- Earnings call transcript Q3 2023

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Operator

Good afternoon. And thank you for attending today’s SentinelOne Earnings Conference Call. My name is Jason, and I will be the moderator for today’s call. All lines will be muted during the presentation portion of the call with an opportunity for questions-and-answers at the end. [Operator Instructions] I would now like to past conference over to our host, Doug Clark.

Doug Clark

everyone. afternoon, Good SentinelOne’s fiscal to for third the And XXXX earnings ended of year October quarter welcome call XXst. With us our Bernhardt, and CEO; today are CFO. Tomer Weingarten, Dave

made performance, SEC, during issued judgment posted Our Relations today contained These important regarding financial call well our XX-Q, materially. live that file particular, on reports section call, the of today. contain Form and and this be for I as in replay time-to-time Any our this and Form via for today’s actual the documents are including website. on during cause to statements may call known letter based If statements risk will and call materially caution assume that fourth following as the full identify press financial could broadcast documents the the the would QX. current were that those of becomes making our or forward-looking forward-looking long-term to in we And required fiscal such differ remind targets. our if Except an We information or statements release update factors is our events differ being our future. on call currently including during and and from factors quarter our in today, not the could anticipated from and guidance filings is by no you and or differ our results contain on will like available reasons the update information these certain Investor call, to you being statements quarterly are as made webcast. website. XX-K report the annual other Please be us This reviewed those XXXX, shareholder forward-looking or on that best fiscal earlier we actual forward-looking to to information from as presented forward-looking even results results information. in obligation statements audio to events publicly available after actual new our materially year refer replayed law, we that the reflect the accurate with may future statements.

During let non-GAAP unless in press this SentinelOne. prepared accordance stated, discuss otherwise These release financial me of Weingarten, will Accounting reconciliation call And results financial our measures Accepted to letter. in provided the Principles. call, Generally measures. is that, turn today’s shareholder not over GAAP and we with and A CEO with the non-GAAP are of non-GAAP in Tomer

Tomer Weingarten

guidance. third achieved Good our our you full for year earnings again, expectations. And of fiscal our margin of reported thank and expansion, XX, revenue and were significant a meaningfully afternoon, revenue another quarter ahead ARR Rule of growth We joining quarter with combined margin everyone. call. we we triple-digit Once raising

best-in-class. of challenges mission-critical. impact remains importantly, become cybersecurity pronounced, our more the While autonomous is technology has macro Most

we And cybersecurity enterprises details growth one, help in have we our the broader dynamics; headcount execute use. taking actions today’s cost two Our platform the of Financially, environment. investments growth. performance. to teams our to expansion, taken our we superior approach two, focus remain and streamlining new and enable and operationally, and will protected return efficiency, performance stay for path and to unlock like macro moderating more prudent a profitability higher are as well positioned are demand on on scalability including quarterly productivity to ease key realize to today’s is well spend. as call, of purpose-built efficacy, areas; and leading customer On We I their a and

our ARR to the Let’s growth XDR Singularity triple-digit across and again platform once and adoption revenue performance. of identity. We discussion delivered cloud endpoint, the quarterly our turn fueled first by

are XX of again market the in a third share quarter. Rule achieved We taking we and

margin unit rapid strong with consistently combined growth have meaningful economics improvement, our and We showcasing business scalability model. of

operating for consecutive have year-over-year percentage five margin over points XX quarters. We expanded by

in that expect continue to QX. We

highlight our business we the more We the of from before. me the than in added XXX world, key of the some strengths Around over customers Let new ever enterprises protecting quarter. are quarter.

just now XX last over businesses That’s base well customer more Our X,XXX. the exceeds X,XXX months. added in

Our nearly traction enterprises. grew XXX%, continued with ARR reflecting over customers $XXX,XXX larger with

endpoint, reflecting for consumer our several For global and iconic example, brand SentinelOne’s media In competitors. cloud-native consolidated and next-gen example, an platform, legacy across retention. data cloud superior SentinelOne a chose performance brand another on

significant based our and performance extended success CISA, We continue arena federal a across wins securing secure the competitive situations platform on capabilities. agencies with the Building our also in we technical by majority of new during three quarter. to on our partnership

adjacent QX. QX Our customers. strategy land XXX%. adoption With at record solutions quarter expansion X,XXX our extremely strong driven existing in for remained which This footprint customers, rate and remained net fastest-growing our once was expand our Singularity and rapid is plus working. by our retention by solution Cloud, a of is again

existing Separately, our these quarters quarter cloud highlights few continuation deployed over expanded next-gen are ease superior our cloud in from and a for existing demand A EDR workload among endpoints. trends third We selected software cloud protection of company security leading workload of customer past coverage and Cloud, the despite solution a deployment protection. adoption The a security new of on increasing strong seeing competitive Singularity solution. row. having their the customers, the large reinforcing for

breadth the large of of be conditions. resilient platform still to regardless NRR base, opportunity. our are expanding proving early is we macro very innings and of the expansion Given we customer believe a in

high. remains retention extremely customer Our

base expect continue of growth. NRR to a to We drive healthy

with strategic with partners continues channel ecosystem, and including incidence to especially shine, MSSPs our momentum Our partner providers. response

automated medium-sized shortages, security protection. efficiencies gain customers intensive human turning are and helps and partners small- and It while them offering offset cyber challenges. talent address processes, service economic Our increasingly best-in-class that cost to on want reliance Many reduce businesses solutions managed providers. potential

and role-based don’t platform set our full partners, capability. for customizable partner scale SentinelOne of unprecedented integration of to with These fully globe. but access our across We the the compete product-driven multi-tenancy, This ease MSSPs a choice and fuel open control them. makes We have management differentiators of enable documented APIs. and deployment, support designed

the MSSP. with are most We leading of partnering

to MSSP and Our continues to as drive resilient growth models. exposure meaningful security SMB flexible shift more

finally, are cycles limited Let’s software budget demand to budgets. seeing of pronounced competitors, more Consistent focused later are higher environment are with even security the require availability. our the our turn approvals. companies level taking sales to exchange IT consciousness many the in an That’s are These the discussion other and Customers market. and trends we areas. prudence we spend headwind and around cost a elongated factors most most other evaluations they in and in deals for larger EMEA. seeing incremental and presented on immediate and critical leading and while foreign And approach higher needs

