December 4, 2025 — AI-powered cybersecurity vendor SentinelOne, Inc. (NYSE: S) reported fiscal Q3 2026 results after Thursday’s close, beating Wall Street expectations on revenue and earnings but unnerving investors with softer-than-expected guidance and a surprise CFO transition.
Q3 FY26: Strong Top-Line Growth and New Profitability Milestones
SentinelOne’s third quarter of fiscal 2026 (three months ended October 31, 2025) extended its run of 20%+ growth and showed meaningful operating leverage:
- Revenue: $258.9 million, up 23% year over year (vs. $210.6 million a year ago). [1]
- Annualized recurring revenue (ARR): $1.06 billion, also up 23% year over year. [2]
- Large customers: Clients generating over $100,000 in ARR grew 20% to 1,572. [3]
Profitability metrics improved sharply:
- GAAP gross margin was 74% (75% a year ago), while non-GAAP gross margin held at a high 79% (80% last year). [4]
- GAAP operating margin improved to –28% from –42% year over year; non‑GAAP operating margin swung to +7% from –5%. [5]
- GAAP net loss margin narrowed to –23% (from –37%), while non‑GAAP net income margin improved to 10% (from 0%). [6]
- Operating cash flow margin reached 8% (vs. –3% a year earlier); free cash flow (FCF) margin climbed to 6% (vs. –6%). [7]
- SentinelOne ended the quarter with $873.6 million in cash, cash equivalents and investments, providing a sizable liquidity cushion. [8]
On an adjusted basis, the company delivered non‑GAAP EPS of $0.07, beating analyst expectations of roughly $0.05 per share. [9] That marked another step toward sustained profitability for a business still posting sizeable GAAP losses.
Management highlighted the combination of high growth and margin expansion. CEO Tomer Weingarten pointed to demand for SentinelOne’s AI-native security platform across endpoint, cloud and data, while departing CFO Barbara Larson emphasized new “profitability milestones” and improved free cash flow trends in the quarter. [10]
Momentum Built on a Strong Q2
The Q3 print follows a robust Q2 FY26, where SentinelOne:
- Grew revenue 22% year over year to $242.2 million.
- Pushed ARR above $1.0 billion, up 24% year over year.
- Expanded its pool of >$100k ARR customers by 23% to 1,513.
- Improved non‑GAAP operating margin to 2%, from –3% a year earlier. [11]
Taken together, Q2 and Q3 show a pattern of mid‑20% revenue growth paired with steadily improving operating and cash-flow margins.
Guidance, CFO Transition and Share Price Reaction
Q4 and Full-Year Outlook: Solid Growth, Slight Miss vs. Street
Despite the Q3 beat, the market focused quickly on SentinelOne’s forward guidance.
For Q4 FY26 and the full fiscal year ending January 31, 2026, management issued the following outlook: [12]
- Q4 FY26 guidance
- Revenue: $271 million
- Non‑GAAP gross margin: ~77.5%
- Non‑GAAP operating margin: ~5%
- Full FY26 guidance
- Revenue: $1.001 billion
- Non‑GAAP gross margin: ~78.5%
- Non‑GAAP operating margin: ~3%
While those numbers still imply healthy growth, they were slightly below consensus on the top line. Reuters noted that the Q4 revenue midpoint of $271 million trails analyst estimates of about $273.1 million, based on LSEG data. [13]
That minor shortfall, combined with ongoing GAAP losses, appeared enough to spark a bout of profit‑taking.
CFO Barbara Larson to Depart; Barry Padgett Named Interim CFO
The earnings release also included a Leadership Update:
- CFO Barbara Larson will leave SentinelOne to pursue an opportunity outside the cybersecurity industry.
- She will remain in her role through mid‑January 2026 to help with the transition.
- Chief Growth Officer Barry Padgett will step in as interim CFO. Padgett is a veteran software executive with over 25 years of experience at companies including SAP and Stripe. [14]
Weingarten credited Larson with helping SentinelOne reach positive non‑GAAP operating margins, strengthening free cash flow and guiding the company past the $1 billion ARR mark, while framing Padgett as a “steady hand” as the company searches for a new permanent CFO. [15]
Leadership transitions in the finance seat often make investors nervous—especially at high‑growth, still‑loss‑making software names—so this news likely contributed to the stock’s volatility after the report.
Stock Volatility on December 4, 2025
The initial market response was negative:
- Reuters and other outlets reported shares down around 6% in extended trading immediately after the guidance and CFO news crossed the tape. [16]
- StockTitan’s real‑time tracker showed the stock down roughly 7.9% at one point, with a last price around $15.63, elevated volume (about 2× normal), and notable valuation compression. [17]
By late regular trading, however, the sell‑off had largely moderated:
- As of the latest quote on December 4, SentinelOne closed around $16.97, essentially flat on the day (down about 0.1%).
