S-1/A: SailPoint Aims for Second IPO, Targeting $21-$23 per Share

SailPoint, backed by Thoma Bravo, files for an IPO aiming to list on the Nasdaq under the symbol 'SAIL', offering 47.5 million shares with an expected price range of $21.00 to $23.00.

Summary

• SailPoint, a Delaware limited partnership intending to convert to a corporation named SailPoint, Inc., has filed for an IPO.
• The company is offering 47,500,000 shares of common stock, with selling stockholders offering an additional 2,500,000 shares.
• The anticipated initial public offering price is between $21.00 and $23.00 per share.
• Funds controlled by Thoma Bravo are expected to own approximately 88.0% of the outstanding common stock immediately after the offering (or 86.8% if the underwriters exercise their option in full).
• Cornerstone investors have indicated an interest in purchasing up to 20% of the offered shares.
• As of October 31, 2024, SailPoint's ARR was $813.2 million, with a YoY growth of 30%.
• SaaS ARR was $485.7 million, reflecting a 40% YoY increase.
• The company estimates its market opportunity at approximately $55 billion in 2024.
• For the year ended January 31, 2025, SailPoint expects ARR of $875 million to $877 million and SaaS ARR of $538 million to $540 million.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook, highlighting strong growth metrics and a large market opportunity, but also acknowledges risks and challenges associated with the business and industry.

Positives

• Strong ARR and SaaS ARR growth indicate a healthy subscription business.
• High dollar-based net retention rate of 114% suggests customer satisfaction and expansion.
• The company's transition to a SaaS-first model is substantially complete.
• The company has a large and growing market opportunity.
• The company has a strong ecosystem of partners and alliances.

Negatives

• The company has a history of net losses.
• The company has a substantial amount of indebtedness.
• Thoma Bravo will retain significant control, which could lead to conflicts of interest.
• The company's quarterly results fluctuate significantly and may not fully reflect the underlying performance of the business.

Risks

• Rapid growth may not be sustainable.
• Inability to acquire new customers or retain existing ones could harm future revenues.
• Intense competition in the identity security market.
• Cyber attacks or security breaches could disrupt operations and compromise sensitive information.
• Interruptions or outages affecting the delivery of the SaaS solution could adversely affect the business.
• Thoma Bravo's interests may conflict with those of other stockholders.
• The company's estimated market opportunity and forecasts of market growth may prove to be inaccurate.

Future Outlook

The company expects ARR of $875 million to $877 million and SaaS ARR of $538 million to $540 million for the year ended January 31, 2025.

Management Comments

• SailPoint has evolved as a company, as has the market we operate in, so I thought it would be helpful to share not just who SailPoint is today, but how we have evolved and enhanced our business and our offerings since our first IPO in 2017.
• We believe that identity security is at the absolute core of enterprise security.
• Enterprises now recognize that taking an inside out or identity centric approach to enterprise security is critical.
• We believe that AI-enabled identity security is the best path forward for enterprises that can no longer keep up with the speed and complexity surrounding identity and access issues in their organizations.
• This market is dynamic and evolving and I believe our depth of knowledge within identity is unmatched.

Industry Context

The announcement highlights the increasing importance of identity security in the face of rising cyber attacks and complex IT environments, aligning with broader industry trends.

Comparison to Industry Standards

• The document mentions competitors like IBM, Microsoft, Oracle, CyberArk, Okta, and One Identity.
• SailPoint's solutions are compared to legacy and homegrown identity solutions, highlighting the limitations of the latter.
• The document cites industry reports from Gartner, Forrester, and KuppingerCole recognizing SailPoint's leadership in the identity governance sector.
• The document references IBM's Cost of a Data Breach Report 2024, which states that the global average cost of a data breach in 2024 is nearly $5 million.
• The document references IDSAs 2024 Trends in Identity Security report, which states that 73% of companies surveyed cite identity security as a top three security priority.

Related Party Transactions

• Thoma Bravo acquired $50.0 million of our Term Loan on August 16, 2022, and as of January 15, 2025, Thoma Bravo held $32.7 million of our Term Loan.
• We expect to use a portion of our net proceeds from this offering to repay a portion of our Term Loan. As a result, assuming an initial public offering price of $22.00 per share (the midpoint of the estimated price range set forth on the cover page of this prospectus), we expect that Thoma Bravo will receive $21.7 million of our net proceeds in connection with such repayment.
• Also on August 16, 2022, we entered into an advisory services agreement with Thoma Bravo (as amended, the Advisory Services Agreement), pursuant to which we engaged Thoma Bravo as a financial, transactional, and management consultant for consultation and advice related to corporate strategy, budgeting of future corporate investments, acquisition and divestiture strategies, and debt and equity financings.
• The Advisory Services Agreement will be terminated in connection with this offering, and we expect to use $9.3 million of our net proceeds from this offering to pay all outstanding fees payable under the Advisory Services Agreement.

Stakeholder Impact

• Shareholders will experience dilution as a result of the offering.
• Employees may benefit from increased equity value and liquidity.
• Customers may benefit from increased investment in product development and customer support.
• Suppliers and creditors may benefit from improved financial stability.

Next Steps

• The company intends to use the net proceeds from this offering as follows (assuming an initial public offering price of $22.00 per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus): (i) approximately $52.8 million to settle in cash all outstanding equity awards that were issued in connection with the Take-Private Transaction, (ii) approximately $26.2 million to settle in cash all vested EARs, (iii) approximately $9.3 million to pay all outstanding fees payable by us to Thoma Bravo pursuant to the Advisory Services Agreement, (iv) approximately $690.0 million to repay a portion of our Term Loan, and (v) the remainder for general corporate purposes.

Key Dates

Keywords

identity security, SaaS, IPO, Thoma Bravo, ARR, SaaS ARR, market opportunity, subscription, cybersecurity, compliance