SentinelOne achieves profitability milestone in Q3 FY2025 as revenue and ARR surge

SentinelOne (NYSE: S) has delivered a robust performance for the third quarter of fiscal year 2025, reporting a 28% year-over-year increase in revenue to $210.6 million and a 29% rise in annual recurring revenue (ARR) to $859.7 million. These results underscore the company’s continued momentum in the AI-driven cybersecurity market, driven by its industry-leading Singularity Platform.

The company also marked a significant financial milestone by achieving positive free cashflow on a trailing-twelve-month profitability basis for the first time, showcasing improvements in operating margin improvements and efficiency.

Profitability and operational highlights

SentinelOne reported key metrics that reflect its progress toward sustained financial health. GAAP gross margin improved to 75%, compared to 73% in the same period last year, while the non-GAAP gross margin rose to 80% from 79%. The company’s operating margin also demonstrated improvement, with a GAAP operating margin of (42)% compared to (50)% a year ago, and a non-GAAP operating margin of (5)%, up from (11)%.

Customer acquisition remains a cornerstone of SentinelOne’s strategy. The number of customers generating ARR over $100,000 increased by 24% year-over-year to 1,310 as of October 31, 2024, reflecting growing Singularity Platform adoption among enterprises seeking advanced autonomous security solutions.

Barbara Larson, SentinelOne’s Chief Financial Officer, highlighted the strong operational progress, attributing the company’s results to consistent execution, revenue growth outlook, and exceptional gross margins. Larson emphasized achieving positive free cashflow on a trailing-twelve-month profitability basis as a critical milestone in the company’s journey toward long-term profitability.

CEO highlights innovation and growth

Tomer Weingarten, CEO of SentinelOne, underlined the company’s strong execution and the increasing appeal of its enterprise security solutions. He noted that businesses are increasingly choosing the AI-driven cybersecurity offerings of the Singularity Platform due to its cutting-edge innovations and scalable capabilities.

Financial outlook

Bolstered by its Q3 results, SentinelOne has raised its full-year revenue growth outlook to 32% for fiscal year 2025. The company projects fourth-quarter revenue of $222 million, with a non-GAAP gross margin of 79%. Full-year revenue guidance stands at $818 million, reflecting confidence in its growing cybersecurity market leadership and annual recurring revenue streams.

With cash reserves of $1.1 billion, SentinelOne is well-positioned to sustain investments in innovation, further bolstering its role as a leader in the AI-driven cybersecurity sector.

Challenges ahead

While SentinelOne’s results demonstrate strong momentum, challenges persist in achieving consistent profitability. Its GAAP operating margin remains in negative territory, underscoring the need for continued operating margin improvements. Additionally, as competition intensifies, maintaining rapid Singularity Platform adoption and customer growth will be essential.

Industry outlook

The cybersecurity sector is undergoing rapid transformation, with increasing demand for scalable enterprise security solutions. SentinelOne’s focus on autonomous security solutions and AI innovation aligns with these market trends, positioning it as a leader in the cybersecurity market leadership space.

SentinelOne’s Q3 FY2025 results underline its impressive growth trajectory and operational milestones. By achieving positive free cashflow and improving operating margin improvements, the company has signaled strong progress toward sustained profitability. As SentinelOne raises its revenue growth outlook, its focus on innovation and customer success solidifies its position in the competitive AI-driven cybersecurity landscape.