You must learn the next dialogue and evaluation of our monetary situation
and outcomes of operations along side our unaudited condensed
consolidated monetary statements and notes thereto in Half I, Merchandise 1 of this
Quarterly Report on Kind 10-Q (this “Quarterly Report”) and our Annual Report on
Kind 10-Okay for the yr ended December 31, 2021, which was filed with the U.S.
Securities and Change Fee (the “SEC”) on February 28, 2022 (the “Annual
Report”), together with the consolidated monetary statements and associated notes
included therein.
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report accommodates forward-looking statements throughout the which means of
the federal securities legal guidelines, which statements contain substantial dangers and
uncertainties. Ahead-looking statements typically relate to future occasions or
our future monetary or working efficiency. All statements included on this
Quarterly Report, apart from statements of historic truth, are forward-looking
statements. This contains statements concerning our pending acquisition by Thoma
Bravo, our expectations concerning the timing of the Merger, our technique, future
operations, monetary place, estimated revenues and losses, projected prices,
prospects, plans and goals of administration. In some circumstances, you possibly can determine
forward-looking statements as a result of they comprise phrases akin to “might,” “will,”
“ought to,” “expects,” “plans,” “anticipates,” “might,” “intends,” “goal,”
“tasks,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or
“proceed” or the adverse of those phrases or different comparable phrases or expressions.
You shouldn’t depend on forward-looking statements as predictions of future
occasions or place undue reliance thereon. We’ve based mostly the forward-looking
statements contained on this Quarterly Report totally on our present
expectations and projections, in mild of at present accessible data, about
future occasions and tendencies that we consider might have an effect on our enterprise, monetary
situation, outcomes of operations and prospects. The end result of the occasions
described in these forward-looking statements is topic to dangers, uncertainties
and different components. Necessary components, a few of that are past our management, that
might trigger precise outcomes to vary materially from our historic outcomes or
these expressed or implied by these forward-looking statements embrace the
following: the completion of the Merger (as outlined beneath) on anticipated phrases
and timing, regulatory approvals, anticipated tax therapy, unexpected
liabilities, future capital expenditures, revenues, bills, earnings,
synergies, financial efficiency, indebtedness, monetary situation, losses,
future prospects, enterprise and administration methods for the administration,
enlargement and development of SailPoint’s enterprise and different situations to the
completion of the Merger; important transaction prices related to the
proposed Merger; potential litigation regarding the proposed Merger; the chance
that disruptions from the proposed Merger will hurt SailPoint’s enterprise,
together with present plans and operations; potential hostile reactions or adjustments
to enterprise relationships ensuing from the announcement or completion of the
proposed Merger; restrictions in the course of the pendency of the proposed Merger that
might impression SailPoint’s capacity to pursue sure enterprise alternatives or
strategic transactions; the scope, period and severity of the COVID-19
pandemic, together with any recurrence, in addition to the timing of the financial
restoration following the pandemic and its impact on the worldwide financial system and on our
enterprise; our capacity to attain and maintain profitability; our capacity to
maintain historic development charges; our capacity to draw and retain clients and
to deepen {our relationships} with present clients; an elevated focus in our
enterprise from promoting licenses to promoting subscriptions; breaches in our
safety, cyber-attacks or different cyber-risks; interruptions with the supply of
our software program as a service (“SaaS”) options or third-party cloud-based methods
that we use in our operations; our capacity to compete efficiently towards
present and future rivals; the size and unpredictable nature of our gross sales
cycle; delayed results on our working outcomes from ratably recognizing a few of
our income; fluctuations in our quarterly outcomes; our capacity to take care of
profitable relationships with our channel companions; the growing complexity of
our operations; actual or perceived errors, failures or disruptions in our
platform or options; our capacity to adapt and reply to quickly altering
expertise, trade requirements, laws or buyer wants, necessities or
preferences; our capacity to adjust to our privateness coverage or associated authorized or
regulatory necessities; the impression of assorted tax legal guidelines and laws,
together with our failure to conform therewith; our capacity to efficiently determine,
purchase and combine firms and belongings; our capacity to take care of and improve
our model or popularity as an trade chief; and the power of our platform
and options to successfully interoperate with our clients’ present or future
data expertise (“IT”) infrastructures. Extra data on these dangers
and different potential components that would have an effect on our monetary outcomes is included
in our different filings with the SEC, together with within the “Danger Elements” and
“Administration’s Dialogue and Evaluation of Monetary Situation and Outcomes of
Operations” sections of the Annual Report and “Danger Elements” in Half II, Merchandise 1A
on this Quarterly Report and subsequent quarterly studies. Furthermore, we function
in a really aggressive and quickly altering setting. New dangers and
uncertainties emerge sometimes and it’s not potential for us to foretell
all dangers and uncertainties that would have an effect on the forward-looking
statements contained on this Quarterly Report. We can not guarantee you that the
outcomes, occasions and circumstances mirrored within the forward-looking statements
might be achieved or happen, and precise outcomes, occasions or circumstances might
differ materially from these described within the forward-looking statements.
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The forward-looking statements made on this Quarterly Report relate solely to
occasions as of the date hereof. We undertake no obligation to replace any
forward-looking statements made on this Quarterly Report back to replicate occasions or
circumstances after the date of this Quarterly Report or to replicate new
data or the incidence of unanticipated occasions, besides as required by
regulation. Our forward-looking statements don’t replicate the potential impression of any
future acquisitions, mergers, tendencies, joint ventures or investments we might
make.
