Proxy Statement and
Annual Report
2022
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to §240.14a-12
SAILPOINT TECHNOLOGIES HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
March 18, 2022
To Our Stockholders:
You are cordially invited to attend the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) of SailPoint
Technologies Holdings, Inc. (“SailPoint”) on April 28, 2022, at 12:30 p.m. Central Time, to be held in a live
virtual meeting format in light of ongoing concerns relating to the public health impact of the coronavirus.
The matters expected to be acted upon at the meeting are described in the accompanying Notice of Annual
Meeting of Stockholders and proxy statement. You are entitled to vote at the Annual Meeting and any
adjournments, continuations or postponements of the Annual Meeting only if you were a stockholder as of the
close of business on February 28, 2022.
Thank you for being a SailPoint stockholder. We look forward to seeing you at the Annual Meeting.
Sincerely,
Chief Executive Officer and Director
Your vote is important. Whether or not you can attend the meeting, please read the enclosed proxy statement
carefully, and then cast your vote as soon as possible over the Internet, by telephone, or by completing and
returning the enclosed proxy card so that your shares are represented at the Annual Meeting. Your vote will mean
that you are represented at the Annual Meeting regardless of whether you attend the virtual meeting. Returning
the proxy does not deprive you of your right to attend the virtual meeting or to vote your shares electronically at
the virtual meeting.
SAILPOINT TECHNOLOGIES HOLDINGS, INC.
11120 FOUR POINTS DRIVE, SUITE 100
AUSTIN, TEXAS 78726
Notice of Annual Meeting of Stockholders
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) of
SailPoint Technologies Holdings, Inc. will be held on April 28, 2022, at 12:30 p.m. Central Time in a live
virtual meeting format, to consider and vote upon the following proposals:
1. To elect three Class II directors to hold office until the 2025 Annual Meeting of Stockholders or until their
successors are duly elected and qualified;
2. To ratify the selection by the Audit Committee of our Board of Directors of Grant Thornton LLP to serve as
our independent registered public accounting firm for the fiscal year ending December 31, 2022;
3. To approve, on an advisory basis, our named executive officer compensation; and
4. Such other matters as may properly come before the Annual Meeting or any adjournment(s) or
postponement(s) thereof.
Beginning on or about March 18, 2022, we will send to our stockholders a Notice of Internet Availability of
Proxy Materials (the “Notice”) with instructions on how to access our proxy materials over the Internet and how to
vote. The Notice also provides instructions on how to obtain paper copies if preferred.
In light of the continued public health risks posed by the coronavirus, we have determined it is appropriate to
hold the Annual Meeting virtually. To attend and participate in the Annual Meeting, you will need to register in
advance at www.proxydocs.com/SAIL (the “Meeting Website”). You will be required to enter the control number
found on your proxy card, voting instruction form or Notice. Upon completing your registration, you will receive
further instructions via email, including your unique links that will allow you to access the meeting and will permit
you to submit questions during the meeting. We encourage you to log on 15 minutes prior to the start time of the
meeting. If you have difficulty accessing the Annual Meeting through the Meeting Website, please call the
technical support number provided in the registration email.
Only stockholders of record at the close of business on February 28, 2022 are entitled to notice of, and to
vote at, the Annual Meeting or any adjournment or postponement thereof. You may vote and ask questions in
advance of or during the Annual Meeting by following the instructions on your proxy card, voting instruction form
or Notice and available on the Meeting Website, as applicable. Whether or not you plan to attend the Annual
Meeting, we urge you to vote and submit your proxy in advance of the Annual Meeting by one of the methods
described in the proxy materials for the Annual Meeting. A list of the names of stockholders entitled to vote at the
Annual Meeting will be available for ten days prior to the Annual Meeting for examination by any stockholder for
any purpose germane to the Annual Meeting between the hours of 9:00 a.m. and 5:00 p.m. Central Time at our
headquarters at 11120 Four Points Drive, Suite 100, Austin, Texas 78726. This list will also be available for such
purposes during the Annual Meeting on the Meeting Website.
By Order of the Board of Directors,
Christopher G. Schmitt
Secretary
Austin, Texas
March 18, 2022
Your vote is important. Whether or not you expect to attend the virtual meeting, please vote over the Internet,
by telephone, or by completing and promptly returning the enclosed proxy card so that your shares may be
represented at the meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER
MEETING TO BE HELD ON APRIL 28, 2022: THIS PROXY STATEMENT FOR THE 2022 ANNUAL MEETING
OF STOCKHOLDERS AND OUR ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED
DECEMBER 31, 2021 ARE AVAILABLE AT http://www.proxydocs.com/SAIL.
Table of Contents
THE MEETING .....................................................................................................................................................1
ATTENDING THE VIRTUAL MEETING ......................................................................................................................1
VOTING RIGHTS, QUORUM AND REQUIRED VOTE ..................................................................................................1
VOTING YOUR SHARES .......................................................................................................................................2
EXPENSES OF SOLICITATION ................................................................................................................................2
REVOCABILITY OF PROXIES .................................................................................................................................3
ELECTRONIC DELIVERY OF PROXY MATERIALS TO STOCKHOLDERS .......................................................................3
DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS ..................................................................3
OUR COMPANY ..................................................................................................................................................4
BUSINESS OVERVIEW ..........................................................................................................................................4
PERFORMANCE HIGHLIGHTS ................................................................................................................................4
PROPOSAL NO. 1 – ELECTION OF DIRECTORS ............................................................................................5
NOMINEES FOR ELECTION AS CLASS II DIRECTORS ...............................................................................................6
CONTINUING DIRECTORS .....................................................................................................................................7
VOTE REQUIRED .............................................................................................................................................. 10
CORPORATE GOVERNANCE .......................................................................................................................... 11
COMPOSITION OF THE BOARD ............................................................................................................................ 11
DIRECTOR INDEPENDENCE ................................................................................................................................ 11
LEADERSHIP STRUCTURE OF THE BOARD OF DIRECTORS .................................................................................... 11
COMMUNICATIONS BY STOCKHOLDERS AND OTHER INTERESTED PARTIES WITH THE BOARD ................................. 11
BOARD COMMITTEES ....................................................................................................................................... 12
Audit Committee ........................................................................................................................................ 12
Compensation Committee ......................................................................................................................... 13
Nominating and Corporate Governance Committee ................................................................................. 14
Cybersecurity Committee........................................................................................................................... 14
RISK OVERSIGHT ............................................................................................................................................. 15
CODE OF BUSINESS CONDUCT AND ETHICS ....................................................................................................... 15
DIRECTOR RECOMMENDATIONS ........................................................................................................................ 15
Director Qualification Standards and Selection Criteria ............................................................................ 15
Stockholder Nominations ........................................................................................................................... 15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION .............................................................. 16
FAMILY RELATIONSHIPS .................................................................................................................................... 16
BOARD AND ANNUAL MEETINGS ........................................................................................................................ 16
CORPORATE RESPONSIBILITY ........................................................................................................................... 16
Governance and Oversight ........................................................................................................................ 16
People ........................................................................................................................................................ 17
Community Involvement ............................................................................................................................ 19
Environment ............................................................................................................................................... 19
PROPOSAL NO. 2 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM ........................................................................................................................................ 20
AUDIT AND RELATED FEES ................................................................................................................................ 20
PRE-APPROVAL POLICY ................................................................................................................................... 20
VOTE REQUIRED .............................................................................................................................................. 20
PROPOSAL NO. 3 – ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION21
VOTE REQUIRED .............................................................................................................................................. 21
EXECUTIVE OFFICERS ................................................................................................................................... 22
EXECUTIVE COMPENSATION ........................................................................................................................ 23
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
COMPENSATION DISCUSSION AND ANALYSIS ...................................................................................................... 23
Executive Summary ................................................................................................................................... 23
Executive Compensation Philosophy and Objectives ............................................................................... 26
Setting Executive Compensation for 2021 and Establishing Our 2021 Peer Group ................................. 26
Key Elements of Our 2021 Executive Compensation Program ................................................................. 27
Compensation Risk Assessment ............................................................................................................... 31
COMPENSATION COMMITTEE REPORT ............................................................................................................... 32
IMPORTANT NOTE REGARDING COMPENSATION TABLES ..................................................................................... 32
EXECUTIVE COMPENSATION TABLES ................................................................................................................. 33
2021 Summary Compensation Table......................................................................................................... 33
2021 Grants of Plan Based Awards ........................................................................................................... 34
2021 Outstanding Equity Awards at Year End ........................................................................................... 35
2021 Option Exercises and Stock Vested ................................................................................................. 36
No Pension Benefits or Nonqualified Deferred Compensation Plan ......................................................... 37
Potential Payments Upon Termination or Change in Control .................................................................... 37
DIRECTOR COMPENSATION ......................................................................................................................... 40
2021 DIRECTOR COMPENSATION PROGRAM ..................................................................................................... 40
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS ....................................................... 41
POLICIES AND PROCEDURES FOR RELATED PARTY TRANSACTIONS .................................................................... 41
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT .............................. 41
CEO PAY RATIO ............................................................................................................................................... 44
EQUITY COMPENSATION PLAN INFORMATION.......................................................................................... 45
AUDIT COMMITTEE REPORT......................................................................................................................... 46
DELINQUENT SECTION 16(A) REPORTS ..................................................................................................... 46
SUBMISSION OF STOCKHOLDER PROPOSALS ......................................................................................... 46
OTHER BUSINESS .......................................................................................................................................... 47
WHERE YOU CAN FIND MORE INFORMATION ............................................................................................ 47
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
SAILPOINT TECHNOLOGIES HOLDINGS, INC.
11120 FOUR POINTS DRIVE, SUITE 100
AUSTIN, TEXAS 78726
PROXY STATEMENT FOR THE 2022 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 28, 2022
The Meeting
The Board of Directors (the “Board”) of SailPoint Technologies Holdings, Inc., a Delaware corporation
(“SailPoint,” the “Company” or “we”), is soliciting proxies for use at the 2022 Annual Meeting of Stockholders (the
“Annual Meeting”) to be held on April 28, 2022 at 12:30 p.m. Central Time in a live virtual meeting format. The
Notice of Internet Availability of Proxy Materials (the “Notice”) was first furnished to stockholders on or about
March 18, 2022. Electronic copies of this proxy statement (this “Proxy Statement”) and our Annual Report to
Stockholders for the year ended December 31, 2021 (our “2021 Annual Report”) are available at
www.proxydocs.com/SAIL.
Attending the Virtual Meeting
In light of the continued public health risks posed by the coronavirus, we have determined that it is
appropriate to hold the Annual Meeting virtually. To attend and participate in the Annual Meeting, you will need to
register in advance at www.proxydocs.com/SAIL (the “Meeting Website”). You will be required to enter the control
number found on your proxy card, voting instruction form or Notice. Upon completing your registration, you will
receive further instructions via email, including your unique links that will allow you to access the meeting and will
permit you to submit questions in advance of and during the meeting. We encourage you to log on 15 minutes
prior to the start time of the meeting. If you have difficulty accessing the Annual Meeting through the Meeting
Website, please call the technical support number provided in the registration email.
In accordance with the rules of conduct for the Annual Meeting, which you will find on the Meeting Website
following registration, you may submit up to two questions during or in advance of the Annual Meeting, which
questions may address no more than one topic each and must be relevant to the issues before the meeting.
During the Annual Meeting, at the appropriate time, we will endeavor to provide oral responses to all questions so
submitted. Because we believe it is important for stockholders to have the opportunity to submit questions both in
advance of and during the meeting, we are requiring all questions to be submitted in writing. Whether or not you
plan to attend the Annual Meeting, we urge you to vote and submit your proxy in advance of the Annual Meeting
by one of the methods described in the proxy materials for the Annual Meeting.
Voting Rights, Quorum and Required Vote
Only holders of record of our common stock at the close of business on February 28, 2022 (the “Record
Date”) will be entitled to vote at the Annual Meeting. At the close of business on the Record Date, we had
94,191,701 shares of common stock outstanding and entitled to vote. Holders of our common stock are entitled to
one vote for each share held as of the Record Date. Holders of our common stock do not have the right to
cumulative voting. A quorum is required for our stockholders to conduct business at the Annual Meeting. The
holders of a majority of the outstanding voting power of all shares of our common stock entitled to vote at the
meeting, present in person or represented by proxy, shall constitute a quorum at the Annual Meeting. Abstentions
and “broker non-votes” (described below) will be counted in determining whether there is a quorum.
For Proposal No. 1 – Election of Directors, directors will be elected by a plurality of the votes of the shares of
our common stock present in person or represented by proxy at the Annual Meeting and entitled to vote in the
election of directors, which means that the three nominees receiving the highest number of “for” votes will be
elected. Withheld votes and broker non-votes will have no effect on Proposal No. 1.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Proposal No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm requires the
affirmative vote of the majority of voting power of common stock present in person or represented by proxy at the
Annual Meeting and entitled to vote thereon. Abstentions will count the same as votes against Proposal No. 2.
Proposal No. 3 – Advisory Vote on our Named Executive Officer Compensation requires the affirmative vote
of the majority of voting power of common stock present in person or represented by proxy at the Annual Meeting
and entitled to vote thereon. Abstentions and broker non-votes will count the same as votes against Proposal No.
3.
Voting Your Shares
If you are a registered holder of our common stock, meaning that you hold our common stock directly (not
through a bank, broker or other nominee), you may vote by telephone or electronically through the Internet by
following the instructions included on your Notice or your proxy card, or by completing, dating, signing and
promptly returning your proxy card. All signed, returned proxies that are not revoked will be voted in accordance
with the instructions contained thereon. Signed proxies that give no instructions as to how they should be voted
on a particular proposal at the Annual Meeting will be counted as votes “for” the election of each of the Class II
director nominees presented by the Board under Proposal No. 1, as votes “for” Proposal No. 2, and as votes “for”
Proposal No. 3.
If your shares of our common stock are held through a bank, broker or other nominee, you are considered the
“beneficial owner” of those shares held in “street name.” You may be able to vote by telephone or electronically
through the Internet (i.e., if those options are made available to you by your bank, broker or other nominee) in
accordance with the voting instructions provided by that nominee. You may also vote by completing, dating,
signing and promptly returning the voting instruction form sent by that nominee. You must obtain a legal proxy
from the nominee that holds your shares if you wish to participate virtually at the Annual Meeting. If you do not
provide voting instructions to your broker in advance of the Annual Meeting, New York Stock Exchange (“NYSE”)
rules grant your broker discretionary authority to vote on “routine” proposals. Where a proposal is not “routine,” a
broker who has received no instructions from its clients does not have discretion to vote its clients’ uninstructed
shares on that proposal, and the unvoted shares are referred to as “broker non-votes.” For the Annual Meeting,
Proposals No. 1 and No. 3 are not considered “routine” proposals, and therefore, brokers cannot exercise
discretionary authority regarding such proposals for beneficial owners who have not returned voting instructions.
Proposal No. 2 is considered a “routine” proposal, and therefore, brokers can exercise discretionary authority
regarding this proposal for beneficial owners who have not returned voting instructions.
In the event that sufficient votes in favor of the proposals are not received by the date of the Annual Meeting,
the Chairman of the Annual Meeting may adjourn the Annual Meeting to permit further solicitations of proxies.
The telephone and Internet voting procedures are designed to authenticate stockholders’ identities, to allow
stockholders to give their voting instructions and to confirm that stockholders’ instructions have been recorded
properly. Stockholders voting via the telephone or Internet should understand that there may be costs associated
with telephonic or electronic access, such as usage charges from telephone companies and Internet access
providers, which must be borne by the stockholder.
Expenses of Solicitation
The expenses of any solicitation of proxies to be voted at the Annual Meeting will be paid by the Company.
Following the original distribution of the proxies and other soliciting materials, the Company and its directors,
officers and other employees (for no additional compensation) may also solicit proxies in person, by telephone or
e-mail. Following the original distribution of the proxies and other soliciting materials, the Company will request
that banks, brokers and other nominees forward copies of the proxy and other soliciting materials to persons for
whom they hold shares of common stock and request authority for the exercise of proxies. We will reimburse
banks, brokers and other nominees for reasonable charges and expenses incurred in forwarding soliciting
materials to their clients.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Revocability of Proxies
Any person who validly submits a proxy has the power to revoke it prior to the Annual Meeting or at the
Annual Meeting prior to the vote. A proxy may be revoked by a writing delivered to the Company stating that the
proxy is revoked, by a subsequent proxy that is submitted via telephone or Internet or by a subsequent proxy that
is signed by the person who signed the earlier proxy and is delivered before or at the Annual Meeting. If you are a
beneficial owner and wish to change any of your previously provided voting instructions, you must contact your
bank, broker or other nominee directly.
Electronic Delivery of Proxy Materials to Stockholders
Beginning on or about March 18, 2022, we mailed to our stockholders a Notice with instructions on how to
access our proxy materials over the Internet and how to vote. If you received such Notice and would prefer to
receive paper copies of the proxy materials, or if you received paper copies of the proxy materials and would
prefer to receive a Notice for future annual meetings, you may notify us by telephone, e-mail or mail at the
respective telephone number, e-mail address or mailing address provided on the Notice.
Delivery of Documents to Stockholders Sharing an Address
Because many stockholders hold shares of our common stock in multiple accounts or share an address with
other stockholders, stockholders may receive duplicate mailings of proxy materials. Stockholders may avoid
receiving duplicate mailings as follows:
•
Stockholders of Record. If your shares are registered in your own name and you are interested in
consenting to the delivery of a single set of proxy materials, you may contact Mediant Communications,
Inc. (“Mediant”) by telephone at 1-866-648-8133, by Internet at www.investorelections.com/SAIL, or by
email at paper@investorelections.com.
•
Beneficial Stockholders. If your shares are not registered in your own name, the bank, broker or other
nominee that holds your shares may have asked you to consent to the delivery of a single set of proxy
materials if there are other SailPoint stockholders who share an address with you. If you currently receive
more than one copy of the proxy materials at your household and would like to receive only one copy in
the future, you should contact your nominee.
If you consent to the delivery of a single set of proxy materials but later decide that you would prefer to
receive a separate copy of the proxy materials for each stockholder sharing your address, then please notify
Mediant or your nominee, as applicable, and they will promptly deliver the additional proxy materials.
If you wish to receive a separate copy of the proxy materials for each stockholder sharing your address in the
future, you may also contact Mediant by telephone at 1-866-648-8133, by Internet at
www.investorelections.com/SAIL, or by email at paper@investorelections.com if you are a stockholder of record,
or you may contact your broker nominee if you are a beneficial stockholder.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Our Company
Business Overview
SailPoint is the leading provider of enterprise identity security solutions. For the modern enterprise, securely
connecting the right people to the right technology is incredibly complex and has moved well beyond human
capacity alone. SailPoint's autonomous approach helps organizations easily discover, manage and secure all
identities (both human and non-human software bots) and their access to technology resources, all done at the
speed and scale their business demands.
We offer both software as a service (“SaaS”) and software platforms, which provide organizations visibility
and the intelligence required to both seamlessly empower users and securely manage their access to systems,
applications and data across hybrid information technology (“IT”) environments, spanning on-premises and cloud
applications and file storage platforms. We help customers enable their businesses with more agile and
frictionless IT, streamline and accelerate the delivery of access to their businesses, enhance their security posture
and better meet compliance and regulatory requirements. Our customers include many of the world’s largest and
most complex organizations, including commercial enterprises, financial institutions and governments.
We believe that our identity security platform is a critical, foundational layer of a modern enterprise security
strategy, which increasingly leverages a zero-trust approach for securing access. Open architecture allows our
platform to complement and build upon traditional perimeter- and endpoint-centric security solutions, which we
believe on their own are increasingly insufficient to secure organizations, and their applications and data. We
deliver an identity security platform that forms a holistic view of the enterprise's identities, both human and non-
human, and their access to all applications, data and infrastructures.
Performance Highlights
In 2021, we successfully executed on the large and growing market opportunity in front of us. Global
enterprises now recognize that identity security plays a foundational role in the overall security of the business
and have prioritized their investment in identity security as a result.
Key business and financial performance highlights from 2021 include:
•
We continued our industry leadership with 2021 Forrester Wave: Identity Management & Governance
leadership placement for the third time consecutively.
