0001564590-19-029443.txt : 20190806 0001564590-19-029443.hdr.sgml : 20190806 20190806165914 ACCESSION NUMBER: 0001564590-19-029443 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 73 CONFORMED PERIOD OF REPORT: 20190630 FILED AS OF DATE: 20190806 DATE AS OF CHANGE: 20190806 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Sailpoint Technologies Holdings, Inc. CENTRAL INDEX KEY: 0001627857 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 471628077 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38297 FILM NUMBER: 191002904 BUSINESS ADDRESS: STREET 1: 11120 FOUR POINTS DRIVE STREET 2: SUITE 100 CITY: AUSTIN STATE: TX ZIP: 78726 BUSINESS PHONE: (512) 346-2000 MAIL ADDRESS: STREET 1: 11120 FOUR POINTS DRIVE STREET 2: SUITE 100 CITY: AUSTIN STATE: TX ZIP: 78726 10-Q 1 sail-10q_20190630.htm 10-Q sail-10q_20190630.htm
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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                      TO                      

Commission File Number 001-38297

 

SailPoint Technologies Holdings, Inc.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

47-1628077

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

 

 

11120 Four Points Drive, Suite 100,

Austin, TX

78726

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (512346-2000

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.0001 per share

 

SAIL

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes      No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No  

 

The registrant had 89,122,643 shares of common stock outstanding as of August 1, 2019.

 

 

 

 


Table of Contents

 

SailPoint Technologies Holdings, Inc.
Table of Contents

 

 

PART I. FINANCIAL INFORMATION

Page

 

 

Item 1.

Financial Statements (Unaudited)

2

 

Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018

2

 

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018

3

 

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2019 and 2018

4

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018

6

 

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

30

Item 4.

Controls and Procedures

30

 

 

 

 

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

32

Item 6.

Exhibits, Financial Statement Schedules

33

 

Signatures

34

 


1


Table of Contents

 

PART I

ITEM 1. Financial Statements

Sailpoint technologies Holding, Inc. and subsidiaries

Condensed Consolidated Balance sheets

 

 

 

As of

 

 

 

June 30, 2019

 

 

December 31, 2018

 

 

 

(In thousands, except per share data)

 

 

 

(Unaudited)

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

93,049

 

 

$

70,964

 

Restricted cash

 

 

6,303

 

 

 

6,272

 

Accounts receivable

 

 

70,613

 

 

 

101,469

 

Prepayments and other current assets

 

 

23,289

 

 

 

21,850

 

Total current assets

 

 

193,254

 

 

 

200,555

 

Property and equipment, net

 

 

21,524

 

 

 

19,268

 

Right-of-use assets

 

 

31,330

 

 

 

 

Other non-current assets

 

 

22,973

 

 

 

20,374

 

Goodwill

 

 

219,377

 

 

 

219,377

 

Intangible assets, net

 

 

70,198

 

 

 

74,860

 

Total assets

 

$

558,656

 

 

$

534,434

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,444

 

 

$

4,636

 

Accrued expenses and other liabilities

 

 

21,768

 

 

 

21,731

 

Income taxes payable

 

 

591

 

 

 

2,143

 

Deferred revenue

 

 

95,496

 

 

 

95,919

 

Total current liabilities

 

 

121,299

 

 

 

124,429

 

Deferred tax liability - non-current

 

 

4,142

 

 

 

4,142

 

Long-term operating lease liabilities

 

 

38,813

 

 

 

9,788

 

Deferred revenue - non-current

 

 

19,928

 

 

 

18,382

 

Total liabilities

 

 

184,182

 

 

 

156,741

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value, authorized 300,000 shares, issued and outstanding 89,050 shares at June 30, 2019 and 87,512 shares at December 31, 2018

 

 

9

 

 

 

9

 

Preferred stock, $0.0001 par value, authorized 10,000 shares, no shares issued and outstanding at June 30, 2019 and December 31, 2018

 

 

 

 

 

 

Additional paid in capital

 

 

391,841

 

 

 

377,473

 

(Accumulated deficit) retained earnings

 

 

(17,376

)

 

 

211

 

Total stockholders' equity

 

 

374,474

 

 

 

377,693

 

Total liabilities and stockholders’ equity

 

$

558,656

 

 

$

534,434

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

2


Table of Contents

 

Sailpoint technologies Holding, Inc. and subsidiaries

Condensed Consolidated STATEMENTS OF OPERATIONS

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2019

 

 

June 30, 2018

 

 

June 30, 2019

 

 

June 30, 2018

 

 

 

(In thousands, except per share data)

 

 

 

(Unaudited)

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Licenses

 

$

19,333

 

 

$

19,620

 

 

$

38,002

 

 

$

36,428

 

Subscription

 

 

33,711

 

