margin declined 870 basis points (bps) year over year to 66.8% compared with 58.1% in the year-ago quarter.

Research & development expenses, as a percentage of revenues, plunged 1300 bps on a year-over-year basis to 45.9%. General & administrative expenses, as a percentage of revenues, were 25.8%, down 180 bps year over year. Sales and marketing expenses, as a percentage of revenues, reached 64.2% on a year-over-year basis.

Total operating expenses, as reported in the third quarter, amounted to $76.1 million, up 93.4% year over year.

The operating loss was $38.7 million in the reported quarter compared with an operating loss of $25.1 million in the year-ago quarter.

Balance Sheet & Cash Flow

As of Oct 31, 2021, SentinelOne had cash, cash equivalents and short-term investments of $1,664.86 million compared with $395.836 million as of Jan 31, 2021.

Free cash outflow was $20.68 billion in the reported quarter compared with the free cash outflow of $19.84 million in the year-ago quarter.

Guidance

For fourth-quarter fiscal 2022, SentinelOne expects revenues in the range of $60-$61 million.

Non-GAAP gross margin is expected in the range of 62%-63% for the fiscal fourth quarter.

For fiscal 2022, SentinelOne expects total revenues in the band of $199-$200 million.

Non-GAAP gross margin is forecast within 61-62% for fiscal 2022.

Zacks Rank & Stocks to Consider

SentinelOne currently has a Zacks Rank #3 (Hold).

SentinelOne’s shares have returned 20.1% year to date compared with the Zacks IT Services industry’s increase of 0.9% and Computer & Technology sector’s growth of 21.4%.

Some better-ranked stocks in the Computer & Technology sector are Arrow Electronics ARW, Salesforce CRM and Advanced Micro Devices AMD.

Currently, Arrow Electronics sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The long-term earnings growth rate is pegged at 27.36%.

ARW has increased 28.7% year to date compared with the Zacks Electronics-Parts Distribution industry’s growth of 30.3% and the Computer & Technology sector’s return of 21.4%.

Salesforce, sporting a Zacks Rank #1, has a long-term earnings growth rate of 16.75%.

CRM is up 20% against the Zacks Computer Software industry’s decline of 35.8% and Computer & Technology sector’s return of 21.4% year to date.

The long-term earnings growth rate for AMD, a Zacks Rank #2 (Buy) stock, is currently pegged at 46.2%.

AMD has surged 57.9% year to date compared with the Electronics-Semiconductors industry’s growth of 32.5% and the Computer & Technology sector’s return of 21.4%.


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