It is best to learn the next dialogue and evaluation of our monetary situation
and outcomes of operations at the side of our unaudited condensed
consolidated monetary statements and notes thereto in Half I, Merchandise 1 of this
Quarterly Report on Type 10-Q (this “Quarterly Report”) and our Annual Report on
Type 10-Okay for the yr ended December 31, 2021, which was filed with the U.S.
Securities and Trade 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 comprises forward-looking statements throughout the that means of
the federal securities legal guidelines, which statements contain substantial dangers and
uncertainties. Ahead-looking statements usually relate to future occasions or
our future monetary or working efficiency. All statements included on this
Quarterly Report, aside from statements of historic truth, are forward-looking
statements. This consists of statements relating to our pending acquisition by Thoma
Bravo, our expectations relating to the timing of the Merger, our technique, future
operations, monetary place, estimated revenues and losses, projected prices,
prospects, plans and aims of administration. In some circumstances, you possibly can determine
forward-looking statements as a result of they comprise phrases similar to “might,” “will,”
“ought to,” “expects,” “plans,” “anticipates,” “might,” “intends,” “goal,”
“tasks,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or
“proceed” or the damaging of those phrases or different related phrases or expressions.
You shouldn’t rely on forward-looking statements as predictions of future
occasions or place undue reliance thereon. We now have primarily based the forward-looking
statements contained on this Quarterly Report totally on our present
expectations and projections, in gentle of at present obtainable data, about
future occasions and traits that we imagine might have an effect on our enterprise, monetary
situation, outcomes of operations and prospects. The result of the occasions
described in these forward-looking statements is topic to dangers, uncertainties
and different components. Essential 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 embody the
following: the completion of the proposed transaction on anticipated phrases and
timing, together with acquiring shareholder and regulatory approvals, anticipated
tax remedy, unexpected liabilities, future capital expenditures, revenues,
bills, earnings, synergies, financial efficiency, indebtedness, monetary
situation, losses, future prospects, enterprise and administration methods for the
administration, growth and development of SailPoint’s enterprise and different circumstances to
the completion of the Merger; important transaction prices related to the
proposed Merger; (v) potential litigation regarding the proposed Merger; the
threat that disruptions from the proposed Merger will hurt SailPoint’s enterprise,
together with present plans and operations; potential opposed reactions or modifications
to enterprise relationships ensuing from the announcement or completion of the
proposed Merger; restrictions throughout the pendency of the proposed Merger that
might affect SailPoint’s potential to pursue sure enterprise alternatives or
strategic transactions; the scope, length 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 potential to attain and maintain profitability; our potential to
maintain historic development charges; our potential to draw and retain prospects and
to deepen {our relationships} with present prospects; 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 programs
that we use in our operations; our potential 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 potential to keep up
profitable relationships with our channel companions; the rising complexity of
our operations; actual or perceived errors, failures or disruptions in our
platform or options; our potential to adapt and reply to quickly altering
know-how, business requirements, rules or buyer wants, necessities or
preferences; our potential to adjust to our privateness coverage or associated authorized or
regulatory necessities; the affect of assorted tax legal guidelines and rules,
together with our failure to conform therewith; our potential to efficiently determine,
purchase and combine firms and belongings; our potential to keep up and improve
our model or fame as an business chief; and the flexibility of our platform
and options to successfully interoperate with our prospects’ present or future
data know-how (“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 “Threat Elements” and
“Administration’s Dialogue and Evaluation of Monetary Situation and Outcomes of
Operations” sections of the Annual Report and “Threat Elements” in Half II, Merchandise 1A
on this Quarterly Report and subsequent quarterly reviews. Furthermore, we function
in a really aggressive and quickly altering surroundings. New dangers and
uncertainties emerge occasionally and it isn’t 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’t 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.
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 mirror occasions or
circumstances after the date of this Quarterly Report or to mirror new
data or the prevalence of unanticipated occasions,
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besides as required by legislation. Our forward-looking statements don’t mirror the
potential affect of any future acquisitions, mergers, tendencies, joint
ventures or investments we might make.
Pending Transaction
On April 10, 2022, the Firm entered into the Merger Settlement by and amongst
the Firm, Guardian and Merger Sub, 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, which is managed by Thoma Bravo.
