Profitability Predictions and Paramount Punches Back
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What were the earnings results for SentinelOne and Snowflake?
Profits? Who needs profits? You're listening to Motley Fool Money.
Welcome, Fools! I'm your host, Tim Beyers, and with me are two of my teammates, Rick Munarriz, whom I've served with on Rule Breakers for over 20 years now, and longtime Fool, Sammy Deo, who's with me allocating capital in the Supernova Odyssey portfolio.
Which company is predicted to achieve profitability first, SentinelOne or Snowflake?
That's been fun and frantic. Hopefully, you're both fully caffeinated because we got some spicy earnings to get to. Today, we're going to be talking about fiscal Q3 2026 earnings from SentinelOne, ticker S, and from Snowflake, ticker SNOW, and predicting which of these two will reach GAAP profitability first, and ideally, when. We're going to make some reckless predictions here, and we want your reckless predictions too. Leave them in the comments below.
What are the implications of the Netflix-Warner Bros deal?
We're also going to provide a Critics' Choice view of the Netflix Warner Brothers Discovery deal, which got a little bit spicier this morning as we are recording this. But let's start with earnings. So, Rick Sandmeat, I'm going to give you some quick overviews on the Sentinel-1 earnings. There was some good stuff here. There was some strong growth.
How does Paramount's counteroffer impact the Netflix-Warner Bros deal?
Annual recurring revenue up 23% year-over-year to $1.05 billion. This is a company, remember, that competes directly with CrowdStrike. It is CrowdStrike's most direct competitor. They make endpoint security, meaning your device, your iPhones, your computers, they protect those things. And they do it with some AI here.
What key metrics indicate SentinelOne's performance?
Non-gap operating margins were decent, 7%. It was a 1200 basis point improvement. The non-GAAP net income margin was 10%. So that was up 1,000 basis points. So some good stuff here.
What are the growth prospects for Snowflake's business model?
Revenue up 23% to $258.9 million. And emerging products, mostly AI products, now account for 50% of quarterly bookings. But the GAAP losses are big, Sandmeat. GAAP operating margin for the quarter was negative 28%. And the GAAP net loss margin was negative 23%.
How do the analysts predict GAAP profitability timelines for both companies?
So give me your take here. How do you look at this quarter and Sentinel-1 overall?
sounds like a very strong quarter in terms of, you know, their current revenue growth and their business fundamentals, you know, cybersecurity, you know, there's a few major players that I think, you know, are, are, are really ramping up and, and it's a very important industry that's very much needed. And I don't think it's going to ever be a winner takes all kind of areas. So, so would like to, would like to see, I can't anticipate them,
What are the potential consequences of a bidding war for Warner Bros Discovery?
Generating profits soon because it's just an area where they have to invest in their business and continue to grow, continue to scale, continue to provide value to their customers. So profits may come much later down the road.
Rick, let me get your take here, and I'll give you this. This is another of those companies that issues a lot of stock-based compensation equivalent to 29% of revenue during the quarter. That worth it? Not worth it? What do you think about this company?
I think it's the price of admission if you're a tech company. You have to pay up with stock-based compensation. That's how you hire the best programmers and everything else you need to make the company run smoothly. And in this case, I think the report was solid. And again, yeah, stock-based compensation is a big reason why we're talking about non-GAAP profitability instead of non-non-GAAP, which would be GAAP profitability. But it is the kind of thing where you are seeing improvements, and margin-wise, they are getting better. It's SentinelOne, a lot like Snowflake. Five, six years ago, these companies were seeing doubling the revenue year after year, and now it's slowed dramatically, both in the 20%-plus range now, a little more than 20% for Snowflake.
But it is the kind of thing where I'm comfortable with where they are now, especially now that they're improving their finances. They are doing things necessary to continue to grow, possibly stabilizing here at this level. As a growth investor, I'd love to see that. But I do think that Gap Profitability is still many, many years away. And I did cheat, I did look at it up.
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Chapters
8 chapters
1
What were the earnings results for SentinelOne and Snowflake?
0:05–0:34
2
Which company is predicted to achieve profitability first, SentinelOne or Snowflake?
0:34–1:08
3
What are the implications of the Netflix-Warner Bros deal?
1:08–1:30
4
How does Paramount's counteroffer impact the Netflix-Warner Bros deal?
1:30–1:52
5
What key metrics indicate SentinelOne's performance?
1:52–2:06
6
What are the growth prospects for Snowflake's business model?
2:06–2:28
7
How do the analysts predict GAAP profitability timelines for both companies?
2:28–3:04
8
What are the potential consequences of a bidding war for Warner Bros Discovery?
3:04–21:59