SentinelOne Inc

Previous wording

Our Singularity Platform is used globally by organizations of all sizes across a broad range of industries. We had 1,233 customers with annualized recurring revenue (ARR) of $100,000 or more as of July 31, 2024, up from 994 as of July 31, 2023. We define ARR as the annualized revenue run rate of our subscription and consumption and usage-based agreements at the end of a reporting period, assuming contracts are renewed on their existing terms for customers that are under contracts with us. As of July 31, 2024, no single end customer accounted for more than 3% of our ARR. Our revenue outside of the U.S. represented 37% and 36% for the three months ended July 31, 2024 and 2023, respectively, illustrating the global nature of our solutions.

Current wording

Our Singularity Platform is used globally by organizations of all sizes across a broad range of industries. We had 1,310 customers with annualized recurring revenue (ARR) of $100,000 or more as of October 31, 2024, up from 1,060 as of October 31, 2023. We define ARR as the annualized revenue run rate of our subscription and consumption and usage-based agreements at the end of a reporting period, assuming contracts are renewed on their existing terms for customers that are under contracts with us. As of October 31, 2024, no single end customer accounted for more than 3% of our ARR. Our revenue outside of the U.S. represented 37% for the three months ended October 31, 2024 and 2023, illustrating the global nature of our solutions.

Previous wording

We have grown rapidly since our inception. Our revenue was $198.9 million and $149.4 million for the three months ended July 31, 2024 and 2023, respectively, representing year-over-year growth of 33%. Our revenue was $385.3 million and $282.8 million for the six months ended July 31, 2024 and 2023, respectively, representing year-over-year growth of 36%. During this period, we continued to invest in growing our business to capitalize on our market opportunity. As a result, our net loss for the three months ended July 31, 2024 and 2023 was $69.2 million and $89.5 million, respectively, and our net loss for the six months ended July 31, 2024 and 2023 was $139.3 million and $196.4 million, respectively.

Current wording

We have grown rapidly since our inception. Our revenue was $210.6 million and $164.2 million for the three months ended October 31, 2024 and 2023, respectively, representing year-over-year growth of 28%. Our revenue was $595.9 million and $447.0 million for the nine months ended October 31, 2024 and 2023, respectively, representing year-over-year growth of 33%. During this period, we continued to invest in growing our business to capitalize on our market opportunity. As a result, our net loss for the three months ended October 31, 2024 and 2023 was $78.4 million and $70.3 million, respectively, and our net loss for the nine months ended October 31, 2024 and 2023 was $217.7 million and $266.7 million, respectively.

Previous wording

Our overall performance depends in part on worldwide economic and geopolitical conditions and their impact on customer behavior. Worsening economic conditions, including inflation, interest rate volatility, slower growth, potential recession, fluctuations in foreign exchange rates, actual or perceived instability in the global banking industry, potential uncertainty with respect to the federal debt ceiling and budget and other changes in economic conditions, and the impact of natural or man-made global events, including wars and other regional geopolitical armed conflict, such as the conflicts in the Middle East, Ukraine and tensions between China and Taiwan, may result in decreased sales productivity and growth and adversely affect our results of operations and financial performance. As a result of the current macroeconomic environment, we have recently experienced certain impacts on our business, including a decline in usage and consumption patterns from certain customers, especially larger enterprise customers, longer sales cycles, and deal downsizing by new customers and of renewals by existing customers, especially larger enterprises.

Current wording

Our overall performance depends in part on worldwide economic and geopolitical conditions and their impact on customer behavior. Worsening economic conditions, including inflation, interest rate volatility, slower growth, potential recession, fluctuations in foreign exchange rates, actual or perceived instability in the global banking industry, potential uncertainty with respect to the federal debt ceiling and budget and other changes in economic conditions, and the impact of the change in the U.S. presidential administration or natural or man-made global events, including wars and other regional geopolitical armed conflict, such as the conflicts in the Middle East, Ukraine and tensions between China and Taiwan, may result in decreased sales productivity and growth and adversely affect our results of operations and financial performance. As a result of the current macroeconomic environment, we have recently experienced certain impacts on our business, including a decline in usage and consumption patterns from certain customers, especially larger enterprise customers, longer sales cycles, and deal downsizing by new customers and of renewals by existing customers, especially larger enterprises.

