SailPoint
Software that keeps track of who inside a large company may open which systems, grants and removes that access, and proves it to the auditors.
The scores
Growth3/4 →
ARR up 25% and SaaS ARR 36%, but revenue up 17%, 4 points from a migration that runs out, and the guide slows to 23%.
Business quality3/4 →
Gross retention in the high 90s and 113% net for three years; but Microsoft bundles governance cheaply and Palo Alto and Okta sell it too.
Financial position4/4 ↑
$310M of cash, no debt, an undrawn revolver and about $200M of free cash flow guided; the plan needs no outside money.
Execution record3/4 →
Under two years listed: the ARR guide was raised twice and EPS beat in 6 of 8 quarters, but revenue missed in 3.
Per share capture3/4 →
Shares grow about 2% a year against revenue near 17%; stock pay near a fifth of revenue and a 5% evergreen pool keep it leaky.
Potential2/4 ↑
The 2029 plan needs migration, new customers and AI revenue together; the backlog is committed, but the AI line is expected and partly relabelled.
Risk profile3/4 →
One serious dependency: Thoma Bravo controls 84.6% and the board and times its own exit; a security vendor also carries breach risk.
Valuation2/4 ↓
About 9.6 times FY2027 sales and 50 times guided adjusted profit pay for the 2029 plan; counting stock pay, little is left if it half-happens.
Evidence quality3/4 →
Statements, customers, backlog and ownership are filed; retention, the migration lift and the AI-driven figure rest on management's word.
If it works 0.9× · if it fails you keep about 70%.
The Verdict
We rate SailPoint Neutral. The business is solid: customers rarely leave, recurring revenue grows 25%, and it has cash and no debt. The price is full: at about 10 times sales it already pays for management's 2029 plan, and stock pay that the adjusted figures leave out runs near a fifth of sales. As a bet it is priced for success: if its products for AI agents take off the shares gain little, and if they never become new money the core business at a normal price is worth less than today's.
The long caseEvery AI agent a company runs needs its access granted, checked and removed, and the vendor already doing that for staff can sell it.
The evidence under this - 6 claims
About 4 points of the 25% is customers moving from IdentityIQ to the cloud at a higher price (C08), which runs out as the on-premises base shrinks.
Net retention eased from 114% in FY2025 to 113% (C06), and it includes the migration uplift, which is a higher price on seats already sold rather than wider use.
- Adjusted operating income and free cash flow both leave out about $240M a year of stock pay (C12), so on owner earnings the multiple is far higher.
- The earlier-years median covers only the years since the 2022 buyout, a short base.
If AI-agent revenue is a new market rather than an upgrade path, FY2029 revenue could beat consensus and the multiple then would be lower.
Management says adopters raised spend by over 60% and AI was over 30% of net new ARR (C09), which is new money by any definition.
The company
A bank or a hospital has tens of thousands of staff and thousands of applications. Someone has to decide who may open each one, remove access the day a person leaves, and show regulators the record. SailPoint's software does that: it reads every account, matches it to a person, and runs the reviews.
It sells to large companies, 53% of the Fortune 500 among them. Without it they use spreadsheets and tickets, older tools from IBM or Oracle, or the basic version in Microsoft's suite.
The evidence under this - 3 claims
How it makes money
Customers pay a yearly subscription, mostly for the cloud version, which brought in $193.9M of the $308.8M of sales in the quarter to July 2026. The rest is licences for the version customers run on their own servers, its maintenance, and installation work. Sales were $1,071.4M in the year to January 2026, and 1,330 customers pay over $250,000 a year.
The evidence under this - 4 claims
About 4 points of the 25% is customers moving from IdentityIQ to the cloud at a higher price (C08), which runs out as the on-premises base shrinks.
Customers below $250,000 fell by 35, so growth is coming from selling more to big customers rather than from new small ones.
Where the money comes from, stream by stream
| Stream | Share of sales (Q2 FY2027) | How it earns it |
|---|---|---|
| SaaS subscriptions | 63% | Identity Security Cloud, billed yearly and recognised over the contract. |
| Term licences | 18% | IdentityIQ licences for customers' own servers, mostly recognised when delivered. |
| Maintenance | 11% | Support and updates on older perpetual IdentityIQ licences, shrinking as customers migrate. |
| Services and other subscription | 7% | Installation and consulting, and other subscription items. |
Who runs it
Mark McClain co-founded SailPoint in 2005 and still runs it; Matt Mills, the president, came from MapR and Oracle, and Brian Carolan, the finance chief, ran Commvault's finances through its own move to subscriptions.
