SailPoint Inc. ($SAIL) Stock: Shares Slip Despite Strong Q226 Growth and Upbeat Guidance

TLDR

• Q2 2026 revenue rose 33% year-over-year to $264 million.
• Annual recurring revenue grew 28% to $982 million.
• SaaS ARR surged 37% to $623 million.
• Record cash flow from operations reached $50 million.
• Fiscal 2026 guidance was raised across revenue and margins.

SailPoint Inc. (NASDAQ: SAIL) closed at $20.66 on September 9, 2025, down 7.73%, before ticking up 1.40% to $20.95 in pre-market trading following its second-quarter fiscal 2026 earnings release.

SailPoint, Inc. (SAIL)

The company, a leader in enterprise identity security, reported strong top-line and ARR growth but still faces a challenging competitive and macroeconomic environment. Results were announced on September 9, 2025.

Quarterly Highlights

For the quarter ended July 31, 2025, SailPoint posted revenue of $264 million, representing a 33% increase year-over-year. Subscription revenue accounted for $248 million, growing 36% from the prior year. Annual recurring revenue climbed 28% to $982 million, with SaaS ARR expanding 37% to $623 million. Net revenue retention remained strong at 114%.

The company reported a GAAP operating loss of $41 million, or 15% of revenue, an improvement from a $66 million loss in the same quarter last year. Adjusted operating income grew sharply to $54 million, or 20% of revenue, compared to $21 million, or 11% of revenue, a year ago.

Cash flow from operating activities hit a record $50 million, while free cash flow reached $46 million, representing a 17.4% margin.

Growth in Enterprise Adoption

SailPoint highlighted significant momentum in large-scale enterprise adoption, with customers generating ARR greater than $1 million increasing by 48% year-over-year. This reflects the company’s ability to scale identity solutions for complex global organizations.

CEO and founder Mark McClain emphasized that SailPoint’s intelligent identity security platform is becoming essential in the AI era. He pointed to the launch of new offerings like SailPoint Accelerated Application Management, which reduces onboarding time, and SailPoint agent identity security, aimed at governing AI agents.

Competitive and Market Pressures

Despite the strong results, SailPoint acknowledged facing a crowded identity governance market with new entrants and evolving customer expectations. Traditional PAM technologies remain difficult to scale, creating challenges for enterprises. The company also cited macroeconomic uncertainty as a potential headwind for IT security spending.

SailPoint noted that educating less mature enterprise buyers continues to be a hurdle as the identity market grows more complex. To maintain momentum, the company plans to keep investing in innovation and go-to-market strategies, even if it affects short-term margins.

Upgraded Guidance

Looking ahead, SailPoint raised its fiscal 2026 revenue guidance to $1.055 billion, reflecting 22.4% year-over-year growth. Adjusted operating income is projected at $179 million, or a 17% margin. For Q3, revenue is expected to reach $270 million, a 15% increase from the prior year.

Management said the strategy is working, with identity security now seen as a central element of enterprise security frameworks. SailPoint expects sustained demand as businesses adapt to managing both human and AI-driven digital identities.

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