SentinelOne Securities Lawsuit: Allegations and Dismissal

The SentinelOne securities lawsuit was a federal class action accusing the cybersecurity company and two of its top executives of misleading investors about a key subscription-revenue metric, filed in the Northern District of California after a $27 million downward revision to annualized recurring revenue sent the stock down as much as 38% in a single day. A federal judge dismissed the case with prejudice on October 2, 2025, finding that the plaintiffs failed to show the defendants intended to defraud investors rather than simply missed accounting errors.¹

What Triggered the Lawsuit

On June 1, 2023, SentinelOne reported first-quarter fiscal 2024 results and disclosed a one-time downward adjustment of $27 million to its Annualized Recurring Revenue, a figure roughly 5% of total ARR. The company said it had changed how it accounted for consumption and usage-based agreements, moving to reflect only committed contract values, and had corrected what it described as “historical recording inaccuracies” on certain contracts. SentinelOne said the adjustment did not affect its historical total bookings or revenue.²

The next trading day, the stock dropped as much as 38% intraday, hitting a low of $12.86, which MarketWatch described as the stock’s worst single-day percentage decline ever. One analyst said the revision to historical ARR “clearly impeded management’s ability (and ours) to forecast revenue and ARR with any sort of accuracy.”³

Investor suits followed within days. The consolidated action, In re SentinelOne, Inc. Securities Litigation, No. 4:23-cv-02786, was assigned to Judge Haywood S. Gilliam Jr. in the Northern District of California. Named as defendants were SentinelOne, CEO and co-founder Tomer Weingarten, and CFO David Bernhardt.⁴

What Investors Alleged

Brought under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, the complaint covered a class period running from June 1, 2022 through June 1, 2023. The plaintiffs’ core theory was that SentinelOne’s reported ARR was artificially inflated and that the executives knew or should have known the numbers were wrong.⁵

The plaintiffs argued that reported ARR was misleading because it included revenue from consumption and usage charges that customers were not contractually obligated to pay, turning the metric into a partial revenue forecast rather than a measure of committed subscription revenue. They also alleged the company double-counted ARR when customers renewed contracts while adding new services, stacking the old contract value on top of the new one.⁶

The complaint further alleged that Weingarten and Bernhardt signed false Sarbanes-Oxley certifications about the adequacy of the company’s internal controls despite those controls being insufficient to catch the recurring calculation errors that ultimately drove the $27 million correction. Bernhardt was singled out as the officer with the authority and access to non-public financial information needed to prevent or correct the allegedly misleading disclosures.⁵

The First Dismissal

On July 2, 2024, Judge Gilliam granted the defendants’ motion to dismiss the amended complaint. The court ruled that the plaintiffs had not adequately alleged scienter, the intent to defraud required under the Private Securities Litigation Reform Act. In the court’s view, the “more convincing theory” was that the defendants “failed to catch certain accounting errors and at most might unintentionally have misled investors” by defining a revenue metric “with less than ideal clarity.”⁷

The dismissal was without prejudice, and the plaintiffs were given leave to amend and try again.⁷

The Final Dismissal With Prejudice

The plaintiffs filed a further amended complaint. On October 2, 2025, Judge Gilliam dismissed the case again, this time with prejudice, closing the door on refiling. The court walked through each of the plaintiffs’ theories of scienter and found none of them sufficient.¹

On the usage-revenue theory, the court found that including consumption revenue in ARR did not show fraudulent intent because that revenue was volatile and just as likely to decrease ARR as inflate it.
On the confidential witnesses, one had left the company before the ARR methodology change even took place, and another did not establish that any executive actually knew about the double-counting errors.
On insider trading, the court found the stock sales by Weingarten and Bernhardt were consistent with their historical trading patterns, and Bernhardt’s sales were largely conducted through pre-arranged 10b5-1 trading plans.
On the merger theory, the plaintiffs argued the company inflated ARR to facilitate a corporate merger, but the merger closed before the class period began.
On the core operations doctrine, the court held there was no showing that the individual defendants were specifically involved in calculating ARR or aware of the inaccuracies before the correction.

The case was terminated. As of the last docket update in March 2026, no appeal had been filed.⁴

The Related Shareholder Derivative Suit

A separate shareholder derivative action was filed on January 10, 2024, in the U.S. District Court for the District of Delaware. The case, Stochevski v. Weingarten, et al., No. 4:24-cv-00024, named SentinelOne’s board of directors, CEO, and CFO as defendants, with the company as a nominal defendant. The complaint alleged that the directors and officers breached their fiduciary duties by making or failing to correct false statements about ARR and internal controls, and, according to Bloomberg Law, that the directors failed to disclose that the company lacked effective financial reporting controls, resulting in overstated revenue figures for a full year.⁸⁹

1
A&O Shearman. NDOC Holds Complaint Against Cybersecurity Company Fails To Allege Scienter For a Second Time
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SentinelOne. SentinelOne Announces First Quarter Fiscal Year 2024 Financial Results
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MarketWatch. SentinelOne Stock Plummets More Than 30% for Worst One-Day Drop
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CourtListener. In Re SentinelOne, Inc. Securities Litigation
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ZLK. SentinelOne First Filed Complaint
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A&O Shearman. In Re SentinelOne, Inc. Securities Litigation
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Bloomberg Law. SentinelOne Wins Dismissal of Investor Suit Over Accounting Gaffe
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SEC. SentinelOne SEC Filing
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Bloomberg Law. SentinelOne Board Allegedly Concealed Errors in Revenue Figures