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SailPoint Technologies Holdings, Inc. (NYSE:SAIL)
Q4 2020 Earnings Call
Feb 25, 2021, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings. Welcome to SailPoint Technologies Holdings Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions]

I will now turn the conference over to Josh Harding, Vice President of Financial Planning, Analysis and Investor Relations. Josh, you may now begin.

Josh Harding -- Senior Vice President, Finance and Investor Relations

Good afternoon, and thank you for joining us today to discuss SailPoint's fourth quarter and full year 2020 financial results. Joining me today are SailPoint's CEO and Co-Founder, Mark McClain and our Chief Financial Officer, Jason Ream.

Please note that today's call will include forward-looking statements, and because these statements are based on the Company's current intent, expectations and projections, they are not guarantees of future performance and a variety of factors could cause actual results to differ materially. Since this call will include references to non-GAAP results, which excludes special items, please reference this afternoon's press release in the Investors section of sailpoint.com for further information regarding forward-looking statements and reconciliations of GAAP to non-GAAP results.

And now, I'd like to turn the call over to Mark McClain.

Mark McClain -- Chief Executive Officer and Co-founder

Thanks, Josh, and thanks to each of you for joining the call today. I hope you and your families remain safe and healthy. I'm very pleased to share both our fourth quarter and fiscal year end 2020 results with you today. Our results in both periods were driven by solid execution across the business and strong demand for SailPoint's Identity platform.

For the full year 2020, total revenue was approximately $365 million, representing 27% growth year-on-year. Total revenue for the fourth quarter was approximately $103 million, the largest quarter in our history and the first time we've exceeded $100 million in quarterly revenue. Our team and our partners executed extremely well around the globe throughout the year and I'd like to thank each one for their contribution to our ongoing success, especially during the such a tumultuous time.

Now I'd like to spend a few minutes talking through some key business highlights from 2020 before shifting to our focus and strategy for 2021. SailPoint's business performed at a high level throughout 2020 despite the economic disruption related to the pandemic. We experienced significant demand and subsequent growth throughout the year as the relevancy and criticality of Identity Security became even more apparent. The SailPoint team responded well to this increased demand, delivering a high-level of tight execution across all geographies. The events of 2020 reinforced many of the positive trends of our business, which we expect to continue going forward.

For example, this past year, the rapid shift to working from anywhere drew significant attention to an issue that many companies simply hadn't probably seen before. We helped numerous companies understand the extent of risk exposure in their business due to loosely managed and largely uncovered access. Providing access for remote workers proved to be a light-bulb moment as more organizations realized they were operating under a false sense of security if they were only focused on connecting their people to technology without properly securing their access. With SailPoint serving as the foundation for securing all of their digital identities, including both human and non-human, our customers can confidently enable access critical systems and data while eliminating business risk.

As a result, throughout 2020, we saw increased demand for our solutions as more and more companies sought to dramatically improve their Identity Security program. This included a strong and growing interest in our SaaS solution from larger enterprises as many of them have become increasingly comfortable shifting their Identity Security infrastructure into the cloud.

For example, a large media and information services conglomerate chose SailPoint to help them securely enable their digital transformation. Their goal is to achieve a 360 degree view of access needs across the 25,000-plus employees and contractors that make up their workforce. This visibility into all their organizations' access capabilities across every application, data and cloud infrastructure is critical to both securing and enabling their expansive business.

With SailPoint at the center of their transformation, they have the multi-tenant SaaS identity platform needed to quickly deliver on their vision for comprehensive Identity Security across their business. Our product leadership team leveraged a strong vision in SaaS expertise to help us accelerate our ability to innovate at scale, delivering a high volume of new Identity Security solutions to market this year. These investments benefit all customers and have helped us to extend our industry-leading platform to be the most comprehensive SaaS identity platform in the market.

A few of these recent capabilities include new SaaS-delivered AI services like access modeling, role insights and access request recommendations. Deeper integration into critical business applications that enabled remote work and the sensitive data housed within including applications like Slack, Microsoft Teams, Zoom and Jira. And finally, the ability to govern and secure access to cloud infrastructure like AWS, Azure and the Google Cloud platform within the SailPoint Identity platform.

