SentinelOne stock reversed up on Wednesday after the cybersecurity firm delivered January-quarter earnings and revenue that beat estimates by a smaller magnitude, and made a sizable acquisition.
Mountain View, Calif.-based SentinelOne reported earnings after the market close on Tuesday. S stock initially fell on the earnings release. But SentinelOne stock reversed up. It popped 13.5% to close at 35.05 on the stock market today as the Nasdaq also gained.
"SentinelOne reported good Q4 results, with revenue exceeding the high-end of guidance by 8%, though the stock traded down," Wells Fargo analyst Andrew Nowinski said in a report to clients. "There really weren't any negatives to highlight, with all key metrics coming in better than expected. The Q1 guidance was certainly better than expected for revenue, though operating loss was slightly higher than the street was expecting."
Also on Tuesday, SentinelOne acquired Attivo Networks in a cash-and-stock deal valued at $616.5 million. Attivo was not included in fiscal 2023 guidance, the company said.
SentinelOne Makes Acquisition
SentinelOne's cybersecurity software detects malware on laptops, mobile phones and other "endpoints" that access corporate networks. Also, it's building a broad, threat-detection cybersecurity platform.
Called XDR, or extended detection and response, the cybersecurity technology monitors and analyzes endpoints as well as web/email gateways, web application firewalls, cloud business workloads and information technology infrastructure.
"While another chunkier acquisition could make it harder to gauge underlying business strength, Attivo should bring $30 million in annual recurring revenue, growing 50%," said UBS analyst Roger Boyd in a report. "We like the strategy of expanding the XDR aperture with identity detection and response."
SentinelOne reported an adjusted loss of 17 cents a share vs. an 84-cent loss a year earlier. Revenue rose 120% to $65.6 million, up 120%. Analysts expected SentinelOne to report revenue of $60.7 million and a loss of 18 cents a share. Results were for the fourth quarter ended Jan. 31.
SentinelOne Stock: Revenue Guidance Tops Estimates
For fiscal 2023, SentinelOne forecast revenue of $368 million at the midpoint of the company's forecast. Analysts were projecting a loss of 69 cents a share on revenue of $346.1 million.
"We ended the fourth quarter with double-digit, year-over-year improvement in both our non-GAAP gross and operating margin," SentinelOne management said in a letter to shareholders. "Given the significant market opportunity ahead, we remain committed to investing in the growth of our business in a disciplined manner. In fiscal 2023, we expect to continue making progress toward our long-term profitability targets."
Heading into the SentinelOne earnings report, the stock had dropped 37% in 2022. SentinelOne stock owned a Relative Strength Rating of only 18 out of a best-possible 99, according to IBD Stock Checkup.
Annual recurring revenue from subscription-based services rose 123% to $292 million, topping estimates of 60% ARR growth.
SentinelOne competes with CrowdStrike Holdings and others.
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Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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