0001564590-19-041073.txt : 20191106 0001564590-19-041073.hdr.sgml : 20191106 20191106163147 ACCESSION NUMBER: 0001564590-19-041073 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 78 CONFORMED PERIOD OF REPORT: 20190930 FILED AS OF DATE: 20191106 DATE AS OF CHANGE: 20191106 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: 191196793 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_20190930.htm 10-Q sail-10q_20190930.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 September 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 89,211,098 shares of common stock outstanding as of October 31, 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 September 30, 2019 and December 31, 2018

2

 

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018

3

 

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

4

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 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

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

36

Item 4.

Controls and Procedures

36

 

 

 

 

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

38

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

43

Item 6.

Exhibits, Financial Statement Schedules

44

 

Signatures

46

 


1


Table of Contents

 

PART I

ITEM 1. Financial Statements

Sailpoint technologies Holding, Inc. and subsidiaries

Condensed Consolidated Balance sheets

 

 

 

As of

 

 

 

September 30, 2019

 

 

December 31, 2018

 

 

 

(In thousands, except per share data)

 

 

 

(Unaudited)

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

464,332

 

 

$

70,964

 

Restricted cash

 

 

6,317

 

 

 

6,272

 

Accounts receivable

 

 

73,671

 

 

 

101,469

 

Prepayments and other current assets

 

 

25,932

 

 

 

21,850

 

Income tax receivable

 

 

2,465

 

 

 

 

Total current assets

 

 

572,717

 

 

 

200,555

 

Property and equipment, net

 

 

21,616

 

 

 

19,268

 

Right-of-use assets

 

 

30,321

 

 

 

 

Other non-current assets

 

 

23,389

 

 

 

20,374

 

Goodwill

 

 

219,377

 

 

 

219,377

 

Intangible assets, net

 

 

67,867

 

 

 

74,860

 

Total assets

 

$

935,287

 

 

$

534,434

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,632

 

 

$

4,636

 

Accrued expenses and other liabilities

 

 

28,937

 

 

 

21,731

 

Income taxes payable

 

 

 

 

 

2,143

 

Deferred revenue

 

 

103,317

 

 

 

95,919

 

Total current liabilities

 

 

134,886

 

 

 

124,429

 

Deferred tax liability - non-current

 

 

16,073

 

 

 

4,142

 

Convertible senior notes, net

 

 

304,777

 

 

 

 

Long-term operating lease liabilities

 

 

37,889

 

 

 

9,788

 

Deferred revenue - non-current

 

 

20,521

 

 

 

18,382

 

Total liabilities

 

 

514,146

 

 

 

156,741

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value, authorized 300,000 shares, issued and outstanding 89,196 shares at September 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 September 30, 2019 and December 31, 2018

 

 

 

 

 

 

Additional paid in capital

 

 

434,840

 

 

 

377,473

 

(Accumulated deficit) retained earnings

 

 

(13,708

)

 

 

211

 

Total stockholders' equity

 

 

421,141

 

 

 

377,693

 

Total liabilities and stockholders’ equity

 

$

935,287

 

 

$

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

 

 

Nine Months Ended

 

 

 

September 30, 2019

 

 

September 30, 2018

 

 

September 30, 2019

 

 

September 30, 2018

 

 

 

(In thousands, except per share data)

 

 

 

(Unaudited)

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Licenses

 

$

26,825

 

 

$

28,023

 

 

$

64,827

 

 

$

64,451

 

Subscription

 

 

37,383

 

 

 

27,916

 

 

 

102,929

 

 

 

74,531

 

Services and other

 

 

11,671

 

 

 

9,796

 

 

 

31,760

 

 

 

29,350

 

Total revenue

 

 

75,879

 

 

 

65,735

 

 

 

199,516

 

 

 

168,332

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Licenses

 

 

1,083

 

 

 

1,145

 

 

 

3,157

 

 

 

3,543

 

Subscription

 

 

6,862

 

 

 

5,252

 

 

 

18,990

 

 

 

14,829

 

Services and other

 

 

8,985

 

 

 

7,617

 

 

 

25,361

 

 

 

21,788

 

Total cost of revenue

 

 

16,930

 

 

 

14,014

 

 

 

47,508

 

 

 

40,160

 

Gross profit

 

 

58,949

 

 

 

51,721

 

 

 

152,008

 

 

 

128,172

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

14,148

 

 

 

11,474

 

 

 

40,318

 

 

 

31,351

 

General and administrative

 

 

10,192

 

 

 

8,763

 

 

 

27,819

 

 

 

24,163

 

Sales and marketing

 

 

33,274

 

 

 

26,701

 

 

 

99,298

 

 

 

72,934

 

Total operating expenses

 

 

57,614

 

 

 

46,938

 

 

 

167,435

 

 

 

128,448

 

Income (loss) from operations

 

 

1,335

 

 

 

4,783

 

 

 

(15,427

)

 

 

(276

)

Other expense, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income (expense), net

 

 

10

 

 

 

(202

)

 

 

282

 

 

 

(4,180

)

Other, net

 

 

(295

)

 

 

(388

)

 

 

(1,018

)

 

 

(1,104

)

Total other expense, net

 

 

(285

)

 

 

(590

)

 

 

(736

)

 

 

(5,284

)

Income (loss) before income taxes

 

 

1,050

 

 

 

4,193

 

 

 

(16,163

)

 

 

(5,560

)

Income tax (expense) benefit

 

 

2,618

 

 

 

(2,385

)

 

 

2,244

 

 

 

4,087

 

Net income (loss)

 

$

3,668

 

 

$

1,808

 

 

$

(13,919

)

