SailPoint Inc(SAIL) - 2026 Q2 - Quarterly Results

Fiscal Second Quarter 2026 Results Overview SailPoint's strong fiscal Q2 2026 results, driven by SaaS ARR growth and record cash flow, led to raised full-year guidance Executive Summary SailPoint reported strong fiscal second quarter 2026 results, surpassing all previous guidance metrics - SailPoint delivered strong Q2 results, exceeding all previously guided metrics[3] - The strong performance was driven by 37% year-over-year SaaS ARR growth and record cash flow from operations[3] - The company is raising its guidance for the full year across all metrics due to strong demand for its identity security solutions in the AI era[3] Fiscal 2026 Second Quarter Financial Highlights For fiscal Q2 2026, SailPoint achieved a 28% year-over-year increase in total ARR to $982 million, with SaaS ARR growing 37% to $623 million, and total revenue rising 33% to $264 million Fiscal 2026 Second Quarter Financial Highlights | Metric | Q2 2026 Value | YoY Growth % | | :-------------------------------- | :-------------- | :----------- | | Total ARR | $982 million | 28% | | SaaS ARR | $623 million | 37% | | Total Revenue | $264 million | 33% | | Subscription Revenue | $248 million | 36% | | GAAP Operating Loss | $(41) million | N/A (vs $(66)M) | | Adjusted Income from Operations | $54 million | N/A (vs $21M) | | Cash Flows from Operating Activities | $50 million | N/A | | Free Cash Flow | $46 million | N/A | Financial Outlook SailPoint has raised its financial guidance for both the third quarter and the full fiscal year 2026, reflecting increased expectations across key metrics Q3 and FY 2026 Financial Guidance (in millions, except per share amounts and percentages) | Metric | Q3'26 Guidance | FY'26 Guidance | Prior FY'26 Guidance | | :-------------------------------- | :--------------- | :--------------- | :------------------- | | Total ARR | $1,027 to $1,031 | $1,105 to $1,115 | $1,095 to $1,105 | | Total ARR YoY growth % | 26% to 27% | 26% to 27% | 25% to 26% | | Total Revenue | $269 to $271 | $1,052 to $1,058 | $1,034 to $1,044 | | Total Revenue YoY growth % | 14% to 15% | 22% to 23% | 20% to 21% | | Adjusted Income from Operations | $42.5 to $43.5 | $177 to $181 | $161 to $166 | | Adjusted Operating Margin % | 15.7% to 16.2% | 16.7% to 17.2% | 15.4% to 16.1% | | Adjusted Earnings Per Share (Adjusted EPS) | $0.05 to $0.06 | $0.20 to $0.22 | $0.16 to $0.20 | Company Information This section details SailPoint's enterprise identity security focus, non-GAAP financial measures, key business metrics, and corporate conversion information About SailPoint SailPoint is a leader in enterprise identity security, providing a unified platform to manage and secure access for human and digital identities - SailPoint is a leader in enterprise identity security, focusing on securing human and digital identities[10] - The company offers a unified, intelligent, and extensible platform for identity-first security, helping enterprises manage access and defend against threats[10] Non-GAAP Financial Measures SailPoint uses non-GAAP financial measures to provide a clearer understanding of its core operating performance by excluding specific non-recurring or non-cash items - SailPoint uses non-GAAP measures (Adjusted income from operations, Adjusted operating margin, Adjusted EPS, Free cash flow, Free cash flow margin) to clarify and enhance understanding of past performance[11][12][13][15][16] - These non-GAAP measures exclude items such as equity-based compensation, payroll taxes related to IPO-accelerated awards and RSUs, amortization of acquired intangible assets, and acquisition-related expenses[17][18][19][21][22] - The company believes these adjustments enable comparison of underlying business performance, evaluate cost trends, and enhance comparability with other technology companies[17] Definitions and Rationale This section defines key non-GAAP financial measures and explains the rationale behind their use, detailing specific exclusions for a clearer view of core operations - Adjusted income from operations excludes equity-based compensation, payroll taxes, amortization of acquired intangibles, acquisition-related expenses, and other specific non-recurring items[11] - Adjusted operating margin