October 1, 2022

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SentinelOne buys Attivo for $616.5M, but shares drop despite strong earnings report

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Shares in SentinelOne Inc. dropped in late trading today despite beating expectations in its latest earnings report on the same day the cybersecurity provider announced it has agreed to acquire Attivo Networks Inc. for $ 616.5 million.

For the quarter ended Jan. 31, SentinelOne reported an adjusted loss of 16 cents per share, compared with a loss of 84 cents per share in the same quarter last year. Revenue jumped 120%, to $ 65.6 million, thanks in part to its extended detection and response services. Analyst had expected an adjusted loss of 19 cents per share on revenue of $ 60.7 million.

Annualized recurring revenue in the quarter rose 123% year-over-year, to $ 292.3 million as of Jan. 31, and SentinelOne’s total customer count grew 70%, to more than 6,700 customers. The number of customers with ARR above $ 100,000 grew 137%, to 520, and the dollar-based net revenue rate was 129% as of the end of the quarter.

For the full fiscal year 2022, SentinelOne reported total revenue rose 120% over the previous year, to $ 204.8 million.

“We delivered ARR growth in the triple digits for a fourth consecutive quarter,” Tomer Weingarten, chief executive officer of SentinelOne, said in a statement. “Our extraordinary performance was driven by the strength of our XDR platform coupled with [a] relentless focus on innovation and execution. ”

Looking forward, SentinelOne forecast revenue of $ 74 million to $ 75 million in its fiscal 2023 first quarter and $ 366 million to $ 370 million for the full fiscal year 2023. Analysts had predicted $ 68.7 million and $ 346.2 million, respectively.

SentinelOne’s earnings and forecast were positive, but the only surprise was the deal to acquire Attivo. The $ 616.5 million deal consists of cash and stock. Subject to regulatory approval, it’s expected to close in SentinelOne’s fiscal second quarter.

Founded in 2010, Attivo calls itself a “deception-based threat detection” service. Attivo uses security technology that relies on decoys to lure cyber attackers into revealing themselves, giving companies better insight into how hackers attempt to access their systems.

The company provides required visibility and actionable, substantiated alerts to detect, isolate and defend against cyberattacks. The Attivo Deception and Response Platform provides continuous visibility and efficient threat management for user networks, data centers, cloud, branch, “internet of things,” industrial control systems such as supervisory control and data acquisitions systems, and point-of-sale environments.

Coming into its acquisition, Attivo had raised $ 60.1 million, according to data from Crunchbase. Investors included Singtel Innov8, Bain Capital, Energy Impact Partners, Forgepoint Capital and Omidyar Technology Ventures.

Attivo serves global customers from leading Fortune 500 companies to government entities, protecting against identity compromise, privilege escalation and lateral movement attacks. For SentinelOne, Attiva’s technology is said to enhance its Singularity XDR product that offers autonomous protection.

“The shift to hybrid work and increased cloud adoption has established identity as the new perimeter, highlighting the importance of visibility into user activity,” Nicholas Warner, chief operating officer of SentinelOne, said in a statement. “Identity Threat Detection and Response is the missing link in holistic XDR and zero trust strategies. Our Attivo acquisition is a natural platform progression for protecting organizations from threats at every stage of the attack lifecycle. ”

Whether the Attivo deal, which was on the arguably high side – or perhaps some investors expected SentinelOne’s results to be better than they were – the company’s share price headed south after the bell, falling almost 6%.

Photo: SentinelOne

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