•
We secured overall leadership in both the 2021 KuppingerCole Leadership Compass for Identity as a
Service – Identity Governance & Administration and the 2021 KuppingerCole Leadership Compass
for Identity Governance & Administration.
•
We largely completed our transition to a subscription model during 2021, ahead of expectations.
•
Total ARR at December 31, 2021 was $370.4 million, a 48% increase year-over-year. Total annual
recurring revenue (“Total ARR”) represents the annualized value of the active portion of SaaS, term-
based license, maintenance and support contracts and other subscription services at the end of the
reporting period. We calculate Total ARR by dividing the active contract value by the number of days
in the active portion of the overall contract term and then multiplying by 365.
•
Total revenue for the year was $439.0 million, a 20% increase year-over-year. Subscription revenue
for the year was $273.2 million, a 39% increase year-over-year.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Proposal No. 1 – Election of Directors
The Board is presently comprised of nine members, who are divided into three classes, designated as Class
I, Class II and Class III. One class of directors is elected by the stockholders at each annual meeting to serve a
three-year term. Class I directors consist of Mark D. McClain, Tracey E. Newell and Sudhakar Ramakrishna;
Class II directors consist of Cam McMartin, Heidi M. Melin and James M. Pflaging; and Class III directors consist
of William G. Bock, Ronald J. Green and Michael J. Sullivan.
Class II directors standing for re-election at the Annual Meeting are Ms. Melin and Messrs. McMartin and
Pflaging. Class III directors will stand for re-election at the 2023 Annual Meeting of Stockholders, and Class I
directors will stand for re-election at the 2024 Annual Meeting of Stockholders.
Each of the nominees for election to Class II is currently a director of the Company. If elected at the Annual
Meeting, each of the nominees would serve for three years and until his or her successor is duly elected and
qualified, or until such director’s earlier death, resignation or removal. Each of the nominees has indicated his or
her willingness to serve as a member of the Board, if re-elected. If any of the nominees is unable to serve or will
not serve (a contingency which the Board does not expect to occur), the proxies will be voted for a substitute
nominee chosen by the Board. In the alternative, the stockholders may vote for just the remaining nominees,
leaving a vacancy that may be filled at a later date by the Board, or the Board may reduce the size of the Board.
At the Annual Meeting, proxies cannot be voted for a greater number of individuals than the number of nominees
named in this Proxy Statement (which is three).
The names of the nominees for election as Class II directors at the Annual Meeting and of the incumbent
Class I and Class III directors, and certain information about them, are included below.
Names
Class
Position
Current
Term
Expiration
Expiration of
Term for which
Nominated
Director Nominees
Cam McMartin
II
Director
2022
2025
Heidi M. Melin
II
Director
2022
2025
James M. Pflaging
II
Director
2022
2025
Continuing Directors
William G. Bock
III
Chairman of the Board
2023
—
Ronald J. Green
III
Director
2023
—
Mark D. McClain
I
Chief Executive Officer and Director
2024
—
Tracey E. Newell
I
Director
2024
—
Sudhakar Ramakrishna
I
Director
2024
—
Michael J. Sullivan
III
Director
2023
—
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Nominees for Election as Class II Directors
Cam McMartin
Director Since: 2020
Board Class: II
Term Expiration: 2022
Age: 65
Board Committees:
• Cybersecurity
Biography
Cam McMartin has served on our Board since January 2020. He served as our
Chief Financial Officer from 2011 to May 2019, as our Chief Operating Officer from
May 2019 until his retirement in December 2019, and most recently as our Interim
Chief Financial Officer from September 2021 to March 15, 2022. He served on the
board of directors of Thoma Bravo Advantage (NYSE: TBA), a special purpose
acquisition company, from January 2021 until its merger with ironSource Ltd. in
June 2021. Mr. McMartin formerly served as Managing Director and Chief
Financial Officer for CenterPoint Ventures, a $425 million venture capital group.
Before CenterPoint Ventures, Mr. McMartin held senior financial management
positions with a number of corporations, including Chief Financial Officer at
Convex Computer (NYSE: CNX) and Senior VP, Operations at Dazel.
Mr. McMartin holds a B.A. in Business Administration from Trinity University and
an M.B.A. from the University of Michigan.
Director Qualifications
The Board believes that Mr. McMartin’s extensive industry and Company
experience, along with his financial and cybersecurity expertise, qualify him to
serve as a director.
Heidi M. Melin
Director Since: 2019
Board Class: II
Term Expiration: 2022
Age: 56
Board Committees:
• Compensation (Chair)
• Nominating and
Corporate Governance
Biography
Heidi Melin has served on our Board since January 2019. Ms. Melin has served
as a part-time Senior Operating Advisor since October 2021 at Hellman &
Friedman, a San Francisco-based private equity firm, and since November 2021
she has served on the board of directors of Origami Risk, a privately held company
providing an integrated SaaS platform for the risk and insurance industry. Before
that, she served as the Chief Marketing Officer of Workfront Inc., a cloud-based
company that develops enterprise work management software, from February
2018 until January 2021 when Workfront was acquired by Adobe. From June 2013
to January 2018, Ms. Melin served as the Chief Marketing Officer of Plex Systems,
Inc., a cloud-based enterprise resource planning technology company. Prior to
that, she served as Chief Marketing Officer at a number of other companies,
including Eloqua, Inc. (later acquired by Oracle Corporation), Taleo Corporation,
Polycom, Inc. (“Polycom”) and Hyperion Solutions Corporation. She also
previously served on the board of directors and the human resources committee
of Accelrys, Inc., a public reporting company prior to its acquisition by Dassault
Systèmes SA. Ms. Melin holds a B.A. in Political Science and Organizational
Psychology from Willamette University.
Director Qualifications
The Board believes that Ms. Melin’s extensive marketing and industry experience
as well as her prior board experience qualify her to serve as a director.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
James M. Pflaging
Director Since: 2015
Board Class: II
Term Expiration: 2022
Age: 59
Board Committees:
• Audit
• Cybersecurity (Chair)
Biography
Jim Pflaging has served on our Board since January 2015. Mr. Pflaging is the sole
Managing Partner at Cynergy Partners Inc. (“Cynergy Partners”), a cybersecurity
advisory firm he founded in March 2018, where he works closely with technology
companies and investors to identify, acquire, and build companies and advises
boards of directors and executives on assessing risk and improving their cyber
governance. Currently, he serves on the board of directors of several private
technology companies. Prior to founding Cynergy Partners, from January 2012 to
March 2018, Mr. Pflaging was employed by The Chertoff Group, a security
advisory firm that provides risk management, business strategy and merger and
acquisition advisory services. While employed by The Chertoff Group, from April
2014 until March 2018, Mr. Pflaging was a Principal, a member of its Operating
Committee and responsible for its strategy practice, and, beginning in 2017, he
assumed leadership for its technology vertical. Mr. Pflaging has over 30 years of
Silicon Valley experience, including 15 years as Chief Executive Officer of
cybersecurity and data management companies. Mr. Pflaging holds a B.S. in
Commerce with dual concentrations in Finance and Marketing from the University
of Virginia.
Director Qualifications
The Board believes that Mr. Pflaging’s management and extensive industry
experience qualify him to serve as a director.
Continuing Directors
William G. Bock (Chairman of the Board)
Director Since: 2011
Board Class: III
Term Expiration: 2023
Age: 71
Board Committees:
• Audit
• Compensation
Biography
Bill Bock has served on our Board since 2011. Mr. Bock has served on the board
of directors of Silicon Laboratories Inc. (NASDAQ: SLAB) (“Silicon Labs”) since
2011 and as chairman of the board of directors of N-Able, Inc. (NYSE: NABL) since
July 2021. He has served as a member of the board of directors of SolarWinds
Corporation (NYSE: SWI) (“SolarWinds”) since October 2018 and was appointed
as chairman of its board in August 2020. From 2013 to his retirement in 2016,
Mr. Bock served as the President of Silicon Labs. He also served Silicon Labs as
Senior Vice President of Finance and Administration and Chief Financial Officer
from 2006 to 2011. Prior to joining Silicon Labs, Mr. Bock participated in the
venture capital industry, principally as a partner with CenterPoint Ventures, and
previously held senior executive positions with various venture-backed
companies. Mr. Bock began his career with Texas Instruments (NASDAQ: TXN).
Mr. Bock holds a B.S. in Computer Science from Iowa State University and an
M.S. in Industrial Administration from Carnegie Mellon University.
Director Qualifications
The Board believes that Mr. Bock’s extensive financial and industry experience as
well as his prior board experience qualify him to serve as a director.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Ronald J. Green
Director Since: 2021
Board Class: III
Term Expiration: 2023
Age: 53
Board Committees:
• Audit
• Cybersecurity
Biography
Ron Green has served on our Board since July 2021. He is an experienced
security leader and currently serves as Executive Vice President, Chief Security
Officer of Mastercard Inc. (NYSE: MA), where he serves on Mastercard’s
Management Committee and leads a global team that ensures the safety and
security of Mastercard’s network, products and services. Prior to joining
Mastercard in January 2014, he served as Deputy Chief Information Security
Officer at Fidelity Information Services from December 2012. Prior to this position,
Mr. Green was Director, Investigation and Protections Operations at BlackBerry
Limited (NYSE: BB), and before that he served as a senior vice president across
several areas at Bank of America (NYSE: BAC). He also has extensive experience
working with international and federal law enforcement agencies, both as a special
agent in the United States Secret Service, where among other things he worked
on fraud investigations, and as an officer in the United States Army. Mr. Green
currently serves as Chair of the Financial Services Sector Coordinating Council
and as a member of the United States Secret Service Cyber Investigations
Advisory Board. Mr. Green holds a B.S. in mechanical engineering from the United
States Military Academy at West Point, is a graduate of the FBI’s Domestic
Security Executive Academy and holds a graduate certification in Information
Assurance from The George Washington University.
Director Qualifications
The Board believes that Mr. Green’s business and security expertise qualify him
to serve as a director.
Mark D. McClain (Chief Executive Officer)
Director Since: 2005
Board Class: I
Term Expiration: 2024
Age: 59
Biography
Mark McClain co-founded SailPoint in December 2005 and has served as our
Chief Executive Officer and on our Board since that time. He has more than 20
years of experience developing and leading innovative technology companies that
have operated in the identity management market. In 2000, he founded Waveset
Technologies (“Waveset”), a pioneer in the identity management market. Following
the acquisition of Waveset by Sun Microsystems (“Sun”) in 2003, Mr. McClain
served as Vice President of Software Marketing for Sun. His career also includes
experience in international sales and marketing with HP (NYSE: HPQ) and IBM
Tivoli Systems. Mr. McClain holds a B.A. in Economics from Point Loma Nazarene
University and an M.B.A. from the University of California, Los Angeles.
Director Qualifications
The Board believes that Mr. McClain’s industry expertise and his daily insight into
corporate matters as our Chief Executive Officer qualify him to serve as a director.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Tracey E. Newell
Director Since: 2019
Board Class: I
Term Expiration: 2024
Age: 55
Board Committees:
• Compensation
• Nominating and
Corporate Governance
(Chair)
Biography
Tracey Newell has served on our Board since March 2019. She served as
President of Global Field Operations at Informatica LLC (“Informatica”), an
enterprise cloud data management company, from July 2018 until her retirement
in January 2021, during which time she was responsible for worldwide field sales,
alliances, channels and sales operations and customer success. In December
2020, Ms. Newell joined the board of directors of Sumo Logic, Inc. (NASDAQ:
SUMO), and she also currently serves on the board of directors of several private
technology companies. She previously served as a member of the Informatica
board of directors from June 2016 to June 2018, and prior to joining Informatica,
Ms. Newell was Executive Vice President of global field operations at Proofpoint,
an enterprise security software and solutions company, from August 2013 until
June 2018. Before Proofpoint, from July 2011 to August 2013, Ms. Newell was
Executive Vice President, Global Sales at Polycom. She has also held sales
leadership positions at Juniper Networks and at Cisco WebEx. Ms. Newell holds
a B.A. in Business Economics from the University of California, Santa Barbara.
Director Qualifications
The Board believes that Ms. Newell’s management and extensive industry
experience as well as her prior board experience qualify her to serve as a director.
Sudhakar Ramakrishna
Director Since: 2021
Board Class: I
Term Expiration: 2024
Age: 54
Board Committees:
• Nominating and
Corporate Governance
Biography
Sudhakar Ramakrishna has served on our Board since June 2021. He is a global
technology leader with nearly 25 years of experience across cloud, mobility,
networking, security and collaboration markets and currently serves as the
President and Chief Executive Officer of SolarWinds (NYSE: SWI) since January
2021, where he also has served on the board of directors since December 2020.
Prior to joining SolarWinds, Mr. Ramakrishna served as the Chief Executive Officer
of Pulse Secure, LLC, a leading provider of secure and zero trust access solutions
for hybrid IT environments, from May 2015 until December 2020, and before that,
he served as the Senior Vice President and General Manager for the Enterprise
and Service Provider Division at Citrix Systems, Inc. (NASDAQ: CTXS). Mr.
Ramakrishna has also held senior leadership roles at Polycom, Motorola, Inc.,
Stoke, Inc., 3COM Corporation and U.S. Robotics. He is currently a partner at
Benhamou Global Ventures, a leading venture capital firm investing in emerging
startups in the fields of security, analytics and applications, and serves on the
board of directors of Enterprise 4.0 Technology Acquisition Corp. (NASDAQ:
ENTF). Mr. Ramakrishna holds an M.S. in computer science from Kansas State
University and an M.S. in Management Studies from Northwestern University.
Director Qualifications
The Board believes that Mr. Ramakrishna’s business and industry expertise and
his extensive experience working with technology companies qualify him to serve
as a director.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Michael J. Sullivan
Director Since: 2017
Board Class: III
Term Expiration: 2023
Age: 57
Board Committees:
• Audit (Chair)
• Cybersecurity
Biography
Mike Sullivan has served on our Board since November 2017. Mr. Sullivan has
also served on the board of directors of CoalFire Systems, Inc., a provider of IT
audit, security and compliance solutions, since July 2021. He served as the Chief
Financial Officer at Ping Identity (NYSE: PING), an identity security company, from
March 2013 until his retirement in December 2016, and his tenure there
culminated in the successful sale of Ping Identity to Vista Equity Partners. Prior to
joining Ping Identity, Mr. Sullivan spent 12 years as the Executive Vice President
and Chief Financial Officer of IHS Inc. (now IHS Markit Ltd.) (“IHS”), a business
information services company (NASDAQ: INFO, formerly NYSE: IHS), which he
helped take public and where he worked closely with the audit committee of its
board of directors. Prior to joining IHS, Mr. Sullivan spent three years with the
Coors Brewing Company (NYSE: TAP), directing the corporate accounting
function and leading corporate planning and analysis efforts. He began his career
with Price Waterhouse, LLP, managing the firm’s participation in more than 30
domestic and international mergers and acquisitions, and also serving in the audit
practice, managing financial audits and audit committee representation for both
public and private companies. In addition, Mr. Sullivan has served on the boards
of directors and chaired the audit committees of two private equity-backed portfolio
companies: Vertafore (a SaaS company), from April 2011 to December 2013, and
SNL Financial (a business information services company), from December 2011
to April 2014. Mr. Sullivan holds a B.A. in Business Administration and Accounting
from the University of Iowa.
Director Qualifications
The Board believes that Mr. Sullivan’s extensive management, financial and
industry experience as well as his prior board and audit committee experience
qualify him to serve as a director.
Vote Required
The three nominees who receive the greatest number of “FOR” votes will be elected as Class II directors. Any
shares that are not voted, whether by abstention, broker non-votes or otherwise, will not affect the election of
directors.
Holders of proxies solicited by this Proxy Statement will vote the proxies received by them as directed on the
proxy card or, if no direction is given, then “FOR” the election of the nominees named in this Proposal No. 1.
The Board recommends a vote “FOR” the election of each of the director nominees.
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Corporate Governance
Composition of the Board
In accordance with our charter and bylaws, the Board is divided into three classes with staggered three-year
terms. At each annual meeting of stockholders, directors will be elected to succeed the class of directors whose
terms have expired. Our charter provides that the authorized number of directors will be fixed by the affirmative
vote of the directors then in office, and newly created directorships and vacancies may be filled by the Board.
Director Independence
The Board has undertaken a review of the independence of each director. Based on information provided by
each director concerning his or her background, employment and affiliations, the Board has determined that none
of our directors (other than Messrs. McClain and McMartin) have relationships that would interfere with the
exercise of independent judgment in carrying out the responsibilities of a director and that each of our directors
(other than Messrs. McClain and McMartin) is “independent” as that term is defined under the listing standards of
the NYSE. For a director to be considered independent, the Board must determine that the director does not have
any material relationships with the Company (other than as a director or stockholder), either directly or as a
partner, stockholder, or officer of an organization that has a relationship with the Company. Material relationships
can include vendor, supplier, consulting, legal, banking, accounting, charitable, and family relationships, among
others, including transactions described in the section titled “Certain Relationships and Related Party
Transactions.”
Leadership Structure of the Board of Directors
The offices of Chairman of the Board and Chief Executive Officer are presently separated. Our bylaws and
corporate governance guidelines, which do not require the separation of our Chairman of the Board and Chief
Executive Officer positions, allow the Board to determine the board leadership structure that is appropriate for us
at any given point in time, taking into account the dynamic demands of our business, our senior executive
personnel and other factors.
The Board believes that the separation of the Chairman of the Board and Chief Executive Officer roles
currently provides the most efficient and effective leadership model for the Company as it encourages free and
open dialogue regarding competing views and provides for strong checks and balances. Specifically, the balance
of powers among our Chief Executive Officer and Chairman of the Board facilitates the active participation of our
independent directors and enables our Board to provide more effective oversight of management.
Pursuant to our corporate governance guidelines, if the offices of Chairman of the Board and Chief Executive
Officer are combined, the Board shall have a lead director (the “Lead Director”) designated by the independent
directors to provide, in conjunction with the Chairman of the Board and Chief Executive Officer, leadership and
guidance to the Board. The Lead Director would serve as a liaison between the Chairman of the Board and the
independent directors and preside at all meetings of the Board at which the Chairman of the Board is not present,
unless the other directors determine otherwise. Additionally, the Lead Director would coordinate the nature,
quality, quantity and timeliness of, and have the authority to approve, information sent to the Board in advance of
meetings, would also have the authority to approve the agendas for meetings and would have such other
responsibilities as are described in our corporate governance guidelines and as designated from time to time by
the Board.
Communications by Stockholders and Other Interested Parties with the Board
Stockholders and other interested parties may contact any individual director, the Lead Director (if any), the
Chairman of the Board, the Board as a group, or a committee or subset of the Board by sending mail to: Board of
Directors, SailPoint Technologies Holdings, Inc., 11120 Four Points Drive, Suite 100, Austin, Texas 78726,
Attention: Corporate Secretary; by e-mail at investor@sailpoint.com; or by telephone at (512) 664-8916.
All such concerns will be forwarded to the appropriate director or directors for review and will be
simultaneously reviewed and addressed by the Company’s Corporate Secretary. The status of all outstanding
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
concerns will be reported to the Board on a quarterly basis. The Board or the Audit Committee may direct special
treatment, including the retention of outside advisors or counsel, for any concern addressed to them. The
Company will not take any adverse action, and will not tolerate any retaliation, against any person for asking
questions or making good faith reports of possible violations of law, Company policy or the Company’s code of
business conduct and ethics.
Board Committees
The Board has established four standing committees: the Audit Committee, the Compensation Committee,
the Nominating and Corporate Governance Committee and the Cybersecurity Committee. The composition,
duties and responsibilities of each of these committees are described below. Each of these committees reports to
the Board as provided in the applicable committee charter, as they deem appropriate and as the Board may
request. The Board may establish such other committees as it deems appropriate from time to time.
The following table provides information on the Board’s current committee memberships.