- The stock traded in a wide intraday range between $15.31 and $17.31, on volume of roughly 12.6 million shares, underscoring heightened volatility around the print.
In short, Q3 fundamentals impressed, but the slightly conservative Q4 outlook plus a CFO change created enough uncertainty to keep a lid on the share price.
Wall Street’s SentinelOne Stock Forecast After the Earnings
Consensus Rating: “Moderate Buy” With Double-Digit Upside
Despite near‑term volatility, Wall Street remains generally constructive on SentinelOne.
MarketBeat’s December 4 update shows: [18]
- Consensus rating: “Moderate Buy”
- Analyst mix: 2 “Strong Buy”, 16 “Buy”, 9 “Hold”, 1 “Sell” (28 analysts in total)
- Average 12‑month price target: $23.81 per share
- Trading context: Shares around $16.95 with a 12‑month range of $15.17–$29.06, market cap about $5.65 billion, and a negative trailing P/E ratio of roughly –12.8.
MarketBeat’s forecast page indicates that current price targets span a low of $18 to a high of $32, with the average implying around 40% upside from the mid‑$16s level. [19]
Other aggregators paint a similar picture. Benzinga’s compiled analyst data shows an average price target in the mid‑$20s (around $24.5), with high and low targets again clustered near $32 and $18, respectively. [20]
Recent Price-Target Cuts: Cantor Fitzgerald and Barclays Turn More Cautious
Even within an overall “Moderate Buy” framework, several firms have lowered their near‑term expectations.
- Cantor Fitzgerald (November 24, 2025)
- Cut its price target from $24 to $22 but maintained an Overweight rating.
- At the time, the new target still implied roughly 40% upside from about $15.70 per share.
- Cantor cited “recent market contraction” ahead of Q3 earnings but remained encouraged by strong large‑deal activity, the launch of SentinelOne’s Flex offering, expansion of its CNAPP (cloud‑native application protection platform), and momentum from acquisitions and partnerships. [21]
- Barclays (around November 19, 2025)
- Reduced its price target from $21 to $18 and kept an Equal Weight stance.
- The firm modeled roughly flat quarter‑over‑quarter net new ARR of $53 million and said its channel checks on SentinelOne were “mixed,” reflecting competitive pressures and scrutiny ahead of the Q3 print. [22]
Both moves underscore a more selective but still generally positive institutional view: SentinelOne is seen as a high‑potential AI‑security name, but expectations are being recalibrated as growth normalizes and competition intensifies.
Valuation and Profitability Lens
From a fundamentals and valuation standpoint:
- GuruFocus highlights SentinelOne’s TTM net margin of about –47% and TTM EPS around –1.32, confirming the company is still meaningfully loss‑making on a GAAP basis.
- At the same time, gross margin sits near 75%, well above many software peers, and the price‑to‑sales ratio of roughly 6.1× is close to its five‑year low, suggesting some multiple compression despite continued growth. [23]
Analysts broadly view SentinelOne as a high‑growth, improving‑margin story where non‑GAAP profitability has arrived before GAAP earnings, but where execution on operating leverage will remain under the microscope over the next several years.
Strategic Drivers: AI Security, Cloud Partnerships and M&A
AWS Partnership and Generative AI Credentials
Strategically, SentinelOne is leaning hard into AI‑driven cybersecurity and cloud partnerships—key themes that underpin many bullish forecasts.
In a recent announcement, SentinelOne disclosed that it: [24]
- Earned the AWS Generative AI Competency, recognizing its expertise in securing AI and GenAI workloads on Amazon Web Services.
- Expanded automation and AI capabilities on AWS, including hyperautomation for incident response, the Purple AI assistant for investigating CloudTrail logs, and the integration of Prompt Security solutions into AWS Marketplace.
AWS executives framed the partnership as a way for customers to adopt AI technologies “with robust protection,” while a customer testimonial cited a 100% improvement in visibility and a 50% reduction in issue‑detection time thanks to SentinelOne’s platform on AWS. [25]
These developments reinforce SentinelOne’s pitch as a broad, AI‑native security platform spanning endpoint, cloud, identity and data—not just a point solution.
Government Work and Observo AI Acquisition
Recent analyst commentary from Investing.com also points to several complementary growth levers: [26]
- A $2 million award from the U.S. Cybersecurity and Infrastructure Security Agency (CISA) under the Continuous Diagnostics and Mitigation (CDM) program, in collaboration with ManTech and RavenTek.
- A roughly $225 million acquisition of Observo AI, aiming to bolster observability, telemetry and AI‑driven analytics within the SentinelOne platform.
- Additional coverage initiations and rating reiterations (e.g., Berenberg’s Buy with a $25 target, JMP’s Market Outperform with a $29 target), tied to expectations that ARR could climb well above $1 billion over the next few quarters.
These moves support the idea that SentinelOne is expanding its addressable market beyond core endpoint security, positioning itself as a broader AI‑security and data platform.
