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SentinelOne's 'Solid' Quarter Overshadowed by Soft Outlook, Restructuring Plan, Wedbush Says

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SentinelOne (S) remains well positioned to capture the growing opportunity around AI security, despite "solid" fiscal Q1 results being overshadowed by weaker-than-expected guidance and a restructuring plan that includes about 8% workforce reduction, Wedbush Securities said in a Friday note.

The company's net new annual recurring revenue for the quarter increased 55%, marking the fourth consecutive quarter of positive growth and bringing total annual recurring revenue to about $1.16 billion. SentinelOne is seeing strong demand for its Singularity platform and emerging offerings in AI, data and cloud, which accounted for nearly half of total annual recurring revenue, the analysts said.

Customers spending more than $100,000 annually increased 17% in the quarter, driven by the company's Flex model. Flex has generated more than $200 million in total contract value within three quarters of launch and is helping support larger platform adoption deals, according to the note.

Under new Chief Financial Officer Sonalee Parekh, SentinelOne is "sharpening its operating model" and remains positioned to benefit from rising demand for AI security, the analysts added.

Wedbush maintained its outperform rating and $20 price target on the stock.

Shares of SentinelOne were down 11% in Friday trading.

Price: $16.05, Change: $-1.98, Percent Change: -10.96%

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