While our XXX%. a healthy re-pricing can softer expected competitive strong. new that over impact power Still, purchasing organizations. net growth in signs the international pace we exchange are decelerating factors at ARR of positioning growth. had contributed with dollars, foreign and than we There to a demand remains very clear ARR growing Together, these are

are we cancellations, the seeing adjustments. elongated and experiencing not are we deal budget cycles While

close successfully these deals. to continue We

remains of in pushed units million close secured ended. extremely quarter our technical believe temporary security. the large time. QX That there factors several healthy next-generation We deals Also, change long-term the to dollars is for strong. that these win pricing our are leading closed that and rates already instance, after with QX was in and simply have some several to-date didn’t beyond macro For no remain closings opportunity

new a the high, in again opportunity us. Our giving to pipeline us front once of in grew confidence

the to are And With with of newer identity retention by key expansion our the from opportunities are solutions productivity the of even steps world. XXX%. second extremely We and also to retention gears like strong increase enable Shifting cloud encouraged to enterprises installed we and largest north opening taking more our to in base. some the profitability. net path customer are topic, the and

further believe sales are We past of executive hire quickly elevate newer We sales of ramping regardless our elevating still of and We our conditions. market Nearly are and streamlining a reps. ramping. can the over moved talent teams, our half we leaders terrific reps execution year. lot our to

reps deliver productivity meaningful gains improve maturity these the execution should ramp our curve, up further. this and As

and We focus on more company-wide. in growing are This scale management of a part putting efficiency is performance routine business. seek across functions as the we all optimizing

all than Sentinels. remains our Our culture by employee better is of inclusive result and that industry average valued highly retention as a dynamic

account and accelerate change, further opportunities higher the one in under customer sales customer finally, engagement our we a on largest emphasis pipeline. and combined execution velocity organization have to to growth every a shortened sales improve And replacing of tactical and new region. in engineering solution our Next, more cycles

steps large winning success Global made adjust two-thirds to a our $X have QX. by ARR and fully few positioned more XXXX accounts. the million We is in comes impact. enterprises. we we to of strong predict the to taking and to can there’s It’s the are the largest well the in seasonally growth are and over in and This past drive progress one next clear year-over-year with years from further on QX. are conditions, going slowdown the customers grew we step seeing evolving XXX enterprises extent Over with Based no XXX% significant what than deliver of Fortune right ARR on

need enterprises demonstrates Our customer security. is and there growing that pipeline intent

gaining across and large early and expanding long-term are multiple share We the in large a remain our growth market. and identity. are We in potential of cloud endpoint confident segments, market addressable innings

growth with We pairing that commitment are to profitability. a

and the of cost management We on and growth. calibrating are productivity, with focus increasing our our investments pace

flexible. investments which allow Our largely to be elected, us are

have more Over to prudent adapted a the last two approach taking market we evolving investments. to conditions, quarters,

delivered QX. have over percentage two As a improvement points result, quarters upside with XX of in we margin for significant consecutive

accordingly, we we investments macroeconomic as adjust signs As moderating the pace early hiring. started such of saw of to challenges, the

deviate to our forward, that and scenarios. our a does profitability ensure is team not to time economic across as growth different or focus Going

our topline balance growth year margin third margin quarter and compelling raised improvement. Our with consistent results ability to expectations demonstrate full

and We and truly the in support few security past back, FY years, will continue step platform. over Taking high built XXXX. to to disruptive calibrate superior a growth we profitability investments a have reach technically

and in the and succeeding. trust, status have of next-gen We are quo the we challenged and like legacy vendor protection collaboration and security pursuit of enterprise the

all choose use in overwhelmingly other or from platform technology solutions out Singularity the it. truly our evaluate Customers market. whenever stands they Our

total by consolidating cost-conscious In effective proposition compelling, in leading We to platform. Singularity especially performance. addition can customers ownership higher a solution best-of-breed of Singularity our value cost designed be a optimize is security, to environment. This their on cost with

all all superiority of platform services, demonstrates and enterprises. company mission-critical across identity endpoint, leading Cybersecurity which the are managed macro for and our three must evaluations is in We only remains results a product buy with and services.

committed our We are innovation, profile resources. best and relentless We customers security optimizing margin ever magic strong and efficient is number. with us identity the cloud larger empowering endpoint, improving before. believe across than our Today’s to businesses evidenced to on requires listening execution, market a front and and in of security focus opportunity the by as

every We are even taking market better. we share can quarter and do

are security and today’s strong growth our all partner. want productivity and SentinelOne for discipline also in thank our thank on organization. delivering I trust cost We as Sentinels even driving their our their in environment. I technology to focus for macroeconomic want sharpening to customers throughout leading

decision SentinelOne excellent Before a of and will to concluding, building him. to turn SentinelOne. more Financial the advisory role. for continuing his from Warner look Chief our to Nick of the President recognize to Nick our After that years With dedication Security forward and five work I call Officer. transition Bernhardt, business, I’d has Nick support continue and than to like am over an made to with that, to will together pleased Dave I to customers leadership

