SailPoint revenue rises 17% to $308.8M
SailPoint grows subscription and SaaS revenue strongly with rising ARR, but remains loss-making while taking on large cloud purchase commitments and funding the Entro acquisition.
SailPoint, Inc. (SAIL) reported continued top-line growth for the three months ended July 31, 2026, with total revenue of $308.8 million, up 17% year over year, driven mainly by subscription revenue of $295.2 million, which grew 19%. SaaS revenue rose 34% to $193.9 million, and total gross margin held at 67%.
The company remains unprofitable, with a quarterly net loss of $50.4 million (basic and diluted net loss per share $0.09), widening versus the prior-year quarter, largely reflecting higher operating expenses and equity-based compensation. For the first six months, revenue grew 19% to $589.0 million, ARR reached $1.23 billion (SaaS ARR $846.9 million), dollar-based net retention was 113%, and operating activities generated $83.2 million of cash, while SailPoint completed the $122.6 million Entro acquisition and entered into long-term cloud commitments totaling $721.0 million through fiscal 2031.
Positive
- Total revenue grew 17% year over year to $308.8 million, with subscription revenue up 19% and SaaS revenue up 34%, indicating robust demand for the core cloud offerings.
- Annual Recurring Revenue reached $1.23 billion, up from $982.0 million a year earlier, and SaaS ARR rose to $846.9 million, with a dollar-based net retention rate of 113%, showing continued expansion within the customer base.
- Net cash provided by operating activities was $83.2 million for the first six months of fiscal 2027, a significant improvement from $(46.9) million in the prior-year period, indicating stronger cash-generation despite ongoing GAAP losses.
Negative
- The company reported a quarterly net loss of $50.4 million and a six‑month net loss of $125.0 million, with equity-based compensation expense of $140.4 million over six months continuing to weigh on profitability.
- Services and other posted a quarterly negative gross margin of 42%, as revenue declined 17% while partner-related delivery costs increased, pressuring overall margin mix.
- A new cloud storage agreement requires minimum purchases totaling $721.0 million over five years (through January 31, 2031), creating a sizable long-term contractual cash commitment.
Filing Explained
Existing holders face potential dilution from 25,173,794 granted RSUs and 44,924,448 available plan shares; no ESPP shares had been purchased by July 31.
This Form 10-Q is an unaudited quarterly report and, as of
The Omnibus Plan authorized a maximum of
The filing separately reports cash and cash equivalents at
The holder-relevant follow-up is whether the granted RSUs vest and shares are issued; the filing reports no shares purchased under the employee stock purchase plan as of
Key Figures
Quarterly Revenue: $308.8 million
Quarterly Net Loss: $50.4 million
Operating Cash Flow: $83.2 million
+5 more
8 metrics
Quarterly Revenue
$308.8 million
Three months ended July 31, 2026; up 17% year over year
Quarterly Net Loss
$50.4 million
Net loss for the three months ended July 31, 2026
Operating Cash Flow
$83.2 million
Net cash provided by operating activities, six months ended July 31, 2026
Annual Recurring Revenue (ARR)
$1.23 billion
ARR as of July 31, 2026 versus $982.0 million a year earlier
SaaS ARR
$846.9 million
SaaS Annual Recurring Revenue as of July 31, 2026; up from $622.7 million
Dollar-Based Net Retention Rate
113%
As of July 31, 2026; slightly down from 114% a year earlier
Cloud Purchase Commitments
$721.0 million
Minimum purchases under cloud storage agreement over contract years one through five
Entro Acquisition Consideration
$122.6 million
Cash purchase consideration paid on June 29, 2026 for Entro
Key Terms
Annual Recurring Revenue, SaaS, Dollar-based net retention rate, Remaining performance obligations, +2 more
6 terms
Annual Recurring Revenue financial
"We define ARR as the annualized value of SaaS, maintenance, term subscription"
Annual recurring revenue is the predictable amount of money a company expects to earn each year from ongoing customer subscriptions or contracts. It helps businesses understand how much steady income they can count on, much like a subscription service that charges customers every month or year. This figure is important because it shows the company's stability and growth potential.
SaaS technical
"Entro is a cloud-based platform that helps organizations manage identity-related SaaS"
SaaS, or Software as a Service, is a way of delivering computer programs over the internet, allowing users to access and use them through a web browser without needing to install or maintain the software themselves. For investors, it highlights a business model where companies generate recurring revenue by providing ongoing access to their software, often leading to predictable income and growth potential.
Dollar-based net retention rate financial
"Our dollar-based net retention rate has decreased to 113% as of July 31, 2026"
Dollar-based net retention rate measures how much recurring revenue a company keeps and grows from its existing customers over a set period, after accounting for upgrades, downgrades, and churn. Think of it like checking whether a group of current customers are spending more, the same, or less this year compared with last year; investors use it as a thermometer for revenue health and the business’s ability to expand sales without finding new customers.
Remaining performance obligations financial
"As of July 31, 2026, remaining performance obligations were $1.9 billion"
Remaining performance obligations are the work a company still needs to complete for its customers, like finishing a service or delivering a product. It’s important because it shows how much future income the company has coming in from current agreements, giving a clearer picture of its ongoing business.
Non-human identities technical
"Entro is a cloud-based platform that secures non-human identities, machine secrets"
Non-human identities are legal or digital identities assigned to machines, software agents, Internet-of-Things devices, or automated accounts so they can act, communicate, and be tracked separately from people. For investors this matters because these identities affect who is legally responsible, how transactions are authenticated, and how automated systems impact revenue or liability — think of them like a licensed driver’s license or bank account for a robot or software agent.
Omnibus Incentive Plan regulatory
"the shareholders and the Company's Board of Directors approved the Omnibus Incentive Plan"
An omnibus incentive plan is a single, flexible program a company uses to give employees and executives different types of pay tied to performance — for example stock options, restricted shares, cash bonuses and other awards — all governed by one set of rules. It matters to investors because it determines how many new shares may be created, how leaders are motivated and how much the company will spend on compensation over time; think of it as a master toolbox that affects both costs and the total share supply.
Earnings Snapshot
Revenue: $308.8 million (quarter); $588.9 million (six months)
Three and six months ended July 31, 2026
Revenue
$308.8 million (quarter); $588.9 million (six months)
Quarterly revenue up 17% and six‑month revenue up 19% year over year
Net loss
$50.4 million (quarter); $125.0 million (six months)
Quarterly net loss increased versus prior year; six‑month net loss narrowed from $197.9 million
ARR
$1.23 billion
Increased from $982.0 million as of July 31, 2025
SaaS ARR
$846.9 million
Increased from $622.7 million as of July 31, 2025
Operating cash flow
$83.2 million
Improved from $(46.9) million for the prior-year six‑month period
FAQ
How did SailPoint (SAIL) perform financially in the quarter ended July 31, 2026?
SailPoint reported revenue of $308.8 million, up 17% year over year, with subscription revenue of $295.2 million. Gross margin was 67%. The company posted a net loss of $50.4 million, or $0.09 per basic and diluted share.
What were SailPoint’s key subscription and SaaS metrics this quarter?
Subscription revenue was $295.2 million, up 19% year over year, including $193.9 million of SaaS revenue, which grew 34%. Annual Recurring Revenue was $1.23 billion, with SaaS ARR of $846.9 million and a dollar-based net retention rate of 113%.
Is SailPoint (SAIL) generating positive cash flow?
Yes. For the six months ended July 31, 2026, SailPoint generated $83.2 million of net cash from operating activities, compared with $(46.9) million in the prior-year period, while funding acquisitions and capital spending from investing cash flows.
What major acquisitions did SailPoint complete recently?
On June 29, 2026, SailPoint acquired Entro for approximately $122.6 million in cash. The deal added $15.8 million of developed technology intangibles, $5.0 million of customer relationships, $0.4 million of tradename, and $98.7 million of goodwill.
What long-term commitments and credit facilities does SailPoint have outstanding?
SailPoint’s 2025 Credit Agreement provides a $250.0 million secured revolving credit facility maturing June 25, 2030. Separately, a new cloud storage contract requires minimum annual purchases totaling $721.0 million over five contract years.
How many customers does SailPoint (SAIL) serve, and how is large-customer growth trending?
As of July 31, 2026, SailPoint had 3,310 customers, up from 3,105 a year earlier. Customers with ARR over $250,000 rose to 1,330 and those over $1,000,000 ARR increased to 235, representing 22% and 27% year-over-year growth respectively.
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________________
FORM 10-Q
________________________________________________________________
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended July 31, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission File Number: 001-42522
________________________________________________________________
(Exact name of registrant as specified in its charter)
________________________________________________________________
(State or other jurisdiction of
incorporation or organization)
(Address of principal executive offices)
(I.R.S. Employer
Identification No.)
(Zip Code)
(512 ) 346-2000
(Registrant’s telephone number, including area code)
________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
| x | Smaller reporting company | ||||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
The registrant had 570,911,633 shares of common stock outstanding as of September 4, 2026.
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SailPoint, Inc.
Quarterly Report on Form 10-Q
Table of Contents
| Page | ||||||||
PART I | ||||||||
| Item 1. | Financial Statements (Unaudited) | |||||||
Condensed Consolidated Balance Sheets | 3 | |||||||
Condensed Consolidated Statements of Operations | 4 | |||||||
Condensed Consolidated Statements of Redeemable Convertible Units, Stockholders' Equity and Partner's Deficit | 5 | |||||||
Condensed Consolidated Statements of Cash Flows | 7 | |||||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | 9 | |||||||
Special Note About Forward-Looking Statements | 20 | |||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 39 | ||||||
| Item 4. | Controls and Procedures | 39 | ||||||
PART II | ||||||||
| Item 1. | Legal Proceedings | 40 | ||||||
| Item 1A. | Risk Factors | 40 | ||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 40 | ||||||
| Item 3. | Defaults Upon Senior Securities | 40 | ||||||
| Item 4. | Mine Safety Disclosures | 40 | ||||||
| Item 5. | Other Information | 40 | ||||||
| Item 6. | Exhibits | 41 | ||||||
Signatures | 42 | |||||||
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SAILPOINT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(unaudited)
| July 31, 2026 | January 31, 2026 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net of allowance | |||||||||||
| Contract acquisition costs | |||||||||||
| Contract assets, net of allowance | |||||||||||
| Prepayments and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Contract acquisition costs, non-current | |||||||||||
| Contract assets, non-current, net of allowance | |||||||||||
| Other non-current assets | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
Liabilities and stockholders' equity | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses and other liabilities | |||||||||||
| Deferred revenue | |||||||||||
| Total current liabilities | |||||||||||
| Deferred tax liabilities, non-current | |||||||||||
| Other long-term liabilities | |||||||||||
| Deferred revenue, non-current | |||||||||||
| Total liabilities | |||||||||||
Commitments and contingencies (Note 6) | |||||||||||
Stockholders' equity | |||||||||||
Preferred stock, par value of $ | |||||||||||
Common stock, par value of $ | |||||||||||
| Additional paid in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
Total stockholders' equity | |||||||||||
Total liabilities and stockholders' equity | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
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SAILPOINT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Subscription | $ | $ | $ | $ | |||||||||||||||||||
| Services and other | |||||||||||||||||||||||
| Total revenue | |||||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Subscription | |||||||||||||||||||||||
| Services and other | |||||||||||||||||||||||
| Total cost of revenue | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
| Other income (expense), net | |||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Other income (expense), net | ( | ( | ( | ( | |||||||||||||||||||
| Total other income (expense), net | ( | ( | |||||||||||||||||||||
| Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Income tax benefit | |||||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Class A yield | ( | ||||||||||||||||||||||
| Net loss attributable to common stockholders | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Net loss per share attributable to common stockholders, basic and diluted (1) | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Weighted average common shares outstanding, basic and diluted (1) | |||||||||||||||||||||||
________________
(1) Amounts for the period during February 2025 prior to the Corporate Conversion have been retrospectively adjusted to give effect to the Corporate Conversion described in Note 1. These amounts do not consider the shares of common stock sold in the Company's IPO or the Class A Units considered preferred shares that were converted into common stock due to the Corporate Conversion.
See accompanying notes to condensed consolidated financial statements.