Previous wording

We maintain an office in Tel Aviv, Israel and had approximately 12% of our personnel in Israel as of July 31, 2024. We are closely monitoring the events of the armed conflict in the Middle East which began in October 2023. While this conflict is still evolving, to date, the conflict has not had an adverse impact on our business and results of operations. However, if the conflict continues to worsen or intensify, any business interruptions or spillover effects could adversely affect our business and operations.

Current wording

We maintain an office in Tel Aviv, Israel and had approximately 11% of our personnel in Israel as of October 31, 2024. We are closely monitoring the events of the armed conflict in the Middle East which began in October 2023. While this conflict is still evolving, to date, the conflict has not had an adverse impact on our business and results of operations. However, if the conflict continues to worsen or intensify, any business interruptions or spillover effects could adversely affect our business and operations.

Previous wording

ARR grew 32% year-over-year to $806.0 million as of July 31, 2024, primarily due to high growth in the number of new customers purchasing our subscriptions and to additional purchases by existing customers.

Current wording

ARR grew 29% year-over-year to $859.7 million as of October 31, 2024, primarily due to high growth in the number of new customers purchasing our subscriptions and to additional purchases by existing customers.

Previous wording

Customers with ARR of $100,000 or more grew 24% year-over-year to 1,233 as of July 31, 2024, primarily due to growth in the ARR of existing customers from additional purchases and to growth in the average size of purchases by new customers.

Current wording

Customers with ARR of $100,000 or more grew 24% year-over-year to 1,310 as of October 31, 2024, primarily due to growth in the ARR of existing customers from additional purchases and to growth in the average size of purchases by new customers.

Previous wording

Our NRR remained in expansionary territory as of July 31, 2024, driven by existing customers adoption of additional endpoint licenses and adjacent platform solutions. A larger portion of our business mix was driven by new customers in 2024, which will open doors for platform adoption over time. We see significant long-term expansion potential based on high customer retention rates, expanding product categories, and early-stage adoption from our installed base.

Current wording

We believe that our ability to retain and expand our revenue generated from our existing customers is an indicator of the long-term value of our customer relationships and our potential future business opportunities. NRR measures the percentage change in our ARR derived from our customer base at a point in time. Our NRR remained in expansionary territory as of October 31, 2024, driven by existing customers adoption of additional endpoint licenses and adjacent platform solutions. A larger portion of our business mix was driven by new customers in 2024, which will open doors for platform adoption over time. We see significant long-term expansion potential based on high customer retention rates, expanding product categories, and early-stage adoption from our installed base.

Previous wording

Revenue increased by $49.5 million primarily due to a combination of sales to new customers and sales of additional endpoints and modules to existing customers.

Current wording

Revenue increased by $46.5 million primarily due to a combination of sales to new customers and sales of additional endpoints and modules to existing customers.

Previous wording

Cost of revenue increased by $6.0 million primarily due to a $4.7 million increase in allocated customer support costs which were mostly personnel-related expenses, a $1.5 million increase in amortization of capitalized internal use-software due to the continued investment in our platform, and a $0.9 million increase in cloud hosting usage charges to support our expanding business. The increase is partially offset by a $0.9 million decrease in amortization of acquired intangible assets in connection with the acquisition of Attivo Networks, Inc. Gross margin increased to 75%, primarily due to revenue growth from existing and new customers outpacing growth in cost of revenue.

Current wording

Cost of revenue increased by $9.5 million primarily due to a $4.6 million increase in customer support costs which were primarily personnel-related expenses, a $3.7 million increase in cloud hosting usage charges to support our expanding business, and a $1.4 million increase in amortization of capitalized internal use-software due to the continued investment in our platform. Gross margin increased to 75%, primarily due to revenue growth from existing and new customers outpacing growth in cost of revenue.

Previous wording

Research and development expenses increased by $9.4 million primarily due to an increase in personnel-related expenses of $6.5 million, including an increase of $5.4 million related to stock-based compensation expense as a result of increased headcount and a $2.1 million increase in allocated overhead costs.

Current wording

Research and development expenses increased by $18.1 million primarily due to an increase in personnel-related expenses of $13.5 million, including an increase of $7.2 million related to stock-based compensation expense as a result of increased headcount, a $3.2 million increase in allocated overhead costs, and an increase of $1.3 million in cloud hosting expenses driven by expanded research and development activities.

Previous wording

Sales and marketing expenses increased by $21.4 million primarily due to an increase in personnel-related expenses of $13.8 million, including an increase of $5.2 million in stock-based compensation expense as a result of increased headcount. In addition, there was an increase in sales and marketing expenses of $6.2 million due to overall business growth and further investment in marketing activities.