Pending Transaction
On April 10, 2022, the Firm entered into an Settlement and Plan of Merger (the
“Merger Settlement”) by and among the many Firm, SailPoint Intermediate Holdings
III, LP (“Guardian,” f/okay/a Mission Resort California Holdings, LP) and Mission
Resort California Merger Sub, Inc. (“Merger Sub”), pursuant to which Merger Sub
will merge with and into the Firm (the “Merger”), with the Firm surviving
the Merger as a completely owned subsidiary of Guardian. Guardian and Merger Sub are
associates of Thoma Bravo Fund XV, L.P. (the “Thoma Bravo Fund”), managed by
Thoma Bravo, L.P. (“Thoma Bravo”).
Because of the Merger, every share of the Firm’s frequent inventory excellent
instantly previous to the Efficient Time of the Merger (the “Efficient Time”)
(topic to sure exceptions, together with shares of frequent inventory owned by
stockholders of the Firm who haven’t voted in favor of the adoption of the
Merger Settlement and have correctly exercised appraisal rights in accordance with
Part 262 of the Basic Company Legislation of the State of Delaware) will, at
the Efficient Time, mechanically be transformed into the precise to obtain the
Merger Consideration of $65.25 in money, topic to relevant withholding taxes.
The transaction is anticipated to shut within the second half of 2022, topic to
customary closing situations, together with receipt of regulatory approvals. Upon
closing of the transaction, SailPoint’s frequent inventory will not be listed on
any public market. See Observe 1 “Description of Enterprise and Abstract of
Vital Accounting Insurance policies” to the condensed consolidated monetary
statements on this Quarterly Report on Kind 10-Q for data concerning the
Merger.
Enterprise Overview
SailPoint Applied sciences Holdings, Inc. (“we,” “our,” the “Firm” or
“SailPoint”) is the main supplier of enterprise id safety options.
Our id safety options present organizations with important visibility
into who at present has entry to which sources, who ought to have entry to
these sources and the way that entry is getting used.
We provide each SaaS and software program platforms, which offer organizations
visibility and the intelligence required to each seamlessly empower customers and
securely handle their entry to methods, functions and knowledge throughout hybrid IT
environments, spanning on-premises, cloud and cell functions and file
storage platforms. We assist clients allow their companies with extra agile and
frictionless IT, streamline and speed up the supply of entry to their
companies, improve their safety posture and higher meet compliance and
regulatory necessities. Our clients embrace lots of the world’s largest and
most complicated organizations, together with business enterprises, monetary
establishments and governments.
Our set of id safety options at present consists of:
•IdentityNow: our cloud-based, multi-tenant id safety platform, which
supplies clients with a set of absolutely built-in providers for compliance,
provisioning and password administration for functions and knowledge hosted
on-premises or within the cloud;
•IdentityIQ: our on-premises id safety answer, which will be hosted in
the general public cloud or deployed in a buyer’s knowledge heart, that gives giant,
complicated enterprise clients a unified and extremely configurable id safety
answer; and
•SailPoint Identification Companies: our multi-tenant SaaS subscription providers that
will be utilized along side IdentityNow and IdentityIQ and at present
consisting of:
•Entry Insights: collects a wealth of id data and turns that
data into actionable insights and supplies business-oriented dashboards
and studies to trace the effectiveness of shoppers’ id applications;
•Entry Modeling: makes use of machine studying to counsel roles based mostly on comparable entry
between customers and offers clients insights to substantiate the right entry for
every position;
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•Entry Danger Administration: our cloudbased mostly entry controls answer that permits
our clients to handle their danger by automating entry controls for enterprise
functions with complicated safety necessities;
•Cloud Entry Administration: makes use of machine studying to mechanically be taught, monitor
and safe entry to cloud infrastructure;
•Advice Engine: makes use of machine studying, peer group evaluation, id
attributes and entry exercise to assist clients determine whether or not entry needs to be
granted or eliminated; and
•SaaS Administration: our cloudbased mostly answer that helps clients uncover,
handle, and safe their SaaS functions.
Our options handle the complicated wants of worldwide enterprises and mid-market
organizations. Our success is principally depending on our capacity to ship
compelling options to draw new clients and retain present clients.
Rising safety threats and evolving laws and compliance requirements for
cyber safety, knowledge safety, privateness and inside IT controls create new
alternatives for our trade and require us to adapt our options to be
profitable. Sustaining our historic development price can also be difficult as a result of
our development technique relies upon partially on our capacity to drive new buyer development
inside present geographic markets, additional penetrate our present buyer
base, proceed to put money into our platform, leverage and broaden our community of
companions, broaden market and product funding throughout present vertical markets,
and proceed to broaden our international presence, whereas competing towards a lot bigger
firms with extra recognizable manufacturers and monetary sources. Though we
search to develop quickly, we additionally give attention to working leverage and effectivity whereas
persevering with to put money into our platform to ship progressive options to our
clients.
We consider enterprises are more and more embracing the cloud to accommodate their
important safety infrastructure. Because of this, a rising variety of enterprises
are altering their method to id safety and now choose to make use of a SaaS
answer moderately than buy software program outright and set up it in their very own
infrastructure. This trade shift aligns effectively with our present product
technique. Our product technique is to (1) speed up innovation inside our core
id safety SaaS choices, (2) ship continued innovation as we execute
towards our imaginative and prescient for SailPoint id safety, and (3) make sure that as we
ship these new improvements, they work in live performance with our SaaS choices in
addition to our on-premises choices.