Dave Bernhardt

our I you. and XXXX. financial highlights QX around provide thank and discuss additional will fiscal Tomer, year quarterly for context our guidance

a delivered economics. business non-GAAP unit margins discussed stated. all once meaningful combined expansion, our strong reminder, with model otherwise high the As efficiency and margin of again growth unless are We showcasing

of opportunities. expectations, timing significant of year-over-year revenue ARR wins raising largely growth. a driven related additions year deals lost FX million revenue full upsells. the renewals of We net quarter, across net ARR and by we new of are the In conditions size growth still deal we ARR saw are third cases, of in $XX and XXX% lower was new $XXX impacting have either incremental achieved a facing general, quarter, our and to geographies had In expectations customer existing to combination and international million. awaiting are mix fourth new We markets and macroeconomic in we similar closure. achieved deals. new Compared due pressure. margin to ARR existing the dynamics with delivering grew enterprise We not the new these In and and the again. a Nonetheless, customers. customer and or quarter are our We secured closed many technical healthy our

to faster. count direct Our our strength customers single million MSSP count from customer One SMB nearly Therefore, that reminder by as XXX% with we ARR XXX, the over ARR over much some much a impact and customers total is MSSP faster each budgetary offset of year-over-year that to for even count $XXX,XXX shift customers customer. ecosystem. is grew with $X and than facing with the customer on growth pressures,

There Singularity concerns. XDR our were enterprises Our outsized business in ARR among the large large of of the in more deals adoption no spite strength per the customer recessionary of platform QX. and increased sequentially, of reflecting

rate cross-sell of and to expansion be a strong solutions. from to should north has of broader net continue growth installed retention driven XXX%, and Growth base conditions. base Our subscription of regardless quite of fuel adjacent our remained by proven durable solid

cost to our and margins. Turning

the Our we points gross I last made since the percentage in improving nearly XX margins, year-over-year. of overstate X have progress gross QX on increase of percentage XX.X%, year. an margin was can’t points beginning

benefiting collect more strategy where data economics expand land and capabilities. unit and We are platform once we enable and and from more our

continued cross-sell. processing including from data scale, We now efficiencies set benefits of are seeing economies end data and back module a

points our improvement year-over-year XX negative P&L, operating margin delivered expanding Looking substantial XX%. percentage at the to of rest we

As evolve became selective throughout investments. we quarter, conditions with more market the our

our XXXX. quarters On a reduced prior we also percentage margin As basis, EBIT dollar of losses operating a guidance outperformed to result, byXX points. we our the fiscal compared

scale, channel our and achieving talent are We pool. globalizing our leveraging

Our growth a magic our These topline results profitability number balance between targets. maintain ability compelling progress signify to towards our was over and X.Xx.

million, we revenue QX, of Moving to In about our growth expect XX% guidance. of $XXX reflecting year-over-year.

raising million prior million, up guidance. our we are is For our revenue growth. $XXX reflecting the outlook the at to This million versus $X full year, XXX% to $XXX over midpoint

While guide tracked for ARR growth business, revenue we our a don’t specifically year-over-year closely. and subscription total ARR being

ARR XX% relationship new is To that to expect and QX to clear, net hold to expect we least QX, are quarter. by believe compared this a be We QX. the sequentially increase view We in third at prudent of position market yet of a in no headwinds we the platform. the seasonally macro there deliver continuation experienced reflects a in demand Fundamentally, for is end year. a Singularity we the to strong

we high record value. time, platform and we optimally to the top a autonomous exited priority IT a reached pipeline as AI-based mindful Our deliver QX. At of positioned to is be cash remains our want prioritizing Singularity enterprises Cybersecurity same enterprise superior preservation.

outlook the margins. to Turning for

higher. target and We above have or the forward as a XX% taken operating a major margin to company, gross gross XX% moving long-term margin step XX% closer to of

platform benefiting platform are model We our inherent from our efficiencies and business data approach. in

full up XX% and prior be X up margin gross of to from to guidance is we of year XXXX about XX.X%. are XX% margin XX.X% to and guidance about year-over-year. XX% We points This expect gross QX fiscal increasing our

Finally, for margin. operating

operating up to QX expect year XX improving points XX and the quarter. XX% negative same Rule of negative year-over-year time, the to margin implying XX%, full negative of a we At outlook margin for our XX%. are We

the at prior XX midpoint year. of It last margin compared guidance point also points range. an is improvement is from operating a percentage improvement updated to X Our our percentage

primarily intact to Our which calendar year margin year operating for reach long-term XXXX, our goal remain targets and XXXX. breakeven fiscal is is

progress. profitability. our some excellent path to drivers longer growth on shed Thinking term, making are light We and me let our

significant dynamic and growth deliver demonstrated the several we as the Over outperformance even moderates. ability to quarters, margin remain past

economic profitability confident our timeline different are in We to across scenarios.

growth is growth in beyond. because slowing our to we of deliver next high conditions of While macro year ability near-term, confident in and the remain levels

and from customers customers are growth, further over pipeline, security. We top quarter. believe at to a existing enterprise XXXX. durable. base will the and least ARR and based our continue like to see the MSSPs also We expectations unique growth portions expect prudent rates, of of is securing we share base and installed of bottoms-up X,XXX endpoint, on expect retention every on outgrow and environment expansion take expansion view that for fiscal market. rates, win share to need of and deceleration, On remains the hundreds partners potential us market to economic total in Based deliver our high market our identity, new strategic in we perspective, of and and current year strong continue our tremendous of exposure to expand XX% fast-growing channel a cloud competition. This From win growing with the of a macro give we customers,

