10-Q 1 s-20220430.htm 10-Q s-20220430
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-40531
SENTINELONE, INC.
(Exact name of registrant as specified in its charter)
Delaware99-0385461
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
444 Castro Street, Suite 400, Mountain View, California
94041
(Address of Principal Executive Offices)(Zip Code)
(855) 868-3733
Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, par value $0.0001SThe New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒
As of May 27, 2022, the registrant had 199,213,454 shares of Class A common stock and 79,761,665 shares of Class B common stock outstanding.


TABLE OF CONTENTS
Page


Special Note About Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 17A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, about us and our industry that involve substantial risks and uncertainties. All statements contained in this Quarterly Report on Form 10-Q, other than statements of historical fact, including statements regarding our future operating results and financial condition, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” and similar expressions are intended to identify forward-looking statements.
Forward-looking statements include, but are not limited to, statements about:
our future financial performance, including our expectations regarding our total revenue, cost of revenue, gross profit or gross margin, operating expenses, including changes in operating expenses and our ability to achieve and maintain future profitability;
the impact of the continuing COVID-19 pandemic on our operations, financial results, and liquidity and capital resources, including on customers, sales, expenses, and employees;
our business plan and our ability to effectively manage our growth;
our total market opportunity;
anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;
our ability to maintain the security and availability of our platform;
market acceptance of our platform and our ability to increase adoption of our platform;
beliefs and objectives for future operations;
our ability to further penetrate our existing customer base and attract, retain, and expand our customer base;
our ability to timely and effectively scale and adapt our platform;
our ability to develop new products and services and bring them to market in a timely manner and make enhancements to our platform;
our expectations concerning relationships with third parties;
our ability to maintain, protect, and enhance our intellectual property;
our ability to continue to expand internationally;
the effects of increased competition in our markets and our ability to compete effectively;
future acquisitions or investments in complementary companies, products, services, or technologies and our ability to integrate such acquisitions or investments;
our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the United States and internationally;
economic and industry trends, projected growth, or trend analysis;
the impact of natural or man-made global events on our business, including wars and other armed conflicts, such as Russia’s invasion of Ukraine;
expenses associated with being a public company; and


other statements regarding our future operations, financial condition, and prospects and business strategies.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. We undertake no obligation to update publicly any of these forward-looking statements for any reason after the date of this report or to conform these statements to actual results or to changes in our expectations, except as required by law. Our forward-looking statements do not reflect the potential impact of any future acquisitions, partnerships, mergers, dispositions, joint ventures, or investments we may make.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the SEC as exhibits to this report with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.



PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
SENTINELONE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data) (unaudited)
April 30,
January 31,
2022
2022
Assets
Current assets:
Cash and cash equivalents$766,101 $1,669,304 
Short-term investments
851,418 374 
Accounts receivable, net
86,871 101,491 
Deferred contract acquisition costs, current
26,261 27,546 
Prepaid expenses and other current assets
24,849 18,939 
Total current assets
1,755,500 1,817,654 
Property and equipment, net
29,083 24,918 
Operating lease right-of-use assets25,731 23,884 
Deferred contract acquisition costs, non-current43,679 41,022 
Intangible assets, net15,130 15,807 
Goodwill108,193 108,193 
Other assets11,132 10,703 
Total assets
$1,988,448 $2,042,181 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$13,925 $9,944 
Accrued liabilities
23,820 22,657 
Accrued payroll and benefits
39,654 61,150 
Operating lease liabilities, current
2,925 4,613 
Deferred revenue, current196,385 182,957 
Total current liabilities
276,709 281,321 
Deferred revenue, non-current79,259 79,062 
Operating lease liabilities, non-current27,199 24,467 
Other liabilities8,039 6,543 
Total liabilities
391,206 391,393 
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock; $0.0001 par value; 50,000,000 shares authorized as of April 30, 2022 and January 31, 2022, and no shares issued and outstanding as of April 30, 2022 and January 31, 2022
  
Class A common stock; $0.0001 par value; 1,500,000,000 shares authorized as of April 30, 2022 and January 31, 2022; 190,708,012 and 162,666,515 shares issued and outstanding as of April 30, 2022 and January 31, 2022, respectively
19 16 
Class B common stock; $0.0001 par value; 300,000,000 shares authorized as of April 30, 2022 and January 31, 2022; 81,788,612 and 107,785,100 shares issued and outstanding as of April 30, 2022 and January 31, 2022, respectively
8 11 
Additional paid-in capital2,309,505 2,271,980 
Accumulated other comprehensive income (loss)(783)454 
Accumulated deficit(711,507)(621,673)
Total stockholders’ equity1,597,242 1,650,788 
Total liabilities and stockholders’ equity$1,988,448 $2,042,181 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5

SENTINELONE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data) (unaudited)
Three Months Ended April 30,
20222021
Revenue
$78,255 37,395 
Cost of revenue27,139 18,283 
Gross profit51,116 19,112 
Operating expenses:
Research and development
45,881 27,820 
Sales and marketing
60,641 36,180 
General and administrative
34,890 16,724 
Total operating expenses
141,412 80,724 
Loss from operations(90,296)(61,612)
Interest income1,087 23 
Interest expense(5)(303)
Other income (expense), net(291)(593)
Loss before provision for income taxes(89,505)(62,485)
Provision for income taxes329 149 
Net loss$(89,834)(62,634)
Net loss per share attributable to Class A and Class B common stockholders, basic and diluted
$(0.33)$(1.37)
Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted269,594,565 45,725,703 
The accompanying notes are an integral part of these condensed consolidated financial statements.
6

SENTINELONE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands) (unaudited)
Three Months Ended April 30,
2022
2021
Net loss
$(89,834)$(62,634)
Other comprehensive income (loss):
Change in unrealized gains (losses) on investments(1,237) 
Foreign currency translation adjustments 190 
Total comprehensive loss
$(91,071)$(62,444)
The accompanying notes are an integral part of these condensed consolidated financial statements.
