SentinelOne (S): Cybersecurity Stock Growth and Future Potential

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Introduction.

With the rapid spread of AI, the security field is becoming increasingly important.

The security incident related to CloudStrike (July 19, 2024) vividly illustrated the need for security and the risk of global service outages caused by inadequate measures.

The cybersecurity market is expected to continue to grow, as many companies are required to enhance their security measures.

In this context, we will focus on Sentinel One, one of the hottest cybersecurity companies, and delve into the company's business, unique strengths, and future prospects.

High growth potentialCyber Security IssuesClick here for an article summarizing the

Top Cybersecurity Stocks with Growth Potential (US & Japan)

Security risks are increasing along with the evolution of AI. Companies are expected to take steps to prevent these risks, and cybersecurity is a field that is expected to grow in the future. Here, we pick up advanced security-related stocks that we believe have high growth potential and explain them in detail.

mifsee.com

What is Sentinel One (S) and what kind of business does it do?

• SentinelOne, Inc,A company specializing in cyber security using artificial intelligence (AI).
• The company was founded in 2013 and is headquartered in Mountain View, California.
• Sentinel One offers the cloud-based Singularity™ platform, through which it protects an organization's endpoints, cloud workloads, identities, mobile devices, and network-connected equipment.
• The main features of Sentinel One are,AI-based autonomous threat detection and response enables real-time detection and immediate protection against cyber attacks.
• The company's products offer a wide variety of cybersecurity capabilities. The company also deploys management services such as WatchTower and Vigilance MDR to provide 24/7 threat hunting and management services.

SentinelOne's (SentinelOne) company information is as follows

• Company Name:: SentinelOne, Inc.
• Date of Establishment: 2013
• Name of Representative:Tomer Weingarten : Tomer Weingarten
• Official Site: https://jp.sentinelone.com/

What are Sentinel One's main products and services?

Sentinel One's core products and services include

Singularity™ Platform

The core platform of Sentinel One, a system that leverages AI to autonomously detect and prevent cyber threats. This platform is,Protect a variety of digital assets within the enterprise, including endpoints, cloud workloads, identities, and mobile devices.

• Key Features:
  • Endpoint Protection (EPP): Basic protection against threats at the endpoint.
  • Endpoint detection and response (EDR): Detects advanced threats and enables real-time response.
  • Extended Detection and Response (XDR): Enhanced EDR to detect and respond to threats across the network, cloud, and applications.
  • Identity Security: Protect user identities and strengthen the authentication process.

WatchTower

24/7/365 threat hunting management service.Sentinel One's team of experts monitors emerging threats in real time and responds immediately to emergencies.

Vigilance MDR (Managed Detection and Response)

Managed services to maximize the use of Sentinel One's suite of products. Proactive threat hunting and rapid response to minimize your company's cybersecurity risk.

Singularity Control

Advanced security suite for endpoint management. It includes network connection management, control of USB, Bluetooth, and other peripheral devices, and detection of unauthorized devices.

Singularity Complete

The flagship product with all the capabilities of the Singularity platform, it provides integrated security management for the entire organization.

With these products and services, Sentinel One enhances corporate cybersecurity,Provides real-time autonomous threat protectionThe company is doing so.

What is Sentinel One's business model?

Sentinel One's business model is characterized by the following features

subscription-based revenue model

Sentinel One is,The company offers its flagship Singularity™ platform on a subscription basis.Contracts typically require one to three years, and revenue is recognized based on the length of this contract. Many contracts are large or multi-year contracts, and this ensures a stable revenue stream.

Product Tiering

The Singularity™ platform is multi-tiered, offering security levels from basic endpoint protection (EPP) to extended detection and response (XDR) to meet the needs of the enterprise.
This tiering allows us to provide flexible security solutions for companies of different sizes and industries, andThe following is a summary of the results of the survey.

Expandability by adding modules

Customers can extend their security capabilities by adding modules to the Singularity™ platform. This allows them to customize the functionality to meet their specific security needs, making it easier to maintain long-term customer relationships.

Provide management services

WatchTowerand ... andVigilance MDRand other security management services to help customers take more effective security measures.

Ongoing contract renewal

Since most contracts are renewed on a one-year basis, the company expects revenues to be stable during the annual renewal period. In addition, since some contracts are multi-year, revenues are relatively stable during the contract period, contributing to increased customer loyalty.

Thus, Sentinel One's business model relies on subscription revenues while meeting the diverse needs of its customers through flexible product tiering and additional features.

Who is Sentinel One's clientele?