Turning to 2021, we believe we are well-positioned to continue to build upon the strong market momentum established in 2020. Let me highlight a few of the ways we're executing against the attractive opportunity in front of us. First, we are investing to meet the growing market demand at the upper end of the market. I mentioned earlier that we expect to see more large enterprises embrace a SaaS-delivered approach to Identity. To address this increased interest, we are laser-focused on building innovation into our SaaS platform and address the needs of global enterprise customers. This requires us to take a sophisticated yet intuitive approach to Identity that supports the complexity and velocity of our customers' business environment.

Second, we are reorienting our business to focus on subscription-based pricing, regardless of how a customer chooses to deploy with us. Obviously, our SaaS solutions have always been subscription-based, but we have also seen increasing demand for this pricing approach from customers deploying our software, whether on-prem or in the cloud. This decision is primarily a reflection of our customer's choice, but it will also simplify our selling, contracting and renewals process across the company. In addition, the simplified pricing model will lead to lower upfront investment for customers and higher customer lifetime value and more predictable revenue for SailPoint.

And third, we're expanding upon our market opportunity by pivoting to address adjacent market needs for customers. For example, we recently announced the acquisition of Intello, a SaaS-management platform. This acquisition helps us to address an emerging need for companies who lack visibility into the entirety of their SaaS app landscape due to a sharp rise in shadow IT happening across most businesses today. This additional capability will help our customers to see and understand the full extent of their SaaS application landscape and then put the right Identity Security controls around who should have access and how that access is being used. This acquisition will allow our customers to securely achieve their SaaS adoption goals by ensuring they understand the risks associated with new SaaS applications, even those in the realm of shadow IT. And this new functionality will fit neatly into what companies are already doing to govern the rest of their critical business applications in SailPoint's Identity platform.

Taken together, we believe these strategic moves will drive incremental value for both our customers and SailPoint in 2021, and will continue to strengthen our competitive position. We will be discussing in greater depth our 2021 focus, our business strategy and our long-term financial goals during our first ever Analyst Day, which takes place tomorrow February 26, 2021 beginning at 11:00 AM Eastern Time. We hope you can join us.

In closing, we are very pleased with the strong performance of the business over the course of 2020 and believe that we're well-positioned for continued success in 2021. We believe our differentiated platform and an increased depreciation for the criticality of Identity Security's role in securing the modern enterprise will continue to drive interest and demand. We have the right team, technology and vision to continue to grow our global footprint throughout 2021.

With that, I'd like to hand it over to Jason, who will cover our financial performance in greater detail.

Jason Ream -- Chief Financial Officer

Thanks, Mark, and thank you to everyone joining us on the call today. As Mark mentioned in the beginning of the call, we're pleased with our performance in Q4 and throughout 2020. Here are some of the financial highlights that I'd like to call out with respect to Q4.

First, total revenue of $103 million, representing 16% growth year-over-year and more than $8 million above the high-end of our previous guidance range. Second, subscription revenue of $56 million, representing 38% growth year-over-year and $3 million above our previous guidance. This outperformance was driven by strong sales performance and by better than expected retention of our SaaS and maintenance customers. Third, non-GAAP operating income of $13 million, well above our expectations.

This outperformance was driven by revenue well ahead of our plan and by expenses slightly under plan. While we are aggressively investing in the business, our team is disciplined and tends to find efficiencies as we execute through our plan. And lastly, we have two new metrics we'll be disclosing going forward and we'll go into more detail on those tomorrow in our Analyst Day.

But to give you a quick preview, we closed the year with ARR of $251 million, representing 40% year-over-year growth and SaaS revenue for the year was $67 million, an increase of 58% from 2020. In terms of execution throughout the quarter, we had a very balanced performance with all of our geographies contributing nicely to growth. Additionally, we saw a nice balance of deals in the quarter, with a healthy number of good-sized transactions but without any reliance on the mega deals.

