Cyber Security Provider SentinelOne (NYSE: S† despite triple-digit growth, its share has declined year-to-date (-44%) in the technology bear market. The cloud based cybersecurity provider offers: artificial intelligence (AI) based protection for endpoints, cloudand identity, which areas provide significant growth possibilities. Revenues were up 109% and non-GAAP gross margins peaked at 68% in the fiscal first quarter of 2023, when customer numbers grew 55%. Annual recurring revenue (ARR) increased 110% to $339 and customers with ARR over $100,000 rose 113% to 591. The company has more than $1.5 billion in cash and raised its forward guidance. Despite the economic slowdown amid rising interest rates, cybersecurity remains a top priority for IT spending, indicating: recession file resistance. This is driven by secular trends including digital transformation, increasing attacks and data proliferation. Headlines have shown how expensive it can be without having a cybersecurity solution. SentinelOne delivers continuous autonomous protection through AI and machine learning and represents one of the largest operational implementations of AI in the world. The company is still in the hyper-growth stage with a path to profitability driven by the scalability of its solutions and high margins. Cautious investors looking for growth in the cybersecurity segment can look forward to opportunistic pullbacks in SentinelOne’s stock.
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Q1 Fiscal 2023 Profit Release
On June 1, 2022, SentinelOne released its fiscal first quarter 2023 earnings report for the quarter ended April 2022. The company saw earnings per share (-$0.21), excluding one-time items, better than consensus analyst estimates at a loss from (-$0.24) by $0.03. Revenues were up 109.4% year-over-year (year-on-year) to $78.3 million, better than analysts’ estimates of $74.64 million. Annual recurring revenue (ARR) increased 110% to $339 million. Tomer Weingarten, CEO of SentinelOne, said: “Our first quarter results demonstrate the combination of a robust demand environment for our leading cybersecurity platform and impressive execution across the board. We continued to grow triple digits with significant margin expansion, new customers added”, and ended the quarter with an extremely strong pipeline. We are raising our revenue guidance to near triple-digit growth again this fiscal year, including our acquisition of Attivo Networks.”
Upside Income Guidance
SentinelOne raised its fiscal second quarter 2023 forecast for revenue to between $95 million and $96 million, compared with consensus analyst estimates of $84.83 million. The company expects revenue for fiscal 2022 to be between $403 million and $407 million, versus $371.03 million by consensus analysts.
Takeaway for conference calls
CEO Weingarten cited some highlights of the quarter, including Q1 2023 as the fifth consecutive quarter of triple-digit ARR growth, which expects to repeat in the next quarter. The cybersecurity outlook looks bright, prompting the company to raise its guidelines. He highlighted the success of his land and expansion strategy, as evidenced by the record number of new customers growing even more than in the seasonally strong fourth quarter. He alluded to some of the notable victories, including one of the country’s largest telecom companies, a major US agency and a global media conglomerate. The net retention rate rose to a record 131%. They also closed the Attivo acquisition, making their footprint in the identity security segment. Cloud security remained the high-growth segment. The demand for mission-critical cybersecurity has never been greater and is a top priority for IT spending. The proprietary technology-core Singularity XDR platform is the largest operational implementation of AI in the world because it provides autonomous protection. CEO Weingarten summed it up: “Our XDR platform targets the key attack surfaces that enterprises need. In addition to endpoint, these emerging capabilities such as cloud, Ranger, data and vigilance are driving growth. Cloud grew to nearly 10% of our Q1 ACV. “
Opportunistic Withdrawal Levels
Using the gun cards on the weekly and daily time frames allows an accurate picture of the playing field of price action for S-shares. The weekly gun chart formed an inverted pup breakdown as it broke the $37.91 Fibonacci (fib) level† The downtrend bottomed out at $19.08 before rallying through the 5-period weekly moving average (MA) resistance at $24.63 to the 15-period MA resistance at $30.34. The weekly lower Bollinger Bands (BBs) sit at $14.36 and the 50-period daily MA is near the $46.05 fib. The weekly stochastic forms a mini pup with kicks through the 20 band. the weekly market structure layer (MSL) buy triggers on a breakout to $27.18 which also nearly overlaps with the 50-period daily MA at $27.00. The gun chart’s daily breakout has a rising 5-period MA support at $24.47 followed by the 15-period MA at $23.53 as the stochastic rise moves through the 60 band. The daily upper BBs are $28.01. Cautious investors should avoid hunting and patiently watch for opportunistic pullback levels on the $23.26 fib, $21.10 fib, $20.03, $19.08 fib, $17.48, $15.54 and the $12.81 fib. Upward trajectories range from the $35.90 fib level all the way to the $47.02 fib level.
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