SailPoint's Q3 2026: Contradictions Emerge on IDaaS Diversification, SaaS Growth, AI Focus, and Flex Pricing Models

Date of Call: December 9, 2025

Financials Results

• Revenue: $282M, up 20% YOY
• Operating Margin: Adjusted operating margin 19.8% (Q3), well above guidance

Guidance:

• Q4 FY26 revenue expected $292M, up 22% YOY; adjusted operating margin 20.2%; adjusted EPS $0.09.
• FY26 revenue expected $1.069B, up 24% YOY; adjusted operating margin 18%; adjusted EPS $0.23; diluted share count ~565M.
• ARR guidance raised $12M to $1.122B, up 28% YOY; implies net new ARR $82M for Q4 (30% growth) and $245M for FY26 (26% growth).
• Flex licensing is SaaS, ratably recognized, tied to list rates; average contract ~3 years; management expects no material margin degradation.

Business Commentary:

* *Record ARR Milestone and Growth: - SailPoint surpassed $1 billion in annual recurring revenue (ARR) for the first time in fiscal Q3 '26, closing the quarter at $1.04 billion, representing a 28% year-over-year increase. - The growth was driven by strong demand, new product offerings, increased customer retention, and platform modernizations.

• *Product Innovation and Product Launch Success:
• The introduction of new products at the Navigate conference, such as SailPoint Machine Identity and real-time identity governance, has been well-received, with orders booked within a month of availability.

• This is attributed to strong customer interest in adapting to the evolving identity landscape and expanding digital identities like agents and machines.

• *Cross-Sell Expansion and Platform Modernizations:

• Cross-sell motions, including Non-Employee Risk Management, Machine Identity Security, and Data Access Security, more than doubled in ARR year-over-year.

• This expansion was driven by strong customer demand for more comprehensive identity security solutions and migrations to the Identity Security Cloud platform.

• *Usage of AI and Flex Licensing Model:

• SailPoint is embracing AI internally for several business functions, with early stage tools showing promising payback.
• The introduction of the flex licensing model is aimed at simplifying customer adoption of new solutions, contributing to the healthy expansion of the company's pipeline.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management emphasized momentum and confidence: "surpassed $1 billion in ARR... $1.04 billion, representing a 28% year-over-year increase," raised ARR guidance by $12M to $1.122B, and reported "adjusted operating income of $56 million or 19.8% margin, well above our guidance." Leadership repeatedly cited a "strong pipeline," accelerating product adoption and an optimistic outlook into Q4.

Q&A:

• Question from Joseph Gallo (Jefferies LLC): Congrats on the $1 billion ARR milestone. Can you talk about the top-of-funnel pipeline with new logos? Is agentic forcing people to reexamine their human identities as well?
  Response: Flex pricing (Digital Identity Flex) lowers entry cost and accelerates new-logo interest; AI is embedded in greenfield proposals, boosting demand.

• Question from Joseph Gallo (Jefferies LLC): On 4Q, any factors (slip deals, FX) to consider to gain comfort in the ramp into Q4?
  Response: Management is confident; Q4 is typical seasonality (about one-third of net new ARR), no meaningful slip-deal impact and healthy pipeline.

• Question from Robbie Owens (Piper Sandler & Co.): Any market confusion from consolidation and why is SailPoint defensible versus larger entrants?
  Response: SailPoint's moat is combined breadth (many identity types) and depth (entitlement detail/integrations); competitors struggle to match both at scale.

• Question from Gray Powell (BTIG): How does the Savvy acquisition / SAAM impact customer time-to-value and ability to move down market?
  Response: SAAM enables rapid Tier-1 discovery and categorization of applications, accelerating visibility and onboarding and supporting broader/go-to-market expansion.

• Question from Shaul Eyal (TD Cowen): How are you using AI internally to curb costs?
  Response: SailPoint is adopting AI across product, go-to-market and G&A; early-stage deployments are live and beginning to show payback.

