Artificial intelligence (AI) is set to revolutionize the global economy, driving productivity growth. However, it also poses significant risks when in the wrong hands. A recent survey conducted by PwC revealed that 64% of leading corporate executives believe that AI will increase cybersecurity risks within their organizations. Palo Alto Networks, a prominent cybersecurity giant, has reported a tenfold increase in email-based phishing attacks over the past year, attributing this surge to the rapid content creation capabilities of AI, which enables malicious actors to craft realistic messages to deceive employees into divulging sensitive information. These concerns expressed by executives are well-founded, highlighting the urgent need for advanced protection measures.
SentinelOne, a cybersecurity software provider, offers a comprehensive portfolio of solutions that leverage AI-driven automation to identify and respond to threats. The company’s Singularity platform is a holistic solution designed to safeguard cloud networks, employee identities, and endpoints. By harnessing the power of AI, SentinelOne aims to automate as much of the cybersecurity stack as possible, recognizing that machines can react faster than humans. One of the platform’s unique features, Storyline, autonomously tracks security events and creates a timeline for managers to review, enabling them to swiftly trace incidents back to their source. This reduces the time spent on manual investigations and facilitates faster response times. Additionally, the platform includes a one-click remediation tool that allows managers to easily roll back networks to their pre-breach state in the event of an attack.
To further enhance the capabilities of Singularity, SentinelOne introduced Purple AI, an AI-powered virtual assistant. This assistant can be prompted using natural language to hunt for threats, summarize incidents, and provide remediation assistance. Essentially, it empowers employees to become cyber experts, significantly accelerating threat hunting and incident investigations by up to 80%, according to early adopters. SentinelOne recently launched a new feature for Purple AI called Alert Summaries, which autonomously summarizes security alerts, complete with contextual information. This enables managers to make more informed decisions regarding the urgency of each alert.
SentinelOne’s revenue growth has been impressive, with $199 million generated in Q2, representing a 33% increase compared to the same period last year. This growth outpaces that of industry leaders Palo Alto Networks (12%) and CrowdStrike (32%) in their recent quarters. While SentinelOne’s smaller size may contribute to its ability to grow more quickly, it also suggests that the company is gaining market share in the AI-powered cybersecurity space. Notably, SentinelOne achieved a significant milestone during Q2, generating a positive non-GAAP net income of $3.5 million for the first time in its history. Although the company has not yet achieved “true” profitability, this result indicates a step in the right direction.
From a valuation perspective, SentinelOne’s stock appears attractive. With a market capitalization of $7.7 billion and revenue of $723 million over the last four quarters, the stock currently trades at a price-to-sales (P/S) ratio of 10.8. This is significantly lower than the company’s average P/S ratio of 27.9 since its IPO in 2021. While it is unlikely to reach those previous levels, which were inflated during a tech frenzy, the 68% decline in SentinelOne’s stock, coupled with its continued revenue growth, has brought its P/S ratio to a more reasonable level. Moreover, SentinelOne’s valuation is notably lower than that of Palo Alto Networks and CrowdStrike.
SentinelOne’s Singularity platform and Purple AI have garnered increasing interest, particularly following a major outage experienced by CrowdStrike, which cost its customers an estimated $5.4 billion. SentinelOne reports heightened interest in its products, with several large enterprises evaluating them and yielding positive results. Additionally, the evolving threat landscape further bolsters the demand for SentinelOne’s platform.