Thoma Bravo owns 84.6% and names directors; insiders own 1.7%. Three quarters of the bonus rides on recurring revenue, and McClain's $80.1M of pay last year was nearly all shares that vest with time, not results.
The evidence under this - 3 claims
Why it wins, and who could beat it
Why customers come back
Once a company has wired its applications, roles and audit reviews into SailPoint, switching means rebuilding all of it and proving the controls to auditors again. So customers stay and buy more: gross retention is in the high 90s, and customers paying over $1M a year rose from 90 to 235 in under three years.
Regulators keep the need alive. New York's financial regulator requires every covered firm to review all user access at least once a year.
The evidence under this - 4 claims
Net retention eased from 114% in FY2025 to 113% (C06), and it includes the migration uplift, which is a higher price on seats already sold rather than wider use.
Customers below $250,000 fell by 35, so growth is coming from selling more to big customers rather than from new small ones.
The threat
Microsoft sells governance inside the suite most of these customers already own, at $7 a user a month, and a control plane for AI agents. Okta sells its own governance and offers agent identity in early access, and Palo Alto bought CyberArk to build an identity platform.
The evidence under this - 3 claims
The rivals: MSFT, MSFT, OKTA, OKTA, PANW, ORCL, IBM, and 3 more that are private, in-house or listed abroad.
Who else does this, rival by rival
| Ticker | Rival | Where it competes | How far along | Priced against it |
|---|---|---|---|---|
| MSFT | Microsoft Entra ID Governance and Agent 365Priced against it: One segment only | Identity governance for people | On sale | One segment only |
| Microsoft Agent 365 | AI-agent and machine identity | On sale | ||
| OKTA | Okta Identity GovernancePriced against it: Same product | Identity governance for people | On sale | Same product |
| Okta's identity for AI agents | AI-agent and machine identity | Announced | ||
| PANW | Palo Alto Networks (CyberArk)Priced against it: One segment only | Identity governance for people | On sale | One segment only |
| ORCL · IBM | Oracle and IBM identity productsPriced against it: One segment only | Identity governance for people | On sale | One segment only |
| Private | One Identity and SaviyntPriced against it: Private | Identity governance for people | On sale | Private |
| In-house | Companies' own scripts and ticketsPriced against it: In-house | Identity governance for people | On sale | In-house |
| Private | Non-human-identity start-upsPriced against it: Private | AI-agent and machine identity | On sale | Private |
How big it could get
How big this could get
In 2022 there were 2,262 US companies with 5,000 or more staff, employing 49.3M people. SailPoint already serves 53% of the Fortune 500 and 29% of the world's 2,000 largest public companies, so most of the room is the large companies abroad it does not yet serve and selling more to those it does. Nobody publishes what large companies spend on governance, and the AI-agent market has not been measured.
The evidence under this - 4 claims
Customers below $250,000 fell by 35, so growth is coming from selling more to big customers rather than from new small ones.
Who has signed
Customers have signed contracts worth $1.9B not yet earned, $931M of it due within a year. Management also names a partnership with Amazon Web Services and a multimillion-dollar Fortune 500 deal, neither filed.
The evidence under this - 2 claims
Customers below $250,000 fell by 35, so growth is coming from selling more to big customers rather than from new small ones.
The results
The numbers
Sales grew 20% over the twelve months to Jul 2026, about the same pace as the 24% in the year to Jan 2026.
Operating margin is −19%, up from −48% in the year to Jan 2024.
Running costs take 85¢ of each sales dollar, down from 108¢ in the year to Jan 2024.
Shareholders' money lost 2.9% a year, up from −43% in the year to Jan 2026.
It turned 17% of sales into free cash, $195M over the last twelve months.
The share count rose 604% in 2.5 years, and pay in shares costs 20% of sales.
All the numbers
Filed figures from the company's 10-K and 10-Q, read 2026-10-24. Fiscal years end in January.
