Cyber Firm’s FY Revenue Rises 120%; Makes $600M Acquisition

Source: Streetwise Reports   03/16/2022

Shares of cyber security firm SentinelOne Inc. traded 12% higher after the company reported a 120% increase in FY/22 sales and announced it is acquiring ITDR firm Attivo Networks for $616.5 million.

After U.S. markets closed for trading yesterday, cyber security company SentinelOne Inc. (S:NYSE), developer of an autonomous AI extended detection and response (XDR) platform to fight off cyberattacks in real-time, announced financial results for the fourth quarter and fiscal year of 2022 ended January 31, 2022.

SentinelOne’s CEO Tomer Weingarten commented, “We delivered ARR growth in the triple digits for a fourth consecutive quarter. Our extraordinary performance was driven by the strength of our XDR platform coupled with relentless focus on innovation and execution…With our planned acquisition of Attivo Networks, we’re excited to add leading identity threat detection and response to our Zero Trust capabilities.”

The company’s CFO Dave Bernhardt remarked, “We once again delivered significant top line growth and margin improvement. Our fourth quarter ARR increased 123% year-over-year to $292 million, driven by strength from large enterprises, both new and existing…We’ve paired phenomenal growth with double digit gross and operating margin expansion compared to last year, highlighting the efficiency and scalability of our model.”

The firm reported that total revenue in Q4/22 increased by 120% to $65.6 million, compared to $29.9 million in Q4/21. The company noted that as of the end of the fourth quarter, annualized recurring revenue (ARR) grew by 123% year-over-year to $292.3 million. The company noted that it considers ARR to be a key operating metric as it captures the firm’s ability to acquire new subscription customers and maintain and expand client relationships.

The company highlighted that in Q4/22 its total number of customers rose by more than 70% year-over-year to over 6,700 and noted that its customers spending greater than $100K annually grew 137% year-over-year to 520.

The firm stated that GAAP gross margin in Q4/22 improved to 63%, up from 54% during Q4/21 and listed that GAAP operating margin also improved to (108)%, versus (124)% in Q4/21.

The company stated that as of the end of Q4/22 it held $1.7 billion of cash and other liquid assets on its balance sheet.

SentinelOne reported that for FY/22 it posted total revenue of $204.8 million, which represented a 120% increase over the $93.1 million recorded in FY/21.

The company added that FY/22 GAAP gross margin was 60%, compared to 58% during FY/21 and that GAAP operating margin came in at (130)%, versus (124)% in the prior year.

SentinelOne offered some forward guidance and advised that for Q1/23 it expects revenue of $74-75 million and estimates that it will have a non-GAAP gross margin of 63-64% and a non-GAAP operating margin of (86)-(84)%.

The company advised that for FY/23 it expects revenue of $366-370 million and anticipates that it will have a non-GAAP gross margin of 65-67% and a non-GAAP operating margin of (60)-(55)%.

The firm noted that its forward guidance estimates do not include any results from its planned acquisition of Attivo Networks. Inc.

In a separate news release, SentinelOne announced yesterday that “it has entered into a definitive agreement to acquire Attivo Networks, a leading identity security and lateral movement protection company.”

The firm stated that the addition of Attivo Networks and its technology will “extend the company’s AI-powered prevention, detection, and response capabilities to identity-based threats, setting the standard for XDR and accelerating enterprise zero trust adoption.”

The acquisition terms include a combination cash and stock offer valued at $616.5 million. The transaction is expected to close in SentinelOne’s second fiscal quarter of 2023, subject to ordinary closing conditions and regulatory approval.

SentinelOne’s COO Nicholas Warner commented, “The shift to hybrid work and increased cloud adoption has established identity as the new perimeter, highlighting the importance of visibility into user activity. Identity Threat Detection and Response (ITDR) is the missing link in holistic XDR and zero trust strategies…Our Attivo acquisition is a natural platform progression for protecting organizations from threats at every stage of the attack lifecycle.”

Attivo Networks CEO Tushar Kothari stated, “We are thrilled to join SentinelOne, the category leader in XDR. Attivo’s solutions are a perfect complement, as an XDR with identity protection significantly improves organizational security posture…As the threat landscape evolves, identity remains the central nervous system of the enterprise. Combined with the power of SentinelOne’s autonomous XDR, we’ll bring real-time identity threat detection and response to the front lines of cyberdefense.”

SentinelOne’ CEO Weingarten added, “The acquisition of Attivo Networks continues our commitment to defining and delivering autonomous XDR…Identity fuses together all enterprise assets, and I see identity threat detection and response as an integral part of our XDR vision. Attivo Networks is the right technology and team to advance our portfolio, complementing our hypergrowth and accelerating enterprise zero trust adoption.”

Attivo Networks® was described as a company having great expertise in Identity Detection and Response (IDR), The firm is capable of delivering innovative defenses to guard against specific intrusions including identity compromise, access and privilege escalation and lateral movement cyberattacks.

SentinelOne is a cybersecurity company based in Mountainview, Calif. The company has developed a single autonomous artificial intelligence (AI) extended detection and response (XDR) platform that defends against cyberattacks in real-time. The firm stated that its AI-powered platform solution offers capabilities for “prevention, detection, response and hunting across endpoints, containers, cloud workloads, and IoT devices.”

SentinelOne started the day with a market cap of around $8.2 billion with approximately 266.9 million shares outstanding and a short interest of about 3.1%. S shares opened relatively unchanged today at $30.77 (-$0.12, -0.39%) from yesterday’s $30.89 closing price. The stock has traded today between $30.77 and $36.83 per share and is currently trading at $34.52 (+$3.63, +11.75%).

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