SentinelOne Q2 Earnings: Beat, Guidance Cut

SentinelOne, Inc. reported on Aug. 27, 2026, that its Q2 earnings topped consensus on revenue and non-GAAP earnings. The company raised its FY2027 revenue and operating-income guidance while lowering adjusted EPS guidance, a contrast some observers described as soft.

Q2 Results and Guidance Shift

For the quarter ended July 31, 2026, SentinelOne said revenue reached about $292 million, up 21% from $242 million a year earlier, with international sales accounting for 39% of the total. On a non-GAAP basis, the company posted diluted EPS of $0.08, beating the $0.07 consensus by $0.01. It delivered a record 10% non-GAAP operating margin and a 77% non-GAAP gross margin, with net income margin also at 10%. CEO Tomer Weingarten said, “Our Q2 performance demonstrates strong progress across every dimension of our business – a top-tier growth profile, accelerating platform adoption, and undisputed technology leadership for both AI for Security and Security for AI.”

On a GAAP basis, SentinelOne reported a net loss of $93.4 million and a diluted loss per share of $(0.27), compared with $(0.22) a year earlier. GAAP gross margin declined to 72% from 75%, operating margin improved slightly to (31)% from (33)%, while the net-loss margin widened to (32)% from (30)%.

Annualized recurring revenue (ARR) rose 22% year-over-year to $1.2 billion, with net new ARR hitting a record $56 million for the quarter. Remaining performance obligations grew 45% to $1.7 billion. The company had 1,715 customers with ARR of $100,000 or more, a 13% increase, and dollar-based net retention for that group expanded sequentially for the third quarter. Management highlighted rapid adoption of AI security products, noting that Prompt Security and Purple AI tripled ARR year-over-year and could become the company’s next nine-figure ARR category. Data and cloud security each showed multi-quarter ARR acceleration, supported by large contract wins that boosted ARR per customer.

SentinelOne raised its full-year FY2027 revenue guidance to a range of $1.202 billion to $1.207 billion, implying about 20% growth at the midpoint. It also lifted operating income guidance to $124 million to $128 million, which implies roughly a 10% operating margin and about 700 basis points of margin expansion versus FY2026. At the same time, management lowered adjusted (non-GAAP) EPS guidance for FY2027, a move discussed on the Aug. 27 earnings call.

Executives described Q2 as outstanding, citing record net new ARR and operating margin as reasons for raising revenue and operating income outlooks despite trimming per-share assumptions. They attributed the raised guidance to accelerating platform adoption and strong AI security demand while maintaining investment levels.

Cash Position and Efficiency Gains

SentinelOne ended the quarter with $813 million in cash, cash equivalents, and investments, with no debt. This included $200.9 million in cash and cash equivalents, $454.3 million in short-term investments, and $158.0 million in long-term investments. Operating cash flow for the first six months of FY2027 was $31.9 million, down from $51.2 million a year earlier. Free cash flow for Q2 was negative $13.2 million.

Management pointed to improved go-to-market efficiency as a key driver of margin expansion. Sales and marketing expenses ran at 34% of revenue, reflecting a year-over-year improvement of more than 900 basis points, which contributed materially to operating leverage gains.