SentinelOne sees weaker growth despite strong revenue increase

Shares of SentinelOne fell over 5% after the company announced its fiscal 2025 fourth-quarter results on March 12. The cybersecurity firm reported strong revenue growth but issued a weaker guidance than expected for the upcoming year. Despite this drop, there are factors that could make SentinelOne an appealing investment. In fiscal 2025, SentinelOne saw revenue rise by 32% to $821 million. The company also reduced its non-GAAP net loss, which decreased by 20% to $0.92 per share. However, it expects only 23% revenue growth in fiscal 2026, citing challenges like economic conditions and uncertainty in federal spending. Key metrics indicate potential for faster growth. SentinelOne has secured larger deals with existing clients and gained business from competitors. The integration of AI features into its platform has helped customers detect threats more quickly and reduced costs. This has resulted in a significant increase in the company's revenue pipeline, with a 30% year-over-year rise in its remaining performance obligations (RPO) to $1.2 billion. SentinelOne's margin profile is also improving. The company ended its fiscal year with a non-GAAP operating margin of minus 3%, much better than the previous year's minus 19%. It expects to reach an operating margin of 3% to 4% in the current fiscal year. The company sees a large addressable market worth over $100 billion for its services, suggesting future growth. Analysts are optimistic, expecting strong earnings growth in the coming years. SentinelOne became profitable on a non-GAAP basis, reporting earnings of $0.05 per share. With a median price target of $25 from analysts, shares could rise by 33% from current prices. Nearly 75% of analysts recommend buying the stock, suggesting that the recent drop has created a buying opportunity for investors. Stronger future results could lead to further gains for SentinelOne.