Name
Audit
Committee
Compensation
Committee
Nominating and Corporate
Governance Committee
Cybersecurity
Committee
William G. Bock
X
X
Ronald J. Green
X
X
Cam McMartin
X
Heidi M. Melin
Chair
X
Tracey E. Newell
X
Chair
James M. Pflaging
X
Chair
Sudhakar Ramakrishna
X
Michael J. Sullivan
Chair
X
Our corporate governance guidelines, along with our code of business conduct and ethics and the charters for
our Audit, Compensation, Nominating and Corporate Governance and Cybersecurity Committees, are available
on our website at investors.sailpoint.com/leadership-and-governance/governance-documents. Stockholders may
also obtain copies of these documents upon written request to SailPoint Technologies Holdings, Inc., Attn:
Investor Relations, 11120 Four Points Drive, Suite 100, Austin, Texas 78726 or by e-mail to
investor@sailpoint.com.
Audit Committee
Each member of the Audit Committee is financially literate, as required by the NYSE listing standards. In
addition, the Board has determined that Messrs. Bock, McMartin, Pflaging, Ramakrishna and Sullivan each
qualifies as an “audit committee financial expert” within the meaning of Item 407(d) of Regulation S-K
promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The Board has also determined
that each member of the Audit Committee meets the additional independence standards of the NYSE and the
Securities Exchange Commission (the “SEC”) applicable to members of audit committees.
The Audit Committee, which operates under a written charter that satisfies the applicable rules and
regulations of the SEC and the listing standards of the NYSE, is, among other things, responsible for:
•
selecting a qualified firm to serve as the independent registered public accounting firm to audit our
financial statements;
•
helping to ensure the independence and performance of the independent registered public accounting
firm;
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
•
discussing the scope and results of the audit with the independent registered public accounting firm, and
reviewing, with management and the independent registered public accounting firm, our interim and year-
end operating results;
•
developing procedures for employees to submit concerns anonymously about questionable accounting or
audit matters;
•
reviewing our policies on risk assessment and risk management;
•
reviewing its charter annually and recommending any proposed changes thereto to the Board for
approval;
•
reviewing and evaluating its own performance annually, reporting such evaluation to the Board;
•
reviewing related party transactions; and
•
approving or, as required, pre-approving, all audit and all permissible non-audit services, other than de
minimis non-audit services, to be performed by the independent registered public accounting firm.
Compensation Committee
The Board has determined that each member of the Compensation Committee meets the additional
independence standards of the NYSE and SEC applicable to members of compensation committees. The
Compensation Committee, which operates under a written charter, is, among other things, responsible for:
•
reviewing and approving the goals and objectives relating to the compensation of our executive officers,
including any long-term incentive components of our compensation programs;
•
evaluating the performance of our executive officers in light of the goals and objectives of our
compensation programs and determining each executive officer’s compensation based on such
evaluation;
•
assessing and advising the board of directors regarding succession planning for the CEO, and consulting
with the CEO on succession planning for our executive officers;
•
reviewing the operation and efficacy of our executive compensation programs in light of their goals and
objectives;
•
reviewing and assessing risks arising from our compensation programs;
•
reviewing and recommending to the board of directors the appropriate structure and amount of
compensation for our directors;
•
reviewing and approving, subject, if applicable, to stockholder approval, material changes in our
employee benefit plans;
•
reviewing its charter annually and recommending any proposed changes thereto to the Board for
approval;
•
reviewing and evaluating its own performance annually, reporting such evaluation to the Board;
•
reviewing and providing guidance to the Board and management about the Company’s policies,
programs, and initiatives for diversity and inclusion; and
•
establishing and periodically reviewing policies for the administration of our equity compensation plans.
The Compensation Committee has complete authority to retain and terminate outside counsel, compensation
consultants, or other experts or consultants, as it deems appropriate, including complete authority to approve their
fees and other retention terms. However, the Compensation Committee may only select such outside counsel,
compensation consultants, or other experts or consultants after taking into consideration all factors relevant to
that entity or person’s independence from management, including the factors enumerated in the applicable
exchange rules.
The Compensation Committee has retained Compensia, Inc. (“Compensia”) to provide independent
compensation consulting support. Compensia has provided market information on compensation trends and
practices and makes compensation recommendations based on competitive data of a peer group of companies.
Compensia is also available to perform special projects at the Compensation Committee’s request. Compensia
provides analyses and recommendations that inform the Compensation Committee’s decisions but does not
decide or approve any compensation actions. As needed, the Compensation Committee may also consult with
Compensia on other compensation-related matters. Compensia reports exclusively to the Compensation
Committee and does not provide any additional services to the Company. The Compensation Committee has
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
assessed the independence of Compensia pursuant to applicable SEC and NYSE rules and concluded that
Compensia’s work for the Compensation Committee does not raise any conflict of interest.
The Compensation Committee may form and delegate authority to subcommittees and may delegate
authority to one or more designated members of the Compensation Committee. The Compensation Committee
may delegate to one or more executive officers the authority to make grants of equity-based compensation to
eligible individuals who are not executive officers and to administer the Company’s equity-based compensation
plans. Any executive officer to whom the Compensation Committee grants such authority must regularly report to
the Compensation Committee grants so made and the Compensation Committee may revoke any delegation of
authority at any time.
Nominating and Corporate Governance Committee
The Board has determined that each member of the Nominating and Corporate Governance Committee
meets the independence standards of the NYSE. The Nominating and Corporate Governance Committee, which
operates under a written charter, is, among other things, responsible for:
•
identifying, evaluating and recommending qualified nominees to serve on the Board;
•
considering and making recommendations to the Board regarding the composition of the committees of
the Board;
•
instituting plans or programs for the continuing education of the Board and orientation of new directors;
•
developing and making recommendations to the Board regarding corporate governance guidelines and
matters;
•
reviewing its charter annually and recommending any proposed changes thereto to the Board for
approval;
•
reviewing and evaluating its own performance annually, reporting such evaluation to the Board;
•
periodically reviewing, assessing and discussing with management the Company’s policies and programs
concerning corporate social responsibility, including environmental, social and governance matters; and
•
overseeing periodic evaluations of the Board’s performance, including committees of the Board and
management.
Cybersecurity Committee
The Cybersecurity Committee, which operates under a written charter, is, among other things, responsible for
reviewing and advising on the following matters:
•
the effectiveness of our cybersecurity programs and our practices for identifying, assessing and mitigating
cybersecurity risks across our products, services and business operations;
•
our controls, policies and guidelines to prevent, detect and respond to cyber attacks or data breaches
involving our products, services and business operations;
•
our security strategy and technology planning processes;
•
the safeguards used to protect the confidentiality, integrity, availability and resiliency of our products,
services and business operations;
•
our cyber crisis preparedness, security breach and incident response plans, communication plans, and
disaster recovery and business continuity capabilities;
•
our compliance with applicable information security and data protection laws and industry standards,
including our ISO 27001 Certification and Service Organization Control 2 Type 2 Report;
•
new or updated legal implications of security, data privacy and/or other regulatory or compliance risks to
us or our products, services or business operations;
•
our cybersecurity budget, investments, training and staffing levels to ensure they are sufficient to sustain
and advance successful cybersecurity and industry compliance programs, including company-wide
information and security training
•
an annual review of its charter and recommendations regarding any proposed changes thereto to the
Board for approval; and
•
an annual review and evaluation of its own performance, reporting such evaluation to the Board.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Risk Oversight
The Board is responsible for overseeing our risk management process. The Board focuses on our general
risk management strategy and the most significant risks facing us and oversees the implementation of risk
mitigation strategies by management. The Board, including through its committees, is also apprised of particular
risk management matters in connection with its general oversight and approval of corporate matters and
significant transactions.
The Board does not have a standing risk management committee, but rather we administer this oversight
function directly through the Board as a whole. In particular, the Board is responsible for monitoring and assessing
strategic risk exposure. Such responsibility is facilitated in part by the Audit Committee, which receives reports
from management, the internal audit team, and the Company’s independent registered public accounting firm; the
Compensation Committee, which assesses and monitors whether any of our compensation policies and programs
have the potential to encourage unnecessary risk-taking; the Nominating and Corporate Governance Committee,
which monitors the effectiveness of our corporate governance guidelines; and the Cybersecurity Committee,
which oversees our policies, plans and programs relating to cybersecurity and data protection risks associated
with our products, services and business operations.
Our management is responsible for day-to-day risk management. This oversight includes identifying,
evaluating and addressing potential risks that may exist at the enterprise, strategic, financial, operational,
compliance or reporting levels.
Code of Business Conduct and Ethics
We have adopted a written code of business conduct and ethics that applies to our directors, officers and
other employees, including our principal executive officer, principal financial officer, principal accounting officer
and controller (or persons performing similar functions). We have posted a current copy of the code on our
website at investors.sailpoint.com/leadership-and-governance/governance-documents. In addition, we intend to
post on our website all disclosures that are required by law or the NYSE listing standards concerning any
amendments to, or waivers from, any provision of the code.
Director Recommendations
Director Qualification Standards and Selection Criteria
The Nominating and Corporate Governance Committee, in recommending director candidates, and the
Board, in nominating director candidates, will evaluate candidates in accordance with the qualification standards
set forth in our corporate governance guidelines. Pursuant to our corporate governance guidelines, directors
should possess the highest personal and professional ethics, integrity and values and be committed to
representing the long-term interests of our stockholders. They also should be intelligent, inquisitive and objective
in thought and have practical wisdom and mature judgment and a willingness to gain an understanding of the
Company, its competitive position in its industry and its business strategy. Directors must be willing to devote
sufficient time to carrying out their duties and responsibilities effectively and should be committed to serving on
the Board for an extended period of time. Along with the selection criteria described above, some of the other
qualifications that the Nominating and Corporate Governance Committee considers include, without limitation,
independence, diversity, skills, education, expertise, business experience, length of service, understanding of the
Company and industry and other commitments. While we do not have a formal diversity policy for directors, the
Nominating and Corporate Governance Committee and Board generally consider the diversity of director
candidates in terms of knowledge, geography, age, gender, ethnicity, experience, background, skills, expertise
and other demographic factors.
Stockholder Nominations
The Nominating and Corporate Governance Committee will consider director candidates recommended by
stockholders in the same manner it considers other candidates, but it has no obligation to recommend such
candidates. A stockholder that wants to recommend a candidate for election to the Board should send a
recommendation in writing to SailPoint Technologies Holdings, Inc., c/o Corporate Secretary, 11120 Four Points
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Drive, Suite 100, Austin, Texas 78726. Such recommendation should describe the candidate’s qualifications and
other relevant biographical information and provide confirmation of the candidate’s consent to serve as director.
Stockholders may also nominate directors at an annual meeting by adhering to the advance notice procedure
described under “Submission of Stockholder Proposals” elsewhere in this Proxy Statement.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee in 2021 was an officer or employee of the Company in
2021, nor have they ever been an officer or employee of the Company. None of our executive officers currently
serves, or in the past year has served, as a member of the board of directors or compensation committee of any
entity that has one or more executive officers serving on the Board or Compensation Committee.
Family Relationships
There are no family relationships among any of our directors or executive officers.
Board and Annual Meetings
The Board meets on a regularly scheduled basis during the year to review significant developments affecting
the Company and to act on matters requiring their approval. It also holds special meetings when important
matters require action between regularly scheduled meetings. During 2021, the Board held four meetings, the
Audit Committee held seven meetings, the Compensation Committee held four meetings, the Nominating and
Corporate Governance Committee held four meetings and the Cybersecurity Committee held four meetings. Each
incumbent director attended at least 75% of the aggregate number of meetings held by the Board and the
committees of the Board during the period for which such director served on the Board or committee(s), if
applicable, during 2021.
The Board regularly holds executive sessions of the non-management directors. If independent, the Chairman
of the Board presides over such executive sessions. If the Chairman of the Board is not independent, the Lead
Director presides over such executive sessions. Such executive sessions do not include employee directors. The
Board held at least one executive session during 2021 that included only independent directors, consistent with
NYSE rules.
The Company’s directors are encouraged to attend our annual meetings of stockholders, but we do not
currently have a policy relating to directors’ attendance at these meetings. Each then-current member of the
Board attended our 2021 Annual Meeting of Stockholders.
Corporate Responsibility
We believe that operating our company in an environmentally and socially responsible manner will help drive
long-term value for our stockholders. Consistent with this belief and our core values (Innovation, Integrity, Impact
and Individuals), we recognize that we have a meaningful opportunity to provide value to all of our stakeholders,
including through maintaining good governance practices and oversight, promoting a safe, positive, diverse and
inclusive environment for all of our crew members to work in, investing in and supporting our communities and
being mindful of our impact on the environment.
Governance and Oversight
We believe that good corporate governance provides a strong foundation for operating our business in a
manner that is fair, ethical and responsible and is therefore essential to the long-term success of our company.
Our Board and its committees help set the tone for our company in this regard, as they regularly review and, as
appropriate, update various corporate governance and other key policy documents in light of current regulations
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
and best practices. The Board also conducts an annual review and evaluation of its own performance and reviews
the annual evaluations conducted by each of its committees, as discussed above. The Board is focused on and
devotes substantial attention to matters of corporate responsibility, including environmental, social and
governance (“ESG”) matters, and pursuant to its charter, our Nominating and Corporate Governance Committee
has oversight over the Company’s ESG efforts.
Our corporate governance guidelines emphasize the importance of considering potential director candidates’
diversity, including geographic, age, gender, and ethnic diversity, among other factors, and the Compensation
Committee of our Board routinely reviews and provides guidance to the Board and management about SailPoint’s
policies, programs, and initiatives for diversity and inclusion. As mentioned above, you can find certain of our
governance documents on our website at investors.sailpoint.com/leadership-and-governance/governance-
documents.
Since our initial public offering in 2017, three directors affiliated with our former equity sponsor rolled off our
Board and have been replaced by five new directors, including two women and two individuals from
underrepresented communities. Half of our Board committees are chaired by women, and the average tenure of
directors from the time we went public through the Record Date is 3.0 years. As reflected in the following graph,
we believe that our directors represent a wide range of skills, experiences and backgrounds, which allows them to
offer a variety of perspectives in fulfilling their responsibilities on the Board:
People
Our people are our greatest asset, and each of our core values is designed to support this foundational tenet
of our business model, because we recognize that each crew member’s unique characteristics and talents are
what make us the company we are today. We think team member engagement is critical to maintaining a positive
culture, and our annual team member engagement survey helps us evaluate our efforts in light of our core
principles. Overall team member satisfaction reached 90% each of the last four years we completed this survey,
and over the last 10 years, organizations such as Austin Business Journal, Fortune and Glassdoor have
recognized SailPoint as a “best place to work.” In 2021, SailPoint was also named as one of Fortune’s 100 Best
Small and Medium Workplaces for Millennials and recognized by Great Place to Work as one of the 100 Best
Workplaces for Parents.
We believe that each individual has value and is important and should be treated respectfully, no matter their
background, culture, ability, age, ethnicity, gender identification, race, sexual orientation, religious belief, or
5
8
9
3
8
7
7
8
6
9
4
Accounting
Business Development and M&A
Executive Management
Finance
International
Government, Legal and Regulatory
Human Capital
Risk Management
Sales and Marketing
Technology Industry
Diversity
BOARD SKILLS & EXPERIENCE
# of directors with relevant skill or experience (out of 9 total)
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
veteran’s status. We strive to foster an inclusive and diverse work environment and culture that helps enable all of
our employees to achieve and contribute, and we put that philosophy into action by:
•
Constantly striving to improve inclusion and equity indicators in our talent funnel, hiring, retention and
promotions;
•
Conducting pay equity reviews during our annual merit and equity planning process;
•
Focusing enablement and holding company-wide interactive trainings on recognizing and reducing
unconscious bias, including in our interviewing and selection process;
•
Shifting toward a distributed talent model that facilitates global hiring, broadening the diversity of our
talent pool;
•
Strengthening relationships with diversity-focused talent acquisition vendors and recruiting at historically
Black and Latinx colleges and universities (HBCUs);
•
Partnering with organizations that advance racial justice in our communities;
•
Working with organizations committed to supporting veteran and caregivers who are returning to the
workforce;
•
Ensuring our employee communications are accessible; and
•
Encouraging the creation of and participation in employee groups that help our crew members engage
with and support one another.
The health and safety of our crew members and their families is of paramount importance, as is the welfare of
our customers, partners and visitors. Our response to the COVID-19 pandemic demonstrated our commitment to
the health and safety of our team, as we acted swiftly in accordance with our Business Continuity and Disaster
Recovery Plan and with oversight by and collaboration with our Board to take decisive, informed action to ensure
the safety of the SailPoint community and continuity of our business. For example, we implemented the following
measures:
•
We acted quickly to support remote work for all SailPoint employees;
•
We shifted all customer events and the provision of services to a virtual format;
•
We suspended non-essential travel to certain countries in accordance with recommendations by public
health officials;
•
We reduced participation in large events and gatherings;
•
We introduced programs to facilitate balance and wellness for our crew members, including specific
initiatives to assist crew members in their adjustment to a primarily virtual workplace;
•
We accommodated the scheduling needs of our crew members whose families were impacted by COVID-
19 illness and pandemic restrictions, including through our flexible leave policy;
•
We took deliberate steps to ensure that our shift to a primarily virtual workplace did not have a negative
impact on our employee engagement;
•
We developed phased re-entry plans for each of our office locations, in compliance with local regulations
and guidelines;
•
We have reimagined and redesigned our workspace and protocols to make it as safe and healthy as
possible for those of our crew members who choose or otherwise need to come to the office; and
•
We are following and encouraging employees and visitors to follow recommendations from the World
Health Organization and Centers for Disease Control and Prevention, including practicing good hygiene,
implementing social distancing and, most importantly, staying home if they feel sick or have a sick family
member at home.
While we continue to follow recommendations from government and public health officials, we are also
looking to the future as we reimagine how we can continue to provide a fair, flexible and optimal work environment
that positions us for continued success. We continue to support flexible work arrangements and have introduced
programs to facilitate balance and physical, emotional and financial wellness for all crew members. Our location-
agnostic approach to hiring not only helps us reach a more diverse pool of candidates, but also reflects our
commitment to a long-term hybrid work environment. We strive to help crew members feel engaged and heard in
meetings, whether participants are collaborating together in an office, remotely, or through a combination. We
continue to look for creative ways to support crew members’ emotional wellbeing, including through our Employee
Assistance Program, which offers confidential services for crew members seeking mental or emotional support,
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
and our Free2Focus program, which offers crew a two-hour block of meeting-free time each Tuesday and
Thursday to help reduce meeting fatigue.
We also strive to attract and retain our top talent by offering a competitive compensation and benefits
package, which includes competitive base salaries, comprehensive health, welfare, income protection and long-
term savings benefits, the opportunity to participate in our employee stock purchase plan, and incentive equity
compensation and incentive cash plans for eligible crew members. Our headquarters and some of our other office
locations are equipped with fitness centers and ergonomic standing desks. Our headquarters and recently-
opened London office have been redesigned into a modern workspace, where we utilize a “hoteling” strategy that
allows for social distancing and appropriate levels of sanitization during the pandemic, while also promoting crew
member engagement and collaboration and accommodating flexible work arrangements, which we believe helps
us maximize productivity.
Community Involvement
We are passionate about being good citizens in the communities where we live and work, and we have a long
history of philanthropic giving. In 2020, we formally established the SailPoint Gives Back Foundation (the
“Foundation”) to enable a legacy of giving, both by SailPoint and by individual crew members. Initially seeded by
SailPoint and our Chief Executive Officer and Founder, Mark McClain, the Foundation allows for consistent and
meaningful contributions to our communities through a thoughtful giving strategy and enables individual crew
members to have their philanthropic contributions stretch even farther with donor matching. As an example, when
Texas experienced a historic winter storm with severe power outages in February 2021, the Foundation worked
with the Central Texas Foodbank to help provide food for those who were impacted. In addition to other traditional
forms of philanthropic giving, we also sponsor an annual event where we invite local non-profits to make a “pitch”
for their cause, and our crew members decide how to allocate SailPoint-sponsored financial contributions to the
winning organizations. On Giving Tuesday in 2021, the Foundation matched crew member donations, up to $100
per crew member, to the non-profit of their choice, and in light of the tragic events unfolding in Ukraine, the
Foundation is matching crew member donations to the Red Cross up to $25,000 in the aggregate.
