SentinelOne Inc. (NYSE: S) saw its shares retreat approximately 3.1% in after-hours trading on Thursday, reversing a portion of the strong gains recorded during the regular session. The cybersecurity firm closed the regular trading day up 10.5% at $22.71, but shares hovered near $22.00 shortly after the market close, reflecting investor caution over a lowered earnings forecast.
The company reported fiscal second-quarter revenue of $292 million, a 21% increase year-over-year, surpassing the high end of its own guidance by $1 million. Annualized recurring revenue (ARR) climbed 22% to $1.218 billion, underscoring sustained demand for its AI-driven security platform. Adjusted earnings per share came in at $0.08, doubling from the prior year, while the non-GAAP operating margin expanded to 10% from 2%, indicating significant operational leverage.
Despite these robust top-line results, management’s updated full-year guidance painted a mixed picture. The midpoint for fiscal 2027 revenue was raised by $4.5 million, now projecting $1.202 billion to $1.207 billion. Operating income guidance was also lifted, with the midpoint increasing by $6 million to a range of $124 million to $128 million. However, the adjusted EPS midpoint was trimmed by four cents, now expected between $0.30 and $0.32.
The reduction in earnings guidance is largely attributed to a higher projected diluted share count. SentinelOne now expects 361 million diluted shares for fiscal 2027, up from 350 million in its May forecast—a 3.1% increase. This dilution offsets a portion of the operating income growth, resulting in an 11.4% decline in the EPS midpoint despite a 5% rise in operating income.
Customer metrics remained solid, with accounts generating at least $100,000 in ARR growing 13% to 1,715. The company’s cash and investments totaled $813 million at quarter-end. However, non-GAAP gross margin slipped two percentage points to 77%, reflecting ongoing investments in infrastructure and product development that continue to weigh on unit economics.
Chief Executive Tomer Weingarten highlighted faster platform adoption, linking demand to AI security and the protection of AI workloads. “We are seeing accelerating interest in our AI-native security solutions as enterprises seek to safeguard their expanding AI environments,” Weingarten said in a statement.
The market’s reaction underscores the high expectations ahead of the results. Thursday’s trading volume was substantial, with 17.9 million shares changing hands—approximately 2.7 times the average daily volume of 6.6 million. Analyst sentiment remains largely positive, with 58% Buy ratings, 40% Hold, and 3% Sell among 38 analysts, according to Robinhood data.
Looking ahead, management guided for third-quarter revenue between $309 million and $311 million, with adjusted EPS projected at $0.08 to $0.09. Investors will be closely monitoring the company’s ability to sustain ARR growth while managing dilution and margin pressures.