| Jan 2024 | Jan 2025 | Jan 2026 | 12 mo to Jul 2026 | |
|---|---|---|---|---|
| Size and growth | ||||
| Sales | $700M | $862M | $1.07B | $1.17B |
| Sales growth | - | +23% | +24% | +20% |
| Profit | ||||
| Gross margin | 60% | 65% | 64% | 66% |
| Operating margin | −48% | −22% | −29% | −19% |
| Net margin | −57% | −37% | −25% | −17% |
| What growth costs, per sales dollar | ||||
| Research and development | 26% | 20% | 21% | 20% |
| Sales and marketing | 66% | 54% | 54% | 51% |
| General and admin | 16% | 13% | 19% | 15% |
| Pay in shares | 19% | 12% | 29% | 20% |
| Capital spending | 0.4% | 0.6% | 0.6% | 0.5% |
| Cash | ||||
| Cash from operations | −$250M | −$106M | $70.6M | $201M |
| Free cash flow | −$253M | −$112M | $64.6M | $195M |
| Balance sheet | ||||
| Cash and short-term investments | $212M | $121M | $358M | $310M |
| Debt | - | $1.02B | $0 | - |
| Net cash | - | −$903M | $358M | - |
| Returns and shares | ||||
| Shares (diluted) | 80.7M | 83.7M | 544M | 568M |
What growth costs
Growth is getting a little cheaper on the company's adjusted measure, as sales and marketing hold near half of sales while sales grow. The reported loss widened the year after the listing, when stock pay tripled, and has narrowed since.
The evidence under this - 3 claims
The last report (9 Sep)
Quarter ended July 2026, filed figures.
In the quarter to July 2026 recurring revenue grew 25% while reported sales grew only 17%. The gap is the move to the cloud: a licence is booked up front, a cloud subscription month by month, so every customer that moves lowers this quarter's sales and raises later ones.
Adjusted profit was 20% of sales, but after $68.3M of stock pay the company still lost money. Management raised its forecast for recurring revenue for the year and said its AI-agent products passed $70M.
What it did to the thesisIt supported the core case: customers kept moving to the cloud and the year's forecast went up. It left the AI question open, because the AI figure counts customers who could upgrade as well as those who did, and the products only ship this quarter.
The quarter in detail
Sales growth from the previous quarter, filed figures.
Earnings per share $0.09 against $0.08 expected; $-0.09 as filed, the gap being what the company adds back.
The evidence under this - 5 claims
About 4 points of the 25% is customers moving from IdentityIQ to the cloud at a higher price (C08), which runs out as the on-premises base shrinks.
The lift is one-off for each customer: once the IdentityIQ base has moved, the 4 points end, and management has not said how much of the base is left.
The finance chief said the AI-driven figure includes suite customers with an immediate upgrade path to the Agentic Suites, which had not yet shipped (C36).
The full-year guide implies ARR growth slowing from 25% to about 23% by January.
What management did with the money
Insiders in 2022Q3: 0 purchases and 13 sales, from their Form 4 filings.
The price, and where we disagree
In short. Full. The price pays for management's 2029 plan delivered, with stock pay left out of the profit it is measured on, and little is left if the plan only half-happens.
The shares fell to $10.49 in April after a slower forecast, then rose 82% in six months on the AI-agent story, back to where they started a year ago while sales per share grew 17.5%.
A third of the freely traded shares are sold short, and analysts have grown less keen. Third-quarter results on 8 December are the next test of the raised forecast.
The evidence under this - 4 claims
The full-year guide implies ARR growth slowing from 25% to about 23% by January.
How we read the multiple
A buyer pays for the plan working. About $240M a year of stock pay is left out of adjusted profit and cash flow, so on what owners actually earn the price is higher still.
- With no debt and $309.9M of cash, the business is valued at about $12.1B.
- That is about 9.6 times the $1,270M of sales management forecasts for this year.
- Analysts expect sales of $1.80B in the year to January 2029.
- On that, the price is about 6.7 times sales, near its own earlier normal.
Against its own history. Buyers are paying well above what they paid in the company's short listed history, so the price already counts on growth staying strong.
The evidence under this - 4 claims
- Adjusted operating income and free cash flow both leave out about $240M a year of stock pay (C12), so on owner earnings the multiple is far higher.
- The earlier-years median covers only the years since the 2022 buyout, a short base.
If AI-agent revenue is a new market rather than an upgrade path, FY2029 revenue could beat consensus and the multiple then would be lower.
Priced against its rivals
Only Okta sells the same thing to the same buyers as a large part of what it does. A price comparison needs at least two, so the price is judged against its own history instead.
The bet: what it pays if it works
The bet is that SailPoint's products for AI agents become real new revenue on top of its governance business. Even if they grow as fast as the evidence allows, the whole company would be worth a little less than today at the prices this thesis uses.
If they never become new money, the core business at the price it has normally traded at, plus the cash, holds about two-thirds of today's market value.
| AI-agent and machine identity revenue in two to three years | Customers buying the AI-agent products needed | At the stated multiple |
|---|---|---|
| $100.00M | about 417 at 100% kept | 0.8× |
| $300.00M (the big win) | about 1.2K at 100% kept | 0.9× |
| $500.00M | about 2.1K at 100% kept | 1.1× |
To pay 2× (a Fair bet) it would need about $1.59B of AI-agent and machine identity revenue (about 6.6K customers buying the AI-agent products); to pay 5× (a Cheap bet), about $5.23B of AI-agent and machine identity revenue (about 21.8K customers buying the AI-agent products), at the same multiple.
