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SentinelOne, Inc. (S)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 delivered 23% revenue growth to $229.0M, non-GAAP gross margin held at 79%, and record free cash flow margin of 20%; non-GAAP diluted EPS was $0.02. Management authorized a $200M share repurchase and reiterated full-year non-GAAP operating margin of 3–4% .
  • vs. estimates: Revenue modestly beat S&P Global consensus ($229.0M vs $228.4M*) and EPS beat ($0.02 vs $0.016*); beats were driven by platform adoption (AI, data, cloud) and disciplined cost structure .
  • Guidance reset: FY26 revenue trimmed to $996–$1,001M (from $1,007–$1,012M), Q2 guide set at $242M revenue and ~79% gross margin; CFO guided Q2 non-GAAP operating margin to break-even, with stronger margin expansion expected in 2H FY26 .
  • Narrative catalyst: Strong AI momentum (Purple AI Athena, AI SIEM) and FedRAMP High expansions support long-term growth, while April macro volatility elongated sales cycles and pushed net new ARR; management flagged improved May trends and expects Q2 net new ARR to be above typical seasonality .

What Went Well and What Went Wrong

What Went Well

  • AI adoption and innovation: Purple AI achieved triple-digit bookings growth with >25% attach rate; Athena launched as an end-to-end agentic AI platform, and FedRAMP High authorization expanded to Purple, CNAPP, and hyperautomation. “We’re leading a transformational shift toward AI-powered security” – CEO .
  • Data & platform momentum: Data solutions surpassed $100M ARR; record ARR per customer; notable AI SIEM win at a Fortune 500 retailer to lower Splunk costs and simplify operations .
  • Cash generation and margins: Record 20% FCF margin; non-GAAP operating margin improved to -2% from -6% YoY; Q2 gross margin guided to ~79% and FY gross margin to 78.5–79.5% .

What Went Wrong

  • Macro elongation in April: Sales cycles elongated, slipping deals and depressing Q1 net new ARR; management cited no elevated churn and improved May trends but adopted a more measured full-year stance .
  • Revenue outlook cut: FY26 revenue lowered to $996–$1,001M (from $1,007–$1,012M), with guidance incorporating end‑of‑sale of the Hologram (deception) solution .
  • GAAP net loss impacted by discrete tax item: GAAP net loss margin was -91% due to a $136M accrual related to ongoing APA negotiations with Israel Tax Authorities; excluded from non-GAAP results .

Financial Results

Summary vs prior periods

MetricQ3 FY25Q4 FY25Q1 FY26
Revenue ($USD Millions)$210.6 $225.5 $229.0
Non-GAAP Gross Margin %80% 79% 79%
Non-GAAP Operating Margin %(5)% 1% (2)%

EPS vs prior quarter and estimates

MetricQ4 FY25Q1 FY26 ActualQ1 FY26 ConsensusSurprise
Non-GAAP Diluted EPS ($USD)$0.04 $0.02 $0.016*Beat

Revenue vs estimates

MetricQ1 FY26 Actual ($USD)Q1 FY26 Consensus ($USD)Surprise
Revenue$229,029,000 $228,399,600*Beat

KPIs

KPIQ3 FY25Q4 FY25Q1 FY26
ARR ($USD Millions)$859.7 $920.1 $948.1
Customers with ARR ≥ $100K1,310 1,411 1,459
Operating Cash Flow Margin %(3)% (2)% 23%
Free Cash Flow Margin %(6)% (4)% 20%
Remaining Performance Obligations ($USD Billions)——$1.2
International Revenue Mix (%)——38% (27% YoY growth)