In Q4, we continue to see our business transition toward SaaS, with SaaS representing the highest percentage of new bookings in our history. At the same time, just as we did in Q2 and Q3, we saw our software customers continue to move toward subscription opting for term license. In Q4, subscription arrangement in their SaaS to term license made up more than two-thirds of our new bookings in the quarter.

As we move on to the rest of the call, please note that unless otherwise stated, all references to expenses and operating results are calculated on a non-GAAP basis and exclude the items outlined in the GAAP to non-GAAP reconciliations provided in today's press release.

Combined gross margins in the quarter were 81%, the same as last quarter. Underneath the covers, SaaS gross margins improved quarter-over-quarter and year-over-year reaching record levels. SaaS gross margins benefited from both increase in scale as well as continued focus by our DevOps and engineering teams on efficiently delivering our SaaS platform. Operating expenses were a bit below what we expected to spend in the quarter, some conservative assumptions on non-headcount expense as we entered the quarter as well as some operating efficiencies created by our team as we executed throughout the quarter.

Turning toward the year in front of us, there are few points to keep in mind as we discuss our expectations for 2021. First, we expect to continue to see strong demand for our solutions and to drive a high growth rate in our new bookings. Second, we expect for our business model to continue to shift as we accelerate in the transition toward SaaS and subscription. In fact, we are now taking a more proactive position on the subscription shift, which we'll talk about in-depth tomorrow during our Analyst Day. But as a result of the transition, I'll focus our guidance a bit differently than we have in the past. And third, we plan to aggressively invest in our business, confident in the opportunity we see in front of us, not just for 2021 but for years to come.

So the first few I'll give as we initiate our 2021 guidance is around total ARR. We finished 2020 with total ARR of $251 million and expect to grow that to $333 million to $339 million by the end of 2021, representing growth of 33% to 35%. Total ARR does get a little tailwind as we make the transition to subscription, but we believe it's a great indicator of the shape of our business, capturing not only new recurring bookings, but also the scale and the retention of our recurring revenue base. As a result, we'll be providing total ARR results every quarter going forward and we'll update our annual guidance as required.

In terms of revenue, our current expectations for total revenue for the full year of 2021 are in the range of $404 million to $412 million. Out of the total, we expect subscription revenue to be in the range of $256 million to $260 million, representing a growth rate of 30% to 32%. And to help you build your model, I'd say that we expect license revenue to be in the range of $100 million to $104 million, while the remainder of our revenue coming from services and other.

And you may have seen that given the focus on SaaS in our go-forward plans, we're now providing SaaS revenue in our reporting as well. Our current expectations for 2021 are for SaaS revenue of $96 million to $100 million, representing year-over-year growth of 43% to 49%. There is some conservatism in that number, which you may see as you compare it to our 2020 results of 58% growth versus 2019. There is still some short-term uncertainty around how much of our new bookings will be staffed in any given period, but we are very bullish about the growth prospects for SaaS revenue over time.

Lastly on revenue. I mentioned a few minutes ago that we expect our business to accelerate it's shift with subscription. And as I'm sure you're aware that impacts the growth rates that we see in recognized revenues. In 2021, we expect that headwind to be approximately 12 points of recognized revenue growth. In other words, at our current expectations for new bookings, if the mix in 2021 was the same as it was in 2020, our revenue growth expectations would be approximately 12 points higher or in the range of 23% to 25%.

In terms of profitability for the full year of 2021, we expect to be in the range of breakeven to a non-GAAP operating loss of approximately $10 million. There are few things to keep in mind with our earnings outlook. First, we plan to aggressively ramp our investment in go to-market capabilities and capacity and our investment in product development. Fundamentally, we're focused on building the foundation for the multi-billion dollar business that we believe SailPoint can become.

Second, keep in mind that 2020 was a year in which expenses were a bit lower than you might normally expect. And as we look forward to 2021 from today, we are assuming some renewed travel and facilities expenses, which were lower than planned in 2020.

Lastly, our investment plan is essentially aligned with the fundamental economic growth of the business set differently, our earnings outlook would largely be in line with our 2020 non-GAAP operating income if you were to adjust for the incremental revenue headwind we will face in 2021 as part of our transition to a subscription model.

