SAIL

A month has gone by since the last earnings report for SailPoint, Inc. (SAIL). Shares have added about 13.5% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is SailPoint, Inc. due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for SailPoint, Inc. before we dive into how investors and analysts have reacted as of late. SailPoint reported fiscal second-quarter 2027 adjusted earnings of 9 cents per share, up 28.6% year over year and 12.5% above the Zacks Consensus Estimate of 8 cents. The quarter benefited from strong SaaS adoption and AI-driven solution demand. Revenues rose 16.8% year over year to $309 million but missed the consensus mark by 0.51%. Dollar-based net retention was 113%, highlighting steady customer retention and expansion. Annual recurring revenue, or ARR, increased 25% year over year to $1.231 billion. SaaS ARR climbed 36% to $847 million, while net new SaaS ARR rose 34% to $66 million and represented 97% of total net new ARR. AI-driven ARR exceeded $70 million. AI-driven solutions accounted for more than 30% of net new ARR, while more than two-thirds of migrations completed in the quarter included an AI-driven solution. The AI-driven pipeline more than doubled since the June 2026 Investor Day to more than $200 million. Management also noted a record number of proofs of concept as enterprises evaluate identity governance solutions for human and non-human identities. SaaS revenues jumped 34% year over year to $193.9 million. Maintenance and support revenues fell 8% to $35.5 million, while term subscription revenues declined 3% to $56.2 million. Other subscription services revenues increased 47% to $9.7 million. Total subscription revenues advanced 19% to $295.2 million. Services and other revenues decreased 17% to $13.6 million, showing that subscription offerings remained the primary source of top-line growth. The higher SaaS mix created an approximately $5 million revenue timing headwind in the quarter. SaaS revenues are recognized ratably, while a portion of term-license revenues is recognized upfront. SaaS customer count increased 16% year over year, while ARR per SaaS customer rose 17% to more than $400,000. SailPoint ended the quarter with approximately 3,310 customers and had 235 customers generating more than $1 million in ARR, up 27% year over year. Remaining performance obligations increased 30% to $1.9 billion. Current remaining performance obligations, representing amounts expected to be recognized as revenues over the next 12 months, advanced 27% to $931 million. Adjusted gross margin was 77.4%, down from 78.2% a year ago. Adjusted subscription gross margin was 82.3% compared with 83% in the prior-year quarter.  Adjusted research and development expenses rose 11.1% to $45 million. Adjusted sales and marketing expenses increased 19.5% to $111.3 million, while adjusted general and administrative expenses grew 4.5% to $20 million. Adjusted income from operations increased 16.3% to $62.8 million, while adjusted operating margin was 20.3% versus 20.4% a year earlier. Cash and cash equivalents were $309.9 million as of July 31, 2026, compared with $358.1 million as of Jan. 31, 2026. Cash flows from operating activities were $45 million, down from $49.9 million in the year-ago quarter. Free cash flow declined 18.6% to $37.4 million from $46 million, with free cash flow margin contracting to 12.1% from 17.4%. Investing outflows included $118.2 million for business acquisitions during the reported quarter. For the fiscal third quarter, SailPoint expects ARR of $1.288-$1.292 billion, implying 24% year-over-year growth. Revenues are projected between $326 million and $330 million, with adjusted income from operations of $57.5-$58.5 million and adjusted earnings of 7-8 cents per share. For fiscal 2027, the company raised its ARR outlook to $1.375-$1.385 billion from $1.364-$1.374 billion. Revenues remain forecast at $1.265-$1.275 billion, adjusted income from operations at $239-$244 million and adjusted earnings at 30-34 cents per share.  SailPoint continues to expect roughly $200 million in free cash flow. It turns out, fresh estimates have trended downward during the past month. Currently, SailPoint, Inc. has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock has a grade of F on the value side, putting it in the bottom 20% quintile for value investors. Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Interestingly, SailPoint, Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. SailPoint, Inc. belongs to the Zacks Internet - Software industry. Another stock from the same industry, Samsara Inc. (IOT), has gained 7.2% over the past month. More than a month has passed since the company reported results for the quarter ended July 2026. Samsara Inc. reported revenues of $508.44 million in the last reported quarter, representing a year-over-year change of +29.9%. EPS of $0.20 for the same period compares with $0.12 a year ago. Samsara Inc. is expected to post earnings of $0.19 per share for the current quarter, representing a year-over-year change of +26.7%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged. Samsara Inc. has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SailPoint, Inc. (SAIL) : Free Stock Analysis Report Samsara Inc. (IOT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wednesday, Sept. 9, 2026 at 8:30 a.m. ET Investor Relations - Scott Schmitz Founder and Chief Executive Officer - Mark McClain Chief Financial Officer - Brian Carolan President - Matt Mills Operator: Thank you for standing by, and welcome to SailPoint's Second Quarter Fiscal Year 2027 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Scott Schmitz, Investor Relations. Please go ahead. Scott Schmitz: Good morning, and thank you for joining us today to discuss SailPoint's Fiscal Second Quarter 2027 Financial Results. Joining me today are SailPoint's Founder and CEO, Mark McClain; and our Chief Financial Officer, Brian Carolan. For the Q&A portion of today's call, we will also be joined by our President, Matt Mills. Please note that today's call will include forward-looking statements, and because these statements are based on the company's current intent, expectations and projections, they are not guarantees of future performance and a variety of factors could cause actual results to differ materially. This call will also include references to non-GAAP results, which exclude certain items that do not reflect our underlying business performance. Please reference this morning's press release and our supplemental earnings presentation posted on investors.sailpoint.com for further information regarding our forward-looking statements and non-GAAP financial measures, including reconciliations to the nearest comparable GAAP financial measures. Additionally, please note that the development, release and timing of any features or functionalities described for our products that are currently not available remains at our sole discretion on a when and if available basis and may not be delivered at all or should not be relied on in making purchasing or investing decisions. And with that, I'd like to turn the call over to Mark. Mark McClain: Thank you, Scott. Good morning, everyone, and thank you for joining us. Our strong second quarter highlights the compounding power of our identity security platform and new product innovations with AI playing an increasingly larger role in our success. We finished the second quarter with ARR of $1.231 billion, up 25% year-over-year, exceeding the midpoint of our guidance by $11 million. SaaS was especially strong, growing 36% year-over-year with SaaS net new ARR increasing 34% year-over-year. In Q2, early adopters of our new solutions moved quickly to secure access to our Agentic Suites ahead of the planned Q3 release. Combining this momentum with our existing solutions, our total AI-driven ARR has already crossed $70 million as of the end of Q2. This momentum gives us tremendous confidence in our FY '29 year-end targets, which include at least $2.1 billion in ARR while continuing on our path of delivering greater than 20% durable growth. Today, millions of non-human identities, from service accounts to autonomous AI agents, are exploding across the enterprise landscape, yet we believe the vast majority remain completely ungoverned. In fact, in our research released last month, we found that 97% of AI agents now have access to sensitive enterprise data, while only 21% of organizations surveyed say they are highly confident in their ability to manage that risk. Competitors are treating these agents as isolated identities. We view identity as a human plus AI challenge that needs to be solved with a unified approach, and we're doing it at scale for many of the world's largest enterprises. You cannot safely secure an agent identity without deep, accountable human context. Conversely, you can no longer govern human access without knowing what agents those humans own and operate. For every agent, an organization must know its origin, what data it can touch and which human is accountable when it goes off script. We believe no company is better positioned to solve this complex intersection than SailPoint. This is no longer a future trend. It is the law. The EU AI Act contains specific human oversight and audit logging requirements, which are scheduled to become enforceable as early as 2027. We believe regulators will increasingly ask who is accountable for this agent and its actions. We built our identity platform to answer that question before regulators even chose to ask it. Real-time human and agentic identity governance is no longer just an IT operational task. It is now a CISO and boardroom priority. As our strategic relevance elevates to the offices of the CISO and the Chief AI Officer, we are unlocking significantly larger enterprise budget opportunities, accelerating our pipeline and paving a clear multipronged path to our fiscal '29 targets. This momentum is evident in our results. In the second quarter, our SaaS customer count grew by 16% year-over-year. Our average ARR per SaaS customer grew 17% to over $400,000. And our AI-driven pipeline has more than doubled since our Investor Day, which was less than 3 months ago. When