Sentinel One's customer base is primarily comprised of companies and organizations that

Large Companies/Enterprises

Sentinel One's security platform is,Widely adopted by large enterprise companies that require a high level of cyber security.These companies manage large amounts of data and multiple endpoints, requiring real-time threat detection and rapid response. In particular, financial institutions, healthcare, and technology companies are key customer segments.

smaller companies

For SMBs, Sentinel One's products are designed to be flexible. With endpoint protection and cloud-based security solutions readily available, Sentinel One's products are also favored by SMBs that require advanced security measures with limited IT resources.

Government and Public Sector

Government agencies and the public sector also use Sentinel One products.These organizations handle highly sensitive information and protection against cyber attacks is essential. Sentinel One's autonomous threat detection and response capabilities are especially helpful in protecting critical infrastructure.

Global Companies

Sentinel One has a global presence, primarily in North America, and many of its customers include multinational corporations and companies with international operations. These companies have IT infrastructures that span multiple countries and regions, and they require consistent and global support for their security solutions.

technology company

Companies in the technology sector,Cloud service providers and software development companies in particular represent a significant portion of Sentinel One's customer base.These companies are constantly exposed to new threats and therefore emphasize advanced security measures.

Sentinel One offers security solutions for companies in a wide variety of industries and sizes, and is being adopted particularly in areas where security risks are considered high.

How was Sentinel One founded?

Sentinel One's founding story began in 2013 when it was founded by Israeli-born Tomer Weingarten and Almog Koren.

Background and Motivation for Establishment

Tomer Weingarten was frustrated with the state of cybersecurity at the time and felt that traditional security methods were ineffective against new threats and that more autonomous and effective defensive measures were needed, especially as cyber attacks became more sophisticated and automated. With this awareness of the problem, he founded Sentinel One to develop next-generation cybersecurity solutions utilizing AI and machine learning.

Company Growth and Evolution

Since its inception, Sentinel One has focused on the development of AI-centered security platforms. In particular, its products for enhancing endpoint security attracted early attention and gradually increased its presence in the market.The company's products were highly regarded for their ability to detect and prevent threats in real time, which led to increased demand, especially from enterprises and government agencies.

The company also grew rapidly in the years following its founding and was listed on the New York Stock Exchange (NYSE) in 2021. This established the company's position in the global cybersecurity market.

What is the trading market?

SentinelOne, Inc. is listed on the New York Stock Exchange (NYSE) under the ticker symbol "S".

The company conducted its IPO on June 30, 2021.

What are Sentinel One's sectors, industries, and themes to which it belongs?

sector

Information Technology: Sentinel One is part of the technology sector, which is comprised of companies that provide digital technology and infrastructure. Sentinel One's AI-driven cybersecurity solutions play a key role in helping companies and organizations protect their digital assets from cyber attacks.

type of industry

cyber security: Sentinel One is classified as a cybersecurity industry. This industry consists of companies that provide technologies and services to secure digital environments, including networks, endpoints, and the cloud. Sentinel One's products provide real-time threat detection and autonomous response, streamlining enterprise security operations.

Themes belonging to

AI-Driven Cybersecurity: Sentinel One's business is focused on AI-based cybersecurity. This theme aims to automate the detection and response to security threats using AI technology to manage security risks quickly and effectively.Through the implementation of AI, Sentinel One is enhancing its ability to defend against unknown threats and protect its clients' digital assets.

Dividends?

Sentinel One does not pay a dividend at this time. The company is in a growth phase and appears to be reinvesting profits to expand its operations and innovate.

What is the size and growth potential of the industry to which Sentinel One belongs?

The cybersecurity industry, of which Sentinel One is a part, has expanded rapidly in recent years and is expected to continue to grow at a high rate.

Size of the Cyber Security Industry

As of 2023, the cybersecurity market is worth approximately $222.6 billion,It is expected to expand further to reach approximately $248.6 billion by 2024.
The market is projected to continue to grow at a compound annual growth rate (CAGR) of 11.21 TP3T and to expand even more significantly by 2030.

Growth potential of cybersecurity

The main factors supporting the growth of this industry are the increasing number of cyber attacks and digitalization. In particular, the growing demand for cloud-based solutions and endpoint security is driving the market growth.

The cloud security sector is expected to continue to grow rapidly, with a CAGR of more than 151 TP3T from 2024 to 2032.

Companies like Sentinel One are playing a major role in this burgeoning market by providing advanced security solutions that leverage AI.

Also,In certain industries, e.g., healthcare and financial services, investments in security are particularly important, which is driving further market growth.

Because of these factors, the cybersecurity industry, of which Sentinel One is a part, has great potential for growth in the future.

