SentinelOne (S) Q3 2026: Non-Endpoint Bookings Hit 50% as Platform Diversifies Beyond Core

2025-12-04 | By EarningsIQ Research

SentinelOne’s Q3 2026 marked a pivotal shift, with half of new bookings now sourced from non-endpoint solutions—underscoring the company’s platform evolution and AI-fueled expansion. The business delivered improved margins and sustainable profitability, but the leadership transition and near-term gross margin compression signal a careful balancing act between growth and operational discipline. Investors should watch the interplay of platform breadth, Flex adoption, and macro-driven deal timing as SentinelOne navigates toward Rule of 40 territory.

Summary

  • Platform Expansion Accelerates: Non-endpoint solutions now comprise half of quarterly bookings, validating SentinelOne’s move beyond core endpoint protection.
  • Profitability Milestone Achieved: Operating and free cash flow margins reached new highs, but near-term investments and leadership transition add complexity.
  • AI and Data Solutions Drive Growth: Purple AI and AI SIEM adoption are fueling larger deals and deeper enterprise penetration.

Performance Analysis

SentinelOne delivered another quarter of broad-based growth, with total revenue up year-over-year and annual recurring revenue (ARR) climbing 23 percent. International markets outpaced the core, rising 34 percent and now accounting for 40 percent of total revenue—a sign of successful global expansion. The business added $54 million in net new ARR, and customers with ARR above $100,000 increased 20 percent, reflecting deeper enterprise traction.

Margin performance was a standout, with gross margin holding at 79 percent and operating margin reaching 7 percent, a nearly 12-point improvement year-over-year. Free cash flow margin turned positive, marking the second consecutive year of projected positive free cash flow. Remaining performance obligations (RPO) grew 35 percent to $1.3 billion, suggesting strong forward visibility. However, management flagged that some expense timing benefited Q3, and Q4 guidance incorporates gross margin compression from cloud investments and FX headwinds.

  • Non-Endpoint Momentum: Non-endpoint solutions, including data and AI products, now make up 50 percent of bookings, signaling successful platform diversification.
  • Record ARR Per Customer: Larger deal sizes and multi-product adoption are driving higher average revenue per customer.
  • Operating Leverage Gains: Margin expansion is outpacing revenue growth, but investments in cloud and acquisitions will pressure Q4 margins.

The company’s “land and expand” model, where initial wins are followed by cross-selling platform modules, is translating into robust net retention and durable multi-product growth. Yet, deal timing and services revenue variability remain watchpoints for quarterly linearity.

Executive Commentary

"Our emerging platform solutions continue to scale and achieve outsized growth. In Q3, our non-endpoint solutions represented approximately half of quarterly bookings, underscoring the growth, diversity, and expanding value of our platform."

Tomer Weingarten, Chief Executive Officer

"We achieved operating profitability of 7% in the quarter, with operating margin improving by nearly 1,200 basis points year-over-year. We also achieved our highest quarterly net income margin, which increased to 10% in Q3, significantly higher from break even in the prior year quarter."

Barbara Larson, Chief Financial Officer

Strategic Positioning

1. Platform Diversification and Flex Model

SentinelOne’s core strategy is to transition from a pure endpoint security provider to a multi-product, AI-native security platform. The Singularity platform’s breadth is now attracting larger, longer-term deals, with Flex, SentinelOne’s dynamic licensing model, enabling customers to adopt multiple modules as needs evolve. This flexibility is unlocking bigger expansions and helping to secure multi-solution commitments across both new and existing customers.

2. AI and Data Solutions as Growth Engines

Purple AI, SentinelOne’s applied AI for security operations, exceeded a 40 percent attach rate on licenses sold, while the AI SIEM solution posted triple-digit bookings growth. The Observo AI acquisition further enhances the platform by delivering real-time, AI-native telemetry pipelines, allowing SentinelOne to own the full data flow from ingestion to analytics. These moves are positioning the company as a leader in both “AI for security” and “security for AI.”

3. Margin Expansion and Profitability Focus

Operating leverage is improving steadily, with gross margin leadership and operating profitability achieved ahead of plan. The business is balancing growth investments—such as cloud infrastructure and capacity expansion—with disciplined cost management. However, Q4 guidance reflects margin headwinds from recent acquisitions and FX, signaling that margin expansion will not be linear.

