Shares slide despite earnings beat
SentinelOne (NYSE:S) came under heavy pressure in pre-market trading on Friday, with the cybersecurity group’s shares dropping nearly 20%, adding to a 16.8% decline recorded in after-hours trading. Investors reacted negatively after the company reported first-quarter fiscal 2027 revenue slightly below expectations and announced a workforce reduction affecting around 8% of employees.
The California-based cybersecurity specialist posted adjusted revenue of $276.7 million for the quarter, narrowly missing the consensus forecast of $277.38 million. Adjusted earnings came in at $0.04 per share, comfortably ahead of analysts’ expectations of $0.02 per share.
Recurring revenue growth remains strong
Despite the market’s negative reaction, SentinelOne continued to deliver healthy growth across key subscription metrics.
Annualized recurring revenue (ARR) increased 23% year-on-year to reach $1.16 billion at the end of the quarter. The number of customers generating at least $100,000 in ARR rose 17% from a year earlier to 1,702.
“We had a solid start to the year, highlighted by record net new ARR growth and a landmark milestone as our emerging solutions reached half of our total company ARR,” chief executive Tomer Weingarten said.
Cost-cutting initiative targets efficiency and AI investment
Alongside its quarterly results, SentinelOne announced a restructuring programme designed to improve efficiency and redirect resources toward strategic growth initiatives.
The company expects the workforce reduction to generate approximately $45 million in annual cost savings. Management said part of those savings will support profitability, while additional investment will be directed toward areas such as AI Security, Purple AI, Data and Cloud solutions.
Guidance disappoints investors
Investor sentiment was also weighed down by second-quarter guidance that came in slightly below market forecasts.
For fiscal Q2 2027, SentinelOne expects adjusted earnings of between $0.06 and $0.08 per share on revenue ranging from $289 million to $291 million. Analysts had been forecasting revenue of approximately $292 million.
Despite the softer near-term outlook, the company maintained its full-year fiscal 2027 revenue and adjusted earnings guidance.
SentinelOne also increased its forecast for non-GAAP operating margin by 40 basis points to 10%, representing an improvement of 650 basis points compared with the prior year.
Bernstein remains constructive on long-term outlook
Analysts at Bernstein, who maintain an “outperform” rating and a $19 price target on the stock, acknowledged that revenue performance was weaker than anticipated.
According to the brokerage, the top line “came in a little weaker than we expected, and missed the midpoint of their own guide by -12bps (and consensus by -24 bps).”
However, Bernstein highlighted stronger performance in recurring revenue metrics.
On an ARR basis, the analysts noted results were “~20bps above consensus.” They added that quarter-on-quarter ARR growth of $44 million was “the best Q1 ever, and +55% from last year.”
Bernstein reiterated its $19 target price, based on a valuation framework combining a 5x next-twelve-month revenue multiple with a discounted cash flow model that assumes a 12% weighted average cost of capital and a 3% terminal growth rate. The firm reduced its revenue multiple from 5.5x, citing slightly lower revenue expectations going forward.