SailPoint Technologies Holdings (SAIL), a software company that helps other companies restrict access to their sensitive data, reported its first-quarter results on Wednesday.

The headline numbers for the quarter landed at the high end of management's guidance range. However, that was the end of the good news. Management noted that the company is experiencing commercial challenges that caused it to issue soft guidance for the current quarter and cut its full-year targets.

SailPoint Q1 results: The raw numbers


Q1 2019

Q1 2018

Year-Over-Year Change


$60.6 million 

$48.9 million


GAAP operating profit (loss)

($6.7 million)

($3.7 million)


GAAP net income 

($8.4 million)

($2.3 million)


GAAP earnings per share




Data source: SailPoint.

What happened with SailPoint this quarter?

  • License revenue grew by 11% to $18.7 million. Subscription revenue grew 41% to $31.8 million. Services and other revenue fell 5% to $10.1 million.
  • Total revenue of $60.6 million came in near the high end of management's guidance range of $59.5 million to $61 million.
  • Consolidated gross margin expanded 100 basis points year over year to 78%.
  • Non-GAAP net loss was $100,000.

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

Closeup of login screen with user name and password fields

Image source: Getty Images.

What management had to say

CEO Mark McClain was happy with SailPoint's quarterly numbers:

Our Q1 results were in-line with our guidance, with total revenue increasing 24% year-over-year. We added 46 net new customers during the quarter with solid partner contribution and ongoing success with legacy replacements. As organizations of all sizes move along their digital transformation journey, identity governance is increasing in strategic importance and our leading solutions are well positioned to meet the needs of our customers.

However, McClain noted some clouds:

We continue to be excited about the identity governance market and our best-in-class solutions, but we've seen some recent changes in our pipeline that are impacting our expectations for the second quarter and remainder of 2019.

Looking forward

On the conference call with analysts, McClain said that the company's pipeline isn't maturing at the rate that was initially expected. The company is changing its targeting and messaging to address this issue, but the challenges are going to put downward pressure on near-term revenue and profits.

Here's the guidance the company issued for the second quarter.

Metric Q2 2019 Guidance
Q2 2018 Actual
Total revenue $59.7 million to $61.2 million $54.6 million
Non-GAAP operating income (loss) ($3.5 million) to ($3 million) $4.6 million
Non-GAAP EPS ($0.05)   $0.03

Data source: SailPoint.

For context, Wall Street was expecting $65.3 million in total revenue and $0.02 in non-GAAP EPS. 

To make matters worse, management also lowered its full-year 2019 guidance range.

Metric Old Guidance Range
Updated Guidance Range
Total revenue $293 million to $299 million $277 million to $281.5 million
Non-GAAP operating income $28 million to $31 million $17.1 million to $18.6 million
Non-GAAP EPS $0.25 to $0.29 $0.14 to $0.16

Data source: SailPoint.

The downbeat guidance took a toll on Sailpoint's stock in the trading session following this earnings release.

McClain did his best to reassure investors that the company is aware of the problem and still has a bright future:

We believe we have identified the challenges and are making changes in our go-to-market initiatives. We are confident that we are on a path that sets us up well for the future.