recent headlines detailed how Frontier AI models broke out of their digital sandboxes, many labeled these as AI safety issues. We see them for what they are, identity governance failures, a massive problem, which we expect will get even more challenging as AI usage expands in the future. The question I'm constantly asked by CIOs and Board members of other companies is simple. Can SailPoint protect our enterprise from these autonomous agent breakouts? The answer is yes because securing and governing all identities, including agentic identities is the exact problem our company was built to solve. Let me give you an example of how we recently expanded our market position in non-human identity security at a global Fortune 500 company. Within a week of a proof of concept, we connected to a majority of their data sources, leading to discovery of more than 10,000 unknown agents and thousands of associated risks in their environment. This resulted in a multimillion-dollar contract for our Digital Identity Flex offering alongside Entro. In another example of this momentum, we closed a 3-year 7-figure commitment with a global software company. This new customer is leveraging our core Identity security cloud with advanced digital identity governance across thousands of machine identities while establishing a direct path to upgrade to our Agentic Business Suite as they scale their AI infrastructure. Our go-to-market engine is significantly more versatile than it was 6 months ago. We've expanded our entry points across CISOs, Chief AI Officers and other C-suite leaders to win new customers, securing human workforces, autonomous agent fleets, or both together. In Q2, we also expanded our ecosystem with new agent identity security connectors for Snowflake and Databricks. We introduced our Cursor Enterprise Connector for autonomous coding agents and launched a cloud enterprise integration utilizing Anthropic's Compliance API. Whether an agent is writing code, analyzing data or querying an LLM, SailPoint provides comprehensive visibility and human accountability in a single independent platform. Let me expand on our innovation. Our approach is grounded in a continuous intelligent security loop across 3 pillars: First, we discover every identity across all platforms and map their entire lineage so you know exactly what permissions they hold and who authorized them. Second, we govern them under a strict policy of zero standing privilege, dynamically orchestrating life cycle policies across millions of agentic and non-human identities with support for global compliance frameworks. And third, we will protect the enterprise with the ability to deploy a kill switch when an agent violates a guardrail. We are working to enable real-time authorization, prompt security and response and remediation capabilities integrated with the SOC. To deliver on these pillars, we fundamentally advanced our platform this quarter with the launch of SailPoint Identity Security, featuring 2 purpose-built products: Agentic Fabric, which is now generally available and Human Fabric, which is the evolution of Identity Security Cloud. This enables organizations to move beyond static compliance into real-time threat-aware enforcement across both human and non-human identities. These aren't future promises. These real-time detection, SOC integration and automated enforcement capabilities are available right now. Unifying AI and human identities under one control plane creates an immediate compounding effect. All of this runs on our core technology foundation, SailPoint Atlas. Atlas provides one unified data model, a powerful comprehensive identity graph and a shared set of AI services engineered for agent scale, real-time telemetry and in-line threat response. We also accelerated our road map by acquiring Entro Security, and we are rapidly integrating its capabilities directly into the SailPoint Agentic Fabric. This expands our discovery capabilities to over 1,200 non-human identity types and provides deep lineage context. While other vendors are racing to bolt-on session visibility or point-in-time threat detection, we believe we are one of the first to bring deep machine credential discovery and full agent life cycle governance under one enterprise-grade control plane. Already this quarter, demand generated from live demonstrations of these capabilities at major industry events like Black Hat and Ai4 has translated directly into enterprise deals in our pipeline with evaluations and POCs at an all-time high. Overall, the market response to our architecture and product road map has been exceptional, with our AI-driven solutions accounting for more than 30% of our net new ARR in Q2. Enterprises are also using Agentic AI governance as a catalyst to accelerate cloud migrations. And through SailPoint Agentic Acceleration, we have dramatically simplified the migration process from on-prem to SaaS. Let me give you an example. This quarter, a global financial services firm signed a multiyear agreement to modernize with our SaaS platform to manage over 300,000 identities. By utilizing our automated onboarding tools, we dramatically reduced implementation friction and accelerated their migration by reducing weeks of configuration time to less than 10 hours. Ultimately, our ability to deliver rapid time to value remains a major differentiator. As part of this modernization, the company also adopted our Digital Identity Flex model to help ensure long-term flexibility in managing non-human identities. Now I'd like to turn to the competitive landscape. While many vendors market non-human identity or Agentic AI governance, we differentiate on 3 fronts. First, monitoring is not the same as security. Simply watching an agent go rogue is just a dashboard of active breaches. Regulators and CISOs require proactive governance. SailPoint is designed to enforce accountability before the agent ever takes action. We are moving the industry beyond static compliance and into continuous automated governance and protection. Second, governance is not a bolt-on feature. While others try to add governance to adjacent platforms, it lacks the depth required for modern security. Through our Agentic and Human Fabric, governance is natively embedded into our core, giving organizations seamless, unified control across the entire converged workforce. Third, access is not accountability. Giving an AI agent a login is easy. Proving to an auditor exactly what it did, who owns it and instantly revoking that access at enterprise scale requires a unified identity graph. You cannot protect an AI-driven enterprise on a fragmented stitched-together architecture. We are shipping a unified control plane today. Our architectural leadership isn't just our opinion. It is heavily validated by the industry analyst community, too. I'm incredibly proud to share that KuppingerCole, one of the industry's leading identity security analysts, named SailPoint the widely recognized leader in their latest Identity and Access Governance Leadership Compass released last month. Additionally, Gartner Peer Insights has us at 4.8 out of 5 based on 824 reviews submitted in the identity governance and administration category as of September 2, 2026. The market is consistently confirming that SailPoint is one of the only identity platforms that can handle this workforce convergence. This is further strengthened by our strategic collaboration agreement with AWS, which establishes SailPoint as a preferred identity governance solution for Agentic AI on AWS. In conclusion, SailPoint is delivering strong growth at scale while redefining identity security for the AI era. The reality is clear. Basic monitoring isn't security. Governance isn't a bolt-on and access isn't accountability. This is why we believe no one else can do what we do. By delivering a robust identity security framework that spans humans, cloud resources and all non-human identities, particularly autonomous AI agents, SailPoint empowers the enterprise to harness the power of AI with absolute confidence. Our customers don't just secure AI, they secure their future. We believe we have the platform, the architecture and the execution engine to lead this market. Now I'll turn it over to Brian. Brian Carolan: Thank you, Mark. Good morning, everyone, and thank you for joining us today. Fiscal Q2 '27 was another strong quarter with robust demand for our identity security platform. We are successfully executing a deliberate strategy to build a more durable and predictable business, delivering total ARR of $1.231 billion, which represents growth of 25% year-over-year. The central driver of this continued growth is the rapid adoption of our SaaS platform. SaaS ARR grew 36% year-over-year to $847 million. Net new SaaS ARR reached $66 million, a 34% increase from last year, underscoring the ongoing market shift toward our cloud-native solutions. In fact, SaaS accounted for 97% of our net new ARR this quarter. Within our SaaS platform, we are seeing healthy momentum across our AI-driven solutions, which accounted for more than 30% of our net new ARR in Q2. This is particularly evident within our installed base, where customers adopting our AI-driven solutions increased their annual spend by over 60%. Customer interest in the recent launch of our SailPoint Agentic Fabric and Agentic Suites is encouraging. Ahead of Q3 availability, we saw strong demand from early adopters. As Mark mentioned, this brings our total AI-driven ARR to over $70 million, putting us well ahead of the pace to achieve our $100 million target by fiscal year-end. As we discussed at our Investor Day, our AI-driven ARR definition encompasses our Agentic Fabric, our Agentic Suites and our Agentic add-on modules. We chose this definition because it reflects the underlying customer preference for an integrated identity solution across both human and non-human identities. Regarding the migration of our on-prem installed base to our SaaS solutions, the unit economics remain compelling. This expansion continues to be driven largely by additional capacity, hosting cost and expanded functionality. In fact, over 2/3 of our migrations added an AI-driven solution. Most importantly, once customers migrate