As our be we looking is in continued on of crossed $X.X are Indeed, a cost efficient. we operationally any can the milestone parts growth more company, focus and profitability. our for at that business billion ARR, carefully and

We we are on sacrifice of most We investments areas. don’t the the are profitability and on our our growth, flow. but moderating to focusing intend cash increasing focus pace strategic and

several performance increasing to velocity are accountability We teams aligning improve and and execution.

here, a positive That’s generation. longevity, cash cash with balance runway achieve with have cash, consider It margin to billion to guidance. equivalents We flow about investments When our very flexibility in strong and no $X.X path provides our thinking debt. ample substantial. sheet profitability QX and from

about Continuing another operating year points We this percentage fiscal are with our on the in year to and profitability improvement. of points track is forward, goal operating progress achieve in XX XX XXXX at we XXXX year-over-year to expect fiscal year quarters two improvement exit of margin fiscal margin XXXX.

economic conditions. evolving to laser-focused on stay are of ahead We execution

turbulence. and to enhancing was intact. quarter QX is profitability. summary, strategy strong near-term remains our to demand Our another for our in dynamically despite path cybersecurity the In The while technology business, invest

secular continue our headwind technology the we expect Thank business we all enterprise. attending have earnings for our believe the the protect best supporting modern call. We and to to you

Operator, ready please now questions. you Thank the you. for can line. are We open up

Operator

[Operator first with is Saket Instructions] Our question Barclays. from Kalia

is Your open. line now

Saket Kalia

taking you, clearly, lot Thanks a questions afternoon, the of Okay. Tomer, for Hey. here. hitting Good commentary my guys. and maybe just everyone. it’s for helpful around macro,

surprise bit, if am much just are competitive option there, was a But you I Microsoft. evaluations out thoughts? a bit the I about solutions So see landscape Defender viewing particular, could not if you customers little wondering Microsoft of Singularity a probably customer in think and wondering in a talk any other you or like specialist and next-gen like a them more how tool either. versus

Tomer Weingarten

Yes.

I much competitive think large, few token software that, as to that years. same look had. relatively quarters, might offering pertains pretty also as Microsoft be All dynamics as piece best-of-breed security by stays it the past and have the of have past and It’s free. they seen as couple folks in in in all, we at while same the the worth mentioning included perceived the

service in manner. If and you pretty bumps costs, services significant a costs then up actually at or management the integration look DDR that price any affiliated

you it relatively TCO, offerings. if comparable look at So best-of-breed with the stays overall

we dynamic that want seen highlight customers more to offering. The I have second rebounding Microsoft from is and more displacements, Microsoft

as terms, the cost eventual Some manage an years. the solution to expensive they citing had over it eventually most

sustained. competitive is we environment versus So the relatively feel Microsoft

focus an prevail cost all, seen even if more and environment haven’t at major the a we displacement. will And We cases. still we are in be on in of feel people seeing security, better that any lot where again, shift,

Saket Kalia

I That’s but congrats phase. next if it. not Nick. him going really I call, on my this question his next Got was to on direct sure the helpful. to it. Got he’s am to

channel. well. of you talk of Tomer, So, lot to are to some about emerging -- the and Could talk selling stuff follow-up your can with that make just kind of will about the you there opportunity you what could products just for good I maybe extent as be? MSSP newer they revenue A what

Tomer Weingarten

it’s Nick motion. highly on us, all Of He’s strategic go-to-market a not call. for we MSSP course wish and the again, best. the

the unlock have even to with haven’t possibilities ecosystem. MSSP line started other We the revenue we

for the the modules first them to actually sell enabled happened first For last time. we quarter have that time, new

now, So and it’s addressing security on innings of the like core laser still Right we first are that just EDR focused EPP. needs opportunity.

are and MDR We Ranger it now extending well to a as resell. as

looking to sustained part software as to all, in feel that’s of avoid see going technology us. scale all recruiting resilient and by offset are So, that costs, and headcount a MSSP services services, our you trying SMBs in for be and business, Obviously, more more and not but their especially we procuring the really the teams into security bodes that overhead to ecosystem. from direct the well

complete more ecosystem allows a that have what actually multi-tenanted do. they productive We to in them that solution be MSSP for

even this point shining So, in environment, MSSP definitely again, us. is a for

Saket Kalia

very Thanks much. guys. helpful, Very

Operator

Henderson with next comes Needham. Alex Our question from

line Your now open. is

Alex Henderson

Great. so much. Thank you

will or spend FY -- XX% similar you still guess, way muted it rate, the to guide produce of forecast, us a leverage gave without are for You bit in of growth. some becomes of you really you the the I a a environment, more before have sense The XX% thinking leverage the degree a a preliminary OpEx at is is XXXX, type think you about or result guide, slower the question growth you giving reacceleration? I can ARR right same for say the do give that way the little as growth a

Dave Bernhardt

let’s ARR, believe conservative. the think about next guidance really it, it’s is tentative year for it, I that think floor. We call When we a

at as We it from. something are we can looking build

have where In XX% A we of margins. in terms of past spend, we when beat the quarters and over operating highly XX% said it will of have spend is elective back this our invest you when it and our always and couple will OpEx and we makes of sense we doesn’t. seen definitely pull by lot terms

long-term our in towards map terms to of projections profitability. going always are We

look, continue anticipate So year half about We by and year. to years we that down have past. our great in next cut basically strides would I made every you into the losses if

growth is. and what our goals long-term Our matter to that the path no is unchanged,

Alex Henderson

business demand seems little October quarter? really with is, consistent of second to September the decelerating linearity like of the question are I’d The a the into or is that over sharply you resigning like and from Thanks. seeing October is variance some can broadly. the from It talk you that? about you November, giving then ask very course Is bit to what

