Motley Fool Money — "Profitability Predictions and Paramount Punches Back"

Date: December 8, 2025
Host: Tim Byers
Analysts: Rick Benares, Sanmeet Deo

Episode Overview

In this episode, host Tim Byers and analysts Rick Benares and Sanmeet Deo break down recent Q3 earnings from cybersecurity firm SentinelOne and cloud data leader Snowflake, candidly debate which will reach GAAP profitability first (with predictions and skepticism about Wall Street forecasts), and shift gears to review the blockbuster Netflix acquisition offer for Warner Bros. Discovery, plus the surprise hostile bid from Paramount+Skydance. It's a spirited discussion of high-growth tech, streaming mega-mergers, and the nuances of strategic leadership in dynamic markets.

Key Discussion Points and Insights

1. SentinelOne (S) Q3 2026 Earnings

• Strong topline growth:

  • Annual recurring revenue (ARR): Up 23% year-over-year to $1.05 billion.
  • Quarterly revenue: $258.9 million (up 23%).
  • Emerging (AI) products: Now 50% of quarterly bookings.

• Profitability metrics:

  • Non-GAAP operating margin: 7% (improved by 1200 basis points).
  • Non-GAAP net income margin: 10% (up 1000 basis points).
  • GAAP operating margin: -28%.
  • GAAP net loss margin: -23%.
  • Heavy stock-based compensation: 29% of revenue.

• Analyst takeaways:

  • Sanmeet Deo (02:36):

    "Very strong quarter in terms of their current revenue growth and their business fundamentals... but profits may come much later down the road."

  • Rick Benares (03:38):

    "Stock-based compensation is the price of admission... margin wise, they are getting better. Analysts don’t see [GAAP profitability] happening for SentinelOne until 2032... Investors will forgive that as long as you're making growth and generating healthy free cash flow."

2. Snowflake (SNOW) Q3 2026 Earnings

• Growth and operational highlights:

  • Product revenue: $1.16 billion (up 29%).
  • Backlog (RPO): $7.88 billion (up 37%).
  • Non-GAAP operating margin: Improved by 450 basis points to 11%.
  • AI focus: Snowflake Intelligence (enterprise AI agent) is now 50% of new bookings, used by 1,200 customers.

• Valuation and guidance:

  • Sanmeet (05:39):

    "Classic case of fantastic business, tough stock... The business fundamentals just continue to improve... But it’s a very high valuation stock and they recently reported some slowing guidance for next quarter."

  • Rick on business model and AI (07:24):

    "Investments in AI have to scare you away about profitability... but it’s the right move. They have the cows in there, they're a leader in this whole data mining thing... Analysts see [GAAP profitability] in 2031... very long wait for investors."

3. Which Gets to Profitability First — Reckless Predictions

• Consensus: Both analysts believe SentinelOne will beat Snowflake to GAAP profitability, despite Wall Street’s long-range forecasts (SentinelOne in 2032, Snowflake in 2031).

  • Rick (09:05):

    "The further [forecasts] go, it’s more like trying to land a parachute in a tin cup... I do think SentinelOne will actually get there faster, sooner than Snowflake."

  • Sanmeet (09:42):

    "SentinelOne will get there faster... Snowflake is kind of a slow burn... they have to build for that."

• Tim Byers note (10:07):

  "Snowflake has been aggressively saying don’t look to us for profitability because it may never come... They are going full Amazon in this area, so it does seem like SentinelOne is likely to get there first."

4. [SEGMENT BREAK: Netflix – Warner Bros. Discovery Mega-Deal]

Netflix Acquires Warner Bros. Discovery: An Armchair Critic Session

• Deal details: $72 billion cash/stock deal; Netflix to assume $10B debt; intends to spin off ‘Discovery Global’ legacy assets.