Current wording

Sales and marketing expenses increased by $25.5 million primarily due to an increase in personnel-related expenses of $14.9 million, including an increase of $4.5 million in stock-based compensation expense as a result of increased headcount. In addition, there was an increase in marketing-related expenses of $8.4 million due to overall business growth and further investment in marketing activities.

Previous wording

Restructuring charges decreased by $4.3 million due to activities undertaken pursuant to the Plan announced in June 2023. The decrease includes severance and employee benefit charges of $5.3 million incurred during the six months ended July 31, 2023, partially offset by stock-based compensation savings of $1.1 million due to decreased headcount.

Current wording

Restructuring charges decreased by $0.1 million due to activities undertaken pursuant to the Plan announced in June 2023. The decrease includes severance and employee benefit charges of $0.1 million.

Previous wording

Revenue increased by $102.5 million, or 36%, from $282.8 million for the six months ended July 31, 2023 to $385.3 million for the six months ended July 31, 2024, primarily due to a combination of sales to new customers and sales of additional endpoints and modules to existing customers.

Current wording

Revenue increased by $149.0 million from $447.0 million for the nine months ended October 31, 2023 to $595.9 million for the nine months ended October 31, 2024, primarily due to a combination of sales to new customers and sales of additional endpoints and modules to existing customers.

Previous wording

Cost of revenue increased by $13.6 million from $87.3 million for the six months ended July 31, 2023 to $100.8 million for the six months ended July 31, 2024, primarily due to an increase of $9.2 million in allocated overhead costs, a $2.3 million increase in amortization of capitalized internal-use software due to the continued investment in our platform, and a $2.2 million increase in cloud hosting usage charges to support our expanding business. Gross margin increased from 69% for the six months ended July 31, 2023 to 74% for the six months ended July 31, 2024, primarily due to revenue growth from existing and new customers outpacing growth in cost of revenue.

Current wording

Cost of revenue increased by $23.1 million from $131.0 million for the nine months ended October 31, 2023 to $154.1 million for the nine months ended October 31, 2024, primarily due to an increase of $13.8 million in customer support costs which were primarily personnel-related expenses, a $5.8 million increase in cloud hosting usage charges to support our expanding business, and a $3.7 million increase in amortization of capitalized internal-use software due to the continued investment in our platform. Gross margin increased from 71% for the nine months ended October 31, 2023 to 74% for the nine months ended October 31, 2024, primarily due to revenue growth from existing and new customers outpacing growth in cost of revenue.

Previous wording

Research and development expenses increased from $109.4 million for the six months ended July 31, 2023 to $121.9 million for the six months ended July 31, 2024, primarily due to an increase in personnel-related expenses of $8.7 million, including an increase of $8.0 million related to stock-based compensation expense as a result of increased headcount, and a $3.6 million increase in allocated overhead costs.

Current wording

Research and development expenses increased from $161.7 million for the nine months ended October 31, 2023 to $192.4 million for the nine months ended October 31, 2024, primarily due to an increase in personnel-related expenses of $22.1 million, including an increase of $15.2 million related to stock-based compensation expense as a result of increased headcount, a $6.8 million increase in allocated overhead costs, and an increase of $2.5 million in cloud hosting expenses driven by expanded research and development activities.

Previous wording

Sales and marketing expenses increased from $197.4 million for the six months ended July 31, 2023 to $235.4 million for the six months ended July 31, 2024, primarily due to an increase in personnel-related expenses of $26.8 million, including an increase of $10.7 million in stock-based compensation expense as a result of increased headcount. In addition, there was an increase in sales and marketing expenses of $8.5 million and a $1.9 million increase in sales related expenses due to overall business growth and further investment in marketing activities.

Current wording

Sales and marketing expenses increased from $295.7 million for the nine months ended October 31, 2023 to $359.2 million for the nine months ended October 31, 2024, primarily due to an increase in personnel-related expenses of $41.7 million, including an increase of $15.2 million in stock-based compensation expense as a result of increased headcount. In addition, there was an increase in marketing-related expenses of $16.9 million, and a $2.5 million increase in sales-related expenses due to overall business growth and further investment in marketing activities.

