Cybersecurity AI platform provider SentinelOne (NYSE: S) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 21.7% year on year to $242.2 million. The company expects next quarter’s revenue to be around $256 million, close to analysts’ estimates. Its non-GAAP profit of $0.04 per share was $0.01 above analysts’ consensus estimates.

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StockStory’s Take

SentinelOne’s second quarter was marked by accelerated growth and positive market response, underpinned by broad-based customer adoption and a significant milestone in annual recurring revenue. Management highlighted that both new customer acquisitions and expansion within existing accounts fueled net new annual recurring revenue, aided by robust demand for AI-powered solutions and the new Flex licensing model. CEO Tomer Weingarten noted that “results underscore our stronger competitive position and growing product differentiation,” pointing to rapid adoption of SentinelOne’s AI and data offerings as key contributors. Notably, the company’s performance was evenly split between new logos and expansion, reflecting a balanced growth strategy.

Looking ahead, SentinelOne’s guidance is shaped by ongoing investment in AI innovation, expanding product adoption, and a cautious approach given an unpredictable macroeconomic environment. Management stated that the Prompt Security acquisition positions the company to address emerging risks from generative AI adoption, while continued momentum in non-endpoint products is expected to support durable revenue growth. CFO Barbara Larson signaled that, “our investment approach strikes a thoughtful balance between maximizing long-term growth opportunities and maintaining a strong, responsible and profitable financial profile,” with an emphasis on sustaining positive operating margins and free cash flow as the platform evolves.

Key Insights from Management’s Remarks

Management attributed quarterly momentum to increased demand for AI security solutions, balanced customer growth, and early success with the flexible licensing model, Flex.

• AI Solutions Drive Adoption: SentinelOne saw rapid uptake of its Purple AI offering, with attach rates surpassing 30% of licenses sold and triple-digit growth year-over-year, reflecting strong demand for efficient, autonomous security operations.

• Flex Licensing Model Gains Traction: The newly launched Flex licensing option allowed customers broader access to the Singularity platform, enabling larger deal sizes and streamlining both new customer wins and expansions within existing accounts. Early adoption included an eight-figure deal with a multinational company.

• Non-Endpoint Solutions Expand: About half of quarterly bookings originated from non-endpoint products, such as AI SIEM (Security Information and Event Management), data analytics, and cloud security. This diversification reflects growing customer needs for unified security platforms and positions SentinelOne as more than a point-solution vendor.

• Prompt Security Acquisition: The acquisition of Prompt Security marks an entrance into securing generative AI at runtime, addressing emerging risks like data leakage and shadow AI use. Management expects Prompt to become a significant contributor as enterprise AI adoption accelerates, although financial impact will be modest this year.

• International and Partner Ecosystem Growth: International markets contributed 38% of total revenue with growth outpacing the U.S., and SentinelOne deepened relationships with partners such as AWS and Lenovo to extend reach and scale, particularly in managed security services and cloud marketplaces.

Drivers of Future Performance

Management expects product expansion, AI-driven demand, and prudent execution to drive next quarter and full-year performance.

• AI and Platform Differentiation: SentinelOne believes ongoing investments in AI-powered security and the integration of Prompt Security will strengthen its platform, enabling safe generative AI adoption and attracting enterprises prioritizing unified protection for endpoints, cloud, and data.

• Sales Efficiency and Flex Impact: Management expects the Flex licensing model to continue improving deal velocity and average contract value, simplifying procurement for customers and supporting multi-product adoption, which could drive higher retention and expansion rates.

• Macro and Deal Timing Risks: While the pipeline remains healthy, management highlighted that variability in deal timing, particularly for larger contracts and within federal or international segments, could affect quarterly results. Ongoing macroeconomic uncertainty leads to a cautious stance on revenue recognition and guidance for the remainder of the year.

Catalysts in Upcoming Quarters

In coming quarters, the StockStory team will monitor (1) adoption rates and upsell success tied to the Flex licensing model, (2) early customer traction and integration milestones for Prompt Security’s AI risk management features, and (3) continued growth in non-endpoint platform bookings versus traditional endpoint products. Execution in international markets and progress on partner-led managed security services will also be important signposts for ongoing platform expansion.

SentinelOne currently trades at $19.15, up from $17.63 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).

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