SailPoint Revenue Jumps 33% in Fiscal Q2

Key Points

• SailPoint (NASDAQ:SAIL) reported revenue growth of 33% year over year, reaching $264.4 million in Q2 FY2026.

• Annual recurring revenue climbed 28% year over year to $982 million in Q2 FY2026, with SaaS annual recurring revenue now accounting for 63% of the total.

• Free cash flow was $45.96 million in Q2 FY2026, compared with negative $56.5 million in Q2 FY2025.

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SailPoint (NASDAQ:SAIL), a leader in identity security software, posted results on September 9, 2025, delivering revenue, recurring revenue, and margins that exceeded both prior company guidance and consensus expectations. The company reported a record quarter, powered by rising demand for its cloud-based identity solutions, a sharp acceleration in software-as-a-service (SaaS) adoption, and robust cash flow. While still unprofitable on a net basis, SailPoint expanded its operating margins and raised its full-year outlook for FY2026, underlining continued business momentum.

SailPoint’s Business and Strategic Focus

SailPoint specializes in identity security solutions, providing software to help organizations manage, govern, and secure digital identities for people, devices, and machine agents. Its core offerings help companies guard against unauthorized access, automate compliance, and improve access management in complex IT environments.

Key to its strategy is innovation in artificial intelligence-driven identity security, proactive risk detection, and broadening its platform to serve both human users and machine accounts. Recent efforts have centered on expanding its SaaS product family, driving higher recurring revenue, and deepening relationships with large enterprises and technology partners. Critical success factors for SailPoint include continual product development, broadening its enterprise customer base, and expanding global presence through alliances and compliance with international security standards.

Quarter Highlights: Growth, Innovation, and Financial Performance

The quarter saw a sharp acceleration in both growth and profitability metrics. Revenue was up 33%, well above company guidance, outpacing previous forecasts by more than $20 million.

Annual recurring revenue, a key measure of software companies’ revenue predictability, reached $982 million. Within this, SaaS ARR rose 37% year over year, reflecting the ongoing shift from traditional software to cloud services. This growth was enabled by a mix of new customers and increased sales to current clients, with around half of new bookings from each group. The average recurring revenue per customer now exceeds $300,000, and SailPoint serves about 2,975 organizations as of January 31, 2025—over half of which are in the Fortune 500.

On the operational side, SailPoint’s adjusted operating margin profile improved substantially. The company delivered a 20.4% adjusted operating margin, up from 10.7% a year ago. Free cash flow turned positive at $46.0 million, compared with a cash outflow last year, helped by rising revenues and lower capital spending after the company’s initial public offering (IPO).

SaaS product adoption remained the primary growth engine, with term subscriptions—contracts with defined time periods—also seeing notable strength. Maintenance and support revenues were slightly down year over year, and perpetual license sales, where customers buy the software outright, remained negligible. SailPoint underscored continued demand for its “intelligent approach” to identity security, particularly focusing on its AI-driven features within the “Harbor Pilot” assistant, the “Atlas” data platform, and support for agent identities. No new product launches were announced, but management emphasized steady progress in innovation and customer adoption of existing modules. Over 90% of new business continued to flow through technology partners such as AWS, CyberArk, and ServiceNow, reinforcing the importance of alliances in driving global sales for the year ended January 31, 2025.

Looking Ahead: Guidance and Trends

SailPoint raised its guidance across all major metrics for FY2026. It now expects revenue between $1.052 billion and $1.058 billion, annual recurring revenue between $1.105 billion and $1.115 billion, and adjusted earnings per share (non-GAAP) between $0.20 and $0.22 for FY2026—each reflecting higher confidence in continued demand and expanding deal pipelines compared to prior expectations. The company projects Q3 FY2026 revenue between $269 million and $271 million, with recurring revenue expected to grow 26% to 27% year over year.

Management points to ongoing investment in product development, further leveraging its partner network, and expanding its global reach as priorities. Key areas for investor attention in coming quarters include continued scaling of SaaS adoption and expense discipline—especially regarding stock-based compensation.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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