SentinelOne, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 34 ) 86 Consolidated Balance Sheets 88 Consolidated Statements of Operations 89 Consolidated Statements of Comprehensive Loss 90 Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) 91 Consolidated Statements of Cash Flows 93 Notes to Consolidated Financial Statements 95 85 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of SentinelOne, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of SentinelOne, Inc. and subsidiaries (the “Company”) as of January 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, redeemable convertible preferred stock and stockholders’ equity (deficit), and cash flows, for each of the three years in the period ended January 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2024, 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, 2024, 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 27, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. 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 audits in accordance with the standards of the PCAOB. 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. 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. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 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 (i) ratably over the subscription term as the performance obligations are satisfied, (ii) based on transaction volume or (iii) based on certain usage-based measures. 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”). 86 Table of Contents 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 during the year 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 March 27, 2024 We have served as the Company’s auditor since 2018. 87 Table of Contents SENTINELONE, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) January 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 256,651 $ 137,941 Short-term investments 669,305 485,584 Accounts receivable, net 214,322 151,492 Deferred contract acquisition costs, current 54,158 37,904 Prepaid expenses and other current assets 102,895 101,812 Total current assets 1,297,331 914,733 Property and equipment, net 48,817 38,741 Operating lease right-of-use assets 18,474 23,564 Long-term investments 204,798 535,422 Deferred contract acquisition costs, non-current 71,640 55,536 Intangible assets, net 122,903 145,093 Goodwill 549,411 540,308 Other assets 8,033 5,516 Total assets $ 2,321,407 $ 2,258,913 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 6,759 $ 11,214 Accrued liabilities 104,671 100,015 Accrued payroll and benefits 74,345 54,955 Operating lease liabilities, current 4,689 3,895 Deferred revenue, current 399,603 303,200 Total current liabilities 590,067 473,279 Deferred revenue, non-current 114,930 103,062 Operating lease liabilities, non-current 18,239 23,079 Other liabilities 4,128 2,788 Total liabilities 727,364 602,208 Commitments and contingencies (Note 15) Stockholders’ equity: Preferred stock; $ 0.0001 par value; 50,000,000 shares authorized as of January 31, 2024 and 2023, and no shares issued and outstanding as of January 31, 2024 and 2023 — — Class A common stock; $ 0.0001 par value; 1,500,000,000 shares authorized as of January 31, 2024 and 2023; 269,780,805 and 222,951,206 shares issued and outstanding as of January 31, 2024 and 2023, respectively 27 21 Class B common stock; $ 0.0001 par value; 300,000,000 shares authorized as of January 31, 2024 and 2023; 34,910,917 and 63,812,651 shares issued and outstanding as of January 31, 2024 and 2023, respectively 3 8 Additional paid-in capital 2,934,607 2,663,394 Accumulated other comprehensive loss ( 1,550 ) ( 6,367 ) Accumulated deficit ( 1,339,044 ) ( 1,000,351 ) Total stockholders’ equity 1,594,043 1,656,705 Total liabilities and stockholders’ equity $ 2,321,407 $ 2,258,913 The accompanying notes are an integral part of these consolidated financial statements. 88 Table of Contents SENTINELONE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) Year Ended January 31, 2024 2023 2022 Revenue $ 621,154 $ 422,179 $ 204,799 Cost of revenue 179,281 144,177 81,677 Gross profit 441,873 278,002 123,122 Operating expenses: Research and development 218,176 207,008 136,274 Sales and marketing 397,160 310,848 160,576 General and administrative 198,247 162,722 93,504 Restructuring (Note 11) 6,706 — — Total operating expenses 820,289 680,578 390,354 Loss from operations ( 378,416 ) ( 402,576 ) ( 267,232 ) Interest income 45,880 21,408 202 Interest expense ( 1,216 ) ( 1,830 ) ( 787 ) Other income (expense), net 918 ( 1,293 ) ( 2,280 ) Loss before income taxes ( 332,834 ) ( 384,291 ) ( 270,097 ) Provision for (benefit from) income taxes 5,859 ( 5,613 ) 1,004 Net loss $ ( 338,693 ) $ ( 378,678 ) $ ( 271,101 ) Net loss per share attributable to Class A and Class B common stockholders, basic and diluted $ ( 1.15 ) $ ( 1.36 ) $ ( 1.56 ) Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted 294,923,536 277,802,861 174,051,203 The accompanying notes are an integral part of these consolidated financial statements. 89 Table of Contents SENTINELONE, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) Year Ended January 31, 2024 2023 2022 Net loss $ ( 338,693 ) $ ( 378,678 ) $ ( 271,101 ) Other comprehensive income (loss): Changes in unrealized gains (losses) on investments 4,817 ( 6,821 ) — Foreign currency translation adjustments — — 289 Total comprehensive loss $ ( 333,876 ) $ ( 385,499 ) $ ( 270,812 ) The accompanying notes are an integral part of these consolidated financial statements. 90 Table of Contents SENTINELONE, INC. CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) (in thousands, except share data) Redeemable Convertible Preferred Stock Class A and Class B Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity (Deficit) Shares Amount Shares Amount Balances as of January 31, 2021 167,058,113 $ 621,139 39,242,316 $ 2 $ 29,869 $ 165 $ ( 350,572 ) $ ( 320,536 ) Conversion of redeemable convertible preferred stock to common stock upon initial public offering ( 167,058,113 ) ( 621,139 ) 169,787,200 10 621,129 — — 621,139 Issuance of common stock upon initial public offering and private placements, net of underwriting discounts and commissions — — 41,678,568 4 1,380,956 — — 1,380,960 Issuance of common stock upon exercise of options — — 9,793,331 10 14,611 — — 14,621 Issuance of common stock upon exercise of warrants — — 940,953 — — — — — Vesting of restricted stock units — — 15,218 — — — — — Issuance of common stock under employee stock purchase plan — — 381,716 — 11,356 — — 11,356 Vesting of early exercised options — — — — 572 — — 572 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 — — — — 92,668 — — 92,668 Issuance of restricted stock for services provided — — 20,000 — 500 — — 500 Foreign currency translation adjustments — — — — — 289 — 289 Net loss — — — — — — ( 271,101 ) ( 271,101 ) Balances as of January 31, 2022 — $ — 270,451,615 $ 27 $ 2,271,980 $ 454 $ ( 621,673 ) $ 1,650,788 Issuance of common stock upon exercise of 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 Issuance of common stock upon exercise of options — — 10,298,114 1 28,317 — — 28,318 91 Table of Contents SENTINELONE, INC. CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) (in thousands, except share data) Vesting of restricted stock units — — 6,021,877 — — — — — Issuance of common stock under employee stock purchase plan — — 1,607,874 — 19,147 — — 19,147 Vesting of early exercised options — — — — 186 — — 186 Stock-based compensation — — — — 223,563 — — 223,563 Other comprehensive income — — — — — 4,817 — 4,817 Net loss — — — — — — ( 338,693 ) ( 338,693 ) Balance as of January 31, 2024 — $ — 304,691,722 $ 30 $ 2,934,607 $ ( 1,550 ) $ ( 1,339,044 ) $ 1,594,043 The accompanying notes are an integral part of these consolidated financial statements. 