to our SaaS platform, they typically continue to expand and grow with us over time. The migration contribution to our overall ARR growth was approximately 4 points this quarter. We believe we are still early in this motion and our latest AI innovations and the launch of SailPoint Agentic Acceleration, an AI tool to accelerate deployments, gives us confidence that this can be a durable growth driver. As a reminder, as customers migrate from our on-prem solutions or land with SaaS first, there is a temporary timing impact on recognized revenue and adjusted operating income due to the shift from upfront license recognition to ratable SaaS revenue. As a general rule of thumb, each $5 million shift between SaaS and term impacts in-period revenue by approximately $10 million, with the majority flowing through to adjusted operating income. While this tempers near-term reported growth, it strengthens the predictability and long-term health of our business as that revenue is recognized over the full length of the contract. We saw this play out in the second quarter with a higher mix of net new SaaS ARR, which equated to approximately a $5 million revenue timing headwind. Putting this all together, we delivered total revenue of $309 million, an increase of 17% year-over-year, with SaaS revenue growing 34%. Excluding approximately $36 million of revenue recognized at point in time, primarily from term contracts, our revenue recognized over time grew 22% year-over-year. Additionally, our remaining performance obligation, or RPO, growth accelerated to 30% year-over-year to reach $1.9 billion, and our current RPO grew 27% to $931 million. Our adjusted operating margin was 20.3%. We generated $37 million of free cash flow in our fiscal second quarter, representing a 12.1% free cash flow margin. Our dollar-based net revenue retention remained robust at 113%, and our gross retention remains in the high 90s. Acquired ARR from Entro was less than $3 million, which was more than offset by currency headwinds in the quarter. In other words, our total net new ARR results are consistent with organic constant currency growth. Turning now to guidance. For simplicity, I will refer to the midpoint of our guidance ranges where applicable. Full details can be found in this morning's press release and supplemental earnings deck, where you can also find additional modeling notes. For the fiscal third quarter of 2027, we expect ARR to be $1.29 billion, up 24% year-over-year. We expect revenue to be $328 million, an increase of 16% year-over-year with adjusted operating margin of 17.7%. We expect our diluted share count to be approximately 577 million shares and adjusted EPS to be $0.07 to $0.08. For fiscal year 2027, we are flowing through the Q2 ARR upside to our full year guidance. This translates to an increase of $11 million to $1.38 billion, up 23% year-over-year. We expect revenue to be approximately $1.27 billion, an increase of 19% year-over-year. And we expect our adjusted operating margin to be approximately 19%, which is inclusive of additional costs for Entro. We expect our diluted share count to be approximately 575 million shares and adjusted EPS to be $0.32. We continue to expect to generate approximately $200 million of free cash flow in FY '27. We expect SaaS to account for approximately 85% to 90% of our net new ARR in Q3 and approximately 90% to 95% for the full year 2027. In summary, we believe our strong results, growth at scale and innovative product road map position us extremely well for continued success in the AI-powered future. We are confident in our strategy and our ability to achieve our fiscal 2029 targets of at least $2.1 billion of ARR, at least $800 million of AI-driven ARR, at least 22% adjusted operating margin and at least $400 million of free cash flow. We believe our execution against these targets will deliver long-term value to our shareholders. With that, let's invite Matt Mills, our President, to join us and open the call for questions. Operator? Operator: [Operator Instructions] Our first question comes from the line of Matt Hedberg of RBC. Matthew Hedberg: Congrats on the results. A lot of AI nuggets sprinkled through the prepared remarks, hearing that the AI-driven pipeline has doubled since Investor Day. And also, I think you said AI-driven ARR was over $70 million this quarter and contributed, I think, meaningfully to net new ARR. I guess I'm wondering, can you help unpack like how that pipeline is converting? And I guess as you continue to target $800 million in AI-driven ARR by fiscal '29, like how should we think about the progression towards that number? Talking about like attach rates to deal sizes. Just sort of curious on the mechanics because it feels like you guys are off to a really nice start there. Mark McClain: Matt, it's Mark. And I'll probably start and then turn it over to Matt for a little more. I think what we're seeing, not surprisingly, is just tremendous interest in what we've brought to market in the last few months. I think as we all have discussed and customers everywhere are kind of in a search mode on how to get their arms around the risks associated with AI. Everybody is familiar with some of the famous breach or risk stories that have hit the news. And so what we're finding is just tremendous interest in this topic. And then I think Matt can comment more on kind of some of the shifts we made in our go-to-market approach, but we've, I think, successfully deployed a focused team in our field who can get in front of like the Chief AI Officer, help them understand specifically what SailPoint is doing to address those risks and differentiate that from some of the -- frankly, the noise that's out in the market around everybody talking about what they're going to do to help you with AI. So I think what we're finding is we get the audience because there's interest in the topic. We're a credible player to come into the dialogue. And when we present in more specificity what we're doing, it tends to get very, very interesting, very fast. That's why we feel good about the pipeline build. Matthew Mills: Yes. Matt, I'll just add, it's a pretty good place to be in, in that there's a ton of interest in this topic, right? So it's much easier to get calls returned and get access to folks. And to that end, we're seeing a tremendous amount of interest in our products. It makes -- it's a pretty easy story, right? If you look at our installed base and when you start moving from our, let's say, business suites to Agentic, it's really an upgrade, right? It's not a modernization. It's not a big migration. It's an upgrade. And now you get access to all the Agentic tools. And so we're going through that process. I'll tell you another thing that's really interesting is we pivoted a bit in terms of our go-to-market motions. As Mark said, we've got an overlay group that's really designed to sell to a different persona, right, which would be the AI side of the house, the security side of the house and still continue to work the traditional silos around identity. But that kind of trifecta there is proving to be fairly effective in us being able to drive opportunities and get into things that, quite frankly, maybe we hadn't been getting into. Operator: Our next question comes from the line of Saket Kalia of Barclays. Saket Kalia: Brian, maybe for you. I think most folks understand that more SaaS conversions means less upfront revenue. But could you maybe help us frame how your SaaS and upfront revenue outlooks are changing this year? Just to sort of flesh out why the ARR beat isn't necessarily flowing through to full year revenue. Just to explain the mechanics so we're all on the same page. Brian Carolan: Saket, thanks for the question. So as you saw, we did land with a 97% SaaS net new ARR mix, which was above our guided range of 90% to 95%. I think just looking out to the second half, this is definitely not a demand issue. It's a rev rec timing issue. So we're expecting the full year to still remain in that 90% to 95% range, and that's what we're providing today as a range. So that could swing one way or the other. Each $5 million move in net new ARR means a $10 million move in revenue. So for Q3, we're expecting a range of closer to 85% to 90% SaaS mix given the Fed year-end. And then for the full year, it will be 90% to 95%. But just to reiterate, this ends up being a rev rec timing issue. You're going to recognize it either largely upfront in the period of sale or over time in the form of SaaS. It's definitely not a demand issue for us. Operator: Our next question comes from the line of Brian Essex of JPMorgan. Brian Essex: Thank you for the Entro contribution, by the way. That was a popular question this morning. A question for me. I guess I have 2 related ones. Either Matt or Mark, how much of the traction, and maybe more importantly, how much of your pipeline was competitive displacement? One of the things we're hearing about, particularly, in the channel is AI as a catalyst for technology transformation kind of similar but maybe more accelerated to what we saw in the cloud transformation era. And then maybe part 2 of the question, we heard about a greater-than-average amount of deal slippage in the quarter. If that's true, fantastic results in spite of that, but would love to understand the deal dynamics and what may have caused some of that -- some movement, if any, whether it was the size of deals or complexity of deals? Just would love your color on those 2 points. Mark McClain: Why don't I take the back half, let Matt have the first. Brian, just to clarify, we did not -- we did -- I apologize for any misunderstanding. We did not indicate any significant or any deal slippage of note. We feel like we've closed the business we expected to close in the quarter. That's why we came in higher than our guided ARR number. There's a lot of complexity in getting some of these business closed, but I wouldn't say we saw any significant slippage. I think it's more that we are seeing tremendous pipeline build in the back half. And it is taking some time to convert. Just as a reminder to everyone, we launched a lot of these Agentic solutions in the middle of early May, and our