 

$

(1,473

)

Net income (loss) available to common stockholders

 

$

3,668

 

 

$

1,793

 

 

$

(13,919

)

 

$

(1,473

)

Net income (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.04

 

 

$

0.02

 

 

$

(0.16

)

 

$

(0.02

)

Diluted

 

$

0.04

 

 

$

0.02

 

 

$

(0.16

)

 

$

(0.02

)

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

89,143

 

 

 

86,825

 

 

 

88,739

 

 

 

86,268

 

Diluted

 

 

90,808

 

 

 

90,355

 

 

 

88,739

 

 

 

86,268

 

 

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 September 30, 2019

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Number

of shares

 

 

Par

value

 

 

paid in

capital

 

 

Accumulated

deficit

 

 

Stockholders'

equity

 

 

 

(In thousands)

 

 

 

(Unaudited)

 

Balance at June 30, 2019

 

 

89,050

 

 

$

9

 

 

$

391,841

 

 

$

(17,376

)

 

$

374,474

 

Exercise of stock options

 

 

130

 

 

 

 

 

 

764

 

 

 

 

 

 

764

 

Restricted stock units vested, net of tax settlement

 

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,489

 

 

 

 

 

 

4,489

 

Equity component of convertible senior notes, net of issuance costs

 

 

 

 

 

 

 

 

86,764

 

 

 

 

 

 

86,764

 

Purchase of capped calls

 

 

 

 

 

 

 

 

(37,080

)

 

 

 

 

 

(37,080

)

Deferred tax liability related to issuance of convertible senior notes and capped calls

 

 

 

 

 

 

 

 

(11,938

)

 

 

 

 

 

(11,938

)

Net income

 

 

 

 

 

 

 

 

 

 

 

3,668

 

 

 

3,668

 

Balance at September 30, 2019

 

 

89,196

 

 

$

9

 

 

$

434,840

 

 

$

(13,708

)

 

$

421,141

 

 

 

 

 

For the Nine Months Ended September 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

 

 

618

 

 

 

 

 

 

2,560

 

 

 

 

 

 

2,560

 

Restricted stock units vested, net of tax settlement

 

 

140

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

14,098

 

 

 

 

 

 

14,098

 

Incentive units vested

 

 

724

 

 

 

 

 

 

37

 

 

 

 

 

 

37

 

Common stock issued under employee stock plan

 

 

202

 

 

 

 

 

 

2,926

 

 

 

 

 

 

2,926

 

Equity component of convertible senior notes, net of issuance costs

 

 

 

 

 

 

 

 

86,764

 

 

 

 

 

 

86,764

 

Purchase of capped calls

 

 

 

 

 

 

 

 

(37,080

)

 

 

 

 

 

(37,080

)

Deferred tax liability related to issuance of convertible senior notes and capped calls

 

 

 

 

 

 

 

 

(11,938

)

 

 

 

 

 

(11,938

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(13,919

)

 

 

(13,919

)

Balance at September 30, 2019

 

 

89,196

 

 

$

9

 

 

$

434,840

 

 

$

(13,708

)

 

$

421,141

 

 

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 September 30, 2018

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Number

of shares

 

 

Par

value

 

 

paid in

capital

 

 

Accumulated

deficit

 

 

Stockholders'

equity

 

 

 

(In thousands)

 

 

 

(Unaudited)

 

Balance at June 30, 2018

 

 

86,596

 

 

$

9

 

 

$

363,817

 

 

$

(6,740

)

 

$

357,086

 

Exercise of stock options

 

 

152

 

 

 

 

 

 

364

 

 

 

 

 

 

364

 

Restricted stock units vested, net of tax settlement

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,883

 

 

 

 

 

 

4,883

 

Incentive units vested

 

 

254

 

 

 

 

 

 

15

 

 

 

 

 

 

15

 

Net income

 

 

 

 

 

 

 

 

 

 

 

1,808

 

 

 

1,808

 

Balance at September 30, 2018

 

 

87,005

 

 

$

9

 

 

$

369,079

 

 

$

(4,932

)

 

$

364,156

 

 

 

 

 

For the Nine Months Ended September 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

 

 

517

 

 

 

 

 

 

1,257

 

 

 

 

 

 

1,257

 

Restricted stock units vested, net of tax settlement

 

 

54

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

14,138

 

 

 

 

 

 

14,138

 

Incentive units vested

 

 

1,486

 

 

 

1

 

 

 

75

 

 

 

 

 

 

76

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(1,473

)

 

 

(1,473

)

Balance at September 30, 2018

 

 

87,005

 

 

$

9

 

 

$

369,079

 

 

$

(4,932

)

 

$

364,156

 

 

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

 

 

 

Nine Months Ended

 

 

 

September 30, 2019

 

 

September 30, 2018

 

 

 

(In thousands)

 

 

 

(Unaudited)

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(13,919

)

 

$

(1,473

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

10,562

 

 

 

7,977

 

Amortization of debt discount and issuance costs

 

 

376

 

 

 

220

 

Amortization of contract acquisition costs

 

 

7,346

 

 

 

5,556

 

Loss on modification and partial extinguishment of debt

 

 

 

 

 

1,536

 

Loss (gain) on disposal of fixed assets

 

 

17

 

 

 

(36

)

Bad debt expense

 

 

183

 

 

 

299

 

Stock-based compensation expense

 

 

14,098

 

 

 

14,138

 

Operating leases, net

 

 

301

 

 

 

 

Deferred taxes

 

 

(7

)

 

 

 

Net changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Accounts receivable

 

 

27,615

 

 

 

1,487

 

Prepayments and other current assets