SailPoint, Inc. 10-Q Summary: Quarter Ended July 31, 2026
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended July 31, 2026, and the six months ended on that date. SailPoint, Inc. provides identity security solutions, including the SaaS-based Identity Security Cloud and customer-hosted IdentityIQ. The company operates as a single reportable segment. Following its February 2025 IPO and Corporate Conversion, the company is controlled by Thoma Bravo. As of July 31, 2026, the company had 570.9 million shares of common stock outstanding.
Key Financial Metrics
| Metric | Three Months Ended July 31, 2026 | Six Months Ended July 31, 2026 |
|---|---|---|
| Total Revenue | $308.8 million | $589.0 million |
| Net Loss | $(50.4) million | $(125.0) million |
| Net Loss Per Share (Basic & Diluted) | $(0.09) | $(0.22) |
| Gross Profit Margin | 67% | 66% |
| Operating Cash Flow | N/A | $83.2 million |
| Free Cash Flow | N/A | $69.9 million |
| Cash and Cash Equivalents | $309.9 million (Balance Sheet) | $309.9 million (Balance Sheet) |
| Debt | $0 (No outstanding revolver balance) | $0 |
Key Non-GAAP Metrics:
- Annual Recurring Revenue (ARR): $1,230.7 million (as of July 31, 2026).
- SaaS ARR: $846.9 million (69% of total ARR).
- Dollar-Based Net Retention Rate: 113%.
- Adjusted Operating Income: $62.8 million (Q3) and $100.6 million (Six Months).
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 17% year-over-year (YoY) for the quarter and 19% for the six-month period. Subscription revenue grew 19% (Q3) and 21% (Six Months), driven primarily by a 34% (Q3) and 35% (Six Months) increase in SaaS revenue.
- Profitability: Net loss narrowed significantly compared to the prior year. For the six months ended July 31, 2026, the net loss was $125.0 million compared to $197.9 million in the prior year period. This improvement was largely due to a reduction in interest expense following the repayment of Term Loans in the prior year and lower equity-based compensation expense related to IPO accelerations.
- Operating Expenses: Total operating expenses increased 21% in the quarter but decreased 1% over the six-month period compared to the prior year. The six-month decrease was driven by a $29.1 million reduction in equity-based compensation in General and Administrative expenses.
- Acquisitions: The company completed the acquisition of Entro Security Ltd. on June 29, 2026, for approximately $122.6 million in cash, expanding its capabilities in non-human identity and secrets security.
Guidance, Outlook, and Risks
Management Commentary: Management highlights a strategic shift toward SaaS, with SaaS ARR now representing 69% of total ARR. The acquisition of Entro complements the recently launched SailPoint Agentic Fabric solution. The company expects to continue investing in R&D and sales to drive growth, though it anticipates near-term negative impacts on revenue growth rates due to the shift from term subscriptions to SaaS (which recognizes revenue ratably).
Liquidity: The company reported positive operating cash flow of $83.2 million for the six months ended July 31, 2026. It maintains a $250 million revolving credit facility with no outstanding balance and $309.9 million in cash and cash equivalents.
Risks and Contingencies:
- Cloud Commitments: The company entered a five-year agreement with a cloud storage provider requiring minimum annual purchases totaling $721 million. Failure to meet these minimums requires payment of the difference.
- Integration Risk: Risks associated with successfully integrating the Entro acquisition and achieving expected synergies.
- Market Conditions: Exposure to macroeconomic factors, including interest rates, inflation, and geopolitical uncertainties.
Investor Verification Checklist
- SaaS Transition Impact: Verify the long-term revenue recognition impact of the shift from term subscriptions to SaaS, which may depress near-term GAAP revenue growth despite ARR growth.
- Cloud Cost Obligations: Review the $721 million cloud storage commitment and assess the company's ability to meet minimum purchase thresholds to avoid penalty payments.
- Acquisition Integration: Monitor the integration progress of Entro and the realization of synergies in the non-human identity and AI agent security markets.
- Equity Compensation Trends: Track future equity-based compensation expenses, noting the significant reduction in the current period due to the absence of IPO-related accelerations seen in the prior year.
- Free Cash Flow Sustainability: Confirm the sustainability of positive free cash flow given the heavy investment in sales, marketing, and R&D.