SentinelOne IPO filing reveals surging sales, strength of channel

security, sentinelone, endpoint security vendor, The company’s sole acquisition, according to the S-1 filing

SentinelOne became the second cybersecurity company to pursue an initial public offering this year, revealing skyrocketing sales, growing losses and a channel-first selling motion.

The endpoint security vendor said channel partners brought in 96 percent of SentinelOne’s revenue in the fiscal year ended 31 January 2021, up from 92 percent of revenue in fiscal 2020. SentinelOne’s solution provider focus has led to surging sales and more services engagements for partners as the company looks to raise up to US$100 million in a New York Stock Exchange public offering.

“Substantially all of our sales are filled through our channel partners, including resellers, distributors, MSPs, MSSPs, MDRs, OEMs and IR [incident response] firms, and we expect that we will continue to generate a significant portion of our revenue from channel partners for the foreseeable future,” SentinelOne wrote in a 180-page filing late Thursday with the US Securities and Exchange Commission.

SentinelOne intends to use the net proceeds of its IPO for general corporate purposes, including product development, general and administrative matters, and capital expenditures. The company said it may also use some of the proceeds to acquire or invest in complementary technologies, solutions or businesses. SentinelOne plans to be listed under the ticker symbol “S,” and declined to comment on its IPO filing.

The company’s two largest channel partners are France-based distributor Exclusive Networks and US-based direct market reseller SHI International. SentinelOne generated 19 percent of its revenue from Exclusive Networks and 13 percent of its revenue from SHI in the fiscal year ended 31 January 2021.

SentinelOne has experienced massive growth in recent years, according to its regulatory filing, with sales jumping to US$93.1 million in its most recent fiscal year, up 100.2 percent from US$46.5 million in fiscal 2020. However, the company’s loss surged to US$117.6 million in fiscal 2021, or US$3.31 per share, 53.6 percent worse than a loss of US$76.6 million, or US$2.34 per share, in fiscal 2020.

“We also expect our operating expenses to increase in the future as we continue to invest for our future growth, including expanding our research and development function to drive further development of our platform, expanding our sales and marketing activities, developing the functionality to expand into adjacent markets, and reaching customers in new geographic locations,” SentinelOne wrote in its filing.

International sales accounted for 30 percent of SentinelOne’s revenue in fiscal 2021, up from 27 percent of revenue in fiscal 2020. SentinelOne said it intends to continue growing its international customer base, with the company recently investing and hiring for planned expansions in Asia-Pacific and Europe, the Middle East and Africa, and Latin America.

In addition, SentinelOne said it doesn’t have a services offering that competes with the company’s IR partners, prompting those partners to bring SentinelOne in during remediation situations. As a result, SentinelOne said many of its channel partners act as force multipliers and provide the company with significantly broader market reach.

“Our sales team leverages our global network of channel and alliance partners for prospect access and fulfillment,” SentinelOne wrote in its S-1 filing. “For specific market segments, our channel partners independently manage the complete sales cycle, resulting in a highly scaled and leveraged sales experience.”

SentinelOne’s IPO filing comes two months after Clearwater, Fla.-based security awareness training vendor KnowBe4 raised $152 million on a $2.6 billion valuation in a Nasdaq initial public offering. Several other cybersecurity vendors plan to go public this year through special purpose acquisition companies (SPACs).

SentinelOne was founded in 2013 and has raised $696.5 million in eight rounds of funding. SentinelOne employed more than 850 people as of April 30, 2021, more than 450 of whom are based in the U.S.—up 88.9 percent from more than 450 employees globally as of 1 February 2020. The company’s sole acquisition took place this February, when it bought data analytics firm Scalyr for US$155 million.

The company had over 4,700 customers across more than 80 countries as of April 30, 2021, up 74.1 percent from more than 2,700 customers a year earlier. No single customer accounts for more than 3 percent of SentinelOne’s revenue, according to the company. SentinelOne said its customers include three of the Fortune 10, 37 of the Fortune 500 and 66 of the Global 2000.

SentinelOne co-founder, Chairman, President and CEO Tomer Weingarten, 38, owns 4 percent of the company before the IPO, according to the S-1 filing. Meanwhile, Chief Operating Officer Nicholas Warner, 49, holds a 1.1 percent stake in SentinelOne, while board member Daniel Scheinman, 58, owns 0.7 percent of the company.

Institutional investors hold a nearly 58 percent stake in the company, with entities affiliated with Insight Venture Partners owning 15.7 percent, entities affiliated with Tiger Global owning 12.4 percent, entities affiliated with Third Point Ventures owning 11.3 percent, entities affiliated with Redpoint Ventures owning 8 percent, entities affiliated with Data Collective owning 5.2 percent, and entities affiliated with Anchorage Capital owning 5.1 percent.

Insight was the lead investor in SentinelOne’s US$120 million Series D round in June 2019 and US$200 million Series E found in February 2020. Tiger Global was the lead investor in the company’s US$12 million Series A in April 2014 and US$267 million Series F in November 2020. Third Point was the lead investor in the company’s US$25 million Series B in October 2015, while Redpoint led the US$70 million Series C round in January 2017.

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