What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-29 compared with 2022-04-07 · 381 added, 357 removed, 741 unchanged (50% of the section changed)

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Consolidated Statements of Comprehensive Loss

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)

Consolidated Statements of Cash Flows

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of SentinelOne, Inc.

To the stockholders and the Board of Directors of SentinelOne, Inc.

Opinion on the Financial Statements

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In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 29, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Acquisitions – Acquisition of Attivo — Refer to Notes 2 and 15 to the financial statements

Critical Audit Matter Description

On May 3, 2022, the Company completed the acquisition of Attivo Networks, Inc.

for consideration of $534.8 million.

The Company accounted for the acquisition as a business combination.

Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including $77.6 million of customer relationships and $63.2 million of developed technology.

We identified forecasted revenue used in the valuation of customer relationships and developed technology as a critical audit matter because it requires management to make significant estimates and assumptions.

This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecasted revenue.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasted revenue included the following, among others:

• Assessed the reasonableness of forecasted revenue, by performing a retrospective review of the forecasted revenue and comparing it to (1) historical revenue results of the acquired business, (2) historical and forecasted revenue of peer companies in industry, and (3) communications with the Board of Directors.

Revenue Recognition — Refer to Notes 2 and 3 to the financial statements

Critical Audit Matter Description

The Company generates substantially all its revenue from subscriptions to its Singularity Platform.

This includes subscription, premium support and maintenance and other Singularity Modules, which are distinct performance obligations and are recognized ratably over the subscription term as the performance obligations are satisfied.

To determine the amount and pattern of revenue recognition, management identifies and evaluates the relevant contractual terms in its customer contracts based on its accounting policy (collectively “contract terms and conditions”).

Given the significance of the proper identification and evaluation of contract terms and conditions to the amount and pattern of revenue recognition, performing audit procedures to evaluate whether management properly identified the relevant contract terms and conditions that impact the amount and pattern of revenue recognition required a high degree of auditor judgment and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the evaluation of management’s identification of the relevant contract terms and conditions that impact the amount and pattern of revenue recognition included the following, among others:

• We assessed management’s significant accounting policies related to revenue recognition for compliance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers.

• We selected a sample of recorded revenue transactions and contracts entered into during the period and performed the following procedures:

◦ Obtained and read customer source documents and the contract, including master agreements and related amendments, to evaluate if relevant contract terms and conditions have been appropriately identified by management.

◦ Evaluated the appropriateness of management’s determination of the impact of those terms and conditions on the amount and pattern of revenue recognition.

/s/ DELOITTE & TOUCHE LLP

San Jose, California

April 7, 2022

March 29, 2023

We have served as the Company’s auditor since 2018.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of SentinelOne, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of SentinelOne, Inc.

and subsidiaries (the “Company”) as of January 31, 2023 and 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 31, 2023, of the Company and our report dated March 29, 2023, expressed an unqualified opinion on those financial statements.

As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Attivo Networks, which was acquired in May 2022, and whose financial statements constitute approximately 0.5% of total assets as of January 31, 2023 and approximately 7% of total revenue during the year ended January 31, 2023.

Accordingly, our audit did not include the internal control over financial reporting at Attivo Networks.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

San Jose, California

March 29, 2023

SENTINELONE, INC.

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Operating lease right-of-use assets 23,564 23,884

Long-term investments 535,422 6,000

Deferred contract acquisition costs, non-current 55,536 41,022

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$ 2,258,913 $ 2,042,181

Liabilities, Redeemable Convertible Preferred Stock, and Stockholders’ Equity (Deficit)

Liabilities and Stockholders’ Equity

Current liabilities:

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Accrued liabilities

100,015 22,657

Accrued payroll and benefits

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Deferred revenue, non-current 103,062 79,062

Long-term debt — 19,621

Operating lease liabilities, non-current 23,079 24,467

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Commitments and contingencies (Note 13)

Redeemable convertible preferred stock;

$ 0.0001 par value;

zero and 168,985,413 shares authorized as of January 31, 2022 and 2021, respectively;

zero and 167,058,113 shares issued and outstanding as of January 31, 2022 and 2021, respectively, and liquidation preference of zero and $ 622,414 as of January 31, 2022 and 2021, respectively

Stockholders’ equity (deficit):

Stockholders’ equity:

Preferred stock;

$ 0.0001 par value;

50,000,000 and zero shares authorized as of January 31, 2022 and 2021, respectively;

and zero shares issued and outstanding as of January 31, 2022 and 2021

50,000,000 shares authorized as of January 31, 2023 and 2022, and no shares issued and outstanding as of January 31, 2023 and 2022

Class A common stock;

$ 0.0001 par value;

1,500,000,000 and zero shares authorized as of January 31, 2022 and 2021, respectively;

162,666,515 and zero shares issued and outstanding as of January 31, 2022 and 2021, respectively

1,500,000,000 shares authorized as of January 31, 2023 and 2022;

222,951,206 and 162,666,515 shares issued and outstanding as of January 31, 2023 and 2022, respectively

Class B common stock;

$ 0.0001 par value;

300,000,000 and 264,659,000 shares authorized as of January 31, 2022 and 2021, respectively;

300,000,000 shares authorized as of January 31, 2023 and 2022;

63,812,651 and 107,785,100 shares issued and outstanding as of January 31, 2023 and 2022, respectively

Additional paid-in capital 2,663,394 2,271,980

Accumulated other comprehensive income 454 165

Accumulated other comprehensive income (loss) ( 6,367 ) 454

Accumulated deficit ( 1,000,351 ) ( 621,673 )

Total stockholders’ equity (deficit) 1,650,788 ( 320,536 )

Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit) $ 2,042,181 $ 520,560

Total stockholders’ equity 1,656,705 1,650,788

Total liabilities and stockholders’ equity $ 2,258,913 $ 2,042,181

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

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2023 2022 2021

$ 422,179 $ 204,799 $ 93,056

Cost of revenue 144,177 81,677 39,332

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Interest expense ( 1,830 ) ( 787 ) ( 1,401 )

Other income (expense), net ( 2,280 ) ( 424 ) $ ( 217 )

Loss before provision for income taxes ( 270,097 ) ( 117,113 ) $ ( 76,330 )

Provision for income taxes 1,004 460 $ 237

Other expense, net ( 1,293 ) ( 2,280 ) ( 424 )

Loss before income taxes ( 384,291 ) ( 270,097 ) ( 117,113 )

Provision (benefit) for income taxes ( 5,613 ) 1,004 460

Net loss $ ( 378,678 ) $ ( 271,101 ) $ ( 117,573 )

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Other comprehensive income (loss):

Changes in unrealized losses on investments ( 6,821 ) — —

Foreign currency translation adjustments — 289 366

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Shares Amount Shares Amount

Balances as of February 1, 2019 97,686,390 $ 149,955 31,679,835 $ 1 $ 3,660 $ 177 $ ( 156,432 ) $ ( 152,594 )

Issuance of Series D Preferred Stock, net of issuance costs of $ 0.1 million

15,837,558 51,871 — — — — — —

Issuance of common stock upon exercise of options — — 1,870,974 — 899 — — 899

Vesting of early exercised options — — — — 68 — — 68

Stock based compensation expense — — — — 4,359 — — 4,359

Foreign currency translation adjustments — — — — — ( 378 ) — ( 378 )

Net loss — — — — — — ( 76,567 ) ( 76,567 )

Balances as of January 31, 2020 113,523,948 $ 201,826 33,550,809 $ 1 $ 8,986 $ ( 201 ) $ ( 232,999 ) $ ( 224,213 )

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Vesting of early exercised options — — — — 572 — — 572

Issuance of common stock and awards assumed in connection with Scalyr acquisition — — 7,277,214 1 120,319 — — 120,320

SENTINELONE, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)

(in thousands, except share data)

Issuance of common stock and awards assumed in connection with acquisition — — 7,277,214 1 120,319 — — 120,320

Issuance of restricted stock awards — — 1,315,099 — — — — —

Stock based compensation expense — — — — 92,668 — — 92,668

Stock-based compensation — — — — 92,668 — — 92,668

Issuance of restricted stock for services provided — — 20,000 — 500 — — 500

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Balances as of January 31, 2022 — — 270,451,615 $ 27 $ 2,271,980 $ 454 $ ( 621,673 ) $ 1,650,788

SENTINELONE, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)

(in thousands, except share data)

Issuance of common stock upon exercise of options — — 7,650,525 1 17,334 — — 17,335

Vesting of restricted stock units — — 1,303,854 — — — — —

Issuance of common stock under employee stock purchase plan — — 1,335,183 — 19,159 — — 19,159