7

SENTINELONE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
(in thousands, except share data) (unaudited)
Three Months Ended April 30, 2022
Redeemable Convertible Preferred StockClass A and Class B Common Stock Additional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance as of January 31, 2022
 $ 270,451,615 $27 $2,271,980 $454 $(621,673)$1,650,788 
Issuance of common stock upon exercise of stock options— — 2,018,597 — 5,090 — — 5,090 
Vesting of restricted stock units— — 26,412 — — — — — 
Vesting of early exercised stock options— — — — 18 — — 18 
Stock-based compensation— — — — 32,417 — — 32,417 
Other comprehensive income (loss)— — — — — (1,237)— (1,237)
Net loss— — — — — — (89,834)(89,834)
Balance as of April 30, 2022
 $ 272,496,624 $27 $2,309,505 $(783)$(711,507)$1,597,242 
Three Months Ended April 30, 2021
Redeemable Convertible Preferred StockClass B Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Stockholders’ Deficit
SharesAmountSharesAmount
Balance as of January 31, 2021
167,058,113 $621,139 39,242,316 $2 $29,869 $165 $(350,572)$(320,536)
Issuance of common stock upon exercise of stock options— — 2,649,961 — 3,210 — — 3,210 
Issuance of common stock in connection with acquisition— — 7,277,214 1 120,318 — — 120,319 
Issuance of restricted common stock— — 1,315,099 — — — — — 
Issuance of restricted stock for services provided— — 20,000 — — — — — 
Vesting of early exercised stock options— — — — 17 — — 17 
Stock-based compensation— — — — 13,560 — — 13,560 
Foreign currency translation adjustments— — — — — 190 — 190 
Net loss— — — — — — (62,634)(62,634)
Balances as of April 30, 2021
167,058,113 $621,139 50,504,590 $3 $166,974 $355 $(413,206)$(245,874)

The accompanying notes are an integral part of these condensed consolidated financial statements.
8                

SENTINELONE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
Three Months Ended April 30,
2022
2021
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss$(89,834)$(62,634)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
2,102 1,659 
Amortization of deferred contract acquisition costs
7,975 4,375 
Non-cash operating lease costs
682 766 
Stock-based compensation expense
31,630 13,437 
Other
288 (672)
Changes in operating assets and liabilities, net of effects of acquisition
Accounts receivable14,779 6,317 
Prepaid expenses and other assets
(5,208)257 
Deferred contract acquisition costs
(9,347)(5,472)
Accounts payable5,079 (2,211)
Accrued liabilities190 2,724 
Accrued payroll and benefits
(21,478)1,291 
Operating lease liabilities(1,330)(717)
Deferred revenue
13,626 9,702 
Other liabilities1,495 380 
Net cash used in operating activities
(49,351)(30,798)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment(2,808)(780)
Purchases of intangible assets
(152) 
Capitalization of internal-use software
(2,574)(1,013)
Purchases of investments
(852,991) 
Cash paid for acquisition, net of cash and restricted cash acquired
 (3,449)
Net cash used in investing activities
(858,525)(5,242)
CASH FLOW FROM FINANCING ACTIVITIES:
Payments of deferred offering costs(186)(1,826)
Proceeds from exercise of stock options
5,090 3,743 
Net cash provided by financing activities
4,904 1,917 
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
 1,289 
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
(902,972)(32,834)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH–Beginning of period
1,672,051 399,112 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH–End of period
$769,079 $366,278 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid$5 $263 
Income taxes refunded, net of payments$(184)$(20)
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Stock-based compensation capitalized as internal-use software$787 $123 
Property and equipment purchased but not yet paid$1,277 $595 
Vesting of early exercised stock options$18 $17 
Deferred offering costs accrued but not yet paid$ $1,045 
Issuance of common stock and assumed equity awards in connection with acquisition$ $120,319 
The accompanying notes are an integral part of these condensed consolidated financial statements.
9

SENTINELONE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1.ORGANIZATION AND DESCRIPTION OF BUSINESS
Business
SentinelOne, Inc. (SentinelOne, we, our, or us) was incorporated in January 2013 in the State of Delaware. On March 29, 2021, we amended our certificate of incorporation to change our name from Sentinel Labs, Inc. to SentinelOne, Inc. We are a cybersecurity provider that delivers an artificial intelligence-powered platform to enable autonomous cybersecurity defense. Our headquarters is located in Mountain View, California with various other global office locations.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), and applicable rules and regulations of the Securities and Exchange Commission, (SEC), regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022 filed with the SEC on April 7, 2022.
In management’s opinion, the accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which reflect all normal recurring adjustments necessary to present fairly the results for the interim periods, but are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of SentinelOne and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. These estimates are based on management’s knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ from these estimates, and such differences could be material to our condensed consolidated financial statements. There have been no material changes in our use of estimates during the three months ended April 30, 2022, as compared to the use of estimates disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022 filed with the SEC on April 7, 2022.
Significant Accounting Policies
There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report on Form 10-K filed with the SEC on April 7, 2022.
Segment and Geographic Information
We have a single operating and reportable segment. Our chief operating decision maker (CODM) is our Chief Executive Officer. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and assessing financial performance. For information regarding our revenue by geography, see Note 3.
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SENTINELONE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Cash, Cash Equivalents, and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash to the total of these amounts shown in the condensed consolidated statements of cash flows (in thousands):
As of April 30,
As of January 31
2022
2022
Cash and cash equivalents$766,101 $1,669,304 
Restricted cash, non-current2,978 2,747 
$769,079 $1,672,051 
Recently Adopted Accounting Pronouncements
In October 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The new guidance requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized in accordance with Accounting Standards Codification Topic 606 as if the acquirer had originated the contracts. Previously, contract assets and contract liabilities were measured at fair value. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and early adoption is permitted. We early adopted this guidance on February 1, 2022, which did not have a material impact on our condensed consolidated financial statements.
3.REVENUE AND CONTRACT BALANCES
Disaggregation of Revenue
The following table summarizes revenue by geography based on the shipping address of end customers who have contracted to use our platform for the periods presented (in thousands, except percentages):
Three Months Ended April 30, 2022
Three Months Ended April 30, 2021
Amount% of RevenueAmount% of Revenue
United States$52,557 67 %$26,176 70 %
International25,698 33 11,219 30 
Total$78,255 100 %$37,395 100 %
No single country other than the United States represented 10% or more of our revenue during the three months ended April 30, 2022 and 2021.
The following table summarizes revenue by sales channel for the periods presented (in thousands, except percentages):
Three Months Ended April 30, 2022
Three Months Ended April 30, 2021
Amount% of RevenueAmount% of Revenue
Channel partners$71,454 91 %$34,112 91 %
Direct customers6,801 9 3,283 9 
Total$78,255 100 %$37,395 100 %
Contract Balances
Contract assets consist of unbilled accounts receivable, which arise when a right to consideration for our performance under the customer contract occurs before invoicing the customer. The amount of unbilled accounts
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SENTINELONE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
receivable included within accounts receivable, net on the condensed consolidated balance sheets was $1.8 million and $1.5 million as of April 30, 2022 and January 31, 2022, respectively.
