SentinelOne (S) Stock Plunges Nearly 20% on Workforce Cuts and Disappointing Q2 Outlook

Key Takeaways

• SentinelOne shares plummeted approximately 20% in premarket trading Friday following the announcement of workforce reductions affecting 8% of employees
• First-quarter fiscal 2027 adjusted earnings per share reached 4 cents, doubling year-ago results and exceeding analyst expectations of 2 cents
• Quarterly revenue climbed 21% year-over-year to $277 million, meeting the analyst consensus of $277.3 million
• Second-quarter revenue forecast of $290 million (at midpoint) fell short of the $292 million Street estimate, triggering investor concerns
• Annual revenue projection remains unchanged at $1.195B–$1.205B, with earnings guidance maintained at 32–38 cents per share

SentinelOne shares were changing hands around $14.91 during early Friday trading, representing a decline of approximately 17–20% from Thursday’s closing price of $18.02. The cybersecurity provider’s stock retreat followed a dual announcement combining strong first-quarter results with plans to eliminate 8% of its workforce.

SentinelOne, Inc., S

Prior to the earnings report, the stock had enjoyed considerable momentum — posting a 27% gain in May and climbing 20% since the start of the year. That rally quickly evaporated.

The organizational restructuring will eliminate approximately 8% of full-time positions. Management indicated that financial resources freed up by the cuts will be reallocated toward artificial intelligence initiatives, data capabilities, and cloud infrastructure development.

The company anticipates absorbing a one-time restructuring expense of approximately $25 million. This total comprises $12–14 million allocated to severance packages and $10–12 million in accelerated stock-based compensation costs. Management expects to complete the majority of restructuring activities during the second quarter.

Chief Executive Officer Tomer Weingarten positioned the move as a strategic pivot. “Enterprises recognize that securing the AI era requires machine speed defense which only truly modern infrastructure can deliver,” he stated in the quarterly earnings announcement.

Strong Q1 Performance Overshadowed by Weak Q2 Projection

Looking at the quarterly performance metrics, the first quarter delivered positive surprises. Adjusted earnings of 4 cents per share exceeded the 2-cent consensus forecast. Revenue reached $277 million, representing 21% year-over-year growth and essentially matching analyst projections of $277.3 million.

Annual recurring revenue (ARR) totaled $1.163 billion, advancing 23% and slightly surpassing the $1.16 billion estimate.

However, market participants zeroed in on future expectations. The second-quarter revenue projection of $290 million (at the midpoint) came in below the $292 million consensus — a modest shortfall, yet sufficient to spark concerns about growth trajectory.

JPMorgan analyst Brian Essex highlighted a “revenue and ARR growth disconnect,” noting that a significant managed service provider contract will experience delayed revenue recognition because of the agreement’s implementation timeline.

Company Reaffirms Annual Projections

Notwithstanding the second-quarter miss, SentinelOne reaffirmed its full-year fiscal 2027 targets. Revenue expectations remain anchored between $1.195 billion and $1.205 billion. Adjusted earnings per share guidance continues at 32–38 cents.

Analyst consensus currently projects full-year earnings of 34 cents per share and revenue of $1.2 billion — squarely within management’s projected range.

The company also upgraded its fiscal 2027 margin forecast. JPMorgan’s Essex recognized this as encouraging but emphasized that revenue growth remains the primary driver of valuation for growth-oriented technology stocks.

SentinelOne operates in a competitive landscape alongside CrowdStrike, Microsoft, and Palo Alto Networks.

Before the earnings release, the stock had developed a cup base pattern with a technical breakout level at 21.40. That threshold now sits substantially above current trading levels.

SentinelOne maintains an IBD Composite Rating of 88 out of 99, accompanied by an Accumulation/Distribution Rating of A-minus as of Thursday’s market close.

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