TenQ

The SentinelOne story

SentinelOne provides AI-powered cybersecurity through its Singularity platform, with the central question being whether expanding enterprise adoption can turn adjusted profitability into sustained GAAP profits and cash generation.

SentinelOne stock reportTenQ Score 16/36 · every chart and check from its filings
  • $21.58share price, last close
  • $7.5Bmarket value
  • 16/36TenQ Score checks passed

The story in brief

  • Enterprise adoption expands. As of July 31, 2026, annualized recurring revenue grew 22% to $1,218 million, while customers contributing at least $100,000 in ARR increased 13% to 1,715.
  • Profit measures diverge. In the quarter to July 2026, non-GAAP operating margin improved to 10% from 2% a year earlier, but GAAP operating margin remained (31)%.
  • Equity compensation matters. Over the last twelve months, stock-based pay of $322 million substantially exceeded free cash flow of $57 million.

What drives the business

  • SentinelOne built Singularity to automate threat prevention, detection, and response across endpoints, cloud workloads, and identity credentials, with Purple AI adding natural language investigation and threat hunting.
  • Its expansion strategy combines additional licenses and platform modules for existing customers with distribution through managed security providers and incident response partners.
  • The September 2025 acquisitions of Prompt Security and Observo AI extended the platform into protection for enterprise AI deployments and data ingestion for security analytics.
  • Subscription, consumption, and usage-based agreements supported ARR of $1,218 million as of July 31, 2026, while revenue in the quarter to July 2026 grew 21% to $292 million.
  • International expansion is another business driver, with revenue outside the U.S. accounting for 39% in fiscal 2026 compared with 37% in fiscal 2025.

What the price assumes

The reverse DCF does not produce a measurable growth assumption because operating earnings remain negative, leaving the valuation dependent on future profitability despite positive free cash flow over the last twelve months.

At $25.38, SentinelOne has a market value of $8.8 billion and trades at 8.0x sales, while revenue growth over the last twelve months was 21.1%, below its three-year annual pace of 33.4%.

Its free cash flow yield of 0.6% falls short of the TenQ check requiring more than 3%, and the company passes 1 of 6 Value checks.

What could change the story

  • Adjusted operating improvement has not eliminated pressure on product margins, with GAAP gross margin declining to 72% from 75% a year earlier in the quarter to July 2026.
  • Stock-based compensation is excluded from non-GAAP results, and the share count increased 18.8% over three years, making dilution an important distinction between business growth and shareholder participation.
  • Cash conversion of 5.2% trails the TenQ sector comparison of 24.4%, although $655 million in cash and short-term investments and $0 in debt provide financial flexibility.
  • Competition, platform defects or security incidents, and difficulties integrating acquisitions could disrupt the customer renewals and expansion on which Singularity depends.

What to watch next

  • For the third quarter of fiscal 2027, management expects revenue of $309 to 311 million and non-GAAP operating income of $38 to 40 million.
  • For fiscal 2027 ending January 31, 2027, management expects revenue of $1.202 to 1.207 billion and non-GAAP operating income of $124 to 128 million.
  • The next releases will show whether ARR growth and the number of customers with at least $100,000 in ARR sustain enterprise expansion, and whether GAAP margins and free cash flow improve alongside adjusted earnings.

Sources

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