Because of the Merger, every share of the Firm’s frequent inventory excellent
instantly previous to the Efficient Time of the Merger (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
DGCL) will, on the Efficient Time, mechanically be transformed into the proper to
obtain the Merger Consideration of $65.25 in money, topic to relevant
withholding taxes.
The transaction is predicted to shut within the second half of 2022, topic to
customary closing circumstances, together with approval by SailPoint stockholders and
receipt of regulatory approvals. Upon closing of the transaction, SailPoint’s
frequent inventory will now not be listed on any public market. See Word 14
“Subsequent Occasions” to the condensed consolidated monetary statements on this
Quarterly Report on Type 10-Q for data relating to 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 vital visibility
into who at present has entry to which assets, who ought to have entry to
these assets 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 programs, functions and knowledge throughout hybrid IT
environments, spanning on-premises, cloud and cell functions and file
storage platforms. We assist prospects 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 prospects embody most of the world’s largest and
most advanced organizations, together with industrial 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 prospects with a set of absolutely built-in companies for compliance,
provisioning and password administration for functions and knowledge hosted
on-premises or within the cloud;
•IdentityIQ: our on-premises id safety resolution, which could be hosted in
the general public cloud or deployed in a buyer’s knowledge middle, that gives massive,
advanced enterprise prospects a unified and extremely configurable id safety
resolution; and
•SailPoint Identification Providers: our multi-tenant SaaS subscription companies that
could be utilized at the side of 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 reviews to trace the effectiveness of consumers’ id packages;
•Entry Modeling: makes use of machine studying to counsel roles primarily based on related entry
between customers and offers prospects insights to verify the right entry for
every position;
•Entry Threat Administration: our cloudÂprimarily based entry controls resolution that allows
our prospects to handle their threat by automating entry controls for enterprise
functions with advanced safety necessities;
•Cloud Entry Administration: makes use of machine studying to mechanically be taught, monitor
and safe entry to cloud infrastructure;
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•Suggestion Engine: makes use of machine studying, peer group evaluation, id
attributes and entry exercise to assist prospects determine whether or not entry ought to be
granted or eliminated; and
•SaaS Administration: our cloudÂprimarily based resolution that helps prospects uncover,
handle, and safe their SaaS functions.
Our options tackle the advanced wants of world enterprises and mid-market
organizations. Our success is principally depending on our potential to ship
compelling options to draw new prospects and retain present prospects.
Rising safety threats and evolving rules and compliance requirements for
cyber safety, knowledge safety, privateness and inside IT controls create new
alternatives for our business and require us to adapt our options to be
profitable. Sustaining our historic development price can be difficult as a result of
our development technique relies upon partly on our potential to drive new buyer development
inside present geographic markets, additional penetrate our present buyer
base, proceed to put money into our platform, leverage and develop our community of
companions, develop market and product funding throughout present vertical markets,
and proceed to develop our world presence, whereas competing towards a lot bigger
firms with extra recognizable manufacturers and monetary assets. Though we
search to develop quickly, we additionally deal with working leverage and effectivity whereas
persevering with to put money into our platform to ship modern options to our
prospects.
We imagine enterprises are more and more embracing the cloud to deal with their
vital safety infrastructure. Consequently, a rising variety of enterprises
are altering their strategy to id safety and now favor to make use of a SaaS
resolution somewhat than buy software program outright and set up it in their very own
infrastructure. This business shift aligns nicely 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 Providers are offered in trade for a
subscription charge and provide prospects entry to those options and
infrastructure help throughout their subscription settlement. Our
normal subscription settlement for our SaaS choices has a length of three
years. For our IdentityIQ options, our prospects 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 embody the rights to a time period license
and upkeep and help sometimes for a three-year time period. Accordingly, we
allocate the transaction value to every efficiency obligation. Our upkeep
and help providing supplies software program upkeep in addition to entry to our
technical help companies throughout the upkeep time period. After the preliminary
upkeep interval, prospects with perpetual licenses might renew their
upkeep and help settlement for an extra charge.