Contract liabilities consist of deferred revenue, which represents invoices billed in advance of performance under a contract. Deferred revenue is recognized as revenue over the contractual period. The deferred revenue balance was $275.6 million and $262.0 million as of April 30, 2022 and January 31, 2022, respectively. We recognized revenue of $60.0 million and $29.1 million during the three months ended April 30, 2022 and 2021, respectively, that was included in the corresponding contract liability balance at the beginning of the period.
Remaining Performance Obligations
Our contracts with customers typically range from one to three years. Revenue allocated to remaining performance obligations represents non-cancelable contract revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced in future periods.
As of April 30, 2022, our remaining performance obligations were $372.6 million, of which we expect to recognize 83% as revenue over the next 24 months, with the remainder to be recognized thereafter.
We periodically review deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit. We did not recognize any impairment of deferred contract acquisition costs during the three months ended April 30, 2022 and 2021.
4.CASH AND CASH EQUIVALENTS, INVESTMENTS, AND FAIR VALUE MEASUREMENTS
The following table summarizes information about our cash and cash equivalents, and short-term investments by investment category (in thousands):
As of April 30, 2022
Fair Value LevelAmortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
Cash and cash equivalents:
Cash$26,991 $— $— $26,991 
Money market fundsLevel 1592,161 — — 592,161 
Commercial paperLevel 274,969 — (9)74,960 
U.S. Treasury securitiesLevel 171,989 — — 71,989 
Total cash and cash equivalents$766,110 $— $(9)$766,101 
Short-term investments:
Certificates of depositLevel 2$357 $ $ $357 
Commercial paperLevel 2367,072  (498)366,574 
Corporate notes and bondsLevel 247,333  (200)47,133 
U.S. Treasury securitiesLevel 1435,879 1 (518)435,362 
U.S. agency securitiesLevel 22,005  (13)1,992 
      Total short-term investments$852,646 $1 $(1,229)$851,418 
As of April 30, 2022, we determined that the declines in the market value of our investment portfolio were not driven by credit related factors. During the three months ended April 30, 2022 and 2021, we did not recognize any losses on our investments due to credit related factors. As of January 31, 2022, the aggregate fair value of our cash equivalents and short-term investments approximated amortized cost and, as such, there were no unrealized gains or losses, either individually or in the aggregate.
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SENTINELONE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
As of April 30, 2022 and January 31, 2022, our cash and cash equivalents had contractual maturities of three months or less and short-term investments had contractual maturities within one year of each respective date.
The following table summarizes the respective fair value and the classification by level within the fair value hierarchy (in thousands):
As of January 31, 2022
Level 1Level 2Level 3Total
Assets
Cash equivalents:
Money market funds$1,641,642 $ $ $1,641,642 
Short-term investments:
Certificates of deposit 374  374 
Total assets measured and recorded at fair value$1,641,642 $374 $ $1,642,016 
There were no transfers between the levels of the fair value hierarchy during the three months ended April 30, 2022 and 2021.
5.INTANGIBLE ASSETS
Intangible assets, net consisted of the following (in thousands):
As of April 30,As of January 31,
20222022
Developed technology$15,500 $15,500 
Customer relationship1,500 1,500 
Non-compete agreements650 650 
Trademarks150 150 
Patents1,246 1,094 
Total finite-lived intangible assets19,046 18,894 
Less: accumulated amortization(4,171)(3,342)
Total finite-lived intangible assets, net$14,875 $15,552 
Indefinite-lived intangible assets - domain names255 255 
Total intangible assets, net$15,130 $15,807 
Amortization expense of intangible assets was $0.8 million and $0.7 million for the three months ended April 30, 2022 and 2021, respectively.
As of April 30, 2022, estimated future amortization expense is as follows (in thousands):
Fiscal Year Ending January 31,
Remainder of 2023
$2,572 
20242,598 
20252,373 
20262,361 
20272,361 
Thereafter2,610 
Total$14,875 
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SENTINELONE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
6.STOCK-BASED COMPENSATION
Stock-Based Compensation Expense
The components of stock-based compensation expense recognized in the condensed consolidated statements of operations consisted of the following (in thousands):
Three Months Ended April 30,
20222021
Cost of revenue$1,848 $383 
Research and development10,463 7,139 
Sales and marketing7,096 2,047 
General and administrative12,223 3,868 
Total$31,630 $13,437 
Restricted Stock Units
A summary of our restricted stock unit (RSU) activity is as follows:
Number of SharesWeighted-Average Grant Date Fair Value
Outstanding as of January 31, 2022
1,770,304 $52.51 
Granted4,510,717 $39.68 
Released(26,630)$51.06 
Forfeited(105,238)$45.79 
Outstanding as of April 30, 2022
6,149,153 $43.24 
As of April 30, 2022, we had unrecognized stock-based compensation expense related to unvested RSUs of $242.7 million that is expected to be recognized on a straight-line basis over a weighted-average period of 3.6 years.
Stock Options
A summary of our stock option activity is as follows:
Number of OptionsWeighted-Average Exercise Price
Outstanding as of January 31, 2022
42,422,473 $4.30 
Granted $ 
Exercised(2,018,597)$2.52 
Forfeited(479,224)$5.55 
Outstanding as of April 30, 2022
39,924,652 $4.37 
Vested and exercisable as of April 30, 2022
18,831,095 $2.83 
As of April 30, 2022, we had unrecognized stock-based compensation expense related to unvested options of $137.4 million that is expected to be recognized on a straight-line basis over a weighted-average period of 2.6 years.
Milestone Options
In March 2021, we granted options to purchase 1,404,605 shares of Class B common stock subject to service-based, performance-based, and market-based vesting conditions to our Chief Executive Officer and Chief Financial Officer under the 2013 Plan. These stock options will vest 100% upon the occurrence of our initial public offering (IPO) (the performance-based vesting condition) and the achievement of certain milestone events and our share
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SENTINELONE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
price targets (the market-based vesting conditions), subject to the executive’s continued service to us from the grant date through the milestone events. For these options, we used a Monte Carlo simulation to determine the fair value at the grant date and the implied service period.
During the three months ended April 30, 2022, we recorded $0.9 million of stock-based compensation expense related to these milestone options. During the three months ended April 30, 2021, we did not recognize any stock-based compensation expense associated with these options as the occurrence of our IPO was not deemed probable until consummated. As of April 30, 2022, we had unrecognized stock-based compensation expense related to these milestone options of $15.4 million that is expected to be recognized over the remaining vesting period of 4.3 years.
