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Here's Why SailPoint Technologies Holdings Is Tanking Today

By Brian Feroldi - May 9, 2019 at 11:24AM

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First-quarter results looked good, but the company's guidance left investors wanting more.

What happened

In response to reporting first-quarter results and issuing soft guidance, shares of SailPoint Technologies Holdings (SAIL -0.30%), a cybersecurity company focused on identity governance solutions, fell 28% as of 10:45 a.m. EDT on Thursday.

So what

Here's a look at the key numbers from SailPoint's first quarter:

  • Revenue grew 24% to $60.6 million. This figure was at the high end of guidance and ahead of the $60.6 million that Wall Street was expecting.
  • Non-GAAP net loss was -$0.1 million, or $0.00 per share. That matched the consensus estimate. 

Check out the latest earnings call transcript for SailPoint Technologies Holdings.

As for guidance, here's what management expects to happen in the second quarter:

  • Revenue is expected to land between $59.7 million and $61.2 million. This range is well below the $65.3 million in total revenue that Wall Street was expecting. 
  • Non-GAAP loss per share should be between about -$0.05. That's below the $0.02 in EPS that was expected.

Management also updated its targets for the full year and the news wasn't pretty:

  • Revenue is now expected to be the range of $277 million to $281.5 million. That's far below its old range of $293 million to $299 million.
  • Non-GAAP income from operations is expected to land between $17.1 million and $18.6 million. That's also far below its prior range of $28 million to $31 million.
  • Non-GAAP net income per share is now projected to land between $0.14 and $0.16. That's also below its old range of $0.25 to $0.29.
Three people looking at a computer screen and acting concerned

Image source: Getty Images.

Given the weak guidance, it is no surprise to see shares being mauled today.

Now what

On the call with investors, CEO Mark McClain stated that the company's sales pipeline "has not matured at the rate we initially expected." However, he reaffirmed his belief that SailPoint's competitive position remains "as strong as ever and we have best-in-class solutions for both large enterprise and mid-market enterprise buyers."

Management stated that is taking action to address the sales shortfall. If the company can get its growth trajectory back on track then today's discount could prove to be an attractive entry price into this growing software-as-a-service business. However, if this level of growth is the new normal for the business, then there could be more downside ahead.

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