Tomer Weingarten

is a the -- generally, What we that of under something lot is are that linearity is also control. seeing our linearity

at when deal deep we the inspections, a progress see into the of end can, we It’s what lot of lies as by at seen something our that we performing kind look the we what it to extent, within we linearity dive see hand. to just is in reckon our an pipeline, day, healthier mitigate that as something we have better when So ability we of previous that and that much it’s something we QX, quarters. than in enter the

it even Some changes. achieve linearity under make we sure of can also actually conditions. decelerating What is to are doing we macro our

given couple again, pretty us of for we and the confident every we seen quarters, our is past behind. feel, we factor stand linearity something have the in in once to So can right us that we guide feel it now, seasonality, we gave that our QX. To that embodies given

Alex Henderson

Great. Thanks taking question. much so the for

Operator

with from question Stanley. Hamza next comes Our Morgan Fodderwala

line is now open. Your

Hamza Fodderwala

us would for of QX, deals. very Thanks I Tomer, or and but that help have quantify fiscal you think, would in of these four XXXX expect to how you XXXX. cash be couple large full that much year you deals clear, the fiscal in contributed slipped guys. much. were Thank free those pretty contributed Dave, to to mentioned, flow secondly, profitability Hi, deals some that want QX? to breakeven quarters? A fiscal you just my proceed taking questions. of Can about by QX and And some for operating then is for you alluded closed I out questions.

Tomer Weingarten

slipped, But next closed are deals. slip just to somewhat of these in think deals millions this seeing what of the is When now days is not of assume part contribute slip. to as we that that more To They our that the business safe we dynamics. we kind look us and different a follow. quarter. I at that are One the two several deals saw

before. large deal more have second The are time, on pressures have more we and than and than sizes same added oddly deals enough, quarter ever one given seeing more to we logos before, budget. ever the nature at this the large in changed actually But

all, operate are we can market. in kind we recalibrating our the this realities environment. all to we that we like highly feel But once, around So, confident in in of feel continue again, new

Dave Bernhardt

And we talked Hamza, about second free have answer free in timing flow, positive creating cash question, of cash flow. your to

are happen of We still achieve year fiscal in fiscal how at what expecting really and is to then to next to end and working year are for breakeven get that XXXX. hoping we the

year. following the So

cash So before will then we be together. mapped much do expect free hit flow to profitability and those more two

Hamza Fodderwala

Thank you.

Tomer Weingarten

Okay.

Operator

Blair. comes question next from William Our Jonathan Ho with

Your line is now open.

Jonathan Ho

afternoon. Hi. Good

additional able existing cost to I balancing of sort around think do bit being that to you Just while driving a sales out little savings. also of on your of start additional and you confidence maybe just want driving wanted about your this to achieve color with, of how understand think about more how effort all teams, out both? productivity

Tomer Weingarten

Hey.

and have on the a recruited are mentioned especially talent lot folks, actually the still these a ramping year that, we I have think ton past in side, of and great of ramping. sales we just

working enable to now are them faster. We

We are are And in are a working year have get they sooner. in not people line, that people the the can naturally, to a for down that two. them and productive as year than or you productive as less company half as company progress as been imagine, the

the for also enterprises that, sell customers. solution curated North and that on and more how emphasis engineering the productivity. we America sales in pipeline. combined leader are new to more expect more, have putting and a a engineering sorry, we we we we naturally, have put So and in global more the We to sales the largest our more to create a highest With experience organization create to

of have show those and already of success great All started doing that. we signs continue will to

eventually we many the more stronger other that are As continue in us. in stronger upstream, feel avenue moving more just go-to-market made of and are our us changes business Again, we we a initiatives us that ramp, is future. again, into and element for are is remains, organization and there already drive strategic taking. go-to-market that getting and and all the yielding that and have enablement all, results our to going for But, are the we to

Jonathan Ho

just renewals, being Thank a Got anything they seeing being deal are can typically about it. and there, little terms you you are in actually talk or are in more of deals more as out of that in, in well? resizing then are these durations it. the scope follow-up, size you. like, a Got bit reduced seeing terms you all changing phased at And

Tomer Weingarten

me for main dynamic are we seeing come buy out is back most I any to that by mean, out seeing counts for That to there not note is the we right-sizing they The customers. might now to are procure planned multiphase dynamic. deployments. me, really and versus just thing prevailing for what mean, I just have once want the for they need that they prevalent they again, seeing future we aspirational expansion. the People is and there. are

our the with as platform a seeing I and ability are really this trying the to of now philosophy. adjacent stay and and to models, more. choosing entire them them are counts is seat upsell versus later on That’s more opportunity. future really have more upsell to they in progress customers what need sell and of time, just go We back we also on our true on it customers environment core more components mean these

Jonathan Ho

Great. you. Thank

Operator

with question Citi. next from Boolani Fatima comes Our

open. Your is now line

Fatima Boolani

my Good you go-to-market start just of changes. questions. the and that you operations with so the itemized afternoon. to Thank for Tomer, respect some with taking around sales much you items

the succession about of plan talked should overseeing customers. the his thought first way about off a guidance? in your post curious then, building am and So terms you sales and And of sensitivity management XQ for the just broader conservation question, I potential organization of last you, impacting and transition Nick’s is, how the topline one about kind execution in cash cash we think Dave, the transition you about the the operations

were revenue for. at your look I performance, little than when we was bit So a deferred lighter looking it

appreciate are management from relates that you and seeing shed sensitivity, a maybe it? can cash invoicing to you contractual Thank standpoint if really I what on behavior So as light you. it

Tomer Weingarten

Yes.