is defined as adjusted income from operations divided by total revenue[12] - Adjusted EPS is calculated based on adjusted net income divided by diluted weighted average shares outstanding, with a fixed projected tax rate of 24.5% for fiscal year 2026[13][14] - Free cash flow is defined as net cash provided by (used in) operating activities, less cash used for purchases of property and equipment and capitalized software development costs, used as a measure of financial progress[15] Specific Adjustments This section details the specific adjustments made to GAAP figures for non-GAAP reporting, including exclusions for equity-based compensation, payroll taxes, and acquisition-related costs - Equity-based compensation expense is excluded due to its variability and irrelevance to core operating performance[18] - Payroll taxes related to IPO-accelerated awards and RSUs are excluded as they are one-time or highly variable and unrelated to core operating performance[19][20] - Amortization of acquired intangible assets and impairment of intangible assets are excluded to provide a more meaningful comparison of operating results over time[21] - Acquisition-related costs are excluded as they are not indicative of ongoing operating performance[22] - Benefit from amortization related to acquired contract acquisition costs is adjusted to reflect the full amount of commission expense, providing a consistent basis for comparison[23] Limitations of Non-GAAP Measures Non-GAAP financial measures may not be comparable across companies and should not be considered in isolation from GAAP measures due to excluded material expenses - Non-GAAP financial measures may not be directly comparable to those of other companies due to differing calculation methodologies[24] - These measures are not prepared in accordance with GAAP and exclude expenses that may materially impact reported financial results, thus should not be considered in isolation or as a substitute for GAAP measures[24] Definitions of Certain Key Business and Other Metrics SailPoint defines key operating metrics such as Annual Recurring Revenue (ARR) and SaaS ARR as annualized values of subscription contracts, with subscription revenue recognized ratably - Annual Recurring Revenue (ARR) is defined as the annualized value of SaaS, maintenance, term subscription, and other subscription contracts as of the measurement date[25] - SaaS Annual Recurring Revenue (SaaS ARR) is specifically the annualized value of SaaS contracts[26] - Subscription revenue includes fees for SaaS offerings, term subscriptions, maintenance and support of perpetual license solutions, and other subscription services, recognized ratably over the agreement term[28][29] Explanatory Note Regarding Our Corporate Conversion SailPoint Parent, LP converted to SailPoint, Inc. on February 12, 2025, in connection with its IPO, affecting how company references are interpreted - SailPoint Parent, LP converted into SailPoint, Inc. on February 12, 2025, in connection with its IPO[30] - References to 'SailPoint' refer to the limited partnership before the conversion and the corporation after[30] Forward-Looking Statements This section disclaims forward-looking statements, which are subject to uncertainties and risks that could cause actual results to differ materially from expectations - The report contains forward-looking statements subject to uncertainties, risks, and changes in circumstances that could cause actual results to differ materially[31] - Key risk factors include the ability to sustain growth, attract and retain customers, deepen existing customer relationships, grow the identity security market, maintain partner relationships, and compete successfully[32] - Other risks involve operational complexity, brand reputation, industry conditions, market opportunity accuracy, personnel management, corporate culture, AI integration, security breaches, service disruptions, and compliance with regulations[32] Condensed Consolidated Financial Statements This section presents SailPoint's condensed consolidated statements of operations, balance sheets, and cash flows for the reported periods Condensed Consolidated Statements of Operations For Q2 2026, SailPoint reported total revenue of $264.36 million, significantly