92 Table of Contents SENTINELONE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended January 31, 2024 2023 2022 CASH FLOW FROM OPERATING ACTIVITIES: Net loss $ ( 338,693 ) $ ( 378,678 ) $ ( 271,101 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 38,912 29,721 7,909 Amortization of deferred contract acquisition costs 48,682 36,417 21,670 Non-cash operating lease costs 4,020 3,559 2,862 Stock-based compensation expense 216,870 164,466 87,889 Accretion of discounts, and amortization of premiums on investments, net ( 19,943 ) ( 12,217 ) — Net gain on strategic investments ( 2,703 ) — — Other 4,637 ( 1,187 ) ( 456 ) Changes in operating assets and liabilities, net of effects of acquisitions Accounts receivable ( 61,949 ) ( 44,442 ) ( 59,082 ) Prepaid expenses and other current assets ( 1,207 ) ( 14,499 ) ( 7,319 ) Deferred contract acquisition costs ( 81,039 ) ( 61,289 ) ( 53,565 ) Accounts payable ( 4,499 ) 3,670 ( 2,076 ) Accrued liabilities 4,271 4,976 18,080 Accrued payroll and benefits 19,140 ( 7,205 ) 41,462 Operating lease liabilities ( 4,410 ) ( 5,320 ) ( 3,139 ) Deferred revenue 108,197 92,496 115,142 Other liabilities 1,340 ( 3,755 ) 6,136 Net cash used in operating activities ( 68,374 ) ( 193,287 ) ( 95,588 ) CASH FLOW FROM INVESTING ACTIVITIES: Purchases of property and equipment ( 1,304 ) ( 4,953 ) ( 3,653 ) Purchases of intangible assets ( 3,505 ) ( 407 ) ( 802 ) Capitalization of internal-use software ( 13,956 ) ( 13,452 ) ( 5,839 ) Purchases of investments ( 466,253 ) ( 1,938,007 ) ( 6,000 ) Sales and maturities of investments 639,193 925,185 — Cash paid for acquisitions, net of cash and restricted cash acquired ( 13,585 ) ( 281,032 ) ( 3,449 ) Net cash provided by (used in) investing activities 140,590 ( 1,312,666 ) ( 19,743 ) CASH FLOW FROM FINANCING ACTIVITIES: Payments of deferred offering costs — ( 186 ) ( 7,416 ) Repayment of debt — — ( 20,000 ) Proceeds from exercise of stock options 28,317 17,335 14,622 Proceeds from issuance of common stock under the employee stock purchase plan 19,147 19,159 11,356 Proceeds from initial public offering and private placement, net of underwriting discounts and commissions — — 1,388,562 Net cash provided by financing activities 47,464 36,308 1,387,124 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS — — 1,146 NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 119,680 ( 1,469,645 ) 1,272,939 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH–Beginning of period 202,406 1,672,051 399,112 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH–End of period $ 322,086 $ 202,406 $ 1,672,051 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ 7 $ 17 $ 409 Income taxes paid, net of refunds $ 5,111 $ 500 $ 583 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Stock-based compensation capitalized as internal-use software $ 6,693 $ 4,020 $ 4,779 Property and equipment purchased but not yet paid $ 98 $ 203 $ 913 Vesting of early exercised stock options $ 186 $ 103 $ 575 Deferred offering costs accrued but not yet paid $ — $ — $ 186 93 Table of Contents SENTINELONE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Issuance of common stock and assumed equity awards in connection with acquisitions $ — $ 186,332 $ 120,319 Conversion of redeemable convertible preferred stock to common stock upon initial public offering $ — $ — $ 621,139 The accompanying notes are an integral part of these consolidated financial statements. 94 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Business SentinelOne, Inc. (SentinelOne, the Company, we, our, or us) was incorporated in January 2013 in the State of Delaware. We are a cybersecurity provider that delivers an artificial intelligence-powered platform to enable autonomous cybersecurity defense. Our headquarters is located in Mountain View, California with various other global office locations. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) in the United States (US). The consolidated financial statements include the accounts of SentinelOne and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Fiscal Year Our fiscal year ends on January 31. References to fiscal 2024, 2023 and 2022 refer to the fiscal years ended January 31, 2024, January 31, 2023 and January 31, 2022, respectively. 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, 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. Segment and Geographic Information We have a single operating and reportable segment. Our chief operating decision maker (CODM) is our Chief Executive Officer. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and assessing financial performance. For information regarding our revenue and long-lived assets by geography, see Note 3, Revenue and Contract Balances , and Note 14, Geographic Information , respectively. Foreign Currency During fiscal 2022, we changed the functional currency of certain subsidiaries from their respective local currency to the US dollar. The change in functional currency is due to increased exposure to the US dollar as a result of a change in facts and circumstances in the primary economic environment in which these subsidiaries operate. The effects of the change in functional currency were not significant to our consolidated financial statements. Subsequent to the change, our reporting currency and the functional currency of our foreign subsidiaries is the US dollar. Foreign currency transaction gains and losses are recorded in other income (expense), net in the consolidated statements of operations and were not material for any periods presented. Revenue Recognition We recognize revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers . 95 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration that we expect to be entitled to receive in exchange for the subscriptions and services. We apply the following five-step approach to recognize revenue: (i) Identification of the Contract, or Contracts, with the Customer —We determine that we have a contract with a customer when the contract is approved, the payment terms for the services can be identified, each party’s rights regarding the services to be transferred can be identified, the customer has the ability and intent to pay, and the contract has commercial substance. We apply judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit and financial information of the customer. We sell through our indirect relationships with our channel partners or direct relationships with end customers through our internal sales force. Apart from certain sales arrangements where channel partners are determined to be our customers, we have concluded that the end customer is our customer. (ii) Identification of the Performance Obligations in the Contract —Performance obligations in a contract are identified based on the services that will be transferred to a customer that are both capable of being distinct, where the customer can benefit from the service either on its own or together with other resources that are readily available to the customer, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, we apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised services are accounted for as a combined performance obligation. We have concluded that our contracts with customers do not contain warranties that give rise to a separate performance obligation. (iii) Determination of the Transaction Price —The transaction price is the amount of consideration we expect to be entitled from a customer in exchange for providing the subscriptions and services. Variable consideration is included in the transaction price if, in our judgment, it is probable that no significant future reversal of cumulative revenue under the contract will occur. Some of our end customers are entitled to receive service level commitment credits, in which we may be contractually obligated to provide partial refunds, and in rare instances, each representing a form of variable consideration. We have historically not experienced any significant incidents affecting the defined guarantees of performance levels or service response affecting the defined guarantees of performance levels or service response rates, and accordingly, estimated refunds related to service level commitment credits in the consolidated financial statements were not material during fiscal 2024, 2023 and 2022. None of our contracts contain a significant financing component. The transaction price excludes amounts collected on behalf of third parties, such as sales taxes. (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 standalone selling price (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 96 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS amount that reflects the consideration expected to be received in exchange for the subscriptions or services. We generate substantially all of our revenue from subscriptions to our Singularity Platform. Our Singularity Platform delivers artificial intelligence-powered threat prevention, detection, and response capabilities, enabling an automatic protection against a full spectrum of cyber threats. We built our Singularity Platform to be deployed as a cloud service or in private and hybrid clouds. Customers can extend the functionality of their subscription to our platform by subscribing to additional Singularity Modules. The nature of our promise to the customer under the subscription is to stand ready to provide protection for the duration of the contractual term. As a result, we recognize revenue for these performance obligations ratably over the contractual term. 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 i) recognize revenue as each distinct service period is performed, ii) recognize the estimate of variable consideration ratably over the period to which it relates, or iii) 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. Most of our subscription contracts have a term of one to three years . Our payment terms typically range between 30 to 45 days. The invoiced amounts are treated as deferred revenue on the consolidated balance sheets and are recognized ratably over the term of the contract beginning on the date the customer is given access to our platform. Our contracts are generally non-cancelable over the contractual term. Contracts with Multiple Performance Obligations Our contracts with customers may contain multiple promised services consisting of subscriptions to our Singularity Platform, premium support and maintenance, and other Singularity Modules that are distinct and accounted for separately. The transaction price is allocated to separate performance obligations on a relative SSP basis. Our best evidence for SSP is the price we charge for the subscription or service when we sell it separately in similar circumstances to similar customers. 