Who are Sentinel One's competitors?

Sentinel One's competitors include.

• Cloud Strike [CRWD]:CrowdStrike provides cloud-based endpoint security, threat intelligence, and extended detection and response (XDR) solutions. In particular, its cloud-based platform, Falcon, has the ability to detect and defend against advanced threats in real time. The company competes with Sentinel One as well as other AI-based security solutions.
• Palo Alto Networks [PANW].:Palo Alto Networks is a cybersecurity company that offers products such as next-generation firewalls, cloud security, and endpoint security. In particular, the company provides comprehensive security solutions for cloud environments and endpoints through products such as Prisma and Cortex.
• Microsoft [MSFT]:In addition to its extensive cloud services and enterprise software, Microsoft offers security products Microsoft Defender and Azure Sentinel. These tools provide comprehensive endpoint-to-cloud security coverage and compete directly with Sentinel One.
• Fortinet [FTNT]:Fortinet offers a wide range of security products, including firewalls, antivirus, and intrusion prevention systems (IPS). The company's products are competitive in that they cover a wide range of endpoints and networks and offer cost-effective solutions.
• Zed scaler [ZS]:Zscaler specializes in cloud-based security services, providing secure Internet access and private access solutions. In particular, the company offers security-enhancing solutions for enterprises using cloud-based applications and services.

These companies, like Sentinel One, offer advanced security solutions that leverage AI and the cloud, making them major competitors in the cybersecurity market.

What are Sentinel One's differentiators and advantages over the competition?

Sentinel One's differentiating factors and advantages over its competitors are primarily in the following areas

AI-driven autonomous threat detection and defense

• differentiator: Sentinel One's superior ability to utilize AI and machine learning to autonomously detect and defend against cyber threats eliminates the need for manual intervention and enables real-time threat response. While other competitors also use AI, Sentinel One's Singularity platform offers a higher degree of automation.
• predominance: In particular, Sentinel One's AI-driven defense capabilities have been recognized as superior to its competitors in achieving a strict security model known as "zero trust.

Extended Detection and Response (XDR) Platform

• differentiator: Sentinel One's "Singularity™" platform, which specializes in extended detection and response (XDR), provides comprehensive protection for the entire organization, including endpoints, cloud workloads, identities, and mobile devices The integration of XDR functionality allows different security solutions to enhance the coordination of information between them and enable faster response to threats.
• predominance: Competitors also offer XDR solutions, but Sentinel One's platform is superior in that it provides a more seamless and integrated solution, allowing for consistent protection in different environments.

All-in-one integrated security platform

• differentiator: Sentinel One provides endpoint protection (EPP), endpoint detection and response (EDR), and XDR on a single platform, eliminating the need for customers to rely on multiple security vendors. This reduces costs and simplifies management.
• predominance: While competitors often offer separate solutions, Sentinel One's integrated approach provides a more efficient and cost-effective solution, especially for large enterprises and organizations with complex IT environments.

Real-time threat intelligence and response capabilities

• differentiator: Sentinel One's platform provides real-time threat intelligence and immediate response, minimizing damage when threats occur.
• predominance: Competitors also offer real-time intelligence, but Sentinel One's autonomous response capabilities enable it to respond more quickly and effectively than its competitors.

Flexibility in cloud and on-premise environments

• differentiator: Sentinel One offers security solutions that work effectively in both cloud and on-premise environments, and can accommodate companies with hybrid cloud environments.
• predominance: Competitors are also focusing on cloud security, but Sentinel One's platform is particularly strong in cloud-native security, making it an attractive option for companies that are transitioning to the cloud.

These differentiators and advantages uniquely position Sentinel One against its competitors and give it a competitive edge in the cybersecurity market.

What is the partnership between Sentinel One and Wiz?

The partnership between Sentinel One and Wiz is an important strategic collaboration aimed at strengthening cloud security.

The partnership, announced in 2023, will combine Sentinel One's Cloud Workload Protection Platform (CWPP) with Wizof the "The Cloud Native Application Protection Platform (CNAPP) is integrated to provide an end-to-end cloud security solution.

Partnership Objectives and Benefits

• The partnership will enable customers to increase visibility across their entire cloud infrastructure and quickly identify and remediate attack vectors to critical resources. It also provides run-time protection with real-time threat detection and response capabilities to enhance security in cloud environments.
• The combination of the two companies' platforms simplifies deployment and enables security teams to respond quickly and efficiently to complex threats. This integration allows for enhanced security without compromising the speed and agility of application development.
• Sentinel One and Wiz are considered two of the most trusted and innovative companies in the cybersecurity industry. Through this partnership, the two companies aim to combine their cutting-edge technologies to deliver even greater value to their customers.