Each row is AI-agent and machine identity alone, plus the rest of the company (Identity governance for people) counted at about $8.40B.
The steps it has to take
- Done Entro bought for machine credentials
- Done Agentic Fabric generally available
- In progress Agentic Suites ship due 2026-12
- In progress AI-driven ARR reaches $100M due 2027-03
- Not started AI-driven ARR reaches $800M due 2029-03
The detail behind the label
The evidence under this - 4 claims
The finance chief said the AI-driven figure includes suite customers with an immediate upgrade path to the Agentic Suites, which had not yet shipped (C36).
- Adjusted operating income and free cash flow both leave out about $240M a year of stock pay (C12), so on owner earnings the multiple is far higher.
- The earlier-years median covers only the years since the 2022 buyout, a short base.
The uplift is measured on customers who adopted early, who are likely the largest; later adopters may spend less.
Where we disagree with the market
The identity company for AI agents, rated a buy by 28 of 37 analysts, while a third of the free shares are sold short.
A good business fully priced: its AI-agent figure partly relabels existing customers, and the 2029 plan is already in the price.
Most analysts see SailPoint as the company that will govern AI agents, and its AI figure grew fast. But management counts customers who merely could upgrade, so the new money is smaller than the headline, and the price already pays for the 2029 plan.
We would be wrong if the AI figure passes $150M while recurring revenue keeps growing 24% or more.
What analysts say, and the evidence
The evidence under this - 5 claims
The finance chief said the AI-driven figure includes suite customers with an immediate upgrade path to the Agentic Suites, which had not yet shipped (C36).
Management says adopters raised spend by over 60% and AI was over 30% of net new ARR (C09), which is new money by any definition.
If AI-agent revenue is a new market rather than an upgrade path, FY2029 revenue could beat consensus and the multiple then would be lower.
What could go wrong, and how we would know
The risks
- Microsoft bundles it cheaply. Most customers already own Microsoft's suite, which sells governance at $7 a user a month and a control plane for AI agents.
- An 85% owner will sell. Thoma Bravo controls the board and must sell its shares some day, onto a free float a sixth of the company.
- Stock pay is a real cost. About $240M a year of stock pay is left out of the adjusted profit and cash flow the price is judged on.
- The cloud lift runs out. About 4 points of growth come from customers moving to the cloud, which ends once they have all moved.
- A security vendor can be breached. In April 2026 someone reached some of its code repositories through another firm's flaw; no customer data was touched.
The evidence under this - 6 claims
The lift is one-off for each customer: once the IdentityIQ base has moved, the 4 points end, and management has not said how much of the base is left.
Management says adopters raised spend by over 60% and AI was over 30% of net new ARR (C09), which is new money by any definition.
What we still do not know
- How much of the AI-agent figure is new spending rather than existing customers counted because they could upgrade.
- When and how Thoma Bravo will sell its 84.6%.
- How many customers still run the older version on their own servers, and so how long the cloud lift lasts.
The evidence under this - 3 claims
Management says adopters raised spend by over 60% and AI was over 30% of net new ARR (C09), which is new money by any definition.
The lift is one-off for each customer: once the IdentityIQ base has moved, the 4 points end, and management has not said how much of the base is left.
What would change our view
- Neutral→AttractiveA price that pays for the core alone
It needs:
- ○The business is valued at 7 times its last year's sales, down from about 10.4, with sales held.about ≈$14.67 today, 33% below the last close
- Neutral→AttractiveAI proves to be new money
It needs all of:
- ○Its AI-agent recurring revenue reaches $150M at a quarterly report.checked at the next results, due by 8 Dec
- ○Total recurring revenue grows 24% or more in a year at the same report.checked at the next results, due by 8 Dec
- Neutral→UnattractiveThe engine slows
It needs any of:
- ○Total recurring revenue grows less than 20% in a year.checked at the next results, due by 8 Dec
- ○Existing customers' spending, net of those leaving, grows less than 10% a year.checked at the next results, due by 8 Dec
We would also be wrong if
- The AI-agent figure misses management's $100M target for January 2027.
- Customers paying over $1M a year stop growing while Microsoft sells governance in its suite.