IdentityNow and our SailPoint Identification Companies are supplied in change for a
subscription payment and provide clients entry to those options and
infrastructure help in the course of their subscription settlement. Our
customary subscription settlement for our SaaS choices has a period of three
years. For our IdentityIQ options, our clients both buy a perpetual
software program license, which incorporates one yr of upkeep and help, or a time period
license, offered as bundled preparations that embrace the rights to a time period license
and upkeep and help sometimes for a three-year time period. Accordingly, we
allocate the transaction worth to every efficiency obligation. Our upkeep
and help providing supplies software program upkeep in addition to entry to our
technical help providers in the course of the upkeep time period. After the preliminary
upkeep interval, clients with perpetual licenses might renew their
upkeep and help settlement for a further payment.
Pricing for every of our options depends on the variety of digital
identities of workers, contractors, enterprise companions, software program bots and different
human and non-human customers that the client is entitled to control with the
answer. We additionally package deal and worth our IdentityNow and IdentityIQ options
into modules. Every module has distinctive functionalities, and our clients are in a position
to buy a number of modules, relying on their wants. We additionally provide
superior integration modules for key functions and methods which will be
bought along with our base answer modules. They’re additionally priced based mostly
on the full variety of identities, as are our SailPoint Identification Companies. Thus,
our income from every buyer is mostly decided by the variety of
identities that such buyer is entitled to control in addition to the variety of
modules bought by the client for our IdentityIQ and IdentityNow options
and which, if any, of the SailPoint Identification Companies that the client
purchases.
Mixtures of our SaaS merchandise are additionally provided in bundles via our
Identification Safety Cloud Enterprise and Enterprise Plus suites. These suites of
merchandise present complete units of options for patrons, assembly their
wants at varied levels of their id safety journey.
Along with our options, we provide skilled providers to our clients
and companions to configure and optimize the usage of our options in addition to
coaching providers associated to the configuration and operation of our platform.
Most of our skilled providers exercise is in help of our companions, who
carry out a big majority of all preliminary and follow-on implementation work
for our clients. Most of our consulting providers are priced on a
time-and-materials foundation, whereas our coaching providers are supplied via
a number of pricing fashions, together with on a per-person foundation for teacher led
programs and a flat-rate foundation for our e-learning programs.
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Over the previous a number of years, our income combine has modified as demand for our
services has shifted from gross sales of perpetual licenses to gross sales of
SaaS and time period licenses, and in 2021, we largely accomplished our transition to a
subscription mannequin, with our principal give attention to promoting subscription-based
preparations, together with SaaS and time period licenses, and with income from perpetual
licenses representing an more and more smaller portion of our whole income.
Though we count on to often see perpetual license transactions with new
clients and ongoing enlargement offers for present clients, our principal focus
is on promoting subscription-based preparations. For patrons that also want to
buy and function non-SaaS software program, we’re more and more promoting our software program
via subscription-based time period licenses, moderately than via perpetual
licenses, and over time, we count on that gross sales to new clients might be
solely comprised of SaaS, time period licenses and different subscriptions.
Our acceleration towards subscription-based choices, which occurred extra
quickly than anticipated, has resulted in and is more likely to proceed to end in
short-term income headwind. Specifically, our transition to a subscription
mannequin has impacted, and can proceed to impression, the timing of our recognition
of income as an growing proportion of our gross sales change into acknowledged ratably,
in addition to impression our working margins as subscription income turns into a bigger
proportion of our gross sales. Nonetheless, we consider that continued development of SaaS,
term-based license and upkeep and help income will result in a extra
predictable income mannequin and improve our visibility to future interval whole
revenues. Nonetheless, our income and gross margins differ relying on the kind
of answer we promote, and we count on that in a primarily subscription-based mannequin,
retention charges for our subscription clients may very well be barely decrease than the
retention charges for help and upkeep for our perpetual clients. As a
consequence, a shift within the gross sales mixture of our options might have an effect on our efficiency
relative to historic outcomes. Our shift to a subscription mannequin has fluctuated
between intervals, and our capacity to foretell our income and margins in any
specific interval has been, and should proceed to be, restricted.
As a part of our development technique, within the first quarter of 2021 we acquired Intello
Inc. (“Intello”), an early-stage SaaS administration firm that helps
organizations to find, handle, and safe SaaS functions, and ERP
Maestro, Inc. (“ERP Maestro”), an early-stage SaaS governance, danger and
compliance answer that gives separation-of-duty controls monitoring,
enabling clients to handle their danger by automating entry controls for
enterprise functions with complicated safety ideas. See Observe 4 “Enterprise
Mixtures” within the notes to our unaudited condensed consolidated monetary
statements included on this Quarterly Report for extra data.
See “Key Elements Affecting Our Efficiency” inside “Administration’s Dialogue and
Evaluation of Monetary Situation and Outcomes of Operations” in Half II, Merchandise 7 of
the Annual Report for data concerning the important thing components affecting our
efficiency.
Influence of COVID-19
In mild of the continued unfold of COVID-19 in the US and overseas,
together with the emergence of latest variants of the coronavirus, authorities and
public well being authorities proceed to advocate and impose varied laws
and restrictive measures on parts of the inhabitants, together with measures
directed at companies. Whereas supposed to guard human life, these restrictions
have had and are anticipated to proceed to have severe hostile impacts on
home and international economies of unsure period. We’ve made sure
changes to our operations as we proceed to supply our choices to new and
present clients in response to those measures. For instance, because of
the COVID-19 pandemic, we shifted all buyer occasions to virtual-only
experiences starting in early 2020. In 2021, we resumed sure in-person and
hybrid occasions, however we count on that for the foreseeable future, a few of our
buyer occasions might be virtual-only or hybrid occasions.