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. 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 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. Advertising Expenses Advertising costs are expensed as incurred and included in sales and marketing expenses in the consolidated statements of operations. Advertising expenses were $ 18.5 million, $ 12.3 million, and $ 8.4 million for fiscal 2024, 2023 and 2022, respectively. 97 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Stock-Based Compensation 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. Stock-based compensation expense for awards with only service-based vesting conditions is recognized on a straight-line basis over the requisite service period of the awards. Forfeitures are accounted for in the period in which they occur. We granted certain awards that have both service-based vesting conditions and performance-based vesting conditions. For these awards, we recognize stock-based compensation expense on a graded basis over the total requisite service period for each separately vesting portion of performance tranches where it is probable that the performance-based vesting conditions will be achieved. We also granted stock option awards with service-based, performance-based, and market-based vesting conditions to our Chief Executive Officer and Chief Financial Officer. For these awards, stock-based compensation expense is recognized using the accelerated attribution method over the requisite implied service period when it is probable the performance-based vesting condition will be achieved. Income Taxes We are subject to income taxes in the US and other foreign jurisdictions. We utilize the asset and liability method of accounting for income taxes whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, as well as from net operating loss carryforwards, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. 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. 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 income tax expense, in the consolidated statements of operations. Net Loss per Share Attributable to Common Stockholders We compute basic and diluted net loss per share attributable to common stockholders using the two-class method required for participating securities. 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. Cash, Cash Equivalents, and Restricted Cash We consider all highly liquid investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents may consist of amounts invested in money market funds and certificates of deposit. Restricted cash consists of indemnity escrow funds related to acquisitions 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. 98 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table provides a reconciliation of cash, cash equivalents, and restricted cash to the total of these amounts shown in the consolidated statements of cash flows (in thousands): As of January 31, 2024 2023 Cash and cash equivalents $ 256,651 $ 137,941 Restricted cash, current 61,264 61,264 Restricted cash, non-current 4,171 3,201 $ 322,086 $ 202,406 Investments We determine the appropriate classification of our investments at the time of purchase and reevaluate such determination at each balance sheet date. 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. Our investments are recorded at fair value with unrealized gains and losses, if any, reported in accumulated other comprehensive income (loss). 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, 2024 and 2023. 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. Realized gains and losses on the sale of investments during fiscal 2024, 2023 and 2022 were not significant. Strategic Investments 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 recorded 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 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 operations. During fiscal 2024, the Company recognized impairment charges of $ 0.8 million and realized gains of $ 3.5 million on its non-marketable strategic investments. Impairment charges and realized gains on strategic investments were recognized 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 2023 and 2022. 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 accounts receivable, accounts payable, accrued liabilities, and accrued payroll and benefits approximate their respective fair values due to their short-term nature. 99 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Concentrations of Credit Risk 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 US and Israel. 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. We perform periodic credit evaluations of our customers and generally do not require collateral. Channel partners that represented 10% or more of accounts receivable, net for the periods presented were as follows: As of January 31, 2024 2023 Channel partner A 26 % 20 % Channel partner B 12 % * Channel partner C 10 % * * Less than 10% There were no end customers that represented 10% or more of accounts receivable as of January 31, 2024 or 2023. The only channel partner that represented 10% or more of our total revenue for the periods presented was as follows: Year Ended January 31, 2024 2023 2022 Channel partner A 19 % 18 % 18 % There were no end customers that represented 10% or more of total revenue for fiscal 2024, 2023 and 2022. Accounts Receivable Accounts receivable are recorded at invoiced amounts and are non-interest bearing. We have a well-established collection history from our channel partners and end customers. 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. The allowance for doubtful accounts balance was $ 0.7 million and $ 0.8 million as of January 31, 2024 and 2023, respectively. Deferred Contract Acquisition Costs We capitalize sales commissions and associated payroll taxes, and certain incentives (such as referral fees) paid to partners, that are incremental to obtaining a customer contract, which are recorded as deferred contract acquisition costs on the consolidated balance sheets. 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, including certain incentives paid to partners, 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 average contractual term of the renewal. 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. Amortization of deferred contract acquisition costs is included in sales and marketing expenses in the consolidated statements of operations. 100 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS We periodically review these deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit. We did not recognize any impairment of deferred contract acquisition costs during fiscal 2024, 2023 and 2022. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets as follows: Estimated Useful Life Office furniture and equipment 5 years Computers, software, and electronic equipment 3 years Capitalized internal-use software 4 years Leasehold improvements Shorter of useful life or remaining term of lease Costs for maintenance and repairs are expensed as incurred. Capitalized Internal-Use Software We capitalize certain internal-use software development costs related to our cloud platform. Costs incurred in the preliminary stages of development and post-development are expensed as incurred. Internal and external costs incurred during the development phase, if direct, are capitalized until the software is substantially complete and ready for our intended use. We also capitalize costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Maintenance and training costs are expensed as incurred. Capitalized internal-use software is included in property and equipment and is amortized to cost of revenue on a straight-line basis over its expected useful life. 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 assets 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. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the asset group. In fiscal 2024, we recorded a $ 2.4 million impairment loss related to our excess facilities. No impairment loss was recorded during fiscal 2023 and 2022. Goodwill is not amortized but tested for impairment at least annually in the fourth quarter, or more frequently if events or changes in circumstances indicate that impairment may exist. The impairment test consists of a qualitative assessment to determine if the quantitative assessment is required. 