Cancellation of holdback shares — — ( 9,551 ) — — — — —

Vesting of early exercised options — — — — 103 — — 103

Issuance of common stock in connection with acquisition — — 6,032,231 1 186,332 — — 186,333

Stock-based compensation — — — — 168,486 — — 168,486

Other comprehensive loss — — — — — ( 6,821 ) — ( 6,821 )

Net loss — — — — — — ( 378,678 ) ( 378,678 )

Balance as of January 31, 2023 — — 286,763,857 29 2,663,394 ( 6,367 ) ( 1,000,351 ) 1,656,705

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

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Year Ended January 31,

2023 2022 2021

CASH FLOW FROM OPERATING ACTIVITIES:

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164,466 87,889 15,912

Loss on investments, accretion of discounts, and amortization of premiums on investments, net ( 12,217 ) — —

( 1,187 ) ( 456 ) ( 22 )

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( 13,452 ) ( 5,839 ) ( 2,758 )

Purchases of strategic investments ( 6,000 ) — ( 334 )

Cash paid for acquisition, net of cash and restricted cash acquired

Purchases of investments ( 1,938,007 ) ( 6,000 ) —

Maturities of investments 925,185 — —

Cash paid for acquisition, net of cash acquired

( 281,032 ) ( 3,449 ) —

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CASH FLOW FROM FINANCING ACTIVITIES:

Proceeds from issuance of Series D redeemable convertible preferred stock, net of issuance costs — — 51,871

Proceeds from issuance of Series E redeemable convertible preferred stock, net of issuance costs — — 152,539

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EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

( 1,469,645 ) 1,272,939 351,432

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Our headquarters is located in Mountain View, California with various other global office locations.

Initial Public Offering and Private Placement

In July 2021, we completed our initial public offering (IPO) and a concurrent private placement, in which we issued and sold an aggregate of 41,678,568 shares of our Class A common stock at $ 35 per share, including 5,250,000 shares issued upon the exercise of the underwriters’ option to purchase additional shares and 1,428,568 shares issued pursuant to the private placement.

We received net proceeds of approximately $ 1.4 billion after deducting underwriting discounts, commissions and deferred offering costs.

Upon closing of the IPO, all 167,058,113 shares of our then-outstanding redeemable convertible preferred stock automatically converted into an aggregate of 169,787,200 shares of Class B common stock.

All of our redeemable convertible preferred stock converted on a one-to-one basis, other than 31,405,183 shares of our then-outstanding Series E redeemable preferred stock, which converted into 34,134,270 shares of Class B common stock.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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References to fiscal 2023, 2022 and 2021 refer to the fiscal years ended January 31, 2023, January 31, 2022 and January 31, 2021, respectively.

Forward Stock Split

On February 6, 2020, we effected a one-to-three forward stock split of our issued and outstanding shares of common stock and redeemable convertible preferred stock.

The par values of common stock and redeemable convertible preferred stock were not adjusted as a result of the stock split.

All references to shares of common stock, options, warrants, and redeemable convertible preferred stock and per share amounts have been retroactively adjusted to reflect the forward stock split for the periods presented.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

These estimates include, but are not limited to, the valuation of our common stock prior to our IPO in June 2021, stock-based compensation, the period of benefit for deferred contract acquisition costs, standalone selling prices (SSP) for each performance obligation, useful lives of long-lived assets, the incremental borrowing rate (IBR) used for operating lease liabilities, and accounting for income taxes.

These estimates include, but are not limited to, stock-based compensation, the period of benefit for deferred contract acquisition costs, useful lives of long-lived assets and intangibles, the valuation of intangibles acquired as part of a business combination, and accounting for income taxes.

Actual results could differ from those estimates.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As the impact of the COVID-19 pandemic continues to evolve, estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require increased judgment.

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The effects of the change in functional currency were not significant to our consolidated financial statements.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Subsequent to the change, our reporting currency and the functional currency of our foreign subsidiaries is the U.S.

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If these criteria are not met, the promised services are accounted for as a combined performance obligation.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We have concluded that our contracts with customers do not contain warranties that give rise to a separate performance obligation.

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(iv) Allocation of the Transaction Price to the Performance Obligations in the Contract —If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.

Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on relative SSP.

Contracts that contain multiple performance obligations require an allocation

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of the transaction price to each performance obligation based on relative SSP.

Certain arrangements include variable consideration that is typically a function of transaction volume or another usage-based measure.

Depending upon the structure of a particular arrangement, we may allocate the variable amount to each distinct service period within the series (i.e.

direct allocation).

(v) Recognition of Revenue when, or as, Performance Obligations are Satisfied —Revenue is recognized when control of the related performance obligation is transferred to the customer in an amount that reflects the consideration expected to be received in exchange for the subscriptions or services.

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Premium support and maintenance and other Singularity Modules are distinct from subscriptions and are recognized ratably over the term as the performance obligations are satisfied.

Certain arrangements include variable consideration related either to transaction volume or another usage-based measure.

Depending upon the structure of a particular arrangement, we (1) recognize revenue as each distinct service period is performed, (2) recognize the estimate of variable consideration ratably over the period to which it relates, or (3) apply the ‘right to invoice’ practical expedient and recognize revenue based on the amount invoiced to the customer during the period.

We generally invoice our customers upfront upon signing for the entire term of the contract, periodically, or in arrears.

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In instances where performance obligations do not have observable standalone sales, we utilize available information that may include, but is not limited to, product groupings or applying the expected cost-plus margin approach to estimate the price we would charge if the service was sold separately.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, personnel-related costs associated with our customer support and services organization, including salaries, benefits, bonuses, and stock-based compensation, amortization of capitalized internal-use software, software and subscription services used by our customer support and services team, and allocated overhead costs.

Cost of revenue consists primarily of third-party cloud infrastructure expenses incurred in connection with the hosting and maintenance of our platform, personnel-related costs associated with our customer support and services organization, including salaries, benefits, bonuses, and stock-based compensation, amortization of intangible assets, amortization of capitalized internal-use software, software and subscription services used by our customer support and services team, and allocated overhead costs.

Research and Development

Research and development costs are expensed as incurred, unless they qualify for recognition as capitalized internal-use software.

Research and development expenses consist primarily of personnel-related costs, including salaries, benefits, bonuses, and stock-based compensation, consulting fees, software and subscription services, third-party cloud infrastructure expenses incurred in developing our platform and modules, and allocated overhead costs.

Research and development expenses consist primarily of personnel-related costs, including

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

salaries, benefits, bonuses, and stock-based compensation, consulting fees, software and subscription services, third-party cloud infrastructure expenses incurred in developing our platform and modules, and allocated overhead costs.

Advertising Expenses

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Stock-Based Compensation

We account for stock-based awards issued to employees and directors based on the fair value of the awards at grant date.

We account for stock-based awards issued to employees, directors, and non-employee consultants based on the fair value of the awards at grant date.

The fair value of stock option awards granted and rights to purchase shares under our employee stock purchase plan (ESPP) are generally estimated using the Black-Scholes option pricing model.

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Forfeitures are accounted for in the period in which they occur.

We granted certain awards that have both a service-based and achievements of certain milestones.

We granted certain awards that have both service-based vesting conditions and performance-based milestones.

We recognize stock-based compensation expense on a graded basis over the total requisite service period for each separately vesting portion of the performance tranches related to these performance milestone options.

We also granted stock option awards with a service-based, performance-based, and market-based vesting conditions to our Chief Executive Officer and Chief Financial Officer, These stock options will vest 100% upon the occurrence of our IPO (the performance-based vesting condition) and the achievement of certain milestone events and our share price targets (the market-based vesting conditions), subject to the executive’s continued service to us from the grant date through the milestone events.

We also granted stock option awards with a service-based, performance-based, and market-based vesting conditions to our Chief Executive Officer and Chief Financial Officer.

These stock options will vest upon the occurrence of our IPO (the performance-based vesting condition) and the achievement of certain milestone events and our share 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.

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We consider all available evidence, both positive and negative, including historical levels of income, expectations, and risks associated with estimates of future taxable income in assessing the need for a valuation allowance.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We recognize income tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the position.

We recognize penalties and accrued interest related to unrecognized tax benefits as a component of other income (expense), net and interest expense, respectively, in the consolidated statements of operations.

We recognize penalties and accrued interest related to unrecognized tax benefits as income tax expense, in the consolidated statements of operations.

Net Loss per Share Attributable to Common Stockholders

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We consider our redeemable convertible preferred stock, restricted common stock, and shares issued upon the early exercise of stock options subject to repurchase to be participating securities.