Whereas we consider that the pandemic has not had a right away materials hostile
impression on our monetary efficiency, our enterprise might but be negatively impacted
by the COVID-19 pandemic because the period of the pandemic and the long-term scope
of its results in the end stay unknown. For instance, the situations brought on by
the COVID-19 pandemic might materially adversely have an effect on the speed of IT spending by
our present and potential clients, together with our clients’ capacity or
willingness to buy our choices, delay potential clients’ buying
choices, delay the provisioning of our choices, or trigger clients to fail
to make well timed funds. We’ve seen an immaterial variety of buyer requests,
and should proceed to see comparable requests, to elongate cost phrases or cut back
the worth or period of subscription contracts, however this has not resulted in a
materials hostile impression on our renewal charges. As well as, throughout 2020 and the
first a part of 2021, we typically weren’t capable of present on-site consulting
providers to our clients on account of native and regional restrictions associated to the
pandemic, and such restrictions stay in place for a few of our clients.
Nonetheless, this has not resulted in any significant hostile impression on our capacity
to ship such providers as a result of a good portion of our consulting
providers have traditionally been supplied remotely and most on-site tasks
transitioned to a distant supply mannequin.
However the potential and precise hostile impacts described above, because the
pandemic has brought about extra of our clients to shift to a digital workforce, we
consider the worth and scalability of our id platform has change into much more
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evident. We consider that the pandemic has not had a fabric hostile impression on
our monetary efficiency, and certainly, our income grew all through 2020 and 2021
and the primary half of 2022 as in comparison with the prior yr intervals. We count on to
proceed to see wholesome demand for our options; nonetheless, we acknowledge
that the uncertainty associated to COVID-19 might end in elevated volatility in
the monetary projections we use as the idea for estimates and assumptions used
in our monetary statements.
The challenges posed by COVID-19 on our enterprise and our clients’ companies
might evolve quickly, and the pace, trajectory and power of a restoration in
normal financial situations stays extremely unsure and may very well be slowed or
reversed by a variety of components, together with the emergence or unfold of variants
of the coronavirus and the effectiveness and acceptance of vaccines and
therapeutics for the illness as they proceed to be developed and distributed.
Consequently, we’ll proceed to guage our monetary place and outcomes of
operations in mild of future developments, notably these regarding
COVID-19, and we’ll proceed to watch the worldwide impression of the pandemic on
our clients and our enterprise. See the part titled “Danger Elements” in Half I,
Merchandise 1A within the Annual Report for extra data concerning the potential results
of COVID-19 on our enterprise.
Key Enterprise Metric
Along with our monetary data ready in accordance with U.S.
typically accepted accounting rules (“GAAP”), we monitor the next key
metric to assist us measure and consider the effectiveness of our operations:
As of
June 30, 2022 June 30, 2021
(In hundreds)
Whole annual recurring income $ 429,505 $ 291,277
We use whole annual recurring income (“Whole ARR”) to watch the expansion of our
recurring enterprise as we proceed to shift to a subscription mannequin. Whole ARR
represents the annualized worth of the lively portion of SaaS, term-based
license, upkeep and help contracts and different subscription providers at
the top of the reporting interval. We calculate Whole ARR by dividing the lively
contract worth by the variety of days within the lively portion of the general
contract time period after which multiplying by 365. Whole ARR needs to be considered
independently of income and deferred income as Whole ARR is an working
metric and isn’t supposed to be mixed with or exchange this stuff. Whole ARR
just isn’t a forecast of future income, which will be impacted by contract begin and
finish dates and renewal charges, and doesn’t embrace income from perpetual
licenses, coaching, skilled providers or different sources of income which can be
not deemed to be recurring in nature.-
Parts of Outcomes of Operations
See “Parts of Outcomes of Operations” inside “Administration’s Dialogue and
Evaluation of Monetary Situation and Outcomes of Operations” in Half II, Merchandise 7 of
the Annual Report for data concerning the elements of our outcomes of
operations.
Seasonality
We typically expertise seasonal fluctuations in demand for our merchandise and
providers. Our quarterly gross sales are impacted by trade shopping for patterns. As a
consequence, our gross sales have typically been highest within the fourth quarter of a
calendar yr and lowest within the first quarter. Though these seasonal components
are frequent within the expertise trade, historic patterns shouldn’t be
thought of a dependable indicator of our future gross sales exercise or efficiency.