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 2024, 2023 and 2022. 101 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Business Combinations We account for our acquisitions using the acquisition method of accounting. We allocate the fair value of purchase consideration to the tangible and intangible assets acquired, and liabilities assumed, based on their estimated fair values. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. 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, 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. Acquisition costs, such as legal and consulting fees, are expensed as incurred and are included in general and administrative expenses in the consolidated statements of operations. During the measurement period, which is up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statements of operations. See Note 4, Acquisitions , for additional information regarding our acquisitions. Leases In accordance with ASC Topic 842, Leases , we determine if an arrangement is or contains a lease at inception by evaluating various factors, including if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration and other facts and circumstances. Operating lease right-of-use (ROU) assets and operating lease liabilities are recognized on the consolidated balance sheets at the lease commencement date based on the present value of lease payments over the lease term, which is the non-cancelable period stated in the contract adjusted for any options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease payments consist of the fixed payments under the arrangement, less any lease incentives, such as tenant improvement allowances. Variable costs, comprised of maintenance and utilities based on actual usage, are not included in the measurement of operating lease ROU assets and operating lease liabilities and are expensed when the event determining the amount of variable consideration to be paid occurs. When the implicit rate of the leases is not determinable, we use an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. Lease cost for lease payments is recognized on a straight-line basis over the lease term. We account for lease components and non-lease components as a single lease component. In addition, we do not recognize operating lease ROU assets and operating lease liabilities for leases with lease terms of 12 months or less. In addition, we sublease certain of our unoccupied facilities to third parties. We recognize sublease income on a straight-line basis over the sublease term. We did not have any material finance leases during fiscal 2024, 2023 and 2022. Recently Issued Accounting Pronouncement s Not Yet Adopted In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the CODM and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. This ASU 102 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS will likely result in us including the additional required disclosures when adopted. We are currently evaluating the provisions of this ASU. In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. This ASU will result in the required additional disclosures being included in our consolidated financial statements, once adopted. 3. REVENUE AND CONTRACT BALANCES Disaggregation of Revenue The following table summarizes revenue by geography based on the shipping address of end customers who have contracted to use our platform for the periods presented (in thousands, except percentages): Year Ended January 31, 2024 2023 2022 Amount % of Revenue Amount % of Revenue Amount % of Revenue US $ 397,885 64 % $ 276,443 65 % $ 140,034 68 % International 223,269 36 145,736 35 64,765 32 Total $ 621,154 100 % $ 422,179 100 % $ 204,799 100 % No single country other than the US represented 10% or more of our revenue during fiscal 2024, 2023 and 2022. Substantially all of our sales are fulfilled through channel partners, including distributors, resellers, managed security service providers, and others. Contract Balances Contract assets consist of unbilled accounts receivable, which arise when a right to consideration for our performance under the customer contract occurs before invoicing the customer. The amount of unbilled accounts receivable included within accounts receivable, net on the consolidated balance sheets was $ 3.8 million and $ 1.5 million as of January 31, 2024 and 2023, respectively. Contract liabilities consist of deferred revenue, which represents invoices billed in advance of performance under a contract. Deferred revenue is recognized as revenue over the contractual period. The deferred revenue balance was $ 514.5 million and $ 406.3 million as of January 31, 2024 and 2023, respectively. We recognized revenue of $ 305.7 million, $ 195.9 million and $ 95.5 million for fiscal 2024, 2023 and 2022, respectively, that was included in the corresponding contract liability balance at the beginning of the period. Remaining Performance Obligations Our contracts with customers typically range from one to three years . Revenue allocated to remaining performance obligations represents non-cancelable contract revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced in future periods. For consumption and usage-based agreements with non-cancelable commitments, remaining performance obligations are determined based on the ratable recognition of the remaining commitment over the remaining contract term. The amount and timing of revenue recognition are generally dependent on customers’ future consumption, which is inherently variable at the customers’ discretion. As of January 31, 2024, our remaining performance obligations were $ 896.2 million, of which we expect to recognize 87 % as revenue over the next 24 months, with the remainder to be recognized thereafter. 103 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Capitalized contract costs were $ 125.8 million and $ 93.4 million as of January 31, 2024 and 2023, respectively. Amortization expense of contract costs was $ 48.7 million, $ 36.4 million, and $ 21.7 million for fiscal 2024, 2023 and 2022, 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 not recognize any impairment of deferred contract acquisition costs during fiscal 2024, 2023 and 2022. 4. ACQUISITIONS KSG On November 8, 2023, we completed our acquisition of Krebs Stamos Group LLC (KSG), a Washington D.C.-based privately held strategic advisory group. The purchase price of $ 13.9 million for all of the outstanding membership interests of KSG consisted of all cash and has been accounted for as a business combination in accordance with ASC Topic 805, Business Combinations . We recorded $ 4.8 million of net identifiable assets in our consolidated balance sheet as of the KSG acquisition date, of which $ 3.2 million was related to intangible assets. The excess of the purchase price over the fair value of net identifiable assets acquired has been assigned to goodwill in the amount of $ 9.1 million. The goodwill in this transaction is primarily attributable to expected operational synergies and the assembled workforce. The goodwill is expected to be deductible for tax purposes. Intangible assets consist of customer relationships, which will be amortized to sales and marketing expense on a straight-line basis over the estimated useful life of four years . The results of operations of KSG have been included in the consolidated financial statements from the date of acquisition, and would not have had a material impact on our combined results of operation if the acquisition had occurred on February 1, 2022. 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. In connection with the acquisition, we also granted PSUs under our 2021 Equity Incentive Plan. For further details, refer to Note 10, Stock-Based Compensation . As the shares are subject to post-acquisition employment, we are accounting for them as post-acquisition compensation expense. Attivo On May 3, 2022, we acquired 100 % of the issued and outstanding equity securities of Attivo Networks, Inc. (Attivo), an identity security and lateral movement protection company (the Attivo acquisition). Attivo expands our coverage of critical attack surfaces. Identity is an adjacent security solution that complements our core endpoint solution. The Attivo 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 shares 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 us of certain stockholders of Attivo. In connection with the Attivo acquisition, we also granted RSUs and PSUs under our 2021 Equity Incentive Plan. For further details, refer to Note 10, Stock-Based Compensation . 104 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents the allocation of purchase consideration recorded on our consolidated balance sheet as of the acquisition date (in thousands): Amount Consideration: Cash $ 348,917 Common Stock ( 6,032,231 shares) (1) 185,885 Fair value of total consideration transferred $ 534,802 Cash and cash equivalents $ 8,836 Accounts receivable 4,867 Prepaid expense and other current assets 3,880 Operating lease right-of-use assets 260 Intangible assets 151,900 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 valuation of intangible assets acquired are included in Note 7, Intangible Assets . 