SailPoint (NYSE:SAIL) Delivers Strong Q4 Numbers, Stock Soars

Jabin Bastian /
2022/02/28 4:26 pm EST
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Identity governance software company SailPoint (NYSE:SAIL) reported Q4 FY2021 results beating Wall St's expectations, with revenue up 31.2% year on year to $135.5 million. On top of that, guidance for next quarter's revenue was surprisingly good, being $111.5 million at the midpoint, 3.45% above what analysts were expecting. SailPoint made a GAAP loss of $9.7 million, down on its loss of $4.71 million, in the same quarter last year.

Is now the time to buy SailPoint? Access our full analysis of the earnings results here, it's free.

SailPoint (SAIL) Q4 FY2021 Highlights:

  • Revenue: $135.5 million vs analyst estimates of $113.7 million (19.1% beat)
  • EPS (non-GAAP): $0.09 vs analyst estimates of -$0.07 ($0.16 beat)
  • Revenue guidance for Q1 2022 is $111.5 million at the midpoint, above analyst estimates of $107.7 million
  • Management's revenue guidance for upcoming financial year 2022 is $517 million at the midpoint, beating analyst estimates by 6.2% and predicting 17.7% growth (vs 19.8% in FY2021)
  • Free cash flow of $8.82 million, down 30.8% from previous quarter
  • Gross Margin (GAAP): 76.2%, down from 77.9% same quarter last year

“SailPoint’s fourth quarter performance was a record-breaking finish to a terrific year. Revenue and ARR were well above our expectations, driven by strong demand for our SaaS identity security platform and excellent execution by the SailPoint team,” said Mark McClain, SailPoint CEO and Founder.

Started by Mark McClain after his previous identity management company got acquired by Sun Microsystems, SailPoint (NYSE:SAIL) provides software for organizations to manage the digital identity of employees, customers, and partners.

As software penetrates corporate life, employees are using more apps every day, on more devices, in more locations. This drives the need for identity and access management software that help companies efficiently manage who has access to what, and ensure that access privileges are secure from cyber criminals.

Sales Growth

As you can see below, SailPoint's revenue growth has been solid over the last year, growing from quarterly revenue of $103.3 million, to $135.5 million.

SailPoint Total Revenue

This was a standout quarter for SailPoint, with the quarterly revenue up 31.2% year on year, which is above average for the company. On top of that, revenue increased $25.4 million quarter on quarter, a very strong improvement on the $7.62 million increase in Q3 2021, and a sign of acceleration of growth.

Guidance for the next quarter indicates SailPoint is expecting revenue to grow 22.8% year on year to $111.5 million, improving on the 20.3% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $517 million at the midpoint, growing 17.7% compared to 19.8% increase in FY2021.

There are others doing even better than SailPoint. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 150% since the IPO last December. You can find it on our platform for free.


What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. SailPoint's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 76.2% in Q4.

SailPoint Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.76 left to spend on developing new products, marketing & sales and the general administrative overhead. Significantly up from the last quarter, this is a good gross margin that allows companies like SailPoint to fund large investments in product and sales during periods of rapid growth and be profitable when they reach maturity.

Key Takeaways from SailPoint's Q4 Results

With a market capitalization of $3.78 billion SailPoint is among smaller companies, but its more than $435.4 million in cash and the fact it is operating close to free cash flow break-even put it in a robust financial position to invest in growth.

We were very impressed by the strong improvements in SailPoint’s gross margin this quarter. And we were also excited to see that it outperformed Wall St’s revenue expectations. Zooming out, we think this was a fantastic quarter that should have shareholders cheering. The company is up 8.8% on the results and currently trades at $45 per share.

SailPoint may have had a good quarter, so should you invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.