Turning to the first quarter, we expect total revenue to be in the range of $90.5 million to $92 million, representing 20% to 22% growth over Q1 of 2020, and we expect subscription revenue to be $58 million to $58.5 million or 32% to 33% growth year-over-year, and we expect non -- so we expect to see non-GAAP operating income of breakeven to $1 million.

As I close, I'll say that we're proud of the performance that we delivered in Q4 and the full year of 2020, but really, we're looking forward to what we can do in the future. We believe we're well-positioned in an attractive market with an exciting product portfolio and roadmap, a great team and a business model shift well under way that we expect will deliver significant value to our investors and to our customers. And we're also looking forward to giving you more detail on our business at our Analyst Day tomorrow.

With that, I'd now like to turn to the operator to begin the Q&A portion of the call.

Questions and Answers:

Operator

[Operator Instructions] Thank you. And our first question is from the line of Matt Hedberg with RBC. Please proceed with your question.

Matt Hedberg -- RBC Capital Markets -- Analyst

Hey guys, thanks for taking my questions. Congrats on the strong close to the year. I guess -- and thanks for the disclosures too, obviously, we're all -- I think we're all looking forward to tomorrow's Analyst Day. When we look at the SaaS mix, I think it exited the year at about a 19% mix, I think you're guiding for the full year '21 about 24% of total revenue being SaaS. I am curious, as you progress here, are you going to start to incent reps and maybe even customers to sort of lean into SaaS a bit more, just sort of wondering on the go-to-market side there.

Jason Ream -- Chief Financial Officer

Yeah. Thanks, Matt, and thanks for the comments about the quarter. We provided a slight incentive to reps last year and that worked very well. A slight incentive for them to sell SaaS rather than to sell the on-prem product and that worked very well. We're dialing that back a bit this year. There is still -- look, we're always incenting sales reps to do the things that we want them to do, and obviously SaaS is our future direction and so, we're aligned there. But no, there is not -- it's not as if we have to do anything unnatural here. That's -- there is a very natural market pull in that direction, the product is a fit and so, it's a -- there is sort of a synergy coming from both sides.

Matt Hedberg -- RBC Capital Markets -- Analyst

That's great. And then I guess on the acquisition of Intello, I think Mark, you touched on it briefly in your prepared remarks, but maybe just a little bit more on how you expect to integrate this into the platform and -- because obviously it's a little bit different than your historic focus on just pure Identity with now SaaS at management, but maybe just a little bit more details there in terms of the integration plans and kind of the go-to market there.

Mark McClain -- Chief Executive Officer and Co-founder

Yeah. Sure, Matt, and thanks for the comments as well. Yeah, no we found them as we were looking for some ways to accelerate our ability to cover that kind of explosion in SaaS apps. So in particular we felt like to add some kind of slick technology that enables them to see some of the less aware or unmanaged SaaS apps in the environment of the shadow IT concept.

The other thing we like to add some activity data technology that allows us to kind of parse through activity data. So they had a couple of early technology wins that we felt were very attractive and yet they themselves were getting pulled toward integration with Identity tools we found as they had started that kind of get into their market a little bit. There is very early stage with great young group of folks. And so, yeah, we see it is a nice extension and kind of analogous to what we are focused on with a little more explicit focus on those areas.

Matt Hedberg -- RBC Capital Markets -- Analyst

Thanks guys.

Jason Ream -- Chief Financial Officer

Thanks, Matt.

Operator

Our next question is from the line of Rob Owens with Piper Sandler. Please proceed with your questions.

Rob owens -- Piper Sandler -- Analyst

Great, thank you guys very much. And I'm going to hold on to just one question because I have a lot sort out for Jason for tomorrow. So, Mark, in a -- at a high level relative to Sunburst, maybe you can talk about the role of governance when we see attack like that and they go after identities. And where customer conversations have been since this, a potential grooming for your space and do you see an uplift from it or is it just another security event that just raises awareness overall. Thanks.

