SentinelOne, Inc.: revenue up 21%, but GAAP loss widens and shares trade 5% above model value

On August 27, 2026, SentinelOne, Inc. reported results for the second quarter of fiscal year 2027 (ended July 31, 2026). Revenue grew 21% to $292 million, beating guidance, and ARR reached $1.218 billion (+22%). However, the GAAP loss widened to $93.4 million from $72.0 million a year earlier, and free cash flow remained negative. At the current price, the shares look rather unattractive: the portal model implies -5% upside, and the GAAP loss and negative FCF do not support management's optimism.

Key takeaways

— Revenue grew 21% to $292 million, beating guidance, but the GAAP loss widened to $93.4 million

— ARR reached $1.218 billion (+22%), and customers with ARR over $100k grew 13% to 1,715

— GAAP net loss margin was -32% versus -30% a year earlier, despite revenue growth

— Free cash flow remained negative: -$13.2 million for the quarter

— The company raised its revenue and non-GAAP operating income outlook for fiscal year 2027

— Shares rose 10.7% on the release day but then fell 3.1% by September 4

— On the portal's model, fair value is 5% below the current price

Attractiveness

Key figures, USD bn

Revenue grew 21% to $292 million, beating guidance, but the GAAP loss widened to $93.4 million

In the second quarter of fiscal year 2027 (ended July 31, 2026), SentinelOne, Inc. revenue was $291.981 million, up 20.6% year over year. The company beat its own guidance of $285–287 million. Growth was driven by subscriptions and consumption, with ARR up 22% to $1.218 billion.

However, the GAAP loss for the quarter widened to -$93.4 million from -$72.0 million a year earlier. Net margin deteriorated from -29.7% to -32.0%. The main driver is the operating loss, which expanded to -$90.8 million from -$80.6 million despite revenue growth. Restructuring charges were $24.4 million, including $10.8 million of non-cash stock-based compensation.

ARR reached $1.218 billion (+22%), and customers with ARR over $100k grew 13% to 1,715

The key operating metric – annualized recurring revenue (ARR) – reached $1.218 billion as of July 31, 2026, up 22% year over year. This outpaces revenue growth (+20.6%), indicating that new contracts and expansions from existing customers continue to gain momentum.

The number of customers with ARR of $100,000 or more grew 13% to 1,715. The company notes that its platform model drives expansion, with customers adding Singularity modules, including AI runtime protection. This supports the cross-sell strategy, though average revenue per customer is not disclosed.

GAAP net loss margin was -32% versus -30% a year earlier, despite revenue growth

In the second quarter of fiscal year 2027, GAAP net margin deteriorated to -32.0% from -29.7% a year earlier. Operating margin also declined: from -33% to -31% on a GAAP basis, but this improvement did not offset higher other expenses. Notably, interest income fell from $12.2 million to $6.2 million, reflecting a shrinking cash cushion.

The non-GAAP picture looks better: non-GAAP operating margin rose to 10% from 2%, and non-GAAP net margin to 10% from 5%. However, these measures exclude stock-based compensation ($92.1 million for the quarter) and restructuring. The GAAP loss is real: the company spends more than it earns, and the gap is widening.

Free cash flow remained negative: -$13.2 million for the quarter

In the second quarter, operating cash flow was -$6.545 million, and capital expenditures were $0.07 million. Free cash flow (FCF) came in at -$13.2 million (including $6.6 million of capitalized internal-use software). A year earlier, FCF was -$7.1 million, so the negative gap widened.

For the first half of fiscal year 2027, FCF is positive at $17.5 million, but that is thanks to a strong first quarter ($30.7 million). The company attributes seasonality to billing cycles, but the second consecutive quarter shows that cash generation remains volatile. The balance sheet holds $813 million in cash and investments, providing a cushion but not solving the profitability problem.

The company raised its revenue and non-GAAP operating income outlook for fiscal year 2027

SentinelOne, Inc. raised its fiscal year 2027 guidance: revenue is expected at $1.202–1.207 billion (previously $1.185–1.190 billion), and non-GAAP operating income at $124–128 million (previously $115–120 million). For the third quarter, the company expects revenue of $309–311 million and non-GAAP operating income of $38–40 million.

The raised guidance reflects management's confidence in continued growth, particularly in AI security. However, non-GAAP operating income excludes significant non-cash expenses: stock-based compensation was $167 million in the first half. The GAAP operating loss for the first half was $170.5 million, only slightly better than $168.1 million a year earlier.

Shares rose 10.7% on the release day but then fell 3.1% by September 4

On the release day, August 27, shares rose 10.7% – the market reacted positively to the beat and raised guidance. However, by September 4 they had fallen 3.1% from the post-release level, indicating a partial reversal of the initial optimism.

The current market cap is $6.43 billion. With LTM revenue of $1.1 billion, the EV/Sales multiple (net of cash) is around 5.8x – below historical peaks but still expensive for a company with a GAAP loss and negative FCF. The market is pricing in continued high growth, but any miss on guidance could trigger a correction.

On the portal's model, fair value is 5% below the current price

Our fundamental value-creation model, based on EBITDA growth and a target multiple, shows that shares trade 5% above fair value. This means the current price already reflects a significant portion of the expected margin improvement.

The shares are held in the 'US AI infrastructure' strategy on the portal, but this is not an argument for the assessment – portfolio membership follows each strategy's own screen. To change the verdict toward attractiveness, we would need either a lower price or visible progress in GAAP profitability and sustainable positive free cash flow.

Valuation on the latest reported figures

Bottom line

The strong side of the report is the acceleration of ARR to +22% and the raised guidance: the company confirms its status as a fast-growing player in AI security. However, the GAAP loss widened, free cash flow remained negative, and non-GAAP profit is achieved by excluding stock-based compensation and restructuring. At the current price, shares are valued 5% above fair value on the portal's model, making them rather unattractive. To change the assessment, we need either a lower price or sustainable progress in GAAP profitability and positive FCF.