We also recognize that giving back can involve more than donating money to various philanthropic
organizations and events. In addition to providing long-term financial support to a number of organizations in our
communities, we encourage and give our crew members the opportunity to give back through “sweat equity,”
providing meaningful service to worthwhile causes. For example, our crew members have recently donated time
and services to help build homes for those in need, provide volunteer assistance at COVID-19 vaccination clinics,
assemble hygiene kits for a women’s shelter, sponsor drives and a back to school drive for school supplies, and
provide meaningful mentoring to minority and low-income high school students who enter and excel in STEM
(science, technology, engineering and math) undergraduate majors and careers.
Environment
We believe that it is important to be mindful of how our behaviors impact the environment and seek
opportunities to promote more sustainable business practices. One way that we strive to do this is through
energy efficient practices and facilities. Our headquarters is located in a LEED-certified facility, which features
intelligent design for energy efficiency, water conservation, improved indoor air quality, waste reduction and
smarter materials selections. We regularly use efficient LED lights and adopt environmentally friendly
technologies when purchasing new equipment. We purchase recycled materials when feasible, utilize recycling
collection bins for batteries, aluminum, plastic and paper in our offices, recycle toner cartridges, computer
equipment and cell phones where possible and practice responsible disposal when needed.
Our flexible approach to work encourages telecommuting for the majority of crew members, who use video
and teleconferencing technologies when working remotely. All crew members have a company laptop, which
enables them to work from home and reduce the pollution and energy consumption caused by commuting by car
every day. We also emphasize efficient space utilization, which results in lower electricity and heating
requirements for our offices, and we distribute our product documentation and literature in electronic format, use
electronic signature technology and utilize the SEC’s “notice and access rules” for proxy distribution to help
reduce the volume of paper consumed. Modern use of our headquarters space through a free-desking, or
“hoteling” strategy, the implementation of which has been accelerated by COVID-19, allows us to promote
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
collaboration and facilitate project-based work. Coupled with our flexible work arrangement policy, this allows us
to maximize our use of the square footage at our headquarters, thereby minimizing our carbon footprint.
Proposal No. 2 – Ratification Of Appointment Of Independent
Registered Public Accounting Firm
The Audit Committee has selected Grant Thornton LLP (“Grant Thornton”) to be the Company’s independent
registered public accounting firm for the fiscal year ending December 31, 2022, and recommends that the
stockholders vote for ratification of such appointment. Grant Thornton has been engaged as our independent
registered public accounting firm since 2010. As a matter of good corporate governance, the Audit Committee has
requested the Board to submit the selection of Grant Thornton as the Company’s independent registered public
accounting firm for fiscal year 2022 to the Company’s stockholders for ratification. In the event of a negative vote
on such ratification, the Audit Committee will reconsider its selection. We expect representatives of Grant
Thornton to be present at the Annual Meeting. They will have the opportunity to make a statement at the Annual
Meeting if they desire to do so and will be available to respond to appropriate questions.
Audit and Related Fees
The following table sets forth the aggregate fees billed for various professional services rendered by Grant
Thornton:
2021
2020
Audit Fees (1)
$
1,554,820
$
1,395,596
Audit-Related Fees
$
—
$
—
Tax Fees
$
—
$
—
All Other Fees
$
—
$
—
Total Fees
$
1,554,820
$
1,395,596
(1) Consists of fees for the annual audit and quarterly reviews and financial reporting consultations.
Pre-Approval Policy
The charter of the Audit Committee requires that the Audit Committee review the estimated fees of Grant
Thornton’s audit, audit-related, tax and other permitted non-audit services and requires that the Audit Committee,
or a member thereof with designated authority, pre-approve any services provided to the Company by Grant
Thornton. All of the services listed in the above table were approved in accordance with the charter and policies of
the Audit Committee.
Vote Required
Approval of this proposal requires the affirmative vote of a majority of voting power of common stock present
in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will count the
same as votes against this Proposal No. 2.
Holders of proxies solicited by this Proxy Statement will vote the proxies received by them as directed on the
proxy card or, if no direction is given, then “FOR” the ratification of the appointment of Grant Thornton LLP in this
Proposal No. 2.
The Board recommends a vote “FOR”
the ratification of the appointment of Grant Thornton LLP.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Proposal No. 3 – Advisory Vote to Approve Named Executive
Officer Compensation
Pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
consistent with the overwhelming support of our stockholders at our 2021 Annual Meeting of Stockholders to hold
such vote annually, we are providing our stockholders with the opportunity to cast a non-binding advisory vote on
a resolution to approve the compensation of our Named Executive Officers as disclosed in this Proxy Statement.
Stockholders are being asked to vote on the following resolution:
RESOLVED, that the stockholders approve the compensation of SailPoint’s Named Executive Officers as
disclosed in its Proxy Statement for the 2022 Annual Meeting of Stockholders pursuant to Item 402 of Regulation
S-K, including the Compensation Discussion and Analysis, the compensation tables and other executive
compensation disclosures.
The Compensation Discussion and Analysis section of this Proxy Statement and the accompanying tables
and narrative provide a comprehensive review of our executive compensation program, objectives, factors and
rationale. We urge you to read this disclosure before voting on this non-binding proposal. As described in detail in
such disclosure, our executive compensation program is designed to attract and retain highly competent,
motivated executives and reward them for superior performance, consistent with creating long-term stockholder
value. The Compensation Committee believes that our executive compensation program, with its balance of
guaranteed salary, performance-based cash bonuses and time-vesting equity awards promote retention and
reward sustained performance that is aligned with long-term stockholder interests.
While this vote on executive compensation is non-binding and solely advisory in nature, the Board and the
Compensation Committee will review and consider the voting results when making future decisions regarding our
executive compensation program. We expect that the next stockholder advisory vote to approve Named
Executive Officer compensation will occur at our 2023 Annual Meeting of Stockholders.
Vote Required
Approval of this proposal requires the affirmative vote of a majority of voting power of common stock present
in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Abstentions and broker non-
votes will count the same as votes against this Proposal No. 3.
Holders of proxies solicited by this Proxy Statement will vote the proxies received by them as directed on the
proxy card or, if no direction is given, then “FOR” this Proposal No. 3.
The Board recommends a vote “FOR” the resolution approving, on a non
binding advisory basis, our named executive officer compensation.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Executive Officers
The following table provides information regarding our executive officers as of March 16, 2022.
Name
Age
Position
Mark McClain
59
Chief Executive Officer and Director
Colleen Healy
51
Chief Financial Officer
Matt Mills
64
President, Worldwide Field Operations
Chris Schmitt
49
Executive Vice President, General Counsel and Secretary
Grady Summers
45
Executive Vice President, Product
The narrative disclosure below provides information about the business experience of certain of our executive
officers. See “Proposal No. 1 — Election of Directors — Continuing Directors” for such information about Mr.
McClain.
Colleen Healy joined the Company as a Special Advisor in February 2022 and was appointed Chief Financial
Officer effective March 16, 2022. She has nearly 30 years of finance and investor relations experience. Before
joining SailPoint, Ms. Healy served as Chief Financial Officer of Basis Global Technologies, Inc. (formerly Centro,
Inc.) from October 2019 until December 2020, and most recently served as Strategic Advisor at Basis from
December 2020 until June 2021. Prior to that, she served as Vice President and Global Divisional Chief Financial
Officer at Hill-Rom Holdings, Inc. (NYSE: HRC before its merger with Baxter International Inc.) from June 2016
until October 2017 and Vice President, Investor Relations at TransUnion (NYSE: TRU) from December 2014 until
April 2016. Before that, Ms. Healy spent nearly 20 years with Microsoft Corporation (NASDAQ: MSFT) in various
capacities, including General Manager and Head of U.S. Industry for Financial Services, Head of Investor
Relations, and Senior Director, Treasury and Capital Markets Group. Prior to that, she was a Financial Analyst
with Credit Suisse (formerly First Boston). Ms. Healy holds a Bachelor of Business Administration from the
University of Michigan.
Matt Mills joined the Company as our Chief Revenue Officer in August 2019 and was appointed President,
Worldwide Field Operations in February 2021. He brings more than 30 years of experience to this role. Before
joining SailPoint, Mr. Mills was the chief executive officer of MapR Technologies, an enterprise software company,
from October 2015 until February 2018. Immediately prior to that, he spent 20 years at Oracle Corporation
(NYSE: ORCL), most recently as Senior Vice President North America Sales, where he oversaw more than 8,000
employees and was responsible for $4.5 billion in annual revenues. Since September 2018, Matt has served as
board member and advisor to various early-stage SaaS companies. Mr. Mills holds a B.A. in English from Ferris
State University in Michigan.
Chris Schmitt has served as our General Counsel and Secretary since March 2017 and was appointed as an
Executive Vice President in July 2020. He has more than 20 years of corporate legal experience. Prior to joining
SailPoint, Mr. Schmitt was a Partner at the law firm Vinson & Elkins L.L.P. from January 2010 until March 2017,
practicing in the firm’s Capital Markets and Mergers & Acquisitions group. His practice focused on mergers and
acquisitions, public and private securities offerings, technology transactions, and compliance and corporate
governance. Prior to that, Mr. Schmitt was an Associate attorney at Vinson & Elkins and, before that, at the law
firm Baker Botts L.L.P. Mr. Schmitt holds a B.S. in Political Science and Economics and a J.D., both from the
University of Michigan.
Grady Summers has served as our Executive Vice President, Product since April 2020 and has more than
20 years of technology and leadership experience. Before joining SailPoint, Mr. Summers served in a number of
roles at FireEye, Inc., including as the Executive Vice President and Chief Technology Officer from August 2015
until April 2020 and Senior Vice President of Cloud Analytics from December 2014 until August 2015, and for the
two years before that he was the Vice President of Cloud Security at Mandiant Solutions before its acquisition by
FireEye. Prior to that, he was a Principal at Ernst and Young, helping to lead the firm’s information security
practice, and was the Chief Information Security Officer (CISO) at General Electric (NYSE: GE), overseeing a
large global cybersecurity organization. Mr. Summers holds a B.S. in Business/Computer Systems and Political
Science from Grove City College and an M.B.A. from Columbia University.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Executive Compensation
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (“CD&A”) provides a discussion of the compensation philosophy
and objectives underlying our executive compensation program and how we evaluated and set executive
compensation for 2021. This CD&A is intended to provide qualitative information concerning how 2021
compensation was earned and awarded to our Named Executive Officers. Further, it identifies the most significant
factors relevant to our 2021 executive compensation decisions and gives context to the data presented in the
compensation tables included below in this Proxy Statement.
The term “executive officers” means our senior executives. All individuals who fit that description as of March
16, 2022 are listed above in “Executive Officers.” The term “Named Executive Officers” means the executive
officers identified in the table below, each of whom were considered “executive officers” as of December 31, 2021
or at some point during 2021, as applicable.
Named Executive Officer
Title
Mark McClain
Chief Executive Officer
Cam McMartin (1)
Former Interim Chief Financial Officer
Matt Mills
President, Worldwide Field Operations
Jason Ream (2)
Former Chief Financial Officer
Chris Schmitt
Executive Vice President, General Counsel and Secretary
Grady Summers
Executive Vice President, Product
(1) Mr. McMartin was appointed as Interim Chief Financial Officer effective September 1, 2021 and resigned
from that position and from the Company effective March 15, 2022.
(2) Mr. Ream resigned from his position as Chief Financial Officer effective August 31, 2021 and from the
Company effective February 28, 2022.
Executive Summary
This CD&A executive summary describes key features of our executive compensation program and
summarizes the 2021 cash and equity incentive compensation and other benefits received by our Named
Executive Officers. Please read the complete CD&A and remaining compensation sections for further details
regarding the matters summarized below.
Executive Compensation Program Overview
Our executive compensation program is designed to attract and retain highly competent, motivated
executives and reward them for superior performance, consistent with creating long-term stockholder value. It
consists of a mix of three primary components, described below, which we believe appropriately rewards our
executive officers for their overall contribution to company performance, contains a substantial portion of at-risk,
performance-based compensation, incorporates our financial and operational results and aligns our executives’
interests with those of our stockholders with the ultimate objective of increasing long-term stockholder value.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
The three primary components of our executive compensation program are:
Primary
Compensation Components
Overview
Base Salary
Competitive base salaries are established at a level necessary to retain the
individual executive’s services, and to reward and motivate individual
performance.
Annual Cash
Incentive
An annual cash incentive award serves to focus our executives on
achievement of pre-established annual operational targets. This year, as
discussed in further detail below, the ultimate payment amount is based on new
bookings (as described below).
Long-Term
Equity Incentive
A long-term incentive plan and stock ownership guidelines serve to align our
executives with longer term performance achievement and stockholder returns
over time. The long-term incentive approach currently consists of a
combination of restricted stock units (“RSUs”) and stock options vesting over
time. Ownership and holding requirements are based on a designated multiple
of each executive’s base salary.
Compensation Program Design and Governance Policies
In addition to our three primary components of executive compensation, our executive compensation program
includes other features that we believe are consistent with strong governance practices, including:
What We Do
•
Simple and Transparent Compensation
Program: Maintain a simple and transparent
executive compensation program that is
understandable both to stockholders and
employees and that is not overly complex or
subject to constantly changing features
•
Significant At-Risk, Variable Compensation
Aligned with Performance: A significant
percentage of annual compensation is at-risk,
variable and performance-based
•
Rigorous Target Setting: Rigorous performance
targets for new bookings
•
Multi-Year Equity Vesting: Four-year vesting for
all executive equity awards
•
Balanced Mix of Compensation: Balance of
short-term performance-based cash
compensation and long-term equity awards
•
Balanced Mix of Equity Awards: Named
Executive Officers are granted a mix of RSUs and
stock options vesting over time
•
Independent Compensation Consultant:
Engagement by the Compensation Committee of
an independent compensation consultant to
assist with the Compensation Committee’s
regular review of our executive compensation
program
•
Stock Ownership Guidelines: Executive stock
ownership guidelines and holding requirements
What We Do Not Do
• No Gross-Ups: No tax gross-ups upon a change
in control
•
No Perquisites: We generally do not offer any
supplemental executive perquisites
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
• No Repricing Options: We have never repriced
stock options and will not reprice stock options
without stockholder approval
•
No Dividends Paid on Unvested Equity: No
prospective payment of dividends on unvested
equity awards
• No Hedging or Pledging Stock: Insider Trading
Policy that prohibits, among other things, hedging
and pledging transactions relating to our stock
2021 Executive Compensation Pay Mix
As shown in the chart below, targeted direct compensation for our CEO in 2021 was 92% at-risk and variable
compensation that is aligned with our performance, while targeted direct compensation for our other Named
Executive Officers in 2021 was 86% at-risk and variable compensation that is aligned with our performance.
These percentages include actual base salary for the year, targeted annual cash incentives for 2021 (calculated
as described below) and the grant date value of the RSU and stock option awards granted to our Named
Executive Officers in 2021. The stock option award portion of these figures is inherently performance-based
because they only provide value to the recipients if the price of our stock increases following the date of grant of
the awards.
2021 Direct Compensation Components -
CEO
2021 Direct Compensation Components –
Average of Other NEOs
2021 Executive Compensation Program Changes
In 2021, as part of its annual process, the Compensation Committee reviewed our executive compensation
program to ensure it continues to achieve the goals of the program and remains competitive. Based on its review,
the Compensation Committee approved a change in the vesting schedule of annual RSU awards to the
Company’s executive officers. Previously, 25% of such awards vested after the first anniversary and then 6.25%
vested each quarter thereafter, but the Compensation Committee approved quarterly vesting, in an amount equal
to 6.25% per quarter, beginning with the first quarter following grants. The Compensation Committee determined
that this change was appropriate for retaining and incentivizing our executive officers to grow the business in a
way that increases stockholder value.
The Compensation Committee has not made any material changes to the 2022 executive compensation
program. However, certain changes, discussed below, were made to the peer group to be used to inform 2022
compensation.
In connection with our 2019 Annual Meeting of Stockholders, our stockholders voted in favor of an annual
advisory vote to approve our executive compensation. Consistent with that vote, we have determined that it is
advisable to conduct the advisory vote on executive compensation on an annual basis. At our 2021 Annual
Meeting of Stockholders, a substantial majority of the stockholders who voted at the meeting voted in favor of our
executive compensation as presented in our 2021 Proxy Statement; therefore, we did not make any significant
86%
7%
7%
Target LTIP (%)
Target AIP (%)
Base Salary (%)
78%
9%
13%
Target LTIP (%)
Target AIP (%)
Base Salary (%)
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
changes to our compensation program as a direct result of such advisory vote. We expect that the results of such
advisory vote this year and going forward will be one of the factors that we consider on an annual basis when
determining the design of our compensation program for our Named Executive Officers.
Executive Compensation Philosophy and Objectives
Our executive compensation program is designed to reward our executive officers for their overall contribution
to company performance, including the achievement of specific annual goals. The executive compensation
program also seeks to align executive officers’ interest with those of our stockholders by rewarding performance
that meets or exceeds established goals, with the ultimate objective of increasing long-term stockholder value.
Specifically, the program is designed to:
•
Retain and attract a highly competent, motivated team of executives appropriately aligned with the long-
term interests of our stockholders;
•
Encourage behavior that will enhance both current year performance and long-term growth of stockholder
value;
•
Provide, as part of our total compensation, base salary, the opportunity for a cash incentive and the
opportunity for a mix of RSUs and stock options with four-year vesting schedules;
•
Require achievement of minimum performance thresholds prior to any cash incentive compensation
being earned;
•
Provide competitive programs of health, welfare and retirement benefits to all employees on an equivalent
basis; and
•
Make equity ownership and retention guidelines for executives and directors a key component to ensure
alignment with long-term stockholder interests.
Setting Executive Compensation for 2021 and Establishing Our 2021 Peer Group
The Compensation Committee retained Compensia as its independent compensation consultant to review
and provide advice and recommendations with respect to the Company’s executive officer compensation program
and assist the Compensation Committee in determining whether any elements or amounts of the existing
compensation program should be modified from time to time. The Compensation Committee’s relationship with
Compensia and the role that Compensia plays in our compensation-setting process is described further above in
the “Board Committee — Compensation Committee” section.
Consistent with Compensia’s recommendation, the 2021 equity award mixture for our senior officers
(including our Named Executive Officers, with the exception of Mr. McMartin) was 35% stock options and 65%
RSUs (based on value rather than number of shares). For these Named Executive Officers, a targeted dollar
amount was established for the 2021 awards. The number of RSUs to be granted was determined by using 65%
of such aggregate award value divided by the 30-trading-day average closing stock price from the date of grant.
The number of stock options granted was determined by dividing 35% of the aggregate award value by the 30-
trading-day average price of stock from the date of grant and then multiplying by 2. The equity granted to Mr.
McMartin in 2021 consisted of 100% RSUs, which the Compensation Committee determined was appropriate in
light of the nature of his position, and was calculated by dividing the award value by the 30-day average closing
price of stock from the date of grant.
In November 2020, Compensia proposed a peer group for use in the comparisons discussed above for the
2021 compensation year. The Compensation Committee reviewed and evaluated the proposed peer group in
adopting a peer group consisting of the following 18 companies in our industry with comparable revenues and
market capitalization:
Peer Group Used for Determining 2021 Compensation
• 8 x 8 Inc.
• Q2 Holdings, Inc.
• Alarm.com Holdings, Inc.
• Qualys, Inc.
• Appian Corp.
• Rapid7, Inc.
• BlackLine, Inc.
• SPS Commerce Inc.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
• Five9, Inc.
• Talend S.A.
• LivePerson Inc.
• Tenable Holdings, Inc.
• New Relic, Inc.
• Varonis Systems Inc.
• Paylocity Holding Corp.
• Workiva Inc.
• Ping Identity Holding Corp.
• Yext, Inc.
In October 2021, the Compensation Committee reviewed the peer group used for 2021 compensation
decisions and made certain changes effective for compensation decisions made in 2022. Talend was removed
because it was acquired in 2021, and it was replaced with PagerDuty, Inc. and Zuora, Inc.
Key Elements of Our 2021 Executive Compensation Program
The following table highlights the key elements of our 2021 executive compensation program and the primary
purpose of each element. Each element set forth in the table below is discussed in further detail in this CD&A.