4. Global and Enterprise Penetration

International growth is outpacing the core, with 40 percent of revenue now from non-US markets. SentinelOne is also seeing increased traction in large enterprise and federal sectors, as evidenced by multi-year, eight-figure commitments and meaningful expansions in highly regulated environments. The platform’s breadth and unified approach are resonating with customers consolidating legacy point solutions.

5. Partner Ecosystem and M&A Discipline

Strategic partnerships with hyperscalers like AWS and Google Cloud, as well as deepened relationships with channel partners, are amplifying reach and driving mid-market adoption. Management emphasized that M&A will remain opportunistic and highly selective, with the current platform viewed as “complete” for near-term needs.

Key Considerations

This quarter’s results highlight SentinelOne’s inflection from point-solution vendor to platform provider, but also expose the complexities of scaling a diversified business in a volatile macro environment.

Key Considerations:

  • Platform Breadth as Differentiator: Success of non-endpoint modules is validating the multi-product strategy and driving up-sell opportunities.
  • Flex Model Unlocks Larger Deals: Dynamic licensing is increasing deal sizes and enabling faster adoption of new modules, but may elongate sales cycles.
  • Margin Gains Not Fully Linear: While profitability is improving, upcoming investments and FX headwinds will pressure near-term margins.
  • Leadership Transition Adds Uncertainty: CFO departure introduces risk, though interim leadership has deep operational experience.
  • Macro and Deal Timing Volatility: Seasonality, back-end loaded quarters, and variable services revenue could impact quarterly results.

Risks

Key risks include execution against a rapidly expanding product portfolio, the ability to maintain margin discipline amid platform investments, and macro-driven unpredictability in deal timing. The CFO transition, while positioned as orderly, adds potential for disruption in financial oversight. Competitive displacements in the partner ecosystem and elongated enterprise sales cycles could also challenge sustained growth.

Forward Outlook

For Q4, SentinelOne guided to:

  • Revenue of approximately $271 million, reflecting 20 percent year-over-year growth
  • Gross margin of approximately 77.5 percent, down sequentially due to cloud investments
  • Operating margin of approximately 5 percent, up 400 basis points year-over-year

For full-year 2026, management raised revenue guidance slightly and expects:

  • Revenue of $1.001 billion, up 22 percent year-over-year
  • Gross margin of 78.5 percent
  • Operating margin to exceed 3 percent, absorbing acquisition and FX impacts
  • Positive free cash flow margin, a few points above operating margin

Management highlighted several factors that will influence results:

  • Continued adoption of emerging platform modules (AI, data, cloud)
  • Macro-driven deal timing and seasonality, with Q4 expected to be back-end loaded

Takeaways

SentinelOne’s Q3 signals a successful platform pivot, but the company must execute on cross-selling, manage margin pressures, and navigate leadership transitions to sustain momentum.

  • Platform Diversification: Non-endpoint bookings at 50 percent show the company’s evolution beyond endpoint security, with Flex and AI modules driving larger deals.
  • Margin and Profitability Progress: Operating and free cash flow margins are improving, but near-term investments and FX headwinds will test sustainability.
  • Watch for Execution on Expansion: Investors should monitor Flex adoption, net new ARR trajectory, and the impact of leadership changes on financial discipline.

Conclusion

SentinelOne’s Q3 2026 results mark a clear inflection in its business model, with platform breadth and AI differentiation driving larger, more profitable deals. The company’s ability to sustain operating leverage, manage leadership transition, and execute on cross-sell will determine whether it can maintain its growth trajectory and approach Rule of 40 territory.

Industry Read-Through

SentinelOne’s shift to platform and AI-native security mirrors a broader cybersecurity industry trend: customers are consolidating point solutions in favor of unified, data-driven platforms that promise both efficacy and operational simplicity. The rapid adoption of Flex-style licensing and AI-driven modules is likely to pressure legacy endpoint and SIEM vendors, while also setting new expectations for automation and integration. Investors should expect increased competition among platform vendors, more M&A for strategic capabilities, and continued margin volatility as companies invest in cloud and AI infrastructure.

S Technology Cybersecurity AI Platform Flex Endpoint Profitability