SentinelOne Inc Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Byline: The SentinelOne Inc Q3 2026 Earnings Call, held on December 4, 2025, revealed strong financial performance, driven by growth in new customer acquisition and expansion with existing customers. The company exceeded expectations for both top and bottom lines, demonstrating durable growth and operating leverage. Discussions centered on the company's AI-driven Singularity platform, emerging platform solutions, and the acquisitions of Observo AI and Prompt Security. Management provided guidance for Q4 and full fiscal year 2026, while also announcing a leadership transition with the CFO stepping down.
Key Financial Results:
ARR grew 23% year-over-year.
Net new ARR reflected positive growth year-over-year and sequentially.
Operating margin reached 7%, an improvement of nearly 1,200 basis points year-over-year.
Achieved sustained quarterly operating profitability.
Net income margin increased to 10%.
Free cash flow margin of 6% was achieved.
Remaining performance obligations (RPO) grew 35% to $1.3 billion.
Revenue grew 23% year-over-year to $259 million.
Gross margin was 79%.
Business Segment Results:
Non-Endpoint solutions represented approximately half of quarterly bookings.
Data solutions bookings growth accelerated to triple digits year-over-year.
Cloud security bookings growth was the strongest in the last 12 months.
Purple AI achieved a record attach rate that surpassed 40% of licenses sold.
International markets grew 34% and represented 40% of total revenue.
Capital Allocation:
The acquisition of Observo AI for approximately $225 million.
Strategic capital allocation to fuel growth initiatives while driving long-term value creation.
Industry Trends and Dynamics:
Companies are turning to SentinelOne for a platform experience that combines AI, data, and security as AI reshapes how businesses operate.
Rising demand for comprehensive CWS and CNAPP offerings as cloud environments grow and AI workloads multiply.
Enterprises are looking for real-time visibility, governance, and control as they accelerate their use of generative AI and agentic tools.
Competitive Landscape:
SentinelOne is expanding market share and gaining traction in cybersecurity.
The company is well-positioned to lead in both AI for Security and Security for AI.
SentinelOne's technology advantage and platform value are driving improved win rates and deeper expansion across existing accounts.
Named a Leader in Worldwide XDR Software by the 2025 IDC MarketScape.
Macroeconomic Environment:
The company continues to monitor the macro environment, which can influence deal timing and sales cycles.
FX-related headwinds impacted the full-year operating margin by 120 basis points.
Growth Opportunities and Strategies:
Expanding the partner ecosystem to expand reach and scale.
Deepening collaboration with AWS and Google Cloud, integrating technology and platform across their cloud marketplaces and AI services.
Acquisition of Observo AI to extend innovation lead and differentiate AI advantage.
Prompt Security is seeing healthy early traction in the field.
Expansion of Purple AI's agentic capabilities.
Introduction of the new Wayfinder Threat Detection & Response suite of managed services.
Flex is helping secure larger, multi-solution deals and longer-term customer commitments.
Financial Guidance and Outlook:
For fiscal year 2026, revenue is expected to be approximately $1,001 million, representing 22% year-over-year growth.
For Q4, revenue is expected to be approximately $271 million, which represents 20% year-over-year growth.
Full-year gross margin is expected to be approximately 78.5%.
Q4 gross margin is expected to be approximately 77.5%.
Full-year operating margin is now expected to slightly exceed 3%, an improvement of more than 600 basis points compared to fiscal year 2025.
Q4 operating margin is expected to be approximately 5%, representing a year-over-year improvement of about 400 basis points.
Reaffirming commitment to delivering positive free cash flow for the full year, expected to be a few points higher than operating margin.