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Outcomes of Operations
The next desk units forth our unaudited condensed consolidated statements
of operations for the intervals introduced:
Three Months Ended Six Months Ended
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
(In hundreds)
Income
Licenses $ 25,743 $ 24,450 $ 41,014 $ 43,685
Subscription 92,289 64,355 177,880 123,597
Companies and different 16,251 13,681 30,809 25,966
Whole income 134,283 102,486 249,703 193,248
Value of income
Licenses 1,290 1,355 2,668 2,602
Subscription (1) 22,680 13,716 42,646 25,020
Companies and different (1) 15,723 12,519 29,560 24,318
Whole price of income 39,693 27,590 74,874 51,940
Gross revenue 94,590 74,896 174,829 141,308
Working bills
Analysis and growth (1) 33,363 23,033 64,409 42,599
Basic and administrative (1) 13,047 10,461 27,034 21,728
Gross sales and advertising (1) 74,973 58,408 140,703 109,570
Whole working bills 121,383 91,902 232,146 173,897
Loss from operations (26,793) (17,006) (57,317) (32,589)
Different expense, internet
Curiosity revenue 140 212 164 412
Curiosity expense (615) (632) (1,514) (1,421)
Different expense, internet (1,128) (219) (1,788) (220)
Whole different expense, internet (1,603) (639) (3,138) (1,229)
Loss earlier than revenue taxes (28,396) (17,645) (60,455) (33,818)
Revenue tax (expense) profit (975) 903 (2,000) 1,785
Internet loss $ (29,371) $ (16,742) $ (62,455) $ (32,033)
(1)Consists of stock-based compensation expense as follows:
Three Months Ended Six Months Ended
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
(In hundreds)
Value of income – subscription $ 1,434 $
873 $ 2,690 $ 1,535
Value of income – providers and different
1,379 938 2,506 1,712
Analysis and growth 4,757 3,186 9,192 5,406
Basic and administrative 2,895 2,534 5,444 4,596
Gross sales and advertising 7,635 5,341 14,069 9,696
Whole stock-based compensation expense $ 18,100 $
12,872 $ 33,901 $ 22,945
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The next desk units forth the unaudited condensed consolidated statements
of operations knowledge for every of the intervals introduced as a proportion of whole
income:
Three Months Ended Six Months Ended
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Income
Licenses 19 % 24 % 17 % 23 %
Subscription 69 63 71 64
Companies and different 12 13 12 13
Whole income 100 100 100 100
Value of income
Licenses 1 1 1 1
Subscription 17 14 17 13
Companies and different 12 12 12 13
Whole price of income 30 27 30 27
Gross revenue 70 73 70 73
Working bills
Analysis and growth 25 23 26 22
Basic and administrative 10 10 11 11
Gross sales and advertising 56 57 56 57
Whole working bills 91 90 93 90
Loss from operations (21) (17) (23) (17)
Different expense, internet
Curiosity revenue – – – –
Curiosity expense – – (1) –
Different expense, internet (1) – (1) –
Whole different expense, internet (1) – (2) –
Loss earlier than revenue taxes (22) (17) (25) (17)
Revenue tax (expense) profit (1) 1 (1) 1
Internet loss (23) % (16) % (26) % (16) %
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Comparability of the Three and Six Months Ended June 30, 2022 and 2021
Income
Three Months Ended Six Months Ended
June 30, 2022 June 30, 2021 variance $ variance % June 30, 2022 June 30, 2021 variance $ variance %
(In hundreds, besides percentages)
Income
Licenses $ 25,743 $ 24,450 $ 1,293 5 % $ 41,014 $ 43,685 $ (2,671) (6) %
Subscription
SaaS 46,362 25,369 20,993 83 % 87,489 47,258 40,231 85 %
Upkeep and help 43,799 37,304 6,495 17 % 86,131 72,778 13,353 18 %
Different subscription providers 2,128 1,682 446 26 % 4,260 3,561 699 20 %
Whole subscription 92,289 64,355 27,934 43 % 177,880 123,597 54,283 44 %
Companies and different 16,251 13,681 2,570 19 % 30,809 25,966 4,843 19 %
Whole income $ 134,283 $ 102,486 $ 31,797 31 % $ 249,703 $ 193,248 $ 56,455 29 %
License Income. License income elevated by $1.Three million, or 5%, for the three
months ended June 30, 2022 in comparison with the three months ended June 30, 2021
primarily on account of important new time period license agreements entered into in the course of the
quarter.
License income decreased by $2.7 million, or 6%, for the six months ended June
30, 2022 in comparison with the six months ended June 30, 2021 primarily on account of SaaS
choices changing into a bigger portion of latest gross sales.
Subscription Income. Subscription income elevated by $27.9 million, or 43%,
for the three months ended June 30, 2022 in comparison with the three months ended June
30, 2021 primarily on account of new gross sales of our SaaS choices and a rise in
ongoing upkeep and help income from our put in base.
Subscription income elevated by $54.Three million, or 44%, for the six months
ended June 30, 2022 in comparison with the six months ended June 30, 2021 primarily due
to new gross sales of our SaaS choices and a rise in ongoing upkeep and
help income from our put in base.
Companies and Different Income. Companies and different income elevated by $2.6
million, or 19%, for the three months ended June 30, 2022 in comparison with the three
months ended June 30, 2021 primarily because of a rise within the variety of
clients utilizing our consulting and coaching providers.
Companies and different income elevated by $4.Eight million, or 19%, for the six months
ended June 30, 2022 in comparison with the six months ended June 30, 2021 primarily a
results of a rise within the variety of clients utilizing our consulting and
coaching providers.
Geographic Areas. Our clients in the US contributed the biggest
portion of our income in every reporting interval ended June 30, 2022 and 2021
as a result of now we have extra market momentum associated to our bigger and extra established
gross sales pressure, gross sales pipeline and model recognition and consciousness within the United
States as in comparison with our different areas. Income is assessed by the next
main geographic areas: (i) the US, (ii) Europe, the Center East and
Africa (“EMEA”) and (iii) the remainder of the world. We proceed to put money into
growing the dimensions of our worldwide gross sales pressure and strengthening
partnerships with international system integrators and resellers worldwide. For the
three and 6 months ended June 30, 2022, the Firm realized important
income development in the US and EMEA. Income in the remainder of the world
decreased 2% for the three months ended June 30, 2022, however elevated 24% throughout
the six months ended June 30, 2022.