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SAILPOINT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE UNITS, STOCKHOLDERS' EQUITY AND PARTNERS' EQUITY
(In thousands)
(unaudited)
| Redeemable Convertible Units | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||
| Units | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
| Balance at April 30, 2026 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
Equity-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance and vesting of restricted stock and restricted stock units | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Balance at July 31, 2026 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
| Redeemable Convertible Units | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||
| Units | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
Balance at January 31, 2026 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
Equity-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance and vesting of restricted stock and restricted stock units | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Balance at July 31, 2026 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
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| Redeemable Convertible Units | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total Stockholders' Equity / Partners' Deficit | |||||||||||||||||||||||||||||||||||||
| Units | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
| Balance at April 30, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
| Equity-based compensation expense after Corporate Conversion | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon settlement of restricted stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Net loss after Corporate Conversion | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Balance at July 31, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
| Redeemable Convertible Units | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total Stockholders' Equity / Partners' Deficit | |||||||||||||||||||||||||||||||||||||
| Units | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
| Balance at January 31, 2025 | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||
| Vesting of incentive units into Class B Units | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Adjustment to reflect redemption value of redeemable convertible Class A Units | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||
| Adjustment to reflect redemption value of redeemable convertible Class B Units | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||
| Equity-based compensation expense prior to Corporate Conversion | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Net loss prior to Corporate Conversion | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Effect of Corporate Conversion | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with IPO, net of underwriters’ discounts and commissions and offering costs and tax effects | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Equity-based compensation expense after Corporate Conversion | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon settlement of restricted stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Net loss after Corporate Conversion | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Balance at July 31, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
6
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SAILPOINT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
| Six Months Ended July 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Depreciation and amortization expense | |||||||||||
| Amortization and write-off of debt issuance costs | |||||||||||
| Amortization of contract acquisition costs | |||||||||||
Adjustments to contingent consideration | |||||||||||
| Provision for credit losses | |||||||||||
| Equity-based compensation expense, net of amounts capitalized | |||||||||||
| Deferred taxes | ( | ( | |||||||||
| Other | |||||||||||
| Net changes in operating assets and liabilities, net of acquisitions | |||||||||||
| Accounts receivable | |||||||||||
| Contract acquisition costs | ( | ( | |||||||||
| Contract assets | ( | ( | |||||||||
| Prepayments and other current assets | ( | ( | |||||||||
| Other non-current assets | ( | ||||||||||
| Operating leases, net | ( | ||||||||||
| Accounts payable | ( | ||||||||||
| Accrued expenses and other liabilities | ( | ( | |||||||||
| Deferred revenue | ( | ||||||||||
| Net cash provided by (used in) operating activities | ( | ||||||||||
| Cash flows from investing activities | |||||||||||
| Purchase of property and equipment | ( | ( | |||||||||
| Capitalized software development costs | ( | ( | |||||||||
| Business acquisitions, net of cash acquired | ( | ||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Proceeds from IPO, net of underwriting discounts and commissions | |||||||||||
| Repayment of Term Loans | ( | ||||||||||
| Payment of debt issuance costs | ( | ||||||||||
| Payments of deferred offering costs, net | ( | ||||||||||
| Payments related to holdback and contingent consideration | ( | ||||||||||
| Net cash provided by financing activities | |||||||||||
| Net change in cash, cash equivalents and restricted cash | ( | ||||||||||
| Cash, cash equivalents and restricted cash, beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
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| Six Months Ended July 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Supplemental cash flow information: | |||||||||||
| Cash paid for: | |||||||||||
| Interest | $ | $ | |||||||||
| Income taxes, net of refunds | |||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
| Operating cash flows from operating leases | |||||||||||
Supplemental disclosure of noncash investing and financing activities: | |||||||||||
| Effect of Corporate Conversion | |||||||||||
| Adjustment to reflect the redemption value of the redeemable convertible units | |||||||||||
| Capitalized equity-based compensation included in property and equipment, net | |||||||||||
| Operating lease right of use assets obtained in exchange for lease liabilities | |||||||||||
| Reconciliation of cash, cash equivalents and restricted cash from the condensed consolidated balance sheets to the condensed consolidated statements of cash flows: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash within prepayments and other current assets | |||||||||||
| Total cash, cash equivalents, and restricted cash in the consolidated statements of cash flows | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
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SAILPOINT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Description of Business and Summary of Significant Accounting Policies
Organization
On February 12, 2025, in connection with our initial public offering ("IPO"), SailPoint Parent, LP converted into a Delaware corporation pursuant to a statutory conversion and changed its name to SailPoint, Inc. (the "Corporate Conversion"). The purpose of the Corporate Conversion was to reorganize the Company's corporate structure so that the entity offering its securities to the public in the IPO would be a corporation rather than a limited partnership. References in this Quarterly Report on Form 10-Q to “SailPoint,” the “Company,” “we,” “us” and “our” (i) for periods prior to the Corporate Conversion, refer to SailPoint Parent, LP and, where appropriate, its consolidated subsidiaries and (ii) for periods after the Corporate Conversion, refer to SailPoint, Inc. and, where appropriate, its consolidated subsidiaries.
In conjunction with the Corporate Conversion, all of the Company's outstanding partnership units were converted into an aggregate of 499,060,464 shares of our common stock. The number of shares of common stock issuable to holders of Class A Units of SailPoint Parent, LP ("Class A Units") and holders of Class B Units of SailPoint Parent, LP ("Class B Units") in connection with the Corporate Conversion were determined pursuant to the applicable provisions of the plan of conversion. The Company continues to be controlled by Thoma Bravo UGP, LLC (together with its affiliated entities, "Thoma Bravo") following the Corporate Conversion. Immediately after the Corporate Conversion and the closing of the IPO, Thoma Bravo controlled approximately 86.2 % of the voting power of the Company. The condensed consolidated financial statements and footnotes give effect to the Corporate Conversion on a prospective basis as of the conversion date.
The Company conducts business as SailPoint and delivers solutions to enable comprehensive identity security for the enterprise.
Completion of Initial Public Offering
On February 14, 2025, the Company closed its IPO of 60.0 million shares of its common stock, of which 57.5 million shares were sold by the Company and 2.5 million shares were sold by certain selling stockholders, at an initial offering price to the public of $23.00 per share for an aggregate offering price of approximately $1.4 billion. The Company received net proceeds of approximately $1.2 billion, net of approximately $62.8 million of underwriting discounts and commissions and approximately $11.5 million of offering costs, net.
Basis of Presentation
The accompanying condensed consolidated financial statements, which include the accounts of the Company and its wholly owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”). All intercompany accounts and transactions have been eliminated in consolidation.
The condensed consolidated balance sheet data as of January 31, 2026 was derived from the Company’s audited financial statements included in its Annual Report on Form 10-K for the fiscal year ended January 31, 2026 (the “fiscal 2026 Form 10-K”) but does not include all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements and accompanying footnotes should be read in conjunction with the Company’s annual consolidated financial statements and related footnotes included in the fiscal 2026 Form 10-K.
The accompanying condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, that are, in the opinion of management, necessary for the fair presentation of the Company’s results for the interim periods presented. The results of operations for the three and six months ended July 31, 2026 shown in this report are not necessarily indicative of the results to be expected for the full year ending January 31, 2027 or any other period.
Beginning with the year ended January 31, 2026, the Company began presenting "perpetual license revenue" and "cost of perpetual license revenue" as part of "revenue - services and other" and "cost of revenue - services and other," respectively, as the amounts were not material and has recast prior period amounts accordingly to conform to the presentation in the Company's fiscal 2026 Form 10-K.
Use of Estimates
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The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Future events and their effects cannot be determined with certainty. On an ongoing basis, management evaluates these estimates, judgments, and assumptions.
The Company bases its estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. In particular, the Company makes estimates with respect to the fair value allocation of multiple performance obligations in revenue recognition, the expected period of benefit of contract acquisition costs, and estimated useful lives and impairment of intangible assets and goodwill arising from business combinations. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. Actual results could differ from those estimates.
Concentration of Credit and Other Risks
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, accounts receivable, and contract assets. The Company maintains its cash in bank deposit accounts that exceeded federally insured limits as of July 31, 2026 and January 31, 2026. There was no concentration of credit risk for customers as of July 31, 2026 and January 31, 2026 as no individual entity represented more than 10% of accounts receivable and contract assets as of such dates. No customer accounted for more than 10% of revenue during the three and six months ended July 31, 2026 or 2025. The Company did not experience concentration of credit risk in foreign countries as of July 31, 2026 and January 31, 2026 as no foreign country represented more than 10% of the Company’s condensed consolidated revenues or net assets as of such dates.
Significant Accounting Policies
There have been no changes to the Company’s significant accounting policies as previously disclosed in the fiscal 2026 Form 10-K.
Recently Adopted Accounting Pronouncements
Accounting Standards Update 2025-05
In July 2025, the Financial Accounting Standards Board (the "FASB") issued ASU-2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which amends Topic 326 to provide a practical expedient and an accounting policy election related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under Accounting Standards Codification (“ASC”) 606. Specifically, in developing reasonable and supportable forecasts as part of estimating expected credit losses, all entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. Entities should apply the new guidance prospectively. The Company adopted this standard prospectively and it did not have a material impact on its consolidated financial statements or disclosures.
Recently Issued Accounting Standards Not Yet Adopted
Accounting Standards Update 2025-06
In September 2025, the FASB issued ASU-2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software ("ASU 2025-06"), which amends the guidance in ASC 350-40, Intangibles—Goodwill and Other—Internal-Use Software. The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of the new standard on its consolidated financial statements and related disclosures.
Accounting Standards Update 2024-03
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. ASU
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2. Revenue Recognition
Disaggregation of Revenue
The following table presents the Company’s revenue disaggregated by subscription product categories (in thousands):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Subscription | |||||||||||||||||||||||
| SaaS | $ | $ | $ | $ | |||||||||||||||||||
| Maintenance and support | |||||||||||||||||||||||
| Term subscriptions | |||||||||||||||||||||||
| Other subscription services | |||||||||||||||||||||||
| Total Subscription | |||||||||||||||||||||||
| Services and other | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
The following table summarizes the revenue the Company recognizes at a point in time and over time (in thousands):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue recognized over time | $ | $ | $ | $ | |||||||||||||||||||
| Revenue recognized at a point in time | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
Contract Balances
Deferred revenue consists primarily of payments received in advance of revenue recognition under the Company’s contracts with customers. Revenue recognized during the three months ended July 31, 2026 and 2025 that was included in the deferred revenue balances at the beginning of the respective periods was $212.3 million and $174.5 million, respectively. Revenue recognized during the six months ended July 31, 2026 and 2025 that was included in the deferred revenue balances at the beginning of the respective periods was $360.0 million and $290.8 million, respectively.
Remaining Performance Obligations
The Company’s contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. These remaining performance obligations represent contract value that has not yet been recognized as revenue. Remaining performance obligations includes both invoices that have been issued to customers but have not been recognized as revenue and amounts that will be invoiced and recognized as revenue in future periods. As of July 31, 2026, remaining performance obligations were $1.9 billion, of which the Company expects to recognize $931.1 million as revenue over the next 12 months.
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3. Allowance for Expected Credit Losses
The following table presents the balance of the allowance for expected credit losses for accounts receivable and contract assets (in thousands):
| July 31, 2026 | January 31, 2026 | ||||||||||
| Allowance for credit losses - accounts receivable | $ | $ | |||||||||
| Allowance for credit losses - contract assets | $ | $ | |||||||||
For the three months ended July 31, 2026 and 2025, the provision for credit losses was $1.4 million and $0.8 million, respectively. For the six months ended July 31, 2026 and 2025, the provision for credit losses was $2.4 million and $4.3 million, respectively.
4. Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities recorded at fair value in the financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities are as follows:
•Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
•Level 2: Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•Level 3: Unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
The following tables present information about the Company’s financial assets that are measured at fair value on a recurring basis (in thousands):
| July 31, 2026 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash equivalents and restricted cash: | |||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | |||||||||||||||||||
| Certificate of deposit | |||||||||||||||||||||||
Total assets | $ | $ | $ | $ | |||||||||||||||||||
| January 31, 2026 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash equivalents and restricted cash: | |||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | |||||||||||||||||||
| Total assets | $ | $ | $ | $ | |||||||||||||||||||
The Company’s carrying amounts of financial instruments, including cash, accounts receivable, accounts payable, and accrued expenses, are considered Level 1 and approximate their fair values due to their short maturities as of July 31, 2026 and January 31, 2026 and are excluded from the fair value tables above.
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5. Acquisitions
Asset Acquisition
Security Savvy Ltd
On September 15, 2025, the Company acquired certain assets of Security Savvy Ltd, a third-party security platform that helps organizations manage identity-related risks associated with their software as a service ("SaaS") applications, for $18.4 million, which included $0.5 million in direct transaction costs that were capitalized as a component of the consideration transferred. The transaction was accounted for as an asset acquisition and substantially all of the acquired assets consisted of developed technology. The purchase price includes a holdback amount of $1.8 million to be paid 12 months from the date of closing subject to the resolution of certain indemnities. The purchase price also includes a contingent consideration of $0.2 million, which was paid and fully settled on November 21, 2025. The purchase price consideration was primarily allocated to a developed technology intangible asset with a useful life of six years .
Business Combinations
Entro
On June 29, 2026, the Company completed the acquisition of 100 % of the outstanding equity interests of Entro Security Ltd. and its wholly owned subsidiary, Entro Security Inc. (collectively, "Entro"), for total purchase consideration of approximately $122.6 million in cash. In connection with the acquisition, the Company committed to issue up to $7.3 million in restricted stock to certain key employees and former shareholders of Entro who became employees. Because the issuance and vesting of these awards is contingent upon the recipients' continued employment with the Company, this arrangement is excluded from the consideration transferred and is recognized as post-combination compensation expense. The arrangement consists of three annual tranches of restricted stock valued at approximately $2.4 million each, to be granted and issued at closing and on the first and second anniversaries of the acquisition date, with each tranche vesting quarterly over a one-year service period. Entro is a cloud-based platform that secures non-human identities, machine secrets, and artificial intelligence ("AI") agents across enterprise environments, extending the Company's Identity Security Cloud product suite. The Company allocated the preliminary consideration transferred, subject to working capital adjustments and provisional income taxes, to intangible assets of $15.8 million for developed technology, with an estimated useful life of four years , $5.0 million for customer relationships intangible, with a useful life of seven years , and $0.4 million for tradename and trademark with a useful life of two years , preliminary goodwill of $98.7 million, and net assets of $2.7 million. The goodwill arising from the acquisition is deductible for tax purposes.
Imprivata
On December 13, 2024, the Company acquired the Identity Governance and Administration business of Imprivata, a digital identity company for life- and mission-critical industries that is majority owned by Thoma Bravo, for aggregate consideration of $16.4 million, which includes contingent consideration that was settled in August 2025. The Company recorded intangible assets of $1.6 million for developed technology, with an estimated useful life of 3 years and a $8.2 million for customer relationships intangible, with a useful life of 4 years, goodwill of $9.3 million and net liabilities of $2.7 million. The goodwill arising from the acquisition is deductible for tax purposes.
