The Israeli cyber company
Sentinel One
-5.93%
closure:0
opening:27.79
High:27.88
low:23.6
cycle:—
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Issued last year on Wall Street at a value of 10.5 billion dollars, it is now trading at only 7 billion, while on the way it still managed to jump to an amazing (and perhaps exaggerated) value of 19 billion dollars. But in the end it is a company that actually manages to meet the analysts’ expectations (which is not obvious in the last year). So last night, in the reports for the last quarter, the company once again exceeded the expectations on Wall Street and even rose after by 3%. But today it falls by 8% (earlier it fell by 12%).
This is not the first time that this has happened to Sentinel One, that it manages to beat the predictions and yet falls short. But what happened this time?
Investors saw last night the reports and the increase in forecasts and were happy. It seemed that the company continues to grow ‘by the book’ and even surpasses the analysts’ forecasts. Sentinel expects revenues of $111 million, above analysts’ expectations of $108 million, with a gross profit margin of 71% (similar to the second quarter). In the forecast for the entire year, the company expects that in 2022 the revenues will amount to 416 million dollars, above the expected 406 million dollars.
But then between the lines the investors suddenly saw something else: In the first quarter, Sentinel acquired Attivo for $617 million, and the completion took place in the second quarter. This means that part of Sentinel’s growth in the second quarter and a large part of the growth that will be in the third quarter and probably in the entire year will actually come thanks to the acquisition and not just as organic growth of Sentinel One. Ativo is a company that specializes in identity management and deception, and the purpose of the acquisition, according to Sentinel, is to “expand its artificial intelligence-based detection, response and prevention capabilities for cyber intrusions.” Ativo has 300 employees, and Sentinel meanwhile did not detail the sales of the acquired company, but it is probably several tens of millions of dollars.
Let’s emphasize: Sentinel One’s growth is present and significant, but if after the acquisition it is an increase in revenues from 98% compared to the previous quarter to 103%, then it is not certain that there is really an increase in forecast here – the market sees it and punishes the company.
We are not saying that the fate of Sentinel One will be similar to that of Iron Source. Of course we don’t know what will be born on the market. But yes it can be said that the market expected more from Sentinel One. That is, he expected to see organic growth in addition to the acquisition, and not just growth that would come due to the acquisition of a company.
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