SentinelOne: A First Look

seekingalpha2021-06-30

Summary SentinelOne, Inc is filing for an initial public offering after the recent SolarWinds hack improved the visibility of its products. Key customers include Aston Martin, Nvidia, Estee Lauder ...

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Comments

Kristo
2021-06-30
Kristo
Great
manekineko
2021-06-30
manekineko
Nice
Kristo
2021-06-30
Kristo
How
CPCat
2021-06-30
CPCat
Looks like a good one. When would the IPO be?
ValuInvestor
2021-06-30
ValuInvestor
How does one subscribe to the IPO?
patrickLai
2021-06-30
patrickLai
Good News

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Our Singularity Platform instantly defends against cyberattacks - performing at a \n faster speed, greater scale, and higher accuracy than possible from any single human or even a crowd.Source:IPO Prospectus\n\nAsides from the fact that SentinelOne is a subscription-based business, we also like some of the following factors highlighted in the positioning statement.\n\nGlobal reach (US and international presence)\nAI-Powered\nXDR (extended detection and response)\nAutonomous (little human intervention in threat detection and hunting)\n\nIn its IPO filing, SentinelOne listed the usual trends driving the demand for cybersecurity platforms. These trends include the growing volume of enterprise data, the sophistication of cyberattacks, and the scalability issues of legacy security products.\nSentinelOne highlighted attractive growth metrics underlining its strong performance year to date. Revenue grew by over 100% in FY'21. In the most recent quarter, revenue growth accelerated to 108% y/y. ARR (annual recurring revenue) currently stands at $161M representing a y/y growth of 116%.\n\nReaders will also appreciate SentinelOne's strong presence amongst the largest enterprises. From its IPO filing, SentinelOne noted that all of its Fortune 10 customers, 25 of its 37 Fortune 500 customers, and 43 of its 66 Global 2000 customers generated ARR greater than or equal to $100,000 in Q1'22.\nOther interesting metrics include the growth of customers with ARR of $100K to 277, up from 122 in Q1'21. Customers with ARR of $1 million or more grew to 17 in Q1'22, up from 6 in Q1'21.\nIn the future, SentinelOne sees more growth opportunities in its huge addressable market pegged at $40.2 billion in 2024, growing at a compound annual growth rate of 11.9% between 2021 and 2024. This covers modern endpoint security, cyber analytics, intelligence, response, automation, IT operations management, and IOT security. I find this projection plausible because SentinelOne is building a platform that can correlate and analyze data from multiple sources at scale.\nGoing forward, it is important to explore the product and sales moves that will drive sustainable growth, profitability, and cash flows.\nBusiness\nTo drive growth and profitability and total shareholder returns, SentinelOne is led by Co-founder and CEO, Tomer Weingarten who has served in that role since inception (2013). Mr Weingarten will be assisted by Richard Smith, Jr., who joined in March to fill the role of CTO from Medallia (MDLA). We also have David Bernhardt, who has served as Chief Financial Officer since September 2020. Before joining SentinelOne, Mr Bernhardt served in various leadership positions at Chegg, Inc.\nTo drive sales, SentinelOne leverages a mix of internal sales teams and channel partners. Channel partners drive more than 90% of sales, highlighting SentinelOne's strong partnership strategy.\nOn the product front, SentinelOne has a platform with multiple modules akin to CrowdStrike. It intends to keep adding more modules to drive the potential revenue per customer.\nSentinelOne has raised a total of $696.5 million to date to achieve its product and sales goals. While it has enough cash in the bank, the profitability ratios are somewhat worrisome. Gross margin was 58% in FY'21 and 53% (non-GAAP) in Q1'22. Operating margin was -165% in the most recent quarter. Net cash used in operating activities was -$30.8M in Q1'22 versus -$11.8M in Q1'21.\nCompetitors\n\nSource:Gartner\nMajor competitors include CrowdStrike, Microsoft (MSFT), McAfee (MCFE), Trend Micro (OTCPK:TMICF), Sophos and other next-generation AV companies.\n\n Through this acquisition, SentinelOne sets the bar for the XDR market and solves one of the biggest challenges in delivering a fully integrated XDR platform: ingesting and actioning all operational data in real-time from a security-first perspective.Source:SentinelOne\n\nThe unique factor about SentinelOne is its data-driven approach to cyber defense. This spurred the recent acquisition of Scalyr.\nHere are some interesting facts about Scalyr\n\nFounded by the Creator of Google Docs.