quarter closed at the end of July. So with typical enterprise sales cycles, we knew we wouldn't see a tremendous amount of that convert in the quarter, but we did see some, and we're very excited about the pipeline build. And I'll let Matt talk about the whole -- when we see an Agentic deal getting done, is that a displacement kind of a situation? Yes, no, how often, that kind of thing. Matthew Mills: Yes. Brian, when you start to look at the competitive landscape and you start looking at the deals we're working, look, everybody typically is coming from something when they're talking with us. And so AI really has been this catalyst. When you look at the legacy system, they're just not built to be able to handle this human agentic dynamic. And I think that's causing companies to really start to accelerate. We're seeing it, quite frankly, in our installed base. And quite frankly, that's one of the reasons we have come up with our new product offering, SailPoint Agentic Fabric for non-SailPoint customers. If you look at our POCs that we're doing a lot right now, a high percentage of them are coming from non-SailPoint customers. They're very interested in our Entro SaaS solutions. And so we think that's going to be an interesting thing as we see it play out, but we're getting a fair amount of interest from, again, non-SailPoint customers. So I would tell you, I think everybody is kind of feeling it. And not to mention the fact that I think a lot of -- especially the public companies, the mid-market companies that are public, they get a lot of downward pressure, right, to start being able to drive this technology into their company to get the kind of productivity and efficiencies that maybe the Boards and the public markets are looking for. Operator: Our next question comes from the line of Shaul Eyal of TD Cowen. Shaul Eyal: Congrats. Maybe one for Brian. So RPO accelerated to 30%. CRPO grew 7%. Can maybe -- can you share with us this widening gap? Are customers signing larger, longer duration agreements or our implementation and revenue recognition timing just keeps extending? Brian Carolan: Thanks, Shaul. So we are really pleased with the acceleration in the RPO. I think that's a sign for the future and more commitments from customers. We are starting to see larger deal sizes. I wouldn't say the duration of the deals has extended too materially or significantly. They're in line with historicals, but we are seeing larger deal sizes for sure. Mark McClain: Shaul, did you say 7% or 27% for CRPO? Just to clarify. Brian Carolan: 27%. Mark McClain: It's 27%. I thought Shaul said 7%. I apologize if I misheard that. It is 27% for CRPO. Shaul Eyal: 27%, yes. Mark McClain: Sorry, just maybe cut out for a second. Operator: Our next question comes from the line of Gray Powell of BTIG. Gray Powell: Congratulations on the good set of numbers here. I think you kind of hit on this already, but you highlighted that customers who adopted an AI-driven solution in Q2 increased their annual spending with you by about 60% or more. At the Analyst Day, I thought we're talking about more like a 25% to 50% uplift. So I guess my question is, what's driving the upside to those customers? And how should we think about the sustainability of that trend going forward? Brian Carolan: Great question. Thanks, Gray. So yes, I think what we're seeing is a number of things. First of all, with our migration opportunity, our modernization approach is that when we do a migration, about 2/3 of those migrations include an AI-enabled product. So there's definitely a trend here in terms of when customers expand with us and land with us, they're definitely interested in expanding with AI. So it's the power of both the non-human and human identities that's really driving the conversation and the monetization discussions. So we're really pleased with the early signs and green shoots that we're seeing in the funnel and some of the early deals that we've done. Operator: Our next question comes from the line of Joseph Gallo of Jefferies. Joseph Gallo: I also appreciate the Entro disclosure. This one is for Matt and Mark. I mean you spent a lot of time talking about the differentiation with -- in AI versus competitors. Are customers understanding that message yet because it still kind of feels like the Wild West. So like the actual question is, one, who are you seeing most in those deals? Is it identity vendors, backup and recovery or platforms? And then two, anything to note with those sales cycles relative to the company average sales cycle? Are they quicker? Or are they longer? Matthew Mills: Joe, this is Matt. Look, it's quite interesting. We're seeing a ton of interest in what we're calling the SailPoint Entro and the SailPoint Agentic Fabric. And really, what's happening is people are starting to realize that step one is to be able to identify what they don't know. We're really doing these and prosecuting these new opportunities with POCs, right? And we're kind of moving to this mantra. Look, there's a lot of noise in the market. You guys already know this, right? And I think one of the ways we're combating is saying, if you're buying something today or you're looking something today, but you need to see it. You need to put it on your network, you've got to use your data, use your use cases, and that's the only way you're going to find out if it works. So that's an approach we're pushing. We have -- and if you look at our pipeline over the next 3 quarters, 4 quarters, we have hundreds of POCs that are already in the pipeline that we're going to go prosecute. When you look at the time frame, it is accelerated. It's much quicker than a traditional Agentic Business Suite purchase. And I think if you're looking for time lines, it's 30 to 45 days, right? And our hope is that it can accelerate further than that. But it's putting it on the customer's network, using their data, using their use cases and getting through it. And we're having -- what's really interesting is if you go look at 50 of these, you can change the name of the company. The results are all very much the same. I had no idea. I had no idea I had this many agents. I had no idea that I had this many people that were using tools that we weren't using. We -- our company standardized on Copilot and nobody is using Copilot. They're using everything else. And that's not a dig on Copilot. I'm just saying it's one of these things that it's just -- it's real and it's what we're dealing with. And I think the customers are amazed at what they're seeing. Mark McClain: And Joe, piling on, just to touch there on the differentiation, like Matt said, one of the things we accelerated dramatically with the purchase of Entro was the discovery capability. We always like to say you can't govern or secure what you can't see, right? So that kind of was a dramatic increase in expansion of what we can discover. And as Matt said, it's literally 100% of the customers we go into find way more than they expected to that's already out in their environments. But then you have to move to, okay, now that you've seen it, what can you do about it, which is where some of the earlier technologies in the market today are falling pretty short because once you've found these things, you have to do something about it, right? And where we move to very quickly is you need to do a few things. You need to understand what all these non-human, particularly agentic identities are. You do need to tie them to humans because some human has to be responsible for this agent. I like to say you can't bring a lawsuit against an agent, right? If something goes wrong, somebody in that organization has got to be responsible. That's where our -- as Brian was highlighting earlier, our sale is effectively a blended value proposition of you need to see the human world in great depth and breadth and you need to tie it to the agentic and non-human world. SailPoint is uniquely well positioned to do that. And so we show them what we found. We show them how it relates to the human environment. And then we put the protective capabilities in place to say, now when we see something bad happening, we can take action. We can turn it off, we can flag it, whatever the appropriate action is. And it's that combination of value of discovering and then setting up governance policies and then protecting by taking kill switch type actions when we need to. So tying that whole non-human agentic world to the human world that we uniquely manage well is starting to resonate very well with customers. They get that they can't manage these agents completely independent of their human identity landscape. Operator: Our next question comes from the line of Rob Owens of Piper Sandler. Robbie Owens: There's multiple components to your AI ARR definition. Just hoping you can unpack what's driving the strength that you're seeing thus far. Brian Carolan: Rob, it's Brian here. So thanks for your question. As we've been saying, it's hard to look at AI just in isolation. We're really defining it as an integrated solution that crosses both human and non-human identities. So it's sold with the power of kind of both and both being additive to the number. I mean this really drove the 19% net new ARR growth. It grew 34% net new ARR SaaS growth. So what's included in the AI-driven definition is both the AI-driven solutions, suite customers that have an immediate upgrade path to Agentic Suites that were just unveiled. And we really think it's the best prediction or to measure our performance moving forward as opposed to kind of coming up with any kind of arbitrary allocation. We think the power of both of these combined going into the AI-driven number is really the way to look at it. So we're really pleased with the pipeline, more than doubled to over $200 million. We have a record number of POCs, as Matt mentioned, and feel good about where we're tracking against our targets. Operator: Our next question comes from the line of Patrick Colville of Scotiabank. Patrick Edwin Colville: I guess this one is for both Mark and Brian, please. The AI-driven ARR in 2Q accounting for more than 30% of net new, I thought was an incredibly helpful statistic, but also showing to us that AI is