SentinelOne continues to grow its external MSSP partner relationships, but the cybersecurity software company has also "streamlined its teams" over the past month, SentinelOne disclosed during an earnings call and in a letter to shareholders on December 6, 2022.
SentinelOne did not say whether the "streamlining" involved staff cuts or layoffs. Among the key changes to note: Nick Warner has stepped down as president of security, and is now an advisor to the company. Warner played a key role in SentinelOne's growth and MSSP partnerships over the past five years, and previously served as chief revenue officer (CRO) and chief operating officer (COO) at the cybersecurity software company.
Moreover, SentinelOne is taking a "more prudent approach to investments like moderating new headcount growth" amid "more pronounced" macroeconomic challenges, SentinelOne CEO Tomer Weingarten said during the earnings call.
The overall goal: A faster path to profitability, the company indicated.
SentinelOne: December 6 Letter to Shareholders
In that letter to shareholders ($S), SentinelOne further said:
"In light of persistent macroeconomic uncertainty, we’re sharpening our focus on cost management and are calibrating our investments with the pace of growth. In the past month, we’ve taken action to unlock more operational and execution efficiencies by streamlining our teams and elevating top business leaders, empowering them to be even more dynamic and nimble."
Among the variables MSP and MSSP partners should watch closely: SentinelOne is starting to to see "elongated sales cycles and limited budget availability" on some fronts. Also, foreign exchange variables added an incremental headwind in EMEA. Those factors contributed to a "softer net new ARR than we expected" Weingarten said.
Still, SentinelOne's financial performance continues to outpace much of the cybersecurity market. For instance, annualized recurring revenue (ARR) increased 106% to $487.4 million as of October 31, 2022, the company said.
SentinelOne, CrowdStrike: Still Growing Despite Macroeconomic Uncertainty
In some ways, rival CrowdStrike shared similar macroeconomic concerns during a $CRWD earnings call in November 2022.
Despite the warning signals, both SentinelOne and CrowdStrike continue to grow. And both continue to proclaim their respective commitments to MSSP partnerships. On the revenue front:
- CrowdStrike in November 2022 announced total quarterly revenue of $580.9 million, up 53% from $380.1 million in the corresponding quarter last year.
- SentinelOne on December 6, 2022, announced total quarterly revenue of $115.3 million, up 106% from $56 million in the corresponding quarter last year.
Despite that growth, CrowdStrike and SentinelOne over the past year have seen their stocks fall 41% and 68%, respectively, as investor appetite shifted from revenue growth to profit-driven companies.
SentinelOne MSSP Partnerships
SentinelOne's MSSP relationships remain a "highly strategic go-to-market motion," Weingarten told analysts during the earnings call. "We haven’t even started to unlock the other revenue line possibilities we have with the MSSP ecosystem."
Initially, MSSPs embraced SentinelOne's EDR (endpoint detection and response) and EPP (endpoint protection) software. More recently, the company has extended the MSSP solution set to include Ranger (an IoT discovery platform) and MDR (managed detection and response), as well as resell opportunities, Weingarten noted.
Summing up SentinelOne's overall viewpoint on MSSP relationships, Weingarten said:
"So, all in all, we feel going to be a sustained and resilient part of our business, especially as you see SMBs trying to avoid not the technology and software costs. But really the overhead in recruiting more and more headcount into their security teams and are looking to offset that by procuring direct services, scale services from the MSSP ecosystem.
Obviously, that bodes well for us. We have a complete multi-tenanted solution for that MSSP ecosystem that actually allows them to be more productive in what they do. So, again, even in this environment, MSSP is definitely a shining point for us."
CrowdStrike generally makes similar MSSP-related statements during its earnings calls and partner program announcements. But overall, the Top 250 MSSPs worldwide have greater affinity and loyalty to SentinelOne -- which appears to experience lower channel conflict overall, according to our Top 250 MSSPs research for 2022.
SentinelOne: Additional Financial Metrics
Among the additional takeaways from SentinelOne's earnings call on December 6, 2022:
- Total customer count grew about 55% to over 9,250 customers as of October 31, 2022.
- Customers with ARR over $100,000 grew nearly 100% to 827 as of October 31, 2022.
- Dollar-based net revenue retention rate was 134%.
