SentinelOne Earnings: Strong Sales and Improved Margin Profile Spearhead Quarterly Results

We are raising our fair value estimate for no-moat SentinelOne to $18 from $14 after the firm closed out a strong third quarter with financial results above our prior estimates. Along with strong financial results, we were encouraged to see a reacceleration of net new annual recurring revenue, a measure of new business SentinelOne was able to land in the quarter. Despite the strong quarterly performance, we reiterate our long-term view that SentinelOne is a small player in a competitive extended detection and response space dominated by larger, well-entrenched vendors like CrowdStrike and Microsoft. Even after our fair value increase, we view SentinelOne’s shares as trading at a premium to our fair value estimate.