Double Zero
On April 9, 2024, the Company acquired all of the outstanding stock of Double Zero Security, Inc. (“Double Zero”), a third-party provider of digital-identity threat detection and response for secure enterprise access. The aggregate consideration transferred in connection with this acquisition was $5.4 million, net of cash acquired. The Company recorded intangible assets of $1.4 million for developed technology, with an estimated useful life of 6 years. The Company recorded goodwill of $3.6 million, and net assets of $0.4 million.
Additional Business Combination Related Information
The operating results of the acquired companies are included in the Company’s condensed consolidated statements of operations from the respective dates of acquisition. Pro forma results of operations have not been presented because the effects of these acquisitions, individually and in the aggregate, were not material to the Company’s condensed consolidated statements of operations. Unless otherwise noted above, goodwill arising from these acquisitions is not deductible for tax purposes.
The measurement period for the valuation of assets acquired and liabilities assumed ends as soon as information on the facts and circumstances that existed as of the applicable acquisition date becomes available but does not exceed 12 months from
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the acquisition date. The measurement periods have closed for the acquisitions of Imprivata and Double Zero as of July 31, 2026.
6. Commitments and Contingencies
Contractual Purchase Commitments
The Company has contractual commitments associated with agreements that are enforceable and legally binding. These contractual commitments do not include obligations under contracts that the Company can cancel without significant penalty or purchase orders as the purchase orders represent authorizations to purchase rather than binding agreements.
On February 1, 2026, the Company entered into a new amendment with its cloud storage provider, terminating the previous arrangement. The new agreement, effective February 1, 2026 through January 31, 2031, requires the Company to commit to minimum annual purchases of $107.0 million, $127.0 million, $147.0 million, $162.0 million, and $178.0 million in contract years one through five, respectively, for a total commitment of $721.0 million. If the Company does not meet the minimum purchase obligation during any contract year, it will be required to pay the difference. There have been no further amendments or material developments related to this agreement since its execution.
During the six months ended July 31, 2026, there were no other material changes outside the ordinary course of business to the Company’s non-cancelable contractual commitments previously disclosed in the fiscal 2026 Form 10-K.
Indemnification Arrangements
In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to provide indemnification of varying scope and terms to customers, business partners, and other parties with respect to certain matters, including losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties, and other liabilities with respect to the Company’s products, services, and business. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in a particular contract. The Company includes service level commitments to the Company’s cloud customers warranting certain levels of uptime reliability and performance and permitting those customers to receive credits in the event that the Company fails to meet those levels.
To date, the Company has not incurred any material costs as a result of these commitments, and the Company expects the time between any potential claims and issuance of the credits to be short. As a result, the Company has not accrued any liabilities related to these commitments in the accompanying condensed consolidated financial statements.
Litigation Claims and Assessments
The Company is subject to claims and suits that may arise from time to time in the ordinary course of business. In addition, some legal actions, claims, and governmental inquiries may be instituted or asserted in the future against the Company and its subsidiaries. Although the outcome of these legal proceedings cannot be predicted with certainty and no assurances can be provided, based upon current information, the Company does not believe the liabilities, if any, which may ultimately result from the outcome of such matters, individually or in the aggregate, will have a material adverse impact on these condensed consolidated financial statements.
7. Credit Agreement and Debt
2025 Credit Agreement
On June 25, 2025, the Company entered into a credit agreement (the "2025 Credit Agreement") that provides for a five -year $250.0 million secured revolving credit facility, including a letter of credit sub-facility of up to $10.0 million (the "2025 Revolving Credit Facility"). The 2025 Revolving Credit Facility matures on June 25, 2030. The Company incurred deferred financing costs of $2.7 million related to the entry into the 2025 Credit Agreement, which are included in other non-current assets on the accompanying condensed consolidated balance sheets. These costs are being amortized to interest expense over the life of the 2025 Credit Agreement on a straight-line basis. Amortization of deferred financing costs related to the 2025 Credit Agreement was $0.1 million and $0.3 million for the three and six months ended July 31, 2026, respectively. Amortization of deferred financing costs related to the 2025 Credit Agreement was $0.1 0.125 % per annum of the daily maximum amount then available to be drawn under such letters of credit, as well as customary
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issuance and administration fees. These fees were $0.1 million and $0.3 million for the three and six months ended July 31, 2026, respectively, and are recorded as interest expense on the condensed consolidated statements of operations.
The Company is subject to quarterly financial covenants relating to maintaining a Total Net Leverage Ratio (as defined in the 2025 Credit Agreement) of generally not more than 4.00 to 1.00 (which may be increased to 4.50 to 1.00 for a limited period in the event a material acquisition is consummated). The Company was in compliance with all applicable covenants as of July 31, 2026.
All obligations under the 2025 Revolving Credit Facility are unconditionally guaranteed by the Company and each Restricted Subsidiary other than any Excluded Subsidiary (each, as defined in the 2025 Credit Agreement) and are supported by a security interest in substantially all of the borrowers' and guarantors' tangible and intangible assets (subject to permitted liens).
The Company may voluntarily repay and reborrow outstanding loans under the 2025 Revolving Credit Facility at any time without a premium or a penalty. The Company had no outstanding 2025 Revolving Credit Facility balance as of July 31, 2026.
2022 Credit Agreement
On August 16, 2022, the Company entered into a Credit Agreement (the "2022 Credit Agreement") that provided for (i) a six-year $125.0 million senior secured revolving credit facility, including a letter of credit sub-facility of up to $5.0 million (the “2022 Revolving Credit Facility”), and (ii) a seven-year $1.59 billion term loan facility (the “Term Loans”). After the closing of the IPO, the Company fully repaid its Term Loans and recorded an extinguishment of debt related to the remaining balance of its deferred financing costs of $15.3 million during the three months ended April 30, 2025, which is recorded within interest expense on the condensed consolidated statement of operations.
On June 25, 2025, the 2022 Credit Agreement was terminated upon the Company's entry into the 2025 Credit Agreement. The remaining unamortized deferred financing costs of $1.4 million for the 2022 Revolving Credit Facility was recorded as a loss from extinguishment of debt and included in interest expense on the condensed consolidated statements of operations for the three months ended July 31, 2025. There was no 0.2 million and $0.5 million for the three and six months ended July 31, 2025, respectively.
There was no 22.3 million, consisting of contractual interest expense of $6.7 million, amortization of debt issuance costs of $0.2 million, and $15.3 million loss from the extinguishment of debt. There was no interest expense related to the Term Loans for the three months ended July 31, 2025.
8. Related Party Transactions
The Company is an affiliate of Thoma Bravo. The Company engaged in ordinary sales transactions with entities affiliated with Thoma Bravo, with no significant activity for the three months ended July 31, 2026 and $0.1 million for the three months ended July 31, 2025, and $0.8
9. Equity-Based Compensation
Omnibus Incentive Plan and Other Awards
On February 12, 2025, the shareholders and the Company's Board of Directors (the "Board") approved the SailPoint, Inc. Omnibus Incentive Plan (the "Omnibus Plan"), which then became effective. The aggregate number of shares of common stock that may be issued pursuant to the Omnibus Plan is 61,083,763 , subject to an annual increase on February 1 of each fiscal year, equal to the lesser of (a) 5 % of the aggregate number of shares of common stock outstanding on January 31 of the immediately preceding fiscal year and (b) such smaller number of shares as determined by the Board. Pursuant to the "evergreen" provision contained in the Omnibus Plan, the Board approved an increase of 28,189,081 additional shares to be added to the plan effective as of February 1, 2026. As of July 31, 2026, the maximum number of shares authorized under the Omnibus Plan was 89,272,844 and the number of shares available for issuance was 44,924,448 .
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Under the Omnibus Plan, the Company may grant stock options, stock appreciation rights, restricted stock awards ("RSAs"), restricted stock units ("RSUs"), stock awards, dividend equivalents, other stock-based awards, cash awards, and substitute awards intended to align the interests of award holders with those of the Company's stockholders. Awards made under the Omnibus Plan vest based on continued service to the Company and/or its affiliates. Equity-based compensation costs for granted awards are recognized as an expense on a straight-line basis over the requisite service period as the services are performed.
Capitalized equity-based compensation expense is recorded as part of property and equipment, net on the condensed consolidated balance sheets and is amortized on a project-by-project basis using the straight-line method.
During the six months ended July 31, 2026, the Company granted 25,173,794 RSUs that vest ratably, predominantly over two to four years based on continued service to the Company. Remaining total unrecognized equity-based compensation related to outstanding RSUs as of July 31, 2026 is $433.4 million, with a weighted average remaining life of 3.0 years.
In addition to awards granted under the Omnibus Plan, during the six months ended July 31, 2026, the Company issued 160,670 RSAs outside of the Omnibus Plan that vest ratably over one year based on continued service to the Company. Remaining total unrecognized equity-based compensation related to outstanding RSAs as of July 31, 2026 is $2.6 million, with a weighted average remaining life of 0.8 years.
Equity-Based Compensation Expense
A summary of the Company’s equity-based compensation expense by award type is presented below (in thousands):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Incentive equity units | $ | $ | $ | $ | |||||||||||||||||||
| Equity appreciation rights | |||||||||||||||||||||||
| Restricted stock awards | |||||||||||||||||||||||
| Restricted stock units | |||||||||||||||||||||||
| Employee stock purchase plan | |||||||||||||||||||||||
| Cash-settled awards | |||||||||||||||||||||||
| Total equity-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
On January 31, 2025, the Board approved modifications to accelerate the vesting of certain incentive units, equity appreciation rights (“EARs”), and cash-settled awards subject to the pricing and closing of the IPO. Prior to the Corporate Conversion, the Company modified 3,036,888 incentive units and 377,077 EARs. Upon the IPO, the vested incentive units were considered redeemable. For the six months ended July 31, 2025, as a result of the modifications and the closing of the IPO, the Company recognized $113.8 million of equity-based compensation expense in the condensed consolidated statement of operations, which was comprised of $61.5 million, $12.6 million, and $39.8 million of expense for the modified incentive units, EARs, and cash-settled awards, respectively.
A summary of the Company’s equity-based compensation expense as recognized in the condensed consolidated statements of operations is presented below (in thousands):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Cost of revenue - subscription | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue - services and other | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total equity-based compensation expense, net of amounts capitalized | $ | $ | $ | $ | |||||||||||||||||||
| Capitalized equity-based compensation | |||||||||||||||||||||||
| Total equity-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
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There are equity-based compensation awards that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted basic earnings per share because to do so would have been anti-dilutive. The following table summarizes the Company’s anti-dilutive securities (in thousands):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Unvested shares - RSAs | |||||||||||||||||||||||
| Unvested shares - RSUs | |||||||||||||||||||||||
ESPP | |||||||||||||||||||||||
| Total | |||||||||||||||||||||||
Employee Stock Purchase Plan
In February 2025, the Board adopted the SailPoint, Inc. Employee Stock Purchase Plan (the "ESPP"). The ESPP authorized the issuance of shares of common stock pursuant to purchase rights granted to employees. The aggregate number of shares of common stock originally authorized for issuance under the ESPP was 11,106,139 shares, subject to an annual increase on February 1 of each fiscal year, equal to the lesser of (a) 1 % of the aggregate number of shares of common stock outstanding on January 31 of the immediately preceding fiscal year and (b) such smaller number of shares as determined by the Board. As of July 31, 2026, the maximum number of shares authorized and available for issuance under the ESPP was 16,743,955 .
Under the ESPP, employees are offered the right to purchase shares at a discount during one or more offering periods. The plan administrator designates the terms and conditions of each offering, including the offering period. The first such offering period is six months and commenced April 11, 2026. Future offering periods are expected to also be six months and are to begin on each April 11th and October 11th. Stock-based compensation related to the ESPP is recognized on a straight-line basis over the applicable offering period. Under the ESPP, eligible employees may purchase shares of the Company's common stock at a price equal to 85 % of the lower of the fair market value of the Company's common stock on (i) the first trading day of the applicable offering period and (ii) the last trading day of the applicable offering period. As of July 31, 2026, no shares were purchased under the ESPP. Remaining unrecognized equity-based compensation related to the ESPP as of July 31, 2026 is $1.4 million, with a weighted average remaining life of 0.2 years.
The Company uses a Monte Carlo option-pricing model to estimate the fair value of ESPP awards. The grant date for each offering period is the first trading day of the offering period, and compensation cost is measured using the fair value of the award on that date. The following table summarizes the assumptions used in the Monte Carlo model to determine the grant-date fair value of employee stock purchase rights granted under the ESPP for the offering period with a grant date occurring during the six months ended July 31, 2026:
| Six Months Ended July 31, 2026 | |||||||||||
| Expected term (in years) | |||||||||||
| Expected volatility | % | ||||||||||
| Risk-free interest rate | % | ||||||||||
| Expected dividend yield | % | ||||||||||
10. Balance Sheet Related Items
Property and Equipment
The cost and accumulated depreciation of property and equipment are as follows (in thousands):
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| July 31, 2026 | January 31, 2026 | ||||||||||
| Computer equipment | $ | $ | |||||||||
| Capitalized software development costs | |||||||||||
| Furniture and fixtures | |||||||||||
| Leasehold improvements | |||||||||||
| Other | |||||||||||
| Total property and equipment | |||||||||||
| Less: accumulated depreciation and amortization | ( | ( | |||||||||
| Total property and equipment, net | $ | $ | |||||||||
Depreciation and amortization expense was $2.7 million and $2.3 million for the three months ended July 31, 2026 and 2025, respectively, which includes amortization of software development costs of $1.0 million and $0.4 million for the three months ended July 31, 2026 and 2025, respectively. Depreciation and amortization expense was $5.0 million and $4.4 million for the six months ended July 31, 2026 and 2025, respectively, which includes amortization of software development costs of $1.7 million and $0.7 million for the six months ended July 31, 2026 and 2025, respectively,
Prepayments and Other Current Assets and Other Non-Current Assets
Prepayments and other current assets consisted of the following (in thousands):
| July 31, 2026 | January 31, 2026 | ||||||||||
| Prepaid expenses | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Income tax receivables | |||||||||||
| Other | |||||||||||
| Total prepayments and other current assets | $ | $ | |||||||||
Amortization expense related to capitalized implementation costs was $0.5 million and $0.4 million for the three months ended July 31, 2026 and 2025, respectively. Amortization expense related to capitalized implementation costs was $1.4 million and $0.7 million for the six months ended July 31, 2026 and 2025, respectively.
