SentinelOne Inc (S) shares fell 6.7% to $21.19 on Tuesday after the cybersecurity firm reported mixed second-quarter results for fiscal 2027, though it raised its full-year operating income guidance.
The company posted revenue of $292 million, up 21% year-over-year and exceeding analyst expectations. Annual recurring revenue (ARR) rose 22% to $1.218 billion, with net new ARR totaling $56 million for the fifth consecutive quarter of growth. Remaining performance obligations (RPO) increased 45% to $1.7 billion, reflecting strong demand for its cloud security and AI-driven solutions.
Operating performance improved significantly, with a non-GAAP operating margin of 10%, an 820-basis-point increase from the prior year. Sales and marketing efficiency also strengthened, declining to 34% of revenue, a 900-plus-basis-point improvement year-over-year. Non-endpoint products, including cloud security and AI security, now account for over half of total ARR, with Purple AI’s ARR tripling year-over-year and demonstrating a validated 338% three-year ROI for customers.
Free cash flow came in at negative $13.2 million, missing the consensus estimate of negative $1.5 million due to severance-related costs. Earnings per share (EPS) guidance for the third quarter of fiscal 2027 was set at $0.08 to $0.09, below the $0.11 consensus estimate, while full-year operating income guidance was raised to $124 million to $128 million.
Analysts remain broadly positive, with 21 buy ratings, 13 holds, and one sell. Price targets were raised by Scotiabank to $26 and by Cantor Fitzgerald to $26, while UBS maintained a neutral rating with a $24 target. The average street price target stands near $24, implying roughly 13% upside from current levels. The company is scheduled to report third-quarter results on December 8, 2026, with consensus estimates calling for $309.4 million in revenue and $0.11 in EPS.
SentinelOne’s market capitalization stands at $7.24 billion, with the stock trading below its average target despite strong fundamentals in its core cybersecurity business.