• Question from Peter Levine (Evercore): How do you position versus traditional PAM as you move to new-gen PAM? And Brian, how does flex pricing affect margins and seasonality?
  Response: Privilege is shifting to ubiquitous, dynamic JIT models where SailPoint's identity depth/breadth is advantaged; flex is SaaS, ratable, tied to rate cards and not expected to materially degrade margins.

• Question from Ryan Lountzis (Morgan Stanley): How are you ramping sales personnel for new products and initiatives?
  Response: SailPoint is adding specialized sellers and leveraging solution-engineering specialization to onboard new product sales motions (e.g., data-focused sellers).

• Question from Jonathan Ruykhaver (Cantor Fitzgerald): Can you expand on data security success and attach rates with agent identity?
  Response: Cross-sell modules (Non-Employee, Machine Identity, Data Access Security) are doubling YoY with strong attach rates; Data Access Security will extend to structured data and be integral to agentic offerings.

• Question from Shrenik Kothari (Robert W. Baird): How are customers using Observability & Insights in practice and does it embed into SOC workflows?
  Response: O&I stitches identity telemetry to reveal risk chains, provides SOC integrations and potential OEM/deeper integrations to operationalize identity context across security workflows.

• Question from Matthew Hedberg (RBC): Any high-level guide rails for fiscal '27 on growth vs margins?
  Response: Management will prioritize growth over incremental margin expansion while retaining ability to drive margins; prior year benefited from term-revenue tailwinds that may not recur.

• Question from Junaid Siddiqui (Truist Securities): What hurdles to agentic AI adoption and how will organizations trust AI-driven identity decisions?
  Response: Two fronts: handling agent proliferation (third-party and bespoke agents) and building trust in AI decisions; SailPoint is developing agentic features (Harbor Pilot) and using AI internally for detection and root-cause to build confidence.

• Question from Todd Weller (Stephens Inc.): Will new capabilities catalyze more SaaS migrations and update on legacy displacements?
  Response: Yes—strong platform modernizations quarter; migrations often include cross-sell modules and yield 2–3x ARR uplift; only ~15% of maintenance base migrated so far, leaving significant runway.

• Question from Benjamin Bollin (Cleveland Research): Contribution of Non-Employee/Data/Machine Identity to ARR and flex contract durations/unit economics?
  Response: The combined module basket doubled YoY and represents low single-digit percentage of ARR today; flex (Navigator) deals are typical SaaS, ~3-year average, ratably recognized.

• Question from Joshua Tilton (Wolfe Research): How do you reconcile the upbeat tone with a lighter quarterly beat—anything around Fed or term-to-SaaS conversion to note?
  Response: Management points to strong net new ARR ($58M, +24% YoY; SaaS net new ARR +52% YoY), Fed term revenue tailwinds and overall annual beat—business health and pipeline are solid.

• Question from Gregg Moskowitz (Mizuho): How additive will just-in-time capabilities be and value for agentic protection?
  Response: JIT identity is critical for agentic protection—real-time sensing, anomaly detection and SOC integration are strategic priorities though financial impact is early-stage.

Contradiction Point 1

Identity as a Service (IDaaS) Market Diversification

It involves the evolution of the IDaaS market and the company's strategy in response to market dynamics, which can impact product development and customer acquisition.

Can you provide an update on new logo pipeline growth, particularly in IGA? Is the agentic aspect prompting users to reevaluate their human identities? - Joseph Gallo(Jefferies LLC, Research Division)

2026Q3: As folks are starting to move into this, and that is, how much do I need to get started? There's a certain amount of uncertainty. And so that's one of the reasons, I don't know if you saw it yesterday, we announced our flex pricing, the Navigator flex pricing models. This allows companies to get into this at a really nominal rate, then start growing into it from there. It's going to help accelerate a ton of interest because that's been one of the long poles in the tent, if you will. - Matthew Mills(CFO)

Can you explain the modernization trend in identity and the tipping point for legacy transformations? - Robbie Owens(Piper Sandler & Co., Research Division)

2026Q2: We're seeing an acceleration in migrations from legacy environments, driven by the need for Agentic support. This sense of urgency is leading to an increase in both legacy and IQ installed base migrations. - Matthew Mills(President)

Contradiction Point 2

Software as a Service (SaaS) Growth and Mix

It involves the company's financial strategy and revenue mix, which are critical for investor expectations and strategic planning.