Other non-current assets consisted of the following (in thousands):
| July 31, 2026 | January 31, 2026 | ||||||||||
| Prepaid expenses | $ | $ | |||||||||
| Right-of-use assets, net | |||||||||||
| Other | |||||||||||
| Total other non-current assets | $ | $ | |||||||||
Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following (in thousands):
| July 31, 2026 | January 31, 2026 | ||||||||||
| Employee-related costs | $ | $ | |||||||||
| Commissions | |||||||||||
| Operating lease liabilities | |||||||||||
Sales and other taxes payable | |||||||||||
| Other | |||||||||||
| Total accrued expenses and other liabilities | $ | $ | |||||||||
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11. Income Taxes
The provision for income taxes consists of U.S. and state income taxes and income taxes in foreign jurisdictions in which the Company conducts business.
The effective tax rate for the three months ended July 31, 2026 and 2025 was 11.9 % and 74.8 %, respectively. The effective tax rate for the six months ended July 31, 2026 and 2025 was 8.9 % and 19.6 %, respectively. For the three and six months ended July 31, 2026, the effective tax rate differs from the statutory rate primarily as a result of certain non-deductible equity-based compensation, non-deductible executive officer compensation, and an increase in valuation allowance. For the three and six months ended July 31, 2025, the effective tax rate differs from the statutory rate primarily as a result of a net discrete tax benefit for the change in valuation allowance for interest expense and Texas research and development credit carryforwards from changes in tax law.
12. Segments and Geographic Information
Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (the "CODM"). The CODM is comprised of the Company's Chief Executive Officer, Chief Financial Officer and President. The Company's CODM reviews financial information presented on a consolidated basis for the purposes of making operating decisions, allocating resources, and evaluating financial performance. Accordingly, the Company determined that it operates in one
The following is a summary of consolidated revenues within geographic areas determined by the billing address of the customer for the periods presented (in thousands):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| EMEA | |||||||||||||||||||||||
| Rest of the World | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
13. Employee Benefit Plans
The Company has established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code of 1986 (the “401(k) Plan”). The 401(k) Plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a percentage of their annual compensation as defined in the 401(k) Plan. The Company matches portions of employees’ voluntary contributions. Additional employer contributions may also be made at the Company’s discretion. The Company recorded expense of $2.4 million and $2.0 million for the three months ended July 31, 2026 and 2025, respectively, for matching contributions to the 401(k) Plan. The Company recorded expense of $4.9 million and $4.3 million for the six months ended July 31, 2026 and 2025, respectively, for matching contributions to the 401(k) Plan.
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SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of, and we intend such forward-looking statements to be covered by, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts, and these statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely,” and other words and terms of similar meaning. For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, growth rates, and financial results or our plans and objectives for future operations, growth initiatives, or strategies are forward-looking statements. Statements regarding the development, release, and timing of any features or functionality described for our products that are not currently available are also forward-looking statements; the development, release, and timing of any such features or functionality remain at our sole discretion on a when, and if available, basis and may not be delivered at all.
Because forward-looking statements relate to the future, they involve substantial risks and uncertainties, and you should not rely upon forward-looking statements as predictions of future events or place undue reliance thereon. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations include the following:
•our ability to sustain historical growth rates;
•our ability to attract and retain customers and to deepen our relationships with existing customers;
•the growth in the market for identity security solutions;
•our ability to maintain successful relationships with our channel partners;
•the length and unpredictable nature of our sales cycle;
•our ability to compete successfully against current and future competitors;
•our ability to successfully integrate acquired businesses and technologies and achieve the expected benefits of such acquisitions;
•the increasing complexity of our operations;
•our ability to maintain and enhance our brand or reputation as an industry leader and innovator;
•unfavorable conditions in our industry or the global economy;
•our estimated market opportunity and forecasts of our market and market growth may prove to be inaccurate;
•our ability to hire, retain, train, and motivate our personnel and our ability to maintain our corporate culture;
•our ability to successfully introduce, use, and integrate AI with our solutions;
•breaches in our security, cyber attacks, or other cyber risks;
•interruptions, outages, or other disruptions affecting the delivery of our SaaS solution or any of the third-party cloud-based systems that we use in our operations;
•our ability to adapt and respond to rapidly changing technology, industry standards, regulations, or customer needs, requirements, or preferences;
•real or perceived errors, failures, or disruptions in our platform or solutions;
•the ability of our platform and solutions to effectively interoperate with our customers’ existing or future information technology ("IT") infrastructures;
•our ability to comply with our privacy policy or related legal or regulatory requirements;
•the impact of various tax laws and regulations, including our failure to comply therewith; and
•other factors disclosed in the section titled “Risk Factors” in Part I, Item 1A of our fiscal 2026 Form 10-K.
Any forward-looking statements made by us are based only on information available to us as of the date on which such statements are made and speak only as of such date. We undertake no obligation to update any forward-looking statements made in this Quarterly Report to reflect events or circumstances after such date or to reflect new information or the occurrence
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of unanticipated events, except as required by law. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other filings with the SEC and other public communications.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report.
Our fiscal year end is January 31, and our fiscal quarters end on April 30, July 31, October 31, and January 31. Our fiscal years ended January 31, 2027 and January 31, 2026 are referred to herein as "fiscal 2027" and "fiscal 2026," respectively.
Overview
We deliver solutions to enable adaptive identity security for the enterprise. We do this via the SailPoint Platform that unifies identity data across systems and identity types, including employee identities, non-employee identities, machine identities, and AI agents for real-time governance. Our SaaS and customer-hosted offerings leverage intelligent analytics to provide organizations with critical visibility into which identities currently have access to which resources, which identities should have access to those resources, and how that access is being used. Our solutions enable organizations to establish, control, and automate policies that help them define and maintain a robust security posture and achieve regulatory compliance. Powered by AI, our solutions enable organizations to overcome the scale and complexity of managing identities in real-time across dynamic, complex IT environments. Our solutions empower organizations to maintain a robust security posture and achieve regulatory compliance. Today, we offer a range of solutions to meet the varied needs of our customers across a broad set of deployment options including: Identity Security Cloud, our SaaS-based cloud solution built on our unified SailPoint Platform, and IdentityIQ, our customer-hosted identity security solution. These solutions are designed to enable our customers to make more effective decisions regarding access, improve security processes, and provide them with a deeper understanding of identity and access.
Recent Developments
On June 29, 2026, the Company completed the acquisition of Entro for total cash consideration of approximately $122.6 million and restricted stock consideration of approximately $7.3 million. For more information regarding the equity consideration, see Part II Item 2 of this Form 10-Q. Entro is a cloud-based platform specializing in NHI and secrets security, providing discovery and governance capabilities across over 1,200 types of credentials, tokens, and certificates within cloud and hybrid environments, including CI/CD pipelines, codebases, and container registries.
The acquisition extends the Company's Identity Security Cloud product suite and complements the recently launched SailPoint Agentic Fabric solution, which is designed to discover, govern, and secure autonomous AI agents and machine identities at enterprise scale. Together, Entro's NHI-focused security controls and SailPoint Agentic Fabric are intended to deliver an integrated identity security solution spanning human, machine, and agentic identities.
Entro's solutions are available to SailPoint customers as standalone offerings, with native platform integration ongoing. See Note 5 "Acquisitions" in the notes to our consolidated financial statements included in this Quarterly Report for additional information regarding the purchase price allocation.
Our Business Model
Our customers include many of the world’s largest and most complex organizations, including large enterprises across all major verticals and governments. The approximate number of total customers and customers at each annual recurring revenue ("ARR") level are as follows:
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| July 31, 2026 | July 31, 2025 | ||||||||||
Customers | 3,310 | 3,105 | |||||||||
Customers less than $250,000 in ARR | 1,980 | 2,015 | |||||||||
Customers greater than $250,000 in ARR | 1,330 | 1,090 | |||||||||
Customers greater than $1,000,000 in ARR | 235 | 185 | |||||||||
The number of customers with $250,000 or more of ARR as of July 31, 2026 increased 22% on a year-over-year basis, and the number of customers with over $1,000,000 of ARR as of July 31, 2026 increased 27% on a year-over-year basis.
For Identity Security Cloud, our SaaS-based cloud solution, and IdentityIQ, our customer-hosted solution, our customers typically enter into three-year contracts, with annual billing upfront.
For Identity Security Cloud, our pricing is tiered and based on the suite, with the option for the customer to purchase additional products and capabilities à la carte. We price our IdentityIQ term subscriptions based on a number of factors, including the number of digital identities governed with the solution. Customers also have the option to purchase additional products and capabilities.
Key Factors Affecting Our Performance
Our historical financial performance has been, and we expect our financial performance in the future to be, driven by our ability to:
Add New Customers within Existing Markets. Countless organizations still use a combination of legacy solutions and home-grown tools. Furthermore, we estimate that over 60% of organizations in our target market still have a fragmented identity experience or use a mostly manual process based on our internal research. As a result, we believe that there is a significant opportunity for us to accelerate the growth of our customer base by enhancing our marketing efforts, increasing our sales capacity and productivity, and expanding and further leveraging our use of channel partners, including managed service providers. Our ability to attract new customers depends on a number of factors, including the effectiveness and pricing of our solutions, our ability to drive awareness of them, and the offerings of our competitors.
Generate Additional Sales to Existing Customers. We believe that our existing customer base provides us with a significant opportunity to expand incremental sales. Most new customers initially purchase one of our SaaS suites (Standard, Business, or Business Plus). We focus on expanding our customer relationships over time through up-selling and cross-selling opportunities, including suite upgrades and additional products. Additionally, we are focused on continuing to migrate customers of our customer-hosted solution to our SaaS suites, which typically results in increased ARR because of the additional functionality that our SaaS suites offer. Our ability to increase sales to existing customers will depend on a number of factors, including our customers’ satisfaction with our products, competition, pricing, and overall changes in our customers’ spending levels.
Increase Share of Revenue Derived from SaaS. Our go-to-market motion is focused primarily on Identity Security Cloud, our SaaS offering. While we expect that an increase in SaaS contracts will drive growth in ARR, it is also expected to have a near term negative impact on revenue growth, driven by differences in revenue recognition policies between SaaS subscriptions and term subscriptions, and gross margins, as we incur hosting costs for our SaaS offering. Our ability to increase our revenue from SaaS subscriptions will depend on a number of factors, including our customers’ specific circumstances, some of which necessitate their preference for our customer-hosted identity governance solution, IdentityIQ.
Deepen our Penetration in International Markets. We expect to continue to invest in our sales and marketing efforts and channel partner network to expand our reach and deepen our presence in existing geographies and to expand into new geographies. We believe that our global market opportunity is large and growing in response to the evolving IT and threat landscapes. For the three and six months ended July 31, 2026, we generated 66% and 65% of our revenue from the United States, 20% and 21% from Europe, the Middle East and Africa ("EMEA"), and 13% and 14% from the rest of the world, respectively. For the three and six months ended July 31, 2025, we generated 64% and 65% of our revenue from the United States, respectively, 22% of our revenue from EMEA and 13% from the rest of the world for both periods, respectively. Our ability to deepen our penetration in international markets will depend on a number of factors, including the competitiveness of our solutions, the efficacy of our channel partner network, and our sales and marketing efforts.
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Sustain Technology Leadership Through Extending Identity Security Portfolio. We recently launched new offerings in agentic security, non-employee risk management, data access security, access risk management, and cloud infrastructure entitlement management. We are thoughtfully investing in AI, both to increase the capabilities of our solutions, as well as to help our customers protect their organizations while adopting AI for their own use cases. We intend to continue investing to extend our position as the leader in identity security by developing or acquiring new products and technologies and extending our portfolio into additional identity security use cases. Our future success is dependent on our ability to successfully develop, identify, market, and sell existing and new products to both new and existing customers.
Factors Affecting the Comparability of Our Results of Operations
Our historical results of operations may not be comparable from period to period or going forward. During fiscal year 2026, we incurred a significant increase in equity-based compensation expense due to the conversion and vesting of equity awards issued prior to the IPO as well as the issuance of equity awards to certain employees in connection with the IPO. On January 31, 2025, the Board approved modifications to accelerate the vesting of certain incentive units, EARs, and cash-settled awards subject to the pricing and closing of the IPO. Upon the IPO, the vested incentive units were considered redeemable. As a result of the modifications and the closing of the IPO during our fiscal year 2026, we recognized $113.8 million of equity-based compensation expense in the consolidated statement of operations, which was comprised of $61.5 million, $12.6 million, and $39.8 million of expense for the modified incentive units, EARs, and cash-settled awards, respectively, with no comparable activity in the current fiscal year. See Note 9 "Equity-Based Compensation" in the notes to our consolidated financial statements for additional information.