Mark McClain -- Chief Executive Officer and Co-founder

Thanks, Rob, and, Jason only minorly cringed when you said what you said. No, I'm kidding. He is fine. We are looking forward to tomorrow too. No look, I think it's more to the latter, Rob. While nobody is happy about what happened there, at least of all the folks at SolarWinds and FireEye and others, it was not a particular spike that we think will fundamentally shift the demand curve for us.

We felt like a lot of customers are already well aware of these kinds of risks. This is obviously as we all now learned what we know of it at least, a very sophisticated coordinated attack, and it just continues to keep the spotlight on the importance of, as we like to say, knowing who has access to what. And so I think it won't create a real start shift or anything in the demand profile coming up, but -- and like our guys haven't seen a sudden spike in interest, it's just kind of more like head nodding like, yeah, there is another ugly story and this is why we got to keep our focus on getting our security even stronger in our business. That's the kind of reaction we hear in the field.

Rob owens -- Piper Sandler -- Analyst

Sounds good. Thanks, Mark.

Mark McClain -- Chief Executive Officer and Co-founder

Thanks, Rob.

Operator

Thank you. Our next question is from the line of Brent Thill with Jefferies. Please proceed with your question.

Joseph Gallo -- Jefferies -- Analyst

Hey, guys. This Joe on for Brent. Thanks for the question. It's great to hear about the increased traction with SaaS from the large enterprises. What's reduced that friction? Is it more of a feature-rich solution now? I know full parity might not be the way to think about it, but are you where you want it to be or is it more just the sales force is more confident leading with that?

Mark McClain -- Chief Executive Officer and Co-founder

Actually Joe, it's Mark. I'd say it's all three factors, I think you articulated it too clearly and sort of implied the third. It is a market pull from customers, it is an increasing strength of the product, the SaaS product, to be kind of relatively equivalent from a use case coverage and it's a comfort level in our field and our partners to bring that solution to the large-scale enterprises. So it's really all three converging to create a very good environment for us to win there.

Joseph Gallo -- Jefferies -- Analyst

Okay. And then, really appreciate the extra color as it relates to the model. I'm just curious of that I think 100 to 104 in license, what's the mix? Are you continuing to sell perpetual going forward? I was a little unclear with that or like what's the expected mix with term there? And then as we think about the SaaS line, you gave fantastic guidance for next year, now how much of that is implied transition from maintenance customers today that you're trying to upsell?

Jason Ream -- Chief Financial Officer

So Joe, this is Jason. Let me take that in reverse order. There is no transition in our model or we have a installed base of IdentityIQ customers that represents our maintenance stream, that is a happy customer base. We're not going to try and move them. If they want to move at some point, if they're looking to move to SaaS or if the customer is an older deployment that thinks the easiest way to upgrade is to move to the SaaS offering, then we'll be there for them and we'll make that happen. But we're -- there is no transition program. So nothing in our numbers from that perspective.

The other part of your question was around license and our license revenue does have both perpetual license and the upfront portion of term license that gets recognized at the beginning of a contract per 606 Accounting Rules, and we'll talk a little bit more about that tomorrow. We are definitely moving more toward subscription and more toward term license and more proactively than we did last year.

Joseph Gallo -- Jefferies -- Analyst

Okay, great to hear. Very helpful, thanks.

Operator

Thank you. Our next question is from the line of Brian Essex with Goldman Sachs. Please proceed with your question.

Brian Essex -- Goldman Sachs -- Analyst

Hi, good afternoon, and thank you for taking the question. I guess I was wondering if I could dive in a license guidance, great to see ARR number and subscription revenue guidance, that's fantastic. On the license side, what's your visibility into that trajectory? What do you see in the pipeline, is that based on renewals or is it more new enterprise structuring of pipeline, maybe just a little bit of color there.

Jason Ream -- Chief Financial Officer

Yeah. The license guidance is more based on new. They are under 606 if we renew a term license, we will get some license revenue again upfront in the renewal portion of the contract, but we just don't have that many old term license contracts that are up for renewal, that wasn't something, we're doing a lot in the business three years ago. In terms of visibility, look, that's -- the -- no change necessarily there.