reducing its GAAP operating loss to $(40.80) million and net loss to $(10.55) million Condensed Consolidated Statements of Operations (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | | :------------------------------------------------- | :------- | :------- | | Total Revenue | $264,359 | $198,575 | | Gross Profit | $177,806 | $123,313 | | Loss from Operations | $(40,798) | $(65,830) | | Net Loss | $(10,552) | $(87,130) | | Net Loss per Share, Basic and Diluted | $(0.02) | $(2.97) | | Weighted Average Shares Outstanding, Basic and Diluted | 555,757 | 82,703 | Condensed Consolidated Statements of Operations (Six Months Ended July 31, in thousands) | Metric | 2025 | 2024 | | :------------------------------------------------- | :------- | :------- | | Total Revenue | $494,827 | $386,231 | | Gross Profit | $305,461 | $238,803 | | Loss from Operations | $(225,763) | $(134,023) | | Net Loss | $(197,864) | $(176,306) | | Net Loss per Share, Basic and Diluted | $(0.42) | $(5.89) | | Weighted Average Shares Outstanding, Basic and Diluted | 528,355 | 82,564 | Condensed Consolidated Balance Sheets As of July 31, 2025, total assets increased to $7.45 billion, cash and equivalents rose to $271.05 million, and total liabilities decreased to $629.80 million due to debt repayment Condensed Consolidated Balance Sheets (in thousands) | Metric | July 31, 2025 | January 31, 2025 | | :----------------------------------- | :-------------- | :--------------- | | Cash and Cash Equivalents | $271,052 | $121,293 | | Total Current Assets | $626,600 | $512,382 | | Goodwill | $5,151,668 | $5,151,668 | | Intangible Assets, net | $1,460,597 | $1,560,723 | | Total Assets | $7,445,941 | $7,411,916 | | Total Current Liabilities | $504,465 | $574,693 | | Long-Term Debt, net | $— | $1,024,467 | | Total Liabilities | $629,795 | $1,804,215 | | Total Stockholders' Equity / Partners' Deficit | $6,816,146 | $(5,588,440) | Condensed Consolidated Statements of Cash Flows For Q2 2026, SailPoint generated $49.95 million in net cash from operating activities, a significant improvement, resulting in a $42.98 million increase in cash and equivalents Condensed Consolidated Statements of Cash Flows (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | | :------------------------------------------------- | :------- | :------- | | Net Cash Provided by (Used in) Operating Activities | $49,945 | $(52,797) | | Net Cash Used in Investing Activities | $(3,987) | $(3,819) | | Net Cash Provided by (Used in) Financing Activities | $(2,977) | $(415) | | Net Change in Cash, Cash Equivalents and Restricted Cash | $42,981 | $(57,031) | | Cash, Cash Equivalents and Restricted Cash, End of Period | $277,316 | $96,557 | Condensed Consolidated Statements of Cash Flows (Six Months Ended July 31, in thousands) | Metric | 2025 | 2024 | | :------------------------------------------------- | :-------- | :-------- | | Net Cash Provided by (Used in) Operating Activities | $(46,862) | $(108,183) | | Net Cash Used in Investing Activities | $(7,884) | $(11,503) | | Net Cash Provided by (Used in) Financing Activities | $207,672 | $(2,225) | | Net Change in Cash, Cash Equivalents and Restricted Cash | $152,926 | $(121,911) | | Cash, Cash Equivalents and Restricted Cash, End of Period | $277,316 | $96,557 | Supplemental Financial Information This section provides detailed revenue breakdowns and comprehensive reconciliations of GAAP to non-GAAP financial measures Supplemental Schedules: Revenue Breakdown SailPoint's Q2 2026 revenue breakdown shows strong growth in SaaS and Term subscriptions, with total subscription revenue increasing 36% year-over-year Revenue Breakdown (Three Months Ended July 31, in thousands) | Revenue Type | 2025 | 2024 | % Change | | :---------------------- | :------- | :------- | :------- | | SaaS | $144,758 | $105,716 | 37 % | | Maintenance and support | $38,471 | $38,909 | (1) % | | Term subscriptions | $58,120 | $32,630 | 78 % | | Other subscription services | $6,588 | $4,556 | 45 % | | Total subscription | $247,937 | $181,811 | 36 % | | Perpetual licenses | $430 | $22 | ** | | Services and other | $15,992 | $16,742 | (4) % | | Total revenue | $264,359 | $198,575 | 33 % | Revenue Breakdown (Six Months Ended July 31, in thousands) | Revenue Type | 2025 | 2024 | % Change | | :---------------------- | :------- | :------- | :------- | | SaaS | $276,573 | $202,783 | 36 % | | Maintenance and support | $75,860 | $77,178 | (2) % | | Term subscriptions | $98,160 | $63,315 | 55 % | | Other subscription services | $12,667 | $8,627 | 47 % | | Total subscription | $463,260 | $351,903 | 32 % | | Perpetual licenses | $435 | $91 | ** | | Services and other | $31,132 | $34,237 | (9) % | | Total revenue | $494,827 | $386,231 | 28 % | Reconciliation of GAAP to Non-GAAP Financial Measures SailPoint's GAAP to non-GAAP reconciliations reveal improved adjusted profitability, with Q2 2026 adjusted operating margin at 20.4% and Adjusted EPS at $0.07 GAAP to Adjusted Gross Profit Reconciliation (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :------- | :------- | | GAAP Gross Profit | $177,806 | $123,313 | | GAAP Gross Profit Margin | 67.3 % | 62.1 % | | Equity-based compensation expense | 2,612 | 3,215 | | Amortization of acquired intangible assets | 26,322 | 25,890 | | Adjusted Gross Profit | $206,740 | $152,418 | | Adjusted Gross Profit Margin | 78.2 % | 76.8 % | GAAP to Adjusted Income from Operations Reconciliation (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :------- | :------- | | GAAP Income (Loss) from Operations | $(40,798) | $(65,830) | | GAAP Income (Loss) from Operations Margin | (15.4) % | (33.2) % | | Equity-based compensation expense | 48,418 | 24,390 | | Amortization of acquired intangible assets | 50,214 | 64,479 | | Amortization of acquired contract acquisition costs | (5,444) | (6,559) | | Acquisition-related expenses and Thoma Bravo monitoring fees | 1,609 | 4,714 | | Adjusted Income (Loss) from Operations | $53,999 | $21,194 | | Adjusted Operating Margin | 20.4 % | 10.7 % | GAAP to Adjusted Net Income and EPS Reconciliation (Three Months Ended July 31, in thousands, except per share amounts) | Metric | 2025 | 2024 | | :------------------------------------------------- | :------- | :------- | | GAAP Net Loss | $(10,552) | $(87,130) | | Equity-based compensation expense | 48,418 | N/A | | Amortization of acquired intangible assets | 50,214 | N/A | | Amortization of acquired contract acquisition costs | (5,444) | N/A | | Acquisition-related expenses and Thoma Bravo monitoring fees | 1,609 | N/A | | Tax effect of adjustments | (44,281) | N/A | | Adjusted Net Income | $39,964 | N/A | | Adjusted EPS, diluted | $0.07 | N/A | | Shares used in computing adjusted EPS, diluted | 557,878 | N/A | Gross Profit Reconciliation This section reconciles GAAP to adjusted gross profit, detailing adjustments for equity-based compensation and amortization of acquired intangible assets GAAP to Adjusted Gross Profit Reconciliation (Six Months Ended July 31, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :------- | :------- | | GAAP Gross Profit | $305,461 | $238,803 | | GAAP Gross Profit Margin | 61.7 % | 61.8 % | | Equity-based compensation expense | 24,204 | 6,553 | | Amortization of acquired intangible assets | 52,382 | 51,708 | | Adjusted Gross Profit | $382,681 | $297,064 | | Adjusted Gross Profit Margin | 77.3 % | 76.9 % | Subscription Gross Profit Reconciliation This section reconciles GAAP to adjusted subscription gross profit, highlighting adjustments for equity-based compensation and amortization of acquired intangible assets GAAP to Adjusted Subscription Gross Profit Reconciliation (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :------- | :------- | | GAAP Subscription Gross Profit | $177,494 | $123,323 | | GAAP Subscription Gross Profit Margin | 71.6 % | 67.8 % | | Equity-based compensation expense | 1,931 | 1,626 | | Amortization of acquired intangible assets | 26,322 | 25,844 | | Adjusted Subscription Gross Profit | $205,747 | $150,793 | | Adjusted Subscription Gross Profit Margin | 83.0 % | 82.9 % | Operating Income Reconciliation This section reconciles GAAP to adjusted income from operations, detailing adjustments for equity-based compensation, amortization, and acquisition-related expenses GAAP to Adjusted Income from Operations Reconciliation (Six Months Ended July 31, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :-------- | :-------- | | GAAP Income (Loss) from Operations | $(225,763) | $(134,023) | | GAAP Income (Loss) from