Under the two-class method, net loss is not allocated to redeemable convertible preferred stock, restricted common stock, and early exercised stock options as the holders do not have a contractual obligation to share in our losses.

Under the two-class method, net loss is not allocated to redeemable convertible preferred stock, restricted

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

common stock, and early exercised stock options as the holders do not have a contractual obligation to share in our losses.

Cash, Cash Equivalents, and Restricted Cash

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Cash equivalents consist of amounts invested in money market funds.

Restricted cash consists of collateralized letters of credit established in connection with lease agreements for our office facilities.

Restricted cash consists of the Attivo indemnity escrow fund and collateralized letters of credit established in connection with lease agreements for our office facilities.

Restricted cash, current and non-current, are included within prepaid expenses and other current assets and other assets, respectively, on our consolidated balance sheets.

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$ 202,406 $ 1,672,051

Short-Term Investments

We determine the appropriate classification of our investments at the time of purchase and reevaluate such determination at each balance sheet date.

We classify our investments as available-for-sale securities and present them within current assets as we may liquidate these investments at any time for use in our current operations or for any other purpose.

Investments not considered cash equivalents, and with maturities of one year or less from the consolidated balance sheet date, are classified as short-term investments.

Investments with maturities greater than one year from the consolidated balance sheet date are classified as long-term investments.

We classify our investments as available-for-sale securities and present them within assets.

Our investments are recorded at fair value with unrealized gains and losses, if any, reported in accumulated other comprehensive income (loss).

Unrealized gains and losses and decline in value that are considered to be other-than-temporary are recognized in other income (expense), net in the consolidated statements of operations.

We did not identify any investments with other-than-temporary impairments as of January 31, 2022 and 2021.

Realized gains and losses on the sale of short-term investments are determined on a specific identification method and are recorded in other income (expense), net in the consolidated statements of operations.

There were no realized gains or losses on the sale of short-term investments during fiscal 2022, 2021 and 2020.

When evaluating whether an investment's unrealized losses are related to credit factors, we review factors such as the extent to which fair value is below its cost basis, any changes to the credit rating of the security, adverse conditions specifically related to the security, changes in market interest rates and our intent to sell, or whether it is more likely than not we will be required to sell, before recovery of cost basis.

We invest in highly rated securities with a weighted average maturity of 18 months or less.

In addition, our investment policy limits the amount of our credit exposure to any one issuer and requires investments to be investment grade, with the primary objective of preserving capital and maintaining liquidity.

Fair values were determined for each individual security in the investment portfolio.

We did not identify any credit losses on investments as of January 31, 2023 and 2022.

Realized gains and losses on the sale of investments are determined on a specific identification method and are recorded in other income (expense), net in the consolidated statements of operations.

There were no realized gains or losses on the sale of investments during fiscal 2023, 2022 and 2021.

Strategic Investments

Our strategic investments consist of non-marketable equity investments in privately held companies.

We elect to apply the measurement alternative and record these investments at cost, less any impairment, plus or minus observable price changes in orderly transactions for identical or similar investments of the same issuer.

Strategic investments are included within other assets on our consolidated balance sheets and adjustments to their carrying amounts are recorded in other income (expense), net in the consolidated statements of operations.

There were no material events or circumstances impacting the carrying amount of our strategic investments during fiscal 2022, 2021 and 2020.

Our strategic investments consist of non-marketable equity and debt investments in privately held companies.

We elect to apply the measurement alternative and record non-marketable equity investments at cost, less any impairment, plus or minus observable price changes in orderly transactions for identical or similar investments of the same issuer.

Non-marketable debt securities are classified as available-for-sale and are recorded at their estimated fair value with changes in fair value recorded through accumulated other comprehensive income (loss).

Strategic investments are included within long-term investments on our consolidated balance sheets and adjustments to their carrying amounts are recorded in other income (expense), net in the consolidated statements of

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred Offering Costs

Prior to the IPO, all deferred offering costs were capitalized in other assets on the consolidated balance sheets.

Deferred offering costs of $ 7.6 million, primarily consisting of accounting, legal, and other fees related to our IPO, were offset against the IPO proceeds upon the closing of our IPO in July 2021.

There were no material events or circumstances impacting the carrying amount of our strategic investments during fiscal 2023, 2022 and 2021.

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The carrying amounts reported on the consolidated balance sheets for cash equivalents, short-term investments, accounts receivable, accounts payable, accrued liabilities, and accrued payroll and benefits approximate their respective fair values due to their short-term nature.

The carrying amounts reported on the consolidated balance sheets for accounts receivable, accounts payable, accrued liabilities, and accrued payroll and benefits approximate their respective fair values due to their short-term nature.

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, short-term investments, and accounts receivable.

We maintain our cash, cash equivalents, restricted cash, and short-term investments with high-credit-quality financial institutions mainly in the U.S.

We have not experienced any credit losses relating to our cash, cash equivalents, restricted cash, and short-term investments.

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, investments, and accounts receivable.

We maintain our cash, cash equivalents, restricted cash, and investments with high-credit-quality financial institutions mainly in the U.S.

We have not experienced any credit losses relating to our cash, cash equivalents, restricted cash, and investments.

For accounts receivable, we are exposed to credit risk in the event of nonpayment by customers to the extent of the amounts recorded on the consolidated balance sheets.

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We periodically evaluate the collectability of our accounts receivable and provide an allowance for doubtful accounts as necessary, based on the age of the receivable, expected payment ability, and collection experience.

As of January 31, 2022 and 2021, the allowance for doubtful accounts was not material.

The allowance for doubtful accounts balance was $ 0.8 million and $ 0.3 million as of January 31, 2023 and 2022, respectively.

Deferred Contract Acquisition Costs

We capitalize sales commissions and associated payroll taxes that are incremental to obtaining a customer contract, which are recorded as deferred contract acquisition costs on the consolidated balance sheets.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Sales commissions for the renewal of a contract are not considered commensurate with commissions paid for the initial contracts, given the substantive difference in commission rates in proportion to their respective contract values.

Commissions paid on a new contract are amortized on a straight-line basis over an estimated period of benefit of four years , while commissions paid on renewal contracts are amortized over the contractual term of the renewal.

commissions for the renewal of a contract are not considered commensurate with commissions paid for the initial contracts, given the substantive difference in commission rates in proportion to their respective contract values.

We determine the estimated period of benefit based on both quantitative and qualitative factors, including the duration of our relationships with customers and the estimated useful life of our technology.

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Impairment of Long-Lived Assets (Including Goodwill and Intangible Assets)

Long-lived assets, including intangible assets with finite lives, are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of asset may not be recoverable.

Recoverability of assets is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset.

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Goodwill impairment is recognized when the quantitative assessment results in the carrying value of the reporting unit exceeding its fair value, net of related income tax effect, in which case an impairment charge is recorded to goodwill to the extent the carrying value exceeds the fair value, limited to the amount of goodwill.

We did not recognize any impairment of goodwill during fiscal 2022.

We did not recognize any impairment of goodwill during fiscal 2023 and 2022.

SENTINELONE, INC.

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When determining the fair value of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets.

Significant estimates in valuing certain identifiable assets include, but are not limited to, the selection of valuation methodologies, future expected cash flows, discount rates, and useful lives.

Significant estimates in valuing certain identifiable assets include, but are not limited to, the selection of valuation methodologies, forecasted revenue, discount rates, and useful lives.

Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

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Recently Adopted Accounting Pronouncement s

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

This guidance simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences.

The guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill and the allocation of consolidated income taxes to separate financial statements of entities not subject to income tax.

We early adopted this guidance on August 1, 2021, which did not have a material impact on our consolidated financial statements.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In January 2017, the FASB issued ASU No.

2017-04, Intangibles—Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment .

This ASU simplifies the measurement of goodwill by eliminating step two of the two-step impairment test.

Step two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.

This ASU requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.

Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.

We adopted this guidance on February 1, 2021, which did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which provides new authoritative guidance with respect to the measurement of credit losses on financial instruments.

This update changes the impairment model for most financial assets and certain other instruments by introducing a current expected credit loss (CECL) model.

The CECL model is a more forward-looking approach based on expected losses rather than incurred losses, requiring entities to estimate and record losses expected over the remaining contractual life of an asset.

We adopted this guidance on February 1, 2021, which did not have a material impact on our consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In October 2021, the FASB issued ASU No.

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 acquired in a business combination to be recognized in accordance with Accounting Standards Codification (ASC) Topic 606 as if the acquirer had originated the contracts.

