SailPoint’s Q3 Results Top Estimates; Shares Gain 30.5%

Shares of identity security solutions provider SailPoint Technologies Holdings, Inc. (SAIL) gained up to 30.5% on Wednesday before closing 20.4% up following the company’s release of better-than-expected financial results for the third quarter of 2021 after the market closed on Tuesday.

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Based out of Texas, SailPoint provides enterprise identity governance solutions across the world. It also offers software licensing, professional services, maintenance, and technical support.

Q3 Results

The company reported earnings/loss of $0.00 per share, compared to earnings of $0.11 per share last year. The Street had expected SailPoint to record a loss of 0.06 per share.

Total revenue increased 17% year-over-year to $110.1 million, exceeding analysts’ expectations of $103.43 million.

Subscription revenue grew 39% to $70.8 million, and SaaS revenue jumped 71% to $29.8 million. However, Licenses revenue declined to $26.1 million from $30.9 million in the third quarter of 2020.

Adjusted operating income amounted to $900,000, compared to $12 million in the year-ago quarter.

Meanwhile, total ARR rose 44% year-over-year to $323.8 million. (See Insiders’ Hot Stocks on TipRanks)

CEO Comments

The CEO of SailPoint, Mark McClain, said, “Demand for our SaaS and subscription-based identity security offerings continues to be very strong as global enterprises recognize that SailPoint’s modern identity security solutions are core to their next-generation technology stack.”

Outlook

For the fourth quarter, the company expects total ARR in the range of $358 million to $360 million, and revenue to lie between $112 million and $114 million. The Street expects SailPoint’s revenue to total $114.1 million.

Adjusted operating loss is anticipated to range from $9 million to $11 million, and adjusted loss to range between $0.06 per share and $0.08 per share against analysts’ expectations of $0.

Furthermore, for 2021, SailPoint expects revenue in the range of $415.5 million to $417.5 million, compared to the Street’s estimate of $410.82 million.

Meanwhile, SaaS revenue is expected to lie between $110.5 million and $111.5 million, and adjusted operating loss is projected to range from $6.5 million to $8.5 million.

Adjusted loss per share is likely to come in the range of $0.06 to $0.07. Analysts expect the company’s loss to range from $0.04 per share to $0.08 per share.

Wall Street’s Take

Following the release of the third-quarter results, Wells Fargo (WFC) analyst Andrew Nowinski maintained a Buy rating on the stock and raised the price target to $67 from $54 (15.4% upside potential).

Nowinski said, “SailPoint is well-positioned to continue taking share in the IGA market, as they offer the most feature-rich solutions for both on-premise and in the cloud.”

Additionally, D.A. Davidson analyst Rudy Kessinger reiterated a Buy rating on SailPoint and increased the price target from $62 to $73 (25.8% upside potential).

Kessinger said, “The increasing momentum in the business is being driven in large part by accelerating demand in the upper end of the enterprise market, particularly for their SaaS offering.”

Analyst Recommendation

Overall, the stock has a Strong Buy consensus rating based on 10 unanimous Buys. The average SailPoint Technologies Holdings price target of $70 implies 20.6% upside potential. Shares have lost 33.4% over the past year.

Smart Score

According to TipRanks’ Smart Score rating system, SailPoint scores a 9 out of 10, suggesting that the stock is likely to outperform market averages.