SentinelOne Earnings: Enterprise Sales and Improving Bottom Line Sparks Our Confidence

We maintain our $21 fair value estimate for no-moat SentinelOne after the firm reported fiscal first-quarter earnings above our expectations. However, bottom-line guidance for the second quarter came in lighter than expected compared with our model and consensus, which we think is likely the culprit for after-hours shares falling sharply. We were impressed with SentinelOne’s strong momentum in acquiring enterprise customers in the quarter despite the continued tough selling environment. Nevertheless, we hold our long-term view that SentinelOne is a smaller player in a competitive endpoint security market that houses large players such as CrowdStrike, Microsoft, and Palo Alto Networks. We view shares as fairly valued.