you have as were Srivatsan under as succession, largely we now functions of under X our by well. Nick’s and ago, about we recall COO, Nick a these Vats on moved months Vats So might that added lot

the The executive I and throughout obviously, taking more role sponsorship active emphasis a part is more am in entire process. on as second a that, whole, we put go-to-market have the organization,

and we now is priority right the are center for front myself. putting So topmost for the and go-to-market company

we opportunistic we of months X tenured started So the sales succession do we time, future. both executive, terms inject and that continuing another can might of worked ago. that feel if to same about the to hope also transition the we remain like at highly in so But kind we in we

Dave Bernhardt

in answer to second to think what regards Fatima, flow, two question your free seeing And cash you are dynamics. -- I

they where deals. the You to shift tend are are seeing, prepaying prevalent one, more we expect multiyears, for was for to larger dynamic seeing quarterly which in paying continue upfront versus just a then past MSSP, be also That aren’t where while. the and to you customers

Operator

Zelnick with Bank. comes Deutsche Our Brad from next question

open. Your now line is

Brad Zelnick

competitor Tomer you customer so I endpoints. maybe mention a and maybe future? we this kind and good you, who I David. might mentioned execution running for intrigued have despite is, Tomer, a their Can this the for expect it’s strong something is Great. to circumstance quick the more one and be much the that follow-up you you competitor the that the in Thank can was win see got was by of Cloud on environment. in what chose common Singularity

Tomer Weingarten

Absolutely.

a we offering truly can not the seen illustration. have unlock that where us main the any go in the now is endpoint for side revenue been accounts running quarters. It’s what allows two cloud It’s to you each that for provide unique right now us vendor models And we of environment. can few other that superior at purpose and one. we endpoint the day, one on wish of for strategic merits a you and can have dynamic play secure far pick go-to-market come got to cloud one in, for in imagine, those first But the that with cloud some on we yet it of protection competitors, good them on otherwise workload a you have the another end come the side. We as

standalone footprints than couple have, in cloud are sometimes the a competitive it we again, and footprints in in as the quarters another not wide and side. only the in looking quite once have our serves those at past of endpoint remains, not had you are the only on are situations, We wider platform, that that few the differentiator. actually of and accounts, advantage existing bigger spends own cloud now offering is that endpoint again, But a

can So more what is else again motion. was one we serving deals for that offer the right to incredibly more number offering deals a us, the in now fastest-growing just that invest cloud in space. leg and go-to-market we Cloud can and and do, module, our cloud it’s above our anybody more an more

Brad Zelnick

view a color ARR follow-up and have helpful. from QX, is for QX. QX? you very in have a you. for value your there ramping gave deals this to benefits, sales into trends, the strong net calling seasonal way further the prop, are strong sequential flush, XX% characterize know really And that Christmas confidence declines growth. market the And least including for for budget broader much. that and the but just any Others maybe year, and of at number that really even you That’s David, I underpins no no Thanks frame pushed in a I sequential you appreciate productivity QX retention

Dave Bernhardt

to have One, and out we a QX. it’s persist into expecting a larger go macro things. deals and few Two, still the that sequentially. have in of are a concentration we -- close need due deals. we pipeline. higher assuming This QX. continue are we just historically We XX%, to grow We conditions Well, record to

outperform believe historical more guidance. is historic. or much much We XX% we are and the This versus conservative hoping growth our confident We to that. is this better are sequential in highly

If you look traditionally, we were about XX% sequential growth.

and are We we are -- reflect are think how around I that. more QX that’s hoping are guidance off assuming this it’s that’s looking where we and to build about to conservative at half that we

Tomer Weingarten

Yeah.

to our feel to kind get ARR. materials the there all to are and like I we just Just mean, we raw got have that, on add of right we re-rating now

the are And are That’s the into give step better right to ago, than So we sure quarter to guiding of do absolutely increased that, we that it towards us Dave do. pipelines with feels confidence few what to as mentioned, mentioned record I a right moments that taking better. those that hit all like make linearity we the is doable. us thing can number, quarter, just we QX last entering even potentially the feel

Dave Bernhardt

to thing another budget consider a have never think I that benefits been flush. we is of And

seen I closed. that think we traditionally just have deals

a been for it. have think, of the come us sure never that to customer best We a to got trying trying I need solution provide spend we budget and them. that have a bunch I us, with just hey, what’s are make work companies customers we to have do company, are we say, and When to for I

will flush just a isn’t So the are us. budget idea affect we of expecting that something

Tomer Weingarten

Yeah. I the by concur way.

better that seen have We or for worse. phenomenon never for

Brad Zelnick

much, Okay. Makes you total guys. so Thank sense.

Operator

Gray from with BTIG. comes question next Powell Our

now Your open. line is

Doug Clark

on the Hi, Gray. you line. Are

You might unmute. be

Gray Powell

button. analyst mute [ph] go. stay the Looks we There on, not hit hard to like

So question. taking thanks the for

So a lot in of far. so here good detail

out this expect year loaded? outlook years, next adds So and we prior do ARR your be how we year, you think next that XX% end year to to through think when net growth for more the relative linearity plays back should

Tomer Weingarten

it I I same. remains business. It have expect years. a major in would relatively of be large, mean, departure I to might mean I will but be couple again, at bit think, typical any the operating been our smoothened it past from wouldn’t more how out, the I generally, we say,

Gray Powell

not product my that been And were anymore, know expectations? that motion, your just would then an you I of just you but talking XX% year? more to product be, original the the are original that rate Attivo do breaking relative the sales has in you growth to question Great. into get growth beginning see at out your from as And how Okay. growth about there opportunity we other accelerate

Tomer Weingarten

our of be mean we to we the of I integration, going us, look general. As early potential that’s days next into believe one propositions. we the our in acquisition in and that security still identity stronger believe fully unlocked being year, to haven’t in we in

We this past for generated quarter. identity security record pipeline have

also We we impacts highly holistic may that’s unlock the and could and With expected the We what sellers go-to-market speaking, in integrated identity expect to completely into is terms with offering. and we next look feel product speaking, feel like in of a be year go everything the of a the no we better So about and the of the being sell But, able prospectus into years part way best this more. fully-integrated to technology. our macro identity overall obviously, come. endpoint always to as both that, platform the identity perspective, our will technologically as generally different. be

friction. So remove wouldn’t again any require more configuration and unlock and it would that additional

Gray Powell

Understood.

much. very you Thank Okay.

