In this podcast, Motley Fool analysts Rick Munarriz, Sanmeet Deo, and Tim Beyers:
- Review recent results from SentinelOne and Snowflake.
- Predict which of the two will reach GAAP profitability first.
- Give a critics' choice take on the Netflix-Warner Bros. deal, including some thoughts on Paramount Skydance's hostile bid.
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A full transcript is below.
This podcast was recorded on Dec. 08, 2025.
Tim Beyers: 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 Engdahl, whom I've served with on Rule Breakers for over 20 years now and longtime Fool Sanmeet Deo, who's with me allocating capital in the Supernova Odyssey portfolio. 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. We're also going to provide a critic's 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. Rick, Sanmeet, I'm going to give you some quick overviews on the SentinelOne earnings.
There was some good stuff here. There was some strong growth, 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. They do it with some AI here. Non GAAP operating margins were decent, 7%. It was a 1,200 basis point improvement. The non GAAP net income margin 10%, so that was up 1,000 basis points. Some good stuff here, revenue up 23% to $258.9 billion. Emerging products, mostly AI products now account for 50% of quarterly bookings. But the GAAP losses are big, Sanmeet. GAAP operating margin for the quarter was negative 28%, and the GAP net loss margin was negative 23%. Give me your take here. How do you look at this quarter and SentinelOne one overall?
Rick Munarriz: Sounds like a very strong quarter in terms of their current revenue growth and their business fundamentals cybersecurity there's a few major players that I think are really ramping up, and it's a very important industry that's very much needed, and I don't think it's going to ever be a win or takes all areas. Would like to see I can't anticipate them 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. Profits may come much later down the road.
Tim Beyers: 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?
Sanmeet Deo: 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. Again stock based compensation is a big reason why we're talking about non GAAP profitability instead of non GAAP, which would be GAAP profitability. But it is the thing where you are seeing improvements and margin wise, they are getting better. It's SentinelOne a lot like well, Snowflake, 5, 6 years ago, these companies were seeing doubling the revenue year after year, and now it's slowed dramatically, both in the 20 plus percent range now, a little more than 20% for Snowflake. But it is the thing where I am 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 GAAP profitability is still many, many years away. I did cheat. I did look at it up.
Analysts don't see this happening for SentinelOne until 2032, which is a long time for that to happen. But I think investors will forgive that because as long as you're making growth and you're generating healthy free cash flow, which they are, I think everything will work out just fine for SentinelOne investors. Let's pivot to Snowflake here. Similar story. This is an unprofitable company that has absolutely throttled the market, year to date Sanmeet. Stock is up beating the market by over 66% so far this year. The results were pretty good. Product revenue growth, 29% comes in at 1.16 billion. The remaining performance obligations, if you don't know what that is, think of it as backlog. I'm sorry, 7.88 billion. That's big. That was up over 37%. The non GAAP operating margin did expand by 450 basis points year over year and reached 11%. Give me your take here, and then I'll bring in some other stats here. But you follow this company, so tell me where you're at.
Rick Munarriz: This is a classic case of fantastic business, tough stock because the business fundamentals just continue to improve quarter after quarter. They're continuing to announce strategic partnerships, their pipeline is growing with RPO. It's surged 37%. The business fundamental and they also signed a deal with anthropic to create a software layer to their data warehousing, storage, all that. Fundamentally, this business just continues to perform and execute. But it's a very high valuation stock. Because it's a very high valuation stock they recently in the quarter reported some slowing guidance for next for revenue for the next quarter. That wasn't looked so favorably when you have such a high value stock that isn't executing to perfection. Not too concerned because as a business, this company is performing phenomenally.
Tim Beyers: Rick, let me give you I'm going to give you another bit of data here. Snowflake Intelligence, which is their enterprise AI agent, they've been investing a lot in AI. For those who don't know how Snowflake works, it's like Sanmeet said, it is an archival storage environment. They get paid more when customers put more data into the system and do stuff in the system. Snowflake Intelligence is the gateway to do more stuff with AI inside Snowflake. Rick being used by 1,200 customers, this is what Snowflake says, and it is now 50% of new bookings. How are you feeling about this company and its path to profitability?
Sanmeet Deo: I like the growth. Again, investments in AI have to scare you away about profitability, specifically, because these are heavy investments now for payoff long into the future. But I think it's the right move. I think you're seeing that growth is impressive. The fact that it's so much harder business model makes me excited in the fact that I see this company is yes, Sanmeet mentioned growth may be slowing and understandably so, but they have the cows in there. They are a leader in this whole data mining thing. I do think that this is a company that will continue. As far as profitability goes, I also cheated 2031 is when analysts see it turning profitable on a GAAP basis. Five, six years from now, it's a very long wait for investors. But I do think that especially with Snowflake, which has even stronger free cash flow and a stronger free cash flow margin than SentinelOne, I do think that it positioned well. Again, the company has not been the best of stock sometimes, but I do think that it's a very important company that not very well understood and not even well known. It's not a household name. You don't go and see mainstream investors say Snowflake and they just looking out the window saying for snowfall. This is a very legit company and doing a lot of things right. Well, Snowflake is a household name. It's not the company that is the household name. Let's make a prediction here. Rick I may start with you because you brought us the analyst predictions. I'm going to summarize here. You said analysts saying SentinelOne, GAAP profitability, 2032, Snowflake, GAAP profitability 2031. Agree or disagree, Rick, where are you? Who gets there first to GAAP profitability?
