Hello, and welcome to the SentinelOne Q2 FY 2026 Earnings Conference Call. [Operator Instructions] Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I would now like to turn the call over to Saad Nazir, Head of Investor Relations.

Good afternoon, everyone, and welcome to SentinelOne's earnings call for the second quarter of fiscal year 2026, which ended July 31, 2025. With us today are Tomer Weingarten, CEO; and Barbara Larson, CFO. Our press release and earnings presentation were issued earlier today and are posted on the Investor Relations section of our website. This call and accompanying slides are being broadcast live via a webcast, and a replay will be available on our website after the call. Before we begin, I would like to remind you that during today's call, we'll be making forward-looking statements about financial performance and future events, including our guidance for fiscal third quarter and full fiscal year 2026 as well as our long-term financial targets. We caution you that such statements reflect our best judgment based on factors currently known to us and that our actual results or events could differ materially. Please refer to the documents we file from time to time with the SEC, in particular, our quarterly reports on Form 10-Q and our annual report on Form 10-K. These documents contain and identify important risk factors and other information that may cause our actual results to differ materially from those contained in our forward-looking statements. Any forward-looking statements made during this call are being made as of today. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. Except as required by law, we assume no obligation to update these forward-looking statements publicly or to update the reasons why actual results may differ materially from those anticipated even if new information becomes available in the future. During this call, we will discuss non-GAAP financial measures unless otherwise stated. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the GAAP and non-GAAP results other than with respect to our non-GAAP financial outlook is provided in today's press release and in our earnings presentation. These non- GAAP measures are not intended to be a substitute for our GAAP results. Our financial outlook excludes stock-based compensation expense, employer payroll tax on employee stock transactions, amortization expense of acquired intangible assets, acquisition-related compensation costs, restructuring charges, gain on strategic investments and income tax provision, which cannot be determined at this time and are, therefore, not reconciled in today's press release. And with that, let me turn the call over to Tomer Weingarten, CEO of SentinelOne.

Good afternoon, everyone, and thank you for joining our fiscal second quarter earnings call. Q2 was a landmark quarter for SentinelOne. Our total ARR grew 24% and crossed $1 billion, a significant milestone in our growth journey. We also achieved a record second quarter net new ARR, reflecting positive year-over-year growth of over 20% and a strong uptick in new business generation. That's a clear reflection of our team's execution, business momentum and rising demand for SentinelOne's AI-powered cybersecurity. Our Q2 performance was broad-based with strong contributions from new customer additions, expansion with existing accounts and increased adoption of our AI and data solutions. These results underscore our stronger competitive position and growing product differentiation. We continue to maintain a top-tier growth profile while driving operating leverage. Following a strong Q2 outperformance, we're raising our full year revenue outlook while remaining prudent in our assumptions for the second half given the dynamic macro backdrop. These milestones also mark a defining moment for all Sentinels and signify that Singularity is a leading cybersecurity platform of this era. We've established SentinelOne as a clear technology leader in cybersecurity. Our relentless focus on delivering AI-powered innovations that unify security, data and automation has positioned us at the forefront of the industry. Let's take a closer look at our customer growth and platform momentum. We're winning new logos and expanding our footprint across enterprises of all sizes and industries globally. In the age of AI, customers are turning to SentinelOne for unified AI, data and security platform experience that is seamless to deploy, effortless to scale and designed to autonomously protect critical assets, including endpoints, cloud, data, identities and now GenAI. I'll share more on this later. We've also launched SentinelOne Flex, a major step forward in how customers adopt the Singularity platform. It's…

Thank you, Tomer, and thanks to everyone for joining us today. Let's review the details of our Q2 financial performance and our guidance for Q3 and fiscal year '26. As a reminder, all comparisons are year-over-year and financial measures discussed here are non- GAAP, unless otherwise noted. In Q2, we continued to deliver top-tier growth alongside strong margin expansion. Our total ARR grew 24% and surpassed $1 billion, a significant milestone in our growth journey. We added net new ARR of $53 million in the quarter, which significantly exceeded our expectations. This outperformance was driven by broad-based momentum in both new customer acquisition and platform adoption by our existing customers. We're gaining market share and mind share across our platform solutions, notably AI, data, cloud and endpoint. These results reflect strong execution and healthy demand across the business. In Q2, revenue grew 22% year-over-year to $242 million. International markets grew 27% and represented 38% of total revenue, reflecting balanced growth and an expanding global footprint. Customers with ARR of $100,000 or more grew 23% to 1,513. Our average deal size or ARR per customer reached a new company record, highlighting our broader platform adoption. This performance reflects the value our customers realize from our platform and our continued success in driving multiproduct expansion. Our net retention rate remained strong and well into expansionary territory, driven by customer adoption of our broader platform solutions, including data, cloud and Purple AI. Turning to margins. We maintained an industry-leading gross margin of 79%, highlighting healthy pricing and platform unit economics. We also achieved operating profitability of 2% in the quarter, with operating margin improving by more than 500 basis points year-over-year. Looking ahead, we expect to sustain quarterly operating profitability and remain on track to deliver our first full year of operating profit…

