SailPoint Inc. (NASDAQ:SAIL) stock fell sharply on Tuesday after the identity security software company issued a fiscal second-quarter outlook that pointed to slowing growth, overshadowing first-quarter results that topped Wall Street expectations.
Identity Security Demand Lifts Revenue, Earnings
For the fiscal first quarter ended April 30, SailPoint reported annual recurring revenue (ARR) of $1.163 billion, up 26% from a year earlier. SaaS ARR increased 36% to $781 million.
Total revenue rose 22% to $280.1 million, exceeding analysts’ estimate of $276.0 million. Subscription revenue increased 23% to $265.8 million.
Adjusted gross margin expanded 30 basis points to 76.6%.
The company posted a GAAP operating loss of $79.8 million, improving from a loss of $185.0 million in the year-ago period. Adjusted income from operations increased to $37.8 million from $23.6 million, while adjusted operating margin expanded to 13.5% from 10.2%.
SailPoint earned 5 cents per share on an adjusted basis, topping analysts’ estimate of 4 cents per share.
The company ended the quarter with $390.8 million in cash and cash equivalents and generated $38.2 million in operating cash flow.
CEO Highlights Growing Identity Security Needs
Chief Executive Officer and Founder Mark McClain said SailPoint delivered a strong start to fiscal 2027, driven by demand for identity security solutions.
McClain said the company’s platform helps enterprises secure human identities, cloud resources and autonomous AI agents through a unified framework.
He added that growing regulatory requirements around non-human identities are increasing demand for real-time identity security as organizations deploy artificial intelligence technologies.
Outlook Raised For Fiscal 2027
For the second quarter, SailPoint expects ARR of $1.218 billion to $1.222 billion, revenue of $308 million to $312 million, compared with analysts’ estimate of $309.9 million, and adjusted earnings of 7 cents to 8 cents per share, versus expectations of 8 cents.
Investors appeared focused on slowing growth trends rather than the higher outlook. The company’s second-quarter guidance implies ARR growth of about 24% and revenue growth of roughly 17% to 18%, down from first-quarter growth rates of 26% and 22%, respectively.
For fiscal 2027, SailPoint raised its ARR forecast to $1.364 billion to $1.374 billion from its prior outlook of $1.356 billion to $1.366 billion. The company also increased its revenue forecast to $1.265 billion to $1.275 billion from $1.260 billion to $1.270 billion.
The full-year ARR forecast also implies growth of about 21% to 22%, compared with 28% growth in fiscal 2026.
Analysts expect full-year revenue of $1.266 billion and adjusted earnings of 32 cents per share. SailPoint projects adjusted earnings of 30 cents to 34 cents per share and adjusted income from operations of $239 million to $244 million.
Stock Reaction
SAIL Price Action: SailPoint shares were down 11.11% at $15.72 at the time of publication on Tuesday, according to Benzinga Pro data.
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