• Fourth quarter 2018 total revenue of $80.6 million and full year
  2018 total revenue of $248.9 million (ASC 606)
• 2018 GAAP operating income of $10.9 million (ASC 606); Non-GAAP
  operating income of $38.9 million (ASC 606)
• 2018 GAAP net income of $0.04 per diluted share (ASC 606); Non-GAAP
  net income of $0.37 per diluted share (ASC 606)

AUSTIN, Texas–(BUSINESS WIRE)–SailPoint
Technologies Holdings, Inc. (NYSE: SAIL), the leader in enterprise identity
governance, today announced financial results for the fourth quarter
and full year ending December 31, 2018.

“As SailPoint closes our first full year as a public company, we’re
pleased to report strong momentum across the business. Our 2018 revenues
increased 34% year-over-year, and we were profitable on a GAAP and
non-GAAP basis,” said Mark McClain, SailPoint CEO and Co-founder. “Our
customer base grew 26% year-over-year to 1,173 enterprises who chose
our comprehensive, open identity governance platform to address their
security, compliance and business efficiency challenges.”

“As organizations of all sizes are pressing further on their digital
transformation, CIOs are tasked with securing the foundation of their
enterprise digitization,” added McClain. “To truly address the
mounting security, compliance and efficiency demands, identity
governance must govern all users, whether human or non-human bots,
across all applications and all data. As we head into 2019, SailPoint is
focused on driving innovation to help customers govern all, govern deep
across their IT ecosystem, and govern smarter with insights from
advanced analytics driven by artificial intelligence.”

See “ASC 606 Adoption” below for information regarding the Company’s
adoption of ASC 606 revenue recognition accounting standard as of
January 1, 2018 on a modified retrospective basis.

Financial Highlights for Fourth Quarter 2018:

• Revenue: Total revenue was $80.6 million, a 19% increase over
  Q4 2017. License revenue was $40.6 million, an 11% increase over Q4
  2017. Subscription revenue was $29.5 million, a 39% increase over Q4
  2017. Services and other revenue was $10.5 million, a 7% increase over
  Q4 2017.
• Operating Income: Income from operations was $11.2 million,
  compared to $10.5 million in Q4 2017. Non-GAAP income from
  operations was $18.4 million, compared to $16.7 million in Q4 2017.
• Net Income: Net income was $5.1 million, compared to net income
  of $5.4 million in Q4 2017. Net income available to common
  stockholders per diluted share was $0.06 compared to net income
  available to common stockholders per diluted share of $0.03 in Q4
  2017. Non-GAAP net income was $16.9 million, compared to non-GAAP net
  income of $13.1 million in Q4 2017. Non-GAAP net income per
  diluted share was $0.19 compared to non-GAAP net income per diluted
  share of $0.17 in Q4 2017.
• Adjusted EBITDA: Adjusted EBITDA was $18.6 million, compared to
  $17.1 million in Q4 2017.

Financial Highlights for Full Year 2018:

• Revenue: Total revenue was $248.9 million, a 34% increase
  year-over-year. License revenue was $105.0 million, a 33% increase
  year-over-year. Subscription revenue was $104.0 million, a 47%
  increase year-over-year. Services and other revenue was $39.9 million,
  an 11% increase year-over-year.
• Operating Income: Income from operations was $10.9 million,
  compared to $9.9 million in 2017. Non-GAAP income from
  operations was $38.9 million, compared to $23.3 million in 2017.
• Net Income (Loss): Net income was $3.7 million, compared to net
  loss of $(7.6) million in 2017. Net income available to common
  stockholders per diluted share was $0.04 compared to net loss
  available to common stockholders per basic and diluted share of
  $(0.55) in 2017. Non-GAAP net income was $33.6 million, compared to
  non-GAAP net income of $10.3 million in 2017. Non-GAAP net
  income per diluted share was $0.37, compared to non-GAAP net income
  per diluted share of $0.13, in 2017.
• Adjusted EBITDA: Adjusted EBITDA was $39.5 million, compared to
  $25.5 million in 2017.
• Balance Sheet and Cash Flow: As of December 31, 2018, cash and
  cash equivalents were $71.0 million. As of December 31, 2018, there
  was no outstanding debt. The Company generated $37.5 million in cash
  from operations in 2018 compared to $21.9 million of cash provided by
  operations in 2017.

