SentinelOne, Inc. (NYSE:S) Q3 2023 Earnings Call Transcript

Brad Zelnick: That’s really helpful. And David, just a follow-up for you. I appreciate the color you gave for Q4 and ARR for at least 20% sequential growth. Others in the broader market are calling for no seasonal budget flush, no Christmas this year, even sequential declines in Q4. And I know you have a number of benefits, including the deals that pushed from Q3, strong net retention trends, ramping sales productivity and a really strong value prop, but is there any way to maybe further frame and characterize the confidence that you have that underpins your view into Q4? Thanks very much.

Dave Bernhardt: Well, we are assuming that the macro conditions continue and persist into Q4. We — we are still expecting to grow sequentially. This 20%, it’s due to a few things. One, we have a higher concentration of larger deals historically in Q4. Two, we have a record pipeline. We just need to go out and close deals. We are highly confident in the 20% sequential growth and we are hoping to outperform that. We believe this is historic. This is much better or much more conservative versus our historical guidance. If you look traditionally, we were about 40% sequential growth. We are assuming it’s about half that and I think that’s where we are — that’s how we are looking at this to reflect more conservative guidance around Q4 and we are hoping to build off that.

Tomer Weingarten: Yeah. Just to add to that, I mean, we feel like we have got all the raw materials to get there and right now we are just kind of re-rating on our ARR. So to us it feels like we are taking the right step to make sure that we are guiding towards what we feel is absolutely doable. That’s the right thing to do. And with that, as Dave mentioned, record pipelines entering into the quarter, better linearity than last quarter that I mentioned just a few moments ago, all of those give us increased confidence that we can hit the Q4 number, potentially even do better.

Dave Bernhardt: And I think another thing to consider is that we have never been benefits of a budget flush. I think we have just traditionally seen deals that closed. We have never been a company, I think, that have companies just come to us and say, hey, I have got a bunch of budget I need to spend it. When customers work with us, we are trying to do what’s best for the customer and we are trying to make sure that we provide a solution for them. So the idea of a budget flush just isn’t something that we are expecting will affect us.

Tomer Weingarten: Yeah. I concur by the way. We have never seen that phenomenon for better or for worse.

Brad Zelnick: Okay. Makes total sense. Thank you so much, guys.

Operator: Our next question comes from Gray Powell with BTIG. Your line is now open.

Doug Clark: Hi, Gray. Are you on the line. You might be unmute.

Gray Powell: There we go. Looks like analyst stay on, not hard to hit the mute button. So thanks for taking the question. So a lot of good detail in here so far. So when we think through your outlook for 50% ARR growth next year, how do you think linearity plays out relative to this year and prior years, should we expect that the net adds next year to be more back end loaded?

Tomer Weingarten: I think, generally, I mean, it will be typical to our business. I mean I wouldn’t expect any major departure from how we have been operating in the past couple of years. It might be a bit more smoothened out, but again, at large, I would say, it remains relatively the same.

Gray Powell: Okay. Great. And then just my other question would be, I know you are not breaking out Attivo anymore, but just how has growth there been relative to your original expectations? And as you get that product more into your sales motion, do you see an opportunity to accelerate growth in the product from that original 50% growth rate that we were talking about at the beginning of the year?

Tomer Weingarten: As we look into next year, we believe that’s going to be one of our stronger propositions. I mean to us, being still in the early days of our integration, we believe we haven’t fully unlocked the potential in that acquisition and in identity security in general. We have generated record pipeline for identity security this past quarter. So we feel better about the overall prospectus of what this could look like in the years to come. With that, obviously, macro impacts everything and identity is no different. We always expect highly and we may be expected more. But, generally speaking, as we go into next year with a fully-integrated offering. We feel that’s the best way to unlock the identity perspective, both in terms of the go-to-market and our sellers being able to sell identity as a holistic part of the platform and also technologically speaking, the product will be completely integrated into our endpoint technology.

So it wouldn’t require any additional configuration and that would again unlock and remove more friction.