• Analyst reactions:

  • Rick (12:53):

    "Can I give it two thumbs up? To me, it's a smart deal. They have the largest installed base... Netflix will be able to take these properties, make them stronger... Not only are you taking your largest premium streaming service competitor, but you're doing this in a case where you're prohibiting anyone else from buying Max."

  • Sanmeet (14:34):

    "I’m going to say I’m going to give it one thumb up, one thumb down... the strategic reasons [are good]... but the financial burden is onerous. They’re taking on a ton of debt... you can't have one without the other.”

• Spin-off speculation:

  • Tim asks (15:39): What if Netflix gets a $15B payday from spinning out Discovery Global—does that change your opinion?
  • Sanmeet (16:23):

    "It definitely helps... thumb goes sideways heading towards up... [I] also give it a thumbs up for the management team... I can't imagine they do something like this without a very clear idea of how they're going to manage it all."

5. Paramount + Skydance Issues Hostile Superior Bid

• Deal details: All-cash offer, $30/share ($108.4B total), a premium to Netflix’s offer; backed by sovereign wealth funds.

  • Stock reaction: Warner Brothers up 7%, Paramount up 2%.

• Analyst reactions:

  • Rick (17:56):

    "It's going to be very tempting for the Warner Bros. board... not only is it more money, it's a clear path to clearing regulatory barriers... I hope this doesn’t become a bidding war because then whoever wins will be a loser."

  • Sanmeet (19:23), on whether a bidding war will happen:

    "I don't think so... I think Netflix is going to win out. Even with regulatory concerns, Netflix can argue total views/screen time against YouTube and others. They might win the argument this isn’t as monopolistic as people think."

  • Tim (20:24):

    "It's not just the younger generation [watching YouTube]—it's us older folks too."

Notable Quotes & Memorable Moments

• "Stock-based compensation is the price of admission. If you’re a tech company, you have to pay up... That’s how you hire the best programmer."
  — Rick Benares, 03:38

• "Classic case of fantastic business, tough stock... the business fundamentals just continue to improve quarter after quarter."
  — Sanmeet Deo, 05:39

• "Netflix will be able to take these properties, make them stronger and find new outlets for them... It’s a smart deal."
  — Rick Benares, 12:53

• "The financial burden is onerous... they have been leaner, meaner... but you can’t have the dominance without the commitment."
  — Sanmeet Deo, 14:34

• "I hope this doesn't become a bidding war because then whoever wins will be a loser."
  — Rick Benares, 18:47

Timestamps for Important Segments

• [00:20] - Introduction & episode themes
• [01:15] - SentinelOne earnings review
• [02:36] - Sanmeet critiques SentinelOne’s path to profit
• [03:38] - Rick on stock-based comp and timeline for GAAP profits
• [04:50] - Snowflake earnings review
• [05:39] - Sanmeet on Snowflake’s “tough stock” vs. business strength
• [07:24] - Rick on Snowflake’s AI push; profitability delayed
• [09:05] - "Reckless" profitability predictions
• [10:07] - Hosts: Snowflake embraces growth over profits
• [12:03] - Netflix-WBD acquisition background
• [12:53] - Rick gives two thumbs up
• [14:34] - Sanmeet gives one up, one down
• [15:39] - Spin-off details, changing analyst sentiment
• [17:01] - Paramount/Skydance hostile bid emerges
• [17:56] - Rick sees regulatory advantage, warns against bidding war
• [19:23] - Sanmeet predicts Netflix prevails
• [21:54] - Preview of upcoming episode on merger analysis

Conclusion

This episode offers a fast-paced, nuanced look at two standout high-growth technology stocks wrestling with long-tail profitability, reminding investors to focus on improving fundamentals and strategic direction. It also features a lively, critical review of streaming's mega-merger season—complete with bold predictions, tempered both by financial caution and faith in savvy management.

Whether you invest in disruptors, giants, or just love a good boardroom drama, this episode captures timely market moves, authentic investment debate, and the wit and wisdom of Motley Fool’s expert analysts.