Other than I would say, directionally, as we've progressed in the business, particularly in the last year and a half with Matt Mills, but just generally maturing of the business, we've put more instrumentation. We put more focus and we put more resources around our sales pipeline and around visibility into what's happening going forward, but at the end of the day, it's the pipeline and the forecast. There's nothing structural necessarily there that's much different.

Brian Essex -- Goldman Sachs -- Analyst

Got it. And then, maybe just a follow-up. Is there any change in the way that you're incentivizing the sales force in that channel with regard to selling IdentityNow versus IdentityIQ and any progress in terms of channel relationships that are notable?

Jason Ream -- Chief Financial Officer

Yeah. I'll talk about the incentives and Mark, if you want to jump in about the channel and partner relationships. And as I have said before, look, we have obviously always some incentives in terms of which direction we want people to go, but in terms of selling SaaS or in terms of selling term versus perpetual, that's not something we need to put incentives in any meaningful way to drive those results. We're really talking about whole from the market here, with customers actually visits really more interested in a subscription arrangement, it's really how they're buying software and technology these days and so, it just fits with their buying patterns.

Mark McClain -- Chief Executive Officer and Co-founder

And Brian to the channel part of that, I'd say in general, the great majority of our partners have been actively getting their people spect-up on our SaaS products IdentityNow, they're more and more comfortable selling SaaS products themselves in the marketplace. They are balancing the need to keep it stable, group of folks you can do the services work around our IdentityIQ, because given those are deployments and they stretch out over many years, in some cases, as customers expand and get into new divisions and such. So they have a lot of bench strength in IdentityIQ and they're building bench strength in IdentityNow, but they are all seeing the momentum we are in the market, and they've kind of right rejigger their teams to get ready for that sort of a momentum even increasing in '21.

So yeah, in general, they're seeing the same thing and their pipelines that we're seeing is that the bulk of the pipeline is beginning to shift to SaaS.

Brian Essex -- Goldman Sachs -- Analyst

Got it, very helpful. Thank you.

Mark McClain -- Chief Executive Officer and Co-founder

You bet. Thanks.

Operator

Thank you. Our next question is from the line of Hamza Fodderwala with Morgan Stanley. Please proceed with your question.

Hamza Fodderwala -- Morgan Stanley -- Analyst

Hey, guys. Thank you for taking my question, and I hope you guys are all doing well down there in Texas. So just I wanted to ask a couple of questions. I'm sorry if this was touched upon earlier. But just on the license revenue declined this quarter, I appreciate the SaaS transition really accelerating, but any color you can give around sort of why that declined and perhaps more material pace than some of us might have been expecting, given the fact that three quarters year-to-date it's definitely been growing quite strong.

Jason Ream -- Chief Financial Officer

Yeah. Thanks Hamza, this is Jason and down here in Texas we're warmer this week than we were so thanks.

Hamza Fodderwala -- Morgan Stanley -- Analyst

Excellent.

Jason Ream -- Chief Financial Officer

And it's brighter at night than it was last week. No, on the license side, look, that's something we've been signaling for a long time and we expect that to decline over time. Now, we don't expect it to go away. We think there is a segment of the market for whom IdentityIQ is the right product, but IdentityNow is capable of serving every segment of the market. We've talked before about while IdentityNow might not be able to serve the high-end or it might not be able to serve the largest etc., it's there, it's there, right? It is a product to conserve any part of the market.

Now, there are certain customers who might want their data on-prem or who might need to have single tenancy for regulatory reasons or for their own security policy reasons, whatever it might be and IdentityIQ is there for them. But fundamentally, our growth is coming from IdentityNow and you should expect for IdentityIQ to be declining. We're going to go into more detail on that tomorrow and give you a picture of what that looks like in 2021 and versus 2020, and what that looks like over the next few years and our current expectations. But that's definitely the view that you should have is that that is becoming a smaller piece of the business.

Hamza Fodderwala -- Morgan Stanley -- Analyst

That's helpful. Will wait till tomorrow morning then. Thank you.