[Operator Instructions] Our first question will come from John DiFucci with Guggenheim.

Nice improvement in business momentum, Tomer and Barbara and team. It's a big difference. And also, by the way, it makes the rest of the year look more reasonable. It looked like tougher after last quarter -- after first quarter. Listen, you said, Tomer, you benefited from new logos and expansions along with AI. And I'd like to talk about that expansion part. Given the stage of where you are as a company, new logos are still a big driver, but Barbara also said that platform adoption by existing customers also drove the results this quarter. You said NRR also remains strong, but are there any other metrics or commentary to help us understand if your singularity platform message is not just driving larger initial deals, which you talked about, but also catching on with your existing customers?

Of course. Our Q2 performance, as I mentioned, was really broad-based with strong contributions both from new logos and expansion with existing customers. I would say it's been very consistent also in the past few quarters where we kind of get like an even split between new customers and expansion, which is exactly what we strategically want to see. And it's broad-based in terms of the solutions that are participating. It's strong endpoint growth -- it's emerging solutions like AI, data and cloud that are growing rapidly. Purple AI and data, they remain our fastest-growing solutions. We also had record bookings from data and Purple AI continue to grow triple digits. So all in all, I mean, these are solutions that are applicable both for new logos, but also for expansion. So they're really driving both. And obviously, with the introduction of SentinelOne Flex, that really improves our ability to talk to both existing customers that are renewing and net new customers and just land bigger or expand with those that are renewing. So overall, the business momentum is strong across the board, and we continue to gain market share across pretty much every growth area we have.

Our next question will come from Rob Owens with Piper Sandler. [Operator Instructions]

Obviously, a lot of variability throughout the first half as we contemplate just what you've done in net new ARR. Curious, looking at Q3, if there's any guardrails you'd like to put around it to shape our thinking. I appreciate the timing and variability of larger deals that was in your script relative to revenue. But anything we should be thinking about relative to that net new ARR as we move into the back half and in particular, Q3?

I'll go ahead and take that one. Thanks for the question, Rob. We don't provide formal ARR guidance, but you can approximate it just based on our revenue outlook that we've provided as well as the underlying business model assumptions. I would say, overall, Q2 results and the updated revenue outlook implies a relatively improved view on net new ARR for the full year.

Our next question will come from Brad Zelnick with Deutsche Bank.

Congrats on a good quarter, especially the strong net new growth. I wanted to ask about Flex. Tomer, it's good to see how Flex is driving nice wins for you. How much of this is really new versus formalizing things that you were already doing and how it might compare to other similar concepts in the market? And then just for Barbara, can you talk to us a bit about how a Flex deal flows through the financials, specifically the impact to ARR into revenue?

Of course. So we just launched SentinelOne Flex this quarter. For us, it's obviously a major step forward in how customers are adopting the overall platform. The reception has been outstanding. Flex deal, as I mentioned, already delivered an 8-figure in deal value. The target is really everybody that's renewing, everybody that's mid- and large-sized organizations, and they have any type of a dynamic licensing need. It's very reflective for what other vendors are doing in the space. And it just gives customers the flexibility to adopt more and obviously remix whatever they choose to acquire, choose to consume. In all, we're seeing it's getting customers to the point where they sample more from our platform and thus, it drives more consumption of different modules across the board. So all in all, it's still early days for us, but obviously, this is a superior way to consume our platform capabilities, which today span close to 30 different distinct capabilities and about 7 different platform solutions. When we introduced Prompt Security, obviously, and announced that acquisition, that's going to become part of Flex. So as you can imagine, now that we have all these different growth frontiers in our platform, Flex is the enabler for our customers to now easily consume and enjoy these new offerings.