Element
Objectives and Basis
Key Features
Base Salary
•
Competitive base salaries are established
at a level necessary to retain the individual
executive’s services, and to reward and
motivate individual performance.
•
Varies by executive based upon
individual skills, experience,
responsibilities of the position,
performance and other factors.
Annual Cash
Incentive
•
Focus our executives on achievement of
pre-established annual financial targets.
•
Align executive officers’ interests with those
of our stockholders by promoting strong
annual results.
•
Retain executive officers by providing
competitive compensation.
•
Cash incentive based on achievement
of new bookings targets.
•
Actual payout can vary from 0% to
150% of the annualized target amount.
Long-Term
Equity Incentive
•
Link a significant portion of each executive
officer’s compensation to longer term
performance achievement and stockholder
returns.
•
Provide ownership opportunities which
promote retention and enable us to attract
and motivate our executive officers.
•
Retain executive officers through multi-year
vesting of equity grants.
•
Utilizes RSUs and stock options.
•
RSUs granted in 2020 vest 25% after
one year and then 6.25% per quarter
over a four-year period of continued
service.
•
RSUs granted in 2021 vest 6.25% per
quarter over a four-year period of
continued service.
•
Stock options vest 25% after one year
and then 1/48 per month for the
following 36 months.
The Compensation Committee has the authority to use its business judgment to provide for discretionary
bonuses to the extent individual performance would warrant additional amounts.
Base Salary
Each Named Executive Officer’s base salary is a fixed component of annual compensation for performing
specific job duties and functions. The Board makes adjustments to the base salary rates of the Named Executive
Officers upon consideration of any factors that it deems relevant, including but not limited to: (i) any increase or
decrease in the executive’s responsibilities, (ii) the executive’s job performance, and (iii) the level of compensation
paid to executives of other companies with which we compete for executive talent, as estimated based on publicly
available information and the experience of members of the Board and our Chief Executive Officer.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Base salaries are reviewed annually by our Compensation Committee, taking into account peer group
comparisons and guidance from Compensia. The Compensation Committee assesses the individual skills,
performance, experience, responsibilities and time in position of each Named Executive Officer. This assessment
is typically conducted mid-year, with changes effective July 1 of that year. Below are the 2021 annual base
salaries for our Named Executive Officers. Base salaries for 2020 and 2021 are reported as of December 31 of
each year.
Base Salary
Name
2021 Annual Base Salary
2020 Annual Base Salary
Mark McClain
$ 500,000
$ 450,000
Cam McMartin (1)
$ 450,000
—
Matt Mills
$ 450,000
$ 400,000
Jason Ream
$ 425,000
$ 380,000
Chris Schmitt
$ 350,000
$ 320,000
Grady Summers
$ 425,000
$ 380,000
(1) Mr. McMartin was not an executive officer during 2020.
Annual Incentive Compensation and Process for Setting Performance Objectives
Our Compensation Committee establishes performance targets on an annual basis with respect to our
Named Executive Officers. As in prior years, the target bonus amounts (“target”) under our incentive plans for
2021 awards were based on a percentage of each executive’s base salary for 2021. Each of our Named
Executive Officers participate in our corporate bonus plan.
The Compensation Committee asked Compensia to compare the target annual incentive potentially payable
to our executive officers to the target (and maximum) annual incentive bonus of similarly situated executives
within our peer group. The Compensation Committee reviewed the target (and maximum) annual incentive bonus
of our Named Executive Officers, taking into account Compensia’s comparison, and adjusted their target (and
maximum) annual incentive bonuses as they deemed appropriate. For 2021, the Compensation Committee
established a target bonus amount of 100% of base salary for each of Messrs. McClain, McMartin and Mills and
60% of base salary for each of Messrs. Ream, Schmitt and Summers. For participants in the corporate bonus
plan, the Compensation Committee established a threshold level of 50% of their target levels and a maximum
level of 150% of their target level. Actual payout is calculated by multiplying the participant’s actual base salary by
the participant’s bonus target percentage, and then by the performance payout multiple achieved for the year.
Where changes to base salary or bonus target percentage are made mid-year, the pre-change base salary is
multiplied by the pre-change bonus target percentage, and that is added to the post-change base salary multiplied
by the post-change bonus target percentage, the sum of which is multiplied by the applicable performance payout
multiple.
For 2021, new bookings determined 100% of the total bonus that could be potentially earned within the
corporate bonus plan. The definition of new bookings for purposes of our annual bonus plan is inclusive of
bookings for (a) license agreements, both perpetual and term, and the related initial maintenance and (b) SaaS
agreements. New bookings does not include (x) maintenance and SaaS renewal agreements and (y)
professional services. Term license and SaaS agreements are generally multi-year arrangements. Our new
bookings target assumed a three-year contract duration for all term licenses and SaaS agreements. The new
bookings attainment calculation is based on the actual duration of contracted term license and SaaS agreements
(but capped at three years for purposes of the attainment calculation). In addition, the initial maintenance portion
of our new bookings target is based on an assumed ratio of standard and premium maintenance bookings, based
on the historical mix of agreements. The actual attainment is based on the realized mix which can vary based on
customer preferences in a given period.
In setting the new bookings target, minimum and maximum thresholds for the corporate bonus plan for 2021,
the Compensation Committee established a target that was greater than the new bookings necessary to achieve
the Company’s target revenue for 2021.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
The following table provides the 2021 target multiple, as well as potential payments that could have been
made upon the achievement of a threshold, target or maximum level of performance, calculated as described
above, for each of our Named Executive Officers:
2021 Target Annual Incentive Opportunities
Name
2021 Target
Award (% of
Base Salary)
2021 Threshold:
50% of Target
Award
2021 Target:
100% of Target
Award
2021 Maximum:
150% of Target
Award
Mark McClain
100
$
237,534 $
475,068 $
712,602
Cam McMartin (1)
100
$
75,206 $
150,411 $
225,617
Matt Mills
100
$
212,534 $
425,068 $
637,602
Jason Ream
60
$
120,769 $
241,537 $
362,306
Chris Schmitt
60
$
100,513 $
201,025 $
301,538
Grady Summers
60
$
120,769 $
241,537 $
362,306
(1) Mr. McMartin joined the Company as a Special Advisor in June 2021 but did not become eligible for an
annual incentive bonus until his appointment as Interim Chief Financial Officer effective September 1,
2021.
Bonuses for 2021 were paid following a year-end review by the Compensation Committee of the applicable
performance criteria. The actual bonus amounts paid to each Named Executive Officer for 2021 were based on a
150% payout, calculated as described above, in accordance with the 2021 corporate bonus plan, as reflected in
the table below.
Name
2021 Bonus Plan Payout
2020 Bonus Plan Payout
Mark McClain
$
712,602
$
637,500
Cam McMartin
$
225,617
$
—
(1)
Matt Mills
$
637,602
$
581,250
Jason Ream
$
362,306
$
328,500
Chris Schmitt
$
301,538
$
195,000
Grady Summers
$
362,306
$
245,754
(1) Mr. McMartin was not an executive officer during 2020.
Long-Term Equity-Based Awards
We intend for a significant portion of the total compensation provided to our executive officers to consist of
equity-based compensation, and the LTIP provides for the grant of a variety of equity-based awards. The LTIP is
intended to promote our long-term success and increase long-term stockholder value by attracting, motivating and
retaining our non-employee directors, officers and other employees. Additionally, to better align our executive
officers’ long-term interests with those of our stockholders, the LTIP does not allow for the repricing of stock
options after they are awarded unless approved by our stockholders.
Following our initial public offering, we began granting RSUs, for which no purchase price is paid. RSUs
granted to executive officers in 2021, with the exception of Mr. McMartin, vest and will be settled in shares of our
common stock over a four year-period. Stock options also vest over a four-year period. One-fourth of the stock
options vest on the one-year anniversary of the date of grant, or thereabout, and the remainder of the option
awards vest in substantially equal monthly installments, over the remaining three-year period. The RSU awards
vest in substantially equal quarterly installments on pre-determined dates that are likely to be in an open trading
window to allow for transactions in vesting awards to cover any tax withholding.
As indicated above, with the exception of Mr. McMartin, in 2021 the Named Executive Officers were granted
equity based on a specified dollar amount, where 65% of the grant date amount consisted of RSUs and 35%
consisted of stock options. The number of RSUs awarded to these Named Executive Officers was calculated by
dividing 65% of the overall award value by the 30 day average closing price of stock from the date of grant, and
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
the number of Options issued was calculated by dividing 35% of the overall award value by the 30 day average
closing price of stock from the date of grant and then multiplying that amount by 2. The equity granted to Mr.
McMartin in connection with his hiring in 2021 consisted of 100% RSUs, which the Compensation Committee
determined was appropriate in light of the nature of his position, and was calculated by dividing the award value
by the 30 day average closing price of stock from the date of grant.
At the direction of the Compensation Committee, Compensia conducts an annual market analysis of peer
company executive compensation, which is then supplemented with additional market information specific to each
executive officer’s role and responsibilities. In setting target equity compensation levels for 2021, the
Compensation Committee considered pay practices of a group of peer companies (i.e., the peer companies
identified above) that were selected based on relative annual revenue, market capitalization and industry, among
other criteria. In addition to reviewing and analyzing competitive market data, for incumbent officers, the
Compensation Committee considered then-current values of unvested equity (with the objective of ensuring it is
sufficient to retain executives in a highly competitive market), the relationship of annual target compensation
among external and internal peers, individual performance over the prior year and expected impact of each
individual over the vesting period of the new grant. For Mr. McMartin, who was hired during 2021, the
Compensation Committee considered the competitive market data, the relationship of annual target compensation
among internal peers and the equity value necessary to attract and retain him for the appropriate interim period.
The target equity award value set for each Named Executive Officer for the 2021 year is as follows:
Name
2021 Equity Award Target Value
Mark McClain
$
6,000,000
Cam McMartin
$
1,000,000
Matt Mills
$
3,500,000
Jason Ream
$
2,500,000
Chris Schmitt
$
1,500,000
Grady Summers
$
2,500,000
Stock Ownership Guidelines and Holding Requirements
The Compensation Committee has adopted stock ownership guidelines pursuant to which covered persons
(including our Named Executive Officers) are prohibited from selling or disposing of any shares of our common
stock unless and until the covered person holds an aggregate value of our common stock (or equivalents
recognized under our policy) equal to, in the case of Mr. McClain, three times his annual base salary, and, in the
case of our other Named Executive Officers, one times their annual base salary. Our guidelines also apply to our
non-employee directors who are required to hold an aggregate value of our common stock (or equivalents
recognized under our policy) equal to three times their annual cash retainer. Common stock owned directly or
indirectly is considered for calculation purposes under our guidelines, but unexercised stock options and unvested
RSUs do not count towards ownership requirements. Covered persons may sell shares to pay the exercise price
under stock options or satisfy tax withholding obligations with respect to equity awards generally without violating
our guidelines. Covered persons are allowed five years to achieve their respective ownership requirements and
are not prohibited from selling shares that would cause them to fall below their applicable threshold until that
period has lapsed. Each of our Named Executive Officers is still within the five-year transition period.
Insider Trading Policy; Prohibitions Against Hedging and Pledging
In addition to addressing other customary topics, our Insider Trading Policy prohibits company employees,
including officers, and directors from engaging in certain transactions, including transactions in company or
subsidiary debt securities, short sales of company securities, publicly-traded options, any hedging transactions
(generally, any transaction that will hedge or offset, or is designed to hedge or offset, any decrease in the market
value of our common stock) and margin accounts and pledged securities. This policy does not allow for any
exception to the above provisions.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Other Benefits
Retirement and Health and Welfare — We offer the same types of retirement, health and welfare benefits to
all of our employees, including to our executive officers as part of our total executive compensation package. Our
programs are designed to be competitive and cost-effective. It is our objective to provide core benefits, including
medical, retirement, life insurance, and paid time off to all our employees and executive officers. Benefits
programs are reviewed on a periodic basis by comparing against companies with which we directly compete,
reviewing published survey information, and obtaining advice from various third-party benefits consultants.
We currently maintain a retirement plan intended to provide benefits under Section 401(k) of the Internal
Revenue Code of 1986, as amended (the “Internal Revenue Code”), where employees, including our Named
Executive Officers, are allowed to contribute portions of their base compensation to a tax-qualified retirement
account. We do not provide profit-sharing contributions under the plan, but we do offer matching under our 401(k)
plan at the rate of 50% of the first 6% of employee contributions.
Employee Stock Purchase Plan — In addition to the LTIP, we sponsor an Employee Stock Purchase Plan
(the “ESPP”). The ESPP provides eligible employees with the opportunity to purchase shares of our common
stock conveniently through periodic payroll deductions at a reduced price. The ESPP is generally intended to
qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code and, therefore, is
open to employees generally.
Severance Pay Plan — In 2018, our Board adopted the Severance Pay Plan pursuant to which our senior
leadership team, as identified by the Compensation Committee and including the Named Executive Officers, is
eligible to receive certain severance benefits upon a qualifying termination of employment. Additional information
regarding the Severance Pay Plan is set forth below under “Potential Payments upon Termination or Change in
Control.” Prior to our IPO, Mr. McClain had received a Senior Management and Restricted Stock Agreement,
which contained certain provisions governing his employment and potential severance benefits. Following our
adoption of the Severance Pay Plan, we amended Mr. McClain’s individual agreement in order to remove any
provisions that were duplicative or inconsistent with the Severance Pay Plan. The potential severance benefits
that Mr. McClain could receive upon certain qualifying terminations will not be solely governed by the Severance
Pay Plan.
Perquisites — It is our policy, generally, to not grant perquisites to our named executive officers as a matter
of good practice, although the Compensation Committee reserves the right to grant perquisites in the future if it
finds that doing so furthers its compensation goals and objectives.
Tax Deductibility of Certain Executive Compensation
Section 162(m) of the Internal Revenue Code limits the tax deductibility of annual compensation paid to
certain executives (i.e., any individual who is the chief executive officer, chief financial officer, or one of the three
most highly compensated executive officers other than the chief executive officer and chief financial officer during
any given year) to $1 million. Prior to 2021, our annual incentive compensation and equity awards were not
subject to the deduction limitations of Section 162(m) of the Internal Revenue Code due to a transition period
applicable to issuers that had recently completed an initial public offering. That transition period expired in
connection with our 2021 Annual Meeting of Stockholders. Tax deductibility is only one factor that the Company
considers when setting compensation, therefore certain compensation paid to applicable executive officers may
not be deductible.
Compensation Risk Assessment
In accordance with the requirements of Item 402(s) of Regulation S-K, to the extent that risks may arise from
our compensation policies and practices for our employees that are reasonably likely to have a material adverse
effect on us, we are required to discuss our policies and practices for compensating our employees (including our
employees that are not Named Executive Officers) as they relate to our risk management practices and risk-
taking incentives. We have determined that our compensation policies and practices for our employees, including
our Named Executive Officers, are not reasonably likely to have a material adverse effect on us. Our
Compensation Committee routinely assesses our compensation policies and practices and takes this
consideration into account as part of its review.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Compensation Committee Report
The following report of the Compensation Committee of the Board does not constitute soliciting material and
should not be deemed filed or incorporated by reference into any future filings under the Securities Act or the
Exchange Act, except to the extent we specifically incorporate this report by reference.
The Compensation Committee of the Board of Directors has reviewed and discussed with management the
Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and contained in this Proxy
Statement. Based on such review and discussions, the Compensation Committee recommended to the Board
that the Compensation Discussion and Analysis be included in this Proxy Statement.
THE COMPENSATION COMMITTEE
Heidi M. Melin, Chair
William G. Bock
Tracey E. Newell
Important Note Regarding Compensation Tables
The following compensation tables have been prepared pursuant to SEC rules. Although some amounts (e.g.,
salary and non-equity incentive plan compensation) represent actual dollars paid to an executive, other amounts
are estimates based on certain assumptions about future circumstances (e.g., payments upon termination of an
executive’s employment) or they may represent dollar amounts recognized for financial statement reporting
purposes in accordance with accounting rules, but do not represent actual dollars received by the executive (e.g.,
dollar values of stock awards and option awards). The footnotes and other explanations to the Summary
Compensation table and the other tables herein contain important estimates, assumptions and other information
regarding the amounts set forth in the tables and should be considered together with the quantitative information
in the tables.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Executive Compensation Tables
The following table sets forth information regarding compensation for each of our Named Executive Officers
for 2019 through 2021, to the extent that the executive was a Named Executive Officer for such year.
2021 Summary Compensation Table
Name and Principal Position Year
Salary
($)
Bonus
($)(1)
Stock
Awards
($)(2)
Option
Awards
($)(2)
Non-Equity
Incentive Plan
Compensation
($)(3)
All Other
Compensation
(4)
Total
($)
Mark McClain
2021 $ 475,000
$
— $ 4,090,433
$ 2,148,145 $
712,602
$
4,350 $ 7,430,530
Chief Executive Officer
2020 $ 425,000
$ 200,000 $ 2,966,997
$ 1,726,801 $
637,500
$
— $ 5,956,298
2019 $ 400,000
$
— $ 1,699,576
$ 1,459,215 $
—
$
— $ 3,558,791
Cam McMartin (5)
2021 $ 243,163 (6) $
— $ 1,181,124 (7) $
— $
225,617
$
— $ 1,453,355
Former Interim Chief Financial
Officer
Matt Mills
2021 $ 425,000
$
— $ 2,386,040
$ 1,253,065 $
637,602
$
— $ 4,701,707
President, Worldwide Field
Operations
2020 $ 387,500
$
— $ 1,186,784
$
690,718 $
581,250
$
— $ 2,846,251
2019 $ 123,438
$
— $ 1,639,929
$ 1,310,749 $
62,500
$
— $ 3,136,616
Jason Ream (5)
2021 $ 402,500
$
— $ 1,704,332
$
895,051 $
362,306
$
4,350 $ 3,368,539
Former Chief Financial Officer 2020 $ 365,000
$ 58,973 $ 1,186,784
$
690,718 $
328,500
$
— $ 2,629,975
2019 $ 196,875
$
— $ 1,051,229
$
872,839 $
—
$
— $ 2,120,943
Chris Schmitt (5)
2021 $ 335,000
$
— $ 1,022,563
$
537,036 $
301,538
$
4,350 $ 2,100,487
EVP and General Counsel
2020 $ 305,000
$
— $
593,379
$
345,352 $
195,000
$
— $ 1,438,731
Grady Summers (5)
2021 $ 402,500
$
— $ 1,704,332
$
895,051 $
362,306
$
4,350 $ 3,368,539
EVP, Product
2020 $ 273,485
$
— $ 3,925,624
$
— $
245,754
$
— $ 4,444,864
(1) As noted in our 2021 proxy statement, in February 2020, the Compensation Committee decided to award
retention bonuses to executive officers who participated in the 2019 corporate bonus plan.
(2) Amounts shown do not reflect compensation actually received by the Named Executive Officers. Rather,
the amounts represent the aggregate grant date fair value of awards granted to the Named Executive
Officer in 2021, 2020 and 2019, in each case computed in accordance with Financial Accounting
Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”), with the exception that
the amount shown assumes no forfeitures. A discussion of the assumptions used in the calculation of
these amounts is included in Note 13 “Stock-Based Compensation” in the annual consolidated financial
statements included in our 2021 Annual Report.
(3) Reflects amounts for services provided in the respective years pursuant to our annual cash incentive
programs, which were paid to our Named Executive Officers during the first quarter of the subsequent
year. As noted in our 2021 proxy statement, none of our Named Executive Officers received payments
from our corporate bonus plan for fiscal year 2019, although Mr. Mills did receive a commission under the
sales incentive plan for individual performance during 2019.
(4) Reflects matching contributions by the Company under its 401(k) plan.
(5) Messrs. Schmitt and Summers were not Named Executive Officers during 2019, and therefore, this table
does not provide compensation data for them for 2019. Mr. McMartin was not a Named Executive Officers
during 2019 or 2020, and therefore, this table does not provide compensation data for him for 2019 or
2020. Mr. Ream served as an executive officer until the end of August 2021 and departed the Company
on February 28, 2022.
