8-K: SentinelOne Q3 FY26: Revenue Up 23%, CFO Transition

SentinelOne reported strong third-quarter fiscal year 2026 financial results with 23% year-over-year revenue and ARR growth, alongside a CFO transition and new board appointment.

Summary

• Total revenue for Q3 FY26 increased 23% year-over-year to $258.9 million.
• Annualized Recurring Revenue (ARR) grew 23% year-over-year to $1,055.3 million as of October 31, 2025.
• Customers with ARR of $100,000 or more increased 20% year-over-year to 1,572.
• Non-GAAP operating margin improved significantly to 7% in Q3 FY26, compared to (5)% in Q3 FY25.
• Non-GAAP net income margin reached 10% in Q3 FY26, up from 0% in Q3 FY25.
• Operating cash flow margin was 8% and free cash flow margin was 6% in Q3 FY26, both turning positive from negative margins in the prior year.
• Barbara Larson will transition from her role as Chief Financial Officer by mid-January 2026.
• Barry Padgett, the current Chief Growth Officer, will serve as interim Chief Financial Officer effective upon Ms. Larson's departure.
• Mark Barrenechea was appointed to the Board of Directors as a Class II director, effective December 3, 2025.
• The company announced the acquisition of Observo AI, an AI-native data pipeline platform, and launched Prompt Security for generative AI runtime security.

Sentiment

Score: 8

Explanation: The filing indicates strong financial performance with significant improvements in profitability and cash flow, coupled with strategic product launches and a new board appointment. The CFO transition introduces some uncertainty but is managed with an interim appointment and a search for a permanent replacement. Overall positive outlook despite minor margin dips in guidance due to strategic investments and FX.

Positives

• Total revenue increased 23% to $258.9 million, compared to $210.6 million in Q3 FY25.
• Annualized Recurring Revenue (ARR) increased 23% to $1,055.3 million as of October 31, 2025.
• Customers with ARR of $100,000 or more grew 20% to 1,572 as of October 31, 2025.
• Non-GAAP operating margin improved significantly to 7% in Q3 FY26, compared to (5)% in Q3 FY25, representing nearly 1,200 basis points improvement.
• Non-GAAP net income margin was 10% in Q3 FY26, compared to 0% in Q3 FY25.
• Operating cash flow margin was 8% in Q3 FY26, compared to (3)% in Q3 FY25.
• Free cash flow margin was 6% in Q3 FY26, compared to (6)% in Q3 FY25.
• Trailing-twelve month operating cash flow margin improved to 7% from 4% year-over-year.
• Trailing-twelve month free cash flow margin improved to 5% from 1% year-over-year.
• Approximately 50% of quarterly bookings came from Emerging Products (Data, AI, Cloud, and others), supported by triple-digit growth of Singularity Data.
• Expanded platform offerings through the acquisition of Observo AI, a category-defining data streaming platform for AI-native telemetry pipeline management.
• Launched Security for AI offerings powered by Prompt Security, an industry-first AI runtime security for visibility, confidence, and control over GenAI.
• Mark Barrenechea, an executive with over 25 years of experience, was appointed as a Class II Director to the Board.
• Recognized as a Leader in the 2025 Gartner Magic Quadrant for Endpoint Protection Platforms for the 5th consecutive year.
• Named a Growth and Innovation Leader in the 2025 Frost & Sullivan Radar for Endpoint Security.
• Received 98% Willingness to Recommend Rating from User Reviews for Cloud-Native Application Protection Platforms (CNAPP) in the 2024 Gartner Customers Choice.
• An IDC study demonstrated that SentinelOne's Purple AI enables 338% three-year return on investment, 55% faster remediation of security threats, and 60% reduced likelihood of major security events for interviewed customers.
• Achieved 100% Detection Accuracy, 100% Technique, 100% Real-Time, and 88% Less Noise in the 2024 MITRE ATT&CK Evaluations.