Operator

Our question next from comes Joseph Gallo with Jefferies.

is line Your open. now

Joseph Gallo

impact that partially MSSP seeing the market should lower channel? the think the it Hey, I large or market? know end How the you was strength deals is pronounced. macro the we of about where at appreciate the question. end Is said is of by lower masked more guys. Really being the

Tomer Weingarten

It that our to direct But could bit MSSP, dynamic look I mean, with remained extent a to in be. us. masks line MSSP we of hard relatively from at these in It’s past an just as tell. some contribution given trends. that own it things

taking customers from anything SMB, MSSP in So have rise, MSSP seen we the on haven’t business. dramatic definitely is more seen what too the direct we going but

basically of an all these these example, kind customer in as are the at So our count that by even if look actually customers added a master of masked provider of have service that onboard-s we lot you MSSP customers. quarter one

and feel between that into and the in we as strength execution, we continue So, MSSP our all feel we should well. direct have largely consistent that in all, SMB, seen future

Joseph Gallo

Ranger Thanks update is remains of Awesome. give on and a And you an macro just then professionals, we the I has an that those as lot comments. Can next appreciate had guys. or is the intensifying which been -- must-have just nice-to-have congos IoT, a with West. lot environment? cyber real viewed a in around have a frontier

Tomer Weingarten

Sure.

If same just that’s you know I the eyes don’t of customers a the ask me, must-have, it’s yet. in

on frontier, still With real a work I not of good In prevalent think Ranger. EPP. the seeing frontier with traction are and that, terms EDR fundamentals there’s still in the enough. with to security in still EDR and are EPP is we lot still

We been have with Ranger. traction traditionally seeing good

bit and protection and more tiny devices we Ranger help when the lags to always out can landscape, your the you go environment, entire more education map the and into market and but of of as environment of their entire think for map that out fast your network, that threat asset to all kind provide need better better imperatives I believe is this then one get customers your addressed hygiene. actually

I So for in it us hope even more that again, remains, years. we a module contribution see and one will couple the leading next of

Joseph Gallo

you. Thank

Operator

comes Roger Boyd Securities. with question next from Our UBS

Your line is open. now

Roger Boyd

macro, do on with for but customer are much so the Great. in the broader question. around update taking security projects as Thanks. the analytics kind what an look in terms CSO have of to you going And those Tomer, strategy we you set think Thank where data interest you lots priorities? of of calendar product. I up stack on terms seeing and XDR XXXX,

Tomer Weingarten

of Singularity away two lot one like processing a enterprises on there they account for we means with data legacy cost projects actually the of when ingestion, that priority the offset the these proposition that have actually deal It’s XDR from XDR Absolutely. data top most just out with are to solutions.

own a traditional ingestion mechanism SIM log into preexisting out platform XDR to full away they providers. Singularity there that we leverage So costs conversations a the of have that from offsets and lot already in

or exists can start or and data this already and for if true environment ingesting a in in you especially XDR user solution EDR you for are Singularity down one that cost. environment, into macro data it’s if for EPP, your for save especially our So it XDR

side you security more security We controls way the away from the building and ranges analytics all endpoint cost for realistic consolidating saving have into business endpoint now and are log protection analytics. that a proposition to and on that the more now value

go cases of make cases. So all customers security a but business and operations. are very be as early still also outcome that expect cycle, to a business adding sure more to more next the and for to applicable that in of that narrow to able use there’s band and we very, execute the But use Still enjoy cost year, across with happen. we towards finance benefit, now associated that’s more way it to and just

Roger Boyd

Thanks again. color. Great

Operator

Andrew comes from question Wells Nowinski next Our Fargo. with

open. now line Your is

Andrew Nowinski

Thanks. Okay.

a have I question So on FY the XXXX guidance.

by new X%. to get year only net that at you that to your share, Can going preliminary outlook year about your where new only worse So market grows to seeing you going all-time grow the talked about you factors talk they for is pipeline gaining an think high, is this displacements, just Microsoft are next net X%? than ARR were ARR more suggests that

Tomer Weingarten

are a to we a we we believe mean, really, really economy a predict We time looking We don’t crystal would don’t at the know can of like. a, don’t look some ball. have anything really. prediction Yeah. a where way conservative to how I put have form

and prudent we we growth. maybe anytime our always growth Our make more out have we two our expect approach as assumption are how sure to keeping in spend And to and the growth, a the of versus gas want just account an growth. soon, on not maybe that that, and continue to get more we better as going agile conservative we eye Dave pedal for on things incredibly can nimble, there mentioned, to that put taking will target and press we us, incredibly we is when aspirational don’t how been to and accelerate

year, conservative just taking predict now, that are be view. we sure and next perfectly that that all right in all, want view we means that see, so being most us So, this responsible can that there’s honest, are we we not the can are to the to much custodians to to we make giving and of

Andrew Nowinski

might new of I then I just they those vendors fed to agencies you exclusively or side, SentinelOne deals agencies. Okay. fed other in protection three Fair be are endpoint trying three you the well? said those using the Thanks. using secured enough. am you as the wondering, And for on magnitude am understand just mentioned?