Previous wording

General and administrative expenses decreased from $100.2 million for the six months ended July 31, 2023 to $87.1 million for the six months ended July 31, 2024, primarily due to a decrease of $7.1 million in stock-based compensation expense due to the stock modifications during the six months ended July 31, 2023 that did not recur in the current period. In addition, there was a decrease of $3.0 million in legal expenses due to lower legal consulting fees related to prior year settlements, and a $2.3 million increase in overhead expenses allocated out.

Current wording

General and administrative expenses decreased from $151.4 million for the nine months ended October 31, 2023 to $139.4 million for the nine months ended October 31, 2024, primarily due to a decrease of $5.0 million in stock-based compensation expense due to the higher stock modifications expenses during the nine months ended October 31, 2023. In addition, there was a $4.7 million increase in overhead expenses allocated out, and a decrease of $3.0 million in litigation expenses due to lower settlement charges during the nine months ended October 31, 2024. These settlement charges include amounts related to the Fortis litigation settlement, see Note 10, Commitments and contingencies - Fortis Litigation in Part I, Item 1 of this Quarterly Report for more details.

Previous wording

Restructuring charges decreased by $4.3 million due to activities undertaken pursuant to the Plan announced in June 2023. The decrease includes severance and employee benefit charges of $5.3 million incurred during the three months ended July 31, 2023, partially offset by stock-based compensation savings of $1.1 million due to decreased headcount.

Current wording

Restructuring charges decreased by $4.3 million due to activities undertaken pursuant to the Plan announced in June 2023. The decrease includes severance and employee benefit charges of $5.4 million incurred during the nine months ended October 31, 2023, partially offset by stock-based compensation savings of $1.1 million due to decreased headcount.

Previous wording

Interest income increased $1.4 million as a result of higher interest rates during the three months ended July 31, 2024. Interest expense decreased primarily due to a reduction in the amortization of the discount related to acquisition-related liabilities. The change in other income (expense), net is primarily due to a decrease in net gains on strategic investments.

Current wording

Interest income increased $3.7 million as a result of higher income earned from investments in marketable securities during the nine months ended October 31, 2024. Interest expense decreased primarily due to a reduction in the amortization of the discount related to acquisition-related liabilities. The change in other income (expense), net is primarily due to a decrease in net gains on strategic investments.

Previous wording

The provision for income taxes increased for the six months ended July 31, 2024, compared to the six months ended July 31, 2023, primarily as a result of the increase in foreign taxes related to operations in international subsidiaries.

Current wording

The provision for income taxes increased for the nine months ended October 31, 2024, compared to the nine months ended October 31, 2023, primarily as a result of the increase in foreign taxes related to operations in international subsidiaries.

Previous wording

We have financed operations primarily through proceeds received from sales of equity securities, payments received from our customers, and borrowings under a now-terminated loan and security agreement, and we have generated operating losses, as reflected in our accumulated deficit of $1.5 billion and $1.3 billion as of July 31, 2024 and January 31, 2024, respectively. We expect these and other operating losses to continue for the foreseeable future. We also expect to incur significant research and development, sales and marketing, and general and administrative expenses over the next several years in connection with the continued development and expansion of our business. As of July 31, 2024 and January 31, 2024, our principal source of liquidity was cash, cash equivalents, and investments of $1.1 billion and $1.1 billion, respectively.

Current wording

We have financed operations primarily through proceeds received from sales of equity securities, payments received from our customers, and borrowings under a now-terminated loan and security agreement, and we have generated operating losses, as reflected in our accumulated deficit of $1.6 billion and $1.3 billion as of October 31, 2024 and January 31, 2024, respectively. We expect these and other operating losses to continue for the foreseeable future. We also expect to incur significant research and development, sales and marketing, and general and administrative expenses over the next several years in connection with the continued development and expansion of our business. As of October 31, 2024 and January 31, 2024, our principal source of liquidity was cash, cash equivalents, and investments of $1.1 billion and $1.1 billion, respectively.

Previous wording

Cash provided by operating activities during the six months ended July 31, 2024 was $44.3 million, primarily consisting of our net loss of $139.3 million, offset by adjustments for non-cash items of $171.7 million and $11.9 million provided by net changes to our operating assets and liabilities. The main drivers of the changes in operating assets and liabilities were a $59.3 million decrease in accounts receivable due to timing of cash received from customers, a $8.9 million decrease in prepaid expenses and other assets and an increase of accrued liabilities of $5.4 million. These amounts were partially offset by a $34.9 million increase in deferred contract acquisition costs, a $12.6 million decrease in deferred revenue, a $10.6 million decrease in accrued payroll and benefits and a $2.8 million decrease in operating lease liabilities.