Negatives

• GAAP gross margin slightly decreased to 74% in Q3 FY26, compared to 75% in Q3 FY25.
• Non-GAAP gross margin slightly decreased to 79% in Q3 FY26, compared to 80% in Q3 FY25.
• GAAP net loss was $(60.3) million in Q3 FY26, though an improvement from $(78.4) million in Q3 FY25.
• CFO Barbara Larson is resigning to pursue an opportunity outside the cybersecurity industry, introducing a leadership transition.
• The full fiscal year 2026 revenue outlook reflects an approximate 1% impact from the end-of-sale of the Hologram (deception) solution.
• Q4 FY26 and full FY26 outlook incorporates strategic investments in cloud infrastructure and capacity expansion, which may impact future margins.
• The full FY26 operating margin outlook includes an estimated impact of ~120 bps from foreign exchange (FX), ~70 bps from the Prompt Security acquisition, and ~60 bps from the Observo AI acquisition.

Risks

• Limited operating history and a history of losses.
• Intense competition in the market.
• Fluctuations in operating results.
• Actual or perceived network or security incidents against the company.
• Actual or perceived defects, errors or vulnerabilities in the platform.
• Ability to successfully integrate any acquisitions and strategic investments.
• Risks associated with managing rapid growth.
• General global, political, economic, and macroeconomic climate, including changes in U.S. federal spending and policies, significant political or regulatory developments or changes in trade policy, actual or perceived instability in the banking industry, supply chain disruptions, a potential recession, inflation, and interest rate volatility, and geopolitical conflicts.
• Ability to attract new and retain existing customers, or renew and expand relationships with them.
• The ability of the platform to effectively interoperate within customers' IT infrastructure.
• Disruptions or other business interruptions that affect the availability of the platform, including cybersecurity incidents.
• Failure to timely develop and achieve market acceptance of new products and subscriptions as well as existing products, subscriptions and support offerings.
• Rapidly evolving technological developments in the market for security products and subscription and support offerings.
• Length of sales cycles.
• Risks of securities class action litigation.

Future Outlook

SentinelOne provided guidance for the fourth quarter of fiscal year 2026, projecting revenue of $271 million (20% year-over-year growth), non-GAAP gross margin of 77.5%, and non-GAAP operating margin of 5%. For the full fiscal year 2026, the company expects revenue of $1,001 million (22% year-over-year growth), non-GAAP gross margin of 78.5%, and non-GAAP operating margin of 3%. The full-year revenue outlook reflects an approximate 1% impact from the end-of-sale of the Hologram solution, and the operating margin outlook incorporates estimated impacts from foreign exchange, the Prompt Security acquisition, and the Observo AI acquisition.

Management Comments

• "We continue to demonstrate a strong combination of top-tier growth and margin improvement. Our third-quarter performance underscores the growing demand for our AI-native security platform that combines data, intelligence, and defense." Tomer Weingarten, CEO.
• "Our early-mover advantage and approach for both AI for Security and Security for AI is resonating with customers. We are winning new logos and expanding existing accounts while empowering organizations to advance their digital transformations securely and intelligently." Tomer Weingarten, CEO.
• "We outperformed our expectations on both top and bottom line metrics – demonstrating disciplined execution and achievement of new profitability milestones. We are successfully balancing industry-leading growth with financial rigor, ensuring we remain firmly on track to deliver sustainable, profitable growth at scale." Barbara Larson, CFO.
• "Barbara’s leadership has helped SentinelOne drive its rapid growth as a leading AI-powered security and cyber-defense firm. She helped guide our transition to positive non-GAAP operating margins, strengthened our free cash flow profile and supported our path to surpassing $1 billion in ARR. We’re grateful for her leadership at SentinelOne. Going forward, Barry, as a seasoned executive, will ensure a steady hand during this transition." Tomer Weingarten, CEO, on Barbara Larson's departure.

Industry Context

SentinelOne's Q3 FY26 results highlight its strong position in the rapidly evolving cybersecurity market, particularly through its focus on AI-native security. The company's emphasis on 'AI for Security and Security for AI' aligns with broader industry trends where AI is becoming central to both threat detection and defense, as well as securing the use of generative AI tools. The acquisition of Observo AI and the launch of Prompt Security demonstrate a strategic move to address the challenges of increasing data volumes and the need for robust GenAI security, positioning SentinelOne as a leader in next-generation SIEM and data pipeline management. This proactive approach allows the company to capitalize on growing demand for advanced, automated security solutions amidst a competitive landscape, driving both top-tier growth and improved profitability.