Impact of Current Economic Conditions
Worldwide economic and political uncertainties and negative trends, including financial and credit market fluctuations, tariffs and increasing trade protectionism, changes in government spending levels, uncertainty in the banking sector, rising interest rates, inflation, and other impacts from the macroeconomic environment have, and could continue to, adversely affect our business operations or financial results. As we continue to monitor the direct and indirect impacts of these circumstances, the broader implications of these macroeconomic and political events on our business, results of operations, and overall financial position remain uncertain. See the section titled "Risk Factors'' included under Part I, Item 1A of the fiscal 2026 Form 10-K for further discussion of the possible impact of these factors and other risks on our business.
Key Business Metrics
In addition to our financial information prepared in accordance with GAAP, we monitor the following key business metrics to help us measure and evaluate the effectiveness of our operations. Although we believe we have a reasonable basis for each of these metrics, we caution you that these metrics are based on a combination of assumptions that may prove to be inaccurate over time. Please see the section titled “Risk Factors” included under Part I, Item 1A of the fiscal 2026 Form 10-K for more information.
Annual Recurring Revenue
We believe ARR is a key metric to measure our business performance because it measures our ability to generate sales with new customers and to maintain and expand spend with existing customers. The way we define ARR normalizes the impact of revenue recognition differences between SaaS contracts and term subscription agreements. In recent years, ARR has grown faster than revenue, as a greater share of incremental ARR (which we define as the increase in ARR from the prior period to current period) has been driven by SaaS contracts which have ratable revenue recognition compared to term subscription agreements where a portion of the contract value is recognized as revenue upfront.
We define ARR as the annualized value of SaaS, maintenance, term subscription, and other subscription contracts as of the measurement date. To the extent that we are actively negotiating a renewal or new agreement with a customer after the expiration of a contract, we continue to include that contract’s annualized value in ARR until the customer notifies us that it is not renewing its contract. The amount included in our ARR calculation related to these contracts was less than 1% as of the dates shown in the ARR table below. We calculate ARR by dividing the active contract value by the number of days of the contract and then multiplying by 365. ARR should be viewed independently of revenue, as ARR is an operating metric and is not intended to be combined with or to replace revenue. ARR is not a forecast of future revenue, which can be impacted by ASC 606 allocations, and ARR does not consider other sources of revenue that are not recurring in nature.
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ARR does not have a standardized meaning and is not necessarily comparable to similarly titled measures presented by other companies. The following table presents our ARR as of the dates noted below (dollars in millions):
| July 31, 2026 | July 31, 2025 | ||||||||||
ARR | $ | 1,230.7 | $ | 982.0 | |||||||
SaaS Annual Recurring Revenue
In recent years, we have transitioned our business to a SaaS-first subscription model. As a result of those efforts, the share of SaaS ARR to total ARR has increased to 69% as of July 31, 2026 from 63% as of July 31, 2025. We believe the share of ARR generated by our SaaS solution will continue to increase over time.
We define SaaS ARR as the annualized value of SaaS contracts as of the measurement date. To the extent that we are actively negotiating a renewal or new agreement with a customer after the expiration of a contract, we continue to include that contract’s annualized value in SaaS ARR until the customer notifies us that it is not renewing its contract. The amount included in our ARR calculation related to these contracts was less than 1% as of the dates shown in the SaaS ARR table below. We calculate SaaS ARR by dividing the active SaaS contract value by the number of days of the contract and then multiplying by 365.
SaaS ARR should be viewed independently of subscription revenue as SaaS ARR is an operating metric and is not intended to be combined with or replace subscription revenue. SaaS ARR is not a forecast of future subscription revenue, which can be impacted by ASC 606 allocations and renewal rates and does not consider other sources of revenue that are not recurring in nature. The following table presents our SaaS ARR as of the dates noted below (dollars in millions):
| July 31, 2026 | July 31, 2025 | ||||||||||
SaaS ARR | $ | 846.9 | $ | 622.7 | |||||||
Dollar-Based Net Retention Rate
Our dollar-based net retention rate has decreased to 113% as of July 31, 2026 from 114% as of July 31, 2025. We continue to focus on growing our product portfolio, increasing our SaaS mix, and expanding customer relationships over time through cross-selling and up-selling.
We define dollar-based net retention rate as the comparison of our ARR from our subscription customers against the same metric for those subscription customers from the prior year. For the purposes of calculating our dollar-based net retention rate, we define a subscription customer as a separate legal entity that has entered into a distinct subscription agreement. Our dollar-based net retention rate reflects customer expansion, contraction, and churn. We calculate our dollar-based net retention rate as of period end by starting with the ARR from all subscription customers as of 12 months prior to such period end “prior period ARR”). We then calculate the ARR from these same subscription customers as of the current period end (“current period ARR”). We then divide the current period ARR by the prior period ARR to arrive at our dollar-based net retention rate. The dollar-based net retention rate at the end of any period is the weighted average of the dollar-based net retention rates as of the end of each of the trailing four quarters. The following table presents our dollar-based net retention rate as of the dates noted below:
| July 31, 2026 | July 31, 2025 | ||||||||||
Dollar-based net retention rate | 113 | % | 114 | % | |||||||
Components of Results of Operations
Revenue
Subscription Revenue
The majority of our revenue relates to subscription revenue which consists of (i) fees for access to, and related support for, the SaaS offerings, (ii) fees for term subscriptions, (iii) fees for ongoing maintenance and support of perpetual license
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solutions, and (iv) other subscription services such as cloud managed services, and certain professional services. Term subscriptions include the term licenses and ongoing maintenance and support. Maintenance and support agreements consist of fees for providing software updates on a when and if available basis and for providing technical support for software products for a specified term.
Subscription revenue, including support for term licenses, is recognized ratably over the term of the applicable agreement. Revenue related to term subscription performance obligations, excluding support for term subscriptions, is recognized upfront at the point in time when the customer has taken control of the software license.
Over time, we expect subscription revenue will increase as a percentage of total revenue as we continue to focus on increasing our subscription revenue, specifically our SaaS offering, as a key strategic priority.
Services and Other Revenue
Services and other revenue consist primarily of fees from professional services provided to customers and partners to configure and optimize the use of our solutions as well as non-subscription training services. Our professional services are structured on a time-and-materials or fixed priced basis, and the related revenue is recognized as the services are rendered.
Services and other revenue also consists of revenues from perpetual license performance obligations and is recognized upfront at the point in time when the customer has taken control of the software license. All perpetual license transactions include maintenance and support performance obligations which are included in subscription revenue.
Over time, we expect our professional services revenue as a percentage of total revenue to decrease as we increasingly rely on partners to help our customers deploy our software and we focus on increasing subscription revenue.
Cost of Revenue
Cost of Subscription Revenue
Cost of subscription revenue consists primarily of third-party cloud-based hosting costs, software, amortization expenses for developed technology acquired, amortization expense for capitalized software development costs, equity-based compensation, employee-related costs (which we define as salaries, benefits, bonuses, and allocated overhead) for providing subscriptions, third party royalties, facilities costs, and contractor costs to supplement staff levels. We expect third-party cloud-based hosting costs to increase as our SaaS subscriptions continue to grow.
Cost of Services and Other Revenue
Cost of services and other revenue consists primarily of (i) employee-related costs of professional services and training organizations, equity-based compensation, travel-related costs, facilities costs, and contractor costs to supplement staff levels; and (ii) amortization expense for developed technology acquired and third-party royalties related to perpetual licenses.
Gross Profit and Gross Profit Margin
Gross profit is revenue less cost of revenue, and gross profit margin is gross profit as a percentage of total revenue. Gross profit has been and will continue to be affected by various factors, including the mix of our revenue, the costs associated with third-party cloud-based hosting services and software for our SaaS offering, and the extent to which we expand our customer support, professional services, and training organizations. We expect that our overall gross profit margin will fluctuate from period to period depending on the mix of these various factors.
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of employee-related costs, equity-based compensation, software and hosting arrangement expenses, facilities costs, professional services expense, and amortization expense for acquired intangible assets.
We believe that continued investment in our offerings is vital to the growth of our business, and we intend to continue to invest in product development. We expect our research and development expenses to continue to increase on an absolute basis in the foreseeable future but to decrease as a percentage of revenue as our business grows.
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Sales and Marketing Expenses
Sales and marketing expenses consist primarily of employee-related costs (which includes commissions), equity-based compensation, costs for events and travel, facilities costs, costs of general marketing and promotional activities, payment processing fees, amortization expense for acquired intangible assets, and contract acquisition costs.
We expect our sales and marketing expenses to increase on an absolute basis for the foreseeable future as we continue to invest in our sales force for expansion to new geographic and vertical markets. We expect sales and marketing expenses to continue to be our largest operating expense category.
General and Administrative Expenses
General and administrative expenses consist primarily of employee-related costs related to the corporate functions such as executive and internal administrative operations, as well as equity-based compensation, third-party professional fees, bad debt expense, travel, and facilities costs.
We expect our general and administrative expenses to increase on an absolute basis as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations, and increased expenses for insurance, investor relations, and professional services. However, we expect that our general and administrative expense will decrease as a percentage of our revenue as our revenue grows over the longer term as our business grows.
We also expect to incur higher equity-based compensation, which will result in an increase in costs of revenue, research and development expenses, sales and marketing expenses, and general and administrative expenses.
Other Income (Expense), Net
Other income (expense), net consists primarily of interest income and interest expense. Interest income consists primarily of interest received on cash equivalents, which we expect will fluctuate based on our cash balances and interest rates. We expect interest expense to be insignificant unless we begin to utilize our 2025 Revolving Credit Facility.
Income Tax Benefit
Our income tax benefit (expense) consists of U.S. and state income taxes and income taxes in certain foreign jurisdictions in which we conduct business. Our income tax rate varies from the federal statutory rate due to state income taxes, differences in accounting and tax treatment of our equity-based compensation, research and development credits, and changes in the valuation allowance. We expect fluctuation in effective income tax rates, as well as its potential impact on our results of operations, to continue.
Seasonality
We generally experience seasonal fluctuations in demand for our products and services. Our quarterly sales are impacted by industry buying patterns. As a result, our sales have generally been highest in the fourth fiscal quarter and lowest in the first fiscal quarter. Although these seasonal factors are common in the technology industry, historical patterns should not be considered a reliable indicator of our future sales activity or performance.
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Results of Operations
The following table sets forth our results of operations for the periods presented and as a percentage of revenue(1) (in thousands, except for percentages and per share amounts)(2). The period-to-period comparison of results is not necessarily indicative of results for future periods.
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||||||||||||||
| Subscription | $ | 295,205 | 96 | % | $ | 247,937 | 94 | % | $ | 561,026 | 95 | % | $ | 463,260 | 94 | % | |||||||||||||||||||||||||||||||
| Services and other | 13,608 | 4 | 16,422 | 6 | 27,929 | 5 | 31,567 | 6 | |||||||||||||||||||||||||||||||||||||||
| Total revenue | 308,813 | 100 | 264,359 | 100 | 588,955 | 100 | 494,827 | 100 | |||||||||||||||||||||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||||||||||||||||||||||||||
Subscription (3) (4) | 84,103 | 27 | 70,443 | 27 | 164,323 | 28 | 145,934 | 29 | |||||||||||||||||||||||||||||||||||||||
Services and other (3) (4) | 19,325 | 6 | 16,110 | 6 | 38,135 | 6 | 43,432 | 9 | |||||||||||||||||||||||||||||||||||||||
| Total cost of revenue | 103,428 | 33 | 86,553 | 33 | 202,458 | 34 | 189,366 | 38 | |||||||||||||||||||||||||||||||||||||||
| Gross profit | 205,385 | 67 | 177,806 | 67 | 386,497 | 66 | 305,461 | 62 | |||||||||||||||||||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||||||||||||||||||||
Research and development (3) (4) | 62,185 | 20 | 48,111 | 18 | 123,871 | 21 | 115,381 | 23 | |||||||||||||||||||||||||||||||||||||||
Sales and marketing (3) (4) | 155,881 | 50 | 131,289 | 50 | 310,157 | 53 | 295,819 | 60 | |||||||||||||||||||||||||||||||||||||||
General and administrative (3) | 46,277 | 15 | 39,204 | 15 | 91,253 | 15 | 120,024 | 24 | |||||||||||||||||||||||||||||||||||||||
| Total operating expenses | 264,343 | 86 | 218,604 | 83 | 525,281 | 89 | 531,224 | 107 | |||||||||||||||||||||||||||||||||||||||
| Loss from operations | (58,958) | (19) | (40,798) | (15) | (138,784) | (24) | (225,763) | (46) | |||||||||||||||||||||||||||||||||||||||
| Other income (expense), net | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | 3,390 | 1 | 2,336 | 1 | 6,439 | 1 | 5,562 | 1 | |||||||||||||||||||||||||||||||||||||||
| Interest expense | (264) | — | (1,693) | (1) | (529) | — | (24,082) | (5) | |||||||||||||||||||||||||||||||||||||||
| Other income (expense), net | (1,301) | — | (1,710) | (1) | (4,307) | (1) | (1,901) | — | |||||||||||||||||||||||||||||||||||||||
| Total other income (expense), net | 1,825 | 1 | (1,067) | — | 1,603 | — | (20,421) | (4) | |||||||||||||||||||||||||||||||||||||||
| Loss before income taxes | (57,133) | (19) | (41,865) | (16) | (137,181) | (23) | (246,184) | (50) | |||||||||||||||||||||||||||||||||||||||
| Income tax benefit | 6,773 | 2 | 31,313 | 12 | 12,147 | 2 | 48,320 | 10 | |||||||||||||||||||||||||||||||||||||||
| Net loss | $ | (50,360) | (16) | % | $ | (10,552) | (4) | % | $ | (125,034) | (21) | % | $ | (197,864) | (40) | % | |||||||||||||||||||||||||||||||
| Class A yield | $ | — | $ | — | $ | — | $ | (23,786) | |||||||||||||||||||||||||||||||||||||||
| Net loss attributable to common stockholders | $ | (50,360) | $ | (10,552) | $ | (125,034) | $ | (221,650) | |||||||||||||||||||||||||||||||||||||||
Net loss per share attributable to common stockholders, basic and diluted (2) | $ | (0.09) | $ | (0.02) | $ | (0.22) | $ | (0.42) | |||||||||||||||||||||||||||||||||||||||
Weighted average shares outstanding, basic and diluted (2) | 568,113 | 555,757 | 566,360 | 528,355 | |||||||||||||||||||||||||||||||||||||||||||
(1) Certain percentages may not foot due to rounding.