This collaboration is expected to enable companies to obtain optimal security solutions to secure their digital transformation and significantly reduce security risks in cloud environments.

Performance of Sentinel One (S)

SentinelOne, Inc.'s (SentinelOne) financial year ended on January 31, and its quarterly results are presented in the following schedule.

• 1Q Results: (1)Around the end of April
• 2Q Results: (1) Consolidated Around the end of July
• 3Q Results: (1)Around the end of October
• 4th quarter and full year results: (1)Around the end of March

First, we will review the following four indicators for conducting a minimum performance analysis of Sentinel One (S).

1. Sales:An indicator of a company's performance and growth.
2. Operating cash flow and operating cash flow margin:An indicator that looks at how much cash a company generates from its services. Margins are considered excellent when they are 15% of that ratio.
3. Operating income and operating margin:Profit earned by a company from its core business. An indicator to evaluate a company's performance.
4. EPS:An indicator that looks at a company's earning power "profitability" and "growth potential" in terms of net income per share. The higher the number, the higher the profitability.

Each data is,Investing.com, ,TradingViewSee from

Sentinel One (S) Stock Price

View the current real-time stock price chart (TradingView) for Sentinel One (S).

The chart shows the Relative Strength Index (RSI). Reference as an indicator of market overheating.
*An overbought indicator when the RSI exceeds 70% to 80%, and conversely, an oversold indicator when the RSI falls below 20% to 30%.

Sentinel One Quarterly: Sales Trends

Quarterly sales forecasts and actual sales and year-on-year changes.

Sales forecasts and actual results are shown in graphs.

Sentinel One Quarterly: Operating Cash Flow Trends

Quarterly operating cash flow and operating cash flow margin.

Each transition is shown in the graph below.

Sentinel One Quarterly: Operating Income and Operating Margin

Quarterly operating income and operating margin.

Each transition is shown in the graph below.

Sentinel One Quarterly: EPS Trends

Quarterly EPS forecast and actual EPS.

Each transition is shown in the graph below.

Sentinel One Full Year: Sales Trends

This is the sales forecast for the full year and actual sales and year-on-year changes.

Each transition is shown in the graph below.

Sentinel One Full Year: Operating Cash Flow Trends

Operating cash flow for the full year and operating cash flow margin.

Each transition is shown in the graph below.

Sentinel One Full Year: Operating Income and Operating Margin Trends

Operating income and operating margin for the full year.

Each transition is shown in the graph below.

Sentinel One Full Year: EPS Trends

This is the EPS forecast and actual EPS for the full year.

Each transition is shown in the graph below.

What is the future life of Sentinel One (S)?

Market growth and expanding needs

The cybersecurity market is growing rapidly and is projected to grow at a compound annual growth rate (CAGR) of approximately 14.31 TP3T from 2024 to 2032, and this growth is attributed to the increasing need for companies to strengthen their defenses against cyber attacks.

Demand for cloud security and endpoint security in particular is increasing, and Sentinel One's products fit this market need.

technological superiority

Sentinel One's AI-driven, autonomous threat detection and defense technology gives it an edge over its competitors. In particular, the Singularity™ platform, with its extended detection and response (XDR) capabilities, enables real-time threat response and further enhances enterprise security measures.

Expansion of customer base

Sentinel One has a broad customer base, ranging from enterprise companies to SMEs and government agencies, and its ability to provide solutions to meet demand in various market segments is expected to contribute to future growth.

What is the future of Sentinel One (S)?

Product Evolution and Innovation

Sentinel One continues to develop new security capabilities using AI and machine learning and will continue to innovate to provide even stronger security solutions.
In particular, the expected evolution of cloud-native architectures is expected to strengthen our advantage in the area of cloud security.

Strengthen development in global markets

Sentinel One has already established a strong position in the North American market, though,The company plans to further strengthen its presence in other regional markets, such as Europe and Asia-Pacific. In the future, the company expects to expand its share of the global market.

Strategic Partnerships and M&A

Sentinel One is,Through strategic partnerships and mergers and acquisitions (M&A), the company may further strengthen its technological capabilities and market position, and is expected to expand its product portfolio and enter new market segments.

In general, Sentinel One is expected to continue to grow steadily due to its technological superiority and strong product portfolio in the rapidly growing cybersecurity market.

What is the future stock price outlook for Sentinel One (S)?