Comparison to Industry Standards

• Recognized as a Leader in the 2025 Gartner Magic Quadrant for Endpoint Protection Platforms for the 5th consecutive year, indicating consistent strong performance against industry peers.
• Named a Growth and Innovation Leader in the 2025 Frost & Sullivan Radar for Endpoint Security, highlighting its competitive edge in a dynamic market.
• Received a 98% Willingness to Recommend Rating from User Reviews for Cloud-Native Application Protection Platforms (CNAPP) in the 2024 Gartner Customers Choice, demonstrating high customer satisfaction compared to other vendors.
• An IDC study on SentinelOne's Purple AI showed customers achieved a 338% three-year return on investment, 55% faster remediation of security threats, and a 60% reduced likelihood of major security events, showcasing superior operational efficiency and risk reduction compared to traditional methods.
• Achieved 100% Detection Accuracy, 100% Technique, 100% Real-Time, and 88% Less Noise (fewer alerts than the median across all vendors) in the 2024 MITRE ATT&CK Evaluations, indicating a higher fidelity of detection and lower alert fatigue compared to competitors like Palo Alto, Microsoft, Sophos, and Trend Micro.

Management Changes

Corporate Governance

Legal Proceedings

• The company is discussing a framework for a final settlement and resolution with the Israel Tax Authorities (ITA) as part of ongoing bilateral Advance Pricing Agreement negotiations with the U.S. Internal Revenue Service and ITA. A tax charge of $136.0 million was discussed for the nine months ended October 31, 2025. No finalized resolution or agreement has been reached at this time.

Stakeholder Impact

• Shareholders: Likely positive impact due to strong financial performance, improved profitability, and strategic growth initiatives in AI and cybersecurity. The new board appointment adds governance strength, while the CFO transition introduces a minor element of uncertainty.
• Employees: Barry Padgett's transition to interim CFO provides continuity during the search for a permanent replacement. The company's growth and strategic direction may offer new opportunities.
• Customers: Benefit from expanded platform offerings through the acquisition of Observo AI and the launch of Prompt Security, leading to enhanced AI-native security capabilities, better data management, and improved protection against evolving threats.
• Creditors: Improved cash flow and profitability metrics enhance the company's financial stability and creditworthiness.
• Suppliers: No direct impact mentioned, but continued company growth could lead to increased demand for services and products from its supplier base.

Next Steps

• Initiate a comprehensive search for a new Chief Financial Officer.
• File an amendment to the Form 8-K to disclose any appointments of Mark Barrenechea to standing committees of the Board.
• Host a live audio webcast on December 4, 2025, to discuss Q3 FY26 results and Q4/full FY26 outlook.
• Continue to use the Investor Relations section of the website for disclosing material nonpublic information and complying with Regulation FD.

Key Dates

Recommendation

SentinelOne delivered exceptionally strong Q3 FY26 results, significantly outperforming expectations on both top and bottom-line metrics. The company achieved impressive 23% year-over-year revenue and ARR growth, while critically transitioning to positive non-GAAP operating and net income margins, as well as positive free cash flow. This demonstrates robust operational execution and a clear, accelerated path to sustainable profitability. Strategic moves, including the acquisition of Observo AI and the launch of Prompt Security, solidify its leadership in the high-growth AI and cybersecurity sectors, particularly in AI-native security and GenAI protection. Industry accolades and superior performance in competitive evaluations like MITRE ATT&CK further validate its technological advantage. While the CFO transition presents a minor leadership change, the appointment of an experienced interim CFO and a comprehensive search mitigate this risk. The positive guidance for Q4 and full FY26, despite factoring in strategic investments and FX headwinds, reinforces confidence in continued growth and profitability. This compelling combination of strong financial performance, strategic market positioning, and improving financial health makes SentinelOne a highly attractive investment opportunity.

Keywords

SentinelOne, S, Cybersecurity, AI Security, Endpoint Protection, ARR Growth, Financial Results, Q3 FY26, Earnings, CFO Transition, Board Appointment, Observo AI, Prompt Security, Non-GAAP Profitability, Cloud Security, Data Analytics, Managed Detection and Response, MITRE ATT&CK, Gartner Magic Quadrant