(2) Amounts for the period during February 2025 prior to the Corporate Conversion have been retrospectively adjusted to give effect to the Corporate Conversion described in Note 1 Description of Business and Summary of Significant Accounting Policies in the notes to our consolidated financial statements included in this Quarterly Report. These amounts do not consider the shares of common stock sold in our IPO or the Class A Units considered preferred shares that were converted into common stock and issued upon the closing of our IPO.
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(3) Includes equity-based compensation expense as follows:
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||
| Subscription | $ | 4,115 | $ | 1,931 | $ | 8,726 | $ | 13,195 | |||||||||||||||
| Services and other | 1,588 | 681 | 3,506 | 11,009 | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
| Research and development | 15,822 | 7,512 | 31,297 | 35,351 | |||||||||||||||||||
| Sales and marketing | 22,944 | 18,203 | 45,413 | 71,706 | |||||||||||||||||||
| General and administrative | 23,852 | 20,091 | 48,500 | 77,616 | |||||||||||||||||||
| Total equity-based compensation expense, net of amounts capitalized | $ | 68,321 | $ | 48,418 | $ | 137,442 | $ | 208,877 | |||||||||||||||
(4) Includes amortization expense of acquired intangible assets as follows:
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||
| Subscription | $ | 27,013 | $ | 26,322 | $ | 53,845 | $ | 52,380 | |||||||||||||||
| Services and other | — | — | — | 2 | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
| Research and development | 137 | 95 | 274 | 190 | |||||||||||||||||||
| Sales and marketing | 23,878 | 23,797 | 47,675 | 47,553 | |||||||||||||||||||
| Total amortization expense | $ | 51,028 | $ | 50,214 | $ | 101,794 | $ | 100,125 | |||||||||||||||
Comparison of the Three Months Ended July 31, 2026 and 2025
Revenue
| Three Months Ended July 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (In thousands, except percentages) | |||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Subscription | |||||||||||||||||||||||
| SaaS | $ | 193,872 | $ | 144,758 | $ | 49,114 | 34 | % | |||||||||||||||
| Maintenance and support | 35,468 | 38,471 | (3,003) | (8) | % | ||||||||||||||||||
| Term subscriptions | 56,196 | 58,120 | (1,924) | (3) | % | ||||||||||||||||||
| Other subscription services | 9,669 | 6,588 | 3,081 | 47 | % | ||||||||||||||||||
| Total subscription | 295,205 | 247,937 | 47,268 | 19 | % | ||||||||||||||||||
| Services and other | 13,608 | 16,422 | (2,814) | (17) | % | ||||||||||||||||||
| Total revenue | $ | 308,813 | $ | 264,359 | $ | 44,454 | 17 | % | |||||||||||||||
Subscription Revenue. Subscription revenue increased by $47.3 million, or 19%, for the three months ended July 31, 2026 compared to the three months ended July 31, 2025, primarily due to an increase in SaaS revenue from our shift in focus on selling subscriptions to new customers and expanding our footprint with existing customers.
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Services and Other Revenue. Services and other revenue decreased by $2.8 million, or 17%, for the three months ended July 31, 2026 compared to the three months ended July 31, 2025. This decrease was primarily a result of a strategic shift toward selling a higher proportion of professional services and training on a subscription basis.
Cost of Revenue
| Three Months Ended July 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (In thousands, except percentages) | |||||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Subscription | $ | 84,103 | $ | 70,443 | $ | 13,660 | 19 | % | |||||||||||||||
| Services and other | 19,325 | 16,110 | 3,215 | 20 | % | ||||||||||||||||||
| Total cost of revenue | $ | 103,428 | $ | 86,553 | $ | 16,875 | 19 | % | |||||||||||||||
Cost of Subscription Revenue. Cost of subscription revenue increased $13.7 million, or 19%, for the three months ended July 31, 2026 compared to the three months ended July 31, 2025, primarily due to an increase in software and hosting costs of $5.7 million driven by the increase in sales of SaaS subscriptions, an increase in employee-related costs of $4.4 million due to higher headcount and increased investments in existing employees, and a $2.2 million increase in equity-based compensation primarily due to new grants issued during fiscal year 2027.
Cost of Services and Other. Cost of services and other increased by $3.2 million, or 20%, for the three months ended July 31, 2026 compared to the three months ended July 31, 2025, primarily due to an increase in partner-related costs of $2.6 million driven by a greater use of partners to deliver professional services and a $0.9 million increase in equity-based compensation primarily due to new grants issued during fiscal year 2027.
Gross Profit and Gross Margin
| Three Months Ended July 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (In thousands, except percentages) | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Subscription | $ | 211,102 | $ | 177,494 | $ | 33,608 | 19 | % | |||||||||||||||
| Services and other | (5,717) | 312 | (6,029) | ** | |||||||||||||||||||
| Total gross profit | $ | 205,385 | $ | 177,806 | $ | 27,579 | 16 | % | |||||||||||||||
| Three Months Ended July 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Gross profit margin | |||||||||||||||||||||||
| Subscription | 72 | % | 72 | % | |||||||||||||||||||
| Services and other | (42) | % | 2 | % | |||||||||||||||||||
| Total gross profit margin | 67 | % | 67 | % | |||||||||||||||||||
** Percentage not deemed meaningful
Subscription. Subscription gross profit increased by $33.6 million, or 19%, during the three months ended July 31, 2026 compared to the three months ended July 31, 2025. The increase was primarily due to the growth in subscription revenue. Subscription gross margin remained consistent with the prior period.
Services and Other. Services and other gross profit decreased by $6.0 million during the three months ended July 31, 2026 compared to the three months ended July 31, 2025. The decrease in gross profit and gross profit margin was primarily due to the decrease in services and other revenue combined with an increase in the cost of delivering those services through the use of our partners.
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Total gross profit increased by $27.6 million, or 16%, during the three months ended July 31, 2026 compared to the three months ended July 31, 2025. The increase was primarily due to the growth in total revenue. Total gross profit margin remained consistent with the prior period.
Operating Expenses
| Three Months Ended July 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (In thousands, except percentages) | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Research and development | $ | 62,185 | $ | 48,111 | $ | 14,074 | 29 | % | |||||||||||||||
| Sales and marketing | 155,881 | 131,289 | 24,592 | 19 | % | ||||||||||||||||||
| General and administrative | 46,277 | 39,204 | 7,073 | 18 | % | ||||||||||||||||||
| Total operating expenses | $ | 264,343 | $ | 218,604 | $ | 45,739 | 21 | % | |||||||||||||||
Research and Development Expenses. Research and development expenses increased by $14.1 million, or 29%, for the three months ended July 31, 2026 compared to the three months ended July 31, 2025. This increase was primarily driven by an $8.3 million increase in equity-based compensation due to new grants issued during fiscal year 2027, and a $5.4 million increase in employee-related costs due to continued investment in talent related to the development of our products.
Sales and Marketing Expenses. Sales and marketing expenses increased by $24.6 million, or 19%, for the three months ended July 31, 2026 compared to the three months ended July 31, 2025. This increase was primarily driven by an $18.0 million increase in employee-related costs to support deeper penetration into our existing customer base and expansion into new industry verticals and geographic markets, a $4.7 million increase in equity-based compensation primarily due to new grants issued during fiscal year 2027, a $2.2 million increase in travel expenses, and a $2.0 million increase in advertising and promotion costs.
General and Administrative Expenses. General and administrative expenses increased by $7.1 million, or 18%, for the three months ended July 31, 2026 compared to the three months ended July 31, 2025. This increase was primarily driven by a $3.8 million increase in equity-based compensation primarily due to new grants issued during fiscal year 2027, a $2.3 million increase in professional services fees driven by higher third-party consulting and advisory costs, and a $1.3 million increase in software and hosting costs to support the growth of our business operations.
Other Income (Expense), Net
| Three Months Ended July 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (In thousands, except percentages) | |||||||||||||||||||||||
| Other income (expense), net | |||||||||||||||||||||||
| Interest income | $ | 3,390 | $ | 2,336 | $ | 1,054 | 45 | % | |||||||||||||||
| Interest expense | (264) | (1,693) | 1,429 | 84 | % | ||||||||||||||||||
| Other income (expense), net | (1,301) | (1,710) | 409 | 24 | % | ||||||||||||||||||
| Total other income (expense), net | $ | 1,825 | $ | (1,067) | $ | 2,892 | 271 | % | |||||||||||||||
Total other income (expense), net increased by $2.9 million, or 271%, for the three months ended July 31, 2026 compared to the three months ended July 31, 2025. This increase was primarily due to a $1.4 million net decrease in interest expense due to the extinguishment of debt related to the remaining balance of debt issuance costs for our 2022 Revolving Credit Facility in the prior year, a $1.1 million increase in interest income due to higher average cash and cash equivalent balances, and a $0.4 million decrease in other expense related to foreign currency exchange loss.
Income Tax Benefit
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| Three Months Ended July 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (In thousands, except percentages) | |||||||||||||||||||||||
| Income tax benefit | $ | 6,773 | $ | 31,313 | $ | (24,540) | (78) | % | |||||||||||||||
The Company recorded an income tax benefit of $6.8 million for the three months ended July 31, 2026 compared to an income tax benefit of $31.3 million for the three months ended July 31, 2025, leading to a net benefit decrease of $24.5 million, or 78%, year-over-year. The decrease was primarily due to the net discrete tax benefit for the change in valuation allowance for interest expense and Texas R&D credit carryforwards from changes in tax law in the three months period ended July 31, 2025.
For further information, refer to Note 11 “Income Taxes” in the notes to our condensed consolidated financial statements included in this Quarterly Report.
Comparison of the Six Months Ended July 31, 2026 and 2025
Revenue
| Six Months Ended July 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (In thousands, except percentages) | |||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Subscription | |||||||||||||||||||||||
| SaaS | $ | 372,351 | $ | 276,573 | $ | 95,778 | 35 | % | |||||||||||||||
Maintenance and support | 70,031 | 75,860 | (5,829) | (8) | % | ||||||||||||||||||
| Term subscriptions | 100,112 | 98,160 | 1,952 | 2 | % | ||||||||||||||||||
| Other subscription services | 18,532 | 12,667 | 5,865 | 46 | % | ||||||||||||||||||
| Total subscription | 561,026 | 463,260 | 97,766 | 21 | % | ||||||||||||||||||
| Services and other | 27,929 | 31,567 | (3,638) | (12) | % | ||||||||||||||||||
| Total revenue | $ | 588,955 | $ | 494,827 | $ | 94,128 | 19 | % | |||||||||||||||
Subscription Revenue. Subscription revenue increased by $97.8 million, or 21%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025, primarily due to an increase in SaaS revenue from our shift in focus on selling subscriptions to new customers and expanding our footprint with existing customers.
Services and Other Revenue. Services and other revenue decreased by $3.6 million, or 12%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025. This decrease is primarily a result of a strategic shift toward selling a higher proportion of professional services and training on a subscription basis.
Cost of Revenue
| Six Months Ended July 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (In thousands, except percentages) | |||||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Subscription | $ | 164,323 | $ | 145,934 | $ | 18,389 | 13 | % | |||||||||||||||
| Services and other | 38,135 | 43,432 | (5,297) | (12) | % | ||||||||||||||||||
| Total cost of revenue | $ | 202,458 | $ | 189,366 | $ | 13,092 | 7 | % | |||||||||||||||
Cost of Subscription Revenue. Cost of subscription revenue increased $18.4 million, or 13%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025 primarily due to an increase in employee-related costs of $10.0 million due to higher headcount and increased investments in personnel, an increase in software and hosting costs of $9.8 million driven by the increase in sales of SaaS subscriptions, an increase in amortization of intangibles of $1.5 million an
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increase in amortization of capitalized software of $1.0 million, and an increase in third-party royalties of $0.9 million. The overall increase was partially offset by a $4.5 million decrease in equity-based compensation related to the acceleration of awards from the completion of our IPO.
Cost of Services and Other. Cost of services and other decreased by $5.3 million, or 12%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025, primarily due to a decrease in equity-based compensation resulting from the acceleration of equity-based awards from the completion of our IPO.