The guidance is effective for us on February 1, 2023.

We are currently evaluating the impact of this guidance on our consolidated financial statements.

In August 2020, the FASB issued ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity.

Among other changes, ASU 2020-06 removes the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives.

Additionally, ASU 2020-06 requires the application of the if-converted method for all convertible instruments in the diluted earnings per share calculation and the inclusion of the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards.

The guidance is effective for us on February 1, 2024.

We are currently evaluating the impact of this guidance on our consolidated financial statements.

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 at the time of adoption on our consolidated financial statements.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

REVENUE AND CONTRACT BALANCES

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Total $ 422,179 100 % $ 204,799 100 % $ 93,056 100 %

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

No single country other than the United States represented 10% or more of our revenue during fiscal 2023, 2022 and 2021.

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As of January 31, 2023, our remaining performance obligations were $ 609.4 million, of which we expect to recognize 85 % as revenue over the next 24 months, with the remainder to be recognized thereafter.

Capitalized contract costs were $ 93.4 million and $ 68.6 million as of January 31, 2023 and 2022, respectively.

Amortization expense of contract costs was $ 36.4 million, $ 21.7 million, and $ 11.5 million for fiscal 2023, 2022 and 2021 respectively.

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 no t recognize any impairment of deferred contract acquisition costs during fiscal 2022, 2021 and 2020.

We did not recognize any impairment of deferred contract acquisition costs during fiscal 2023, 2022 and 2021.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FAIR VALUE MEASUREMENTS

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the respective fair value and the classification by level within the fair value hierarchy (in thousands):

The following table summarizes information about our cash, cash equivalents, and investments by investment category (in thousands):

As of January 31, 2023

Level 1 Level 2 Level 3 Total

Cash equivalents:

Money market funds $ 1,641,642 $ — $ — $ 1,641,642

Fair Value Level Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

Cash and cash equivalents:

Cash $ 35,055 $ — $ — $ 35,055

Money market funds Level 1 102,886 — — 102,886

Total cash and cash equivalents $ 137,941 $ — $ — $ 137,941

Short-term investments:

Certificates of deposit — 375 — 375

Total assets measured and recorded at fair value $ 1,641,642 $ 375 $ — $ 1,642,017

Treasury securities Level 1 $ 144,392 $ 1 $ ( 501 ) $ 143,892

Commercial paper Level 2 230,305 30 ( 667 ) 229,668

Corporate notes and bonds Level 2 38,443 15 ( 148 ) 38,310

agency securities Level 2 74,060 3 ( 349 ) 73,714

Total short-term investments $ 487,200 $ 49 $ ( 1,665 ) $ 485,584

Long-term investments:

Treasury securities Level 1 $ 192,337 $ — $ ( 2,460 ) $ 189,877

Corporate notes and bonds Level 2 233,946 178 ( 2,029 ) 232,095

agency securities Level 2 101,844 27 ( 921 ) 100,950

Total long-term investments $ 528,127 $ 205 $ ( 5,410 ) $ 522,922

Total assets measured at fair value $ 1,153,268 $ 254 $ ( 7,075 ) $ 1,146,447

The table above does not include the Company’s strategic investments in non-marketable debt and equity securities, which are classified as level 3 investments and were $ 12.5 million as of January 31, 2023.

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

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Total assets measured and recorded at fair value $ 1,641,642 $ 374 $ — $ 1,642,016

We invest in highly rated securities with a weighted average maturity of 18 months or less.

As of January 31, 2023, all of our investments will mature within 2 years.

There were no transfers between the levels of the fair value hierarchy during fiscal 2023, 2022 and 2021.

As of January 31, 2022 and 2021, 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.

As of January 31, 2022 and 2021, 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 table above does not include our strategic investments in privately held equity securities, which are measured using the alternative measurement method.

As of January 31, 2022, our non-marketable equity investments of $ 6.0 million was included in other assets on the consolidated balance sheets.

We did no t have any strategic investments as of January 31, 2021.

As of January 31, 2023, we determined that the declines in the market value of our investment portfolio were not driven by credit related factors.

During the years ended January 31, 2023 and 2022, we did not recognize any

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

losses on our investments due to credit related factors.

As of January 31, 2023, no unrealized losses were in a continuous unrealized loss position for more than twelve months.

PROPERTY AND EQUIPMENT, NET

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As of January 31,

Office furniture and equipment $ 1,318 $ 837

Computers, software, and electronic equipment 4,895 3,489

Office furniture and fixtures $ 2,110 $ 1,318

Computers, software, and equipment 4,603 4,895

Capitalized internal-use software 34,753 17,917

5 unchanged sentences

We capitalized internal-use software costs of $ 17.5 million, $ 10.6 million and $ 2.8 million during fiscal 2023, 2022 and 2021, respectively.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Depreciation and amortization expense related to property and equipment was $ 6.7 million, $ 4.6 million and $ 2.8 million for fiscal 2023, 2022 and 2021, respectively, including amortization expense related to capitalized internal-use software of $ 4.1 million, $ 2.1 million and $ 1.3 million for fiscal 2023, 2022 and 2021, respectively.

4 unchanged sentences

Customer relationship 79,100 1,500

Backlog 11,100 —

Non-compete agreements 650 650

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Total intangible assets, net 145,093 15,807

Intangible assets, net as of January 31, 2021 were not material.

Amortization expense of intangible assets was $ 3.3 million for fiscal 2022.

Amortization expense of intangible assets was no t material for fiscal 2021 and 2020.

Amortization expense of intangible assets was $ 23.0 million and $ 3.3 million for fiscal 2023 and 2022, respectively.

Amortization expense of intangible assets was not material for fiscal 2021.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of January 31, 2023, estimated future amortization expense is as follows (in thousands):

2 unchanged sentences

Total $ 144,838

LONG-TERM DEBT

In May 2018, we entered into a loan and security agreement with a certain lender, which was restated in May 2020, or the Amended Loan and Security Agreement.

The Amended Loan and Security Agreement provided a revolving line of credit of up to $ 45.0 million, maturing in May 2023.

In June 2021, we repaid all outstanding indebtedness owed pursuant to the Amended Loan and Security Agreement, terminated the agreement, and closed our revolving line of credit.

Pursuant to our termination of the Amended Loan and Security Agreement, the related security interests have been removed and the covenants shall be of no further force and effect.

In connection with the initial term loan, we issued warrants to purchase shares of common stock with an exercise price of $ 0.62 per share.

The remaining warrants to purchase 954,884 shares of common stock were outstanding and exercisable as of January 31, 2021.

Upon the closing of the IPO, we issued 940,953 shares of Class B common stock in connection with the cashless exercise of all outstanding warrants to purchase common stock.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We incurred interest expense associated with our long-term debt of $ 0.4 million, $ 1.4 million and $ 2.0 million for fiscal 2022, 2021 and 2020, respectively.

We have entered into non-cancelable operating lease agreements with various expiration dates through fiscal 2029.

We have entered into non-cancelable real estate operating lease agreements with various expiration dates through fiscal 2029.

Our operating lease arrangements do not contain any restrictive covenants or residual value guarantees.

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Year Ended January 31,

2023 2022 2021

Supplemental Cash Flow Information

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Weighted-average discount rate 4.2 % 4.3 %

The components of lease costs consisted of the following (in thousands):

The components of lease costs, net of sublease income, consisted of the following (in thousands):

Year Ended January 31,

2023 2022 2021

Operating lease costs $ 4,905 $ 4,027 $ 3,844

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Sublease income was $ 0.7 million, $ 0.6 million and $ 0.9 million for fiscal 2023, 2022 and 2021, respectively, and was recorded as a reduction of lease costs.

As of January 31, 2022, we had total undiscounted future payments of $ 3.6 million under an operating lease that had not yet commenced, which were not included on the consolidated balance sheets.

This operating lease commenced in February 2022 and has a lease term of 6 years.

SENTINELONE, INC.

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Present value of operating lease liabilities $ 26,974

PREFERRED STOCK

Redeemable Convertible Preferred Stock

Upon the closing of the IPO, all 167,058,113 shares of our then-outstanding redeemable convertible preferred stock automatically converted to an aggregate of 169,787,200 shares of class B common stock.

All of our redeemable convertible preferred stock converted on a one-to-one basis, other than 31,405,183 shares of our then-outstanding Series E redeemable convertible preferred stock, which converted into 34,134,270 shares of Class B common stock.