What is coming
- 8 December 2026 Q3 FY2027 results: Whether ARR lands inside the guide and AI-driven ARR keeps rising once the Agentic Suites ship.
Every dated event ahead
- 8 December 2026 Q3 FY2027 results: Whether ARR lands inside the guide and AI-driven ARR keeps rising once the Agentic Suites ship.
- 31 March 2027 Q4 FY2027 results and FY2028 guidance: Whether AI-driven ARR reached $100M and what ARR growth management expects once migration slows.
Since we wrote this
- 24 OctThesis writtenNeutral, medium convictionWritten six weeks before Q3 results, after the shares doubled from April on the AI-agent story.
Sources 18
Sources - 18
Every claim above cites one of these, or states the reasoning that derived it. The quote is frozen at the date it was read: a link can rot, and an agent fetch returns a reading of a page rather than the page. Backs counts the whole claim ledger, so it can name a claim this page does not surface.
- S01primarycompany filing2026-03-19what it sells, the one segment, staff, customers, retention and large-customer series, competition, controlled-company status and the FY2024 to FY2026 statementsbacksC01C02C06C12C15C33C37
- S02primarycompany release2026-03-18FY2026 ARR and SaaS ARR, adjusted operating income and the first FY2027 guidebacksC02C35
- S03primarycompany release2026-09-09Q2 revenue by type, ARR and SaaS ARR, adjusted operating income, the raised FY2027 guide and the FY2029 targetsbacksC03C04C07C10C11
- S04primarycompany filing2026-09-10the statements, customers and backlog, cash and the revolver, the Entro purchase, the share count and the evergreen planbacksC03C07C12C13C14C26C33C34
- S05primarytranscript2026-09-09SailPoint Q2 FY2027 earnings call transcript (FMP), held 9 September 2026retention, the migration lift and revenue timing, AI-driven ARR and its definition, the pipeline, the AWS agreement and the FY2029 targets
As we discussed at our Investor Day, our AI-driven ARR definition encompasses our Agentic Fabric, our Agentic Suites and our Agentic add-on modules.
backsC05C08C09C10C11C31C32C34C36C38 - S06primarycompany filing2026-04-24the leaders, the ownership table and how pay is setbacksC15C16C17
- S07primarycompany filing2026-05-08the GitHub repository incident and what was touchedbacksC18
- S08primarycompany filing2026-06-12a Thoma Bravo-designated director replaced under the designation agreementbacksC15
- S09primarycompany release2026-06-09Q1 ARR and revenue and the guide as it stood in JunebacksC35
- S10primarycompany filing2026-03-05Okta's governance products, its agent identity in early access and its competitor classesbacksC19
- S11primarycompany filing2026-09-04the completed CyberArk acquisition and its identity security platformbacksC20
- S12primaryother2026-10-24the list price of bundled governance and the agent control plane
Microsoft Entra ID Governance ... $7.00 user/month, paid yearly ... Control plane for observing, governing, and securing AI agents across Microsoft 365 and third-party services
backsC21 - S13primarygovernment data2025-04-10U.S. Census Bureau, Statistics of U.S. Businesses 2022, detailed enterprise employment size table U.S. Census BureauUS firms and employment by firm size
United States, Total, 01: Total, 6395635 firms, 135748407 employment ... 26: 5,000+ employees, 2262 firms, 49310128 employment
backsC22 - S14primaryregulator2023-11-01New York Department of Financial Services, 23 NYCRR 500.7, Access privileges and management (via Cornell LII) New York Department of Financial Servicesthe regulatory requirement for annual access reviews
periodically, but at a minimum annually, review all user access privileges and remove or disable accounts and access that are no longer necessary
backsC23 - S15primaryregulator2024-07-12EU Artificial Intelligence Act, Article 14: Human Oversight European Unionthe oversight duty on high-risk AI systems
High-risk AI systems shall be designed and developed in such a way, including with appropriate human-machine interface tools, that they can be effectively overseen by natural persons during the period in which they are in use.
backsC24 - S16primaryindustry data2025-04-23how attackers get in
The report, which analyzed over 22,000 security incidents, including 12,195 confirmed data breaches, found that credential abuse (22%) and exploitation of vulnerabilities (20%) continue to be the leading initial attack vectors
backsC25 - S17primaryvendor data2026-10-23Research pack for SAIL (FMP market tier, FINRA short interest), fetched 24 October 2026the 23 October close, returns and the move split, daily bars, analyst ratings and estimates, earnings surprises, short interest and insider tradesbacksC26C27C28C29C30C31C35
- S18primarycompany filing2026-10-09the year's insider sales and their plan flagsbacksC30