SailPoint (SAIL) Stock Drops 15% — Beats Earnings but Growth is Slowing

TLDR

• SailPoint stock dropped over 15% in premarket trading Tuesday after Q1 earnings
• Revenue came in at $280M, beating estimates of $275.8M; adjusted EPS of $0.05 beat the $0.04 consensus
• ARR grew 26% year-over-year to $1.16B; SaaS ARR jumped 36% to $781M
• Full-year revenue guidance raised slightly to $1.265B–$1.275B; EPS guidance held at $0.30–$0.34
• Q2 guidance points to slowing growth, with ARR growth expected to drop to 24% and revenue growth to 17–18%

SailPoint (SAIL) stock was down more than 15% in premarket trading on Tuesday, putting it on track for its worst single-day drop since March, according to Dow Jones Market Data.

SailPoint, Inc., SAIL

The sell-off came even though the identity security company beat Wall Street estimates on both the top and bottom line for its fiscal first quarter ended April 30.

Total revenue grew 22% year-over-year to $280.14M, topping analyst expectations of $275.8M. Adjusted EPS came in at $0.05, just above the $0.04 consensus.

Subscription revenue was the engine behind the quarter, rising 23% to $266M and making up the bulk of total revenue.

Annual recurring revenue grew 26% year-over-year to $1.16B. SaaS ARR climbed 36% to $781M.

GAAP operating loss came in at -$80M, a big improvement from the -$185M loss in the same quarter last year. Still, it was wider than the -$40M loss posted in Q4.

Q2 Guidance Flags Slowing Growth

For Q2, SailPoint guided total revenue of $308M–$312M, with a midpoint of $310M. That’s roughly in line with the $309.69M consensus.

Adjusted EPS guidance for Q2 is $0.07–$0.08, compared to a consensus of $0.08.

Total ARR for Q2 is expected in the range of $1.218B–$1.222B, reflecting 24% year-over-year growth — down from the 26% posted in Q1.

Revenue growth is also expected to slow to 17–18% in Q2, compared to the 22% reported this quarter. That deceleration appears to be what’s rattling investors.

Full-Year Outlook Nudged Higher

SailPoint lifted its full-year fiscal 2027 revenue guidance slightly, now targeting $1.265B–$1.275B, up from the prior range of $1.26B–$1.27B. The midpoint of $1.27B matches the current consensus.

Full-year adjusted EPS guidance was kept unchanged at $0.30–$0.34, with a midpoint of $0.32 — also in line with consensus.

The company expects full-year total ARR of $1.364B–$1.374B, representing 21–22% year-over-year growth.

Adjusted operating margin for the full year is forecast at 18.7%–19.3%, with adjusted income from operations expected between $239M and $244M.

For Q2 specifically, adjusted operating margin is guided at 18.1%–18.7%, with adjusted income from operations of $56.5M–$57.5M.

Futures tracking the Nasdaq were pointing roughly 0.8% higher at the time of the premarket move in SAIL.

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