Rick Munarriz: The funny thing about analysts, even sometimes near term expectations are out of whack. The further you go, it's more like dropping trying to land a parachute into, like, a tin cup down at ground level. I take no faith in that the numbers the companies will change a lot. I think cybersecurity is going to continue to be a very important field. SentinelOne they are improving. This last quarter, notwithstanding, as far as margin front, I do think SentinelOne will actually get there faster sooner than Snowflake. But I think both companies will get there eventually. But I don't think investors are going to punish them. But, again, against what I've read, I'm going with SentinelOne. Sanmeet?
Sanmeet Deo: I'm going to agree with Rick. I think SentinelOne One will get there faster. Snowflake is a slow burn that is going to Rick had said, too this is one of those companies that they're going to make some big investments now, and then you're going to see way down the road, those investments paying off in cash flow generation that will be sustainable, but they have to build for that.
Tim Beyers: I have to be fair, well we want your predictions, listeners, but I will say, Snowflake has been aggressively saying, Don't look to us for profitability because it may never come.
Sanmeet Deo: That's sign right there.
Tim Beyers: That's probably not right, but they are going full Amazon in this area. It does seem like SentinelOne is likely to get there first, so if that matters to you, maybe that's one for your watch list. Up next. Is it Siskel and Ebert or Statler and Waldorf? We're going to go armchair critic over the Netflix Warner Brothers deal. You're listening to Motley Fool Money.
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Tim Beyers: Fools. By now, we've all seen the news that Netflix has agreed to buy Warner Brothers discovery. Ticker WBD, Netflix is Ticker NFLX in a cash and stock deal worth 72 billion while also taking on a bit more than 10 billion in Warner Brothers debt, in light of the genre in which this deal exists, we're talking about big screen entertainment here. We're going to play the role of critics and give a thumbs up or thumbs down. On what we've seen so far and no promises, but we will try to be a bit more Siskel and Ebert than Statler and Waldorf. But you know what, Rick? If you want to yell from the rafters that this is terrible, I am not going to stop you. Why don't we start with you on what we've seen so far, and then we'll update folks on what we saw from Paramount this morning.
Rick Munarriz: Very interesting development on that front. But as far as it's Netflix, I think I'm going to give it, can I give it two thumbs up? I forget if two thumbs up was up for any.
Tim Beyers: Two thumbs up?
Rick Munarriz: Ebert both had there.
Sanmeet Deo: Nice.
Rick Munarriz: Two hands. I can give it two thumbs up. To me, it's a smart deal. They have the largest installed base of premium subscribers, 302 million at the start of this year. Netflix no longer reports their subscribers, but revenue is still growing, so the business is still growing. Warner Brothers Discovery was about a third of that. I do think that this is a business that Netflix will be able to take these properties they keep and make them stronger and find new outlets for them. I don't think they're going to get rid of HBO Max. They'll just never name it terribly like HBO Max did with the Max name. But I think that they'll continue because I think that's another incremental revenue scene, not only are you taking your largest premium price streaming service competitor at that pricing range in the mid teens a month, but you're also doing this in a case where you're prohibiting anyone else from buying Max and getting that much stronger and catching up to Netflix. Netflix was always default cable to me. Now it's even more default default cable. Interesting.
Tim Beyers: If the deal goes through.
Rick Munarriz: If the deal goes through. Sorry.
Tim Beyers: Well, that's a big one. We're gonna get to that in a minute here. But on the basis of what we know so far, Sanmeet, Rick's giving it two thumbs up. Where are you on this? Remember, it's a $72 billion deal. It's a cash and stock deal. Netflix may be taking on up to $50 billion in debt to do this deal. There's going to be a complicated spin off if this deal goes through, they're going to spin off what they are calling Discovery Global, which will be some of the legacy media assets of Warner Brothers. What do you think here? Are you with Rick?
Sanmeet Deo: The deal when it was rumored, I wasn't so hot on it. I am a Netflix shareholder. It's been one of my biggest and best holdings. I wasn't too hot on it. As I started to think about it, the announcement came out. I'm going to say I'm going to give it one thumb up, one thumb down. The one thumb up is more for the strategic reasons. I think this puts them as the streaming media powerhouse, like Disney Who at this point. Down thumb for just the fact that the financial burden is onerous. They're taking on a ton of debt. They have been relatively lower debt profile, a leaner meaner company. I always think of Netflix as that young, lean, mean upstart. They're not really that anymore. They're more of the dominant play, but it is a big financial commitment for something that you can't have one without the other. I'm just not I'm not fond of the financial commitment, but you just have to have it if you want that dominance.