Restricted Common Stock
In connection with the acquisition of Scalyr, Inc, we granted 1,315,099 shares of restricted common stock with a fair value of $14.59 per share at the time of grant, that vest over a period of two years. During the three months ended April 30, 2022 and 2021, we recorded $2.1 million and $2.4 million, respectively, of stock-based compensation expense related to restricted common stock in connection with our acquisition of Scalyr. As of April 30, 2022, we had unrecognized stock-based compensation expense related to this restricted common stock of $6.6 million that is expected to be recognized over the remaining vesting period of 0.8 years.
Employee Stock Purchase Plan (ESPP)
The Company recognized stock-based compensation expense related to ESPP of $2.8 million during the three months ended April 30, 2022. No stock-based compensation expense related to ESPP was recognized during the three months ended April 30, 2021.
7.INCOME TAXES
We compute our tax provision for interim periods by applying the estimated annual effective tax rate to year-to-date income from recurring operations and adjusting for discrete items arising in that quarter.
We had an effective tax rate of (0.4)% and (0.2)% for the three months ended April 30, 2022 and 2021, respectively. We have incurred U.S. operating losses and have minimal profits or offsetting loss carryforwards in certain foreign jurisdictions.
8.NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
Basic and diluted net loss per share attributable to common stockholders is computed in conformity with the two-class method required for participating securities. Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potentially dilutive common stock equivalents to the extent they are dilutive. For purposes of this calculation, redeemable convertible preferred stock, stock options, restricted common stock, RSUs, ESPP, early exercised stock options, and common stock warrants are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive for all periods presented.
The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net loss per share attributable to common stockholders are, therefore, the same for both Class A and Class B common stock on both an individual and combined basis.
Basic and diluted net loss per share attributable to common stockholders was as follows (in thousands, except share and per share data):
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SENTINELONE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Three Months Ended April 30,
20222021
Numerator:
Net loss attributable to Class A and Class B common stockholders$(89,834)$(62,634)
Denominator:
Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted269,594,565 45,725,703 
Net loss per share attributable to Class A and Class B common stockholders, basic and diluted$(0.33)$(1.37)
The following potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders because their inclusion would have been anti-dilutive:
Three Months Ended April 30,
20222021
Redeemable convertible preferred stock 169,438,121 
Stock options41,235,372 49,719,846 
Common stock warrants 954,884 
Shares subject to repurchase19,978 344,975 
RSUs1,535,588  
ESPP280,401  
Restricted common stock471,856 1,315,099 
Contingently issuable shares1,317,079 1,317,079 
Total44,860,274223,090,004
9.COMMITMENTS AND CONTINGENCIES
Legal Contingencies
From time to time, we may be a party to various legal proceedings and subject to claims in the ordinary course of business.
BlackBerry Litigation
Starting in October 2019, BlackBerry Corp. and its subsidiary Cylance, Inc. (BlackBerry) filed a total of nine proceedings (seven lawsuits and two arbitrations) against us and certain former BlackBerry employees who joined our company. In these proceedings, BlackBerry alleges that it has viable legal claims as a result of its former employees joining us. Many of these proceedings have now been dismissed. The status of each of the currently pending proceedings is discussed below. We have defended against these claims and expect to continue to defend against these claims.
BlackBerry Corp., et al. v. Coulter, et al. On October 17, 2019, BlackBerry commenced an action captioned BlackBerry Corp., et al. v. Coulter, et al., No. 953-10-19 (Vt. Super. Ct.) (Vermont Action) against Chris Coulter, an employee on our Vigilance services team. On October 23, 2019, BlackBerry filed an amended complaint that added us as a defendant. The amended complaint asserts claims against us for conspiracy, tortious interference with contract, aiding and abetting breach of fiduciary duties, and misappropriation of trade secrets. The court entered a preliminary injunction order enjoining Mr. Coulter from working for us through February 2021. As a result of the court’s order, Mr. Coulter chose to seek other employment and is no longer employed by us. On January 15, 2021, the court entered an order narrowing the scope of the case and limiting the claims against us in order to avoid conflict with a similar action that was previously filed in California and was dismissed. The Vermont Action is currently pending. On October 25, 2019, BlackBerry commenced an action captioned BlackBerry Corp., et al v. Coulter, et al., No. 2019-0854-JTL (Del. Ch.) against Mr. Coulter and us in Delaware Chancery Court. The court
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SENTINELONE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
stayed this case pending resolution of the Vermont Action, and on February 7, 2020, BlackBerry voluntarily dismissed without prejudice all claims against Mr. Coulter and us. On December 3, 2019, BlackBerry initiated a largely duplicative action in arbitration solely against Mr. Coulter administered by JAMS, an alternative dispute resolution provider. That arbitration action, however, was dismissed on or about March 30, 2021, with JAMS informing us that they had closed their files on this matter on April 30, 2021.
BlackBerry Corp., et al. v. Page, et al. On November 18, 2019, BlackBerry commenced an action captioned BlackBerry Corp., et al. v. Page, et al., No. 2019-CP-07-2552 (S.C. Cir. Ct.) against Barnaby Page, a go-to-market employee, and us, in a South Carolina state court. The complaint asserts claims against us for aiding and abetting breach of fiduciary duties, tortious interference with contract, and misappropriation of trade secrets. Following initial discovery, on August 27, 2020, we and Mr. Page filed a joint motion for judgment on the pleadings. Following initial discovery, the parties agreed to stipulate to a dismissal of this lawsuit without prejudice, and a dismissal order was entered by the court on January 31, 2022.
Blackberry Corp. et al. v. Sentinel Labs, Inc., et al. On January 16, 2020, BlackBerry commenced the action captioned, BlackBerry Corp., et al. v. Sentinel Labs, Inc., et al., No. 20CV361950 (Cal. Super. Ct. Santa Clara Cnty.) (Current California Action), against us and unnamed “Doe” defendants, asserting claims against us for trade secret misappropriation and unfair business practices. We filed counterclaims that, in part, seek to invalidate any agreements allegedly supporting BlackBerry’s claims against its former employees. On December 14, 2020, we filed a motion requesting that BlackBerry sufficiently identify any trade secrets it alleges we misappropriated in accordance with California law. On February 12, 2021, the court granted that motion in part, including striking BlackBerry’s expert testimony, and limiting the scope of discovery to customer lists and sales-related information. On March 15, 2021, BlackBerry re-filed a statement identifying its trade secrets to pursue broader claims and discovery. In response, on April 5, 2021, we again filed a motion requesting that BlackBerry sufficiently identify any trade secrets under California law. On June 2, 2021, the court granted the motion in our favor, absent a few discrete areas permitted by the court. On July 2, 2021, Blackberry filed its third amended trade secret identification. In response, on July 16, 2021, we submitted a motion challenging these claims. In its third trade secret statement, in response to our motion again challenging the sufficiency of its trade secret disclosures, Blackberry voluntarily dropped various claims. The parties are currently in the early stages of discovery over the revised trade secret disclosures approved by the court on August 31, 2021. We continue to litigate this action, including actively pursuing our counterclaims against them.
