SentinelOne, Inc. Q1 FY2026 earnings call

Key Points

• Q1 performance exceeded revenue growth expectations with 23% revenue growth and a record free cash flow margin of 20%.
• Platform innovations include the unified cloud security suite, which integrates multiple cloud security components powered by AI. Purple AI saw triple-digit year-over-year growth in quarterly bookings and over 25% attach rate.
• Partner One, a reimagined program for MSSPs, incident responders, VARs, and technology partners, was launched to deepen partner engagements.
• Achieved FedRAMP high authorization for Purple, CNAP, and hyperautomation across the Singularity platform, making Purple AI the first cybersecurity agentic AI solution approved for US government organizations.
• Recognized by Frost and Sullivan and SC Media Awards for leadership in endpoint and cloud security.

SentinelOne, Inc. reported revenue of $229 million in Q1 FY2026, representing a 23% year-over-year growth. Revenue from international markets grew 27% and accounted for 38% of quarterly revenue. Total ARR reached $948 million, up 24% year-over-year. Data solutions surpassed $100 million in ARR. Purple AI achieved triple-digit year-over-year growth in quarterly bookings and an attach rate exceeding 25% across subscriptions sold in the quarter.

Q2 Guidance

• Expected revenue of approximately $242 million, representing 22% growth, driven by sequential net new ARR growth exceeding typical Q2 seasonality.

Full-Year Guidance

• Full-year revenue expected to be $996 million to $1 billion, a 22% growth.
• Q2 gross margin expected to remain at approximately 79%, with full-year gross margin between 78.5% and 79.5%.
• Q2 operating margin expected to be breakeven, with full-year operating margin between positive 3% and 4%, an improvement of over 650 basis points from fiscal year 2025.
• Announced a $200 million open-ended share repurchase authorization.

Risks

• Macro uncertainty and elongated sales cycles due to certain customers pausing spending decisions, impacting Q1 net new ARR.
• Potential further external disruption that could affect sales timelines and performance.

Q: Can you just talk a little bit more about incremental ARR in the quarter? You were expecting net new ARR to grow this year, and it was down materially in Q1. I mean, was there more churn than expected from Deceptions? This a few large deals that slipped or churned? Yeah. Maybe just what gives you confidence that this is macro and not competitive?

A: Thank you for the question. First of all, I think we're already seeing improved trends in May, and we totally expect the year-over-year ARR growth in Q2 to improve relative to Q1. It will imply well above seasonal growth in Q2 compared to last year. So we believe that this was mostly isolated to kind of a Q1 dynamic, if you may. It is more around slip deals than anything else. We've not seen any type of elevated churn. So a lot of what we've seen and observed in Q1 goes back to just more macro volatility than I think anybody expected. If we kind of think about the second half, I think, in a more holistic way, the opportunities, the engagements we see, demand is still strong, and pipeline is still strong. So all of that just points us again to fundamentals being intact.

Q: Barbara, my question is for you. I just wanted to better understand your guidance assumptions. And does the incremental conservatism assume the April trends persist throughout the year? And just related to that, you know, what did you see in May? And I don't believe in your guidance you've given us any update for ARR. But with the revenue cut on the full year, should we also assume that the $200 million plus or minus ARR target no longer stands?

A: Yeah. Thanks, Brad. Appreciate the question. So, just in terms of the broader piece, I would say our outlook is reflecting underlying kind of new business growth as we move throughout the year. We definitely are seeing improved trends in May compared to what we saw in April. But we're also trying to be thoughtful about the environment and the potential that there might be further unexpected external disruption. So trying to capture that all in our expectations for FY2026. As you noted, our revenue guide, we did decrease that by 1%, and you can assume that that means our internal expectations around net new ARR came down a slight bit as well.

Q: Tomer and Barbara, was hoping you can give us some more specific commentary on what customers were telling you with the slip deals. We understand the general macro uncertainty, but are customers saying, for example, that they expect to have more certainty later in the year? Are you expecting the slip deals to close in the July quarter? Is it perhaps gonna take longer? Help us marry the broad economic commentary to the specific SentinelOne, Inc. commentary.

A: Sure. Let's maybe start a bit more high level. The macro backdrop changed in Q1. I think for a lot of folks that was fairly unexpected, especially in April, which is our largest month of the smallest quarter. So we observed longer sales cycles, and I think customers basically paused their spending decisions for a few weeks. We have not seen any deal cancellations. I think as we look ahead, unknowns around federal purchasing, global trade, all of that is still present. We're trying to be mindful and reflect that in our outlook. Second and positively, we do expect 22% growth this year, a top-tier growth rate, especially in the challenging environment. So our success with large enterprises, the platform adoption, continue to drive higher ARR per customer. That actually reached a new record in Q1. So we're seeing many positive factors, but at the same time, it's really clear that we're trying to create some more room to be able to digest better any potential further disruption. You know, this environment is proving to be very unpredictable on almost a daily or weekly basis. So we're just trying to take a more tapered approach to our growth expectations. As we mentioned a couple of times, trends have definitely improved in May. We're starting to see more and more progression in the enterprise and in federal sales. So that's definitely encouraging. Again, the demand overall is still strong. Win rates are strong. And as you see more platform adoption, I think that what gives us the confidence that most of the drivers are there. This disruption is the part that we cannot just predict on our own accord.