Operations Margin | (45.6) % | (34.7) % | | Equity-based compensation expense | 208,877 | 50,247 | | Amortization of acquired intangible assets | 100,125 | 128,886 | | Amortization of acquired contract acquisition costs | (11,208) | (13,304) | | Acquisition-related expenses and Thoma Bravo monitoring fees | 2,192 | 8,580 | | Adjusted Income (Loss) from Operations | $77,622 | $40,386 | | Adjusted Operating Margin | 15.7 % | 10.5 % | Operating Expense Reconciliations This section provides detailed reconciliations of GAAP to adjusted operating expenses, including sales and marketing, research and development, and general and administrative GAAP to Adjusted Sales and Marketing Expense Reconciliation (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :------- | :------- | | GAAP Sales and Marketing Expense | $131,289 | $119,565 | | Equity-based compensation expense | (18,203) | (8,934) | | Amortization of acquired intangible assets | (23,797) | (38,494) | | Amortization related to acquired contract acquisition costs | 5,444 | 6,559 | | Acquisition-related expenses | (1,609) | — | | Adjusted Sales and Marketing Expense | $93,124 | $78,696 | GAAP to Adjusted Research and Development Expense Reconciliation (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :------- | :------- | | GAAP Research and Development Expense | $48,111 | $43,108 | | Equity-based compensation expense | (7,512) | (6,030) | | Amortization of acquired intangible assets | (95) | (95) | | Adjusted Research and Development Expense | $40,504 | $36,983 | GAAP to Adjusted General and Administrative Expense Reconciliation (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :------- | :------- | | GAAP General and Administrative Expense | $39,204 | $26,470 | | Equity-based compensation expense | (20,091) | (6,211) | | Acquisition-related expenses and Thoma Bravo monitoring fees | — | (4,714) | | Adjusted General and Administrative Expense | $19,113 | $15,545 | Free Cash Flow Reconciliation This section reconciles GAAP net cash from operating activities to free cash flow, detailing deductions for property, equipment, and capitalized software development costs GAAP to Free Cash Flow Reconciliation (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | | :------------------------------------------------- | :------- | :-------- | | GAAP Net Cash Provided by (Used in) Operating Activities | $49,945 | $(52,797) | | Less: Purchase of property and equipment | (962) | (889) | | Less: Capitalized software development costs | (3,025) | (2,831) | | Free Cash Flow | $45,958 | $(56,517) | | GAAP Net Cash Provided by (Used in) Operating Activities Margin | 18.9 % | (26.6) % | | Free Cash Flow Margin | 17.4 % | (28.5) % | GAAP to Free Cash Flow Reconciliation (Six Months Ended July 31, in thousands) | Metric | 2025 | 2024 | | :------------------------------------------------- | :-------- | :-------- | | GAAP Net Cash Provided by (Used in) Operating Activities | $(46,862) | $(108,183) | | Less: Purchase of property and equipment | (3,153) | (1,476) | | Less: Capitalized software development costs | (4,731) | (5,345) | | Free Cash Flow | $(54,746) | $(115,004) | | GAAP Net Cash Provided by (Used in) Operating Activities Margin | (9.5) % | (28.0) % | | Free Cash Flow Margin | (11.1) % | (29.8) % | Adjusted Net Income and EPS Reconciliation This section reconciles GAAP net loss to adjusted net income and EPS, detailing various adjustments including equity-based compensation and tax effects GAAP to Adjusted Net Income and EPS Reconciliation (Six Months Ended July 31, in thousands, except per share amounts) | Metric | 2025 | 2024 | | :------------------------------------------------- | :------- | :------- | | GAAP Net Loss | $(197,864) | $(176,306) | | Equity-based compensation expense | 208,877 | N/A | | Payroll taxes for IPO-accelerated awards and RSUs | 3,399 | N/A | | Amortization of acquired intangible assets | 100,125 | N/A | | Amortization of acquired contract acquisition costs | (11,208) | N/A | | Acquisition-related expenses and Thoma Bravo monitoring fees | 2,192 | N/A | | Tax effect of adjustments | (62,334) | N/A | | Adjusted Net Income | $43,187 | N/A | | Adjusted EPS, diluted | $0.08 | N/A | | Shares used in computing adjusted EPS, diluted | 556,712 | N/A |