First Profit at SentinelOne Overshadowed by Job Cuts and Subdued Guidance

SentinelOne has crossed a long-awaited milestone – posting its first adjusted quarterly profit – yet investors greeted the news with a sharp sell-off that erased recent gains. The cybersecurity company’s shares dropped as much as 19% to €12.60 during the session, before recovering partially to trade 12% lower at €13.66, as a restructuring plan and cautious near-term outlook overshadowed the financial breakthrough.

For the first quarter of fiscal 2027, SentinelOne reported revenue of $276.7 million, a 21% jump from the same period last year. Annualised recurring revenue (ARR) climbed 23% to $1.163 billion, while the number of large customers – those generating over $100,000 in annual recurring revenue – rose 17% to 1,702. The adjusted operating margin turned positive for the first time, reaching 4% versus negative 2% a year ago. The company booked adjusted net income of $12.26 million, well above analyst expectations that had called for a loss.

The strong operational performance was tempered by two disruptive announcements. Chief executive Tomer Weingarten unveiled a sweeping cost-cutting programme that will eliminate 8% of the workforce, roughly 230 positions, as the company pivots more aggressively toward automation and artificial intelligence tools. The restructuring is expected to cost around $25 million in one-time charges and is slated for completion by the end of the second quarter. Management said the move is designed to streamline operations and free up resources for growth areas such as cloud security and AI-driven endpoint protection.

Should investors sell immediately? Or is it worth buying SentinelOne?

The immediate market reaction was driven in large part by the company’s revenue guidance for the current quarter. SentinelOne forecast second-quarter revenue in the range of $289 million to $291 million – a figure that fell short of consensus estimates and dampened enthusiasm for the otherwise improved profitability. For the full year, the company lifted its outlook for adjusted operating income to between $115 million and $125 million, up from earlier projections.

Analysts offered a split verdict. Bank of America raised its price target on the stock to $20, arguing the post-earnings pullback presented a buying opportunity. JPMorgan also lifted its target to $20, while Cantor Fitzgerald set a more bullish $24, pointing to the company’s strong momentum in new security solutions and its ongoing integration of recently acquired firms Prompt Security and Observo AI. On the cautious side, Barclays trimmed its target to $16, and Raymond James downgraded the shares, citing risks to second-half revenue growth.

Investor anxiety is also reflected in the stock’s extreme volatility, with shares fluctuating by more than 80% over recent periods. Despite the short-term turmoil, SentinelOne secured a top position in the Gartner Magic Quadrant for endpoint protection for the sixth consecutive time, underscoring its competitive standing even as the broader sector faces margin pressure and an accelerating shift toward AI. The coming quarters will test whether the cost cuts can sustain profitability without choking the double-digit revenue growth that drew investors to the stock in the first place.

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SentinelOne Stock: New Analysis - 29 May

Fresh SentinelOne information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.

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