SentinelOne delivered significant operating leverage during its fiscal second quarter of 2027, with non-GAAP operating margin expanding by 800 basis points while annualized recurring revenue surpassed $1.2 billion.
Revenue increased 21% year-over-year to $292 million from $242 million and exceeded the company’s guidance.
Annualized recurring revenue increased slightly faster, rising 22% to $1.218 billion as of July 31.
The number of customers generating at least $100,000 of ARR increased 13% to 1,715.
The most significant financial improvement came from SentinelOne’s non-GAAP profitability.
Non-GAAP operating margin reached 10%, compared with only 2% in the prior-year quarter.
That represents an 800-basis-point improvement in one year and indicates that SentinelOne is beginning to generate meaningful leverage from its growing revenue base.
Non-GAAP net income margin doubled to 10% from 5%.
Non-GAAP diluted EPS increased to $0.08 from $0.04.
SentinelOne has not yet reached GAAP profitability.
GAAP operating margin improved modestly to negative 31% from negative 33%, while GAAP net loss margin was negative 32% compared with negative 30% a year earlier.
GAAP diluted loss per share was $0.27 compared with a loss of $0.22.
Gross margins also moderated. GAAP gross margin was 72% compared with 75%, while non-GAAP gross margin declined to 77% from 79%.
However, management’s decision to raise the full-year outlook indicates confidence that operating leverage can continue improving while SentinelOne maintains growth above 20%.
Fiscal 2027 revenue is now expected between $1.202 billion and $1.207 billion.
Non-GAAP operating income is projected at $124 million to $128 million, while non-GAAP diluted EPS is expected between $0.30 and $0.32.
For the third quarter, SentinelOne expects $309 million to $311 million of revenue, non-GAAP operating income of $38 million to $40 million and non-GAAP diluted EPS of $0.08 to $0.09.
The company ended the quarter with $813 million of cash, cash equivalents and investments, providing substantial liquidity for continued investment.
SentinelOne’s strategic focus centers increasingly on what it describes as both AI for Security and Security for AI.
The company argues that AI is changing how software is created and how businesses operate, while simultaneously creating new cybersecurity requirements.
Its Singularity platform incorporates AI-native runtime protection, positioning SentinelOne to address traditional endpoint and enterprise cybersecurity requirements alongside emerging AI-related threats.
The quarter therefore combines three attractive trends for the company: recurring revenue growth above 20%, substantial non-GAAP operating leverage and increased management confidence reflected in higher fiscal-year guidance.
The gap between GAAP and non-GAAP profitability remains an important consideration, but the 800-basis-point improvement in non-GAAP operating margin demonstrates how quickly SentinelOne’s economics are changing as revenue scales.
KEY QUOTES:
“Our Q2 performance demonstrates strong progress across every dimension of our business, a top-tier growth profile, accelerating platform adoption, and undisputed technology leadership for both AI for Security and Security for AI.”
Tomer Weingarten, Chief Executive Officer of SentinelOne
“Q2 was an exceptional quarter of execution and demonstrated the power of our platform model.”
“We exceeded all top and bottom-line guided metrics, achieved record profitability and are raising our revenue and operating income outlook for fiscal year 2027.”
“We are scaling the business with discipline, investing in key AI growth opportunities while driving substantial operating leverage.”
Sonalee Parekh, Chief Financial Officer of SentinelOne