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 resulting from the Attivo 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. We incurred $ 5.5 million of transaction expenses in connection with the Attivo acquisition during fiscal 2023. $ 3.2 million of these costs were recorded as general and administrative expenses in our consolidated statements of operations, with the remainder allocated to purchase price consideration. No transaction expenses in connection with the acquisition were recorded during fiscal 2024. 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, 2023 2022 Revenue $ 429,683 $ 235,321 Net loss $ ( 393,773 ) $ ( 326,829 ) 105 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. Scalyr On February 6, 2021, we executed a merger agreement to acquire 100 % of the issued and outstanding equity securities of Scalyr, Inc. (Scalyr), a leading cloud-native, cloud-scale data analytics platform. This Scalyr acquisition allows us to advance our data ingestion, search, and retention capabilities. The Scalyr 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): Amount Cash and cash equivalents $ 699 Accounts receivable 3,665 Restricted cash 444 Prepaid expense 277 Intangible assets 17,150 Goodwill 108,193 Accounts payable ( 412 ) Deferred revenue ( 5,041 ) Other liabilities ( 347 ) Total purchase consideration $ 124,628 The valuation of intangible assets acquired are included in Note 7, Intangible Assets . 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 is not deductible for tax purposes. 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 was recognized ratably over the vesting period. 106 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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): Year Ended January 31, 2022 Revenue $ 204,874 Net loss $ ( 262,145 ) 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. 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. 5. FAIR VALUE MEASUREMENTS We measure fair value based on a three-level hierarchy, maximizing the use of observable inputs, where available, and minimizing the use of unobservable inputs, as follows: Level 1: Assets and liabilities whose values are based on observable inputs such as quoted (unadjusted) prices in active markets for identical assets or liabilities. Level 2: Assets and liabilities whose values are based on inputs from quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability. Level 3: Assets and liabilities whose values are based on unobservable inputs that are supported by little or no market activity and that are significant to the overall fair value measurement. 107 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes information about our cash, cash equivalents, and investments by investment category for the periods presented (in thousands): As of January 31, 2024 Fair Value Level Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Assets Cash and cash equivalents: Cash $ 43,925 $ — $ — $ 43,925 Money market funds Level 1 204,481 — — 204,481 Certificates of deposit Level 2 8,245 — — 8,245 Total cash and cash equivalents $ 256,651 $ — $ — $ 256,651 Short-term investments: US Treasury securities Level 1 $ 234,776 $ — $ ( 1,053 ) $ 233,723 Corporate notes and bonds Level 2 279,248 12 ( 1,068 ) 278,192 US agency securities Level 2 157,873 18 ( 501 ) 157,390 Total short-term investments $ 671,897 $ 30 $ ( 2,622 ) $ 669,305 Long-term investments: US Treasury securities Level 1 $ 27,175 $ 121 $ — $ 27,296 Corporate notes and bonds Level 2 69,970 279 ( 67 ) 70,182 US agency securities Level 2 90,924 303 ( 48 ) 91,179 Total long-term investments $ 188,069 $ 703 $ ( 115 ) $ 188,657 Total assets measured at fair value $ 1,116,617 $ 733 $ ( 2,737 ) $ 1,114,613 108 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of January 31, 2023 Fair Value Level Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Assets 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: US 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 US agency securities Level 2 74,060 3 ( 349 ) 73,714 Total short-term investments $ 487,200 $ 49 $ ( 1,665 ) $ 485,584 Long-term investments: US Treasury securities Level 1 $ 192,337 $ — $ ( 2,460 ) $ 189,877 Corporate notes and bonds Level 2 233,946 178 ( 2,029 ) 232,095 US 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 There were no transfers between the levels of the fair value hierarchy during fiscal 2024, 2023 and 2022. As of January 31, 2024, all of our investments will mature within two years. As of January 31, 2024, 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, 2024 and 2023, we did not recognize any losses on our investments due to credit related factors. As of January 31, 2024, we had $ 2.1 million in continuous unrealized loss positions for more than twelve months on securities with a total fair value of $ 437.2 million. The tables above do not include the Company’s strategic investments in non-marketable debt and equity securities, which are recorded at cost, less any impairment, plus or minus observable price changes in orderly transactions for identical or similar investments of the same issuer (measurement alternative) and were $ 16.1 million and $ 12.5 million as of January 31, 2024 and 2023, respectively. During the year ended January 31, 2024, the Company recognized impairment charges on its non-marketable strategic investments of $ 0.8 million. During the year ended January 31, 2024, the Company recognized realized gains of $ 3.5 million on its non-marketable strategic investments. Impairment charges and realized gains on strategic investments were recognized in other income (expense), net. The fair value was estimated on a non-recurring basis based on Level 3 inputs. 109 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following (in thousands): As of January 31, 2024 2023 Office furniture and fixtures $ 2,078 $ 2,110 Computers, software, and equipment 4,999 4,603 Capitalized internal-use software 54,325 34,753 Leasehold improvements 12,551 13,188 Construction in progress 21 3 Total property and equipment 73,974 54,657 Less: Accumulated depreciation and amortization ( 25,157 ) ( 15,916 ) Total property and equipment, net $ 48,817 $ 38,741 We capitalized internal-use software costs of $ 20.7 million, $ 17.5 million and $ 10.6 million during fiscal 2024, 2023 and 2022, respectively. Depreciation and amortization expense related to property and equipment was $ 10.0 million, $ 6.7 million and $ 4.6 million for fiscal 2024, 2023 and 2022, respectively, including amortization expense related to capitalized internal-use software of $ 7.1 million, $ 4.1 million and $ 2.1 million for fiscal 2024, 2023 and 2022, respectively. 7. INTANGIBLE ASSETS Intangible assets, net as of January 31, 2024 and 2023 consisted of the following (in thousands): As of January 31, 2024 2023 Developed technology $ 78,700 $ 78,700 Customer relationships 82,300 79,100 Backlog 11,100 11,100 Non-compete agreements 650 650 Trademarks 150 150 Patents 5,016 1,501 Total finite-lived intangible assets 177,916 171,201 Less: accumulated amortization ( 55,268 ) ( 26,363 ) Total finite-lived intangible assets, net $ 122,648 $ 144,838 Indefinite-lived intangible assets - domain names 255 255 Total intangible assets, net $ 122,903 $ 145,093 Amortization expense of intangible assets was $ 28.9 million, $ 23.0 million, and $ 3.3 million for fiscal 2024, 2023, and 2022, respectively. 110 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of January 31, 2024, estimated future amortization expense is as follows (in thousands): Fiscal Year Ending January 31, 2025 $ 25,412 2026 23,975 2027 23,975 2028 14,215 2029 8,373 Thereafter 26,698 Total $ 122,648 8. LEASES We have entered into real estate operating lease agreements with various expiration dates through 2029, some of which include options to extend the leases for up to seven years, and some of which include options to terminate the leases. Our lease terms include options to extend the lease if they are reasonably certain of being exercised. Our operating lease arrangements do not contain any restrictive covenants or residual value guarantees. Supplemental cash flow information related to our operating leases for fiscal 2024, 2023, and 2022 as well as the weighted-average remaining lease term and weighted-average discount rate as of January 31, 2024 and 2023 were as follows: Year Ended January 31, 2024 2023 2022 Supplemental Cash Flow Information Cash paid for amount included in the measurement of operating lease liabilities $ 4,987 $ 5,266 $ 4,596 Operating lease ROU assets obtained in exchange for operating lease liabilities $ 616 $ 3,224 $ 8,558 As of January 31, 2024 2023 Lease Term and Discount Rate Weighted-average remaining lease term (years) 4.53 5.55 Weighted-average discount rate 4.2 % 4.2 % The components of lease costs, net of sublease income, consisted of the following (in thousands): Year Ended January 31, 2024 2023 2022 Operating lease costs $ 4,855 $ 4,905 $ 4,027 Short-term lease costs 19 771 2,248 Variable lease costs 1,323 1,886 1,124 Sublease income ( 941 ) ( 700 ) ( 563 ) Total lease costs $ 5,256 $ 6,862 $ 6,836 111 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The maturities of our operating lease liabilities as of January 31, 2024 were as follows (in thousands): Fiscal Year Ending January 31, Amount 2025 $ 5,565 2026 5,684 2027 5,571 2028 5,574 2029 2,687 Thereafter 155 Total operating lease payments $ 25,236 Less: Imputed interest ( 2,308 ) Present value of operating lease liabilities $ 22,928 9. COMMON STOCK We have two classes of common stock: Class A common stock and Class B common stock. In connection with our IPO, we amended and restated our certificate of incorporation and authorized 1,500,000,000 shares of Class A common stock and 300,000,000 shares of Class B common stock. The shares of Class A common stock and Class B common stock are identical, except with respect to voting rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to twenty votes. Class A and Class B common stock each have a par value of $ 0.0001 per share, and are referred to collectively as our common stock throughout the notes to the consolidated financial statements, unless otherwise noted. Holders of common stock are entitled to receive any dividends as may be declared from time to time by the board of directors. Shares of Class B common stock may be converted to Class A common stock at any time at the option of the stockholder. Shares of Class B common stock automatically convert to Class A common stock at the earlier of: (i) the date specified by a vote of the holders of 66 2/3% of the then outstanding shares of Class B common stock, (ii) seven years from the date of our prospectus filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act (Final Prospectus), or June 29, 2028, (iii) the first date following the completion of our IPO on which the number of shares of outstanding Class B common stock (such calculations shall include shares of Class B common stock subject to outstanding stock options) held by Tomer Weingarten, including certain permitted entities that Mr. Weingarten controls, is less than 25 % of the number of shares of outstanding Class B common stock (such calculation shall include shares of Class B common stock subject to outstanding stock options) that Mr. Weingarten originally held as of the date of our Final Prospectus, (iv) the date fixed by our board of directors, following the first date following the completion of our IPO when Mr. Weingarten is no longer providing services to us as an officer, employee, consultant or member of our board of directors, (v) the date fixed by our board of directors following the date on which, if applicable, Mr. 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. Weingarten. Our common stock reserved for future issuance on an as-converted basis as of January 31, 2024 and 2023 were as follows: As of January 31, 2024 2023 Stock options outstanding 21,159,850 32,446,814 RSUs and PSUs outstanding 27,406,457 14,409,166 ESPP reserved for future issuance 9,303,700 8,043,936 2021 Plan available for future grants 36,450,021 40,175,515 Total shares of common stock reserved 94,320,028 95,075,431 112 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. STOCK-BASED COMPENSATION Stock-Based Compensation Expense The components of stock-based compensation expense recognized in the consolidated statements of operations consisted of the following (in thousands): Year Ended January 31, 2024 2023 Cost of revenue $ 17,187 $ 10,093 Research and development 61,055 51,771 Sales and marketing 55,798 40,115 General and administrative 83,890 62,487 Restructuring ( 1,060 ) — Total $ 216,870 $ 164,466 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, restricted stock units (RSUs), and performance stock units (PSUs). A total of 35,281,596 shares of Class A common stock were initially available for issuance under the 2021 Plan. Our compensation committee administers the 2021 Plan. The number of shares of our Class A common stock available for issuance under the 2021 Plan is subject to an annual increase on the first day of each fiscal year beginning on February 1, 2022, equal to the lesser of: (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. 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. Any shares underlying stock options that are expired, canceled, forfeited or repurchased under the Prior Plans will be automatically transferred to the 2021 Plan and be available for issuance as Class A common stock. Restricted Stock Units and Performance Stock Units A summary of our RSU and PSU activity is as follows: Number of Shares Weighted-Average Grant Date Fair Value Outstanding as of January 31, 2023 14,409,166 $ 27.37 Granted 22,822,240 17.17 Released ( 6,021,877 ) 25.15 Forfeited ( 3,803,072 ) 22.17 Outstanding as of January 31, 2024 27,406,457 $ 20.08 As of January 31, 2024, we had unrecognized stock-based compensation expense related to unvested RSUs of $ 482.6 million that is expected to be recognized on a straight-line basis over a weighted-average period of 2.95 years. As of January 31, 2024, we had unrecognized stock-based compensation expense related to unvested PSUs of $ 3.8 million that is expected to be recognized on a straight-line basis over a weighted-average period of 2.13 years. 113 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS During fiscal 2024, we granted PSUs covering 1,133,455 shares of Class A common stock at target to certain executives subject to service-based and performance-based vesting conditions. As of January 31, 2024, the financial performance metrics have not been achieved. As such, we have not recorded any stock-based compensation expense and have no unrecognized stock-based compensation expense related to these PSUs. In November 2023, we granted 312,686 PSUs with a grant date fair value of $ 5.4 million subject to service-based and performance-based vesting conditions to retain the services of certain former KSG employees. 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. For further details, refer to Note 4, Acquisitions . 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, 2023 32,446,814 $ 4.71 6.52 $ 337,214 Granted — — Exercised ( 10,298,114 ) 2.75 Forfeited ( 988,850 ) 5.60 Outstanding as of January 31, 2024 21,159,850 $ 5.63 6.25 $ 447,989 Expected to vest as of January 31, 2024 21,159,850 $ 5.63 6.25 $ 447,989 Vested and exercisable as of January 31, 2024 15,633,560 $ 4.51 5.96 $ 348,522 There were no options granted during fiscal 2024 and 2023. The weighted-average grant-date fair value of options granted during fiscal 2022 was $ 13.14 per share. The aggregate intrinsic value is the difference between the exercise price and the estimated fair value of the underlying common stock. The aggregate intrinsic value of options exercised during fiscal 2024, 2023 and 2022 was $ 170.1 million, $ 173.0 million and $ 333.7 million, respectively. As of January 31, 2024, we had unrecognized stock-based compensation expense related to unvested options of $ 51.8 million that is expected to be recognized on a straight-line basis over a weighted-average period of 1.85 years. 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 i) our IPO (the performance-based vesting condition), which was completed in June 2021, and ii) the achievement of a certain market capitalization target (the market-based vesting condition), subject to the executive’s continued service to us from the grant date through the milestone event. As of January 31, 2024, the market capitalization target has 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. We recorded stock-based compensation expense related to these milestone options of $ 3.6 million, $ 3.6 million, and $ 3.1 million during fiscal 2024, 2023, and 2022, respectively. As of January 31, 2024, we had unrecognized stock-based compensation expense related to unvested milestone options of $ 9.1 million, that is expected to be recognized over the remaining implied service period of 2.6 years. 114 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Restricted Common Stock In connection with the Attivo acquisition, we issued restricted Class A common stock to Attivo’s employees. We recorded stock-based compensation expense related to these restricted shares in connection with the Attivo acquisition of $ 0.7 million and $ 1.0 million during fiscal 2024 and 2023, respectively. As of January 31, 2024, we had unrecognized stock-based compensation expense related to this unvested restricted common stock of $ 0.3 million. In connection with the Scalyr acquisition, we granted 1,315,099 shares of restricted common stock. We recorded stock-based compensation expense related to restricted common stock in connection with the Scalyr acquisition of $ 0.2 million, $ 8.5 million, and $ 10.9 million during fiscal 2024, 2023, and 2022, respectively. As of January 31, 2024, this restricted common stock has fully vested. 