clearly a driver of SailPoint's business as of today. Is your expectation that, that proportion stays consistent or increases? Because my kind of back of the envelope math is if so, then that target for $100 million by the end of 4Q looks really low. I mean we could even get to like $120 million, $130 million, and that would be a really exciting kind of lens into the future of how SailPoint is going to grow from here. Brian Carolan: Yes. So Patrick, it's Brian. So yes, I mean, we're excited about the early traction we're getting. And again, kind of one drives the other. So you can't just look at it as AI only. It's the power of AI with human and non-human combined. So just our packaging and pricing and go-to-market approach is resonating. Again, pipeline build is there for the future. We feel really good about that. Even just since Investor Day, having more than doubled it is compelling. And actually, customers are coming to us on these questions, too. So it's really nice to be in a position where customers are seeking out our counsel and our guidance in terms of how to navigate through this ever-changing world. So -- and yes, you can see the math. We're off to a really good start, strong start on the Investor Day targets that we laid out. We feel good about them, and it's exciting. Mark McClain: You directed that to both of us. So I'll just say, basically, I agree with Brian 100%, Patrick. I think if anything, we feel very good about achieving and potentially obviously overachieving that original target of $100 million. And also this year, the question was, do we continue to see it growing as a proportion of our business? The answer to that is absolutely yes. I think as Brian said, increasingly, customers, I think, won't even be asking us about human-only identity solutions. They'll just be asking about an integrated identity solution, and that's how we're packaging and selling. And so as -- sorry, as Brian pointed out earlier, it's just kind of impossible for us to tease that apart. And so we just want to kind of get you guys thinking that's the way that customers are moving forward with us, and we think it's the right way to think about solving the problem, most importantly. Operator: Our next question comes from the line of Jonathan Ruykhaver of Cantor Fitzgerald. Jonathan Ruykhaver: The question I have is just around Modernization Flex. I'd like to hear a little bit more in terms of how that might be impacting IdentityIQ migrations. I think some of the previous comments do highlight the need for IGA modernization. So I guess the specific question is, is this impacting any of your assumptions around SaaS migration in the second half? And also looking at the potential ARR uplift, which I think, Brian, you've said in the past, it's potentially 2 to 3x. Any change in how you're looking at those 2 dynamics? Brian Carolan: Yes. Thanks, Jonathan. I'll take that one. So yes, in fiscal Q2, migration momentum definitely continued. I think what we're seeing is that customers are buying into the vision, right? So -- and that's evident by about 2/3, actually over 2/3 of our migrations that we completed in Q2 actually included AI-enabled products with it. So I think that is really compelling. We also have a tool called and a service called SailPoint Agentic Acceleration. And this basically simplifies and accelerates the migration process, making it much easier for customers to lean in and continue to move more towards our strategic vision that we have. In terms of the uplift, we're still in that range of 2 to 3x uplift upon migration. Now that grows over time. When we do have a heavier mix of term, that's probably closer to 2x. But the important thing is that, that definitely grows and expands over time over the next several years out. And we just have more and more now to offer in terms of that expansion opportunity. So we really feel good about it. Last thing I'll say, I think you were asking this question, this contributed about 4 points to our overall ARR growth in fiscal Q2, the migration activity alone, along with the expansion. Operator: Our next question comes from the line of Meta Marshall of Morgan Stanley. Meta Marshall: Maybe building on that last question, I just wanted to ask about Agentic Acceleration and just kind of the time line that you're seeing some of these accelerated migrations on and when you could -- when or if you could pivot Agentic Acceleration towards kind of legacy provider solutions? Matthew Mills: Yes, Meta, this is Matt. So absolutely correct. It started out as an accelerating tool to be able to help our IQ customers move much more quicker and more efficiently to our SaaS platform. But today, we're far, far along the road of using this tool now for not only our legacy that you're talking about, but replacing maybe some of our competitors who had some failed implementations and even so far along as taking a new prospect's RFI or RFP and using that for a source to actually go build out a POC that ultimately would end up as a production instance. And this is part of the selling adoption we're going through right now for this new Agentic world. So we're pretty excited about it. Yes. I'm sorry, yes, non-SailPoint environments as well, right? So that would be all the legacy stuff you're thinking about, I'll just call them out, the Oracles and the CAs, the traditional big legacy players. Operator: Our next question comes from the line of Joshua Tilton of Wolfe Research. Joshua Tilton: Maybe just a 2-parter for me. I appreciate the contribution to growth from the migrations in the quarter. But can you just talk to maybe how those 4 points compare to your expectations? How are migrations tracking relative to your expectations? And maybe also just relative to the context of the longer-term targets? Are they ahead of expectations, in line with expectations? And then just the second part is for the back half, do you feel like you have this mix dynamic locked in to the updated guidance that we have? I noticed the mix drops in 3Q, but you're still expecting a similar SaaS net new ARR mix for the full year. So just help us understand how much confidence do you have that we won't continue to see revenue headwinds from this mix dynamic going into the second half of this year? Brian Carolan: Josh, it's Brian here. So I would say that the contribution of the migration/modernizations to the growth was right in line with what we expected heading into the quarter. In terms of the mix assumptions for the second half of the year, the SaaS mix assumptions, we're tilting more towards 85% to 90% because of the federal government year-end in fiscal Q3. We're still sticking with the 90% to 95% SaaS mix for the full year. And again, that could swing. It's just -- that's the reality of the situation. Every $5 million of swing one way or the other could be $10 million of revenue. We monitor it, we track it. We track the pipeline. We try to dial it in as much as possible, but we do want to caveat it that, that is the range that you could see. We feel good about the second half of the year. I think our guidance implies about 58% of our business would come in the second half of the year, Q3, Q4, and that is right in line with where it was last year. So we feel good about the overall number itself of the net new ARR. Operator: Our next question comes from the line of Shrenik Kothari of Baird. Shrenik Kothari: So congrats again. And Entro seems to be really changing the front end of the sales motion, as you said. You now have hundreds of POCs in the pipeline. And Mark and Brian, you mentioned the cycles are materially shorter than traditional Agentic Suite through becoming a faster new logo motion. So my question is, as the mix potentially shifts towards these faster Entro-led land, should we expect kind of smaller initial ACV, but then a much larger subsequent sort of expansion opportunity into Agentic Fabric and the broader suite? And part 2 is as the product boundary itself is surprisingly moving quickly from discovery into like real-time runtime, governance enforcement. Beyond Entro, where are the remaining, let's say, capabilities, either dynamic just-in-time or zero standing or any other runtime remediation where you would still look at from an M&A over building organically? Brian Carolan: I'll take the first one. This is Brian here. So we are not seeing any smaller deal sizes per se when Entro is introduced into the selling process. In fact, I think it's expanding our non-human identity discovery using Entro. So I think it actually could be a compelling use case for maybe having even larger deal sizes at some point in the future. But for now, I would think of it as status quo even with Entro, but it does speed up and make the sales process more efficient from the early stages. Mark McClain: And Shrenik, on the second question, we did see a pretty dramatic expansion, as I said, of our discovery capabilities, particularly with Entro. And we are continually developing a lot around our whole move toward more real-time governance. It's demanded in the world of Agentic, and we think it will kind of slide very much into the way people think about doing human identity governance, which has again been more asynchronous, a little less real time. But in this world, we're emerging toward the real-time ability to make decisions based on human access, based on context is, I think, going to be the buzzword here, based on real-time context, can this human or this agent get access to what it's trying to access. And so that is the place we continue to make significant investments in things like what we call just-in-time provisioning or just-in-time authorization. And we are building a lot there and continue to keep our eye on some of the early-stage technologies in the market to potentially supplement. You've seen us do that a couple of times in the last couple of years of kind of enhancing or accelerating our road map through strategic technology acquisition. So those types of things are still very much in play for us, and we continue to scour the opportunities around the market for that. Operator: Our next question comes from the line of Richard Poland of Wells Fargo. Richard Poland: So I just wanted to