Pricing for every of our options relies on the variety of digital
identities of workers, contractors, enterprise companions, software program bots and different
human and non-human customers that the shopper is entitled to control with the
resolution. We additionally bundle and value our IdentityNow and IdentityIQ options
into modules. Every module has distinctive functionalities, and our prospects are in a position
to buy a number of modules, relying on their wants. We additionally provide
superior integration modules for key functions and programs which could be
bought along with our base resolution modules. They’re additionally priced primarily based
on the entire variety of identities, as are our SailPoint Identification Providers. 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 shopper for our IdentityIQ and IdentityNow options
and which, if any, of the SailPoint Identification Providers that the shopper
purchases.
Mixtures of our SaaS merchandise are additionally provided in bundles by our
Identification Safety Cloud Enterprise and Enterprise Plus suites. These suites of
merchandise present complete units of options for patrons, assembly their
wants at numerous levels of their id safety journey.
Along with our options, we provide skilled companies to our prospects
and companions to configure and optimize using our options in addition to
coaching companies associated to the configuration and operation of our platform.
Most of our skilled companies exercise is in help of our companions, who
carry out a big majority of all preliminary and follow-on implementation work
for our prospects. Most of our consulting companies are priced on a
time-and-materials foundation, whereas our coaching companies are offered by
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.
Over the previous a number of years, our income combine has modified as demand for our
services and products 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 deal with 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 anticipate to often see perpetual license transactions with new
prospects and ongoing growth offers for present prospects, our principal focus
is
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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
by subscription-based time period licenses, somewhat than by perpetual
licenses, and over time, we anticipate that gross sales to new prospects 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 prone to proceed to end in
short-term income headwind. Specifically, our transition to a subscription
mannequin has impacted, and can proceed to affect, the timing of our recognition
of income as an rising share of our gross sales change into acknowledged ratably,
in addition to affect our working margins as subscription income turns into a bigger
share of our gross sales. Nevertheless, we imagine 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. However, our income and gross margins fluctuate relying on the kind
of resolution we promote, and we anticipate that in a primarily subscription-based mannequin,
retention charges for our subscription prospects may very well be barely decrease than the
retention charges for help and upkeep for our perpetual prospects. As a
end result, 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 durations, and our potential to foretell our income and margins in any
explicit 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, threat and
compliance resolution that gives separation-of-duty controls monitoring,
enabling prospects to handle their threat by automating entry controls for
enterprise functions with advanced safety ideas. See Word 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 relating to the important thing components affecting our
efficiency.
Affect of COVID-19
In gentle of the continuing unfold of COVID-19 in the US and overseas,
together with the continued emergence of latest variants of the coronavirus, authorities
and public well being authorities proceed to suggest and impose numerous
rules and restrictive measures on parts of the inhabitants, together with
measures directed at companies. Whereas meant to guard human life, these
restrictions have had and are anticipated to proceed to have severe opposed
impacts on home and international economies of unsure length. We now have made
sure changes to our operations as we proceed to offer our choices to
new and present prospects in response to those measures. For instance, as a
results 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 anticipate that for the foreseeable future, a few of our
buyer occasions might be virtual-only or hybrid occasions.
Whereas we imagine that the pandemic has not had a right away materials opposed
affect on our monetary efficiency, our enterprise might but be negatively impacted
by the COVID-19 pandemic because the length of the pandemic and the long-term scope
of its results finally stay unknown. For instance, the circumstances brought on by
the COVID-19 pandemic might materially adversely have an effect on the speed of IT spending by
our present and potential prospects, together with our prospects’ potential or
willingness to buy our choices, delay potential prospects’ buying
selections, delay the provisioning of our choices, or trigger prospects to fail
to make well timed funds. We now have seen an immaterial variety of buyer requests,
and should proceed to see related requests, to elongate cost phrases or scale back
the worth or length of subscription contracts, however this has not resulted in a
materials opposed affect on our renewal charges. As well as, throughout 2020 and the
first a part of 2021, we usually weren’t in a position to present on-site consulting
companies to our prospects as a result of native and regional restrictions associated to the
pandemic, and such restrictions stay in place for a few of our prospects.