And from a financial perspective, Flex will be very similar to our other ARR contracts, which is TCV divided by duration and revenue will be recognized ratably over the duration of the contract.

Our next question comes from Joseph Gallo with Jefferies.

Congrats on the Prompt AI acquisition. Tomer, if we step back, I'm just curious your thoughts on when the security of AI results in cyber revenue. Obviously, there's a massive need for cyber, but if you look at most tech transformations, it can take time. I believe you said there was immaterial ARR from Prompt. How should we think about the ramp or ability to drive top line from Prompt?

Generative AI adoption is exploding. I think that is something we can all attest to, and it's across all industries, and it really brings a new class of risk. We're seeing regulated usage and unregulated usage, shadow AI usage and Prompt is a pioneer in securing exactly these types of use cases and really putting guardrails on generative AI usage in run time at real time. So when we look at the biggest pain points for enterprises today, it's clearly getting their employee usage under any form of governance and control, and that is directly what Prompt is here to solve. This is why we've been very excited about this acquisition. This is why we believe that the best place to regulate generative AI usage for the enterprise is actually on the endpoint, as closest can be to the user or the operator that's actually running the models and putting data into these models. So for us, when we think about what is the biggest enabler for generative AI usage, what is top of mind for every CISO that sees their employees now accessing all these different API and AI gateways, obviously, they want to get immediate visibility. They want to know what people are doing. They want to know what data is being shared, and they want to put guardrails around it. That's exactly what Prompt is bringing to the Singularity platform. So we believe -- and just by the early traction and customer reception that we're seeing that it's going to be a significant contributor in years to come.

Our next question will come from Rudy Kessinger with D.A. Davidson.

I'm curious. Barbara, I hear you saying kind of your inherent net new ARR assumptions are up for the balance of the year, but you had a really, really strong Q2. I guess I'm just curious if there's any other color you could provide as to why we're not seeing revenue taking up more for the balance of the year.

Yes. So you're right, we had a really strong Q2. We're improving our second half revenue outlook, and that's driven by those strong Q2 results, the momentum we see going into the back half, a healthy pipeline, platform momentum. But at the same time, we're being mindful and incorporating prudent assumptions about the back half of the year.

Our next question will come from Michael Cikos with Needham.

Congrats on the quarter. I like the similar comments. For Tomer, I just wanted to get a better understanding, and this probably goes back to the top of the Q&A with John's question. But great to hear on the new logos, the expansions, the pro-based product adoption. If you think about the ARR outperformance that we saw this quarter, though, is there a way to force rank what was the largest driver of upside when we think about that net new ARR? I know you said or had some very positive comments on the Purple AI and what you're seeing there, but any way to parse that out more specifically, please?

Yes. I've been trying to do so. I mean it is really broad-based. I mean you're talking about pretty significant beat to our net new ARR expectation along the lines of about 40%. So obviously, it doesn't come from just one thing. We got great expansion motion and great emerging capabilities that are a good, I think, point in time for customers to go and consume to solve real problems right now. So our expansion motion is strong. Net new logo acquisition is something we've been putting emphasis on for the past few years. We want that motion to keep on going. We want more customers joining our estate. It's a big focus of ours. So that's working well. And then obviously, when you start looking at some of our data capabilities, when you start looking at the deal sizes that we now are able to sign, you're joining that with Flex. I mean, that is really starting to paint a broad-based picture. And as I mentioned, triple-digit growth, that's becoming a significant contributor. And data with the strongest contribution we've had is another big contribution here. So again, quite broad-based. I would say we are seeing the platform starting to really take hold for us. We said last quarter, it's about 50% of booking. It followed this quarter as well. So all of these are really great trends for us.

Our next question will come from Shrenik Kothari with Baird. [Operator Instructions]

Congrats on the broad-based net new ARR pickup and the record non-endpoint contribution. So in the past, you have noted, of course, the reps on -- especially on the data and non-endpoint been ramping and it's work in progress. Now, with Flex with a strong start and following on the partner, the GSI, MSSP initiatives. Just on go-to-market, can you talk a little bit about the progress in terms of the ramp metrics, especially around the non-endpoint and also anything around the enablement comp plans with the new approach?