Gross Profit and Gross Margin
| Six Months Ended July 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (In thousands, except percentages) | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Subscription | $ | 396,703 | $ | 317,326 | $ | 79,377 | 25 | % | |||||||||||||||
| Services and other | (10,206) | (11,865) | 1,659 | 14 | % | ||||||||||||||||||
| Total gross profit | $ | 386,497 | $ | 305,461 | $ | 81,036 | 27 | % | |||||||||||||||
| Six Months Ended July 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Gross profit margin | |||||||||||||||||||||||
| Subscription | 71 | % | 68 | % | |||||||||||||||||||
| Services and other | (37) | % | (38) | % | |||||||||||||||||||
| Total gross profit margin | 66 | % | 62 | % | |||||||||||||||||||
Subscription. Subscription gross profit increased by $79.4 million, or 25%, during the six months ended July 31, 2026 compared to the six months ended July 31, 2025. The increase was primarily due to the growth in subscription revenue. Subscription gross profit margin was 71% for the six months ended July 31, 2026 and 68% for the six months ended July 31, 2025. The increase was primarily due to the overall increase in subscription revenue.
Services and Other. Services and other gross profit increased by $1.7 million, or 14%, during the six months ended July 31, 2026 compared to the six months ended July 31, 2025. The increase in gross profit was primarily due to the decrease in equity-based compensation related to acceleration of equity-based awards from the completion of our IPO. Services and other gross profit margin remained materially consistent with the prior period.
Total gross profit increased by $81.0 million, or 27%, during the six months ended July 31, 2026 compared to the six months ended July 31, 2025. The increase is primarily due to the growth in total revenue. Total gross profit margin was 66% for the six months ended July 31, 2026 and 62% for the six months ended July 31, 2025. Total gross profit margin increased due to our growth in total revenue and lower equity-based compensation related to acceleration of equity-based awards from the completion of our IPO.
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Operating Expenses
| Six Months Ended July 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (In thousands, except percentages) | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Research and development | $ | 123,871 | $ | 115,381 | $ | 8,490 | 7 | % | |||||||||||||||
| Sales and marketing | 310,157 | 295,819 | 14,338 | 5 | % | ||||||||||||||||||
| General and administrative | 91,253 | 120,024 | (28,771) | (24) | % | ||||||||||||||||||
| Total operating expenses | $ | 525,281 | $ | 531,224 | $ | (5,943) | (1) | % | |||||||||||||||
Research and Development Expenses. Research and development expenses increased by $8.5 million, or 7%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025. This increase was primarily driven by a $11.2 million increase in employee-related costs due to continued investment in talent related to the development of our products and a $1.9 million increase in software and hosting costs, partially offset by a $4.1 million decrease in equity-based compensation due to the acceleration of awards from the completion of our IPO.
Sales and Marketing Expenses. Sales and marketing expenses increased by $14.3 million, or 5%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025. This increase was primarily driven by a $32.4 million increase in employee-related costs to support increased penetration into our existing customer base and expansion into new industry verticals and geographic markets, a $6.8 million increase in advertising and promotion costs and a $2.3 million increase in travel expenses This increase was partially offset by a $26.3 million decrease in equity-based compensation due to the acceleration of awards from the completion of our IPO.
General and Administrative Expenses. General and administrative expenses decreased by $28.8 million, or 24%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025. This decrease was primarily driven by a $29.1 million decrease in equity-based compensation due to the acceleration of awards from the completion of our IPO, a $3.9 million decrease in employee-related costs due to lower contract labor and reduced third-party consulting spend, and a $1.9 million decrease in provision for credit losses. This decrease was partially offset by a $3.2 million increase in software and hosting costs to support the growth of our business operations and a $2.0 million increase in professional service fees driven by higher third-party consulting and advisory costs.
Other Income (Expense), Net
| Six Months Ended July 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (In thousands, except percentages) | |||||||||||||||||||||||
| Other income (expense), net | |||||||||||||||||||||||
| Interest income | $ | 6,439 | $ | 5,562 | $ | 877 | 16 | % | |||||||||||||||
| Interest expense | (529) | (24,082) | 23,553 | 98 | % | ||||||||||||||||||
| Other income (expense), net | (4,307) | (1,901) | (2,406) | (127) | % | ||||||||||||||||||
| Total other income (expense), net | $ | 1,603 | $ | (20,421) | $ | 22,024 | 108 | % | |||||||||||||||
Total other income (expense), net increased by $22.0 million, or 108%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025. This increase was primarily due to a $23.6 million net decrease in interest expense due to the full repayment of our Term Loans and termination of our 2022 Revolving Credit Facility, which includes $16.7 million for the extinguishment of debt related to the remaining balance of the deferred financing costs of our Term Loans and debt issuance costs for our 2022 Revolving Credit Facility, and a $0.9 million increase in interest income due to higher average cash and cash equivalent balances, partially offset by a $2.4 million increase in other expense related to foreign currency exchange loss.
Income Tax (Expense) Benefit
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| Six Months Ended July 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||
| Income tax benefit | $ | 12,147 | $ | 48,320 | $ | (36,173) | (75) | % | |||||||||||||||
The Company recorded an income tax benefit of $12.1 million for the six months ended July 31, 2026 compared to an income tax benefit of $48.3 million for the six months ended July 31, 2025, leading to a net benefit decrease of $36.2 million, or 75%, year-over-year. The decrease is primarily due to the net discrete tax benefit for the change in valuation allowance for interest expense and Texas R&D tax credit carryforwards from changes in tax law in the six months period ended July 31, 2025.
For further information, refer to Note 11 "Income Taxes" in the notes to our condensed consolidated financial statements included in this Quarterly Report.
Non-GAAP Financial Measures
In addition to our financial information presented in accordance with GAAP, we use certain non-GAAP financial measures to clarify and enhance our understanding of past performance.
Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry because they may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP and exclude expenses that may have a material impact on our reported financial results. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. We urge you to review the reconciliations of our non-GAAP financial measures to the comparable GAAP financial measures included below and not to rely on any single financial measure to evaluate our business.
Our non-GAAP financial measures exclude items that do not reflect our ongoing, core operating or business performance, such as equity-based compensation, payroll taxes related to awards that were accelerated upon the closing of our IPO, payroll taxes related to RSUs, amortization of acquired intangible assets, and acquisition-related expenses (including fair value adjustments to acquisition-contingent consideration). We believe these adjustments enable management and investors to compare our underlying business performance from period to period and provide investors with additional means to evaluate cost and expense trends. We also believe these adjustments enhance comparability of our financial performance against those of other technology companies. Accordingly, we believe the presentation of our non-GAAP financial measures provides useful information to investors regarding our financial condition and results of operations. In addition, we use adjusted income (loss) from operations for budgeting and planning purposes, including with respect to our corporate bonus plan.
Adjusted Gross Profit and Adjusted Gross Profit Margin
We define adjusted gross profit as gross profit excluding equity-based compensation expense, payroll taxes related to awards that were accelerated upon the closing of our IPO and payroll taxes related to RSUs, amortization of acquired intangible assets, which includes impairment charges, impairment of intangible assets, acquisition-related expenses, and restructuring expenses. We define adjusted gross profit margin as adjusted gross profit divided by total revenue.
The following table reflects the reconciliation of adjusted gross profit to gross profit:
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| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (In thousands, except percentages) | |||||||||||||||||||||||
| GAAP gross profit | $ | 205,385 | $ | 177,806 | $ | 386,497 | $ | 305,461 | |||||||||||||||
| GAAP gross profit margin | 67 | % | 67 | % | 66 | % | 62 | % | |||||||||||||||
| Equity-based compensation expense | 5,703 | 2,612 | 12,232 | 24,204 | |||||||||||||||||||
Payroll taxes for IPO-accelerated awards and RSUs | 231 | — | 475 | 634 | |||||||||||||||||||
| Amortization of acquired intangible assets | 27,013 | 26,322 | 53,845 | 52,382 | |||||||||||||||||||
| Restructuring expense | 758 | — | 758 | — | |||||||||||||||||||
| Adjusted gross profit | $ | 239,090 | $ | 206,740 | $ | 453,807 | $ | 382,681 | |||||||||||||||
| Adjusted gross profit margin | 77 | % | 78 | % | 77 | % | 77 | % | |||||||||||||||
Our adjusted gross profit margin for the three and six months ended July 31, 2026 and 2025 has remained generally consistent and reflects the high value-added nature of our offerings.
Adjusted Subscription Gross Profit and Adjusted Subscription Gross Profit Margin
We define adjusted subscription gross profit as subscription gross profit excluding equity-based compensation expense, payroll taxes related to awards that were accelerated upon the closing of our IPO and payroll taxes related to RSUs, all of which were issued after the closing of the IPO, amortization of acquired intangible assets, which include impairment charges, impairment of intangible assets, acquisition-related expenses, and restructuring expenses. We define adjusted subscription gross profit margin as adjusted subscription gross profit divided by subscription revenue.
The following table reflects the reconciliation of adjusted subscription gross profit to subscription gross profit:
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (In thousands, except percentages) | |||||||||||||||||||||||
| GAAP subscription gross profit | $ | 211,102 | $ | 177,494 | $ | 396,703 | $ | 317,326 | |||||||||||||||
| GAAP subscription gross profit margin | 72 | % | 72 | % | 71 | % | 68 | % | |||||||||||||||
| Equity-based compensation expense | 4,115 | 1,931 | 8,726 | 13,195 | |||||||||||||||||||
| Payroll taxes for IPO-accelerated awards and RSUs | 146 | — | 282 | 332 | |||||||||||||||||||
| Amortization of acquired intangible assets | 27,013 | 26,322 | 53,845 | 52,380 | |||||||||||||||||||
| Restructuring expense | 520 | — | 520 | — | |||||||||||||||||||
| Adjusted subscription gross profit | $ | 242,896 | $ | 205,747 | $ | 460,076 | $ | 383,233 | |||||||||||||||
| Adjusted subscription gross profit margin | 82 | % | 83 | % | 82 | % | 83 | % | |||||||||||||||
Our adjusted subscription gross profit margin for the three and six months ended July 31, 2026 and 2025 has remained generally consistent and reflects the high value-added nature of our offerings.
Adjusted Income from Operations and Adjusted Operating Margin
We define adjusted income from operations as income (loss) from operations excluding equity-based compensation expense, payroll taxes related to awards that were accelerated upon the closing of our IPO and payroll taxes related to RSUs, all of which were issued after the closing of the IPO, amortization of acquired intangible assets which includes impairment charges, impairment of intangible assets, benefit from amortization related to acquired contract acquisition costs, acquisition-related expenses (including fair value adjustments to acquisition-contingent consideration), Thoma Bravo monitoring fees (which were annual service fees for consultation and advice related to corporate strategy, budgeting of future corporate investments, acquisition and divestiture strategies, and debt and equity financings), and restructuring expenses. The Thoma Bravo monitoring fees were incurred pursuant to a services agreement that was terminated upon the closing of the IPO, and we do not expect to receive similar services in the future or enter into a similar arrangement again in the future.
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The following table reflects the reconciliation of adjusted income (loss) from operations to operating income (loss):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (In thousands, except percentages) | |||||||||||||||||||||||
| GAAP loss from operations | $ | (58,958) | $ | (40,798) | $ | (138,784) | $ | (225,763) | |||||||||||||||
| GAAP loss from operations margin | (19) | % | (15) | % | (24) | % | (46) | % | |||||||||||||||
| Equity-based compensation expense | 68,321 | 48,418 | 137,442 | 208,877 | |||||||||||||||||||
| Payroll taxes for IPO-accelerated awards and RSUs | 1,634 | — | 3,331 | 3,399 | |||||||||||||||||||
| Amortization of acquired intangible assets | 51,028 | 50,214 | 101,794 | 100,125 | |||||||||||||||||||
| Restructuring expense | 2,516 | — | 2,516 | — | |||||||||||||||||||
Amortization of acquired contract acquisition costs (1) | (3,461) | (5,444) | (7,375) | (11,208) | |||||||||||||||||||
| Acquisition-related expenses and Thoma Bravo monitoring fees | 1,707 | 1,609 | 1,707 | 2,192 | |||||||||||||||||||
| Adjusted income from operations | $ | 62,787 | $ | 53,999 | $ | 100,631 | $ | 77,622 | |||||||||||||||
| Adjusted operating margin | 20 | % | 20 | % | 17 | % | 16 | % | |||||||||||||||
(1) In accordance with GAAP reporting requirements, the Company has written off its contract acquisition costs at the time when the Company was acquired in an all-cash take-private transaction by Thoma Bravo on August 16, 2022. Therefore, GAAP commissions expense related to contract acquisition costs after August 16, 2022 do not reflect the commissions expense that would have been reported if the contract acquisition costs had not been written off. Accordingly, the Company believes that presenting the approximate amount of acquisition-related commission expenses (so that the full amount of commission expense is included) provides a more appropriate representation of commission expense in a given period and, therefore, provides readers of the Company’s financial statements with a more consistent basis for comparison across accounting periods.
Our adjusted income from operations and adjusted operating margin for the three and six months ended July 31, 2026 and 2025 has remained generally consistent and reflects the high value-added nature of our offerings.
Free Cash Flow
We define free cash flow as net cash provided by (used in) operating activities, less cash used for purchases of property and equipment, and capitalized software development costs. We use free cash flow as a measure of financial progress in our business, as it balances operating results, cash management, and capital efficiency. We believe information regarding free cash flow provides investors and others with an important perspective on the cash available to make strategic acquisitions and investments, to fund ongoing operations, and to fund other capital expenditures. Free cash flow can be volatile and is sensitive to many factors, including changes in working capital and timing of capital expenditures. Working capital at any specific point in time is subject to many variables including the discretionary timing of expense payments and fluctuations in foreign exchange rates.