(6) Mr. McMartin served as Strategic Advisor from June to August 2021 and was appointed Interim Chief
Financial Officer effective September 1, 2021. Prior to such service, Mr. McMartin served as a non-
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
employee director. Compensation reported in this column for Mr. McMartin includes $17,500, which
represents his annual cash retainer for service on the Board during the portion of 2021 that he was a non-
employee director.
(7) Compensation reported in this column includes $179,049, which represents the aggregate grant date fair
value of 3,566 RSUs that Mr. McMartin was granted on April 29, 2021 for his service on the Board prior to
his appointment as Interim Chief Financial Officer computed in accordance with ASC Topic 718, with the
exception that the amount shown assumes no forfeitures. A discussion of the assumptions used in the
calculation of this amount is included in Note 13 “Stock-Based Compensation” in the annual consolidated
financial statements included in our 2021 Annual Report.
2021 Grants of Plan Based Awards
The following table reflects the various target values of the annual incentive plan award granted to each of our
Named Executive Officers in 2021, as well as the number of RSUs and stock options granted to each of our
Named Executive Officers in 2021.
Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards (1)
Name
Grant Type
Grant
Date
Threshold
($)
Target
($)
Maximum
($)
All Other
Stock
Awards:
Number
of Shares
of Stock or
Units
(2)
All Other
Option
Awards:
Number of
Securities
Underlying
Option (#)
Exercise or
Base Price of
Option Awards
($)
Grant Date Fair
Value of Stock
and Option
Awards (3)
Mark McClain
Annual Cash Bonus
— $ 237,534 $ 475,068 $ 712,602
—
—
—
—
Stock Option Grant
2/17/21
—
—
—
—
72,476
$
60.78 $
2,148,145
RSU Grant
2/17/21
—
—
—
67,299
—
— $
4,090,433
Cam McMartin
Annual Cash Bonus
— $
75,206 $
150,411 $ 225,617
—
—
—
—
RSU Grant (4)
4/29/21
—
—
—
3,566
—
— $
179,049
RSU Grant
8/30/21
—
—
—
21,052
—
— $
1,002,075
Matt Mills
Annual Cash Bonus
— $ 212,534 $ 425,068 $ 637,602
—
—
—
—
Stock Option Grant
2/17/21
—
—
—
42,277
$
60.78 $
1,253,065
RSU Grant
2/17/21
—
—
—
39,257
—
— $
2,386,040
Jason Ream
Annual Cash Bonus
— $ 120,769 $ 241,537 $ 362,306
—
—
—
—
Stock Option Grant
2/17/21
—
—
—
—
30,198
$
60.78 $
895,051
RSU Grant
2/17/21
—
—
—
28,041
—
— $
1,704,332
Chris Schmitt
Annual Cash Bonus
— $ 100,513 $ 201,025 $ 301,538
—
—
—
—
Stock Option Grant
2/17/21
—
—
—
—
18,119
$
60.78 $
537,036
RSU Grant
2/17/21
—
—
—
16,824
—
— $
1,022,563
Grady Summers Annual Cash Bonus
— $ 120,769 $ 241,537
362,306
—
—
—
—
Stock Option Grant
2/17/21
—
—
—
—
30,198
60.78 $
895,051
RSU Grant
2/17/21
—
—
—
28,041
—
— $
1,704,332
(1) The amounts reported represent the minimum, target, and maximum bonus amounts for each applicable
Named Executive Officer under our corporate bonus plan for 2021, calculated as described above. For
more information about our corporate bonus plan, see “Annual Incentive Compensation and Process for
Setting Performance Objectives” and “2021 Target Annual Incentive Opportunities.”
(2) The stock options and RSU awards were granted pursuant to the LTIP. Options and RSUs generally vest
over a four-year period. Options generally expire after a period of ten years from grant date. The Named
Executive Officer must remain employed with us throughout each vesting period. For more information
about our LTIP, see “Long-Term Equity-Based Awards.”
(3) The amounts reported represent the aggregate fair value of each stock option and RSU awarded to the
Named Executive Officers during 2021. These amounts have been calculated in accordance with ASC
Topic 718. The assumptions we used to value these awards are described in Note 13 “Stock-Based
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Compensation” in our consolidated financial statements included in our 2021 Annual Report and do not
necessarily correspond to the actual economic value that may be recognized by the Named Executive
Officer.
(4) Represents Mr. McMartin’s equity retainer for his service as a non-employee director prior to the
commencement of his service as Special Advisor and Interim Chief Financial Officer of the Company.
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Our annual incentive plans are described in greater detail above in our CD&A. With respect to our annual
incentive plans, the treatment of awards, in the event of certain terminations of employment and/or upon the
occurrence of a change in control, is described below under “Potential Payments Upon Termination or Change in
Control.”
2021 Outstanding Equity Awards at Year End
The following table reflects information regarding outstanding equity-based awards held by our Named
Executive Officers as of December 31, 2021.
Option Awards
Stock Awards
Name
Number of
Securities
Underlying
Unexercised
Options
Exercisable (#)(1)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable (#)(2)
Option
Exercise
Price ($)
Option
Expiration
Date
Number
of
Shares
or Units
of Stock
That
Have
Not
Vested (#)(3)
Market
Value
of
Shares
or Units
of Stock
That
Have
Not
Vested ($)(4)
Mark McClain
200,000
—
$
12.00 11/16/2027
—
—
80,499
33,147
$
29.92
2/7/2029
—
—
57,611
68,087
$
25.42
2/5/2030
—
—
—
72,476
$
60.78
2/17/2031
—
—
—
—
—
—
148,747 (5) $
7,190,430
Cam McMartin
—
—
—
—
10,584 (6) $
511,630
Matt Mills
74,872
65,314
$
21.97
9/3/2029
—
—
23,044
27,235
$
25.42
2/5/2030
—
—
—
42,277
$
60.78
2/17/2031
—
—
—
—
—
—
95,481 (7) $
4,615,552
Jason Ream (8)
11,159
44,899
$
17.56
6/10/2029
—
—
23,044
27,235
$
25.42
2/5/2030
—
—
—
30,198
$
60.78
2/17/2031
—
—
—
—
—
—
78,978 (9) $
3,817,797
Chris Schmitt
16,113
—
$
3.17
3/24/2027
—
—
17,112
—
$
12.00
11/16/2027
—
—
17,441
7,182
$
29.92
2/7/2029
—
—
11,522
13,617
$
25.42
2/5/2030
—
—
—
18,119
$
60.78
2/17/2031
—
—
—
—
—
—
32,956 (10) $
1,593,093
Grady Summers
—
30,198
$
60.78
2/17/2031
—
—
—
—
—
—
168,049 (11) $
8,123,489
(1) Stock options reported in this column were fully vested and exercisable by the Named Executive Officer
as of 12/31/2021.
(2) Except as noted in Note 5, below, the stock options reported in this column are subject to time-based
vesting schedules where 25% of the total award becomes vested on the one-year anniversary of the
initial grant date. The remaining vesting takes place at the rate of 1/48 of the total award vesting each
month for the remaining 36 months.
36
2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
(3) The stock awards reported in this column are subject to time-based vesting conditions. The treatment of
these awards upon certain termination and change in control events is described below under “—
Additional Narrative Disclosure—Potential Payments upon Termination or Change in Control.”
(4) Calculated based on the closing price of our common stock on December 31, 2021, which was $48.34
per share.
(5) 28,411 shares vested or will vest in substantially equal amounts on each of February 28, 2022 and
February 28, 2023; 65,655 shares vested or will vest in substantially equal quarterly amounts beginning
February 28, 2022 and ending February 28, 2024; and 54,681 shares vested or will vest in substantially
equal quarterly amounts beginning February 28, 2022 and ending February 28, 2025.
(6) 7,018 shares vested in substantially equal amounts on each of January 28, 2022 and February 28, 2022;
and 3,566 shares (relating to Mr. McMartin’s RSU grant for board service) will vest on April 29, 2022.
(7) 37,322 shares vest in substantially equal amounts on August 20, 2022 and August 20, 2023; 26,262
shares vested or will vest in substantially equal quarterly amounts beginning February 28, 2022 and
ending February 28, 2024; and 31,897 shares vested or will vest in substantially equal quarterly amounts
beginning February 28, 2022 and ending February 28, 2025.
(8) Mr. Ream resigned from his position as Chief Financial Officer effective August 31, 2021 and from the
Company effective February 28, 2022. As such, all unvested options and RSUs were forfeited at that
time, and pursuant to their terms, his vested options remain exercisable for 90 days from February 28,
2022, following which time all unexercised options will also be forfeited.
(9) 29,932 shares were scheduled to vest in substantially equal amounts on each of May 20, 2022 and May
20, 2023; 26,262 shares vested or were scheduled to vest in substantially equal quarterly amounts
beginning February 28, 2022 and ending February 28, 2024; and 22,784 shares vested or were
scheduled to vest in substantially equal quarterly amounts beginning February 28, 2022 and ending
February 28, 2025.
(10) 6,155 shares vested or will vest in substantially equal amounts on each of February 28, 2022 and
February 28, 2023; 13,131 shares vested or will vest in substantially equal quarterly amounts beginning
February 28, 2022 and ending February 28, 2024; and 13,670 shares vested or will vest in substantially
equal quarterly amounts beginning February 28, 2022 and ending February 28, 2025.
(11) 145,265 shares vested or will vest in substantially equal quarterly amounts beginning February 28, 2022
and ending May 28, 2024; and 22,784 shares vested or will vest in substantially equal quarterly amounts
beginning February 28, 2022 and ending February 28, 2025.
2021 Option Exercises and Stock Vested
The table below sets forth information regarding the option exercises and the vesting of outstanding awards
under our LTIP during 2021 for each of our named executive officers.
Option Awards
Stock Awards
Name
Number of Shares Acquired
on Exercise (#)(1)
Value Realized on
Exercise ($)(2)
Number of Shares
Acquired on Vesting (#)
(1)
Value Realized on
Vesting ($) (2)
Mark McClain
—
—
102,888
5,560,258
Cam McMartin
—
—
24,982
2,764,545
Matt Mills
9,102
335,773
46,446
2,252,085
Jason Ream
48,673
1,687,910
40,648
2,013,118
Chris Schmitt
20,088
852,510
23,735
1,286,650
Grady Summers
—
—
92,415
4,421,832
(1) The number of shares acquired is reported on a gross basis. We withheld the necessary number of
shares of common stock in order to satisfy withholding taxes from stock option exercises and stock
awards, thus the Named Executive Officers actually received a lower number of shares of our common
stock than the numbers reported in this table.
37
2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
(2) The value realized on exercise or vesting is calculated based upon the applicable closing market price of
the number of shares acquired (on a gross basis) on the applicable vesting date for each award. It does
not represent cash amounts received.
No Pension Benefits or Nonqualified Deferred Compensation Plan
We do not sponsor or maintain any plans that provide for specified retirement payments or benefits, such as
tax-qualified defined benefit plans or supplemental executive retirement plans nor a nonqualified deferred
compensation plan.
Potential Payments Upon Termination or Change in Control
Our Named Executive Officers are entitled to payments, benefits, and accelerated vesting of certain equity
awards upon a termination of employment under certain circumstances and, in certain limited cases, additional
equity may vest if such termination is following a change in control. These potential payments and benefits are
provided pursuant to the terms of our Severance Pay Plan. We believe our Severance Pay Plan is an important
retention for us as a component of our overall executive compensation program. It helps attract and retain skilled
professionals in our industry, and allows management to focus its attention and energy on our business without
any distractions regarding the effects of any potential change in control. We do not provide tax gross-ups upon a
change in control.
The following paragraphs describe the termination entitlements under the terms of our Severance Pay Plan
that were applicable to all Named Executive Officers as of December 31, 2021. The subsequent tables quantify
the future potential benefits payable pursuant to our Severance Pay Plan upon qualifying terminations.
Upon a termination without “Cause” or, in the case of Mr. McClain, a resignation for “Good Reason,” that does
not occur during the “Protection Period,” a participant in the Plan will be eligible to receive the following benefits:
•
a lump sum cash payment equal to 50% of such person’s annual base salary (or 100% of annual base
salary for Mr. McClain); and
•
continuation coverage for the individual and his or her spouse and eligible dependents under our group
health plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, for
six months (or twelve months for Mr. McClain) at active employee rates, unless such coverage is earlier
terminated in accordance with the terms of the Plan.
Unless otherwise specified in an individual participation agreement, upon a termination without Cause or a
resignation for Good Reason during the period beginning three months prior to a “Change in Control” and ending
on the one-year anniversary following such Change in Control (the “Protection Period”), then the participant will
be eligible to receive the following benefits
•
a lump sum cash payment equal to 100% of such person’s annual base salary (or 150% of annual base
salary for Mr. McClain);
•
continuation coverage for the individual and his or her spouse and eligible dependents under our group
health plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, for
twelve months (or eighteen months for Mr. McClain) at active employee rates, unless such coverage is
earlier terminated in accordance with the terms of the Plan; and
•
accelerated vesting of all outstanding equity compensation awards, with performance-based awards
vesting at the greater of actual performance as of the date of the termination of employment or target
performance.
“Cause” means a termination following a vote of either the Board for Mr. McClain or the Compensation
Committee for our other Named Executive Officers to dismiss the employee due to his or her (a) conviction of a
felony; (b) engagement in any other act of fraud, intentional misrepresentation, moral turpitude, misappropriation
or embezzlement, illegality or unlawful harassment which would materially adversely affect our business or
reputation or would expose us to a risk of material civil or criminal legal damages, liabilities or penalties; (c)
repeated willful failure to follow the reasonable directives of the Board in connection with our business affairs; (d)
material breach or violation of any material agreement with us or our policies; or (e) willful and deliberate non-
38
2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
performance of duty; provided, however, that any termination under clauses (c), (d) or (e) will be subject to a
thirty-day cure period.
“Good Reason” means that, after complying with certain notification and cure periods, the employee resigns
from employment after we, without the employee’s prior written consent, either: (a) reduce the employee’s base
salary in any material respect (other than certain across-the-board salary reductions); (b) fail to pay any material
incentive compensation to which the employee is actually entitled under a written agreement; (c) make a material
reduction in the employee’s job responsibilities so as to constitute a de facto demotion (other than a mere change
in title or reporting relationship in connection with a change in control); or (d) relocate the employee’s principal
place of work outside of a 25-mile radius of the employee’s current principal place of work without the employee’s
prior written approval.
“Change in Control” means (a) the acquisition of more than 50% of the total fair market value or total voting
power of the Company by any person or group; (b) the acquisition of 30% or more of the total voting power of the
Company by any person or group or a change in the majority of the members of our Board, in each case, in any
12-month period; or (c) the acquisition of 40% or more of the total gross fair market value of all the assets of the
Company by any person or group in any 12-month period. The Severance Pay Plan incorporates the definition of
Change in Control used in our LTIP, which definition is intended to constitute a change in the ownership, effective
control or substantial portion of our assets within the meaning of Section 409A of the Internal Revenue Code.
Potential Termination and Change in Control Benefits Table
The following table illustrates an estimated amount of compensation or other benefits potentially payable to
each of our Named Executive Officers (other than Mr. Ream) as of December 31, 2021 that could be triggered
upon termination of such executive’s employment under various scenarios. Due to Mr. Ream’s resignation from
his executive officer position prior to the end of the year, we have not provided hypothetical numbers for him in the
table below, but instead have provided a narrative disclosure, after the table, regarding the actual payments and
benefits he was entitled to receive in connection with his termination of employment on February 28, 2022. With
respect to the values in the table below, we have assumed that all salary payments or any expenses the
executive may be due have been paid currently. Any amount ultimately received will vary based on a variety of
factors, including the reason for such executive’s termination of employment, the date of such executive’s
termination of employment, and the executive’s age upon termination of employment. The amounts shown
assume that such termination was effective as of December 31, 2021, and, therefore, are estimates of the
amounts that would have been paid to such executives upon their termination. Actual amounts to be paid can only
be determined at the time of such executive’s termination from the company.
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2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
No Change in Control
Change in Control (1)
Voluntary
Termination
($)
For Cause
Termination
($)
Termination
Without
Cause or for
Good Reason
(2)
($)
For Cause
Termination
($)
Termination
Without
Cause or for
Good Reason
($)
Death
($)
Disability
($)
Mark McClain
Cash Severance (3)
$
—
$
—
$ 500,000
$
—
$
750,000
$
—
$
—
Unvested Equity (4)
$
—
$
—
$
—
$
—
$ 9,361,552
$
—
$
—
Medical Benefits (5)
$
—
$
—
$
13,415
$
—
$
20,123
$
—
$
—
Estimated Total
$
—
$
—
$ 513,415
$
—
$ 10,131,675
$
—
$
—
Cam McMartin
Cash Severance (3)
$
—
$
—
$ 225,000
$
—
$
450,000
$
—
$
—
Unvested Equity (4)
$
—
$
—
$
—
$
—
$
339,250
$
—
$
—
Medical Benefits (5)
$
—
$
—
$
10,101
$
—
$
20,203
$
—
$
—
Estimated Total
$
—
$
—
$ 235,101
$
—
$
809,453
$
—
$
—
Matt Mills
Cash Severance (3)
$
—
$
—
$ 225,000
$
—
$
450,000
$
—
$
—
Unvested Equity (4)
$
—
$
—
$
—
$
—
$ 6,962,108
$
—
$
—
Medical Benefits (5)
$
—
$
—
$
10,170
$
—
$
20,339
$
—
$
—
Estimated Total
$
—
$
—
$ 235,170
$
—
$ 7,432,447
$
—
$
—
Chris Schmitt
Cash Severance (3)
$
—
$
—
$ 175,000
$
—
$
350,000
$
—
$
—
Unvested Equity (4)
$
—
$
—
$
—
$
—
$ 2,037,487
$
—
$
—
Medical Benefits (5)
$
—
$
—
$
14,543
$
—
$
29,086
$
—
$
—
Estimated Total
$
—
$
—
$ 189,543
$
—
$ 2,416,573
$
—
$
—
Grady Summers
Cash Severance (3)
$
—
$
—
$ 212,500
$
—
$
425,000
$
—
$
—
Unvested Equity (4)
$
—
$
—
$
—
$
—
$ 8,123,489
$
—
$
—
Medical Benefits (5)
$
—
$
—
$
13,479
$
—
$
26,958
$
—
$
—
Estimated Total
$
—
$
—
$ 225,979
$
—
$ 8,575,447
$
—
$
—
(1) As provided by the Severance Pay Plan, all unvested equity-based awards vest in connection with a
change in control only if the Named Executive Officer is terminated within the Protection Period without
Cause or for Good Reason.
(2) Only Mr. McClain is entitled to benefits upon a termination for Good Reason outside of the Protection
Period.
(3) Calculation of benefits for various termination scenarios is described in the narrative preceding this table.
(4) Values are calculated based on the closing price of our common stock of $48.34 on December 31, 2021.
The value for the acceleration of stock option awards is calculated as the difference between the closing
price of our common stock of $48.34 on December 31, 2021 and the exercise price per share of the
award multiplied by the number of shares vesting.
(5) Calculated based on the premiums payable to elect benefit continuation coverage by the Named
Executive Officer pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, (COBRA) for
six or twelve months, as applicable, and for the actual level of group medical, dental and vision coverage
in effect as of December 31, 2021.
Jason Ream Termination Payments and Benefits
On February 23, 2022, the Company entered into a Separation Agreement and General Release of Claims
with Mr. Ream (the “Separation Agreement”), pursuant to which Mr. Ream resigned from all roles and
responsibilities as an employee effective February 28, 2022. The Separation Agreement provides, among other
things, that Mr. Ream is entitled to receive a severance amount equal to one-half of his current base annual
salary (or $212,500) and up to six months of continued COBRA coverage at active employee rates. The
40
2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Separation Agreement also included a customary release of claims by Mr. Ream in favor of us and our affiliates.
Mr. Ream’s severance benefits were conditioned upon his non-revocation of the Separation Agreement as well as
his continued compliance with confidentiality and certain other restrictive covenant obligations.
Director Compensation
2021 Director Compensation Program
The Compensation Committee is responsible for recommending to the Board the form and amount of
compensation for non-employee directors.