BlackBerry Corp., et al. v. Quinn, et al. On February 17, 2020, BlackBerry commenced the action captioned BlackBerry Corp., et al. v. Quinn, et al., No. D-1-GN-20-00096 (Tex. Civ. Ct. – Travis Cnty.) against Sean Quinn, a go-to-market employee, and us, in Texas state court. On August 8, 2020, we and Mr. Quinn moved to stay or dismiss the case in light of the overlapping issues between this case and the Current California Action. On September 21, 2020, the court stayed this case pending resolution of the Current California Action. This lawsuit remains stayed and is pending in abeyance before the Texas court.
BlackBerry Corp., et al. v. Kaylan Brown Coulter. On or about April 7, 2022, BlackBerry commenced an action captioned BlackBerry Corp., et al. v. Kaylan Brown Coulter, No. 22-cv-01249 (Vt. Super. Ct.) (Brown-Coulter Action) against Kaylan Brown Coulter, the wife of Chris Coulter (referenced above), alleging breach of non-disclosure and non-solicitation agreements, breach of covenant of good faith and fair dealing, breach of fiduciary duties, and civil conspiracy. While this is part of the same series of lawsuits by BlackBerry, we were not named in this action. On May 6, 2022, Ms. Brown-Coulter removed the case to the United States District Court for the District of Vermont, No. 5:22-cv-98 (D. Vt.). Shortly thereafter, on May 13, 2022, Ms. Brown-Coulter filed a motion to dismiss all claims under Federal Rule of Civil Procedure 12(b)(6). This motion is currently pending before the court.
We have not recorded any accruals for loss contingencies associated with these legal proceedings, determined that an unfavorable outcome is probable, or determined that the amount or range of any possible loss is reasonably estimable. We believe that there are no other pending or threatened legal proceedings that are likely to have a material adverse effect on our condensed consolidated financial statements.
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SENTINELONE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Warranties and Indemnification
Our services are generally warranted to deliver and operate in a manner consistent with general industry standards that are reasonably applicable and materially conform with our documentation under normal use and circumstances. Our contracts generally include certain provisions for indemnifying customers against liabilities if our products or services infringe a third party’s intellectual property rights.
We also offer a limited warranty to certain customers, subject to certain conditions, to cover certain costs incurred by the customer in case of a cybersecurity breach. We have entered into an insurance policy to cover our potential liability arising from this limited warranty arrangement. We have not incurred any material costs related to such obligations and have not accrued any liabilities related to such obligations in the condensed consolidated financial statements as of April 30, 2022 and January 31, 2022.
In addition, we also indemnify certain of our directors and executive officers against certain liabilities that may arise while they are serving in good faith in their company capacities. We maintain director and officer liability insurance coverage that would generally enable us to recover a portion of any future amounts paid.
10.EMPLOYEE BENEFIT PLAN
Our U.S. employees participate in a 401(k) defined contribution plan sponsored by us. Contributions to the plan are discretionary. There were $0.5 million matching contributions for the three months ended April 30, 2022 and no matching contributions by us for the three months ended April 30, 2021.
Israeli Severance Pay
Israeli labor law generally requires payment of severance pay upon dismissal of an employee or upon termination of employment in certain other circumstances. Pursuant to Section 14 of the Severance Compensation Act, 1963 (Section 14), all of our employees in Israel are entitled to monthly deposits made in their name with insurance companies, at a rate of 8.33% of their monthly salary.
These payments release us from any future severance payment obligation with respect to these employees; as such, any liability for severance pay due to these employees and the deposits under Section 14 are not recorded as an asset on our consolidated balance sheets. We recorded severance expenses related to these employees of $1.0 million and $0.8 million for the three months ended April 30, 2022 and 2021, respectively.
11.SUBSEQUENT EVENTS
On March 15, 2022, we signed a definitive merger agreement to acquire 100% of the issued and outstanding equity securities of Attivo Networks, Inc. (Attivo), an identity security and lateral movement protection company. The acquisition closed on May 3, 2022. The aggregate consideration transferred was comprised of $351.5 million in cash, 6,032,231 shares of our Class A common stock with an aggregate value of $195.9 million, and 378,828 assumed options to purchase shares of our Class A common stock. The total consideration will be allocated between purchase price consideration and post-acquisition compensation expense, as a portion of the equity to be received by certain Attivo employees subject to continuing service obligations. The total consideration to be issued in connection with the acquisition is subject to adjustment based on (i) purchase price adjustment provisions, (ii) continuing service obligations to the Company of certain stockholders of Attivo, and (iii) indemnification obligations of Attivo stockholders after the closing of the acquisition.
The acquisition will be accounted for as a business combination and, accordingly, the total purchase price will be allocated to the tangible and intangible assets acquired and the liabilities assumed based on their respective fair values on the acquisition date, with the exception of contract assets and contract liabilities which will be measured in accordance with ASC 606. We are currently working on the preliminary purchase price allocation and expect it to be completed in the second quarter of fiscal year 2023.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022 filed with the U.S. Securities and Exchange Commission, or the SEC, on April 7, 2022. This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading "Special Note About Forward-Looking Statements" in this Quarterly Report on Form 10-Q. You should review the disclosure under the heading "Risk Factors" in this Quarterly Report on Form 10-Q for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. Our fiscal year ends on January 31, and our fiscal quarters end on April 30, July 31, October 31, and January 31. Our fiscal years ended January 31, 2022 and January 31, 2023 are referred to herein as fiscal 2022 and fiscal 2023, respectively.
Unless the context otherwise requires, all references in this report to “SentinelOne,” the “Company,” “we,” “our,” "us," or similar terms refer to SentinelOne, Inc. and its subsidiaries.
Overview
We founded SentinelOne in 2013 with a dramatically new approach to cybersecurity.