 

 

24,110

 

 

 

65,546

 

 

 

46,615

 

Services and other

 

 

10,010

 

 

 

9,926

 

 

 

20,089

 

 

 

19,554

 

Total revenue

 

 

63,054

 

 

 

53,656

 

 

 

123,637

 

 

 

102,597

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Licenses

 

 

1,015

 

 

 

1,260

 

 

 

2,074

 

 

 

2,398

 

Subscription

 

 

6,315

 

 

 

4,919

 

 

 

12,128

 

 

 

9,577

 

Services and other

 

 

8,379

 

 

 

7,197

 

 

 

16,376

 

 

 

14,171

 

Total cost of revenue

 

 

15,709

 

 

 

13,376

 

 

 

30,578

 

 

 

26,146

 

Gross profit

 

 

47,345

 

 

 

40,280

 

 

 

93,059

 

 

 

76,451

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

13,398

 

 

 

10,115

 

 

 

26,170

 

 

 

19,877

 

General and administrative

 

 

8,490

 

 

 

7,743

 

 

 

17,627

 

 

 

15,400

 

Sales and marketing

 

 

35,536

 

 

 

23,774

 

 

 

66,024

 

 

 

46,233

 

Total operating expenses

 

 

57,424

 

 

 

41,632

 

 

 

109,821

 

 

 

81,510

 

Loss from operations

 

 

(10,079

)

 

 

(1,352

)

 

 

(16,762

)

 

 

(5,059

)

Other expense, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income (expense), net

 

 

261

 

 

 

(2,800

)

 

 

272

 

 

 

(3,978

)

Other, net

 

 

(306

)

 

 

(569

)

 

 

(723

)

 

 

(716

)

Total other expense, net

 

 

(45

)

 

 

(3,369

)

 

 

(451

)

 

 

(4,694

)

Loss before income taxes

 

 

(10,124

)

 

 

(4,721

)

 

 

(17,213

)

 

 

(9,753

)

Income tax (expense) benefit

 

 

927

 

 

 

3,742

 

 

 

(374

)

 

 

6,472

 

Net loss

 

$

(9,197

)

 

$

(979

)

 

$

(17,587

)

 

$

(3,281

)

Net loss available to common stockholders

 

$

(9,197

)

 

$

(979

)

 

$

(17,587

)

 

$

(3,281

)

Net loss per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.10

)

 

$

(0.01

)

 

$

(0.20

)

 

$

(0.04

)

Diluted

 

$

(0.10

)

 

$

(0.01

)

 

$

(0.20

)

 

$

(0.04

)

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

88,767

 

 

 

86,246

 

 

 

88,533

 

 

 

85,984

 

Diluted

 

 

88,767

 

 

 

86,246

 

 

 

88,533

 

 

 

85,984

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

3


Table of Contents

 

Sailpoint technologies Holding, Inc. and subsidiaries

Condensed Consolidated STATEMENTS OF STOCKHOLDERS’ EQUITY

 

 

 

For the Three Months Ended June 30, 2019

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Number

of shares

 

 

Par

value

 

 

paid in

capital

 

 

Accumulated

deficit

 

 

Stockholders'

equity

 

 

 

(In thousands)

 

 

 

(Unaudited)

 

Balance at March 31, 2019

 

 

88,598

 

 

$

9

 

 

$

383,321

 

 

$

(8,179

)

 

$

375,151

 

Exercise of stock options

 

 

217

 

 

 

 

 

 

624

 

 

 

 

 

 

624

 

Restricted stock units vested, net of tax settlement

 

 

33

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,970

 

 

 

 

 

 

4,970

 

Common stock issued under employee stock plan

 

 

202

 

 

 

 

 

 

2,926

 

 

 

 

 

 

2,926

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(9,197

)

 

 

(9,197

)

Balance at June 30, 2019

 

 

89,050

 

 

$

9

 

 

$

391,841

 

 

$

(17,376

)

 

$

374,474

 

 

 

 

 

For the Six Months Ended June 30, 2019

 

 

 

Common Stock

 

 

Additional

 

 

Retained

earnings

 

 

 

 

 

 

 

Number

of shares

 

 

Par

value

 

 

paid in

capital

 

 

(accumulated

deficit)

 

 

Stockholders'

equity

 

 

 

(In thousands)

 

 

 

(Unaudited)

 

Balance at December 31, 2018

 

 

87,512

 

 

$

9

 

 

$

377,473

 

 

$

211

 

 

$

377,693

 

Exercise of stock options

 

 

488

 

 

 

 

 

 

1,796

 

 

 

 

 

 

1,796

 

Restricted stock units vested, net of tax settlement

 

 

124

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

9,609

 

 

 

 

 

 

9,609

 

Incentive units vested

 

 

724

 