What challenges are expected in adopting agentic AI for identity security? How are organizations being prepared to trust AI-driven identity decisions at scale? - Junaid Siddiqui(Truist Securities, Inc., Research Division)

2026Q3: We're seeing a strong demand for our SaaS offerings, and we're excited about our momentum in SaaS. As Brian mentioned, our SaaS ARR grew by 43% year-over-year for the quarter. Our SaaS ARR now represents 91% of total ARR, and we continue to expect our SaaS bookings to grow at least as fast as our overall bookings. - Mark McClain(CEO)

Can you discuss the trends in SaaS adoption versus term licensing and the pipeline trends? - Gabriella Borges(Goldman Sachs Group, Inc., Research Division)

2026Q2: The mix is largely SaaS, with Q2 at 86%. Q3 might see a bit more term, but we expect a continued trend towards SaaS. The mix reflects our target of about 90% SaaS. We're seeing interest in SaaS from both new customers and upsells. - Brian Carolan(CFO)

Contradiction Point 3

Focus on AI and Machine Identity

It reflects a shift in strategic focus and the perceived importance of AI and machine identity within the company's identity security offerings, which could impact market positioning and competitive strategy.

How is the new logo pipeline progressing? Is agentic prompting a reevaluation of human identities? - Joseph Gallo (Jefferies LLC, Research Division)

2026Q3: Look, I think there's a consistent thread in all of that as folks are starting to move into this, and that is, how much do I need to get started? There's a certain amount of uncertainty. And so that's one of the reasons, I don't know if you saw it yesterday, we announced our flex pricing, the Navigator flex pricing models. This allows companies to get into this at a really nominal rate, then start growing into it from there. It's going to help accelerate a ton of interest because that's been one of the long poles in the tent, if you will. - Matthew Mills(President)

What are the current pricing trends and competitive dynamics in the machine identity market? - Joel P. Fishbein (Truist Securities)

2026Q1: I think as we go back to the macro issues, and I think this is why we are well positioned because we had decided probably a year, maybe 18 months ago that we needed to invest in the machine identity part of the business because we recognized that there was an opportunity there and that we could differentiate ourselves. I mean, I think we have a much broader suite of capabilities then some of the folks who are focused on machine authentication or like machine authentication and tend to be pretty one-dimensional when it comes to their capability. - Mark D. McClain(CEO)

Contradiction Point 4

Flex Pricing Model Introduction

It involves the introduction of a new pricing model, which could significantly impact customer acquisition and revenue growth strategies.

Can you discuss the top-of-funnel pipeline with new logos? Is agentic causing people to reevaluate their human identities? - Joseph Gallo(Jefferies LLC, Research Division)

2026Q3: We announced our flex pricing, the Navigator flex pricing models. This allows companies to get into this at a really nominal rate, then start growing into it from there. - Matthew Mills(CRO)

How do SaaS and term contracts impact revenue and margin? - Brian Essex(JPMorgan)

2025Q4: SaaS is expected to be 90% of net new ARR. - Brian Carolan(CFO)

Contradiction Point 5

Customer Adoption of Agentic AI

It involves the company's stance on the adoption of AI in identity security, which is crucial for product development and competitive positioning.

What challenges will customers face in adopting agentic AI for identity security? How are you building trust in AI-driven identity decisions across organizations? - Junaid Siddiqui(Truist Securities, Inc., Research Division)

2026Q3: We're addressing the agent explosion with AI-driven management tools. - Mark McClain(CEO)

How does SailPoint plan to monetize non-human identities? - Peter Levine(Evercore ISI Institutional Equities, Research Division)

2025Q4: Our expertise in managing human identities positions us well for managing non-human identities. - Mark McClain(CEO)