Tomer Weingarten

Of course. Each one is slightly of different. them

use of vendor there. do out Some them another

them of Some exclusively. us use

mean, is just For all lands incredibly initial these this sometimes I an initial just are that over a mean, all even of time. I of will massive I and them agencies land. deal, sizable, land obviously, grow the mean, is but those, are initial us, for

massive, but another just traction important most to the federal, a out we and vendor part. is it’s see win the there, some, For massive which continue to in there’s us,

Andrew Nowinski

Tomer. Thanks, great. That’s

Operator

last Rudy Davidson. Kessinger D.A. Our comes from with question

Your line is now open.

Rudy Kessinger

squeezing one Yeah. me Thanks just for Really me. for in.

as to seeing about opposed but guess look are the emerging it taking and to very pushed kind most if maybe identity, I the products, getting to of then and on will prediction of still am are of endpoint look size products IoT, like demand just which talked in control had the to the bigger taking it Ranger and protection, kind deal they You kind cloud, certainly buying versus may need endpoints of some at high, as impact curious, at as coverage seen you sounds they right-sizing which to really based I customers rank remains order you security the have or data seeing a macro just more opposed side? cloud be need of today Singularity are core complete the future. customers what also number But you

Tomer Weingarten

the is number that people Singularity am we have. one I sorry, package shift and Singularity Singularity to Complete we or, away package Core we haven’t number the Control have still one seen is

started To We into haven’t is bare modules be choose not always firewall could or the to not really Complete using would core about as These capabilities endpoint and really the But has are adjacent on top like second into remote that and Core adjacent execution, Singularity center. EPP the spend to a folks production on transitioning seen right now the deploy anybody protection when EDR Control. there And controls necessities. those. you that, must anybody move front cloud and run it environment protection, that Singularity is sometimes obviously, the of the needs, that now. workload us, look at is script cloud remain obviously, and transitioned or part

So a those become must-have.

services. cost services are and across So and the, MDR well of as we kind of butter retention functions two bread sell Data managed what these today. call demand for more it, Those is I as the data on as costly that’s versus many the there well. with actually Singularity where out one highlight saver platform to that a they in can data it maybe retain folks Again, putting lake. another

grow. to us So and success have seen those most to the continue

for I had, we on and offerings if choose endpoint to most. that’s focus pause some of really think kind especially into of management, ones sometimes the that have look you where the other people matters that

Rudy Kessinger

Great. it. question. taking for Thanks Got the

Operator

America. Tal question final Bank our And Liani from is of with

open. now line Your is

Tal Liani

Hi, guys. squeezing questions. for Thanks I have much, me by the way, two very in.

because looking are some customers the are and balance down an at to issue sheet stable. who are business look was at cash The companies is, cash for cycles, pace, first always looking financially one are burn, smaller flow, if I there at losses shifting companies strength to maintain prior more and

consideration had customers you in is Your bit at is am this a if it’s That’s your because all? kind My wondering address customers. if you you and how with question space I kind had my of of consent, first are this about second a little you a question. leader large case your different discussion them if or

talking question is what first customers you that smaller push across And about are are slowdown We step outs and always Board companies that the the out from the are you or is, are seeing slowdown. push really before what’s thing same slowing only the is the of the today could the see meaning quickly the react customers in doing spending smaller and larger year. we seeing beginning to happening market companies short-term, at just concerned and

bottom means of hit we in yet spending. that So the haven’t terms

who to Thanks. discussions as budgets. are what’s can see. those them comes look How -- annual view not with larger the on when as do as not have your like? it question, of companies, more So kind much you will you question What working it’s say, year of you much next -- you it’s quantitative qualitative as could how qualitative, is it’s

Tomer Weingarten

we seen by our first question, think honestly, balance strong I and First, any on cash the haven’t is degree. incredibly that

that from customers So heard at we haven’t all.

seeing again them look and and still perspective any company customers by stellar think TCO second other for really us solution public been, that think, there a a think, as I that are one and cost has very that enterprises we out I of just almost I To on helps at effective the than more and the comes cybersecurity. right-sizing. large with transparent they on financials back the react question, vendor react a in

I understand not is you or think same the if They to the really actually to costs buy they Cybersecurity time. on something you couple it, intent still the push but pipeline, optimize want that is there. they customer at can punt. want

kind a up and and have it the I way deal I something to pipeline couple are now in quarter, right So even little factoring see a in. are that if think, starting of that’s and last strength quarter you in you this dynamic more bit that you trends couple the pronounced even going it’s show we seen, think, did the right-sizing, we it

with have a enterprises I right it’s cost the structure, new same don’t want or you are going with probably, they feel incumbent have security. going have around security, saying, supply They vendor are can on like their spend they all, to currently that better that spend to security, to the see it. don’t to to large spend in all whether So, the I

So I further purchasing. any are don’t any or they thinking slowdown about in foresee further tapering how

with deals. see And positioned I deal I to well think that. think a continued to that very trend right-size we is will SentinelOne

environment have with That in improving market. if well It model. even had have the gross We why pricing our been bodes more and really on this see to haven’t with robust That’s margin. healthy the always solution that. business cost-optimized happened couple macro in you we us, incredibly couldn’t

Tal Liani

you. Thank Great.

Operator

to no closing call There remarks. for questions. I over the pass more the are management team will back

Tomer Weingarten

Thank today. you, everybody. Really appreciate time your

Operator

Thank the conference call. for concludes your That participation. you

disconnect your now may You lines.

SentinelOne (S) 7 Dec 222023 Q3 Earnings call transcript