sail-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________________________________________________

FORM 10-Q

_____________________________________________________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number 001-38297

SailPoint Technologies Holdings, Inc.

(Exact name of Registrant as specified in its Charter)

_____________________________________________________________________________________________

Delaware

(State or other jurisdiction of

incorporation or organization)

11120 Four Points Drive, Suite 100,

Austin, TX

(Address of principal executive offices)

47-1628077

(I.R.S. Employer

Identification No.)

78726

(Zip Code)

Registrant’s telephone number, including area code: (512) 346-2000

_____________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0001 per share

SAIL

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The registrant had 92,325,246 shares of common stock outstanding as of May 5, 2021.

Table of Contents

SailPoint Technologies Holdings, Inc.

Table of Contents


	PART I. FINANCIAL INFORMATION	Page

Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 20 2 0	2
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020	3
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 6.	Exhibits	37
	Signatures	38

Table of Contents

PART I

ITEM 1. Financial Statements (Unaudited)

SAILPOINT TECHNOLOGIES HOLDING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)


	As of
	March 31, 2021		December 31, 2020
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	416,185	$	510,289
Restricted cash	6,396		6,355
Accounts receivable, net of allowances of $290 and $376	85,299		112,255
Deferred contract acquisition costs, current	16,486		15,592
Prepayments and other current assets	33,390		26,027
Total current assets	557,756		670,518
Deferred tax asset - non-current	1,232		—
Property and equipment, net	18,809		19,443
Right-of-use assets, net	26,375		27,048
Deferred contract acquisition costs, non-current	39,875		38,510
Other non-current assets, net of allowances of $75 and $50	13,465		15,016
Goodwill	288,410		241,103
Intangible assets, net	86,948		63,962
Total assets	$	1,032,870	$	1,075,600
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	4,384	$	4,753
Accrued expenses and other liabilities	39,324		59,460
Income taxes payable	—		978
Convertible senior notes, net	383,891		326,672
Deferred revenue	158,901		165,995
Total current liabilities	586,500		557,858
Deferred tax liability - non-current	—		1,329
Long-term operating lease liabilities	32,038		33,080
Deferred revenue - non-current	17,376		18,723
Total liabilities	635,914		610,990
Commitments and contingencies (Note 7)
Stockholders’ equity
Common stock, $0.0001 par value, authorized 300,000 shares, issued and outstanding 92,228 shares as of March 31, 2021 and 91,386 shares as of December 31, 2020	9		9
Preferred stock, $0.0001 par value, authorized 10,000 shares, no shares issued and outstanding as of March 31, 2021 and December 31, 2020	—		—
Additional paid in capital	428,883		484,012
Accumulated deficit	(31,936)		(19,411)
Total stockholders' equity	396,956		464,610
Total liabilities and stockholders’ equity	$	1,032,870	$	1,075,600

See accompanying notes to unaudited condensed consolidated financial statements.

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SAILPOINT TECHNOLOGIES HOLDING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended
	March 31, 2021		March 31, 2020
Revenue
Licenses	$	19,235	$	21,004
Subscription	59,242		43,881
Services and other	12,285		10,557
Total revenue	90,762		75,442
Cost of revenue
Licenses	1,247		1,080
Subscription	11,304		8,476
Services and other	11,799		9,006
Total cost of revenue	24,350		18,562
Gross profit	66,412		56,880
Operating expenses
Research and development	19,566		15,808
General and administrative	11,267		9,514
Sales and marketing	51,162		36,860
Total operating expenses	81,995		62,182
Loss from operations	(15,583)		(5,302)
Other expense, net
Interest income	200		1,272
Interest expense	(789)		(4,532)
Other expense, net	(1)		(324)
Total other expense, net	(590)		(3,584)
Loss before income taxes	(16,173)		(8,886)
Income tax benefit	882		469
Net loss	$	(15,291)	$	(8,417)
Net loss per share
Basic	$	(0.17)	$	(0.09)
Diluted	$	(0.17)	$	(0.09)
Weighted average shares outstanding
Basic	91,684		89,862
Diluted	91,684		89,862

See accompanying notes to unaudited condensed consolidated financial statements.

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SAILPOINT TECHNOLOGIES HOLDING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	For the Three Months Ended March 31, 2021
	Common Stock			Additional paid in capital		Accumulated deficit		Stockholders' equity
	Number of shares	Par value
Balance at December 31, 2020	91,386	$	9	$	484,012	$	(19,411)	$	464,610
Cumulative effect adjustment from the adoption of ASU 2020-06	—	—		(65,517)		2,766		(62,751)
Exercise of stock options	188	—		1,608		—		1,608
Restricted stock units vested, net of tax settlement	509	—		(1,293)		—		(1,293)
Stock-based compensation expense	—	—		10,073		—		10,073
Partial conversion of convertible senior notes	182	—		—		—		—
Settlement of capped calls related to partial conversion of convertible senior notes	(37)	—		—		—		—
Net loss	—	—		—		(15,291)		(15,291)
Balance at March 31, 2021	92,228	$	9	$	428,883	$	(31,936)	$	396,956


	For the Three Months Ended March 31, 2020
	Common Stock			Additional paid in capital		Accumulated deficit		Stockholders' equity
	Number of shares	Par value
Balance at December 31, 2019	89,676	$	9	$	442,407	$	(8,289)	$	434,127
Cumulative effect adjustment from the adoption of ASC 326	—	—		—		(359)		(359)
Exercise of stock options	228	—		1,317		—		1,317
Restricted stock units vested, net of tax settlement	265	—		(155)		—		(155)
Stock-based compensation expense	—	—		6,191		—		6,191
Net loss	—	—		—		(8,417)		(8,417)
Balance at March 31, 2020	90,169	$	9	$	449,760	$	(17,065)	$	432,704

See accompanying notes to unaudited condensed consolidated financial statements.

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SAILPOINT TECHNOLOGIES HOLDING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended
	March 31, 2021		March 31, 2020
Operating activities
Net loss	$	(15,291)	$	(8,417)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense	4,784		4,586
Amortization of debt discount and issuance costs	633		4,367
Amortization of contract acquisition costs	4,328		3,004
Loss on disposal of fixed assets	27		124
Provision for credit losses	102		127
Stock-based compensation expense	10,073

SEC Form 10-Q filed by SailPoint Technologies Holdings, Inc.