 

 

 

 

 

37

 

 

 

 

 

 

37

 

Common stock issued under employee stock plan

 

 

202

 

 

 

 

 

 

2,926

 

 

 

 

 

 

2,926

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(17,587

)

 

 

(17,587

)

Balance at June 30, 2019

 

 

89,050

 

 

$

9

 

 

$

391,841

 

 

$

(17,376

)

 

$

374,474

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

4


Table of Contents

 

Sailpoint technologies Holding, Inc. and subsidiaries

Condensed Consolidated STATEMENTS OF STOCKHOLDERS’ EQUITY

 

 

 

For the Three Months Ended June 30, 2018

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Number

of shares

 

 

Par

value

 

 

paid in

capital

 

 

Accumulated

deficit

 

 

Stockholders'

equity

 

 

 

(In thousands)

 

 

 

(Unaudited)

 

Balance at March 31, 2018

 

 

85,953

 

 

$

9

 

 

$

358,859

 

 

$

(5,761

)

 

$

353,107

 

Exercise of stock options

 

 

339

 

 

 

 

 

 

831

 

 

 

 

 

 

831

 

Restricted stock units vested, net of tax settlement

 

 

51

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,116

 

 

 

 

 

 

4,116

 

Incentive units vested

 

 

253

 

 

 

 

 

 

11

 

 

 

 

 

 

11

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(979

)

 

 

(979

)

Balance at June 30, 2018

 

 

86,596

 

 

$

9

 

 

$

363,817

 

 

$

(6,740

)

 

$

357,086

 

 

 

 

 

For the Six Months Ended June 30, 2018

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Number

of shares

 

 

Par

value

 

 

paid in

capital

 

 

Accumulated

deficit

 

 

Stockholders'

equity

 

 

 

(In thousands)

 

 

 

(Unaudited)

 

Balance at December 31, 2017

 

 

84,948

 

 

$

8

 

 

$

353,609

 

 

$

(25,220

)

 

$

328,397

 

Cumulative effect adjustment from the adoption of ASC 606

 

 

 

 

 

 

 

 

 

 

 

21,761

 

 

 

21,761

 

Exercise of stock options

 

 

365

 

 

 

 

 

 

893

 

 

 

 

 

 

893

 

Restricted stock units vested, net of tax settlement

 

 

51

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

9,255

 

 

 

 

 

 

9,255

 

Incentive units vested

 

 

1,232

 

 

 

1

 

 

 

60

 

 

 

 

 

 

61

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(3,281

)

 

 

(3,281

)

Balance at June 30, 2018

 

 

86,596

 

 

$

9

 

 

$

363,817

 

 

$

(6,740

)

 

$

357,086

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

5


Table of Contents

 

Sailpoint technologies Holding, Inc. and subsidiaries

CONDENSED Consolidated STATEMENTS OF CASH FLOWS

 

 

 

Six Months Ended

 

 

 

June 30, 2019

 

 

June 30, 2018

 

 

 

(In thousands)

 

 

 

(Unaudited)

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(17,587

)

 

$

(3,281

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

6,890

 

 

 

5,278

 

Amortization of debt issuance costs

 

 

51

 

 

 

191

 

Amortization of contract acquisition costs

 

 

4,691

 

 

 

3,401

 

Loss on modification and partial extinguishment of debt

 

 

 

 

 

1,536

 

Gain on disposal of fixed assets

 

 

(21

)

 

 

(48

)

Bad debt expense

 

 

89

 

 

 

175

 

Stock-based compensation expense

 

 

9,609

 

 

 

9,255

 

Operating leases, net

 

 

443

 

 

 

 

Net changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Accounts receivable

 

 

30,767

 

 

 

17,869

 

Prepayments and other current assets

 

 

(6,131

)

 

 

(4,869

)

Other non-current assets

 

 

(1,820

)

 

 

(655

)

Accounts payable

 

 

(1,192

)

 

 

663

 

Accrued expenses and other liabilities

 

 

(3,531

)

 

 

(10,024

)

Income taxes

 

 

(1,552

)

 

 

(7,529

)

Deferred revenue

 

 

1,123

 

 

 

14,645

 

Net cash provided by operating activities

 

 

21,829

 

 

 

26,607

 

Investing activities

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(3,623

)

 

 

(1,405

)

Proceeds from sale of property and equipment

 

 

17

 

 

 

8

 

Net cash used in investing activities

 

 

(3,606

)

 

 

(1,397

)

Financing activities

 

 

 

 

 

 

 

 

Debt issuance costs

 

 

(829

)

 

 

 

Repayment of debt

 

 

 

 

 

(60,000

)

Prepayment penalty and fees

 

 

 

 

 

(300

)

Repurchase of equity shares

 

 

 

 

 

(1

)