Nevertheless, this has not resulted in any significant opposed affect on our potential
to ship such companies as a result of a good portion of our consulting
companies have traditionally been offered remotely and most on-site tasks
transitioned to a distant supply mannequin.
However the potential and precise opposed impacts described above, because the
pandemic has triggered extra of our prospects to shift to a digital workforce, we
imagine the worth and scalability of our id platform has change into much more
evident. We imagine that the pandemic has not had a cloth opposed affect on
our monetary efficiency, and certainly, our income grew all through 2020 and 2021
and the primary quarter of 2022 as in comparison with the prior yr durations. We anticipate
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.
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The challenges posed by COVID-19 on our enterprise and our prospects’ companies
might evolve quickly, and the pace, trajectory and energy of a restoration in
normal financial circumstances stays extremely unsure and may very well be slowed or
reversed by plenty 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 are going to proceed to judge our monetary place and outcomes of
operations in gentle of future developments, notably these regarding
COVID-19, and we are going to proceed to watch the worldwide affect of the pandemic on
our prospects and our enterprise. See the part titled “Threat Elements” in Half I,
Merchandise 1A within the Annual Report for extra data relating to the potential results
of COVID-19 on our enterprise.
Key Enterprise Metric
Along with our monetary data ready in accordance with U.S.
usually accepted accounting ideas (“GAAP”), we monitor the next key
metric to assist us measure and consider the effectiveness of our operations:
As of
March 31, 2022 March 31, 2021
(In hundreds)
Complete annual recurring income $ 394,689 $ 270,169
We use whole annual recurring income (“Complete ARR”) to watch the expansion of our
recurring enterprise as we proceed to shift to a subscription mannequin. Complete ARR
represents the annualized worth of the energetic portion of SaaS, term-based
license, upkeep and help contracts and different subscription companies at
the top of the reporting interval. We calculate Complete ARR by dividing the energetic
contract worth by the variety of days within the energetic portion of the general
contract time period after which multiplying by 365. Complete ARR ought to be considered
independently of income and deferred income as Complete ARR is an working
metric and isn’t meant to be mixed with or exchange this stuff. Complete ARR
shouldn’t be a forecast of future income, which could be impacted by contract begin and
finish dates and renewal charges, and doesn’t embody income from perpetual
licenses, coaching, skilled companies or different sources of income which might be
not deemed to be recurring in nature.-
Elements of Outcomes of Operations
See “Elements 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 relating to the parts of our outcomes of
operations.
Seasonality
We usually expertise seasonal fluctuations in demand for our merchandise and
companies. Our quarterly gross sales are impacted by business shopping for patterns. As a
end result, our gross sales have usually been highest within the fourth quarter of a
calendar yr and lowest within the first quarter. Though these seasonal components
are frequent within the know-how business, 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 durations introduced:
Three Months Ended
March 31, 2022 March 31, 2021
(In hundreds)
Income
Licenses $ 15,271 $ 19,235
Subscription 85,591 59,242
Providers and different 14,558 12,285
Complete income 115,420 90,762
Value of income
Licenses 1,378 1,247
Subscription (1) 19,966 11,304
Providers and different (1) 13,837 11,799
Complete price of income 35,181 24,350
Gross revenue 80,239 66,412
Working bills
Analysis and improvement (1) 31,046
19,566
Basic and administrative (1) 13,987 11,267
Gross sales and advertising (1) 65,730 51,162
Complete working bills 110,763 81,995
Loss from operations (30,524) (15,583)
Different expense, internet
Curiosity earnings 24 200
Curiosity expense (899) (789)
Different expense, internet (660) (1)
Complete different expense, internet (1,535) (590)
Loss earlier than earnings taxes (32,059) (16,173)
Revenue tax (expense) profit (1,025) 882
Web loss $ (33,084) $ (15,291)
(1)Consists of stock-based compensation expense as follows:
Three Months Ended