The tables included in this press release present a reconciliations of
non-GAAP income from operations to GAAP income from operations, non-GAAP
net income to GAAP net income (loss), non-GAAP to GAAP weighted average
shares outstanding and adjusted EBITDA to GAAP net income (loss) for the
three months and year ended December 31, 2018 and 2017. An explanation
of these measures is also included below under the heading “Non-GAAP
Financial Measures.” Additionally, the tables include impact of the
Company’s adoption of ASC 606 on reconciliations of the income (loss)
from operations for the quarters ended March 31, 2018, June 30, 2018,
September 30, 2018 and December 31, 2018. These tables are provided to
give the reader additional understanding of the quarterly impact of
adopting the revised standard. The cumulative impact on our Consolidated
Balance Sheet as of January 1, 2018 is also presented.

Financial Outlook (under ASC 606):

For the first quarter of 2019, SailPoint expects:

• Revenue in the range of $59.5 million to $61.0 million
• Non-GAAP (loss) or income from operations in the range of $(0.5)
  million to $1.0 million
• Non-GAAP net (loss) per diluted common share in the range of $(0.02)
  to $(0.00), based on estimated cash income tax payments of $0.4
  million and 88.5 million basic common shares outstanding. Expectations
  of non-GAAP income from operations and non-GAAP net income per diluted
  common share exclude items outlined in the “Non-GAAP Financial
  Measures” section below.

For the full year 2019, SailPoint expects:

• Revenue in the range of $293.0 million to $299.0 million
• Non-GAAP income from operations in the range of $28.0 million to $31.0
  million
• Non-GAAP net income per diluted common share in the range of $0.25 to
  $0.29, based on estimated cash income tax payments of $2.0 million and
  93.0 million diluted common shares outstanding. Expectations of
  non-GAAP income from operations and non-GAAP net income per diluted
  common share exclude items outlined in the “Non-GAAP Financial
  Measures” section below.

These statements regarding SailPoint’s expectations of its financial
outlook are forward-looking and actual results may differ materially.
Refer to “Forward-Looking Statements” below for information on the
factors that could cause its actual results to differ materially from
these forward-looking statements.

All of SailPoint’s forward-looking non-GAAP financial measures exclude
estimates for stock-based compensation expense and amortization of
acquired intangibles. SailPoint has not reconciled its expectations as
to non-GAAP income from operations and non-GAAP net income per basic and
diluted common shares to their most directly comparable GAAP measure due
to the high variability and difficulty in making accurate forecasts and
projections, particularly with respect to stock-based compensation
expense. Stock-based compensation expense is affected by future hiring,
turnover, and retention needs, as well as the future fair market value
of our common stock, all of which are difficult to predict and subject
to change. The actual amount of the excluded stock-based compensation
expense will have a significant impact on SailPoint’s GAAP income from
operations and GAAP net income (loss) per basic and diluted common
share. Accordingly, reconciliations of our forward-looking non-GAAP
income from operations and non-GAAP net income per basic and diluted
common shares are not available without unreasonable effort.

ASC 606 Adoption

In May 2014, the Financial Accounting Standards Board (FASB) issued
Accounting Standard Update (ASU) 2014-09, Revenue from Contracts with
Customers (Accounting Standards Codification or ASC 606). ASC 606, the
“revised standard”, supersedes the revenue recognition requirements in
Revenue Recognition (ASC 605) or “prior standard” and requires the
recognition of revenue as promised goods or services are transferred to
customers in an amount that reflects the consideration which the entity
expects to be entitled to in exchange for those goods or services. ASC
606 also includes Subtopic 340-40, Other Assets and Deferred Costs –
Contracts with Customers, which requires deferred recognition of the
incremental costs of obtaining a contract with a customer over the
estimated life of the customer.

The Company adopted the revised standard as of January 1, 2018,
utilizing the modified retrospective method for all contracts with
remaining performance obligations as of the date of adoption. The
Company is providing adjusted 2018 interim financial statements and
recognized the cumulative effect of initially applying the revised
standard as an adjustment to the opening balance of accumulated deficit
on January 1, 2018. The comparative information for 2017 was prepared
under the prior standard and our prior period results were not re-cast
to reflect the revised standard. The reported results for the
three-month and year to date periods ended March 31, 2018, June 30,
2018, September 30, 2018 and December 31, 2018 in the tables included at
the end of the press release reflect the application of the revised
standard as indicated by the “Revised Standard (ASC 606)” notation.

The Company believes this additional information is vital during the
transition year to allow readers of its financial statements to compare
the financial results from the preceding years given the absence of
restatement of 2018 interim financial statements. Our financial
measures, as adjusted, should be considered in addition to, not as a
substitute for, nor superior to or in isolation, from measures prepared
in accordance with GAAP.