ask about, it sounded like early in the prepared remarks, you made mention that customers committed to some of the Agentic Suites ahead of that Q3 launch. So I just wanted to clarify, is it fair to say that there was some contribution in Q2 from the Agentic Suites? And just as we think about Agentic Suites and what's embedded there for the second half, any, I guess, quantification or even qualitative framing for how we should think about Agentic Suites ramping in the second half? Brian Carolan: Yes. So Richard, this is Brian. There was no -- absolutely no pull-in of deals. It was -- these were existing Business Suite customers that have an upgrade path to the Agentic Suites effective immediately. So these were early adopters of the Agentic offerings that we have. It was strictly just a packaging thing. Now that we have the Agentic Suites available, there is an immediate upgrade path to that. And then the second part of your question, I think the second half is, again, continuing to lean in on selling more and more Agentic Suites, and that's the power of both the human and non-human identity packaging that's part of it. Operator: Our next question comes from the line of Gregg Moskowitz of Mizuho. Gregg Moskowitz: Just would like to get back to Gray's question on the spending uplift for existing customers buying AI because certainly, it's very early days, but also really encouraging data. And I'm wondering if this gives you some confidence that you could actually see more of an increase than perhaps you initially believed? Or do you expect that it will settle in at the levels that you had articulated at the Analyst Day? Brian Carolan: I think as of now, Gregg, we're going to say that we feel really good about where we are, and we're off to a strong start. We're not changing anything from the Analyst Day per se, but we are off to a good start and tracking ahead of the goals that we laid out. Operator: Our next question comes from the line of Junaid Siddiqui of Truist. Junaid Siddiqui: Flex Navigator has clearly helped accelerate migrations to the SailPoint platform. But are you seeing it also increase the ultimate lifetime value of those customers through higher module adoption, attach rates or just broader identity coverage? And do you see Flex primarily just as a migration catalyst or a meaningful wallet share expansion opportunity? Matthew Mills: Yes. This is Matt. I would -- really, when we put this in place, really, it really looked as an accelerator, right, to help customers move quicker to the SaaS or now agentic model. And it kind of takes the risk, if you will, out of these large corporations that are moving, right? So they can start to move more strategically than this one big fell swoop trying to get everything done in 6 or 9 or 12 months. So that's kind of how we put it in place. And I think that's -- it's working as we intended. Operator: I would now like to turn the conference back to Mark McClain for closing remarks. Sir? Mark McClain: Thank you, and thank you, everyone, again, for joining us. We feel very good about the results, as we've said throughout the call and try to indicate clearly the momentum we're seeing with the pipeline build and the interest in the Agentic capabilities. And we expect to continue to see a lot of momentum from these products in the market in the coming quarters, and we're excited about where we are today. So thank you for joining us. We look forward to maybe some further dialogue after the call. Thanks again. Operator: This concludes today's conference call. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. SailPoint (SAIL) Q2 2027 Earnings Call Transcript was originally published by The Motley Fool

SailPoint, Inc. (SAIL) reported $308.81 million in revenue for the quarter ended July 2026, representing a year-over-year increase of 16.8%. EPS of $0.09 for the same period compares to $0.07 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $310.4 million, representing a surprise of -0.51%. The company delivered an EPS surprise of +12.5%, with the consensus EPS estimate being $0.08. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately. Here is how SailPoint, Inc. performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Annual Recurring Revenue: $1.23 billion compared to the $1.22 billion average estimate based on three analysts. SaaS Annual Recurring Revenue: $847 million versus $834.94 million estimated by three analysts on average. Customers: 3,310 versus the two-analyst average estimate of 3,288. Revenue- Services and other: $13.61 million compared to the $14.86 million average estimate based on four analysts. The reported number represents a change of -14.9% year over year. Revenue- Subscription: $295.21 million compared to the $295.52 million average estimate based on four analysts. The reported number represents a change of +19.1% year over year. Revenue- Subscription- Other subscription services: $9.67 million versus $8.89 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +46.8% change. Revenue- Subscription- Term subscriptions: $56.2 million versus the three-analyst average estimate of $56.52 million. The reported number represents a year-over-year change of -3.3%. Revenue- Subscription- SaaS: $193.87 million compared to the $193.85 million average estimate based on three analysts. The reported number represents a change of +33.9% year over year. Revenue- Subscription- Maintenance and support: $35.47 million versus $36.43 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a -7.8% change. Gross profit- Subscription: $211.1 million versus the two-analyst average estimate of $216.45 million. Gross profit- Services and other: $-5.72 million versus $-3.19 million estimated by two analysts on average. View all Key Company Metrics for SailPoint, Inc. here>>> Shares of SailPoint, Inc. have returned -6.7% over the past month versus the Zacks S&P 500 composite's -0.4% change. The stock currently has a Zacks Rank #4 (Sell), indicating that it could underperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SailPoint, Inc. (SAIL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by the compounding power of the identity security platform and rapid adoption of SaaS, which accounted for 97% of net new ARR in Q2. Management attributes growth to the strategic elevation of identity governance to CISO and Board-level priorities, unlocking larger enterprise budget opportunities. The acquisition of Entro Security accelerated the product roadmap by expanding discovery capabilities to over 1,200 non-human identity types, providing critical lineage context. Strategic positioning focuses on a unified control plane, arguing that monitoring alone is insufficient and that proactive governance must link autonomous agents to accountable humans. Operational momentum is evidenced by a 17% increase in average ARR per SaaS customer to over $400,000, driven by the adoption of integrated AI-driven solutions. Market dynamics are increasingly influenced by regulatory pressures, such as the EU AI Act, which mandates human oversight and audit logging for AI agents by 2027. Management expressed high confidence in achieving FY '29 targets, including at least $2.1 billion in total ARR and $800 million in AI-driven ARR. Guidance for FY '27 assumes a SaaS mix of 90% to 95% for the full year, acknowledging that higher SaaS adoption creates a temporary revenue timing headwind compared to upfront license recognition. The AI-driven pipeline has more than doubled since the May Investor Day, reaching over $200 million, which serves as a leading indicator for future conversion. Strategic initiatives include the Q3 release of Agentic Suites and the continued rollout of SailPoint Agentic Acceleration to reduce migration friction from on-prem to SaaS. Future growth assumes that identity governance will transition from static compliance to real-time, threat-aware enforcement across converged human and non-human workforces. The shift from term licenses to ratable SaaS revenue resulted in an approximately $5 million revenue timing headwind in Q2, impacting reported growth but not underlying demand. Management flagged that 97% of AI agents currently have access to sensitive data, while only 21% of organizations feel confident in managing that risk, representing a massive governance gap. Acquired ARR from Entro was less than $3 million, which was largely offset by currency headwinds, making the total net new ARR results consistent with organic constant currency growth. The strategic collaboration agreement with AWS establishes SailPoint as a preferred identity governance solution for Agentic AI, providing a significant competitive moat in cloud environments. Management noted that AI-driven solutions are often sold as upgrades to existing business suites rather than complex modernizations, simplifying the sales motion. The company has deployed a focused overlay group in the field to target new personas like Chief AI Officers, which is successfully driving access to previously untapped budgets. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that the ARR beat did not fully flow through to revenue due to the higher-than-expected SaaS mix (97% vs. 90-95% guided). Every $5 million shift from term to SaaS results in a roughly $10 million impact on in-period recognized revenue, though it strengthens long-term predictability. AI is acting as a catalyst for transformation similar to the cloud era, with legacy systems unable to handle the human-agentic dynamic. A high percentage of Proof of Concepts (POCs) are coming from non-SailPoint customers, particularly those interested in the Entro SaaS discovery solutions. Sales cycles for Agentic Fabric are materially shorter than traditional suites, often ranging from 30 to 45 days. The discovery-led motion typically reveals thousands of unknown agents within a week, creating immediate urgency for governance and protection modules. The 60% uplift is driven by the integrated value of human and non-human identity management, with 2/3 of migrations now including an AI-enabled product. While management is not officially raising the 25-50% uplift target from Investor Day yet, they confirmed they are tracking well ahead of those initial goals.