Current wording

Cash provided by operating activities during the nine months ended October 31, 2024 was $37.1 million, primarily consisting of our net loss of $217.7 million and $12.6 million used by net changes to our operating assets and liabilities, offset by adjustments for non-cash items of $267.4 million. The main drivers of the changes in operating assets and liabilities were a $60.1 million increase in deferred contract acquisition costs, a $17.2 million decrease in deferred revenue, a $4.7 million decrease in accrued payroll and benefits and a $3.9 million decrease in operating lease liabilities. These amounts were partially offset by a $50.0 million decrease in accounts receivable due to timing of cash received from customers, an increase of accrued liabilities of $14.6 million, a $6.0 million decrease in prepaid expenses and other assets, and a $3.0 million increase in accounts payable due to timing of invoices received from vendors.

Previous wording

Cash used in operating activities during the six months ended July 31, 2023 was $40.0 million, primarily consisting of our net loss of $196.4 million, partially offset by $17.5 million provided by net changes to our operating assets and liabilities and non-cash items of $138.9 million. The main drivers of the changes in operating assets and liabilities were a$27.9 million decrease in accounts receivable due to timing of cash received from customers, a$15.1 million increase in deferred revenue resulting primarily from increased subscription contracts, and a$6.3 million decrease in prepaid expenses and other assets. These amounts were partially offset by a$30.3 million increase in deferred contract acquisition costs and a$4.4 million decrease in accrued payroll and benefits.

Current wording

Cash used in operating activities during the nine months ended October 31, 2023 was $62.2 million, primarily consisting of our net loss of $266.7 million and $6.7 million used by net changes to our operating assets and liabilities, partially offset by adjustments due to non-cash items of $211.2 million. The main drivers of the changes in operating assets and liabilities were a$47.3 million increase in deferred contract acquisition costs, a $4.7 million decrease in operating lease liabilities, and a $2.0 million decrease in accrued payroll and benefits. These amounts were partially offset by a$18.8 million decrease in accounts receivable due to timing of cash received from customers, a$16.3 million increase in deferred revenue resulting primarily from increased subscription contracts, and a$10.1 million decrease in prepaid expenses and other assets.

Previous wording

Cash used in investing activities during the six months ended July 31, 2024 was $115.6 million, consisting of $442.6 million of investment purchases, $61.6 million of net cash paid for the acquisitions of PingSafe and Stride, and a $14.5 million of capitalized internal-use software costs. These amounts were partially offset by $404.7 million of investment sales and maturities.

Current wording

Cash used in investing activities during the nine months ended October 31, 2024 was $85.9 million, consisting of $597.6 million of investment purchases, $61.6 million of net cash paid for the acquisitions of PingSafe and Stride, and $19.8 million of capitalized internal-use software costs. These amounts were partially offset by $594.9 million of investment sales and maturities.

Previous wording

Cash provided by investing activities during the six months ended July 31, 2023 was$14.7 million, consisting of$372.0 million of investment sales and maturities, partially offset by$350.4 million of investment purchases, and$6.2 million of capitalized internal-use software costs.

Current wording

Cash provided by investing activities during the nine months ended October 31, 2023 was$27.6 million, consisting of$504.3 million of investment sales and maturities, partially offset by$462.5 million of investment purchases,$9.7 million of capitalized internal-use software costs, and $3.4 million of patent purchases.

Previous wording

Cash provided by financing activities during the six months ended July 31, 2024 was $21.6 million, primarily consisting of $12.8 million of proceeds from the exercise of employee stock options and $8.8 million of proceeds from the issuance of common stock under our Employee Stock Purchase Plan (ESPP).

Current wording

Cash provided by financing activities during the nine months ended October 31, 2024 was $31.7 million, primarily consisting of $22.9 million of proceeds from the exercise of employee stock options and $8.8 million of proceeds from the issuance of common stock under our Employee Stock Purchase Plan (ESPP).

Previous wording

Cash provided by financing activities during the six months ended July 31, 2023 was $20.3 million, consisting of $13.8 million of proceeds from the exercise of employee stock options and $6.4 million of proceeds from the issuance of common stock under our ESPP.

Current wording

Cash provided by financing activities during the nine months ended October 31, 2023 was $23.8 million, consisting of $17.4 million of proceeds from the exercise of employee stock options and $6.4 million of proceeds from the issuance of common stock under our ESPP.