SentinelOne files for IPO after landing $3B valuation in most recent funding round

Cybersecurity unicorn SentinelOne Inc. is moving to list its shares seven months after raising $267 million in funding from investors at a private valuation of $3 billion.

The filing for the company’s upcoming initial public offering, which became public on Thursday, reveals that its revenues have more than doubled in its most recent quarter ended April 30. SentinelOne generated sales of $37.4 million and saw its customer count pass the 4,700 mark, up from 2,700 a year earlier.

But expenses grew as well in the three-month period. SentinelOne’s quarterly losses rose from $26.6 million last April to $62.6 million.

SentinelOne provides a so-called extended detection and response platform that enables companies to spot malware across systems ranging from servers to employee laptops. The company claims that its platform’s threat detection algorithms are better than those of many rivals.

In the most recent MITRE ATT&CK assessment, an evaluation of cybersecurity tools performed every year by the prominent research organization Mitre Corp., SentinelOne says, it was the only company that achieved zero missed threat detections across all tested operating systems.

SentinelOne competes with bigger cybersecurity providers such as CrowdStrike Holdings Inc. and Palo Alto Networks Inc., both of which are already publicly traded. One of the ways the startup has set its platform apart is by automating the task of remediating malware infections. SentinelOne provides a feature that allows administrators to revert compromised systems to the state in which they were before a breach with one click.

Under the hood, the company’s platform detects threats with the help of artificial intelligence models that draw on petabytes of security data. SentinelOne pointed out its “proprietary data stack” as a competitive strength in its IPO filing. The company recently enhanced that part of its infrastructure by spending $157 million to acquire Scalyr Inc., a startup whose platform makes it easier to process large amounts of information such as cybersecurity logs.

SentinelOne told prospective investors it plans to make additional acquisitions in the future. “We intend to complement our organic investments with acquisitions to successfully execute on our XDR strategy,” the company’s IPO filing stated. SentinelOne also detailed plans to boost its collaboration with channel partners such as managed service providers in a bid to gain broader market reach.

The company believes the total addressable market it can target is significant. Firms will spend $12 billion annually on endpoint security alone by 2024, according to International Data Corp. research cited by SentinelOne, and that’s not the only part of the cybersecurity market where the company operates.

It also competes in the so-called cybersecurity analytics, intelligence, response and orchestration segment because it provides features for tasks such as responding to breaches. That latter segment is expected to grow from $13.1 billion this year to $17.1 billion in 2024.

SentinelOne’s large addressable market, taken together with its rapid revenue growth, could persuade investors to overlook its losses. Rival CrowdStrike likewise wasn’t profitable when it went public in 2019 and the company’s stock price has more than tripled since. 

After the IPO, SentinelOne plans to continue prioritizing revenue growth. “While we have experienced significant growth in revenue in recent periods, we cannot predict when or whether we will reach or maintain profitability,” the company stated in the filing. “We also expect our operating expenses to increase in the future as we continue to invest for our future growth.”

SentinelOne hasn’t yet shared how many shares it plans to sell in the offering or at what price. The company plans to list on the New York Stock Exchange under the ticker symbol “S.”

The offering will give SentinelOne’s investors an opportunity to sell their shares after providing the startup with nearly $700 million in funding over multiple funding rounds. The company’s backers include, among others, Sequoia Capital, Tiger Global Management, Samsung Electronics Co. Ltd. and Qualcomm Inc.’s venture capital arm.

The news that SentinelOne is heading to the NYSE comes a few weeks after another cybersecurity provider, Darktrace PLC, raised the equivalent of about $230 million in a listing on the London Stock Exchange. Shares of the company jumped as much as 43% in their first day of trading.

Photo: SentinelOne