Conference Call and Webcast:

SailPoint will host a conference call today, March 5, 2019, at 5:00 p.m.
Eastern Time to discuss its fourth quarter and full year 2018 financial
results. The dial-in number will be 877-407-0792 or 201-689-8263.
Additionally, a live webcast of the conference call will be available on
SailPoint’s website at https://investors.sailpoint.com.

Following the conference call, a replay will be available until midnight
on March 19, 2019. The replay dial-in number will be 844-512-2921 or
412-317-6671, using the replay pin number: 13688348. An archived webcast
of the call will also be available at https://investors.sailpoint.com.

Non-GAAP Financial Measures:

In addition to SailPoint’s financial information presented in accordance
with generally accepted accounting principles in the United States
(“GAAP”), SailPoint uses certain non-GAAP financial measures to clarify
and enhance SailPoint’s understanding of past performance and future
prospects. Generally, a non-GAAP financial measure is a numerical
measure of a company’s operating performance, financial position or cash
flow that includes or excludes amounts that are included or excluded
from the most directly comparable measure calculated and presented in
accordance with GAAP. SailPoint monitors the non-GAAP financial measures
described below, and SailPoint’s management believes they are helpful to
investors because they provide an additional tool to use in evaluating
SailPoint’s financial and business trends and operating results. In
addition, SailPoint’s management uses these non-GAAP measures to compare
SailPoint’s performance to that of prior periods for trend analysis and
for budgeting and planning purposes. In particular, SailPoint believes
that non-GAAP income from operations, non-GAAP net income, non-GAAP net
income available to common stockholders per basic share and per diluted
share, and adjusted EBITDA, are important measures for evaluating
SailPoint’s performance because they facilitate comparisons of
SailPoint’s core operating results from period to period by removing,
where applicable, the impact of SailPoint’s capital structure (net
interest income or expense from SailPoint’s outstanding debt, as well as
amortization of debt issuance costs and expenses related to call
protection on early payment of debt), asset base (depreciation and
amortization), income taxes, purchase accounting adjustments,
acquisition and sponsor related costs and stock-based compensation
expense.

SailPoint’s non-GAAP financial measures may not provide information that
is directly comparable to that provided by other companies in our
industry because they may calculate non-GAAP financial results
differently than we do. In addition, there are limitations in using
non-GAAP financial measures because they are not prepared in accordance
with GAAP and exclude expenses that may have a material impact on our
reported financial results. The presentation of non-GAAP financial
information is not meant to be considered in isolation or as a
substitute for the directly comparable financial measures prepared in
accordance with GAAP. SailPoint urges you to review the reconciliations
of our non-GAAP financial measures to the comparable GAAP financial
measures included below, and not to rely on any single financial measure
to evaluate its business.

Non-GAAP income from operations. SailPoint believes that
the use of non-GAAP income from operations is helpful to our investors
to clarify and enhance their understanding of past performance and
future prospects. Non-GAAP income from operations is calculated as
income from operations on a GAAP basis excluding (i) stock-based
compensation expense and (ii) amortization of acquired intangibles.

Non-GAAP net income and non-GAAP net income available to common
stockholders per basic and diluted share. SailPoint believes
that the use of non-GAAP net income and non-GAAP net income available to
common stockholders per basic and diluted share is helpful to our
investors to clarify and enhance their understanding of past performance
and future prospects. Non-GAAP net income is calculated as net income
(loss) (a) excluding (i) stock-based compensation expense,
(ii) amortization of acquired intangibles, (iii) amortization of debt
issuance costs, (iv) expense related to call protection on early payment
of debt and (v) income tax (benefit) expense and (b) including cash paid
for income taxes. SailPoint defines non-GAAP net income available to
common stockholders per basic and diluted share as non-GAAP net income
divided by the non-GAAP weighted average outstanding common shares,
which is calculated as if the conversion of our preferred stock,
including related accumulated and unpaid dividend, occurred at the
beginning of each respective period.

Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial
measure that SailPoint calculates as net income (loss) adjusted to
exclude income taxes, net interest expense, depreciation and
amortization, purchase accounting adjustments, acquisition and sponsor
related costs and stock-based compensation expense.

The accompanying tables have more details on the reconciliations of
non-GAAP financial measures to their nearest comparable GAAP measures.