Our redeemable convertible preferred stock as of January 31, 2021 consisted of the following (in thousands, except share and per share data):

As of January 31, 2021

Shares Authorized Shares Issued and Outstanding Liquidation Amount Carrying Value Original Issuance Price per Share

Series Seed 10,962,327 10,962,327 $ 2,577 $ 2,553 $ 0.2351

Series A 12,855,123 12,855,123 10,000 9,948 0.7779

Series B 20,288,700 20,288,700 24,338 24,241 1.1996

Series C 40,338,867 40,338,867 70,433 69,845 1.7460

Series D 29,078,931 29,078,931 95,476 95,239 3.2833

Series E 31,405,183 31,405,183 152,683 152,539 4.8617

Series F 24,056,282 22,128,982 266,907 266,774 12.0614

Total 168,985,413 167,058,113 $ 622,414 $ 621,139

During fiscal 2021, we issued 31,405,183 shares of Series E Preferred Stock at a price of $ 4.8617 per share for aggregate proceeds of $ 152.5 million, net of issuance costs of $ 0.1 million and 22,128,982 shares of Series F Preferred Stock at a price of $ 12.0614 per share for aggregate proceeds of $ 266.8 million, net of issuance costs of $ 0.1 million.

Preferred Stock

In connection with the IPO, we amended and restated our certificate of incorporation, which became effective immediately prior to the closing of the IPO, which authorized 50,000,000 shares of undesignated preferred stock, with a par value of $ 0.0001 .

As of January 31, 2022, there were 50,000,000 shares of preferred stock authorized and no shares of preferred stock outstanding.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We have two classes of common stock:

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Weingarten is terminated for cause, as defined in our restated certificate of incorporation, and (vi) the date that is 12 months after the death or disability, as defined in our restated certificate of incorporation, of Mr.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our common stock reserved for future issuance on an as-converted basis as of January 31, 2023 and 2022 were as follows:

As of January 31,

Conversion of redeemable convertible preferred stock — 168,951,059

Exercise of common stock warrants — 954,884

Stock options outstanding 32,446,814 42,422,473

RSUs outstanding 1,770,304 —

RSUs and PSUs outstanding 14,409,166 1,770,304

ESPP reserved for future issuance 8,043,936 6,674,603

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2021 Equity Incentive Plan

In May 2021, our board of directors and in June 2021, our stockholders approved our 2021 Equity Incentive Plan (2021 Plan) as a successor to our 2013 Equity Incentive Plan (2013 Plan) and 2011 Stock Incentive Plan (2011 Plan) with the purpose of granting stock-based awards to employees, directors, officers and consultants, including stock options, restricted stock awards and restricted stock units (RSUs).

A total of 35,281,596 shares of Class A common stock were initially available for issuance under the 2021 Plan.

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(i) five percent ( 5 %) of the aggregate number of outstanding shares of all classes of our common stock as of the last day of the immediately preceding fiscal year or (ii) such other amount as our board of directors may determine.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The 2013 Plan and 2011 Plan (together, the Prior Plans) were terminated in July 2021, in connection with the adoption of our 2021 Plan, and stock-based awards are no longer granted under the Prior Plans.

The 2013 Plan and 2011 Plan (together, the Prior Plans) were terminated in June 2021, in connection with the adoption of our 2021 Plan, and stock-based awards are no longer granted under the Prior Plans.

However, the Prior Plans will continue to govern the terms and conditions of the outstanding awards previously granted thereunder.

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Restricted Stock Units

A summary of our RSUs under the 2021 Plan is as follows:

A summary of our RSU activity is as follows:

Number of Shares Weighted-Average Grant Date Fair Value

Outstanding as of January 31, 2022

1,770,304 $ 52.51

Granted 14,992,931 26.28

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As of January 31, 2023, we had unrecognized stock-based compensation expense related to unvested RSUs of $ 353.3 million that is expected to be recognized on a straight-line basis over a weighted-average period of 3.37 years.

2013 Equity Incentive Plan

Our 2013 Plan was adopted by our board of directors in June 2013 and approved by our stockholders in July 2013.

The 2013 Plan provides for the grant of stock-based awards to employees, officers, directors, and other service providers.

Options granted under the 2013 Plan expire ten years from the date of grant.

The options generally vest 25 % on the first anniversary of the grant date and monthly over the course of the following three years .

A summary of our stock option plan activity under the 2013 Plan is as follows:

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock Option Information

A summary of our stock option activity is as follows:

Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands)

Outstanding as of January 31, 2022

Granted 14,048,623 $ 9.66

42,422,473 $ 4.30 6.50 $ 1,714,821

Exercised ( 7,650,525 ) 2.26

Forfeited ( 2,703,962 ) 4.68

Assumed options from Attivo acquisition

Outstanding as of January 31, 2023

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The weighted-average grant-date fair value of options granted during fiscal 2022 and 2021 were $ 13.14 and $ 1.63 per share, respectively.

There were no options granted during fiscal 2023.

The aggregate grant-date fair value of options vested during fiscal 2023, 2022 and 2021 was $ 61.4 million, $ 32.0 million and $ 5.1 million, respectively.

1 unchanged sentence

The aggregate intrinsic value of options exercised during fiscal 2023, 2022 and 2021 was $ 173.0 million, $ 333.7 million and $ 27.0 million, respectively.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of January 31, 2023, we had unrecognized stock-based compensation expense related to unvested options of $ 104.3 million that is expected to be recognized on a straight-line basis over a weighted-average period of 2.14 years.

Restricted Stock Units

A summary of our RSUs under the 2013 Plan is as follows:

Number of Shares Weighted-Average Grant Date Fair Value

Outstanding as of January 31, 2021 — $ —

Granted 346,483 $ 32.39

Released ( 3,316 ) $ 32.69

Forfeited ( 10,216 ) $ 32.48

Outstanding as of January 31, 2022

332,951 $ 32.38

As of January 31, 2022, we had unrecognized stock-based compensation expense related to unvested RSUs of $ 6.8 million that is expected to be recognized on a straight-line basis over a weighted-average period of 1.6 years.

Performance Milestone Options

In February 2021, we granted 1,243,636 performance milestone options to purchase shares of common stock under the 2013 Plan.

The performance milestone options are subject to service-based vesting conditions and achievements of certain milestones.

We recognize compensation cost on a graded basis over the total requisite service period for each separately vesting portion of the performance tranches related to these performance milestone options.

The grant-date fair value of the performance milestone options was $ 10.25 , $ 10.37 , and $ 10.49 per share for each of the performance tranches using the Black-Scholes option-pricing model.

We assess the probability that the performance condition will be met for each of the performance tranches at the end of each reporting period, and recognize cumulative expense only for the performance tranches that are assessed to be probable of vesting.

During fiscal 2022, we recorded $ 12.8 million of stock-based compensation expense.

As of January 31, 2022, we had fully recognized stock-based compensation expense related to performance milestone options.

Milestone Options

In March 2021, we granted 1,404,605 options to purchase shares of 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 IPO (the performance-based vesting condition) and the achievement of certain milestone events and our share price targets (the market-based vesting conditions), subject to the executive’s continued service to us from the grant date through the milestone events.

These stock options will vest 100 % upon the occurrence of our IPO (the performance-based vesting condition), which was completed in June 2021, and the achievement of certain share price targets (the market-based vesting conditions), subject to the executive’s continued service to us from the grant date through the milestone events.

As of January 31, 2023, the share price targets have not yet been achieved, and therefore, these milestone options remain unvested.

For these options, we used a Monte Carlo simulation to determine the fair value at the grant date and the implied service period.

During fiscal 2022, we recorded $ 3.1 million of stock-based compensation expense.

We recorded stock-based compensation expense related to these milestone options of $ 3.6 million and $ 3.1 million during fiscal 2023 and 2022, respectively.

As of January 31, 2023, we had unrecognized stock-based compensation expense related to unvested milestone options of $ 12.7 million, that is expected to be recognized over the remaining implied service period of 3.6 years.

Performance Share Units

In connection with the acquisition of Attivo, we granted 71,003 shares of performance share units subject to service-based and performance-based vesting conditions.

These PSUs will vest 100 % upon the achievement of certain financial performance and integration milestone events, subject to the employees’ continued service to us from the grant date through the milestone events or target dates.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We recorded stock-based compensation expense related to these PSUs of $ 0.5 million during fiscal 2023.

As of January 31, 2023, we had unrecognized stock-based compensation expense related to these PSUs of $ 0.5 million that is expected to be recognized over the remaining vesting period of 2.3 years.

Restricted Common Stock

In connection with the Attivo acquisition, restricted common stock was issued to Attivo employees.

See Note 15, Acquisitions, for more information regarding these restricted common stock.