Of course. So definitely strong execution this quarter. Our teams executed well and above our expectations. You can see that again, both through record net new ARR, but also ARR per customer. So all in all, we've made significant strides in enabling our workforce, in streamlining our offerings and how we lend, how we pitch our platform. So going from product to platform is a journey, and I think we're moving in the right direction. This quarter is a great attestation of that. All in all, we're quite pleased with how we're lending and also how we're expanding. There's always more work to do. It's a constant evolution. The introduction of Flex, I think, has gone tremendously well. I think it's actually a simplifying factor for us on how we talk about our platform. So it's actually a force multiplier. So all in all, these constructs have come for us at the right time as the platform capability set is expanding dramatically.

Our next question will come from Brian Essex with JPMorgan. [Operator Instructions]

Congrats on a nice rebound quarter here with strong net new ARR. Maybe, Tomer, for you, I wanted to zero-in on a comment that you made about your AI native SIEM capabilities in the market. And I think we've seen a few peers make acquisitions recently on the ability to address enhanced real-time detection with streaming data. How do you see, from your perspective, the market evolving in terms of what enterprises are choosing to store and query and perform threat analysis that way versus the demand for real-time ingestion streaming data and perhaps more efficient storage of data from that perspective.

I'll split it in 2. I think that customers today want 2 main things. One is they want control over their data. And I think that's where when we talk to customers, it's all about where is the data, how do I get my hands around the data and how do I get it flowing to the end destinations that I want. So that's one part of it. And the second part is real time. It's really, really clear with the onslaught of attacks that we're seeing right now, they're starting to be more and more AI-driven that this notion that we've been talking about for many years now of machine speed attacks is now taking wholesale approach by adversaries out there. So to counter that, you really have to start ingesting and processing your data in real time, which is something we've been advocating for many years now. We've been the leader in that space. We'll continue and expand that leadership. To us, the ability to gain data and insights and processing of data in real time is the unlocking factor to how you drive AI across the entire enterprise data set. So it's less about, is it the SIEM? Is it something else? It's more about the outcome itself, which is ingestion and processing of real- time data and streaming data, and that is something we've been championing for a few good years now.

Our next question will come from Ittai Kidron with Oppenheimer. [Operator Instructions]

Again, solid numbers. I guess 2 things from you, Barbara. One is, can you give us some more color on the U.S. versus international mix this quarter, how that performed? And then also on RPO, you talked about, I think you mentioned 26% growth in RPO. Can you tell us if duration changed over there?

Yes. Thanks for the question. So on the U.S. versus international, so this quarter, international was 38% of our total revenue, and that's an increase from prior quarter. So real nice performance there. And then your second question was around RPO. So very strong growth in RPO this quarter. So 26%. Keep in mind, this can be impacted by duration. We did see that duration was relatively stable this quarter. So no major changes to call out there. But it is impacted by duration and the timing of renewals, which is why we refer to ARR.

Our next question will come from Shaul Eyal with TD Cowen. [Operator Instructions]

Good to see the stability. Maybe one for Barbara. Thanks for that commentary on the Flex offering. I know it's very early days, pretty much first quarter. But long term, how do you see the potential revenue uplift by those customers that are adopting Flex? And maybe is it fair to assume that pipeline is at record levels right now?

So thanks for the question on Flex. As you said, it's early days right now on Flex. But overall, we would expect this to be positive for deal sizes, duration, overall platform adoption. We're excited about the early momentum and feedback and more to come on this later. And then in terms of pipeline, we're excited about the momentum we're seeing in the business, very healthy pipeline that's growing.

Our next question will come from Roger Boyd with UBS. [Operator Instructions]

I wonder if you could provide an update on where you're at with the Lenovo partnership. I think you're about a year into that. What sort of momentum are you seeing from that? And just any color you can provide around your assumptions around ARR revenue from that?

Sure. We have many exciting partnership opportunities across the partner ecosystem. This is really one amongst quite a few. Specifically on Lenovo, overall, it's a contributor and on track relative to our expectations. We don't really discuss any details of any individual deal, but we're encouraged by the traction. We're definitely seeing more and more market motions with Lenovo coming up online for us. So all in all, it's on track. It's where we want it to be, and it's going to be one out of many contributors to our yearly outlooks going forward.

Our next question will come from Yun Kim with Loop Capital.

Great. Congrats on a solid execution. On the initial success of Flex pricing, is the flex pricing kind of improving your visibility, especially around large deals since it removes at least one element of the negotiation process? And also, should we expect Flex pricing to perhaps lead to early renewals, especially as customers try out new products and realize the value and upgrade the contract?