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The next desk units forth, for every of the intervals introduced, our
consolidated whole income by geography and the respective percentages of whole
income:
Three Months Ended Six Months Ended
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
$ % of income $ % of income $ % of income $ % of income
(In hundreds, besides percentages)
United States $ 96,938 72 % $ 69,742 68 % $ 173,590 70 % $ 135,149 70 %
EMEA (1) 24,289 18 % 19,422 19 % 47,435 19 % 34,878 18 %
Remainder of the World (1) 13,056 10 % 13,322 13 % 28,678 11 % 23,221 12 %
Whole income $ 134,283 100 % $ 102,486 100 % $ 249,703 100 % $ 193,248 100 %
(1)No single nation exterior of the US represented greater than 10% of
our income.
Gross Revenue and Gross Margin
Three Months Ended Six Months Ended
June 30, 2022 June 30, 2021 variance $ variance % June 30, 2022 June 30, 2021 variance $ variance %
(In hundreds, besides percentages)
Gross revenue
Licenses $ 24,453 $ 23,095 $ 1,358 6 % $ 38,346 $ 41,083 $ (2,737) (7) %
Subscription 69,609 50,639 18,970 37 % 135,234 98,577 36,657 37 %
Companies and different 528 1,162 (634) (55) % 1,249 1,648 (399) (24) %
Whole gross revenue $ 94,590 $ 74,896 $ 19,694 26 % $ 174,829 $ 141,308 $ 33,521 24 %
Gross margin
Licenses 95 % 94 % 93 % 94 %
Subscription 75 % 79 % 76 % 80 %
Companies and different 3 % 8 % 4 % 6 %
Whole gross margin 70 % 73 % 70 % 73 %
Licenses. License gross revenue elevated by $1.Four million, or 6%, for the three
months ended June 30, 2022 in comparison with the three months ended June 30, 2021. The
improve in gross revenue was primarily the results of elevated license revenues,
as described above. Gross margin remained materially in keeping with the prior
interval.
License gross revenue decreased by $2.7 million, or 7%, for the six months ended
June 30, 2022 in comparison with the six months ended June 30, 2021. The lower in
gross revenue was primarily the results of decreased license revenues, as
described above, along with elevated royalty prices. Gross margin remained
materially in keeping with the prior interval.
Subscription. Subscription gross revenue elevated by $19.Zero million, or 37%, for
the three months ended June 30, 2022 in comparison with the three months ended June 30,
2021. The rise in gross revenue was the results of development in subscription
income, as described above, partially offset by a $9.Zero million improve in price
of income in comparison with the prior interval. The rise in price of income was
primarily pushed by a $5.7 million improve in cloud-based internet hosting prices to
additional help the scalability of our SaaS choices and a $3.Zero million
improve in employee-based prices to help the expansion of our SaaS choices and
ongoing upkeep and help to our increasing put in buyer base. Gross
margin declined from the comparative prior interval on account of elevated internet hosting prices
in help of SaaS choices, and a larger improve in our SaaS revenues as
in comparison with our upkeep revenues which have greater relative gross margins.
Subscription gross revenue elevated by $36.7 million, or 37%, for the six months
ended June 30, 2022 in comparison with the six months ended June 30, 2021. The rise
in gross revenue was the results of development in subscription income, as described
above, partially offset by a $17.6 million improve in price of income in contrast
to the prior interval. The rise in price of
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income was primarily pushed by a $10.1 million improve in cloud-based internet hosting
prices to additional help the scalability of our SaaS choices, a $6.Four million
improve in employee-based prices to help the expansion of our SaaS choices and
ongoing upkeep and help our increasing put in buyer base and a $0.7
million improve in amortization of intangibles, primarily from our acquired
intangible belongings in the course of the first quarter of 2021. Gross margin declined from
the comparative prior interval on account of elevated internet hosting prices in help of SaaS
choices, and a larger improve in our SaaS revenues as in comparison with our
upkeep revenues which have greater relative gross margins.
Companies and Different. Companies and different gross revenue decreased by $0.6 million,
or 55%, for the three months ended June 30, 2022 in comparison with the three months
ended June 30, 2021. The lower in gross revenue is primarily attributable to a
$3.2 million improve in price of income in comparison with the prior interval, partially
offset by the elevated revenues on account of buyer development. The rise in price of
income was primarily pushed by a $2.1 million improve in employee-based prices
to help an growing variety of clients and a $0.Eight million improve in
accomplice prices on account of greater accomplice utilization in our skilled providers and
coaching group.
Companies and different gross revenue decreased by $0.Four million, or 24%, for the six
months ended June 30, 2022 in comparison with the six months ended June 30, 2021. The
lower in gross revenue is primarily attributable to a $5.2 million improve in
price of income in comparison with the prior interval, partially offset by the elevated
revenues on account of buyer development. The rise in price of income was primarily
pushed by a $3.6 million improve in employee-based prices to help an
growing variety of clients and a $1.1 million improve in accomplice prices due
to greater accomplice utilization in our skilled providers and coaching
group.
Working Bills
Three Months Ended Six Months Ended
June 30, 2022 June 30, 2021 variance $ variance % June 30, 2022 June 30, 2021 variance $ variance %
(In hundreds, besides percentages)
Working bills
Analysis and growth $ 33,363 $ 23,033 $ 10,330 45 % $ 64,409 $ 42,599 $ 21,810 51 %
Basic and administrative 13,047 10,461 2,586 25 % 27,034 21,728 5,306 24 %
Gross sales and advertising 74,973 58,408 16,565 28 % 140,703 109,570 31,133 28 %
Whole working bills $ 121,383 $ 91,902
$ 29,481 32 % $ 232,146 $ 173,897 $ 58,249 33 %
Analysis and Growth. Analysis and growth bills elevated by $10.3
million, or 45%, for the three months ended June 30, 2022 in comparison with the three
months ended June 30, 2021. This improve was primarily pushed by a $9.Zero million
improve in employee-based prices on account of a rise in headcount, in addition to
chosen wage will increase to deal with aggressive market pressures as our
headcount will increase, as we proceed investing in further merchandise and
capabilities and a $1.1 million improve in software program and internet hosting association
bills.