March 31, 2022 March 31, 2021
(In hundreds)
Value of income – subscription $ 1,256 $ 662
Value of income – companies and different 1,127 774
Analysis and improvement 4,435 2,220
Basic and administrative 2,549 2,062
Gross sales and advertising 6,434 4,355
Complete stock-based compensation expense $
15,801 $ 10,073
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The next desk units forth the unaudited condensed consolidated statements
of operations knowledge for every of the durations introduced as a share of whole
income:
Three Months Ended
March 31, 2022 March 31, 2021
Income
Licenses 13 % 21 %
Subscription 74 65
Providers and different 13 14
Complete income 100 100
Value of income
Licenses 1 2
Subscription 17 12
Providers and different 12 13
Complete price of income 30 27
Gross revenue 70 73
Working bills
Analysis and improvement 27 22
Basic and administrative 12 12
Gross sales and advertising 57 56
Complete working bills 96 90
Loss from operations (26) (17)
Different expense, internet
Curiosity earnings – –
Curiosity expense (1) (1)
Different expense, internet (1) –
Complete different expense, internet (2) (1)
Loss earlier than earnings taxes (28) (18)
Revenue tax (expense) profit (1) 1
Web loss (29) % (17) %
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Comparability of the Three Months Ended March 31, 2022 and 2021
Income
Three Months Ended
March 31,
March 31, 2022 2021 variance $ variance %
(In hundreds, besides percentages)
Income
Licenses $ 15,271 $ 19,235 $ (3,964) (21) %
Subscription
SaaS 41,127 21,889 19,238 88 %
Upkeep and help 42,332 35,474 6,858 19 %
Different subscription companies 2,132 1,879 253 13 %
Complete subscription 85,591 59,242 26,349 44 %
Providers and different 14,558 12,285 2,273 19 %
Complete income $ 115,420 $ 90,762 $ 24,658 27 %
License Income. License income decreased by $4.Zero million, or 21%, for the
three months ended March 31, 2022 in comparison with the three months ended March 31,
2021 primarily as a result of SaaS choices changing into a bigger portion of latest gross sales.
Subscription Income. Subscription income elevated by $26.Three million, or 44%,
for the three months ended March 31, 2022 in comparison with the three months ended
March 31, 2021 primarily as a result of new gross sales of our SaaS choices and a rise
in ongoing upkeep and help income from our put in base.
Providers and Different Income. Providers and different income elevated by $2.3
million, or 19%, for the three months ended March 31, 2022 in comparison with the three
months ended March 31, 2021 primarily on account of a rise within the quantity
of consumers utilizing our consulting and coaching companies.
Geographic Areas. Our prospects in the US contributed the most important
portion of our income in every reporting interval ended March 31, 2022 and 2021
as a result of now we have extra market momentum associated to our bigger and extra established
gross sales drive, 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
rising the scale of our worldwide gross sales drive and strengthening
partnerships with world system integrators and resellers worldwide. For the
three months ended March 31, 2022, income in the US, EMEA and the
remainder of the world elevated year-over-year.
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The next desk units forth, for every of the durations introduced, our
consolidated whole income by geography and the respective percentages of whole
income:
Three Months Ended
March 31, 2022 March 31, 2021
$ % of income $ % of income
(In hundreds, besides percentages)
United States $ 76,652 66 % $ 65,407 72 %
EMEA (1) 23,146 20 % 15,456 17 %
Remainder of the World (1) 15,622 14 % 9,899 11 %
Complete income $ 115,420 100 % $ 90,762 100 %
(1)No single nation exterior of the US represented greater than 10% of
our income.
Gross Revenue and Gross Margin
Three Months Ended
March 31, 2022
March 31, 2021 variance $ variance %
(In hundreds, besides percentages)
Gross revenue
Licenses $ 13,893 $ 17,988 $ (4,095) (23) %
Subscription 65,625 47,938 17,687 37 %
Providers and different 721 486 235 48 %
Complete gross revenue $ 80,239 $ 66,412 $ 13,827 21 %
Gross margin
Licenses 91 % 94 %
Subscription 77 % 81 %
Providers and different 5 % 4 %
Complete gross margin 70 % 73 %
Licenses. License gross revenue decreased by $4.1 million, or 23%, for the three
months ended March 31, 2022 in comparison with the three months ended March 31,
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 according to the prior interval.
