SailPoint Inc(SAIL) - 2026 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported an annual recurring revenue (ARR) of $982 million, representing a 28% year-over-year increase, with SaaS ARR growing 37% year-over-year [4][20] - Total revenue for Q2 was $264 million, an increase of 33% year-over-year, with subscription revenue growing 36% year-over-year [20][22] - Adjusted operating margins expanded by 980 basis points to 20.4%, with cash flow from operating activities reaching a record $50 million [20][23] Business Line Data and Key Metrics Changes - The company saw a 48% year-over-year increase in customers with ARR greater than $1 million, indicating strong demand for its identity security solutions [4] - New SaaS customers had a 40% attach rate of add-on modules, up from 25% in the same quarter last year, contributing to the overall growth [21][22] - ARR from emerging add-on modules more than doubled year-over-year, contributing to a net revenue retention (NRR) of 114% [21][22] Market Data and Key Metrics Changes - The company is experiencing robust demand across various industry verticals, with a notable increase in average ARR per new SaaS customer by 30% year-over-year [21][22] - The company is positioned to capitalize on the growing trend of enterprises recognizing the need for real-time identity security controls [6][11] Company Strategy and Development Direction - The company aims to lead in the evolving identity security market by integrating identity, security, and data context into a unified platform [6][11] - The introduction of new products like SailPoint Agent Identity Security is designed to address the governance of AI agents and machine identities [8][15] - The company is focused on modernizing its offerings to meet the challenges posed by the rise of AI and machine identities, emphasizing real-time controls and governance [12][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position heading into the second half of the year, citing strong performance metrics and a robust pipeline [30] - The company anticipates ARR to cross the billion-dollar mark in Q3 2026, with a year-over-year growth expectation of 26.5% [24] - Management highlighted the importance of adapting to the evolving landscape of identity security, particularly with the rise of AI agents [8][11] Other Important Information - The company is increasing its fiscal year 2026 ARR outlook by $10 million to $1.11 billion, reflecting a 26.6% year-over-year growth [24][25] - The acquisition of key assets from Savvy is expected to enhance the company's capabilities in SaaS application visibility and identity risk detection [14] Q&A Session Summary Question: Can you provide more details on the guidance and the impact of federal term renewals? - Management confirmed a 100% renewal rate for term-based federal renewals in Q2, with a $7 million timing shift in revenue recognition from Q3 to Q2 [30][31] Question: What are the dynamics for net new ARR in Q3 and Q4? - Management noted a consistent performance in Q2 and expressed optimism for Q3, expecting to maintain or increase the rate of movement to SaaS [36][60] Question: Can you elaborate on the machine identity market and opportunities? - Management highlighted the need for governance of non-human identities and the unique approach SailPoint is taking to address this challenge [40][41] Question: How does the company view the competitive landscape and governance space? - Management indicated that while there is increased competition, the core competitive landscape remains stable, with strong win rates against traditional competitors [77][78] Question: What are the implications of the shift towards integrated identity solutions? - Management acknowledged the trend towards tighter integration of identity with security ecosystems but emphasized the need for flexibility in customer solutions [88][89]