SailPoint, Inc. (SAIL) came out with quarterly earnings of $0.09 per share, beating the Zacks Consensus Estimate of $0.08 per share. This compares to earnings of $0.07 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +12.50%. A quarter ago, it was expected that this company would post earnings of $0.04 per share when it actually produced earnings of $0.05, delivering a surprise of +25%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. SailPoint, Inc. , which belongs to the Zacks Internet - Software industry, posted revenues of $308.81 million for the quarter ended July 2026, missing the Zacks Consensus Estimate by 0.51%. This compares to year-ago revenues of $264.36 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. SailPoint, Inc. shares have lost about 12.1% since the beginning of the year versus the S&P 500's gain of 12.1%. While SailPoint, Inc. has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for SailPoint, Inc. was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.08 on $327.91 million in revenues for the coming quarter and $0.32 on $1.27 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 35% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, BlackBerry (BB), is yet to report results for the quarter ended August 2026. The results are expected to be released on September 24. This cybersecurity software and services company is expected to post quarterly earnings of $0.04 per share in its upcoming report, which represents no change from the year-ago quarter. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. BlackBerry's revenues are expected to be $143 million, up 10.3% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SailPoint, Inc. (SAIL) : Free Stock Analysis Report BlackBerry Limited (BB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in SailPoint, Inc.? Here are five stocks we like better. SailPoint’s fiscal Q2 performance exceeded expectations: ARR rose 25% year over year to $1.231 billion, while revenue increased 17% to $309 million. SaaS ARR grew 36%, and SaaS accounted for 97% of net new ARR. AI is becoming a major growth driver: AI-driven ARR surpassed $70 million, represented more than 30% of net new ARR, and the AI-related pipeline more than doubled since the company’s investor day. SailPoint is targeting governance of both human identities and autonomous AI agents. The company raised its fiscal 2027 ARR outlook: SailPoint now expects $1.38 billion in ARR, up $11 million from its prior forecast, while maintaining targets for $1.27 billion in revenue, 19% adjusted operating margin and approximately $200 million in free cash flow. Three Stocks Under $20 With Massive Upside Potential SailPoint (NASDAQ:SAIL) reported fiscal second-quarter 2027 annual recurring revenue of $1.231 billion, up 25% from a year earlier and $11 million above the midpoint of its guidance, as demand for its SaaS identity security platform and AI-focused offerings accelerated. Chief Executive Officer and Founder Mark McClain said SaaS ARR increased 36% year over year, while SaaS net new ARR grew 34%. SaaS represented 97% of the company’s net new ARR during the quarter. SailPoint’s total AI-driven ARR surpassed $70 million at the end of the quarter, aided by early customer interest in the company’s Agentic Suites before their planned third-quarter availability. → 3 Under-the-Radar Defense Stocks With Record Backlogs SailPoint Had a Week to Forget—Is This the Buying Window? “Our strong second quarter highlights the compounding power of our identity security platform and new product innovations, with AI playing an increasingly larger role in our success,” McClain said. SailPoint is positioning its platform around the governance of both human and non-human identities, including autonomous AI agents. McClain said enterprises need to identify what data AI agents can access, determine the human accountable for each agent, and maintain the ability to revoke access when necessary. → Ride-Share Reckoning: Tesla Drives Into Uber's Lane Why SailPoint May Cruise Past Cybersecurity Rivals in 2025 The company said its AI-driven pipeline has more than doubled since its investor day, held less than three months before the earnings call. AI-driven solutions accounted for more than 30% of net new ARR in the second quarter, according to management. President Matt Mills said SailPoint has established a focused sales overlay team aimed at chief AI officers and security leaders, while continuing to work with traditional identity buyers. He said the company is seeing interest from both existing customers and organizations that do not currently use SailPoint products. → High Gas Prices Aren't Budging—Here Are 3 Stocks That Benefit Mills said the company has hundreds of proof-of-concept projects in its pipeline over the next several quarters. These evaluations, focused in part on SailPoint Entro and the Agentic Fabric offering, have sales cycles of roughly 30 to 45 days, which he said is faster than a traditional Agentic Business Suite purchase. Management said customers conducting these evaluations often uncover substantially more AI agents and associated security risks than anticipated. McClain cited one global Fortune 500 customer where SailPoint connected to a majority of the company’s data sources within a week of a proof of concept and identified more than 10,000 unknown agents and thousands of related risks. The work led to a multimillion-dollar contract for Digital Identity Flex alongside Entro, he said. Chief Financial Officer Brian Carolan said SailPoint’s SaaS ARR reached $847 million, while net new SaaS ARR totaled $66 million. The company’s SaaS customer count rose 16% year over year, and average ARR per SaaS customer increased 17% to more than $400,000. Carolan said customers adopting AI-driven solutions increased their annual spending by more than 60%. More than two-thirds of SailPoint’s migrations from on-premise deployments to SaaS during the quarter included an AI-driven product. The migration activity contributed about four percentage points to total ARR growth in the quarter, he said. SailPoint continues to expect a two- to three-times ARR uplift when customers migrate, though Carolan said migrations with a heavier term-license mix may initially be closer to two times before expanding over time. SailPoint also highlighted Agentic Acceleration, an AI tool intended to simplify customer migrations and deployments. McClain said a global financial services company signed a multiyear agreement to manage more than 300,000 identities on SailPoint’s SaaS platform. Using automated onboarding tools, the customer reduced configuration work from weeks to less than 10 hours, according to McClain. Mills said the tool is now being used beyond SailPoint’s existing IdentityIQ customers, including for legacy environments and potential replacement opportunities involving competitors’ failed implementations. Fiscal second-quarter revenue rose 17% year over year to $309 million. SaaS revenue increased 34%. Excluding approximately $36 million of point-in-time revenue, primarily from term contracts, revenue recognized over time increased 22%. Remaining performance obligations rose 30% year over year to $1.9 billion. Current remaining performance obligations increased 27% to $931 million. Adjusted operating margin was 20.3%. Free cash flow was $37 million, representing a 12.1% margin. Dollar-based net revenue retention was 113%, while gross retention remained in the high 90% range. Carolan said the company’s higher SaaS mix creates a near-term revenue-recognition timing effect because SaaS revenue is recognized ratably rather than upfront. He said each $5 million shift between SaaS and term business affects in-period revenue by about $10 million, with most of the impact flowing through to adjusted operating income. SailPoint experienced an estimated $5 million revenue timing headwind in the second quarter due to the mix of net new SaaS ARR. For the fiscal third quarter, SailPoint expects ARR of $1.29 billion, representing 24% year-over-year growth; revenue of $328 million, up 16%; and adjusted operating margin of 17.7%. The company expects adjusted earnings per share of $0.07 to $0.08 on approximately 577 million diluted shares. For fiscal 2027, SailPoint raised its ARR outlook by $11 million to $1.38 billion, representing 23% growth. It reiterated expectations for approximately $1.27 billion in revenue, or 19% growth, adjusted operating margin of about 19%, adjusted EPS of $0.32, and approximately $200 million in free cash flow. Management said it remains confident in its fiscal 2029 targets of at least $2.1 billion in ARR, at least $800 million in AI-driven ARR, adjusted operating margin of at least 22%, and free cash flow of at least $400 million. SailPoint Technologies Holdings, Inc (NASDAQ: SAIL) is a leading provider of enterprise identity governance solutions that enable organizations to manage and secure user access across on-premises, cloud and hybrid IT environments. Its software automates identity lifecycle management, access certifications, policy enforcement and privileged account governance, helping enterprises reduce security risks, maintain regulatory compliance and streamline IT operations. The company's flagship offerings include IdentityIQ, a comprehensive on-premises platform, and IdentityNow, a cloud-native identity governance-as-a-service solution. Founded in 2005 by industry veterans Mark McClain and Kevin Cunningham, SailPoint is headquartered in Austin, Texas. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "SailPoint Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for September 2026.

