SentinelOne Dec 8 Barclays Webcast

My paraphrased highlights from the webcast:…

Endpoint will be our core for years to come…but cloud, IOT, management modules like RSO and STAR, are our emerging products that will mean sustained growth for years.
Emerging products are 10% of our ARR and their growth is faster than the rest of our business. We anticipate cloud is a greenfield and huge sized opportunity.

Why has the endpoint market expanded?
CEO: endpoint market was stagnant. it revolved around one element: the antivirus and that was it. A lot of offerings were on prem focused. Which means you’re not really selling the platform or something that can expand. And the attack surface was mainly regarded as something in control of the firewall and network providers. when you look at it today, obviously when you take on our platform it becomes a data processing platform with 24 diff capabilities delivered natively from the cloud and there for consumption of that same user for core next gen antivirus offering, next gen EDR offering, device control, application control, management capabilities, MDR. And that’s all before we talk about cloud footprint which is changing the landscape. endpoint , looking at the very different yield per node. back in the day you had one machine and license cost was all that is to it. here it is different motion, cost per machine is different, capabilities delivered is different, data retention element is different, you are not only putting a protection software but you are actively monitoring them any given moment and all the data is flowing into a data platform that is then used to manage these endpoints. It is constantly evolving landscape and customers need capabilities al the time. Zero trust shift is fueling more spend into endpoint security. Every incumbent dollar is probably 5x or 7x dollar in next gen land. We’re seeing that today with bigger lands, bigger crossell and upsell. The TAM is already bigger because each dollar is worth more, and that’s before talking even about the expansion in surfaces. Cloud is changing everything dramatically. Each work load in cloud can be regarded as another endpoint. It’s more opportunity for vendor like ours.

Why are more and more customers opting for the Complete tier offering [that is Sentinel One’s highest priced package]?
We are seeing a wholesale shift to Complete.
EDR and EPP are becoming the same. Our Complete bundles both. 95% of our sales rips out the incumbent legacy provider. Complete will probably become the entry baseline package in the next couple years. And we might do away with the below tiers.
The pricing: Complete is roughly 20-30% uplift above the midtier Control, and it is double the entry Core package.

Other notable comments:
The ARR per customer has accelerated. Our customers above $1M ARR expanded 4x last quarter. We landed a multimillion dollar deal for protecting the world’s largest financial exchange. It’s not about replacing antivirus or offering the 1st gen EDR…large deals tend to consume more of our technology upfront.
Going into Q4 we have a record pipeline ahead. Q4 is seasonally the biggest quarter in cybersecurity and for us. We are very confident in the guidance provided. Momentum is continuing.

Impact on gross margins from Scalyr
We expect Q4 and first half of next year which will suppress our gross margins by about 4%. Duplicative backend storage and ingestion costs are expected during the timing of Scalyr migration shift. But our recent improved gross margin isn’t tied to pushing back the Scalyr migration this past quarter. We had better economy of scale. We had higher revenue, business expansion, greater benefits from cloud hosting renegotiation. We had a sneak peak to the future of what we are capable of. As we said at IPO, 75-80%+ gross margin is our goal.

In 3-5 years from today, how will SentinelOne be similar or different from Crowdstrike?
CEO: By definition, we will be different. When Crowdstrike went through the period of growth we’re going through now, it didn’t have competitors! We are showing growth even with competition from a successful company like Crowdstrike.
When they went through that period, the landscape was completely different. It gives confidence in what we are able to do. We have the ability to compete and control our destiny.
No competitor is impacting us on our linear growth. We have strategically different go to market. We can cater to different parts of the TAM that they don’t. Reach that they never have.
We have growth for years to come. I truly believe we have so many different growth vectors that are starting to pick up pace at early stages.
Unlike other public companies that grow one product line, then add more capabilities in order to find growth at later stages, our strategy is different.
We planted multiple seeds at very early stages and they are all picking up and accelerating, and that’s how we sustain growth in the future, so maybe in 3-5 years we may have a different leader in this market. But the market is big and sustainable so it won’t take away from their success. It will never be a one vendor world dominance.