SentinelOne Inc at Wolfe Research Software's "March Madness" Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Joshua Tilton - Wolfe Research - Analyst : Guys, I'm going to kick it off with some very high level Q&A that we've basically been asking every company. And then I'm going to dive a little bit deeper. But again, this is for you guys. So, please, please put in questions into the chat box and we will make sure that they get addressed. Also just a reminder, at the end of this, we will be sending out a very, very quick three question survey so that we can get some feedback on the meeting. This is for management, it's very important to them and for us. So, please look for that in your inbox after the meeting and fill it out. It shouldn't take long and we greatly appreciate it. So, with that, let's kick it off. So, just very high level. How is the demand environment for security? More importantly and more specifically, how's the demand environment for EDR been trending over the last few months? And how would you compare the demand environment to maybe a year ago today?

Question: Joshua Tilton - Wolfe Research - Analyst : Got it. And I just want to pick one word out of that, you did mention accelerant. One of the biggest questions we still get from investors is, wasn't there a lot of purchasing that was accelerated during the pandemic? From your guys' perspective, what was COVID's impact on your business and maybe the market? And as we exit the pandemic now -- I am doing this from our office. Are you guys seeing any signs that there was a pull forward in demand?

Question: Joshua Tilton - Wolfe Research - Analyst : And what about just specifically for demand for the international business. I think about a third of your business is coming from international markets. Are you guys seeing any impacts, positive or negative, from the ongoing Russia/Ukraine crisis? And just more broadly, how should we think about the impact to your international business in the event of maybe a post-war recession in Europe? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 22, 2022 / 5:40PM, S.N - SentinelOne Inc at Wolfe Research Software's "March Madness" Conference (Virtual)

Question: Joshua Tilton - Wolfe Research - Analyst : And you touched on this a little bit, but how do you guys think about the size of this endpoint opportunity? I think one of the most interesting comments from our call back after your last earnings was comparing the difference between the greenfield EDR opportunity today versus the legacy AV TAM from 5 to 10 years ago. So how do you guys see the differences between those? And then on the replacement side, you mentioned 50% of the market is still legacy. Who remains and who are you guys mostly replacing on that (multiple speakers)?

Question: Joshua Tilton - Wolfe Research - Analyst : Makes sense. Let's touch on some of that next gen competition. Obviously, the biggest question here is how has competition with CrowdStrike been? Maybe just how have your win rates versus CrowdStrike been trending? Would you call out any notable changes to the competitive dynamic between the two of you guys over the last several months?

Question: Joshua Tilton - Wolfe Research - Analyst : And when you guys win one of these, let's just call it a replacement for a legacy vendor and CrowdStrike is in the deal as well. What's the number one reason why the customer goes with you guys over CrowdStrike?

Question: Joshua Tilton - Wolfe Research - Analyst : And we talked about this pretty large replacement opportunity. But are we at a point where you guys might be replacing a CrowdStrike or vice versa?

Question: Joshua Tilton - Wolfe Research - Analyst : And I wanted to touch on that coexistent comment. But more specifically around Microsoft, maybe the other 800 pound gorilla in the endpoint [space]. Any comments on the competitive dynamic with them? You guys did mention last call, you coexist more with those guys? And are they in the mix for all these legacy replacement RFPs, the same way that a CrowdStrike would be?

Question: Joshua Tilton - Wolfe Research - Analyst : Yeah, that makes sense. What about the rest of the market? Like there's Cybereason, Deep Instinct, (inaudible) -- have like a Walmart long list of other companies that are also in this space. So, how do you guys think about this longer tail of smaller vendors? Are you guys competing with these players as well? And what's your view on the market's ability to support so many different players (multiple speakers)?

Question: Joshua Tilton - Wolfe Research - Analyst : And you talk about just having more at bats, the demand environment is very strong. And your last set of results, I wouldn't suggest this, but do you guys still face this issue of having an emergent vendor problem, where you have to go in and convince the CESO, let's go with SentinelOne even though they're the smaller player? Or are we past that?

Question: Joshua Tilton - Wolfe Research - Analyst : And you also mentioned that pricing has been improving. But I've got to ask -- any incremental discounting recently? Any changes to the discounting environment? Any discounting at all? It's still a question that we get all the time. So, I'd just like to hear your view on it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 22, 2022 / 5:40PM, S.N - SentinelOne Inc at Wolfe Research Software's "March Madness" Conference (Virtual)

Question: Joshua Tilton - Wolfe Research - Analyst : Got it. I want to switch gears a little bit, talk about the recent results. The top line was very strong, but the beats on revenue and ARR were a little bit less than what we've been accustomed to seeing. We just spent 20 minutes talking about how strong the demand environment is. So, is there anything worth calling out that led to the smaller beats this last quarter?

Question: Joshua Tilton - Wolfe Research - Analyst : Yes. So, one of the questions that we've been getting from investors since the results is that it was a little bit light on the top line, the guide was incredibly strong. So, is there anything you can call out maybe -- especially for the first quarter. So, anything to call out from a seasonality perspective? And how should we just think about your potential to outperform in this coming year versus last year?

Question: Joshua Tilton - Wolfe Research - Analyst : And on the call, you guys also called out how the non-endpoint products and data set, they're accounting for I think one-third of new business that you guys had in the quarter. When we look to the guidance for this year, how much more new business do you expect to come from these non-endpoint products versus last year?

Question: Joshua Tilton - Wolfe Research - Analyst : Yes. So, on those margins, you guys finished the year with very strong gross margin improvement. The guidance for this year, not as much expansion as we saw last year. Can you just comment on how much of the Scalyr migration is impacting the guide this year? And maybe just help us conceptualize how should the margin progression look beyond this year when maybe Scalyr is behind us? And what gives you that confidence that you're going to be able to continue to drive that growth margin expansion going forward?

Question: Joshua Tilton - Wolfe Research - Analyst : And just on the operating margin guidance, it was slightly below The Street. But it's still calling for pretty meaningful amount of leverage this year. Are there any changes just in terms of how you think about how much you guys are going to need to invest in order to support the growth relative to when you first went public? And just more broadly, where are these investments going to be focused coming this year?

Question: Joshua Tilton - Wolfe Research - Analyst : Got it. And I'm going to try and rapid fire two more questions real quick here. On Attivo, any more color you can provide on how the deal is going to impact the income statement? And just more broadly, does the deal delay your ability to reach your original 20% operating margin target?

Question: Joshua Tilton - Wolfe Research - Analyst : Any more details on the impact (multiple speakers)?

Question: Joshua Tilton - Wolfe Research - Analyst : And just the last one from my end, what would you say is the most misunderstood part of the SentinelOne story from an investor perspective?

Question: Joshua Tilton - Wolfe Research - Analyst : Amazing. Doug, thank you so much for your time today. Thank you, everyone, for joining us. Please, please fill out the quick survey. That will hit your inbox in about 2 minutes, and we look forward to seeing everyone soon.