\nRegarded as the first cloud-native, cloud-scale data analytics platform for log management and observability.\nScalyr can ingest and store petabytes of structured and unstructured machine data.\nEliminates schema requirements.\n\nValuation\nMost recently, SentinelOne wasvaluedat $3B in its latest funding round. After its IPO, SentinelOne will be targeting a valuation of $10B. Relative to the current ARR of $161M, this valuation isn't cheap.\nLike Sumo Logic (SUMO), investors that value data analytics platform and the coming IoT revolution will find SentinelOne attractive. I don't think this is a short term play, as SentinelOne's best years are still ahead of it. Lastly, like mosthigh-growth SaaS stocks, we can expect SentinelOne to command lofty growth multiples.\nRisk Factors\nThe top risk factors to watch out for include the congestion in the endpoint security space, the weak profitability factor, and the post IPO volatility pending lockup expiration.\nConclusion\nLike Sumo Logic, SentinelOne represents an interesting value proposition in attractive data analytics and cybersecurity segments. Investors will like the growth story. SentinelOne's weak profitability can be attributed to the fact that it is still investing in growth. In the meantime, it helps that it can raise more capital to fund future growth projects. Overall, we expect the IPO to be well received.","kind":"news","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":153241447,"gmtCreate":1625029771689,"gmtModify":1703850525839,"author":{"id":"3557634928383187","authorId":"3557634928383187","name":"Kristo","avatar":"https://static.tigerbbs.com/07075676425d47f31685477722d0d415","vip":1,"crmLevel":7,"crmLevelSwitch":1,"idStr":"3557634928383187","authorIdStr":"3557634928383187"},"htmlText":"Great","listText":"Great","text":"Great","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/153241447","repostId":1125387082,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":153241317,"gmtCreate":1625029747639,"gmtModify":1703850525031,"author":{"id":"3557059841248518","authorId":"3557059841248518","name":"manekineko","avatar":"https://static.tigerbbs.com/2621e2547da4dc7e450da498cd2e8341","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"3557059841248518","authorIdStr":"3557059841248518"},"htmlText":"Nice","listText":"Nice","text":"Nice","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/153241317","repostId":1125387082,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":153241043,"gmtCreate":1625029745282,"gmtModify":1703850525192,"author":{"id":"3557634928383187","authorId":"3557634928383187","name":"Kristo","avatar":"https://static.tigerbbs.com/07075676425d47f31685477722d0d415","vip":1,"crmLevel":7,"crmLevelSwitch":1,"idStr":"3557634928383187","authorIdStr":"3557634928383187"},"htmlText":"How","listText":"How","text":"How","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/153241043","repostId":1125387082,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":153250882,"gmtCreate":1625029077346,"gmtModify":1703850507295,"author":{"id":"3582520228861009","authorId":"3582520228861009","name":"CPCat","avatar":"https://static.tigerbbs.com/3bafaf3d39abfb78a4bedf785310721a","vip":1,"crmLevel":2,"crmLevelSwitch":1,"idStr":"3582520228861009","authorIdStr":"3582520228861009"},"htmlText":"Looks like a good one. When would the IPO be?","listText":"Looks like a good one. When would the IPO be?","text":"Looks like a good one. When would the IPO be?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/153250882","repostId":1125387082,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":153281457,"gmtCreate":1625027446979,"gmtModify":1703850467571,"author":{"id":"4087361572396550","authorId":"4087361572396550","name":"ValuInvestor","avatar":"https://static.tigerbbs.com/5a962911d3cd0763a9f0cb01392cacd9","vip":1,"crmLevel":4,"crmLevelSwitch":0,"idStr":"4087361572396550","authorIdStr":"4087361572396550"},"htmlText":"How does one subscribe&nbsp;to the IPO?","listText":"How does one subscribe&nbsp;to the IPO?","text":"How does one subscribe to the IPO?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/153281457","repostId":1125387082,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":153234405,"gmtCreate":1625026631907,"gmtModify":1703850446336,"author":{"id":"3585604372962377","authorId":"3585604372962377","name":"patrickLai","avatar":"https://static.tigerbbs.com/baedd77ad7c3a28da1ae2ecc8b2e88aa","vip":1,"crmLevel":2,"crmLevelSwitch":1,"idStr":"3585604372962377","authorIdStr":"3585604372962377"},"htmlText":"Good News","listText":"Good News","text":"Good News","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/153234405","repostId":1125387082,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":81,"commentSize":12,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1125387082"}