Forward-Looking Statements:

This press release and statements made during the above referenced
conference call may contain “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995,
including regarding the Company’s growth rate and its expectations
regarding future revenue, operating income or loss or earnings or loss
per share. In some cases, you can identify forward-looking statements
because they contain words such as “may,” “will,” “will be,” “will
likely result,” “should,” “expects,” “plans,” “anticipates,” “could,”
“would,” “foresees,” “intends,” “target,” “projects,” “contemplates,”
“believes,” “estimates,” “predicts,” “potential” or “continue” or the
negative of these words or other similar terms or expressions that
concern our expectations, strategy, plans or intentions. These
statements are not guarantees of future performance, but are based on
management’s current expectations, assumptions and beliefs concerning
future developments and their potential effect on us, which are
inherently subject to uncertainties, risks and changes in circumstances
that are difficult to predict. Our expectations expressed or implied in
these forward-looking statements may not turn out to be correct. Our
results could be materially different from our expectations because of
various risks.

Important factors, some of which are beyond our control, that could
cause actual results to differ materially from our historical results or
those expressed or implied by these forward-looking statements include
the following: our ability to attract and retain customers and our
ability to deepen our relationships with existing customers; our
expectations regarding our customer growth rate; our ability to maintain
successful relationships with our channel partners and further develop
strategic relationships; our ability to develop or acquire new
solutions, improve our platform and solutions and increase the value of
and benefits associated with our platform and solutions; our ability to
compete successfully against current and future competitors; our plans
to further invest in and grow our business, and our ability to
effectively manage our growth and associated investments; our ability to
adapt and respond to rapidly changing technology, evolving industry
standards, changing regulations and changing customer needs; our ability
to maintain and enhance our brand or reputation as an industry leader
and innovator; our ability to hire, retain, train and motivate our
senior management team and key employees; our ability to successfully
enter new markets and manage our international expansion; adverse
economic conditions in the United States, Europe or the global economy;
significant changes in the contracting or fiscal policies of the public
sector; actual or perceived failures by us to comply with privacy policy
or legal or regulatory requirements; our ability to maintain third-party
licensed software in or with our solutions; and our ability to raise
additional capital or generate cash flows necessary to expand our
operations and invest in new technologies. These and other important
risk factors are described more fully in our reports and other documents
filed with the Securities and Exchange Commission (“the SEC”) including
(i) under “Part I, Item 1A. Risk Factors” in our Annual Report on Form
10-K for the year ended December 31, 2017, which was filed with the SEC
on March 19, 2018, and (ii) under “Part II, Item 1A. Risk Factors” in
our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018,
which was filed with the SEC on May 9, 2018, (iii) under “Part II, Item
IA. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter
ended June 30, 2018, which was filed with the SEC on August 8, 2018, and
(iv) under “Part II, Item 1A. Risk Factors” in our Quarterly Report on
Form 10-Q for the quarter ended September 30, 2018, which was filed with
the SEC on November 7, 2018.

Any forward-looking statement speaks only as of the date as of which
such statement is made, and, except as required by law, we undertake no
obligation to update or revise publicly any forward-looking statements,
whether because of new information, future events, or otherwise.

About SailPoint

SailPoint, the leader in enterprise identity governance, brings the
Power of Identity to customers around the world. SailPoint’s open
identity platform gives organizations the power to enter new markets,
scale their workforces, embrace new technologies, innovate faster and
compete on a global basis. As both an industry pioneer and market leader
in identity governance, SailPoint delivers security, operational
efficiency and compliance to enterprises with complex IT environments.
SailPoint’s customers are among the world’s largest companies in a wide
range of industries, including: 8 of the top 15 banks, 4 of the top 6
healthcare insurance and managed care providers, 9 of the top 15
property and casualty insurance providers, 5 of the top 13
pharmaceutical companies, and 11 of the largest 15 federal agencies.

More information on SailPoint is available at: www.sailpoint.com.

(1) The comparative information for 2017 has not been adjusted to
reflect the adoption of the revised standard and is reported on an ASC
605 basis. For additional information see “ASC 606 Adoption” discussion
above.

(2) Includes amortization of acquired intangibles as follows:

(3) Includes stock-based compensation expense and the related employer
payroll tax expense as follows:

(4) For the three months and year ended December 31, 2017, net income
(loss) available to common stockholders is calculated by subtracting the
accretion of undeclared and unpaid dividends on redeemable convertible
preferred stock, and net income allocated to participating securities
from net income (loss).

Contacts

Investor Relations:
Staci Mortenson
ICR for SailPoint
[email protected]
512-664-8916

Media Relations:
Jessica Sutera
[email protected]
978-278-5411

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