Mark McClain -- Chief Executive Officer and Co-founder

Thank you.

Jason Ream -- Chief Financial Officer

Thanks.

Operator

[Operator Instructions] The next question is from the line of Andrew Nowinski with D.A. Davidson. Please proceed with your question.

Andrew Nowinski -- D.A. Davidson -- Analyst

Great. Thank you and congrats on another great quarter. So you've talked about the market shifting to SaaS, and I'd imagine that's loosening up some of the customers that are running legacy solutions from the likes of Oracle CA and IBM. And I know you also talked about AI possibly being the feature that starts to convince those customers to move to a better platform like SailPoint. So I'm curious if you've seen any sort of change or increase in your competitive displacements relative to prior quarters?

Mark McClain -- Chief Executive Officer and Co-founder

Hey, Andy, thanks. It's Mark. Frankly no, really, it's still a good, solid, steady drumbeat. I think we would say we see good momentum in the field, customers engaging with our field that have those legacy platforms. So it's still a good steady drumbeat. We have never seen a sudden uptick from all the many things that might have created such COVID SolarWinds any other things. But yeah, the technology capabilities in our SaaS product including the AI capabilities, which I think really are a step function forward from the kind of traditional capabilities of their legacy products. All that seems to create a lot of interest in dialog and some set of those customers are moving quarter-by-quarter-by-quarter, but there hasn't been a notable uptick in the rate of that.

Andrew Nowinski -- D.A. Davidson -- Analyst

Okay. Yet to come it sounds like. Maybe then also hearing from channel partners about how the remote work environment may have increased the need for an IGA solution, providing customers with better visibility to who has access to what application. So I'm wondering if you could just discuss kind of your -- how that has impacted growth if at all and maybe just rank order your key growth drivers that you're seeing right now.

Mark McClain -- Chief Executive Officer and Co-founder

Yeah. The way we think about Andy is a use a metaphor a couple of times, hopefully it's helpful. In some ways the customers before the pandemic were somewhat aware of their lack of great visibility and control over true security of who had access, right? There was a -- the whole digital transformation movement has been a lot about increasing new access to new systems, because customers are buying and or building all these new systems to drive their business forward. And so, there was a rapid enablement, rapid gaining or granting excuse me of access.

And behind that was maybe a bit of concern as to how well controlled it was. So what we've sort of describe the effect of the pandemic, which again was drove people to be remote than working from home or working from anywhere, was it sort of like shining a spotlight on cobwebs in a corner. The cobwebs were there, the light just expose them, but now that they are exposed, people feel an urgency to deal with it. And I think it's more that the pandemic and the working from home phenomenon sort of caused people to go, well, I do need to deal with the fact that I don't have great visibility and control.

It didn't necessarily change dramatically just because of working from anywhere. One thing is we don't want to feel the pressure of as you know people used to have five access points and now they have 50, that's not what happened. But they might have gone from five to eight and they did -- now they've access to those eight from a less secured fundamental environment at home and that caused people to be worried about exposure and risk. So it's been a general tailwind for the business, not a sudden surge like Zoom experienced for instance, but a good tailwind, but more along the lines of accelerating a trend that was already visible and it just made it better.

Andrew Nowinski -- D.A. Davidson -- Analyst

Great, thank you. Keep up the good work guys.

Mark McClain -- Chief Executive Officer and Co-founder

Thank you, Andy. Appreciate it.

Jason Ream -- Chief Financial Officer

Thanks, Andy.

Operator

Our next question is from the line of Joshua Tilton with Berenberg Capital. Please proceed with your questions.

Joshua Tilton -- Berenberg Capital Markets -- Analyst

Yeah. Hey, guys, thanks for taking my question. The first one and apologies if I missed this, but in regards to the term contribution, was there any meaningful contribution this quarter to license revenue sometime?

Jason Ream -- Chief Financial Officer

Yeah. We had a fair amount of term license in the quarter in our new bookings, it -- consistent with what we saw in Q2 and Q3 of 2020, there was strong customer interest in term license and that's something we were capable -- comfortable with and capable of doing. And so, yeah, we did have term license contribution as well.