Yes. It's definitely streamlining the sales process for us. So we are, I think, unlocking a bit more velocity in the sales process given Flex is allowing customers to just think more broadly and they don't need to lock themselves into one specific construct. So on that front, I think that Flex is definitely an enabler. We're not going to be doing anything unnatural. I mean, we always just work at the pace of customers, both at renewal time and obviously, in our net new logo motion. For us, it's, again, just providing the best tools we have for our customers to procure what they need from our platform.

Our next question will come from Jonathan Ho with William Blair. [Operator Instructions]

Let me echo my congratulations as well. I think you basically described Singularity Cloud as seeing some significant success in this. Can you help us understand whether the transition and value proposition in the cloud to more runtime security as well as your fundamental architectural differences have helped you in this area?

We actually started with runtime security. So for us, it was never a transition to runtime security. We started with cloud workload protection. We always felt that is the most important part of protecting cloud footprints, and that's where we're seeing continued traction. Obviously, today, we have a broad-based cloud security platform that contains all the cloud security posture management capabilities, both agent and agentless as well as DSPM capabilities, CDR capabilities and more. So when we think about our cloud security suite today, first and foremost, it's designed to protect workloads in real time, which is something that we believe customers today are laser-focused on. It's both for on-premise environments, private cloud, hybrid cloud environments. So it really is one of the best coverage type solutions out there in the market today. And obviously, when you couple that with the same level of visibility we have for our EDR product with the same level of analytical capabilities we have with our data lake with the same access that Purple AI can give you, but now on cloud workloads, that becomes a very, very compelling capability for customers because it spends beyond just the innate workload protection, runtime protection capability, you enjoy all other platform capabilities that we have, and that is creating a compounded value for our customers.

Our next question will come from Gabriela Borges with Goldman Sachs. [Operator Instructions]

Barbara, I wanted to better understand your comments on the guidance. If I look at how much you beat in the quarter on net new ARR, I get to about $15 million in net new ARR upside. And so my thought is that, that should be at least $7.5 million in benefit to your full year revenue guidance. And you mentioned the comment earlier on being prudent. So if I'm understanding this right, what is making you more prudent today on the guide for the back half than you were maybe 90 days ago? Are you seeing something in the data or the signals that's making you more prudent than before?

Thanks, Gabriela, for the question. So overall, our second half revenue outlook has improved, and that's driven, as you said, by the strong second half results. We are seeing strong momentum, but we're being prudent about our assumptions in the second half. And that's really as you look at deal timing, overall macro, federal, and we're just trying to take all of that into account and be measured about how we're thinking about the back half and ultimately, the full year. But very pleased with the Q2 performance and the revenue outlook raised for the second half.

Our next question will come from Trevor Walsh with Citizens. [Operator Instructions]

There you go. Can you hear me now?

We can hear you, Trevor.

Great. I wanted to circle back on the acquisition. Tomer, I was just curious, I understand it's early days, but can you maybe tell us about trends that you're seeing around kind of the buyer personas around AI security? Are those people kind of within the core SOC team? Is it someone more kind of cloud infrastructure oriented? I guess, are these relationships that you're going to -- that you already have or kind of new people that you're going to have to go out and kind of engage with?

There's 2 facets to it. One is the employee use case where I think you can really think about it as akin to the DLP motion. This is GenAI DLP. Eventually, we will work to extend that capability set to actually be a fully-fledged DLP for the endpoint. That is obviously a well-established TAM. That is something that is classically on the endpoint. These are the same teams that we're working with, the same footprint, the same deployment model. Obviously, this is incredibly complementary to our market motion today in the endpoint market. The second facet is securing the actual AI runtime usage for models. And that is sometimes more in the realm of the cloud security teams, which we obviously talk to today with our cloud security software. So these are kind of the 2 biggest facets, 2 kind of main buying centers for Prompt capabilities. Again, one is very adjacent to the endpoint and kind of spends into the DLP territory. And the other is more in kind of the AI workload deployment of model, deployment of workloads of the different generative AI endpoints. Those are going to be more cloud-oriented. But again, all in all, we got interfaces with all these teams today.

We have no further questions at this time. I will turn the call back over to Tom Weingarten for closing remarks.

Thank you. Our second quarter performance reflects strong execution and progress in scaling the business. As organizations look to elevate cybersecurity, our ability to deliver value across multiple platform categories is resonating. We remain focused on delivering durable growth, driving operating leverage and expanding our leadership in AI-powered cybersecurity. Thanks again for joining us today.

The call has ended. You may now disconnect.