Analysis and growth bills elevated by $21.Eight million, or 51%, for the
six months ended June 30, 2022 in comparison with the six months ended June 30, 2021.
The rise was primarily pushed by a $19.6 million improve in employee-based
prices on account of a rise in headcount, in addition to chosen wage will increase to
handle aggressive market pressures as our headcount will increase, as we proceed
investing in further merchandise and capabilities and a $1.6 million improve in
software program and internet hosting association bills.
Basic and Administrative. Basic and administrative bills elevated by
$2.6 million, or 25%, for the three months ended June 30, 2022 in comparison with the
three months ended June 30, 2021. This improve was primarily pushed by
employee-related prices associated to elevated headcount and stock-based
compensation and the usage of contract labor associated to the transition of sure
key administration positions. As a part of the Merger, the Firm expects to incur
materials non-recurring bills contingent on the consummation of the Merger,
together with banker charges, authorized charges and different third-party skilled charges.
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Basic and administrative bills elevated by $5.Three million, or 24%, for the
six months ended June 30, 2022 in comparison with the six months ended June 30, 2021.
The rise was primarily pushed by employee-related prices associated to elevated
headcount and stock-based compensation and the usage of contract labor associated to
the transition of sure key administration positions. As a part of the Merger, the
Firm expects to incur materials non-recurring bills contingent on the
consummation of the Merger, together with banker charges, authorized charges and different
third-party skilled charges.
Gross sales and Advertising and marketing. Gross sales and advertising bills elevated by $16.6 million, or
28%, for the three months ended June 30, 2022 in comparison with the three months ended
June 30, 2021. This improve was primarily pushed by a $13.Three million improve in
employee-based prices, a $1.1 million improve in promoting and promotion
expense to help elevated penetration into our present buyer base and
enlargement into new trade verticals and geographic markets and a $1.5 million
improve in journey bills as COVID-19 associated restrictions have been eased.
Gross sales and advertising bills elevated by $31.1 million, or 28%, for the six
months ended June 30, 2022 in comparison with the six months ended June 30, 2021. The
improve was primarily pushed by a $26.Eight million improve in employee-based
prices, a $1.Eight million improve in promoting and promotion expense to help
elevated penetration into our present buyer base and enlargement into new
trade verticals and geographic markets and a $2.Four million improve in journey
bills as COVID-19 associated restrictions have been eased.
Different Expense, internet
Curiosity Revenue
Curiosity revenue for the three months ended June 30, 2022 remained constant
in comparison with the three months ended June 30, 2021.
Curiosity revenue for the six months ended June 30, 2022 decreased by $0.2 million
in comparison with the six months ended June 30, 2021 primarily on account of a big
lower in rates of interest earned on our cash market accounts and a lower in
our money steadiness.
Curiosity Expense
Curiosity expense for the three and 6 months ended June 30, 2022 remained
constant in comparison with the three and 6 months ended June 30, 2021.
Different Expense, internet
Different expense, internet elevated by $0.9 million for the three months ended June 30,
2022 in comparison with the three months ended June 30, 2021. This improve was
primarily pushed by adjustments in international change charges.
Different expense, internet elevated by $1.6 million for the six months ended June 30,
2022 in comparison with the six months ended June 30, 2021. This improve was primarily
pushed by adjustments in international change charges.
Revenue Tax (Expense) Profit
The Firm recorded an revenue tax expense of $2.Zero million and revenue tax
advantage of $1.Eight million for the six months ended June 30, 2022 and 2021,
respectively, resulting in a lower in internet advantage of $3.Eight million
year-over-year. Provision for revenue taxes consists of U.S. federal and state
revenue taxes and revenue taxes in sure international jurisdictions during which we
conduct enterprise. The Firm is in an total deferred tax asset place and
maintains its valuation allowance for sure federal and state tax functions as
present deferred tax liabilities don’t present ample future taxable
revenue to understand the total advantage of its deferred tax belongings.
The efficient tax price for the three and 6 months ended June 30, 2022
was (3.4)% and (3.3)%, respectively, in comparison with 5.1% and 5.3% for the three and
six months ended June 30, 2021, respectively. The primary drivers of the
variations within the charges from the prior interval to the present interval are associated
to variations in pre-tax e-book loss and the discrete tax profit acknowledged for
the change in valuation allowance within the prior-year interval.
Liquidity and Capital Sources
As of June 30, 2022, we had $402.Four million of money and money equivalents (of
which $6.7 million is held in our international subsidiaries), $75.Zero million of
availability beneath the Credit score Settlement (as outlined beneath) and $6.Zero million in
our irrevocable,
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money collateralized, unconditional standby letter of credit score issued in connection
with our company headquarters lease. As of June 30, 2022, we had $179.3
million in internet working capital, which we outline as present belongings much less present
liabilities, excluding deferred income.
On March 11, 2019, SailPoint Applied sciences, Inc., as borrower, and sure of our
different wholly owned subsidiaries entered right into a credit score settlement (as amended, the
“Credit score Settlement”), which incorporates commitments for revolving credit score loans of
$75.Zero million, with a $15.Zero million letter of credit score sublimit, which quantity can
be elevated or decreased beneath specified circumstances and is topic to
sure monetary covenants. We had no excellent revolving credit score mortgage
steadiness, and we have been in compliance with all relevant covenants as of June 30,
2022. See Observe 8 “Credit score Settlement” within the notes to our unaudited condensed
consolidated monetary statements included on this Quarterly Report for extra
data concerning the phrases and situations of the Credit score Settlement.
