SailPoint, Inc. Q4 FY2021 earnings call

• 2021 was an outstanding year with record-breaking Q4, exceeding fiscal year plans. The market for SaaS identity security solutions is large and growing, with strong demand. • Invested in go-to-market and product development in 2022, which will impact near-term profitability but position for long-term growth. • Q4 performance exceeded ARR and revenue guidance, driven by increasing adoption of SaaS platform, record demand for product portfolio, and expanding average deal size. • Made significant enhancements to SaaS platform like workflows capability and identity outliers using AI/ML. • Invested in international business with strong contributions from Europe, Middle East, Africa, and Asia Pacific, Japan in Q4. • Highlighted customer anecdotes showcasing the value of SailPoint's offerings to various global companies. • Priorities for 2022 include continuing innovation in identity security, investing in demand generation and direct sales, and capitalizing on identity security's strategic importance.

In the fourth quarter and full year 2021, SailPoint achieved strong financial performance. Total ARR ended the year at approximately $370 million, up 48% year-over-year. Subscription revenue was approximately $273 million, up 39% year-over-year. In Q4, nearly $30 million of SaaS ARR was added, a year-over-year increase of more than 130%. Subscription ARR consisted of over $161 million from SaaS and approximately $60 million from recurring term licenses. The recurring perpetual maintenance base ended the quarter at approximately $150 million.

• For Q1 2022, expected total ending ARR in the range of $393 million to $395 million (45%-46% year-over-year growth) and total revenue of $110.5 million to $112.5 million (22%-24% year-over-year growth). • For 2022, targeting total ARR of $516 million to $524 million (39%-41% year-over-year growth), total revenue of $513 million to $521 million (17%-19% year-over-year growth), and SaaS revenue of $197 million to $201 million (75%-78% year-over-year growth). • Anticipates an operating loss of $12 million to $14 million in Q1 2022 and an operating loss of $27 million to $35 million for full-year 2022, with revenue growth expected to accelerate in 2023 after a trough year in 2022.

• Model transition has a near-term impact on profitability. • Competition in the identity security space, including potential new entrants, could affect market share. • Talent retention and wage inflation challenges as the company competes for global talent. • Exposure to geopolitical issues like in Russia is minimal but could have indirect impacts.

Q: Matt Hedberg from RBC Capital Markets asked about prioritizing go-to-market initiatives and competitive landscape.

A: Cam McMartin said prioritization is on growing global sales capacity and demand generation, and Mark McClain noted no massive shift in competition, with SailPoint still successful in mid-to-large enterprise segments.

Q: Rob Owens from Piper Sandler asked about maintenance base transitioning to SaaS and license strength.

A: Cam McMartin said there was early activity in Q4 with demand coming to them, and 2022 will be a get-off-the-ground year for migrations, while license strength was due to healthy pipeline and customer expansion.

Q: Hamza Fodderwala from Morgan Stanley asked about ARR guide and maintenance migration.

A: Cam McMartin said ARR guide is driven by SaaS business, and maintenance migration is a small contributor with small sample size.

Q: Joe Gallo from Jefferies asked about operating margin and cash flow.

A: Cam McMartin said free cash flow profile tracks non-GAAP operating income, with 2022 as a trough year and acceleration in 2023.

Q: Mark McClain was asked about traction with federal and local government.

A: He said there's a strong presence but no specific inflection.

Q: Andrew Nowinski from Wells Fargo asked about integrated solutions and customer growth.

A: Mark McClain said focus is on mid-to-high end with AI attachment, and Cam McMartin said customer growth is in line with business growth across size spectrum.

Q: Joshua Tilton from Wolfe Research asked about legacy replacement and Saviynt customers.

A: Cam McMartin and Mark McClain said win rates are strong, with Saviynt customers sometimes coming back.

Q: Alex Henderson from Needham asked about Russia exposure, churn rate, and headcount.

A: Cam McMartin said Russia exposure is small, wage inflation is accelerated, and headcount grows in line with top-line goals.

Q: Rudy Kessinger from D.A. Davidson asked about license revenue mix.

A: Mark McClain said perpetual license percentage came down modestly.

Q: Fatima Boolani from Citi asked about model transition phase 1.

A: No detailed response as Q&A concluded shortly after.