We pioneered the world’s first purpose-built artificial intelligence, or AI,-powered extended detection and response, or XDR, platform to make cybersecurity defense truly autonomous, from the endpoint and beyond. Our Singularity Platform instantly defends against cyberattacks - performing at a faster speed, greater scale, and higher accuracy than otherwise possible from a human-powered approach.
Our Singularity XDR Platform ingests, correlates, and queries petabytes of structured and unstructured data from a myriad of ever-expanding disparate external and internal sources in real-time. We build rich context and deliver greater visibility by constructing a dynamic representation of data across an organization. As a result, our AI models are highly accurate, actionable, and autonomous. Our distributed AI models run both locally on every endpoint and every cloud workload, as well as on our cloud platform. Our Static and vector-agnostic Behavioral AI models, which run on the endpoints themselves, provide our customers with protection even when their devices are not connected to the cloud. In the cloud, our Streaming AI detects anomalies that surface when multiple data feeds are correlated. By providing full visibility into the Storyline of every secured device across the organization through one console, our platform makes it very fast for analysts to easily search through petabytes of data to investigate incidents and proactively hunt threats. We have extended our control and visibility planes beyond the traditional endpoint to unmanaged IoT devices.
Our Singularity Platform can be flexibly deployed on the environments that our customers choose, including public, private, or hybrid clouds. Our feature parity across Windows, macOS, Linux, and Kubernetes offers best-of-breed protection, visibility, and control across today’s heterogeneous IT environments. Together, these capabilities make our platform the logical choice for organizations of all sizes, industry verticals, and compliance requirements. Our platform offers true multi-tenancy, which enables some of the world’s largest organizations and our managed security providers and incident response partners with an excellent management experience. Our customers realize improved cybersecurity outcomes with fewer people.
We generate substantially all of our revenue by selling subscriptions to our Singularity Platform. Our subscription tiers include Singularity Core, Singularity Control, and Singularity Complete. Additionally, customers can extend the functionality of our platform through our subscription Singularity Modules. We generally price our subscriptions and modules on a per agent basis, and each agent generally corresponds with an endpoint, server, virtual machine, or container.
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Our subscription contracts typically range from one to three years. We recognize subscription revenue ratably over the term of a contract. Most of our contracts are for terms representing annual increments, therefore contracts generally come up for renewal in the same period in subsequent years. The timing of large multi-year enterprise contracts can create some variability in subscription order levels between periods, though the impact to our revenue in any particular period is limited as a result of ratable revenue recognition.
Our go-to-market strategy is focused on acquiring new customers and driving expanded usage of our platform by existing customers. Our sales organization is comprised of our enterprise sales, inside sales and customer solutions engineering teams. It leverages our global network of independent software vendors, or ISVs, alliance partners, and channel partners for prospect access. Additionally, our sales teams work closely with our customers, channel partners, and alliance partners to drive adoption of our platform, and our software solutions are fulfilled through our channel partners. Our channel partners include some of the world’s largest resellers and distributors, managed service providers, or MSPs, managed security service providers, or MSSPs, managed detection and response providers, or MDRs, original equipment manufacturers, or OEMs, and incident response firms, or IR firms. Once customers experience the benefits of our platform, they often upgrade their subscriptions to benefit from the full range of our XDR and IT and security operations capabilities. Additionally, many of our customers adopt Singularity Modules over time to extend the functionality of our platform and increase their coverage footprint. The combination of platform upgrades and extended modules drives our powerful land-and-expand motion.
Our Singularity Platform is used globally by organizations of all sizes across a broad range of industries. As of April 30, 2022, we had over 7,450 customers, increasing from over 4,700 customers as of April 30, 2021. We had 591 customers with ARR of $100,000 or more as of April 30, 2022, up from 277 as of April 30, 2021. As of April 30, 2022, no single end customer accounted for more than 3% of our ARR. We define ARR as the annualized revenue run rate of our subscription contracts at the end of a reporting period, assuming contracts are renewed on their existing terms for customers that are under subscription contracts with us. Our revenue outside of the United States represented 33% and 30% for the three months ended April 30, 2022 and 2021, respectively, illustrating the global nature of our solutions.
We have grown rapidly since our inception. Our revenue was $78.3 million and $37.4 million for the three months ended April 30, 2022 and 2021, respectively, representing year-over-year growth of 109%. During this period, we continued to invest in growing our business to capitalize on our market opportunity. As a result, our net loss for the three months ended April 30, 2022 and 2021 was $89.8 million and $62.6 million, respectively.
Attivo Acquisition
On March 15, 2022, we signed a definitive merger agreement to acquire 100% of the issued and outstanding equity securities of Attivo Networks, Inc. (Attivo), an identity security and lateral movement protection company. The acquisition closed on May 3, 2022. The aggregate consideration transferred was comprised of $351.5 million in cash, 6,032,231 shares of our Class A common stock with an aggregate value of $195.9 million, and 378,828 assumed options to purchase shares of our Class A common stock.
Impact of COVID-19
Beginning in January 2020, the COVID-19 pandemic resulted in travel restrictions, prohibitions of non-essential activities, disruption and shutdown of certain businesses worldwide, as well as greater uncertainty in global financial markets. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, operating results, cash flows, and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted. As a result of the COVID-19 pandemic, we have experienced, and may continue to experience, a modest adverse impact on certain parts of our business, including a lengthening of the sales cycle for some prospective customers and delays in the delivery of professional services and trainings to our customers.
We have also experienced, and may continue to experience, a positive impact as a result of the COVID-19 pandemic. For example, in connection with the travel restrictions, shelter-in-place, and work-from-home policies resulting from the COVID-19 pandemic, we have seen an increase in usage and subscriptions from smaller customers, many of whom are small or medium sized businesses. We have also seen slower growth in certain operating expenses due to reduced business travel and the virtualization or cancellation of customer and employee
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events. While a reduction in operating expenses may have an immediate positive impact on our operating results, we do not yet have visibility into the full impact this will have on our business. Moreover, as vaccines become widely available and people begin to return to offices and other workplaces, any positive impacts of the COVID-19 pandemic on our business may slow or decline once the impact of the pandemic tapers.
We cannot predict how long we will continue to experience the impact of the COVID-19 pandemic including any new variants, vaccine mandates, and further travel and office restrictions. Our operating results, cash flows, and financial condition have not been adversely affected to date. However, as certain of our customers or partners experience downturns or uncertainty in their own business operations or revenue resulting from the spread of COVID-19, our operating results, cash flows, and financial condition could be adversely affected. In addition, in response to the spread of COVID-19, we previously required substantially all of our employees to work remotely to minimize the risk of the virus to our employees and the communities in which we operate. Most of our employees continue to work remotely and we have slowly opened up our offices at minimal capacity, subject to local COVID-19 restrictions. We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, and business partners.