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 ended on July 5, 2023. On each purchase date, eligible employees will purchase the shares at a price per share equal to 85 % of the lesser of i) the fair market value of our common stock as of the beginning of the offering period or ii) the fair market value of our common stock on the purchase date, as defined in the ESPP, except for the initial offering period that had a 24-month look back to the IPO price of $ 35 . The following table summarizes the assumptions used in estimating the fair value of employee stock purchase rights using the Black-Scholes option pricing model for the periods presented: Year Ended January 31, 2024 2023 Expected term (in years) 0.5 0.5 - 1.0 Expected volatility 55 % - 85 % 72 % - 96 % Risk-free interest rate 5.2 % - 5.5 % 2.6 % - 4.8 % Dividend yield — % — % We recognized stock-based compensation expense related to ESPP of $ 11.7 million, $ 12.7 million, and $ 5.5 million during fiscal 2024, 2023, and 2022, respectively. Modifications During fiscal 2024 and 2023, certain members of our management team converted to non-employee consultants or to positions that no longer provide substantive service to the Company (Management Transitions). The Management Transitions have been accounted for as modifications, 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 agreements entered into in connection with the Management Transitions. During fiscal 2024 and 2023, we recognized an incremental charge of $ 6.2 million and $ 4.5 million, respectively, related to the Management Transitions. 115 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 11. RESTRUCTURING In June 2023, we announced a restructuring plan (the Plan) as a result of a review of current strategic priorities, resource allocation, and cost reduction intended to reduce operating costs, improve operating margins and continue advancing our ongoing commitment to profitable growth. The Plan includes a reduction of our workforce by approximately 5 %, or approximately 100 full-time employees. We incurred approximately $ 7.4 million in charges in connection with the Plan in fiscal 2024, which consists of $ 5.4 million in charges related to severance payments and employee benefits, $ 2.4 million of impairment charges related to excess facilities, $ 0.7 million related to inventory write-offs, offset partially by $ 1.1 million in savings related to the reversal of certain stock-based compensation expense. Note that the charges related to inventory write-offs are recognized as cost of sales and not restructuring operating expenses in our consolidated financial statements of operations. These costs were paid as of January 31, 2024. The actions associated with the Plan are expected to be fully complete by the end of fiscal 2025, subject to finalizing the disposition of certain office space. 12. INCOME TAXES Our loss before provision for income taxes for fiscal 2024, 2023 and 2022 consisted of the following (in thousands) : Year Ended January 31, 2024 2023 2022 Domestic $ ( 406,151 ) $ ( 432,235 ) $ ( 274,270 ) Foreign 73,317 47,944 4,173 Loss before provision for income taxes $ ( 332,834 ) $ ( 384,291 ) $ ( 270,097 ) The components of provision for income taxes for fiscal 2024, 2023 and 2022 consisted of the following (in thousands): Year Ended January 31, 2024 2023 2022 Current: State $ 150 $ 53 $ 82 Foreign 5,168 3,661 1,011 Total current 5,318 3,714 1,093 Deferred: Federal — ( 6,754 ) — State — ( 2,913 ) — Foreign 541 340 ( 89 ) Total deferred 541 ( 9,327 ) ( 89 ) Total provision for income taxes $ 5,859 $ ( 5,613 ) $ 1,004 116 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A reconciliation of the expected provision for (benefit from) income taxes at the statutory federal income tax rate to our recorded provision for income taxes consisted of the following (in thousands): Year Ended January 31, 2024 2023 2022 Benefit from income taxes at US federal statutory rate $ ( 69,895 ) $ ( 80,701 ) $ ( 56,720 ) State taxes, net of federal benefit 150 53 82 Foreign tax rate differential 23,179 10,140 ( 1,297 ) Stock-based compensation 12,367 2,734 ( 23,442 ) Non-deductible expenses 1,390 1,780 322 Research and development credits ( 2,251 ) ( 688 ) ( 20 ) Change in valuation allowance 40,525 60,145 81,739 Other 394 924 340 Total provision for (benefit from) income taxes $ 5,859 $ ( 5,613 ) $ 1,004 Significant components of our net deferred tax assets and liabilities as of January 31, 2024 and 2023 consisted of the following (in thousands): As of January 31, 2024 2023 Deferred tax assets: Net operating loss carryforwards $ 226,971 $ 228,400 Research and development expenses 106,257 72,432 Deferred revenue 36,199 25,643 Accruals and reserves 9,265 6,215 Operating lease liabilities 7,492 9,139 Stock-based compensation 14,300 17,528 Other 7,111 2,622 Gross deferred tax assets 407,595 361,979 Valuation allowance ( 340,951 ) ( 291,751 ) Total deferred tax assets 66,644 70,228 Deferred tax liabilities: Acquired intangibles, property and equipment ( 28,652 ) ( 37,170 ) Deferred contract acquisition costs ( 30,423 ) ( 22,868 ) Operating lease right-of-use assets ( 6,582 ) ( 8,162 ) Other ( 1,782 ) ( 2,279 ) Total deferred tax liabilities ( 67,439 ) ( 70,479 ) Net deferred tax assets (liabilities) $ ( 795 ) $ ( 251 ) Based upon available objective evidence, we believe it is more likely than not that the US and Israel net deferred tax assets will not be fully realizable. Accordingly, we have established a valuation allowance for the US and Israel gross deferred tax assets. As of January 31, 2024 and 2023, we had a valuation allowance of $ 341.0 million and $ 291.8 million, respectively, against our deferred tax assets. During fiscal 2024 and 2023, total valuation allowance increased by $ 49.2 million and $ 72.8 million, respectively, primarily due to additional net operating losses. 117 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of January 31, 2024, we had federal net operating loss carryforwards of $ 721.2 million, which will begin to expire in 2031, and state net operating loss carryforwards of $ 390.6 million, which will begin to expire in 2025. We also had foreign net operating loss carryforwards of $ 202.8 million, which do not expire. In addition, we had federal research and development credit carryforwards of $ 5.9 million, which will begin to expire in 2037, and state research and development credit carryforwards of $ 2.9 million, which do not expire. Federal and state tax laws impose substantial restrictions on the utilization of the net operating loss carryforwards and tax credit carryforwards in the event of an ownership change as defined in Section 382 of the Internal Revenue Code of 1986, as amended. Accordingly, our ability to utilize these carryforwards may be limited as a result of such ownership change. Such a limitation could result in the expiration of carryforwards before they are utilized. The carryforwards are currently subject to a valuation allowance. Foreign withholding taxes have not been provided for the cumulative undistributed earnings of certain foreign subsidiaries of us as of January 31, 2024 and 2023 due to our intention to permanently reinvest such earnings. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable. We file income tax returns in the US federal jurisdiction and various state and foreign jurisdictions. 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 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, 2024 2023 2022 Balance at beginning of year $ 1,013 $ 566 $ 534 Gross increases for tax positions of current year 1,027 447 32 Gross increases for tax positions of prior year 157 — — Balance at end of year $ 2,197 $ 1,013 $ 566 We recognize interests and penalties related to income tax matters as a component of income tax expense. We do not anticipate that its total unrecognized tax benefits will significantly change during the next 12 months. 13. NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS Basic and diluted net loss per share attributable to common stockholders is computed in conformity with the two-class method required for participating securities. Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potentially dilutive common stock equivalents to the extent they are dilutive. For purposes of this calculation, stock options, restricted common stock, RSUs, PSUs, shares purchased pursuant to our ESPP, and early exercised stock options are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive for all periods presented. The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the 118 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS resulting basic and diluted net loss per share attributable to common stockholders are, therefore, the same for both Class A and Class B common stock on both an individual and combined basis. Basic and diluted net loss per share attributable to common stockholders was as follows (in thousands, except share and per share data): Year Ended January 31, 2024 2023 2022 Numerator: Net loss attributable to Class A and Class B common stockholders $ ( 338,693 ) $ ( 378,678 ) $ ( 271,101 ) Denominator: Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted 294,923,536 277,802,861 174,051,203 Net loss per share attributable to Class A and Class B common stockholders, basic and diluted $ ( 1.15 ) $ ( 1.36 ) $ ( 1.56 ) 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: As of January 31, 2024 2023 2022 Stock options 21,159,850 32,446,814 42,422,473 RSUs and PSUs 27,406,457 14,409,166 1,770,304 ESPP 107,924 134,469 52,381 Shares subject to repurchase 16,543 178,308 20,091 Restricted common stock 10,621 451,444 1,142,496 Contingently issuable shares — — 1,317,089 Total 48,701,395 47,620,201 46,724,834 14. GEOGRAPHIC INFORMATION Long-lived assets, consisting of property and equipment, net, and operating lease right-of-use assets, by geography were as follows (in thousands): As of January 31, 2024 2023 US $ 40,067 $ 27,990 Israel 21,806 27,625 Rest of world 5,418 6,690 Total $ 67,291 $ 62,305 Revenue by geography is presented in Note 3, Revenue and Contract Balances . 15. COMMITMENTS AND CONTINGENCIES Legal Contingencies From time to time, we may be a party to various legal proceedings and subject to claims in the ordinary course of business. 119 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Securities Litigation On June 6, 2023, a securities class action was filed against the Company, its Chief Executive Officer and its Chief Financial Officer, in the Northern District of California, captioned Johansson v. SentinelOne, Inc., Case No. 4:23-cv-02786 . The suit is brought on behalf of an alleged class of stockholders who purchased or acquired shares of the Company’s Class A common stock between June 1, 2022 and June 1, 2023. The complaint alleges that defendants made false or misleading statements about the Company's business, operations and prospects, including its annual recurring revenues and internal controls, and purports to assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended. A substantially similar suit was filed on June 16, 2023 in the same court against the same defendants asserting the same claims, captioned Nyren v. SentinelOne, Inc., Case No. 4:23-cv-02982 . On October 4, 2023, the court issued an order consolidating both cases under the caption In re SentinelOne, Inc. Securities Litigation Case No. 4:23-cv-02786 and appointing a lead plaintiff. Lead plaintiff filed an amended complaint on December 18, 2023. Defendants moved to dismiss the amended complaint on February 16, 2024. We believe the case is without merit and intend to defend the suit vigorously. Fortis Litigation In September 2023, Fortis Advisors LLC (Fortis), in its capacity as the representative for the stockholders of Attivo, filed an action against the Company in Delaware Chancery Court asserting claims arising out of the Attivo Acquisition. The case is captioned Fortis Advisors LLC v. SentinelOne, Inc., Case No. 2023-0946-VLM . In June 2023, the Company sent a letter to Fortis seeking indemnification for certain claims, including for breaches by Attivo of its representations and warranties in the merger agreement. Fortis is now seeking a declaratory judgment that the Company is not entitled to indemnification for the claims it has asserted, and that Fortis should recover the funds held in escrow. Fortis also alleges that the Company breached its representations and warranties in the merger agreement because its SEC filings allegedly contained materially false or misleading statements about the Company’s annual recurring revenues. The Company believes Fortis’ claims are without merit and intends to defend the suit vigorously. On November 3, 2023, the Company filed its answer to Fortis’ complaint. On the same day, the Company filed counterclaims against Fortis, in its capacity as the representative of the stockholders of Attivo, based on Attivo’s breach of several of its representations, warranties and covenants in the merger agreement. The Company’s counterclaims seek an order directing Fortis to comply with its contractual obligations to release funds set aside to indemnify the Company for its losses and any additional damages in excess of the indemnity fund. Derivative Litigation On January 10, 2024, a shareholder derivative complaint was filed, naming the Company’s Board of Directors, its Chief Executive Officer and its Chief Financial Officer as defendants, and the Company as nominal defendant. The action was filed in the United States District Court, District of Delaware, and is captioned Stochevski v. Weingarten, et al., Case No. 4:24-cv-00024. The complaint alleges that the director and officer defendants breached their fiduciary duties by making or failing to correct false or misleading statements about the Company’s business, operations and prospects, including its annual recurring revenues and internal controls. 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. Warranties and Indemnification Our services are generally warranted to deliver and operate in a manner consistent with general industry standards that are reasonably applicable and materially conform with our documentation under normal use and circumstances. Our contracts generally include certain provisions for indemnifying customers against liabilities if our products or services infringe a third party’s intellectual property rights. We also offer a limited warranty to certain customers, subject to certain conditions, to cover certain costs incurred by the customer in case of a cybersecurity breach. We have a cybersecurity liability policy that may cover 120 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS our customers’ actual damages. We have not incurred any material costs related to such obligations and have not accrued any liabilities related to such obligations in the consolidated balance sheets as of January 31, 2024 and 2023. In addition, we also indemnify certain of our directors and executive officers against certain liabilities that may arise while they are serving in good faith in their company capacities. We maintain director and officer liability insurance coverage that would generally enable us to recover a portion of any future amounts paid. 16. EMPLOYEE BENEFIT PLAN Our US employees participate in a 401(k) defined contribution plan sponsored by us. Contributions to the plan are discretionary. We made $ 2.6 million and $ 2.8 million in matching contributions for fiscal 2024 and 2023, respectively. There were no matching contributions for fiscal 2022. Israeli Severance Pay Israeli labor law generally requires payment of severance pay upon dismissal of an employee or upon termination of employment in certain other circumstances. Pursuant to Section 14 of the Severance Compensation Act, 1963 (Section 14), all of our employees in Israel are entitled to monthly deposits made in their name with insurance companies, at a rate of 8.33% of their monthly salary. These payments release us from any future severance payment obligation with respect to these employees; as such, any liability for severance pay due to these employees and the deposits under Section 14 are not recorded as an asset on our consolidated balance sheets. For fiscal 2024, 2023, and 2022, we recorded $ 3.5 million, $ 3.9 million, and $ 3.7 million, respectively, in severance expenses related to these employees. 121 Table of Contents SENTINELONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 17. SUBSEQUENT EVENTS On February 1, 2024, we completed the acquisition of PingSafe Pte. Ltd. (PingSafe) to provide customers better automation across their entire cloud footprint. We acquired 100 % of the shares of PingSafe for total consideration of approximately $ 57.5 million in cash and 2,354,607 shares of our Class A common stock, subject to customary adjustments set forth in the purchase agreement. On February 1, 2024, we acquired 100 % of the issued and outstanding equity securities of Stride Security Ltd. (Stride), a security automation company. The aggregate consideration for the Stride acquisition is approximately $ 7.5 million in cash, subject to customary adjustments. In addition, approximately $ 7.5 million will be earned over three years , subject to continued employment. The PingSafe and Stride acquisitions will be accounted for as business combinations in accordance with ASC Topic 805, Business Combinations and, accordingly, the total purchase price will be allocated to the tangible and intangible assets acquired and the liabilities assumed based on their respective fair values on the date of acquisition. We are currently working on the preliminary purchase price allocations and expect them to be completed in the first quarter of fiscal 2025. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None.