SentinelOne (NYSE:S) shares fell 11% in early trade on Friday after the AI-powered cybersecurity firm’s weaker-than-expected guidance and the announcement that its CFO Barbara Larson is departing the company overshadowed a third quarter earnings beat.
The company’s Q4 guidance of roughly $271 million in revenue fell short of analyst expectations of around $273.2 million, representing lower projected growth of 20% year-over-year.
For the full fiscal year 2026, revenue is expected to reach $1.001 billion, missing the Street’s $1.002 billion estimate, with non-GAAP operating margin of 3% and non-GAAP gross margin of 78.5%.
For the quarter ended October 31, SentinelOne reported revenue of $258.9 million, up 23% from $210.6 million a year earlier and slightly above analyst estimates of $256.2 million.
Annualized recurring revenue (ARR) reached $1.055 billion, also a 23% increase year-over-year, while the number of customers with ARR above $100,000 grew 20% to 1,572.
Adjusted EPS for the quarter was $0.07, above the Street estimate of $0.05.
Wedbush analysts remain bullish on the company post-earnings, repeating their ‘Outperform’ rating. However, they lowered their price target to $20 from $23.
They highlighted that Q3 “featured beats on the top and bottom lines as the company saw strong demand for its Singularity platform but will be overshadowed by its weaker outlook as management takes a prudent approach to the macro environment.”
They highlighted that revenue and ARR slightly exceeded Street estimates, with net new ARR coming in at roughly $54 million, above the prior year period.
“The company continues to see significant traction in Purple AI, which saw a record attach rate of ~40%, and Data Solutions that saw triple-digit year-over-year growth in bookings,” the analysts wrote.
The firm sees the company’s outlook as conservative. “For FY26, the company expects total revenue of $1.001 billion, which we see as conservative given the company’s healthy pipeline and expanding customer contributions while management takes a cautious approach to the near-term macro,” they wrote.
They also noted the strategic margin investments. “The company reduced its FY26 gross margin guidance to 78.5% as the compressed outlook reflects strategic investments in cloud infrastructure and capacity expansion,” they wrote.
Wedbush concluded: “We believe that this was a solid quarter for SentinelOne as the company remains well-positioned to capitalize on the growing AI demand for its innovative solutions with a strong pipeline of deals across its emerging and existing products.”