The global impact of the COVID-19 pandemic continues to rapidly evolve, and we will continue to monitor the situation and the effects on our business and operations closely. We do not yet know the full extent of potential impacts on our business or operations or on the global economy as a whole, particularly if the COVID-19 pandemic continues and persists for an extended period of time. Given the uncertainty, we cannot reasonably estimate the impact on our future operating results, cash flows, or financial condition. For additional information, see the section titled “Risk Factors.”
Key Business Metrics
We monitor the following key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.
Annualized Recurring Revenue
We believe that ARR is a key operating metric to measure our business because it is driven by our ability to acquire new subscription customers and to maintain and expand our relationship with existing subscription customers. ARR represents the annualized revenue run rate of our subscription contracts at the end of a reporting period, assuming contracts are renewed on their existing terms for customers that are under subscription contracts with us. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates and renewal rates.
As of April 30,
2022
2021
(in thousands)
Annualized recurring revenue (ARR)$338,962 $161,323 
ARR grew 110% year-over-year to $339.0 million as of April 30, 2022, primarily due to high growth in the number of new customers purchasing our subscriptions and to additional purchases by existing customers.
Customers with ARR of $100,000 or More
We believe that our ability to increase the number of customers with ARR of $100,000 or more is an indicator of our market penetration and strategic demand for our platform. We define a customer as an entity that has an active subscription for access to our platform. We count MSPs, MSSPs, MDRs, and OEMs, who may purchase our products on behalf of multiple companies, as a single customer. We do not count our reseller or distributor channel partners as customers.
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As of April 30,
2022
2021
Customers with ARR of $100,000 or more591 277 
Customers with ARR of $100,000 or more grew 113% year-over-year to 591 as of April 30, 2022, primarily due to new customers making purchases of greater than $100,000, and partly due to existing customers who made additional purchases.
Dollar-Based Net Retention Rate
We believe that our ability to retain and expand our revenue generated from our existing customers is an indicator of the long-term value of our customer relationships and our potential future business opportunities. Dollar-based net retention rate measures the percentage change in our ARR derived from our customer base at a point in time.
As of April 30,
2022
2021
Dollar-based net retention rate131 %124 %
Our dollar-based net retention rate was 131% as of April 30, 2022, driven by existing customers primarily from expansion of the number of endpoints, purchases of additional modules, and upgrades of subscription tiers.
Components of Our Results of Operations
Revenue
We generate substantially all of our revenue from subscriptions to our Singularity Platform. Customers can extend the functionality of their subscription to our platform by subscribing to additional Singularity Modules. Subscriptions provide access to hosted software. The nature of our promise to the customer under the subscription is to provide protection for the duration of the contractual term and as such is considered as a series of distinct services. We invoice our customers upfront upon signing for the entire term of the contract, periodically, or in arrears. Most of our subscription contracts have a term of one to three years.
Cost of Revenue
Cost of revenue consists primarily of third-party cloud infrastructure expenses incurred in connection with the hosting and maintenance of our platform. Cost of revenue also consists of personnel-related costs associated with our customer support and services organization, including salaries, benefits, bonuses, and stock-based compensation, amortization of acquired intangible assets, amortization of capitalized internal-use software, software and subscription services used by our customer support and services team, and allocated overhead costs.
Our third-party cloud infrastructure costs are driven primarily by the number of customers, the number of endpoints per customer, the number of modules, and the incremental costs for storing additional data collected for such cloud modules. We plan to continue to invest in our platform infrastructure and additional resources in our customer support and services organization as we grow our business. The level and timing of investment in these areas could affect our cost of revenue from period to period.
Operating Expenses
Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel-related expenses are the most significant component of operating expenses and consist of salaries, benefits, bonuses, stock-based compensation, and sales commissions. Operating expenses also include allocated facilities and IT overhead costs.
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Research and Development
Research and development expenses consist primarily of employee salaries, benefits, bonuses, and stock-based compensation. Research and development expenses also include consulting fees, software and subscription services, and third-party cloud infrastructure expenses incurred in developing our platform and modules.
We expect research and development expenses to increase in absolute dollars as we continue to increase investments in our existing products and services. However, we anticipate research and development expenses to decrease as a percentage of our total revenue over time, although our research and development expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses. In addition, research and development expenses that qualify as internal-use software are capitalized, the amount of which may fluctuate significantly from period to period.
Sales and Marketing
Sales and marketing expenses consist primarily of employee salaries, commissions, benefits, bonuses, stock-based compensation, travel and entertainment related expenses, advertising, branding and marketing events, promotions, and software and subscription services. Sales and marketing expenses also include sales commissions paid to our sales force and referral fees paid to independent third parties that are incremental to obtain a subscription contract. Such costs are capitalized and amortized over an estimated period of benefit of four years, and any such expenses paid for the renewal of a subscription are capitalized and amortized over the contractual term of the renewal.
We expect sales and marketing expenses to increase in absolute dollars as we continue to make significant investments in our sales and marketing organization to drive additional revenue, further penetrate the market, and expand our global customer base, but to decrease as a percentage of our revenue over time.
General and Administrative
General and administrative expenses consist primarily of salaries, benefits, bonuses, stock-based compensation, and other expenses for our executive, finance, legal, human resources, and facilities organizations. General and administrative expenses also include external legal, accounting, other consulting, and professional services fees, software and subscription services, and other corporate expenses.
We expect to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations, and increased expenses for insurance, investor relations, and professional services. We expect that our general and administrative expenses will increase in absolute dollars as our business grows but will decrease as a percentage of our revenue over time.
Interest Income, Interest Expense, and Other Income (Expense), Net
Interest income consists primarily of interest earned on our cash equivalents and short-term investments.
Interest expense consisted primarily of interest on borrowings associated with our loan and security agreement.
Other income (expense), net consists primarily of foreign currency transaction gains and losses.
Provision for Income Taxes
Provision for income taxes consists primarily of income taxes in certain foreign and state jurisdictions in which we conduct business. In connection with our global consolidated losses, we maintain a full valuation allowance against our U.S. and Israel deferred tax assets because we have concluded that it is more likely than not that the deferred tax assets will not be realized.