Joshua Tilton -- Berenberg Capital Markets -- Analyst

And then just to follow up on that, I guess some of the feedback that we have received from the channel is basically the on-premise business would have done even better in 2020, if there wasn't COVID. So given that you guys kind of gave us a similar message around the on-premise business going into 2020 last year, and then it obviously meaningfully outperformed. I guess what gives you the confidence today that this is the year of SaaS and that IdentityIQ is going to start to decline?

Jason Ream -- Chief Financial Officer

So that's kind of two questions in there, Joshua. One is confidence around around IdentityNow and the other one I guess is confidence in a different sense around IdentityIQ direction. And on IdentityNow, look, we get the confidence from all sorts of places, but particularly starting with the product and its capability and the success that we've had selling that to and deploying with very large complex customers and the feedback that we've gotten from them as they used the product.

So it -- as Mark answered one of the questions earlier around SaaS, is that the market is the product, is at the -- your confidence, it's all of those,right. And so I think all those together tell a story that makes us very confident that last year was the year of SaaS, like the acceleration that we saw in the SaaS business relative to historical trends were certainly there, and I think this year will -- can be another year of SaaS.

Now, the question around identityIQ is a little bit different. And last year we had sort of the dynamic that the pipeline going into the year was built during a time when SaaS was not the lead product for us. And even during the early parts of 2020, we did have -- did not have the sort of level of confidence around SaaS that we do now, confidence on IdentityNow, that we have currently. So what we closed even at the end of the year when our confidence level was really high in SaaS, what we closed was built during a time when that wasn't necessarily the case, right. So I wouldn't take last year's results as indicative of the direction that IdentityIQ is going.

As you look at this year, we've given you the guidance of what we believe is going to happen, all right, that this is not hedging one direction or another on the mix of IdentityNow versus IdentityIQ. Look, our pipeline as you would imagine, going into the year and throughout the course of the year is larger than the bookings we need to meet our expectations, and within that pipeline, there is both SaaS and on-prem software. It can always happen that the mix end up shifting one direction or another based on that pipeline and based on the new pipeline that we built throughout the year, but our current expectation is for what we've guided to.

And then long-term, as I I think I said to Tom's question, look, we believe that the IdentityIQ portion of our business will be declining. Now it will be there we think, for as far as forward as we can see at this point, right. There will be some portion of our new bookings and some portion obviously of our installed base and recurring revenue base that's IdentityIQ related, but not only is that a smaller piece going forward of the business every year, but what we believe it actually will be declining year-over-year as well.

Joshua Tilton -- Berenberg Capital Markets -- Analyst

Thank you very much. Look forward to tomorrow.

Jason Ream -- Chief Financial Officer

Thanks.

Operator

Thank you. At this time, we've reached the end of the question-and-answer session. I'll now turn the call back to Mark McClain for closing remarks.

Mark McClain -- Chief Executive Officer and Co-founder

Well, again thank you to everyone. We anticipated that it might be a little trimmer because we've got a full day or half day I guess it is roughly, our plan with you all tomorrow and those that can join us. I appreciate those who could dial in tonight for sort of the quarter-end and year-end results, but we'll look forward to a much deeper longer conversation tomorrow. Thanks for taking the time to join us tonight, and we will talk to you tomorrow, those who can join us. Thanks again. Bye now.

Operator

[Operator Closing Remarks]

Duration: 43 minutes

Call participants:

Josh Harding -- Senior Vice President, Finance and Investor Relations

Mark McClain -- Chief Executive Officer and Co-founder

Jason Ream -- Chief Financial Officer

Matt Hedberg -- RBC Capital Markets -- Analyst

Rob owens -- Piper Sandler -- Analyst

Joseph Gallo -- Jefferies -- Analyst

Brian Essex -- Goldman Sachs -- Analyst

Hamza Fodderwala -- Morgan Stanley -- Analyst

Andrew Nowinski -- D.A. Davidson -- Analyst

Joshua Tilton -- Berenberg Capital Markets -- Analyst

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