To The Moon

$SentinelOne, Inc(S)$ The company reported its financial results for Q3 FY2025 on December 4, 2024 .Although the overall results exceeded market expectations and guidance was healthy, instead of a big jump as expected, the company plunged 14% after the earnings report.

While SentinelOne was potentially the biggest beneficiary of the $CrowdStrike Holdings, Inc.(CRWD)$ downtime, it seems that the company didn't catch a splash of riches, and investors still harbor varying degrees of concern about its future margins and market share.

Financials and Market Expectations

SentinelOne's performance in Q3 FY2025 exceeded market expectations.Specific financials are listed below:

• Revenue: SentinelOne reported third-quarter revenue of $199 million, beating market expectations of $197 million, an increase of about 20 percent.

• Earnings per share: the company reported a loss per share of $0.22, slightly exceeding market expectations of a $0.20 loss.

• Annualized Recurring Revenue (ARR) came in at $859 million, beating market expectations of $857 million.

• Deferred revenue of $498 million was below market expectations of $508 million.

• Q4 guidance, with revenue expected to be $222 million.

• Full-year revenue guidance: expected to be $818 million, up from the previous estimate of $815 million.Analysts had previously expected revenue of $816 million.

  

Investment Highlights

• New products are undergoing a period of awareness.Q3 saw significant growth in product revenues, with higher customer acceptance of its AI-powered Singularity platform, as well as an increase in service revenues, demonstrating rising customer demand for ongoing support and services.

• Good performance in terms of new customers, with increased market share among large enterprise customers.

  

  Future growth concerns.Deferred revenue of $498 million for the quarter was below market expectations.While the growth trend is clear, it is likely that investors expected a bit more, and as we are going through a transition now, investors have some concerns about future profit growth.

• Market environment: the overall economic environment and the instability of the technology sector may make investors more cautious.

• Cost control and profitability. Although still in the red, the company has achieved positive free cash flow, which is an important indicator of the transition to profitability.However, the company has yet to provide a clear timeline for profitability, which can also cause investors to lose patience.

  

  

  Industry Competition.The previous event of Crowdstrike made many customers and investors start to pay attention to SentinelOne.With the expansion of the product's functions, the user experience appeared to decline to some extent.Some customers have reported that while the features are rich, they are complex and difficult to manage to use, leading to a decline in customer satisfaction.This situation may affect the renewal rate of customers and the acquisition of new customers, thus affecting the long-term growth of the company