Senstar Technologies Grows Margins in Q2

Senstar Technologies(NASDAQ:SNT) reported second quarter 2025 earnings on August 25, 2025, expanding gross margin to 66.1%. The period demonstrated broad-based growth across core verticals, particularly in the EMEA region, and highlighted tangible margin expansion, operational leverage, and ongoing strategic investments in technological innovation. Key insights include strong EMEA outperformance, robust margin improvements, and evidence of effective business development initiatives fueling market share gains.

EMEA accelerates revenue mix shift for Senstar Technologies

EMEA (Europe, Middle East, Africa) contributed 35% of revenue, up from 27% in the prior year, primarily fueled by demand in energy, data center, and airport perimeter security segments. This regional performance offset weaker Asia Pacific (APAC) sales, which declined 47% year-over-year after a strong prior-year comparison.

"In EMEA, the region is becoming a larger contributor to revenue and grew by 52% in the core second quarter while also gaining over 800 basis points in share of total sales. Our sustained investment in Europe over the previous years is coming to fruition, with the EMEA region now representing 35% of total revenue, up from 27% in the year-ago period. The main verticals driving this record in the region include energy, particularly oil and gas, along with solar farms and electrical generation. In addition, there has been solid customer adoption in higher set value airport and data center infrastructure."
-- Fabien Haubert, CEO

EMEA's rapid growth and increased revenue share demonstrate the effectiveness of the company's regional investment strategy and its ability to offset volatility in other markets.

Margin expansion highlights pricing power and operational discipline

Gross margin was 66.1%, a 292 basis point increase year-over-year, exceeding management targets, while EBITDA margin (non-GAAP) increased 161 basis points to 11.8%. These improvements were achieved despite an 18% rise in operating expenses attributed primarily to one-time costs and team expansion.

"This result reflects the sustained customer demand and, when combined with our cost optimizations and focus on selling high-value-added solutions, drove a material gross margin expansion to 66.1% in the second quarter, comfortably above our targets. We are continuing to invest in technological innovation to protect our competitive positioning and fuel growth while diligently managing costs to deliver margin expansions and sustainable profitability."
-- Fabien Haubert, CEO

Margin expansion in the face of higher operating expenses signals strong pricing power and operational discipline, supporting long-term profitability.

Business development drives core vertical and account penetration

New customer acquisition and cross-selling activity were supported by recent team expansions, with management indicating plans for further additions to accelerate growth in large accounts. Revenue for the four core verticals collectively grew 27% year-over-year.

"The team is now fully ramped and gaining traction with the core focus on driving growth through new customer acquisition and broader penetration within our core verticals. Based on encouraging initial results, we plan to expand the team further to support the development of several large accounts and accelerate market share gain across high-potential sectors."
-- Fabien Haubert, CEO

This proactive investment in business development infrastructure should extend Senstar Technologies' go-to-market reach.

Looking Ahead

Management did not provide explicit forward-looking revenue or profitability guidance in the transcript. However, they cited continued investment in technological innovation, plans to further expand the business development team, and a strategic emphasis on penetrating high-value verticals and international markets. No concrete quantitative targets or timelines for these initiatives were stated during the call.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.