SentinelOne CEO agrees he ‘needs to perform better’ after Q1 earnings

on Jun 2, 2023
  • SentinelOne reports a disappointing Q1 and trims future guidance.
  • CEO Tomer Weingarten discussed the earnings print on CNBC.
  • SentinelOne stock is now down about 40% versus its YTD high.

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SentinelOne Inc (NYSE: S) opened more than 35% down today after reporting disappointing results for its first financial quarter.

SentinelOne stock down on weak outlook

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The cybersecurity stock is being punished also because the management cited a slowdown in business spending and slashed their guidance for the full year.

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SentinelOne now forecasts up to $600 million of sales in fiscal 2024. Still, on CNBC’s “Squawk Box”, CEO Tomer Weingarten said:

What you’re seeing is our transition towards more efficient growth, focused on profitability. Most of the fundamentals are intact but there’s no denying that macro is putting pressure and we need to perform better.

The company’s second-quarter outlook also came in shy of Street estimates.

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SentinelOne improved margins in Q1

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On the plus side, SentinelOne improved its adjusted gross margin by 700 basis points to 75% in the recently concluded quarter.

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Its annualised recurring revenue (ARR) went up a whopping 75% year-on-year to $563.6 million but still missed $594.4 million that experts had forecast. According to the Chief Executive:

What caught us by surprise was the down ticking consumption in terms of log analytics, data ingestion. Customers are looking to right size what they put into the platform, what they store.

Heading into the earnings print, Wall Street had a consensus “overweight” rating on SentinelOne stock.

SentinelOne to cut jobs

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SentinelOne also confirmed that it’s cutting costs to pave its path to profitability.

To that end, the California-based company plans on lowering its headcount by about 5.0%. Commenting further on the weak results and guidance, CEO Weingarten said:

We fell short of own expectations. A lot of it doesn’t come from lack of demand but from our own lack of ability to execute better in a predictable manner. We’re working hard to make sure we can give reliable forecasts.

In total, the announced layoff will affect less than 100 employees. Versus its year-to-date high, SentinelOne stock is now down about 40%.

Notable figures in SentinelOne Q1 earnings report

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  • Lost $106.9 million versus the year-ago $89.8 million
  • Per-share loss also climbed from 33 cents to 37 cents
  • Adjusted loss printed at 15 cents as per the press release
  • Sales increased just over 70% YoY to $133.4 million
  • Consensus was 17 cents a share on $136.6 million revenue

CEO Weingarten also sounded bullish on artificial intelligence for cybersecurity today on CNBC.

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