Tim Beyers: Let me give you I'm going to give you a wrinkle and you tell me whether or not this convinces you to go two thumbs up. What if I tell you that that Warner Brothers or that discovery global business is going to be spun off and it's going to be spun off as a public entity. Because of Netflix's interest, that 100% interest in that entity, that they're going to get a rich payday. Let's say that payday in the equity they spent out to the market is $15 billion. Now they got an extra bit in the war chest there to decide to maybe pay down the debt early, do some other things with it. Does that change your opinion?
Sanmeet Deo: It definitely helps. That gets my thumb to go sideways.
Tim Beyers: Sideways is OK.
Sanmeet Deo: Heading toward up because and look, I also give it a thumbs up for the management team. This is a seasoned, very intelligent management team that's been around with Netflix for a very long time. I can't imagine they do something like this without having a very clear idea of how they're going to manage it all, because they know what they have with Netflix without Warner Brothers Discovery. They want to make sure it continues on. I've always been fond of the management team.
Tim Beyers: We got two thumbs up, and we got one and half thumbs up. Let's talk about what happened this morning, Rick, and then we're going to move on to close out today's show. Paramount Skydance announced a hostile bid. They previously bid. They bid at least twice for Warner Brothers discovery. Both those bids were turned down by the Warner Brothers Board. Today, it's an all cash offer that is a premium over what Netflix has bid, $30 a share, roughly $108.4 billion. Paramount stock is on the rise, as we talked this morning, Rick, I was up more than 6% Warner Brothers stock up more than 7%. Paramount is Ticker PSKY. Rick, reactions to this. It feels a little I mean, it's getting spicy.
Rick Munarriz: I hate that Paramount stock went up when Netflix stock went down when they had on the deal last week. To me, this was like, Well, there's no fairness here. But I think I see why Paramount's doing this. Again, it's an easy not only is it more money, it's going to be very tempting for the Warners Brothers Discovery Board to look at this. First of all, it's more money. That right away, says, well, hey shareholder we got to do right by our shareholders. Also, this is going to have a clear path to just clearing the anti trust regulatory barriers. Even though Paramount Skydance just added Paramount just a couple of months ago, there's still not this monster that anyone's really scared of. I think this is the kind of thing that would definitely put Skydance, Paramount and Warner Brothers, all three together in one company would be very interesting very competitive. The money's coming from some they don't have the money on their own. They're turning into sovereign wealth funds, which I know seems like a weird thing, but Electronic Arts had the same thing a couple of months ago. We're already used to this by now, Santa you're getting international money with these deals. But they're not doing governance to the actual thing, so that's good. I think it's an interesting thing. I don't think this is the last word. I hope this doesn't become a bidding war because then whoever wins will be a loser, whether it's Paramount or Netflix. But I'm really curious how this, definitely a story that was already interesting became must watch TV right now.
Tim Beyers: Yes or no, Sanmeet, will there be an ongoing bidding war, for Warner Brothers discovery?
Sanmeet Deo: I don't think so. I think that Paramount's going to try their hardest to get this asset, which rightfully so, they should. But I think that Netflix is going to win out, and I think that even though there's a regulatory concerns, one thing I was reading through is the argument for it's just it's not just about streaming dominance. Netflix is going to argue total views, which you have YouTube in there or screen time views, I should say. You have YouTube in there, which is a dominant dominant eyeball generator, I guess you could say, for screen time. They have their own share of movies and other things. A lot of the younger generation watches more of YouTube in short form than they do of streaming. They might be able to win an argument there with the regulators in terms of that this isn't as monopolistic as people might think.
Tim Beyers: I got news for you pals, not just the younger generation. It's older folks too are watching a lot of YouTube. Up next, we give you the preview for tomorrow, you're listening to Motley Fool Money.
Fools, on tomorrow's show, we've got a bit more on the Netflix strategy shift. They're going to go a little deeper, I am sure, on the Paramount bid. That'll be Emily Flippin who has Jason Hall and Dan Caplinger. They're going to go deeper on the merger, what it means for investors streamers and how to evaluate. I think this is the thing you're not gonna want to miss Listener, is how to evaluate mega mergers to determine whether they're accretive or dilutive. That's a big thing. A lot of big mergers do a lot of damage and don't create a lot of value. You're going to want to listen to that. They're going to be talking about what Netflix is actually buying, whether or not it's smart capital allocation and a framework for judging those mega mergers. Again, that's with Emily Flipping Jason Hall and Dan Caplinger. But for today, thanks very much to Rick Munarriz and Sanmeet Deo as always.
People on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only, see our full advertising disclosure. Please check out our show notes. That's it for today's Motley Fool Money. Thanks again to Rick and Sanmeet, our engineer, as always, is the incomparable Dan Boyd, our producer is only Anand Chokkavelu your hosts and buyers. Thanks for listening. See you again tomorrow. Fool on, everyone.
