SentinelOne Stock Sinks After Tepid Forecast, Layoffs
SentinelOne stock fell after a cautious Q2 revenue guide and about an 8% workforce cut, prompting investor caution despite ARR growth.
KEY TAKEAWAYS
- Q1 revenue $277 million and ARR $1.2 billion, up 21% and 23%.
- About 8% headcount cut, $25 million pre-tax charge, and $45 million annualized savings.
- Maintained FY revenue guide while setting Q2 revenue to $289-$291 million, sparking investor caution.
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SentinelOne, Inc. (NYSE: S) stock fell after the company reported first-quarter fiscal 2027 results on May 28, 2026, announced workforce reductions to refocus spending on AI and data, and issued a cautious near-term revenue forecast despite improving recurring revenue and non-GAAP profitability.
Quarter Results and Profitability
SentinelOne reported Q1 fiscal 2027 revenue of $276.7 million, up 21% year over year, and annualized recurring revenue (ARR) of $1.163 billion, a 23% increase that reflected accelerating ARR growth. Net new ARR for the quarter reached $44 million, up 55% year over year, while remaining performance obligations rose 30% to $1.5 billion, both record levels.
The company’s Form 10-Q for the quarter ended April 30, 2026, showed a GAAP net loss of $76.2 million, representing a (28)% GAAP net margin, and a GAAP operating loss of $79.7 million. On a non-GAAP basis, SentinelOne reported a 4% operating margin, improving about 550 basis points year over year, and non-GAAP net income of $12.3 million, or $0.04 per diluted share. Adjusted free cash flow was $61.4 million, a 22% margin, with a trailing 12-month adjusted free cash flow margin of 6.5%, up roughly 440 basis points.
Consensus had expected revenue of $277.12 million and non-GAAP EPS of $0.02. The revenue slightly missed that forecast while EPS beat it, marking the second consecutive quarter of revenue meeting or narrowly missing expectations.
Restructuring and Guidance
SentinelOne announced a restructuring plan that will reduce its workforce by about 8% to streamline operations, reduce complexity, and focus resources on AI, data, cloud, and endpoint security. The company expects a pre-tax restructuring charge of about $25 million in Q2 fiscal 2027, including roughly $15 million in cash costs. It projects annualized cost savings of approximately $45 million once the program is fully implemented. These charges are excluded from non-GAAP results.
The company maintained full-year fiscal 2027 revenue guidance of $1.195 billion to $1.205 billion and set Q2 revenue guidance of $289 million to $291 million, implying about 20% year-over-year growth at the midpoint. It raised full-year non-GAAP operating income guidance to $115 million–$125 million and non-GAAP EPS to $0.32–$0.38. For Q2, it guided non-GAAP operating income to $23 million–$25 million and EPS to $0.06–$0.08, assuming a roughly 17% non-GAAP tax rate.
Management described SentinelOne as an AI-powered cybersecurity provider, highlighting rising demand for AI-related security products and the company’s data platform. The workforce reduction was framed as a deliberate reallocation of resources to accelerate ARR growth and support AI use cases.
Despite improving non-GAAP profitability and accelerating ARR, the cautious near-term revenue outlook, restructuring charge, and competitive concerns weighed on investor sentiment.