We recorded stock-based compensation expense related to restricted common stock in connection with our acquisition of Attivo of $ 1.0 million during fiscal 2023.

As of January 31, 2023, we had unrecognized stock-based compensation expense related to this unvested restricted common stock of $ 1.0 million.

In connection with the Scalyr acquisition, 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 fiscal 2022, we recorded $ 10.9 million of stock-based compensation expense.

As of January 31, 2022, we had unrecognized stock-based

We recorded stock-based compensation expense related to restricted common stock in connection with our acquisition of Scalyr of $ 8.5 million and $ 10.9 million during fiscal 2023 and 2022, respectively.

As of January 31, 2023, we had unrecognized stock-based compensation expense related to this unvested restricted common stock of $ 0.2 million that is expected to be recognized by the end of February 2023.

Employee Stock Purchase Plan (ESPP)

In May 2021, our board of directors, and in June 2021, our stockholders approved our ESPP, which became effective on the date of effectiveness of our Final Prospectus, or June 29, 2021.

The ESPP initially reserved and authorized the issuance of up to a total of 7,056,319 shares of common stock to eligible employees.

The number of shares reserved for issuance and sale under the ESPP will automatically increase on the first day of each fiscal year, starting on February 1, 2022 for the first ten calendar years after the first offering date, in an amount equal to (i) 1 % of the aggregate number of outstanding shares of all class our common stock on the last day of the immediately preceding fiscal year, or (ii) such other amount as the administrator of the ESPP may determine.

The ESPP generally provides for six-month offering periods beginning January 6 and July 6 of each year, with each offering period consisting of single six-month purchase periods, except for the initial offering period which began on July 1, 2021, and will end on July 5, 2023 and the second offering period will begin on January 6, 2022.

On each purchase date, eligible employees will purchase the shares at a price per share equal to 85 % of the lesser of (1) the fair market value of our common stock as of the beginning of the offering period or (2) the fair market value of our common stock on the purchase date, as defined in the ESPP except for the initial offering period that has a 24-months look back to the IPO price of $ 35 .

The following table summarizes assumptions used in estimating the fair value of employee stock purchase rights for the initial and subsequent offering periods under the 2021 ESPP using the Black-Scholes option pricing model:

Year Ended January 31,

Expected term (in years) 0.5 - 1.0

Expected volatility 71.5 % - 95.8 %

52.3 % - 70.5 %

Risk-free interest rate 2.6 % - 4.8 %

0.1 % - 0.3 %

Dividend yield — % — %

We recognized stock-based compensation expense related to ESPP of $ 12.7 million and $ 5.5 million during fiscal 2023 and 2022, respectively.

As of January 31, 2023, $ 1.5 million amount has been withheld on behalf of employees for a future purchase under the ESPP due to the timing of payroll deductions.

1,335,183 and 381,716 shares were issued under the ESPP for $ 19.2 million and $ 11.4 million during fiscal 2023 and 2022, respectively.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

compensation expense related to this unvested restricted common stock of $ 8.7 million that is expected to be recognized over the remaining vesting period of 1.0 years.

2011 Stock Incentive Plan

As part of the Scalyr acquisition, we assumed 2,138,347 options to purchase shares of common stock under the 2011 Plan, at a weighted-average exercise price of $ 1.74 per share and weighted-average fair value of $ 13.10 per share, of which 681,332 options remained outstanding with a weighted-average exercise price of $ 1.72 per share as of January 31, 2022.

As of January 31, 2022, 148,499 options were vested and exercisable with a weighted-average exercise price of $ 1.72 per share.

The aggregate grant-date fair value of options vested during fiscal 2022 was $ 10.8 million.

The total unrecognized stock-based compensation expense related to these options was $ 4.1 million, that is expected to be recognized on a straight-line basis over a weighted-average period of 1.2 years.

During fiscal 2022, 1,386,381 options were exercised with an aggregate intrinsic value of $ 33.4 million.

Secondary Stock Sales

In May 2021, we facilitated a secondary sale of our common stock.

Under the terms of the sale, certain preferred stock investors purchased 85,403 shares of common stock from an employee at $ 23.00 per share for an aggregate purchase price of $ 2.0 million.

We did no t recognize any stock-based compensation expense during fiscal 2022 in connection with this sale.

In June 2021, we facilitated certain secondary sales of our common stock.

Under the terms of the sales, certain preferred stock investors purchased 305,724 shares of common stock from certain employees at prices ranging from $ 21.00 to $ 52.00 per share for an aggregate purchase price of $ 8.7 million.

The stock-based compensation expense recognized in connection with these sales were not material.

Common Stock Subject to Repurchase

Common stock purchased by employees pursuant to an early exercise of stock options are not deemed, for accounting purposes, to be outstanding until those shares vest according to their respective vesting schedules and accordingly, the consideration received for early exercises are initially recorded as a liability and reclassified to common stock and additional paid-in capital as the underlying awards vest.

These unvested shares may be repurchased by us in case of employment termination at the price paid by the purchaser for such shares.

As of January 31, 2022 and 2021, the balance of common stock subject to repurchase was not material.

During fiscal 2023, we recorded $ 0.4 million in expense related to modifications of our ESPP as a result of the decrease in our stock price in July 2022 and January 2023 which triggered resets of the ESPP offering periods in accordance with our plan.

We expect to record the remaining $ 0.4 million in expense related to these modifications through the second quarter of 2024.

Attivo Acquisition

In connection with the Acquisition, we granted 539,795 shares of restricted stock units (RSUs) under our 2021 Equity Incentive Plan that will vest over a period of 3 years contingent on continued employment of certain Attivo employees, for which stock-based compensation expense will be recognized ratably over the vesting period.

Attivo Equity Incentive Plan

In connection with the Acquisition, we assumed unvested stock options that were granted under the Attivo 2011 Equity Incentive Plan (“Attivo Plan”).

We do not intend to grant any additional shares under the Attivo Plan and the Attivo Plan will continue to govern the terms and conditions of the outstanding awards previously granted thereunder.

Any shares underlying stock options that are expired, canceled, forfeited or repurchased under the Attivo Plan will be automatically become available for issuance as Class A common stock pursuant to our 2021 Equity Incentive Plan.

During the third quarter of fiscal 2023, certain members of our management team converted to non-employee consultants.

The transition has been accounted for as a modification, under which, the exercise period of certain vested awards has been extended and a certain number of unvested awards will vest through the end of the consulting agreements.

During fiscal 2023, we recognized an incremental charge of $ 4.5 million related to the transition of these employees to non-employee consultants and expect to recognize an aggregate of an additional $ 6.2 million in expense over the requisite service period through the fourth quarter of 2024.

Stock-Based Compensation Expense

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Dividend yield – As we do not currently issue dividends and do not expect to issue dividends on our common stock in the foreseeable future, the expected dividend yield is zero .

Fair value of underlying common stock – Prior to the completion of our IPO, the fair value of our common stock was determined by the board of directors by considering a number of objective and subjective factors

After the completion of our IPO, the fair value of our Class A common stock is determined by the closing price of our Class A common stock, which is traded on the New York Stock Exchange.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

including input from management and contemporaneous third-party valuations.

After the completion of our IPO, the fair value of our Class A common stock is determined by the closing price of our Class A common stock, which is traded on the New York Stock Exchange.

The following table summarizes assumptions used in estimating the fair value of stock options granted under the Black-Scholes pricing model in fiscal 2022 (no stock options were granted in fiscal 2023):

Year Ended January 31,

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Expected volatility 62.3 % - 66.0 %

47.3 % - 48.7 %

Risk-free interest rate 0.8 % - 1.1 %

0.4 % - 0.6 %

Dividend yield — %

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Total $ 164,466 $ 87,889

Employee Stock Purchase Plan

In May 2021, our board of directors, and in June 2021, our stockholders approved our ESPP, which became effective on the date of effectiveness of our Final Prospectus, or June 29, 2021.

The ESPP initially reserved and authorized the issuance of up to a total of 7,056,319 shares of common stock to eligible employees.

The following table summarizes assumptions used in estimating the fair value of employee stock purchase rights for the initial and second offering period under the 2021 ESPP using the Black-Scholes option pricing model:

January 31, 2022

Expected term (in years) 0.5 - 2

Expected volatility 52.3 % - 70.5 %

Risk-free interest rate 0.1 % - 0.3 %

Dividend yield — %

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We recognized stock-based compensation expense related to ESPP of $ 5.5 million during fiscal 2022.

As of January 31, 2022, $ 1.6 million amount has been withheld on behalf of employees for a future purchase under the ESPP due to the timing of payroll deductions.