For 2021, our non-employee directors were entitled to receive a cash retainer and committee and
chairmanship fees payable in cash on a quarterly basis and an annual award of RSUs as provided below:
Annual cash retainer
$
30,000
Additional annual cash retainer for the Chairman of the Board
$
20,000
Additional annual cash retainer for Chairman of the Audit Committee
$
20,000
Additional cash retainer for members of the Audit Committee
$
10,000
Additional cash retainer for the Chairman of the Compensation Committee
$
12,000
Additional annual cash retainer for members of the Compensation Committee
$
6,000
Additional annual cash retainer for Chairman of the Nominating and Corporate Governance Committee
$
7,500
Additional cash retainer for members of the Nominating and Corporate Governance Committee
$
3,750
Annual cash retainer for Chairman of the Cybersecurity Committee
$
10,000
Annual cash retainer for members of the Cybersecurity Committee
$
5,000
Annual equity retainer of RSUs
$
180,000
We also reimburse all reasonable out-of-pocket expenses incurred by directors in connection with the
performance of their duties as directors, including travel expenses relating to their attendance at meetings of the
Board or any committee thereof and up to $5,000 per year for director education expenses.
As described above, the Compensation Committee has adopted stock ownership guidelines pursuant to
which covered persons, including our non-employee directors, are prohibited from selling or disposing of any
shares of our common stock unless and until the covered person holds an aggregate value of our common stock
(or equivalents recognized under our policy) equal to, in the case of our non-employee directors, three times their
annual cash retainer for service on the Board. Common stock owned directly or indirectly is considered for
calculation purposes under our guidelines but unvested RSUs do not count toward the ownership requirement.
Covered persons are allowed five years to achieve the ownership requirement and are not prohibited from selling
shares that would cause them to fall below their applicable threshold until that period has lapsed. All directors are
still within the applicable five-year transition period.
The following table reflects information regarding our director compensation for the year ended December 31,
2021.
Name (1)
Fees Earned or
Paid in Cash ($)
Unit
Awards (2)
Total ($)
William G. Bock
$
$69,750
$
179,049
$
248,799
Ronald J. Green
$
12,903
$
131,844
$
144,747
Heidi M. Melin
$
$47,000
$
179,049
$
226,049
Tracey E. Newell
$
$43,500
$
179,049
$
222,549
James M. Pflaging
$
$53,750
$
179,049
$
232,799
Sudhakar Ramakrishna
$
16,417
$
156,575
$
172,992
Michael J. Sullivan
$
$55,000
$
179,049
$
234,049
41
2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
(1) Cam McMartin did not receive director fees for the period that he served the Company as Special Advisor and
subsequently Interim Chief Financial Officer. The compensation he received during 2021 as a non-employee
director is reported above in the Summary Compensation Table.
(2) Reflects the aggregate grant date fair value of the 3,566 RSUs granted to each then-current non-
employee director on April 29, 2021, computed in accordance with ASC Topic 718, determined without regard
to forfeitures. Also includes 3,297 RSUs granted to Mr. Ramakrishna on June 14, 2021 and 2,694 RSUs
granted to Mr. Green on July 27, 2021, representing a pro-rated award for service from the time they
respectively joined the Board through the 2022 Annual Meeting of Stockholders, valued at the grant date fair
value. These awards represent the non-employee directors’ only outstanding stock awards as of
December 31, 2021 and will become vested and nonforfeitable on April 29, 2022, subject to the director’s
continued service. See Note 13 “Stock Based Compensation” to our audited consolidated financial statements
in our 2021 Annual Report for a discussion of the assumptions used in determining the ASC Topic 718 grant
date fair value of these awards.
Certain Relationships and Related Party Transactions
Since January 1, 2021, other than the compensation arrangements, including employment, termination of
employment and change in control arrangements, discussed in the sections titled “Executive Compensation” and
“Director Compensation,” there have been no transactions in which:
•
we have been or are to be a participant;
•
the amount involved exceeded or is expected to exceed $120,000; and
•
any of our directors, executive officers or holders of more than 5% of our outstanding capital stock, or any
immediate family member of, or person sharing the household with, any of these individuals or entities,
had or will have a direct or indirect material interest.
Policies and Procedures for Related Party Transactions
The Board has adopted a formal written policy providing that the Audit Committee will be responsible for
reviewing “related party transactions,” which are generally transactions, arrangements or relationships (or any
series of similar transactions, arrangements or relationships) to which we are a party, in which the aggregate
amount involved exceeds or may be expected to exceed $120,000 and in which a related person has, had or will
have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director,
executive officer, nominee for director or greater than 5% beneficial owner of our capital stock, in each case since
the beginning of the most recently completed year, and any of their immediate family members. In determining
whether to approve or ratify any such transaction, the Audit Committee will take into account, among other factors
it deems appropriate, (i) whether the transaction is on terms no less favorable than terms generally available to
unaffiliated third parties under the same or similar circumstances and (ii) the extent of the related party’s interest
in the transaction.
Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth certain information with respect to the beneficial ownership of our common
stock, as of the Record Date, for:
•
each of our Named Executive Officers;
•
each of our current directors;
•
all of our current directors and executive officers as a group; and
•
each person known by us to be the beneficial owner of more than 5% of our common stock.
We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents
sole or shared voting or investment power with respect to our securities. Unless otherwise indicated below, to our
knowledge, the persons and entities named in the table have sole voting and sole investment power with respect
42
2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
to all shares of common stock and sole voting and no investment power with respect to all shares of unvested
restricted stock that they beneficially own, subject to community property laws where applicable. The information
does not necessarily indicate beneficial ownership for any other purpose, including for purposes of Sections 13(d)
and 13(g) of the Securities Act.
We have based our calculation of the percentage of beneficial ownership on 94,191,701 shares of our
common stock outstanding as of the Record Date. We have deemed shares issuable pursuant to RSUs that vest
within 60 days of the Record Date and shares of our common stock subject to stock options that are currently
exercisable or exercisable within 60 days of the Record Date to be outstanding and to be beneficially owned by
the person holding the restricted stock unit or stock option for the purpose of computing the percentage ownership
of that person. We did not deem these shares outstanding, however, for the purpose of computing the percentage
ownership of any other person. Unless otherwise indicated, the address of each beneficial owner listed in the
table below is c/o SailPoint Technologies Holdings, Inc., 11120 Four Points Drive, Suite 100, Austin, Texas 78726.
Shares of Common
Stock Beneficially
Owned
Name of Beneficial Owner
Number Percentage
Named Executive Officers and Directors
Mark McClain (1) ............................................................................................................
1,296,223
1.4%
Cam McMartin (2) ..........................................................................................................
48,506
*
Matt Mills (3) ..................................................................................................................
135,980
*
Jason Ream (4) .............................................................................................................
78,768
*
Chris Schmitt (5) ............................................................................................................
74,997
*
Grady Summers (6) ........................................................................................................
49,124
*
William G. Bock (7) ........................................................................................................
77,861
*
Ronald J. Green (8) .......................................................................................................
2,694
*
Heidi M. Melin (9) ..........................................................................................................
12,925
*
Tracey E. Newell (10) ....................................................................................................
18,022
*
James M. Pflaging (11) ..................................................................................................
168,513
*
Sudhakar Ramakrishna (12) .........................................................................................
3,297
*
Michael J. Sullivan (13) .................................................................................................
14,514
*
All directors and executive officers as a group (13 people) ..........................................
1,903,286
2.0%
Other 5% Stockholders
BlackRock, Inc. (14) ......................................................................................................
11,698,122
12.4%
HMI Capital Management, L.P. (15) ..............................................................................
9,157,172
9.7%
The Vanguard Group (16) .............................................................................................
9,098,318
9.7%
SoMa Equity Partners, LP (17) ......................................................................................
5,248,987
5.6%
*
Represents beneficial ownership of less than 1% of the outstanding shares of our common stock.
(1) Consists of 512,036 shares of common stock, 0 shares of common stock issuable pursuant to RSUs that
vest within 60 days of the Record Date and 379,193 shares of common stock subject to stock options
that are currently exercisable or exercisable within 60 days of the Record Date held directly by Mr.
McClain, 260,994 shares of common stock held by the McClain Charitable Remainder Unitrust, 48,000
shares of common stock held by the McClain RHD 2015 Trust, 48,000 shares of common stock held by
the McClain ADM 2015 Trust and 48,000 shares of common stock held by the McClain GMM 2015 Trust.
43
2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Mr. McClain is a co-trustee for each of the McClain Charitable Remainder Unitrust, McClain RHD 2015
Trust, McClain ADM 2015 Trust and McClain GMM 2015 Trust. As such, Mr. McClain may be deemed to
have shared voting and investment power with respect to all of the shares of common stock held by such
trusts.
(2) Consists of 48,506 shares of common stock and 0 shares of common stock issuable pursuant to RSUs
that vest or subject to stock options that are currently exercisable or exercisable within 60 days of the
Record Date held directly by Mr. McMartin.
(3) Consists of 9,102 shares of common stock, 0 shares of common stock issuable pursuant to RSUs that
vest within 60 days of the Record Date and 126,878 shares of common stock subject to stock options
that are currently exercisable or exercisable within 60 days of the Record Date held directly by Mr. Mills.
(4) Consists of 20,156 shares of common stock, 0 shares of common stock issuable pursuant to RSUs that
vest within 60 days of the Record Date and 39,540 shares of common stock subject to stock options that
are currently exercisable or exercisable within 60 days of the Record Date held directly by Mr. Ream.
(5) Consists of 6,123 shares of common stock, 0 shares of common stock issuable pursuant to RSUs that
vest within 60 days of the Record Date and 68,874 shares of common stock subject to stock options that
are currently exercisable or exercisable within 60 days of the Record Date held directly by Mr. Schmitt.
(6) Consists of 40,316 shares of common stock, 0 shares of common stock issuable pursuant to RSUs that
vest within 60 days of the Record Date and 8,808 shares of common stock subject to stock options that
are currently exercisable or exercisable within 60 days of the Record Date held directly by Mr. Summers.
(7) Consists of 74,295 shares of common stock, 3,566 shares of common stock issuable pursuant to RSUs
that vest within 60 days of the Record Date, and 0 shares of common stock subject to stock options that
are currently exercisable or exercisable within 60 days of the Record Date held directly by Mr. Bock.
(8) Consists of 0 shares of common stock, 2,694 shares of common stock issuable pursuant to RSUs that
vest within 60 days of the Record Date and 0 shares of common stock subject to stock options that are
currently exercisable or exercisable within 60 days of the Record Date held directly by Mr. Green.
(9) Consists of 9,359 shares of common stock, 3,566 shares of common stock issuable pursuant to RSUs
that vest within 60 days of the Record Date and 0 shares of common stock subject to stock options that
are currently exercisable or exercisable within 60 days of the Record Date held directly by Ms. Melin.
(10) Consists of 14,456 shares of common stock, 3,566 shares of common stock issuable pursuant to RSUs
that vest within 60 days of the Record Date and 0 shares of common stock subject to stock options that
are currently exercisable or exercisable within 60 days of the Record Date held directly by Ms. Newell.
(11) Consists of 20,499 shares of common stock, 3,566 shares of common stock issuable pursuant to RSUs
that vest within 60 days of the Record Date and 0 shares of common stock subject to stock options that
are currently exercisable or exercisable within 60 days of the Record Date held directly by Mr. Pflaging
and 144,448 shares of common stock held by the MMJ Living Trust. Mr. Pflaging is a co-trustee of the
MMJ Living Trust. As such, Mr. Pflaging may be deemed to have shared voting and investment power
with respect to all of the shares of common stock and shared voting power but no investment power with
respect to all of the shares of restricted stock held by the MMJ Living Trust.
(12) Consists of 0 shares of common stock, 3,297 shares of common stock issuable pursuant to RSUs that
vest within 60 days of the Record Date and 0 shares of common stock subject to stock options that are
currently exercisable or exercisable within 60 days of the Record Date held directly by Mr. Ramakrishna.
(13) Consists of 10,948 shares of common stock, 3,566 shares of common stock issuable pursuant to RSUs
that vest within 60 days of the Record Date and 0 shares of common stock subject to stock options that
are currently exercisable or exercisable within 60 days of the Record Date held directly by Mr. Sullivan.
(14) Pursuant to a Schedule 13G/A filed on January 27, 2022, by BlackRock, Inc. (“BlackRock”), BlackRock
has sole voting power with respect to 11,532,213 shares, sole dispositive power with respect to
11,698,122 shares, shared voting power with respect to 0 shares and shared dispositive power with
respect to 0 shares. The address for BlackRock is 55 East 52nd Street, New York, New York 10055.
44
2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
(15) Pursuant to a Schedule 13G/A filed on February 14, 2022 by HMI Capital Management, L.P. (“HMI
Capital”), HMI Capital, HMI Capital Fund GP, LLC, Members GP, LLC, Marco W. Hellman, Justin C.
Nyweide, Sean M. Barrett, and Radhakrishnan Raman Mahendran each has sole voting power with
respect to 0 shares, sole dispositive power with respect to 0 shares, shared voting power with respect to
9,157,172 shares and shared dispositive power with respect to 9,157,172 shares. HMI Capital’s
Schedule 13G/A also reported that HMI Capital Partners, L.P. (together with HMI Capital, “HMI”) has sole
voting power with respect to 0 shares, sole dispositive power with respect to 0 shares, shared voting
power with respect to 8,610,977 shares and shared dispositive power with respect to 8,610,977 shares.
The address for HMI is 555 California Street, Suite 4900, San Francisco, California 94104.
(16) Pursuant to a Schedule 13G/A filed on February 10, 2022, by The Vanguard Group (“Vanguard”),
Vanguard has sole voting power with respect to 0 shares, sole dispositive power with respect to
8,841,134 shares, shared voting power with respect to 173,319 shares and shared dispositive power
with respect to 257,184 shares. The address for Vanguard is 100 Vanguard Boulevard, Malvern,
Pennsylvania 19355.
(17) Pursuant to a Schedule 13G/A filed on February 11, 2022, by SoMa Equity Partners, LP (“SoMa”), SoMa
has sole voting power with respect to 5,248,987 shares, sole dispositive power with respect to 5,248,987
shares, shared voting power with respect to 0 shares and shared dispositive power with respect to 0
shares. The address for SoMa is 44 Montgomery Street, Suite 3710, San Francisco, California 94104.
CEO Pay Ratio
We believe executive pay should be internally consistent and equitable to motivate our employees to create
stockholder value. We are committed to internal pay equity, and our Compensation Committee monitors the
relationship between the pay that our executive officers receive and the pay that our non-managerial employees
receive. The Compensation Committee reviewed a comparison of Chief Executive Officer total compensation to
that of our median employee. The compensation for our Chief Executive Officer in 2021 was approximately 54
times the compensation of our median employee.
We identified the median employee by examining the 2021 base salary (which we believe is a consistently
applied compensation measure) for all individuals, excluding our Chief Executive Officer, who were employed by
us on December 31, 2021. We included all employees, whether employed on a full-time or part-time basis and
including our employees located outside the U.S. For employees located outside the U.S., we converted salary
amounts from local currency to U.S. dollars using currency conversion rates effective on December 31, 2021.
We also annualized the compensation for any employees that were not employed by us for all of 2021. With the
exception of the foregoing, we did not make any other assumptions, adjustments, or estimates with respect to
determining base salaries.
After identifying the median employee using base salary, we calculated annual total compensation for such
employee using the same methodology we use for our Named Executive Officers as set forth in the “Summary
Compensation Table,” above. The total compensation during 2021 for our Chief Executive Officer, Mark McClain,
as set forth above in the Summary Compensation Table, was $7,430,530. The total compensation during 2021 for
our median employee, using the same methodology, was $137,970. This results in a ratio of our Chief Executive
Officer’s annual total compensation to our median employee’s annual total compensation of approximately 54:1.
For additional information concerning Mr. McClain’s compensation, see “Executive Compensation—Executive
Compensation Tables—2021 Summary Compensation Table.”
45
2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Equity Compensation Plan Information
The following table reflects, as of December 31, 2021, information regarding compensation plans (including
individual compensation arrangements) under which equity securities of the Company are authorized for
issuance.
Plan Category
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding options,
warrants and rights (1)
Number of securities
remaining for future
issuance under equity
compensation plans
Equity compensation plans approved by
security holders
—
$
—
—
Equity compensation plans not
approved by security holders (2)
5,212,228
(3)
$
29.24
17,682,925 (4)
Total
5,212,228
$
29.24
17,682,925
(1) The weighted-average exercise price does not take into account restricted stock units because restricted
stock units do not have an exercise price upon vesting.
(2) Consists of shares issued and issuable pursuant to four plans: the LTIP, the ESPP, our Amended and
Restated 2015 Stock Option and Grant Plan (the “2015 Option Plan”) and our 2015 Stock Incentive Plan
(the “2015 Incentive Plan” and, together with the 2015 Option Plan, the “2015 Plans”). The LTIP and
ESPP were adopted by the Board and our stockholders prior to and in connection with our initial public
offering in November 2017. A description of the material terms of the LTIP, ESPP and 2015 Plans is
available in our prospectus dated November 16, 2017, filed with the SEC pursuant to Rule 424(b)(4) of
the Securities Act under the heading “Executive Compensation—Additional Narrative Disclosure” and in
Note 8 to the Unaudited Consolidated Financial Statements. The 2015 Plans are materially consistent
with the LTIP, except that the 2015 Option Plan permits the issuance of options only and the 2015
Incentive Plan, which is an omnibus plan similar to the LTIP, allows for the issuance of options to eligible
participants in Israel compliant with Section 102 of the Israeli Tax Ordinance, and is currently used
primarily for that purpose.
(3) Includes 1,624,836 shares of common stock issuable upon exercise of outstanding stock options and
3,587,392 restricted stock units settleable in shares of the Company’s common stock.
(4) Of these shares, 3,214,646 shares remained available for issuance under the ESPP, 13,463,706 shares
remained available for issuance under the LTIP, 654,446 remained available for issuance under the 2015
Option Plan and 350,127 remained available under then 2015 Incentive Plan. These shares are in
addition to the shares reserved for issuance pursuant to outstanding awards included in the first column.
46
2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
Audit Committee Report
The following report of the Audit Committee of the Board does not constitute soliciting material and should not be
deemed filed or incorporated by reference into any future filings under the Securities Act or the Exchange Act,
except to the extent we specifically incorporate this report by reference.
Management has the primary responsibility for establishing and maintaining adequate internal financial
controls, for preparing the financial statements and for the public reporting process. Grant Thornton LLP (“Grant
Thornton”), the Company’s independent registered public accounting firm, is responsible for expressing opinions
on the conformity of the Company’s audited financial statements with generally accepted accounting principles.
The Audit Committee has reviewed and discussed with management and Grant Thornton the Company’s
audited consolidated financial statements for the fiscal year ended December 31, 2021. The Audit Committee has
also discussed with Grant Thornton the matters required to be discussed by Auditing Standard No. 1301,
Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (the
“PCAOB”).
The Audit Committee also received the written disclosures and the letter from Grant Thornton that are
required by applicable requirements of the PCAOB regarding Grant Thornton’s communications with the Audit
Committee concerning independence and has discussed with Grant Thornton its independence. On the basis of
the foregoing, the Audit Committee concluded that Grant Thornton is independent from the Company, its affiliates
and management.
Based upon its review of the Company’s audited financial statements and the discussions noted above, the
Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial
statements for the fiscal year ended December 31, 2021 be included in the Company’s Annual Report on Form
10-K for such fiscal year, which was filed with the SEC.
This report has been furnished by the members of the Audit Committee.
THE AUDIT COMMITTEE
Michael J. Sullivan, Chair
William G. Bock
James M. Pflaging
Delinquent Section 16(A) Reports
Section 16(a) of the Exchange Act requires that our directors, executive officers and persons who beneficially
own more than 10% of our common stock to file reports regarding ownership and changes in ownership of our
common stock with the SEC and NYSE. These persons are also required by SEC regulation to furnish the
Company with copies of all such reports they file. Based solely on our review of such reports and any written
representations from such reporting persons, we believe that except as set forth below, all required Section 16
reports were timely filed during 2021 by our directors, executive officers and beneficial owners of more than 10%
of our common stock.
