Cybersecurity firm SentinelOne (S) reported third-quarter results late Tuesday that beat estimates on the top and bottom lines. But SentinelOne stock dropped.
XThe company reported an adjusted loss of 15 cents a share on revenue of $56 million. Analysts expected SentinelOne to report revenue of $49.6 million and a loss of 18 cents a share. Results were for its fiscal third quarter ended Oct. 31.
SentinelOne stock plunged 12% to 45.05 during after-hours trading on the stock market today. During regular hours trading, SentinelOne stock popped 13.4%, closing at 51.04.
SentinelOne stock has experienced a pullback, like many software growth stocks. After a solid run following its initial public offering in June, SentinelOne stock has retreated about 37% from an all-time high of 78.53 set on Nov. 12.
"In a market concerned about inflation and Covid, SentinelOne is likely a crucible for investor sentiment," Needham analyst Alex Henderson said in a report to clients.
DocuSign (DOCU) stock collapsed 40% last week after its revenue outlook badly missed estimates. Cybersecurity firm Zscaler (ZS) sold off despite a stellar fiscal first quarter.
While SentinelOne stock has solid revenue growth, it's still unprofitable on an adjusted basis, which excludes stock compensation to employees.
SentinelOne Stock: Annual Recurring Revenue One Key Metric
Annual recurring revenue is one key financial metric for SentinelOne stock. The company sells subscription-based services. Henderson said analysts expect $216 million in October-quarter ARR.
The SentinelOne IPO in late June raised $1.2 billion with shares priced at 35. The IPO lockup period expires on Thursday, Henderson noted in the report. He said the expiration will free up 185 million shares for trading.
SentinelOne's cybersecurity software detects malware on laptops, mobile phones and other "endpoints" that access corporate networks.
SentinelOne competes with CrowdStrike (CRWD) and others. CrowdStrike reported better-than-expected October-quarter earnings.
Heading into the earnings report, SentinelOne stock owned a Relative Strength Rating of only 32 out of a best-possible 99, according to IBD Stock Checkup.
IBD offers a broad range of growth stock lists, such as Leaderboard. Investors also can create watchlists, find companies nearing a buy point, or develop custom screens at IBD MarketSmith.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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