S Shares Jump 7% on Q2 Earnings Beat and Robust Fiscal 2026 Guidance

SentinelOne S shares have gained 7.1% since the company reported its second-quarter fiscal 2026 results on Aug. 28. Growth can be attributed to strong contributions in new customer acquisitions, platform adoption by existing customers, and rapid growth in AI-powered security solutions.

In the second quarter of fiscal 2026, S reported earnings of 4 cents per share, which surpassed the Zacks Consensus Estimate by 33.33%. The company reported earnings of 1 cent per share in the year-ago quarter.

Revenues were $242.2 million, up 21.7% year over year and beat the consensus mark by 0.07%. The upside can be attributed to the continued adoption of its AI-powered security solutions.

As of July 31, 2025, annualized recurring revenues (ARR) grew 24% year over year to $1 billion. ARR determines the annualized revenue run rate of the company’s subscription, consumption, and usage-based agreements at the end of a reporting period. Customers with over $100,000 or more in ARR grew 23% year over year to 1,513 as of July 31, 2025.

SentinelOne, Inc. Price, Consensus and EPS Surprise

SentinelOne, Inc. price-consensus-eps-surprise-chart | SentinelOne, Inc. Quote

SentinelOne’s shares have plunged 15.1% year to date against the Zacks Computer & Technology sector’s rise of 10.1%. The raised guidance will help S stock to recover.

SentinelOne’s Operating Highlights

Adjusted gross margin in the reported quarter was 79%, which contracted 50 bps year over year.

Total operating expenses of $186.1 million increased 13.1% year over year due to elevated research and development (up 29% year over year), sales and marketing (up 5.8% year over year), and general and administrative expenses (up 15.3% year over year).

Non-GAAP operating margin was 2.2% in the fiscal second quarter, an increase from the loss of 3.2% in the year-ago quarter.

SentinelOne’s Balance Sheet Remains Strong

As of July 31, 2025, SentinelOne had cash, cash equivalents, and investments of $1.2 billion.

Free cash outflow jumped 31.5% year over year to $7.1 million. Free cash outflow margin remained unchanged year over year at 3%.

S Unveils Q3 View and Raises Fiscal 2026 Guidance

For third-quarter fiscal 2025, SentinelOne expects revenues of $256 million, indicating growth of nearly 22% year over year.

Non-GAAP gross margin is expected to be 78.5%.

For fiscal 2026, revenues are forecasted to be between $998 million and $1 billion, down from the prior projected range of $996 million to $1 billion, representing 22% year-over-year growth.

Adjusted gross margin is expected to be between 78.5% and 79% for fiscal 2026.

For fiscal 2026, the company expects the adjusted operating margin to be 3%.

SentinelOne’s Zacks Rank & Stocks to Consider

Currently, SentinelOne has a Zacks Rank #4 (Sell).

Alkami Technology ALKT, Arista Networks ANET, and Amphenol APH are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. While ANET and ALKT carry a Zacks Rank #2 (Buy), APH sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alkami Technology shares have lost 29.9% year to date. The Zacks Consensus Estimate for Alkami Technology’s full-year 2025 earnings is pegged at 58 cents per share, up by 7.4% over the past 30 days, implying growth of 100% from the year-ago quarter’s reported figure.

Arista Networks shares have gained 23.2% year to date. The Zacks Consensus Estimate for ANET’s full-year fiscal 2025 earnings is pegged at $2.81 per share, up by 9.7% in the past 30 days, indicating year-over-year growth of 23.79%.

Amphenol shares have gained 61.2% year to date. The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings has increased 1.34% to $3.02 per share in the past 30 days, indicating year-over-year growth of 59.79%.

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This article originally published on Zacks Investment Research (zacks.com).

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