The following table summarizes our free cash flow for the periods presented:
| Six Months Ended July 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
GAAP net cash provided by (used in) operating activities | $ | 83,204 | $ | (46,862) | |||||||
Less: Purchase of property and equipment | (2,903) | (3,153) | |||||||||
Less: Capitalized software development costs | (10,372) | (4,731) | |||||||||
Free cash flow | $ | 69,929 | $ | (54,746) | |||||||
Our free cash flow for the six months ended July 31, 2026 increased when compared to the six months ended July 31, 2025, primarily due to a lower loss from operations as a result of higher revenue growth compared to the prior period. Free cash flow for the six months ended July 31, 2025 includes $78.5 million of cash paid to settle equity related awards, cash awards and their associated payroll taxes upon the closing of our IPO, $36.7 million in cash paid for interest expense related to our 2022
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Credit Agreement, and $9.3 million of cash paid for fees under our advisory services agreement with Thoma Bravo, which was terminated upon the closing of our IPO.
Liquidity, Capital Resources and Cash Requirements
We believe we have sufficient sources of funding to meet our business requirements for the next 12 months and in the longer term. Our primary sources of liquidity are cash flows from operations and proceeds from the IPO, which are supplemented by our undrawn 2025 Revolving Credit Facility. As of July 31, 2026, we had cash and cash equivalents totaling $309.9 million. Our primary uses of liquidity are operating expenses, working capital requirements, capital expenditures, and acquisitions.
Although cash flows from operations have historically been negative, we had positive cash flow from operations for the year ended January 31, 2026 and for the six months ended July 31, 2026. We expect to continue to incur positive cash flows from operations in the foreseeable future.
Our future capital requirements will depend on many factors, including but not limited to our revenue growth rate, timing of cash receipt and payments, and the timing and extent of spending to support strategic initiatives. We may also enter into arrangements to acquire or invest in complementary businesses, services, and technologies.
To the extent existing cash and cash equivalents are not sufficient to fund future activities, we may borrow under our 2025 Revolving Credit Facility or seek to raise additional funds through equity, equity-linked, or debt financings. Also, we may continue to enter into agreements or letters of intent with respect to potential investments in, or acquisitions of, complementary businesses, services or technologies, which could also require us to seek additional equity financing, incur indebtedness or use cash resources. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, operating results and financial condition would be adversely affected.
2025 Credit Agreement
On June 25, 2025, we entered into the 2025 Credit Agreement, which provides for a five-year $250.0 million secured revolving credit facility, including a letter of credit sub-facility of up to $10.0 million. The 2025 Revolving Credit Facility matures on June 25, 2030. Borrowings under the 2025 Revolving Credit Facility may be used to provide ongoing working capital as well as for other general corporate purposes of the Company. The Company had no outstanding 2025 Revolving Credit Facility balance and was in compliance with all applicable covenants as of July 31, 2026. See Note 7 “Credit Agreement and Debt” in the notes to our condensed consolidated financial statements included in this Quarterly Report for more information regarding the 2025 Credit Agreement.
2022 Credit Agreement
On August 16, 2022, we entered into the 2022 Credit Agreement. The 2022 Credit Agreement provided for (i) a six-year $125.0 million senior secured revolving credit facility, including a letter of credit sub-facility of up to $5.0 million, and (ii) the Term Loans. On June 25, 2025, the 2022 Credit Agreement was terminated upon our entry into the 2025 Credit Agreement.
Summary of Cash Flows
As of July 31, 2026, we had $309.9 million of cash and cash equivalents, $250.0 million of availability under the 2025 Credit Agreement, and $659.4 million in net working capital, which we define as current assets less current liabilities, excluding deferred revenue. As of January 31, 2026, we had $358.1 million of cash and cash equivalents, $250.0 million of availability under the 2025 Credit Agreement, and $723.4 million in net working capital. The change in cash and cash equivalents and net working capital was driven primarily by a lower loss from operations as a result of higher revenue growth, offset by cash used to acquire Entro.
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The following table summarizes our cash flows for the periods presented:
| Six Months Ended July 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Net cash provided by (used in) operating activities | $ | 83,204 | $ | (46,862) | |||||||
| Net cash used in investing activities | (131,500) | (7,884) | |||||||||
| Net cash provided by financing activities | — | 207,672 | |||||||||
| Net change in cash, cash equivalents and restricted cash | $ | (48,296) | $ | 152,926 | |||||||
Cash Flows from Operating Activities
During the six months ended July 31, 2026, cash provided by operating activities was $83.2 million, which consisted of a net loss of $125.0 million, adjusted by non-cash charges of $253.1 million and a net cash outflow of $44.8 million from changes in our net operating assets and liabilities. The non-cash charges are primarily comprised of equity-based compensation of $137.4 million, depreciation and amortization expense of $106.7 million, amortization of contract acquisition costs of $28.6 million, provision for credit losses of $2.4 million, amortization of debt discount and issuance costs of $0.3 million, partially offset by deferred taxes of $22.4 million. The net cash outflow from changes in operating assets and liabilities was primarily a result of an increase in deferred contract acquisition costs of $66.1 million due to an increase in our sales, an increase in prepayments and other current assets of $15.7 million, an increase in contract assets of $7.9 million primarily due to growth in our revenue and the timing of invoices and payments, a decrease in deferred revenue of $11.8 million, and a decrease in accrued expenses and other liabilities of $8.2 million due to the timing of cash disbursements primarily related to bonuses and commissions. The outflows were partially offset by a decrease in accounts receivable of $57.5 million due to the timing of receipts of payments from customers and an increase in accounts payable of $7.6 million due to the timing of invoicing and payments made to vendors.
During the six months ended July 31, 2025, cash used in operating activities was $46.9 million, which consisted of a net loss of $197.9 million, adjusted by non-cash charges of $240.2 million and a net cash outflow of $89.2 million from changes in our net operating assets and liabilities. The non-cash charges are primarily comprised of depreciation and amortization expense of $104.5 million, equity-based compensation of $154.1 million, amortization of contract acquisition costs of $17.5 million, amortization of debt discount and issuance costs, including the early write-off of issuance costs related to the repayment of the Term Loans of $17.1 million, and provision for credit losses of $4.3 million and fair value adjustments to contingent consideration of $1.6 million, partially offset by deferred taxes of $58.9 million. The net cash outflow from changes in operating assets and liabilities was primarily a result of an increase in deferred contract acquisition costs of $26.6 million due to an increase in our sales, an increase in prepayments and other current assets of $21.2 million, an increase in contract assets of $13.7 million primarily due to growth in our revenue and the timing of invoices and payments and a decrease in accrued expenses and other liabilities of $74.9 million due to the timing of cash disbursements primarily related to bonuses and commissions, the settlement of vested EARs and cash-settled awards, interest payments, and fees paid to Thoma Bravo. The outflows were partially offset by a decrease in accounts receivable of $46.3 million due to the timing of receipts of payments from customers.
Cash Flows used in Investing Activities
During the six months ended July 31, 2026, cash used in investing activities was $131.5 million, consisting primarily of $118.2 million for business acquisitions, $10.4 million for capitalized software development costs, and $2.9 million in purchases of property and equipment.
During the six months ended July 31, 2025, cash used in investing activities was $7.9 million, consisting primarily of $4.7 million for capitalized software development costs and $3.2 million in purchases of property and equipment.
Cash Flows from Financing Activities
During the six months ended July 31, 2026, there was no cash provided by financing activities.
During the six months ended July 31, 2025, cash provided by financing activities was $207.7 million primarily due to the proceeds from our IPO, net of underwriting discounts and commissions, of $1.3 billion, partially offset by the repayment of our Term Loans of $1.0 billion, payments of deferred offering costs of $8.6 million, and payments of debt issuance costs related to our 2025 Credit Agreement of $2.7 million.
Material Cash Commitments
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On February 1, 2026, the Company entered into a new amendment with its cloud storage provider, terminating the previous arrangement. The new agreement, effective February 1, 2026 through January 31, 2031, requires the Company to commit to minimum annual purchases of $107.0 million, $127.0 million, $147.0 million, $162.0 million, and $178.0 million in contract years one through five, respectively, for a total commitment of $721.0 million. If the Company does not meet the minimum purchase obligation during any contract year, it will be required to pay the difference. There have been no further amendments or material developments related to this agreement since its execution.
The Company expects to satisfy cash requirements under the above agreements with cash flow from operations.
There were no additional significant changes outside the ordinary course of business to our material cash requirements disclosed in our fiscal 2026 Form 10-K.
We did not have any material off-balance sheet arrangements during the periods presented or as of July 31, 2026.
Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting estimates for the three months ended July 31, 2026 from those disclosed in our fiscal 2026 Form 10-K.
Recent Accounting Pronouncements
Refer to Note 1 "Description of Business and Summary of Significant Accounting Policies" in the notes to our condensed consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates. We do not hold or issue financial instruments for trading purposes. There have been no material changes in our market risk exposures for the six months ended July 31, 2026 as compared to those disclosed in our fiscal 2026 Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive officer (“PEO”) and principal financial officer (“PFO”), to allow timely decisions regarding disclosure. Our management, with the participation of our PEO and PFO, has evaluated the effectiveness of our disclosure controls and procedures as of July 31, 2026 and, based on such evaluation, our PEO and PFO have concluded that our disclosure controls and procedures were effective as of such date.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) during the fiscal quarter ended July 31, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II
Item 1. Legal Proceedings
We are not currently a party to, nor is our property currently subject to, any material legal proceedings other than ordinary routine litigation incidental to the business, and we are not aware of any such proceedings contemplated by governmental authorities.
Item 1A. Risk Factors
There have been no material changes to the risk factors disclosed in Part I, Item 1A in the fiscal 2026 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
On June 29, 2026, the Company issued 160,670 shares of restricted common stock, with an aggregate value of approximately $2.4 million, to certain key employees and former shareholders of Entro who became employees of the Company in connection with its acquisition of Entro (the “Entro Acquisition”). Pursuant to the terms of the Entro Acquisition share purchase agreement, on June 29, 2027 and June 29, 2028, the Company will issue to such persons a number of shares of restricted common stock equal to approximately $2.4 million, based on the fair market value of the Company’s common stock as of such dates. Such shares of restricted common stock vest in four quarterly installments and vest in full roughly a year after issuance, subject to the respective recipients remaining employed by the Company or an affiliate of the Company on the applicable vesting date. For a description of this acquisition, see Note 5 "Acquisitions" in the notes to our consolidated financial statements included in this Quarterly Report.
The offer, sale, and issuance of the shares described above were not registered under the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering and, with respect to shares issued to persons outside the United States, Regulation S promulgated under the Securities Act. The shares were issued to a limited number of persons who had adequate access to information about the Company and who acquired the shares for investment purposes and not with a view to, or for sale in connection with, any distribution thereof. No underwriters were involved in the issuance, and no commissions or other remuneration were paid in connection therewith. Appropriate restrictive legends were affixed to the shares.
Use of Proceeds from Initial Public Offering of Common Stock
On February 12, 2025, the Registration Statement on Form S-1 (File No. 333-284339) (the “Registration Statement”) relating to our IPO was declared effective by the SEC and we priced our IPO. Pursuant to the Registration Statement, we registered an aggregate of 60.0 million shares of our common stock, of which 57.5 million shares were sold by us and 2.5 million shares were sold by certain selling stockholders named therein at a price to the public of $23.00 per share (for an aggregate offering price of approximately $1.4 billion). We received net proceeds of approximately $1.2 billion, net of approximately $62.8 million of underwriting discounts and commissions and approximately $11.5 million of offering costs. Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC acted as joint lead book-running managers and representatives of the underwriters.
There has been no material change in the planned use of proceeds from our IPO as described in the related prospectus filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act, except that we repaid the Term Loans in full.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
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Insider Trading Arrangements
During the three months ended July 31, 2026, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed us of the adoption or termination
| Name | Action | Date of Adoption or Termination | Character of Trading Arrangement(1) | Aggregate Number of Shares of Common Stock to be Purchased or Sold Pursuant to Trading Arrangement | Duration | ||||||||||||
| Rule 10b5-1 trading arrangement | Up to | ||||||||||||||||
(1) Each trading arrangement listed as a “Rule 10b5-1 trading arrangement” is intended to satisfy the affirmative defense of Rule 10b5-1(c) of the Exchange Act (the “Rule”) and, among other things, only permits transactions upon expiration of the applicable mandatory cooling-off period under the Rule.
(2) This trading arrangement permits transactions through and including the earliest to occur of (a) the completion of all sales of shares subject to the arrangement, (b) the date listed in the “Duration” column, and (c) the occurrence of such other termination event as specified in the arrangement.
Item 6. Exhibits
The documents listed below are incorporated by reference or are filed with this Quarterly Report, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).
| Exhibit Number | Description | |||||||
| 3.1 | Certificate of Incorporation of SailPoint, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by the Company on February 19, 2025). | |||||||
| 3.2 | Bylaws of SailPoint, Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed by the Company on February 19, 2025). | |||||||
| 31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
| 31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
| 32.1** | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 32.2** | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 101.INS* | Inline XBRL Instance Document. | |||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 104* | Inline XBRL Cover Page Interactive Data File (included in Exhibit 101). | |||||||
* Filed herewith.
** Furnished herewith (such certification shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, except to the extent that the Company specifically incorporates it by reference).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SailPoint, Inc. | ||||||||
| Date: September 10, 2026 | By: | /s/ Brian Carolan | ||||||
| Brian Carolan Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer) | ||||||||
| Date: September 10, 2026 | /s/ Mitra Rezvan | |||||||
| Mitra Rezvan Chief Accounting Officer (Principal Accounting Officer) | ||||||||
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