Subscription. Subscription gross revenue elevated by $17.7 million, or 37%, for
the three months ended March 31, 2022 in comparison with the three months ended March
31, 2021. The rise in gross revenue was the results of development in subscription
income, as described above, partially offset by a $8.7 million improve in price
of income in comparison with the prior interval. The rise in price of income was
primarily pushed by a $4.Four million improve in cloud-based internet hosting prices to
additional help the scalability of our SaaS choices, a $3.Four 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 and a $0.7
million improve in amortization of intangibles, primarily from our acquired
intangible belongings throughout the first quarter of 2021. Gross margin declined from
the prior interval as a result of elevated internet hosting prices for SaaS choices and better
development charges in our SaaS revenues as in comparison with our upkeep revenues.
Providers and Different. Providers and different gross revenue elevated by $0.2 million,
or 48%, for the three months ended March 31, 2022 in comparison with the three months
ended March 31, 2021. The rise in gross revenue is primarily attributable to
elevated revenues as a result of buyer development, as described above, partially offset
by a $2.Zero million improve in price of income in comparison with the prior interval. The
improve in price of income was primarily pushed by a $1.5 million improve in
employee-based prices to help an rising variety of prospects and a $0.4
million improve in associate prices as a result of larger associate utilization in our
skilled companies and coaching group.
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Working Bills
Three Months Ended
March 31,
March 31, 2022 2021 variance $ variance %
(In hundreds, besides percentages)
Working bills
Analysis and improvement $ 31,046 $ 19,566 $ 11,480 59 %
Basic and administrative 13,987 11,267 2,720 24 %
Gross sales and advertising 65,730 51,162 14,568 28 %
Complete working bills $ 110,763 $ 81,995 $ 28,768 35 %
Analysis and Improvement. Analysis and improvement bills elevated by $11.5
million, or 59%, for the three months ended March 31, 2022 in comparison with the three
months ended March 31, 2021. This improve was primarily pushed by a $10.6
million improve in employee-based prices as a result of a rise in headcount as we
proceed investing in further merchandise and capabilities.
Basic and Administrative. Basic and administrative bills elevated by
$2.7 million, or 24%, for the three months ended March 31, 2022 in comparison with the
three months ended March 31, 2021. This improve was primarily pushed by
employee-related prices associated to stock-based compensation and discretionary
bonuses and 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 deal consummation together with banker charges
and authorized charges.
Gross sales and Advertising. Gross sales and advertising bills elevated by $14.6 million, or
28%, for the three months ended March 31, 2022 in comparison with the three months
ended March 31, 2021. This improve was primarily pushed by a $13.5 million
improve in employee-based prices to help elevated penetration into our
present buyer base and growth into new business verticals and geographic
markets, in addition to a $1.Zero million improve in journey bills as COVID-19
associated restrictions had been eased, partially offset by a $1.1 million lower in
skilled companies expense relating primarily to advisory companies.
Different Expense, internet
Curiosity Revenue
Curiosity earnings for the three months ended March 31, 2022 remained constant
in comparison with the three months ended March 31, 2021.
Curiosity Expense
Curiosity expense elevated for the three months ended March 31, 2022 in comparison with
the three months ended March 31, 2021 due primarily to curiosity on sure
international VAT liabilities.
Different Expense, internet
Different expense, internet elevated by $0.7 million for the three months ended March
31, 2022 in comparison with the three months ended March 31, 2021. This improve was
primarily pushed by modifications in international trade charges.
Revenue Tax (Expense) Profit
The Firm recorded an earnings tax expense of $1.Zero million and earnings tax
good thing about $0.9 million for the three months ended March 31, 2022 and 2021,
respectively, resulting in a lower in internet good thing about $1.9 million
year-over-year. Provision for earnings taxes consists of U.S. federal and state
earnings taxes and earnings taxes in sure international jurisdictions during which we
conduct enterprise. The Firm is in an general deferred tax asset place and
maintains its valuation allowance for sure federal and state tax functions as
present deferred tax liabilities don’t present adequate future taxable
earnings to understand the total good thing about its deferred tax belongings.
The efficient tax price for the three months ended March 31, 2022 was (3.2)%,
in comparison with 5.5% for the three months ended March 31, 2021. The primary drivers of
the variations within the charges from the prior interval to the present interval are
associated to
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variations in pre-tax ebook loss and the discrete tax profit acknowledged for the
change in valuation allowance within the prior-year interval.