In September 2019, we issued $400.Zero million combination principal quantity of 0.125%
convertible senior notes due 2024 (the “Notes”) in a personal providing (the
“Providing”) to certified institutional consumers. The web proceeds from the
Providing have been roughly $391.2 million, after deducting reductions and
commissions and different charges and bills payable by the Firm in connection
with the Providing. Together with the issuance of the Notes, and train
in filled with the preliminary purchasers’ choice, the Firm used roughly $37.1
million of the online proceeds to pay the price of privately negotiated capped name
transactions (the “Capped Name Transactions”) to cut back our publicity to
extra money funds above principal balances within the occasion of a money
conversion of the Notes. The Notes will mature on September 15, 2024, except
earlier redeemed, repurchased or transformed. The Notes bear curiosity at a hard and fast
price of 0.125% per yr payable semiannually in arrears on March 15 and
September 15 of every yr. As of June 30, 2022, we had in combination $1.1 million
in contractual curiosity funds, of which $0.5 million are due throughout the subsequent
12 months.
As of June 30, 2022, the Notes are convertible on the choice of the holders. We
have the power to settle the Notes in money, shares of our frequent inventory, or a
mixture of money and shares of our frequent inventory at our personal election. The
impression of the Notes on our liquidity will depend upon whether or not we elect to settle
any conversion in shares of our frequent inventory or a mixture of money and
shares. Through the three months ended March 31, 2021, the Firm settled
conversion requests within the combination principal quantity of $10.2 million of the
Notes and terminated corresponding Capped Name Transactions. In reference to
these transactions, we paid $10.2 million in money to the changing holders for
the principal quantity, issued to the changing holders 181,629 shares of the
Firm’s frequent inventory with a good worth of roughly $10.1 million, and
obtained 37,301 shares of the Firm’s frequent inventory bearing a good worth of
$1.9 million. As of the date of this submitting, no different holders of the Notes have
submitted requests for conversion. See Observe 9 “Convertible Senior Notes and
Capped Name Transactions” within the notes to our unaudited condensed consolidated
monetary statements included on this Quarterly Report for extra data
concerning the phrases and situations of the Notes and Capped Name Transactions.
There have been no materials adjustments exterior the odd course of enterprise to
the money necessities from our contractual and different obligations, as disclosed
within the Annual Report.
We consider that present money and money equivalents, any optimistic money flows from
operations and accessible borrowings beneath our Credit score Settlement might be
ample to help working capital, capital expenditures and different money
necessities for a minimum of the following 12 months and, based mostly on our present
expectations, for the foreseeable future thereafter. Our future capital
necessities, each near-term and long-term, will depend upon many components,
together with our development price, the timing and extent of spending to help analysis
and growth efforts, the continued enlargement of gross sales and advertising
actions, the introduction of latest options and product enhancements, the
persevering with market acceptance of our choices and providers, the prices of any
future acquisitions in complementary companies and applied sciences and the impression
of the COVID-19 pandemic to our and our clients’, distributors’ and companions’
companies. To the extent present money and money equivalents will not be ample
to fund future actions, we might borrow beneath our Credit score Settlement or search to
elevate further funds via fairness, equity-linked or debt financings. Any
further fairness financing could also be dilutive to our present stockholders. We might
enter into agreements or letters of intent with respect to potential investments
in, or acquisitions of, complementary companies, providers or applied sciences,
which might additionally require us to hunt further fairness financing, incur
indebtedness or use money sources. Within the occasion that further financing is
required from exterior sources, we might not be capable to elevate it on phrases
acceptable to us or in any respect. If we’re unable to lift further capital when
desired, or if we can not broaden our operations or in any other case capitalize on our
enterprise alternatives as a result of we lack ample capital, our enterprise,
working outcomes and monetary situation could be adversely affected.
Since inception, now we have financed operations primarily via license charges,
SaaS subscription charges, upkeep and help charges, consulting and coaching
charges, borrowings beneath our prior credit score settlement and, to a lesser diploma, the
sale of fairness securities. Our principal makes use of of money are funding operations and
capital expenditures. Over the previous a number of years, income has
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elevated considerably from yr to yr and, in consequence, money flows from
buyer collections have elevated. Nonetheless, working bills have additionally
elevated as now we have invested in rising our enterprise. Our working money
necessities might improve sooner or later as we proceed to put money into key
initiatives to drive the Firm’s long-term development.
On April 10, 2022, we entered into the Merger Settlement, pursuant to which
Merger Sub will merge with and into the Firm, with the Firm surviving the
Merger as a completely owned subsidiary of Guardian. Guardian and Merger Sub are
associates of the Thoma Bravo Fund, managed by Thoma Bravo. We’ve agreed to
varied covenants and agreements, together with, amongst others, agreements to conduct
our enterprise within the odd course in the course of the interval between the execution of
the Merger Settlement and the Efficient Time. Outdoors of sure restricted
exceptions, we might not take, authorize, commit, resolve, or conform to do sure
actions with out Guardian’s consent, together with:
•buying companies and disposing of great belongings;
•incurring expenditures above specified thresholds;
•issuing further debt amenities; and
•repurchasing shares of our excellent frequent inventory.
We don’t consider these restrictions will forestall us from assembly our ongoing
prices of operations, working capital wants, or capital expenditure necessities.
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