SentinelOne (NYSE:S) delivered a clean beat-and-raise this quarter, yet Wall Street had mixed opinions. The stock fell more than 8% in the afternoon session after posting its second-quarter 2027 numbers, with analysts having differing opinions on the stock’s trajectory.
Three months ago, the company missed top-line expectations, making this quarter an opportunity to make up for lost investor confidence. However, DA Davidson remained unconvinced of the top-line figures due to the stock’s underlying pace of expansion.
On August 28, investment firm DA Davidson reiterated a Neutral rating on the stock with a $20.00 price target.
Major disruptions among legacy enterprise peers called for a sharp acceleration this quarter- something that was apparently missing in the numbers.
The Bull Case: A Beat-and-Raise Quarter
For the second-quarter fiscal year 2027, SentinelOne reported total revenue growing 21% to $292 million, compared to $242 million in the prior year and topping the high end of management’s own guidance range. The company said it earned an adjusted $0.08 per share, double the $0.04 per share earned a year earlier.
GAAP operating margin was -31%, compared to -33% in the prior year. Non-GAAP operating margin was 10%, compared to 2%. The company’s remaining performance obligations also surged 45% to a record $1.7 billion. SentinelOne also reported its customers with ARR of $100,000 or more growing 13% to 1,715 as of July 31, 2026.
Looking ahead to the third quarter, SentinelOne said it expects to earn an adjusted $0.08 or $0.09 per share, with revenue ranging between $309M and $311M. Analysts expectations for the company were to earn an adjusted $0.11 per share on $309.5M in revenue.
The Bear Case According to DA Davidson
While the quarter looks apparently clean, one number DA Davidson refuses to let go of is net new ARR. Net new ARR is the metric that shows how much new recurring revenue the company is adding to each quarter.
While the number marks then fifth straight quarter of positive net new ARR growth, it has failed to impress the Wall Street firm. The record $56 million figure is only up 4% year-over-year, while in comparison, Q1 had delivered a 55% increase year-over-year with a net new ARR of $44 million.
The trends read as “lacklustre,” with the firm anticipating further deceleration ahead.
Besides the net new ARR aspect, investors also expressed disappointment over a mixed forward guidance, a reduced full-year profit outlook, as well as slower large customer additions.
