SentinelOne's Q2 Earnings Report Drives 7% Share Price Surge

SentinelOne's Q2 earnings report showed a 22% YoY revenue growth to $242mln, with ARR reaching $1bln for the first time. The company's non-GAAP net income tripled to $13.2mln, and the number of clients with ARR over $100,000 increased by 24%. SentinelOne's stock soared nearly 7% in late-session trading.

SentinelOne Inc. (NYSE: S) reported its fiscal 2026 Q2 earnings on Aug 28th, 2025, showcasing a robust performance with a 22% year-over-year (YoY) revenue growth to $242.2 million. This marks a significant milestone as the company’s annual recurring revenue (ARR) surpassed the $1 billion mark for the first time, reaching $1.02 billion. The company's non-GAAP net income also tripled to $13.2 million, indicating a notable improvement in profitability [3].

SentinelOne's stock price responded positively to these results, soaring nearly 7% in late-session trading. This performance reflects the company's strategic focus on AI-driven security solutions and its ability to attract and retain high-value clients. The number of clients with ARR exceeding $100,000 increased by 24%, highlighting the platform's stickiness and strong customer retention [3].

The company's CEO, Tomer Weingarten, highlighted the quarter's achievements, emphasizing that AI is "making security more critical than ever." He noted the company's recent acquisition of Prompt Security for $180 million, which aims to bolster GenAI governance and data loss prevention capabilities [3]. This acquisition is part of SentinelOne's broader strategy to stay ahead of evolving threats in the AI security market, which is projected to grow at a 30% compound annual growth rate (CAGR) through 2030 [4].

SentinelOne's Q2 2026 earnings report underscores the company's ability to scale efficiently while maintaining a focus on long-term value creation. The introduction of SentinelOne Flex, a flexible licensing model, has driven larger deals and accelerated customer adoption, contributing to the company's strong net retention rate of 24% [3]. This model aligns with broader industry trends toward consumption-based pricing, which can enhance customer lifetime value while reducing churn.

While GAAP operating margins remain negative at -33%, non-GAAP metrics provide a more optimistic picture, with a 2% operating margin in Q2, up from -3.2% in the prior year. The company's $1.2 billion in cash reserves for research and development (R&D) and strategic investments offer flexibility for future growth without overleveraging [3]. CFO Barbara Larson emphasized the company's disciplined approach to capital allocation, a critical factor for SaaS companies navigating the tension between growth and profitability.

SentinelOne has raised its full-year 2026 revenue outlook to $998 million to $1.002 billion, with Q3 2026 revenue expected at approximately $256 million. The company expects Q3 gross margin of ~78.5% and full-year gross margin between 78.5% and 79%, with operating margin of ~4% in Q3 and ~3% for the full year [1]. The Prompt acquisition is expected to have a minimal revenue contribution in 2026 but an estimated 80 basis point impact on full-year operating margin [1].

SentinelOne's Q2 results demonstrate its resilience and strategic positioning in the AI-native security market. The company's focus on innovation, customer retention, and disciplined growth signals a promising long-term outlook. Investors should closely monitor SentinelOne's progress as it navigates the dynamic macroeconomic environment and continues to expand its AI-driven security offerings.

References:
[1] https://www.ainvest.com/news/sentinelone-2026-q2-earnings-negative-net-income-revenue-growth-2508/
[2] https://site.financialmodelingprep.com/market-news/sentinelone-shares-gain-after-q-beat-and--billion-arr-milestone
[3] https://www.ainvest.com/news/sentinelone-q2-earnings-beat-strategic-ai-momentum-deep-dive-growth-profitability-potential-2508/