During fiscal 2022, 381,716 shares were issued under the ESPP for $ 11.4 million.

Our loss before provision for income taxes for fiscal 2023, 2022 and 2021 consisted of the following (in thousands) :

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Total current 3,714 1,093 460

Federal ( 6,754 ) — —

State ( 2,913 ) — —

Foreign 340 ( 89 ) —

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Other 236 320 ( 2 )

Total provision for income taxes $ 1,004 $ 460 $ 237

Total provision for (benefit from) income taxes $ ( 5,613 ) $ 1,004 $ 460

SENTINELONE, INC.

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Research and development expenses 72,432 36,989

Deferred revenue 25,643 14,748

Accruals and reserves 6,215 3,960

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Operating lease right-of-use assets ( 8,162 ) ( 9,422 )

Other ( 2,279 ) —

Total deferred tax liabilities ( 70,479 ) ( 32,379 )

Net deferred tax assets $ 89 $ —

Net deferred tax assets (liabilities) $ ( 251 ) $ 89

Based upon available objective evidence, we believe it is more likely than not that the net U.S.

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During fiscal 2023 and 2022, total valuation allowance increased by $ 72.8 million and $ 132.9 million, respectively, primarily due to additional net operating losses.

As of January 31, 2022, we had federal net operating loss carryforwards of $ 436.8 million, which will begin to expire in 2031, and state net operating loss carryforwards of $ 268.9 million, which will begin to expire in 2023.

As of January 31, 2023 , we had federal net o perating loss carryforwards of $ 651.1 million, which will begin to expire in 2031, and state net operating loss carryforwards of $ 338.3 million, which will begin to expire in 2024.

We also had foreign net operating loss carryforwards of $ 289.8 million, which do not expire.

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Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable.

As of January 31, 2022 and 2021, we do not have any material uncertain tax positions.

As of and for fiscal 2022 and 2021, no interest and penalties have been accrued with respect to unrecognized tax benefits.

We file income tax returns in the U.S.

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Our tax years generally remain open and subject to examination by federal, state, or foreign tax authorities.

We are currently under examination by the Israel Tax Authorities for the 2016 through 2020 tax years.

We are not currently under audit in any other tax jurisdictions.

We are currently

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

under examination by the Israel Tax Authorities for the 2017 through 2021 tax years.

We are not currently under audit in any other tax jurisdictions.

The changes in the gross amount of unrecognized tax benefits consisted of the following (in thousands):

As of January 31,

2023 2022 2021

Balance at beginning of year $ 566 $ 534 $ 358

Gross increases for tax positions of current year 447 32 176

Balance at end of year $ 1,013 $ 566 $ 534

We recognize interests and penalties related to income tax matters as a component of income tax expense.

No accrued interest of penalties have been recorded as of January 31, 2023, 2022, and 2021.

We do not anticipate that its total unrecognized tax benefits will significantly change during the next 12 months.

NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS

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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 stocks, 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.

For purposes of this calculation, redeemable convertible preferred stock, stock options, restricted common stocks, RSUs, PSUs, 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.

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Net loss per share attributable to Class A and Class B common stockholders, basic and diluted $ ( 1.36 ) $ ( 1.56 ) $ ( 3.31 )

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

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Shares subject to repurchase 178,308 20,091 37,500

RSUs 1,770,304 — —

RSUs and PSUs 14,409,166 1,770,304 —

ESPP 134,469 52,381 —

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Total 47,620,201 46,724,834 207,174,634

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

GEOGRAPHIC INFORMATION

5 unchanged sentences

Total $ 62,305 $ 48,802

See Note 3 for revenue by geography.

Revenue by geography is presented in Note 3, Revenue and Contract Balances .

COMMITMENTS AND CONTINGENCIES

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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.

We have defended against these claims vigorously and expect to continue to do so.

BlackBerry Corp., et al.

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On October 17, 2019, BlackBerry commenced an action captioned BlackBerry Corp., et al.

Coulter, et al., No.

953-10-19 (Vt.

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.

Chris Coulter, in the Vermont Superior Court—Chittenden Unit, Case No.

953-10-19 Cncv, against Chris Coulter, a now-former employee who worked in our Vigilance services team (the “Vermont Action”).

On October 23, 2019, BlackBerry filed an amended complaint that added the company 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.

On April 17, 2020, the court in the Vermont Action issued a preliminary injunction that enjoined Mr.

Coulter from working at our company until after February 2021.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

On January 15, 2021, the court entered an order narrowing the scope of the case and limiting the claims against us 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.

The matter is set to be ready for trial by July 1, 2023;

no trial date has been set.

On October 25, 2019, BlackBerry commenced a separate 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 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.

Ch.) (the “Delaware Action”) against Mr.

Coulter and the company in Delaware Chancery Court.

The court stayed this case pending resolution of the Vermont Action.

On February 7, 2020, BlackBerry voluntarily dismissed without prejudice all claims against Mr.

Coulter and us in the Delaware Action.

On December 3, 2019, BlackBerry initiated a largely duplicative 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.

On November 18, 2019, BlackBerry commenced an action captioned BlackBerry Corp., et al.

Page, et al., No.

2019-CP-07-2552 (S.C.

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.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

That arbitration, 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.

Sentinel Labs, Inc., et al.

On January 16, 2020, BlackBerry commenced the action captioned, BlackBerry Corp., et al.

On January 16, 2020, BlackBerry commenced an action captioned BlackBerry Corp., et al.

Sentinel Labs, Inc., et al., No.

20CV361950 (Cal.

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.

20CV361950 in the California Superior Court of Santa Clara County, California against us and unnamed “Doe” defendants (who counsel understands are all former BlackBerry employees that we later employed), asserting claims for trade secret misappropriation and unfair business practices (the “California Action”).

We filed counterclaims that, in part, seek to invalidate unlawful provisions under California law in BlackBerry’s agreements it entered into with its employees.

Between December 2020 and August 2021, there were several rounds of motion practice, court hearings, and court orders relating to the sufficiency of BlackBerry’s identification of its alleged trade secrets in connection with its misappropriation of trade secrets claim, resulting in a narrowed scope of this claim.

We are mid-discovery, and there have been court hearings and orders in connection with various discovery disputes.

We continue to vigorously litigate this lawsuit, including our counterclaims against BlackBerry.

Fact discovery is currently set to close by August 2023, and a trial has now been set for March 28, 2024.

BlackBerry Corp., et al.

Quinn, et al.

On February 17, 2020, BlackBerry commenced the action captioned BlackBerry Corp., et al.

Quinn, et al., No.

D-1-GN-20-00096 (Tex.

– Travis Cnty.) against Sean Quinn, a go-to-market employee, and us, in Texas state court.

On February 17, 2020, BlackBerry commenced an action captioned BlackBerry Corp., et al.

Quinn, et al., Case No.

D-1-GN-20-00096, in 459th Judicial District of Travis County, Texas, against Sean Quinn, our now-former employee, and the company.

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.

Quinn moved to stay or dismiss this case in light of the overlapping issues between this lawsuit and the California Action.

On September 21, 2020, the court stayed this case pending resolution of the California Action.

This lawsuit remains stayed and is pending in abeyance before the Texas court.

We have not recorded any accruals for loss contingencies associated with these legal proceedings, determined that an unfavorable outcome is probable, nor have we determined that the amount or range of any possible loss is reasonably estimable.

BlackBerry Corp., et al.

Kaylan Brown Coulter.

On April 7, 2022, BlackBerry commenced an action captioned BlackBerry Corp., et al.

Kaylan Brown Coulter, Case No.

22-cv-01249, in the Superior Court - Chittenden Unit, Vermont, 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 (Case No.

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, and the matter is currently set to be trial ready for April 2023 unless dispositive motions are filed.

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 consolidated financial statements.

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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 on us.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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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 insurance coverage that would generally enable us to recover a portion of any future amounts paid.

We maintain director and officer liability insurance coverage that would generally enable us to recover a portion of any future amounts paid.

EMPLOYEE BENEFIT PLAN

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Contributions to the plan are discretionary.

There was $ 2.8 million matching contributions by us for fiscal 2023.

There were no matching contributions by us for fiscal 2022 and 2021.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Israeli Severance Pay

4 unchanged sentences

For fiscal 2023, 2022, and 2021, we recorded $ 3.9 million, $ 3.7 million, and $ 2.7 million, respectively, in severance expenses related to these employees.

On February 6, 2021, we executed a merger agreement to acquire 100 % of the issued and outstanding equity securities of Scalyr, a leading cloud-native, cloud-scale data analytics platform.

