SentinelOne (S) shares plunged nearly 20% in premarket trading on Friday after the cybersecurity firm released second-quarter revenue guidance that fell short of analyst expectations and announced a restructuring plan that includes cutting approximately 8% of its workforce. The company said it will redirect spending toward artificial intelligence, data, cloud, and endpoint security.
For the first quarter, SentinelOne reported revenue of $277 million, up 21% year-over-year but slightly below the $277.3 million consensus estimate. The company posted adjusted earnings of 4 cents per share, beating the 2 cents analysts had forecast. However, investors focused on the weaker outlook, sending shares sharply lower before the opening bell.
SentinelOne guided second-quarter revenue in the range of $289 million to $291 million, compared to the $292 million analyst consensus. The company also forecast adjusted earnings per share of 6 to 8 cents, versus the 8 cents analysts were expecting. The guidance suggests a deceleration in growth from the first quarter.
Annualized recurring revenue (ARR) rose 23% to $1.163 billion, while the number of customers with ARR of $100,000 or more increased 17% to 1,702. Despite these positive metrics, the market reacted negatively to the forward-looking guidance.
As part of the restructuring, SentinelOne expects to incur a one-time charge of approximately $25 million, including $15 million in cash costs. The charge includes $12 million to $14 million for severance and benefits, and $10 million to $12 million for stock-based compensation. The company expects to complete the plan in the fiscal second quarter.
Chief Executive Tomer Weingarten described the quarter as a “solid start,” highlighting demand for what he called “machine speed defense” as artificial intelligence transforms the cybersecurity landscape. Chief Financial Officer Sonalee Parekh emphasized “operating leverage” and noted that the company is raising its operating-income guidance.
SentinelOne faces stiff competition from larger players such as CrowdStrike (CRWD), Palo Alto Networks (PANW), and Microsoft (MSFT), which bundle security features into their broader software packages. This trend poses a challenge as customers look to consolidate vendors rather than add new ones.
The job cuts could also create risks. If the restructuring slows sales or product development, SentinelOne may struggle to capitalize on its AI initiatives, especially as customers evaluate whether to stick with larger, more established platforms. With IT budgets remaining tight, improved margins alone may not be enough to boost the stock.