Many analysts are predicting an increase in the stock price due to high long-term growth expectations, given Sentinel One's technological superiority and potential for market expansion.However, increased competition and overall market trends have been identified as risk factors.

Sentinel One's stock price could rise in tandem with the growth of the overall cybersecurity market, but there is also a risk that the stock price could be affected by competition from competitors and the speed of technological innovation.
In addition, improved profitability and new product development could be factors that boost the stock price.

In general, while Sentinel One's stock price is expected to continue to grow, it is important to carefully monitor market trends and competition.

Sentinel One's Q1 FY2025 Financial Summary

• Net sales: $186.35 million, up 401 TP3T from $133.39 million in the same period last year.
• Annual recurring revenue (ARR): $762 million, an increase of 351 TP3T over the same period last year.
• GAAP Gross Margin: 73%, improved from 68% in the same period of the previous year.
• Non-GAAP Gross Margin: 79%, up from 75% in the same period of the previous year.
• GAAP Operating Income Margin: minus 431 TP3T, an improvement from minus 861 TP3T in the same period last year.
• Non-GAAP operating margin: minus 61 TP3T, improved from minus 381 TP3T in the same period of the previous year.

Progress of Major Businesses

• Expansion of customer base: 1,193 customers with annual recurring revenues of $100,000 or more, an increase of 301 TP3T over the same period last year.
• AI-driven security: The entire platform, centered on "Purple AI," is designed to enhance security and provide companies with a high level of efficiency and automation.

Cash Flow

• Operating Cash Flow: $42 million positive, a significant improvement from -$28.05 million in the same period last year.
• free cash flow: $33.75 million positive, an improvement from -$31.43 million in the same period last year.

Future Outlook

• Second Quarter Sales Forecast: $197M projected, y/y growth of 321 TP3T.
• Full Year Sales Forecast: We expect $808 million to $815 million.

Sentinel One showed strong revenue growth in the first quarter, especially for its AI-driven security platform, Purple AI. Operating margins and cash flow also improved significantly, and the company is expected to continue to grow.

Sentinel One's Q2 FY2025 Financial Summary

• Net sales: $198.93 million, up about 331 TP3T from $149.42 million in the same period last year.
• GAAP Gross Margin: 74.51 TP3T, improved from 70.11 TP3T in the same period of the previous year.
• Operating loss: $79.38 million, down from $103.5 million in the same period last year.
• net loss: $69.18 million, down from $89.54 million in the same period last year.
• Loss per share (EPS): $0.22 on a GAAP basis, an improvement from $0.31 in the same period last year.

Major Business Developments

• Expansion of customer base: The overall revenue base has been strengthened by an increase in the number of clients with high value annual contracts.
• Introduction of new products and technologies: AI-based security platforms are further evolving and becoming more competitive in the industry.
• Global Expansion: Revenue outside the U.S. is also growing steadily, especially in European and Asian markets.

Cash Flow

• Operating Cash Flow: $44.3 million, a significant improvement from -$39.96 million in the same period last year.
• free cash flow: $33.75 million positive, an improvement from -$31.43 million in the same period last year.

Future Outlook

• Sales forecast for the next quarter: Sales are expected to be approximately $200 million, with continued growth projected.
• Cost reduction and efficiency improvement: Further profitability is expected to improve as operations become more efficient and cost controls are strengthened.

Sentinel One continued on a strong growth trajectory in Q2, showing improved sales and margins, and the evolution of its AI-driven security platform and expansion into new markets are factors that will support future growth.

Which brokerage firm can I buy shares of Sentinel One?

We have listed the major brokerages that offer Sentinel One shares. At these brokerages, you can choose to invest as a CFD (Contract for Difference) as well as directly as a foreign stock.

I myself mainly use SBI Securities, but some stocks they handle may not be available for purchase. In such cases, I sometimes use CFDs at Saxo Bank Securities or IG Securities.

summary

We have delved into the details of Sentinel One(S)'s business, its unique characteristics, competitive advantages, and earnings growth.

Financially, it appears that the company still needs to improve, but we look forward to future growth.

The cybersecurity industry has high growth potential and investment opportunities abound.

In addition to investing in individual stocks, diversification through a cybersecurity ETF (CIBR: First Trust Nasdaq Cybersecurity ETF) can be an effective way to enjoy stable growth profits.

Top Cybersecurity Stocks with Growth Potential (US & Japan)

Security risks are increasing along with the evolution of AI. Companies are expected to take steps to prevent these risks, and cybersecurity is a field that is expected to grow in the future. Here, we pick up advanced security-related stocks that we believe have high growth potential and explain them in detail.

mifsee.com