This acquisition allows us to advance our data ingestion, search, and retention capabilities.

This acquisition closed on February 9, 2021.

The aggregate consideration transferred was $ 125.3 million, of which $ 5.0 million was paid in cash, $ 106.2 million was comprised of 7,277,214 shares of common stock, and $ 14.1 million was comprised of assumed options to purchase 2,138,347 shares of common stock.

As part of the merger agreement, we entered into non-compete agreements with the founder and the co-founder of Scalyr with a term of three years and a fair value of $ 0.7 million.

The fair value of the non-compete agreements was excluded from the purchase consideration and the net assets acquired, resulting in purchase consideration of $ 124.6 million.

The assets acquired and liabilities assumed in connection with the acquisition were recorded at their fair value on the date of acquisition as follows (in thousands):

On May 3, 2022, we acquired 100 % of the issued and outstanding equity securities (the Acquisition) of Attivo Networks, Inc.

(Attivo), an identity security and lateral movement protection company.

Attivo expands our coverage of critical attack surfaces.

Identity is an adjacent security solution that complements our core endpoint solution.

The Acquisition closed on May 3, 2022 and has been accounted for as a business combination in accordance with ASC Topic 805, Business Combinations.

We had post-combination expense with a fair value of $ 32.9 million that was not included in the total purchase consideration, which is comprised of 307,396 of restricted common stock with an aggregate fair value of $ 10.0 million, and 378,828 assumed options with an aggregate fair value of $ 11.5 million.

Restricted common stock and assumed options will be recognized as stock-based compensation expense.

In addition, in connection with the acquisition, certain employees who were promised compensation related to their previous employment agreements will be paid $ 11.4 million in cash based on continued employment which will be recognized on a straight-line basis as acquisition-related compensation costs.

All post-combination expense is expected to be recognized through May 2026.

Post-combination compensation expense is subject to adjustment based on continuing service obligations to the Company of certain stockholders of Attivo.

In connection with the Acquisition, we also granted restricted stock units (RSUs) and performance share units (PSUs) under our 2021 Equity Incentive Plan.

For further details refer to Note 9, Stock-Based Compensation .

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the preliminary allocation of purchase consideration recorded on our consolidated balance sheet as of the acquisition date (in thousands):

Consideration:

Cash $ 348,917

Common Stock ( 6,032,231 shares) (1)

Fair value of total consideration transferred $ 534,802

Cash and cash equivalents $ 8,836

Accounts receivable 4,867

Restricted cash 444

Prepaid expense 277

Prepaid expense and other current assets 3,880

Operating lease right-of-use assets 260

Intangible assets 151,900

Goodwill 108,193

Accounts payable ( 412 )

Accrued liabilities ( 4,270 )

Accrued payroll and benefits ( 1,113 )

Operating lease liabilities ( 259 )

Deferred revenue ( 51,746 )

Other liabilities ( 2,357 )

Deferred tax liability ( 7,310 )

Total identifiable net assets 102,688

Goodwill 432,114

Total purchase consideration $ 534,802

(1) Consideration calculated using the fair value of our common stock

The estimates and assumptions regarding the fair value of certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, income taxes, and goodwill are subject to change as we obtain additional information during the measurement period, which usually lasts for up to one year from the acquisition date.

The excess of the purchase price over the fair value of net tangible and intangible assets acquired has been assigned to goodwill.

Goodwill represents the future benefits as a result of the acquisition that will enhance our product available to both new and existing customers and increase our competitive position.

Goodwill represents the future benefits resulting from the acquisition that will enhance the value of our product for both new and existing customers and strengthen our competitive position.

Goodwill is not deductible for tax purposes.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the amounts allocated to the intangible assets identified and their estimated useful lives as of the date of acquisition:

The following table sets forth the preliminary amounts allocated to the intangible assets identified and their estimated useful lives as of the date of acquisition:

Fair Value Useful Life

(in thousands) (in years)

Developed technology $ 15,500 7

Customer relationships $ 77,600 10

Trademarks 150 2

Developed technology 63,200 5

Backlog 11,100 2

Total intangible assets acquired $ 151,900

The fair value assigned to the developed technology was determined using the multi-period excess earnings method of the income approach.

The fair value assigned to the customer relationships was determined using the distributor method under the income approach, which includes estimates of customer attrition rates.

The preliminary fair value assigned to customer relationships was determined using the multi-period excess earnings method of the income approach.

The fair value assigned to developed technology was determined using the relief from royalty method under the income approach.

The fair value assigned to backlog was determined using the multi-period excess earnings method of the income approach.

The intangible assets acquired are expected to be amortized over their useful lives on a straight-line basis.

As part of the consideration transferred, we withheld 1,317,079 shares of our common stock with a fair value of $ 14.59 per share at the time of grant (Holdback Shares) and $ 0.4 million of cash related to certain obligations, including indemnification for potential breach of general representations and warranties of the sellers.

The Holdback Shares and cash are expected to be released 18 months from the acquisition closing date, subject to claims for any obligations.

In connection with the acquisition, we granted 1,315,099 shares of restricted common stock that vest over a period of two years contingent on continued employment, for which stock-based compensation expense will be recognized ratably over the vesting period.

There was no other contingent consideration or cash consideration expected to be paid out subsequent to the acquisition.

The results of operations of Scalyr have been included in our consolidated financial statements from the date of acquisition.

We incurred $ 1.4 million of transaction costs in connection with the acquisition during fiscal 2022.

These costs were recorded as general and administrative expenses in the consolidated statements of operations.

The following unaudited pro forma financial information summarizes the results of operations of SentinelOne and Scalyr as if the acquisition occurred on February 1, 2020 (in thousands):

Aside from $ 61.0 million, net, within restricted cash on the consolidated balance sheet, held in an indemnity escrow expected to be paid out within 15 months of the Acquisition, there are no other contingent consideration or cash consideration expected to be paid out subsequent to the Acquisition.

The indemnity escrow was measured at fair value within other liabilities in our consolidated balance sheet at Acquisition and will be accreted to face value until paid out.

The results of operations of Attivo have been included in our consolidated financial statements from the date of the Acquisition.

We have incurred $ 5.5 million of transaction expenses in connection with the Acquisition during the year ended January 31, 2023.

$ 3.2 million of these costs were recorded as general and administrative expenses in our consolidated statements of operations during the year ended January 31, 2023, with the remainder allocated to purchase price consideration.

Our consolidated statements of operations from the date of the Acquisition to the period ended January 31, 2023 includes revenue and net loss of Attivo of $ 30.2 million and $ 36.4 million, respectively.

The following unaudited supplemental pro forma financial information is provided for informational purposes only and summarizes our combined results of operations as if the Acquisition occurred on February 1, 2021 (in thousands):

Year Ended January 31,

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Net loss $ ( 393,773 ) $ ( 326,829 )

Our consolidated statements of operations from the acquisition date to the period ended January 31, 2022 includes revenue and net income of Scalyr of $ 13.4 million and $ 0.2 million, respectively.

The pro forma results reflect certain adjustments for the amortization of acquired intangible assets, adjustments to revenue resulting from the fair value adjustment to deferred revenue, recognition of stock-based compensation, and acquisition-related costs.

The unaudited supplemental pro forma results reflect certain adjustments for the amortization of acquired intangible assets, recognition of stock-based compensation, acquisition-related transaction expenses, and acquisition-related compensation costs.

Such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the Acquisition been completed on the date indicated, nor is it indicative of our future operating results.

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), a leading identity security and lateral movement protection company.

The aggregate consideration will be approximately 58 % cash and approximately 42 % in shares of our Class A common stock for a total consideration of $ 616.5 million, subject to adjustments.

The number of shares to be issued in connection with the stock consideration will be based on a fixed value of $ 40.49 per share, which

RECLASSIFICATION OF PRIOR YEAR PRESENTATION

Certain prior year amounts have been reclassified for consistency with the current year presentation.

These reclassifications had no effect on the reported results of operations.

An adjustment has been made to the consolidated balance sheets for fiscal year ended January 31, 2022, to reclassify $ 6.0 million in other assets to long-term investments.

SENTINELONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

represents the average of the daily volume weighted average sales price of a share of our Class A common stock for the 30 consecutive trading days ending on March 14, 2022, subject to adjustments.

This acquisition is expected to close in the second fiscal quarter of 2023, subject to regulatory approval and customary closing conditions.

SUBSEQUENT EVENTS

In February 2023, the Company entered into a non-cancellable agreement with a cloud infrastructure vendor, under which the Company committed to spend an aggregate of at least $ 860.0 million between March 2023 and February 2029.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data