Key Opportunities the Market Is Watching
Putting today’s headlines into a broader context, here are the main bullish themes investors and analysts tend to emphasize:
- Sustained 20%+ Revenue and ARR Growth
Q2 and Q3 FY26 both delivered revenue growth in the low‑20% range, with ARR growth matching or exceeding that pace and the large‑customer base expanding solidly. [27] - High and Improving Margins
Non‑GAAP gross margins around 79% and non‑GAAP operating margins now positive, at 7% in Q3, show SentinelOne has the unit economics to support long‑term profitability if operating expenses are managed carefully. [28] - Positive and Rising Free Cash Flow
The transition from negative to positive free cash flow margin (from –6% a year ago to +6% this quarter, with trailing‑twelve‑month FCF margin at 5%) signals a more disciplined spending profile and reduces the risk of future capital raises. [29] - Strong Balance Sheet
Nearly $874 million in cash and investments provides ample flexibility for continued R&D, go‑to‑market investments and tuck‑in deals like Observo AI, even while GAAP losses persist. [30] - AI and Cloud Tailwinds
Deepening ties with AWS, generative AI competencies and broader AI‑native security capabilities align SentinelOne with secular trends in cloud adoption, AI deployment and data‑centric security. [31] - Supportive (If Moderating) Street View
A consensus “Moderate Buy” rating and average price targets near the mid‑$20s indicate that, even after recent cuts, most covering analysts still expect double‑digit percentage upside over the next 12 months. [32]
Key Risks and Pressure Points
At the same time, several risk factors and bear arguments remain front and center:
- GAAP Losses and Heavy Stock-Based Compensation
GAAP net margins remain deeply negative (around –23% this quarter; –47% on a trailing basis), reflecting high operating costs and stock‑based compensation that are excluded from non‑GAAP metrics. [33] - Leadership Uncertainty at the CFO Seat
The departure of CFO Barbara Larson, who has been closely associated with SentinelOne’s march toward profitability, raises natural questions about continuity and future financial discipline, even with an experienced interim CFO in place. [34] - Mixed Channel Checks and Target Cuts
Barclays’ and Cantor Fitzgerald’s recent price‑target reductions, coupled with comments about “mixed” demand signals and macro uncertainty, show that not all institutional observers are convinced near‑term growth will remain seamless. [35] - Insider Selling
MarketBeat notes that insiders sold roughly 481,000 shares in the past 90 days, including sales by Larson herself, even as the analyst consensus remains constructive—something some investors view as a caution flag. [36] - Intense Competition in Cybersecurity
SentinelOne competes against heavyweight rivals such as CrowdStrike, Microsoft, Palo Alto Networks and others in endpoint, cloud and identity protection. Maintaining high growth and pricing power in that environment will require continuous innovation and differentiated AI capabilities. - Execution Risk on Long-Term Profitability Targets External models and commentary suggest SentinelOne’s long‑term narrative involves scaling revenue toward the $1.5–$1.6 billion mark and generating meaningful earnings by around 2028, assumptions that require sustained ~20% annual growth and continued margin expansion. [37] Any slowdown in growth, uptick in churn or mis‑steps in cost control could push out that timeline.
What to Watch Next for SentinelOne Stock
Looking beyond today’s earnings, investors tracking SentinelOne (S) will likely focus on:
- Net new ARR and large deals: Whether net new ARR can re‑accelerate or remain stable amid competitive pressure and enterprise budget scrutiny.
- Sustained non‑GAAP profitability: Can SentinelOne maintain or expand its mid‑single‑digit non‑GAAP operating margin while still investing for growth? [38]
- Free cash flow trajectory: Continued positive FCF would strengthen the balance sheet story and support acquisitions and R&D without dilution. [39]
- CFO succession: The identity and profile of the next permanent CFO—and their early messaging—will matter for sentiment around discipline and capital allocation. [40]
- Integration of Observo AI and other acquisitions: Evidence that these deals deepen the platform’s value and support higher ARPU rather than simply adding complexity. [41]
- Further cloud and AI-security wins: Additional competency badges, marketplace integrations or hyperscaler co‑sell agreements would reinforce the long‑term AI‑security thesis.
Bottom Line
As of December 4, 2025, SentinelOne sits at a crossroads familiar to many high‑growth software names:
- The company is growing revenue and ARR in the 20%+ range, has turned non‑GAAP profitable, and is generating positive free cash flow.
- At the same time, it still carries significant GAAP losses, faces an important CFO transition, and operates in one of the most competitive corners of enterprise software.
With the stock hovering around the mid‑$16s to high‑$16s, consensus analyst targets in the mid‑$20s imply meaningful upside, but that upside is increasingly tied to flawless execution on growth, margins, and leadership continuity.
For now, SentinelOne remains a volatile AI‑cybersecurity play that is likely to stay highly sensitive to every data point on ARR, profitability—and now, its C‑suite.
References
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