This article first appeared on GuruFocus. Total ARR: $1.231 billion, up 25% year-over-year. SaaS ARR: $847 million, up 36% year-over-year. Net New SaaS ARR: $66 million, a 34% increase year-over-year. Total Revenue: $309 million, up 17% year-over-year. SaaS Revenue: Up 34% year-over-year. Adjusted Operating Margin: 20.3%. Free Cash Flow: $37 million, representing a 12.1% free cash flow margin. Remaining Performance Obligation (RPO): $1.9 billion, up 30% year-over-year. Current RPO: $931 million, up 27% year-over-year. Dollar-Based Net Revenue Retention: 113%. AI-Driven ARR: Over $70 million as of the end of Q2. Average ARR per SaaS Customer: Over $400,000, up 17% year-over-year. SaaS Customer Count: Grew 16% year-over-year. Warning! GuruFocus has detected 6 Warning Signs with SUNB. Is SAIL fairly valued? Test your thesis with our free DCF calculator. Release Date: September 09, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. SailPoint Inc (NASDAQ:SAIL) delivered strong Q2 FY2027 results with total ARR of $1.231 billion, up 25% year-over-year, exceeding guidance midpoint by $11 million. SaaS ARR grew 36% year-over-year to $847 million, with SaaS net new ARR increasing 34%, and SaaS accounting for 97% of total net new ARR. AI-driven solutions are gaining rapid traction, with AI-driven ARR surpassing $70 million and accounting for over 30% of net new ARR in Q2, ahead of pace to hit the $100 million year-end target. The acquisition of Entro Security has expanded discovery capabilities to over 1,200 nonhuman identity types, enhancing the company's competitive edge in agentic AI governance. The company raised its full-year FY2027 ARR guidance to $1.38 billion (up 23% year-over-year) and maintains strong growth momentum with RPO growth accelerating to 30% year-over-year. SailPoint Inc (NASDAQ:SAIL) is seeing strong customer expansion, with existing customers adopting AI-driven solutions increasing their annual spend by over 60%. The shift toward SaaS revenue continues to create a temporary revenue recognition headwind, with a higher mix of SaaS net new ARR equating to approximately a $5 million revenue timing headwind in Q2. Full-year FY2027 revenue guidance was not raised despite the ARR beat, due to the ongoing mix shift toward ratable SaaS revenue, which tempers near-term reported revenue growth. The company faces intense competition in the AI identity governance space, with many vendors marketing nonhuman identity or agentic AI governance solutions, creating market noise. Currency headwinds in the quarter offset the acquired ARR from Entro (less than $3 million), indicating some negative impact from foreign exchange fluctuations. Adjusted operating margin guidance for Q3 FY2027 is expected to decline to 17.7% from 20.3% in Q2, reflecting additional costs related to the Entro acquisition and investments in growth. The company acknowledged that while AI-driven pipeline has more than doubled since Investor Day, converting this pipeline into closed deals takes time due to typical enterprise sales cycles, which could delay revenue realization. Q: Can you unpack how the AI-driven pipeline is converting and how we should think about the progression toward the $800 million AI-driven ARR target by fiscal '29?A: Mark McClain (CEO) and Matt Mills (President) noted tremendous market interest in their agentic AI governance solutions, which has more than doubled the AI-driven pipeline since Investor Day. They have deployed a focused go-to-market team targeting Chief AI Officers and CISOs. Matt Mills added that for existing customers, moving to Agentic Suites is an "upgrade" rather than a complex migration, and the new overlay sales group targeting AI and security personas is proving effective at opening new opportunities. Q: Can you help frame how your SaaS and upfront revenue outlooks are changing this year to explain why the ARR beat isn't fully flowing through to full-year revenue?A: Brian Carolan (CFO) explained that the 97% SaaS net new ARR mix in Q2 was above the guided range, but this is a revenue recognition timing issue, not a demand issue. Each $5 million shift between SaaS and term impacts in-period revenue by approximately $10 million. For Q3, they expect a mix closer to 85%-90% due to the federal year-end, but maintain the full-year guidance of 90%-95% SaaS mix. Q: How much of your traction and pipeline is from competitive displacement, and did you see any deal slippage during the quarter?A: Mark McClain (CEO) clarified there was no significant deal slippage and they closed the business they expected. Matt Mills (President) stated that AI is acting as a catalyst for transformation, with a high percentage of POCs coming from non-SailPoint customers interested in the Entro solution. Legacy systems are not built to handle the human-agentic dynamic, which is accelerating replacement conversations. Q: RPO accelerated to 30% growth while CRPO grew 27%. Are customers signing larger or longer-duration agreements?A: Brian Carolan (CFO) confirmed they are seeing larger deal sizes, though contract duration remains in line with historical averages. The acceleration in RPO reflects more commitments from customers and is a positive sign for future revenue. Q: Customers who adopted an AI-driven solution increased their annual spending by over 60%. What's driving this upside, and is it sustainable?A: Brian Carolan (CFO) attributed the uplift to the fact that over two-thirds of migrations now include AI-enabled products. The combination of human and nonhuman identity governance is driving modernization discussions, and the company is pleased with the early signs in the funnel and initial deals closed. Q: Are customers understanding your differentiation message in AI versus competitors, and who are you seeing most in these deals? What are the sales cycles like?A: Matt Mills (President) said they are prosecuting new opportunities with POCs, pushing customers to test solutions on their own networks. They have hundreds of POCs in the pipeline, with sales cycles accelerated to 30-45 days. Mark McClain (CEO) emphasized that discovery alone isn't enough; SailPoint's differentiation lies in tying nonhuman identities to accountable humans and providing governance and kill-switch capabilities, which resonates strongly with customers. Q: Can you unpack what's driving the strength in your AI-driven ARR definition?A: Brian Carolan (CFO) explained that AI-driven ARR is defined as an integrated solution crossing both human and nonhuman identities, reflecting customer preference for unified identity solutions. The AI-driven pipeline has more than doubled to over $200 million, with a record number of POCs, and the company is tracking well against its targets. Q: AI-driven ARR accounted for more than 30% of net new ARR. Is that proportion expected to stay consistent or increase, and does the $100 million year-end target look conservative?A: Brian Carolan (CFO) and Mark McClain (CEO) confirmed they feel good about achieving and potentially overachieving the $100 million target. They expect AI-driven solutions to grow as a proportion of the business, as customers increasingly seek integrated identity solutions rather than human-only offerings. Q: How is the Digital Identity Flex model impacting IdentityIQ migrations, and are you changing assumptions around SaaS migration uplift in the second half?A: Matt Mills (President) stated migration momentum continued, with over two-thirds of Q2 migrations including AI-enabled products. The Agentic Acceleration tool is simplifying migrations. The ARR uplift from on-prem migrations remains in the 2x-3x range, growing over time, and migration activity contributed approximately 4 points to overall ARR growth in Q2. Q: Can you discuss the timeline for accelerated migrations via Agentic Acceleration and whether it can be pivoted toward legacy provider solutions?A: Matt Mills (President) confirmed the tool started as an accelerator for IdentityIQ customers but is now being used to replace competitors with failed implementations and even to build POCs from new prospect RFPs. It is applicable to non-SailPoint environments, including legacy players like Oracle and CA. Q: How do the migration contribution points compare to expectations, and do you feel the mix dynamic is locked into the updated guidance?A: Brian Carolan (CFO) said the migration contribution was in line with expectations. For the second half, they are guiding to an 85%-90% SaaS mix in Q3 due to federal year-end, maintaining 90%-95% for the full year. The guidance implies about 58% of net new ARR in the second half, consistent with last year. Q: With Entro driving faster entry-led deals, should we expect smaller initial ACVs with larger expansion opportunities, and where are the remaining capability gaps for M&A or organic build?A: Brian Carolan (CFO) said they are not seeing smaller deal sizes with Entro; it may actually enable larger deals through expanded nonhuman identity discovery. Matt Mills (President) noted they are investing heavily in real-time governance, just-in-time provisioning, and authorization, and continue to evaluate early-stage technologies for potential strategic acquisitions. Q: Did customers commit to Agentic Suites ahead of the Q3 launch, and how should we think about the ramp in the second half?A: Brian Carolan (CFO) For the complete transcript of the earnings call, please refer to the full earnings call transcript.