Liquidity and Capital Sources
As of March 31, 2022, we had $414.6 million of money and money equivalents (of
which $5.7 million is held in our international subsidiaries), $75.Zero million of
availability beneath the Credit score Settlement (as outlined under) and $6.Zero million in
our irrevocable, money collateralized, unconditional standby letter of credit score
issued in reference to our company headquarters lease. As of March 31,
2022, we had $165.7 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
stability, and we had been in compliance with all relevant covenants as of March 31,
2022. See Word 8 “Credit score Settlement” within the notes to our unaudited condensed
consolidated monetary statements included on this Quarterly Report for extra
data relating to phrases and circumstances of the Credit score Settlement.
In September 2019, we issued $400.Zero million mixture principal quantity of 0.125%
convertible senior notes due 2024 (the “Notes”) in a non-public providing (the
“Providing”) to certified institutional consumers. The web proceeds from the
Providing had been roughly $391.2 million, after deducting reductions and
commissions and different charges and bills payable by the Firm in connection
with the Providing. Along side the issuance of the Notes, and train
in stuffed with the preliminary purchasers’ possibility, the Firm used roughly $37.1
million of the web proceeds to pay the price of privately negotiated capped name
transactions (the “Capped Name Transactions”) to cut back our publicity to
more money funds above principal balances within the occasion of a money
conversion of the Notes. The Notes will mature on September 15, 2024, until
earlier redeemed, repurchased or transformed. The Notes bear curiosity at a set
price of 0.125% per yr payable semiannually in arrears on March 15 and
September 15 of every yr. As of March 31, 2022, we had in mixture $1.2
million in contractual curiosity funds, of which $0.5 million are due inside
the following 12 months.
As of March 31, 2022, the Notes are convertible on the possibility of the holders. We
have the flexibility 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
affect of the Notes on our liquidity will rely on whether or not we elect to settle
any conversion in shares of our frequent inventory or a mix of money and
shares. Through the three months ended March 31, 2021, the Firm settled
conversion requests within the mixture 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
acquired 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 Word 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
relating to the phrases and circumstances of the Notes and Capped Name Transactions.
There have been no materials modifications exterior the strange course of enterprise to
the money necessities from our contractual and different obligations, as disclosed
within the Annual Report.
We imagine that present money and money equivalents, any constructive money flows from
operations and obtainable borrowings beneath our Credit score Settlement might be
adequate to help working capital, capital expenditures and different money
necessities for at the very least the following 12 months and, primarily based on our present
expectations, for the foreseeable future thereafter. Our future capital
necessities, each near-term and long-term, will rely on many components,
together with our development price, the timing and extent of spending to help analysis
and improvement efforts, the continued growth of gross sales and advertising
actions, the introduction of latest options and product enhancements, the
persevering with market acceptance of our choices and companies, the prices of any
future acquisitions in complementary companies and applied sciences and the affect
of the COVID-19 pandemic to our and our prospects’, distributors’ and companions’
companies. To the extent present money and money equivalents will not be adequate
to fund future actions, we might borrow beneath our Credit score Settlement or search to
increase further funds by 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, companies or applied sciences,
which might additionally require us to hunt further fairness financing, incur
indebtedness or use money assets. Within the occasion that further financing is
required from exterior sources, we might not have the ability to increase it on phrases
acceptable to us or at
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all. If we’re unable to boost further capital when desired, or if we can’t
develop our operations or in any other case capitalize on our enterprise alternatives
as a result of we lack adequate capital, our enterprise, working outcomes and
monetary situation can be adversely affected.
Since inception, now we have financed operations primarily by 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 elevated
considerably from yr to yr and, because of this, money flows from buyer
collections have elevated. Nevertheless, 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 right into a Merger Settlement by and among the many Firm,
Guardian, and Merger Sub, 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 now have agreed to varied covenants and agreements, together with,
amongst others, agreements to conduct our enterprise within the strange course throughout
the interval between the execution of the Merger Settlement and the Efficient Time
of the Merger. 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 imagine these restrictions will stop us from assembly our ongoing
prices of operations, working capital wants, or capital expenditure necessities.
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