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Results of Operations
The following table sets forth our results of operations for the periods presented:
Three Months Ended April 30,
2022
2021
(in thousands)
Revenue$78,255 $37,395 
Cost of revenue(1)
27,139 18,283 
Gross profit51,116 19,112 
Operating expenses:
Research and development(1)
45,881 27,820 
Sales and marketing(1)
60,641 36,180 
General and administrative(1)
34,890 16,724 
Total operating expenses141,412 80,724 
Loss from operations(90,296)(61,612)
Interest income1,087 23 
Interest expense(5)(303)
Other income (expense), net(291)(593)
Loss before provision for income taxes(89,505)(62,485)
Provision for income taxes329 149 
Net loss$(89,834)$(62,634)
__________________
(1)Includes stock-based compensation expense as follows:
Three Months Ended April 30,
2022
2021
(in thousands)
Cost of revenue$1,848 $383 
Research and development10,463 7,139 
Sales and marketing7,096 2,047 
General and administrative12,223 3,868 
Total stock-based compensation expense$31,630 $13,437 
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The following table sets forth the components of our condensed consolidated statements of operations as a percentage of revenue for each of the periods presented:
Three Months Ended April 30,
2022
2021
(as a percentage of total revenue)
Revenue100 %100 %
Cost of revenue3549
Gross profit6551
Operating expenses:
Research and development
5974
Sales and marketing
7797
General and administrative
4545
Total operating expenses181216
Loss from operations(115)(165)
Interest income1
Interest expense(1)
Other income (expense), net(2)
Loss before provision for income taxes(114)(167)
Provision for income taxes
Net loss(115)%(167)%

Note: Certain figures may not sum due to rounding.
Comparison of the Three Months Ended April 30, 2022 and 2021
Revenue
Three Months Ended April 30,
Change
2022
2021
$%
(dollars in thousands)
Revenue$78,255 $37,395 $40,860 109 %
Revenue increased by $40.9 million primarily due to the expansion of our customer base, which grew over 55% as compared to the same period last year. We also experienced increased purchases from our existing customers as they expand the number of endpoints, purchase additional modules from us, and upgrade subscription tiers, as evidenced by our dollar-based net retention rate of 131% as of April 30, 2022.
Cost of Revenue, Gross Profit, and Gross Margin
Three Months Ended April 30,
Change
2022
2021
$%
(dollars in thousands)
Cost of revenue$27,139 $18,283 $8,856 48 %
Gross profit$51,116 $19,112 $32,004 167 %
Gross margin65 %51 %
Cost of revenue increased by $8.9 million primarily due to an increase of $5.0 million in allocated overhead costs and higher third-party cloud infrastructure expenses of $3.3 million from increased data usage. Gross margin increased to 65%, primarily due to revenue growth from existing and new customers outpacing growth in cost of revenue.
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Research and Development
Three Months Ended April 30,
Change
2022
2021
$%
(dollars in thousands)
Research and development expenses$45,881 $27,820 $18,061 65 %
Research and development expenses increased by $18.1 million primarily due to an increase in personnel-related expenses of $8.2 million, including an increase of $3.3 million related to stock-based compensation expense as a result of increased headcount, and an increase of $7.3 million in third-party cloud infrastructure expenses incurred in developing our platform and modules.
Sales and Marketing
Three Months Ended April 30,
Change
2022
2021
$%
(dollars in thousands)
Sales and marketing expenses$60,641 $36,180 $24,461 68 %
Sales and marketing expenses increased by $24.5 million primarily due to an increase in personnel-related expenses of $19.4 million, including an increase of $5.0 million in stock-based compensation expense as a result of increased headcount and an increase of $3.9 million in commission expense as a result of an increase in sales year over year. In addition, there was an increase in allocated overhead costs of $2.2 million, with the remaining increase primarily the result of increased travel as COVID-19 travel restrictions ease.
Three Months Ended April 30,
Change
2022
2021
$%
(dollars in thousands)
General and administrative expenses$34,890 $16,724 $18,166 109 %
General and administrative expenses increased by $18.2 million primarily due to an increase in personnel-related expenses of $13.4 million, including an increase of $8.4 million in stock-based compensation expense as a result of increased headcount. In addition, there was an increase of $2.3 million due to costs incurred related to due diligence and planning associated with our Attivo acquisition which closed in May 2022, with the remaining increase primarily the result of additional operating costs as a public company and software subscription services.
Interest Income, Interest Expense, and Other Income (Expense), Net
Three Months Ended April 30,
Change
2022
2021
$%
(dollars in thousands)
Interest income$1,087 $23 $1,064 4626 %
Interest expense$(5)$(303)$298 (98)%
Other income (expense), net$(291)$(593)$302 (51)%
Interest income increased $1.1 million as a result of interest earned on investments, which we did not have in fiscal year 2022. Interest expense decreased due to the repayment and termination of the revolving line of credit in June 2021. The decrease in other income (expense), net is primarily due to net foreign currency exchange losses.
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Provision for Income Taxes
Three Months Ended April 30,
Change
2022
2021
$%
(dollars in thousands)
Provision for income taxes$329 $149 $180 121 %
The provision for income taxes increased primarily as a result of the increase in foreign taxes related to operations in international subsidiaries.
Liquidity and Capital Resources
In July 2021, upon completion of our IPO and the concurrent private placement, we received net proceeds of $1.4 billion, after deducting underwriters’ discounts and commissions and estimated offering expenses of $81.6 million. We did not pay any underwriting discounts or commissions with respect to shares that were sold in the private placement.
We have financed operations primarily through proceeds received from sales of equity securities, payments received from our customers, and borrowings under a now-terminated loan and security agreement, and we have generated operating losses, as reflected in our accumulated deficit of $711.5 million and $621.7 million as of April 30, 2022 and January 31, 2022, respectively. We expect these and other operating losses to continue for the foreseeable future. We also expect to incur significant research and development, sales and marketing, and general and administrative expenses over the next several years in connection with the continued development and expansion of our business. As of April 30, 2022 and January 31, 2022, our principal source of liquidity was cash, cash equivalents, and short-term investments of $1.6 billion and $1.7 billion, respectively.
In the short term, we believe that our existing cash, cash equivalents, and short-term investments will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. In the long term, our future capital requirements will depend on many factors, including our revenue growth rate, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support research and development efforts, the price at which we are able to purchase third-party cloud infrastructure, expenses associated with our international expansion, the introduction of platform enhancements, and the continuing market adoption of our platform. We have, and in the future, we may enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, operating results, and financial condition.
The following table shows a summary of our cash flows for the periods presented:
Three Months Ended April 30,
2022
2021