Note: Asterisks (*) indicate values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD)Q2 FY26—$242M New
Revenue ($USD)FY26$1,007–$1,012M $996–$1,001M Lowered
Non-GAAP Gross Margin %Q2 FY26—79% New
Non-GAAP Gross Margin %FY2678.5–79.5% 78.5–79.5% Maintained
Non-GAAP Operating Margin %Q2 FY26—~0% (break-even) New
Non-GAAP Operating Margin %FY263–4% 3–4% Maintained
Narrative factorFY26—Outlook incorporates end-of-sale of Hologram (deception) solution Context
Capital allocationFY26—$200M share repurchase authorization New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 FY25, Q-1: Q4 FY25)Current Period (Q1 FY26)Trend
AI initiativesQ3: Strong execution; enterprises selecting Singularity; raising FY25 revenue growth outlook to 32% . Q4: Pioneering autonomous, agentic AI workflows; first positive non-GAAP Op margin .Launched Purple AI Athena; triple-digit bookings; >25% attach rate; FedRAMP High across Purple, CNAPP, hyperautomation .Strengthening
Data & SIEMQ3: Re-accelerated new business . Q4: On track to surpass $1B ARR/revenue .Data solutions >$100M ARR; AI SIEM win displacing/augmenting legacy SIEM to lower cost/complexity .Strengthening
Macro & sales cyclesQ3: Macro risks noted in boilerplate . Q4: Optimizing margins, reiterating FY26 Op margin .April elongation of sales cycles; deals slipped; no elevated churn; improved May trends; more measured FY stance .Deteriorated in April; stabilizing in May
Federal/Public sectorPrior: FedRAMP High for endpoint & AI SIEM .FedRAMP High extended to Purple, CNAPP, hyperautomation; pipeline promising; timelines vary .Improving capability; variable timing
Regional mixPrior: not emphasized.International revenue +27% YoY; 38% of revenue .Improving
R&D executionPrior: expanding platform capabilities .Purple AI auto-triage GA; hyperautomation GA; unified cloud security suite launched .Accelerating
Regulatory/TaxPrior: limited.$136M accrual related to APA negotiations with Israel Tax Authorities excluded from non-GAAP .One-time drag (GAAP)

Management Commentary

  • CEO: “Our top-tier growth and margin improvement reflect continued platform momentum and customer success… With Singularity, we’re leading a transformational shift toward AI-powered security for the future” .
  • CFO: “We delivered strong revenue growth and achieved record free cash flow margin… we’re pleased to announce our first-ever share repurchase authorization” .
  • CFO guidance: “We expect revenue of approximately $242M in Q2 and growth of 22%… we expect Q2 gross margin ~79%… Q2 operating margin to be break-even… reiterating full-year operating margin 3–4%” .

Q&A Highlights

  • Net new ARR dynamics: Q1 softness driven by slipped deals amid April macro volatility; deception churn in line; no elevated churn; improved trends in May; Q2 net new ARR to be “well above seasonal” .
  • Estimate setup: Q2 sequential growth guided at roughly double last year’s ~16%, with improved early-quarter activity and pipeline supporting above-seasonal net new ARR .
  • AI monetization: AI attach rate >25% of subscriptions; ~25% uplift to average deal size, with incremental agentic add-ons expected to further accrete .
  • Federal update: Expanded FedRAMP High authorizations; pipeline promising; longer approval cycles and variable timing; some seven-figure federal renewal/expansion closed in early Q2 .
  • GTM evolution: Shift from product-centric to platform selling to increase flexibility and efficiency; expected net positive over time as enablement matures .

Estimates Context

  • Q1 FY26 revenue modestly beat S&P Global consensus ($229.0M actual vs $228.4M* consensus) and EPS beat ($0.02 actual vs $0.016* consensus), supporting the narrative of platform-driven growth and cost discipline .
  • Q2 FY26 guidance ($242M, ~79% gross margin, break-even operating margin) appears aligned with consensus trajectory and management’s expectation of above-seasonal net new ARR, though macro uncertainty persists .

Note: Asterisks (*) indicate values retrieved from S&P Global.

Key Takeaways for Investors

  • Platform momentum in AI, data, and cloud is translating to higher ARR per customer and durable gross margins; data solutions now >$100M ARR, a key growth vector .
  • Guidance reset de-risks FY26 amid macro elongation in April; watch for Q2 net new ARR rebound and 2H margin expansion to confirm trajectory .
  • Capital allocation turning shareholder-friendly with $200M buyback, while maintaining $1.2B liquidity; expect dilution reduction and opportunistic repurchases .
  • Federal opportunity expanding with FedRAMP High for agentic AI and cloud; timing variability remains but TAM and competitive differentiation strengthen the long-term outlook .
  • Near-term trading lens: modest beats, record FCF margin, and buyback are positives; guidance trim and macro caution temper upside—monitor Q2 bookings cadence and large deal closures .
  • Medium-term thesis: unified AI security platform, improving margin structure, and expanding enterprise/federal footprint support sustained top-tier growth and progress toward profitability .

S&P Global disclaimer: Consensus values marked with an asterisk (*) were retrieved from S&P Global.