SentinelOne rallies 20% as Q3 results suggest momentum is accelerating

(Updated – December 6, 2023 6:01 AM EST)

SentinelOne (NYSE:) shares surged 20% pre-market Wednesday after the cybersecurity company reported better-than-expected results for the third quarter.

EPS of ($0.03) came in better than the consensus estimate of ($0.08). Revenue grew 42% year-over-year to $164.2 million, beating the consensus estimate of $156.09M.

Annualized recurring revenue (ARR) grew 43% year-over-year to $663.9M. Meanwhile, customers with an ARR of $100,000 or more grew 33% to 1,060.

“We delivered strong top-line growth and substantial margin expansion, showcasing the scale and breadth of our Singularity platform. Our gross margin reached a new record, and we achieved our ninth consecutive quarter of over 25 percentage points of year-over-year operating margin improvement,” said CFO Dave Bernhardt.

For Q4/24, the company expects revenue of $169M, above the consensus estimate of $166.5M. For the full year, revenue is seen at $616M, beating the consensus estimate of $605.66M.

Analysts raised their targets on S stock as momentum is accelerating again.

“With valuation close to ~50% discount to Security peers on a growth-adjusted EV/CY25 Sales basis, we see room for upside given continued strong execution on both top and bottom lines,” analysts at Morgan Stanley wrote.

Analysts at Deutsche Bank also raised the price target.

“We continue to hear positive feedback on SentinelOne’s technology in our fieldwork (inc. in CWPP vs. CRWD) and see plenty of opportunity around Purple AI which is just being delivered to enterprise customers.”