During 2021, Mr. Domagalski, who is no longer with the Company, submitted an untimely report on Form 4
reporting equity awards granted in April 2021.
Submission Of Stockholder Proposals
For any proposal to be considered for inclusion in the Company’s proxy statement and form of proxy relating
to the Company’s 2023 Annual Meeting of Stockholders, it must be submitted in writing and comply with the
requirements of Rule 14a-8 of the Exchange Act. Generally, such proposals are due 120 days before the
anniversary of the date the Company released the proxy materials for the prior year; however, if the date of the
annual meeting has been changed by more than 30 days from the date of the previous year’s meeting, then the
deadline is a reasonable time before we begin to print and send our proxy materials. We currently expect to hold
47
2022 PROXY STATEMENT | SAILPOINT TECHNOLOGIES HOLDINGS, INC.
the 2023 Annual Meeting of Stockholders within 30 days of April 28. Therefore, we have determined that
Rule 14a-8 stockholder proposals must be received by the Company at its principal executive offices no later than
the close of business on November 18, 2022, unless otherwise announced by the Company prior to the 2023
Annual Meeting of Stockholders.
In accordance with our bylaws, stockholder proposals and director nominations that are not intended to be
included in the Company’s proxy statement must be received, in writing, by the Secretary of the Company at the
principal executive offices of the Company not later than the close of business on the 90th day nor earlier than the
close of business on the 120th day prior to the first anniversary of the prior year’s annual meeting to be properly
brought before an annual meeting of stockholders; provided, however, that in the event that the date of the annual
meeting is more than 30 days before or more than 70 days after such anniversary date, or if no annual meeting
was held in the preceding year, notice by the stockholder must be so delivered not earlier than the close of
business on the 120th day prior to such annual meeting and not later than the close of business on the later of the
90th day prior to such annual meeting or the 10th day following the day on which public announcement of the
date of such meeting is first made by the Company. Thus, assuming the 2023 Annual Meeting of Stockholders will
be held no more than 30 days before nor more than 70 days after the first anniversary date of the 2022 Annual
Meeting, if the Company does not receive notice of such a proposal or nomination between December 29, 2022
and January 30, 2023 (since January 28, 2023 is a Saturday), it will be considered “untimely,” and the presiding
officer at the 2023 Annual Meeting may properly use his or her discretionary authority to declare that such
proposal or nomination was not properly brought before the meeting and therefore shall not be transacted. Any
matter so submitted must comply with the other provisions of our bylaws. In addition, to comply with the universal
proxy rules (once effective), stockholders must satisfy the requirements set forth in Rule 14a-19 of the Exchange
Act.
Other Business
The Board does not presently intend to bring any other business before the Annual Meeting, and, to the
knowledge of the Board, no matters are to be brought before the Annual Meeting except as specified in the Notice
of the Annual Meeting. As to any business that may properly come before the Annual Meeting, however, it is
intended that proxies will be voted in respect thereof in accordance with the judgment of the persons voting such
proxies.
Whether or not you expect to attend the Annual Meeting, please vote as soon as possible over the Internet or
by telephone, or by completing and returning the enclosed proxy card, so that your shares are represented at the
Annual Meeting.
Where You Can Find More Information
The Company files annual, quarterly and current reports, proxy statements and other information with the
SEC under the Exchange Act. We make available free of charge on or through our Internet website,
investors.sailpoint.com, our reports and other information filed with or furnished to the SEC and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably
practicable after we electronically file such material with, or furnish it to, the SEC. The SEC’s website,
www.sec.gov, also contains reports, proxy statements and other information about issuers, like us, who file
electronically with the SEC.
We will provide, without charge, on the written request of any stockholder, a copy of our 2021 Annual
Report, including the financial statements and the financial statement schedules required to be filed with
the SEC pursuant to Rule 13a-1. Stockholders should direct such requests to Mediant by e-mail at
paper@investorelections.com, by telephone at (866) 648-8133 or online at
www.investorelections.com/SAIL.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________________
FORM 10-K
________________________________________________________________
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
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
(State or other jurisdiction of
incorporation or organization)
11120 Four Points Drive, Suite 100,
Austin, TX
(Address of principal executive offices)
47-1628077
(I.R.S. Employer
Identification No.)
78726
(Zip Code)
Registrant’s telephone number, including area code: (512) 346-2000
________________________________________________________________
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
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes No
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
On June 30, 2021, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the common stock, par value
$0.0001 per share, held by non-affiliates of the Registrant was approximately $4.7 billion, based upon the closing price on the New York Stock Exchange on such
date.
The registrant had 93,840,221 shares of common stock outstanding as of February 22, 2022.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s definitive proxy statement for its 2022 Annual Meeting of Stockholders (the “Proxy Statement”), to be filed within 120 days of the
Registrant’s fiscal year ended December 31, 2021, are incorporated by reference in Part III of this Annual Report on Form 10-K (this “Form 10-K”). Except with
respect to information specifically incorporated by reference in this Form 10-K, the Proxy Statement is not deemed to be filed as part of this Form 10-K.
i
Table of Contents
Page
PART I
Item 1.
Business
2
Item 1A. Risk Factors
13
Item 1B. Unresolved Staff Comments
28
Item 2.
Properties
28
Item 3.
Legal Proceedings
28
Item 4.
Mine Safety Disclosures
28
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
29
Item 6.
[Reserved]
31
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
31
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
47
Item 8.
Financial Statements and Supplementary Data
48
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
87
Item 9A. Controls and Procedures
87
Item 9B. Other Information
87
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
87
PART III
Item 10. Directors, Executive Officers and Corporate Governance
88
Item 11. Executive Compensation
88
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
88
Item 13. Certain Relationships and Related Transactions, and Director Independence
88
Item 14. Principal Accountant Fees and Services
88
PART IV
Item 15. Exhibits, Financial Statement Schedules
89
Item 16. Form 10-K Summary
92
Signatures
93
1
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (this “Annual Report”) contains forward-looking statements within the meaning
of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements
generally relate to future events or our future financial or operating performance. All statements included in this Annual Report,
other than statements of historical fact, are forward-looking statements. This includes statements regarding our strategy, future
operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management. In
some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,”
“expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,”
“potential” or “continue” or the negative of these words or other similar terms or expressions.
You should not rely upon forward-looking statements as predictions of future events or place undue reliance thereon.
We have based the forward-looking statements contained in this Annual Report primarily on our current expectations and
projections, in light of currently available information, about future events and trends that we believe may affect our business,
financial condition, results of operations and prospects. The outcome of the events described in these forward-looking
statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this
Annual Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties
emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the
forward-looking statements contained in this Annual Report. We cannot assure you that the results, events and circumstances
reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ
materially from those described in the forward-looking statements.
The forward-looking statements made in this Annual Report relate only to events as of the date on which the
statements are made. We undertake no obligation to update any forward-looking statements made in this Annual Report to
reflect events or circumstances after the date of this Annual Report or to reflect new information or the occurrence of
unanticipated events, except as required by law. Our forward-looking statements do not reflect the potential impact of any
future acquisitions, mergers, dispositions, joint ventures or investments we may make.
2
PART I
ITEM 1. BUSINESS
Overview
SailPoint Technologies Holdings, Inc. (“SailPoint,” the “Company,” “our” or “we”) is the leading provider of
enterprise identity security solutions. SailPoint's business was built by a team of visionary industry veterans to address the
complex enterprise identity security challenge. For the modern enterprise, securely connecting the right people to the right
technology is incredibly complex and has moved well beyond human capacity alone. SailPoint's autonomous approach helps
organizations easily discover, manage and secure all identities (both human and non-human software bots) and their access to
technology resources, all done at the speed and scale their business demands.
We strive to meet our customers where they are, offering both software as a service (“SaaS”) and software platforms,
which provide organizations visibility and the intelligence required to both seamlessly empower users and securely manage
their access to systems, applications and data across hybrid information technology (“IT”) environments, spanning on-premises
and cloud applications and file storage platforms. We help customers enable their businesses with more agile and frictionless IT,
streamline and accelerate the delivery of access to their businesses, enhance their security posture and better meet compliance
and regulatory requirements. Our customers include many of the world’s largest and most complex organizations, including
commercial enterprises, financial institutions and governments.
Organizations globally are investing in technologies such as cloud computing, artificial intelligence (“AI”) and
machine learning (“ML”) to improve employee productivity, business agility and competitiveness. Today, enterprise
environments are more open and interconnected with their business partners, contractors, vendors and customers. Business
users have driven a dramatic increase in the number of applications and amount of data that organizations need to manage,
much of which sits beyond the traditional network perimeter. Because of these trends, the attack surface is expanding while
well-funded cyber attackers, in some cases sponsored by nation-states, have significantly increased the frequency and
sophistication of their attacks. As a result, IT professionals need to manage and secure increasingly complex hybrid IT
environments within these extended enterprises.
Attackers frequently target the identity vector as it allows them to leverage user identities to gain access to high-value
systems and data while concealing their activity and movements within an organization’s IT infrastructure. The consequences of
a data breach can be extremely damaging, with organizations facing significant costs to remediate the breach and repair brand
and reputational damage. In addition, governments and regulatory bodies have increased efforts to protect users and their data
with a new wave of regulatory and compliance measures that are further burdening organizations and levying severe penalties
for non-compliance. As a result of these trends, enterprises are struggling to efficiently manage and secure their digital
identities.
We believe that our identity security platform is a critical, foundational layer of a modern enterprise security strategy,
which increasingly leverages a zero-trust approach for securing access. Open architecture allows our platform to complement
and build upon traditional perimeter- and endpoint-centric security solutions, which we believe on their own are increasingly
insufficient to secure organizations, and their applications and data. We deliver an identity security platform that forms a
holistic view of the enterprise's identities, both human and non-human, and their access to all applications, data and
infrastructures. In combination with our technology partners, we create identity awareness throughout our customers’
environments by providing valuable insights into, and incorporating information from, a broad range of enterprise software and
security solutions. Our identity security platform provides a system of record for digital identities across our customers’ IT
environments while allowing them to remain agile and competitive. Our adaptable solutions integrate seamlessly into existing
technology stacks, allowing organizations to maximize the value of their technology investments. Our professionals work
closely with customers throughout the implementation lifecycle, from documentation to development to integration.
Our solutions harness the power of AI and ML to deliver the intelligence, automation and integration needed to easily
manage access across the largest, most complex cloud enterprises worldwide. Our go-to-market strategy consists of both direct
sales and indirect sales through resellers and system integrators. Our mature system integrator channel includes global
consultants such as Accenture, Deloitte, Ernst & Young (“EY”), KPMG and PricewaterhouseCoopers (“PwC”), all of whom
have dedicated SailPoint practices, with some dating back more than 10 years.
3
Our Growth Strategy
Key investments we are making to drive growth include:
•
Driving new customer growth within existing geographic markets. There is a significant opportunity to
expand our footprint through both new, greenfield deployments and displacement of competitive legacy
solutions in the markets that we currently serve. We plan to expand our customer base in these countries by
continuing to grow our sales organization, expand and leverage our channel partnerships and enhance our
marketing efforts.
•
Further penetrating our existing customer base. Our customer base of 2,259, as of December 31, 2021,
provides a significant opportunity to drive incremental sales. Our customers have the flexibility to start with a
single use case or project and expand over time. As they realize the value of their investment, new use cases
and deployments are identified, allowing us to sell more products to existing customers and to expand the
number and types of identities, including non-human and machine identities, and governed systems we cover
within their organizations. This is especially true when it comes to our new and expanded SaaS offerings,
including AI and cloud governance. We believe strong customer satisfaction is fundamental to our ability to
expand our customer relationships.
•
Continuing to invest in our platform. Innovation is a core part of our culture. We believe we have established
a reputation as a technology leader and innovator in identity security. We intend to continue investing,
particularly in our SaaS offerings, to extend our position as the leader in identity security by developing or
acquiring new products and technologies.
•
Leveraging and expanding our network of partners. Our partnerships with global system integrators, such as
Accenture, Deloitte, EY, KPMG and PwC, and resellers have helped us extend our reach and serve our
customers more effectively. We see a significant opportunity to offer comprehensive solutions to customers
by collaborating with adjacent technology vendors. We intend to continue to invest in our partnership network
as their influence on our sales is vital to the success of our business.
•
Expanding market and product investment across existing vertical markets. We believe there is significant
opportunity to further penetrate our target vertical markets by continuing to provide vertical-specific identity
solutions and focusing our marketing efforts to address the use cases of those customers. With this approach,
we believe we will be better able to address opportunities in key industries, such as financial services,
healthcare, and federal, state and local government.
•
Continuing to expand our global presence. We believe there is significant opportunity to grow our business
internationally. Enterprises around the world are facing similar operational, security and compliance
challenges, driving the need for identity governance. We have personnel in 18 countries and customers based
in 65 countries as of December 31, 2021, and we generated 31% of our revenue outside of the United States
in 2021. We plan to leverage our existing strong relationships with global system integrators and channel
partners to grow our presence in Europe, Asia Pacific and other international markets.
Product, Subscription, and Support Offerings
We deliver an integrated set of solutions to address identity security challenges for the modern enterprise. This set of
solutions delivers an intelligent and streamlined approach to discover, manage and secure technology access across the modern
enterprise. This provides the comprehensive visibility needed to keep pace with the changing dynamics of the enterprise
environment today without sacrificing security or enablement in the process.
Our solutions deliver governance across the hybrid enterprise, extending from the mainframe to the cloud. We provide
over 100 out-of-the-box connectors to enterprise applications environments such as SAP, Workday and ServiceNow, which
automate the collection, analysis and provisioning of identity data. We also provide governance over infrastructure components,
such as mainframes, operating systems, directories, databases and data storage solutions, and over vertical solutions, such as
Epic in the healthcare provider market. Our identity security solutions take advantage of AI and ML technologies, delivering
actionable insights and recommendations that reduce the risk associated with technology access. These technologies also
accelerate the deployment and administration of our identity security solutions for customers. Given that the complexities of
managing the security of all identities across all technology access points have far exceeded human capacity alone, this type of
intelligent and streamlined approach is required to properly secure the modern enterprise today.
Our solutions are built on our open identity platform, which creates a flexible deployment to address a wide range of
customer use cases and enables integration to a variety of security and operational IT applications such as IT service
management
solutions
(e.g.,
BMC
Remedy
and
ServiceNow),
privileged
access
management (“PAM”) (e.g.,
CyberArk and BeyondTrust), enterprise mobility management and security information and event management. Our open
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identity platform extends the reach of our identity security processes and enables effective identity security controls across
unique customer environments.
IdentityNow
IdentityNow is our cloud-based, multi-tenant identity security platform, which is delivered as a SaaS subscription
offering. IdentityNow provides customers with a set of fully integrated services for compliance, provisioning and password
management for applications and data hosted on-premises or in the cloud. IdentityNow meets the most stringent identity
security requirements and provides enterprise-grade services that meet scalability, performance, availability and security
demands. IdentityNow enables organizations to:
•
Automate identity security processes in one unified solution delivered from the cloud;
•
Accelerate deployment with built-in best practice policies, options and default settings; and
•
Eliminate the need to buy, deploy and maintain hardware and software to run an identity security solution.
We package and price IdentityNow into a Cloud Platform and Governance Services with unique functionality as
outlined below:
•
Cloud Platform: IdentityNow provides foundational components for identity security in the cloud, including
production and sandbox instances and the IdentityNow Cloud Gateway virtual appliance, which leverages our
patented method for integrating with on-premises applications and data. IdentityNow also includes a large
catalog of pre-built connectors and application profiles to on-premises and cloud applications, leveraging the
intellectual property developed for IdentityIQ. It is included with all Governance Services at no additional
charge.
•
User Provisioning: This module enables business users to be productive from day one. With IdentityNow
user provisioning, organizations can streamline the on-boarding and off-boarding process with best practice
configurations and workflows, enabling IT to immediately grant employees access to the applications and
data they need to do their jobs.
•
Access Request: This module empowers the entire enterprise with a robust self-service solution for
requesting and approving access to applications and data. Automating the access request process quickly
delivers business users the access they need to do their jobs.
•
Access Certifications: This module automates the process of reviewing user access privileges across the
organization. Using IdentityNow, organizations can quickly plan, schedule and execute certification
campaigns to ensure the right users have the appropriate access to corporate resources.
•
Separation-of-Duties: This module simplifies and speeds the process of investigating access, quickly
uncovering any access-related conflicts of interest for review and mitigation. It also automates the creation of
policies that ensure continuous compliance with internal and external audit requirements.
•
Password Management: This module offers business users an intuitive, self-service experience for managing
and resetting passwords from any device and from anywhere. This service enforces consistent and secure
password policies for all users across all systems from the cloud to the data center.
IdentityIQ
IdentityIQ is our on-premises identity security solution, which can be hosted in the public cloud or deployed in a
customer’s data center. It provides large, complex enterprise customers a unified and highly configurable identity security
solution that consistently applies business and security policies as well as role and risk models across applications and data on-
premises or hosted in the cloud. IdentityIQ enables organizations to:
•
Empower users to request and gain access to enterprise applications and data;
•
Enable business users to reset their passwords via self-service tools without the need for IT involvement;
•
Provide on-demand visibility to IT, business and risk managers into “which identities have access to what
resources” to help make business decisions, improve security and meet audit requirements;
•
Improve security and eliminate common weak points associated with data breaches, including weak
passwords, orphaned accounts, entitlement creep and separation-of-duties policy violations; and
•
Manage compliance using automated access certifications and policy management.
We package and price IdentityIQ into Core Modules and Advanced Integration Modules. All customers leverage the
IdentityIQ Governance Platform, which provides the base features of the solution, including the identity warehouse, workflow
engine and governance models. The three Core Modules include:
5
•
Lifecycle Manager: This module provides a business-oriented solution that delivers access securely and cost
effectively. The self-service access request capabilities feature an intuitive user interface that empowers
business users to take an active role in managing changes to their access while greatly reducing the burden on
IT organizations. Automated provisioning manages the business processes of granting, modifying and
revoking access throughout a user’s lifecycle with an organization, whether that user is an employee,
contractor or business partner. Changes to user access can be automatically provisioned via a large library of
direct connectors for applications such as Workday and SAP or synchronized with IT service management
solutions such as ServiceNow.
•
Compliance Manager: This module enables the business to improve compliance and audit performance
while lowering costs. It provides business user friendly access certifications and automated policy
management controls (e.g., separation-of-duty violation reporting) that are designed to simplify and
streamline audit processes across all applications and data. Built-in audit reporting and analytics give IT,
business and audit teams visibility into, and management over, all compliance activities in the organization.
•
File Access Manager: This module, a rebranded and repackaged version of the SecurityIQ product line,
secures access to the growing amount of data stored in file servers, collaboration portals, mailboxes and cloud
storage systems. The change was made to align the positioning and packaging of solutions with how our
customers are purchasing and deploying a comprehensive identity security strategy. It helps organizations
identify where sensitive data resides, which identities have access to it, and how they are using it and then
puts effective controls in place to secure it. File Access Manager is designed to interoperate with the
Compliance Manager and Lifecycle Manager modules to provide comprehensive visibility and governance
over user access to all data. By augmenting identity data from structured systems with data from unstructured
data targets, organizations can more quickly identify and mitigate risks, spot compliance issues and make the
right decisions when granting or revoking access to sensitive data.
The Advanced Integration Modules provide connectivity to target application platforms such as SAP, mainframes and
file storage systems.
SailPoint Identity Services
SailPoint Identity Services are delivered as multi-tenant SaaS subscription services and are designed to integrate and
extend IdentityNow and IdentityIQ. We package and price SailPoint Identity Services individually. The current list of SailPoint
Identity Services includes:
•
Access Insights: collects a wealth of identity information, turns that information into actionable insights and
provides business-oriented dashboards and reports to track the effectiveness of customers’ identity programs;
•
Access Modeling: uses AI and ML to suggest roles based on similar access between users and gives
customers insights to confirm the correct access for each role;
•
Access Risk Management: our cloud‐based access controls solution that enables customers to manage their
risk by automating access controls for business applications with complex security requirements;
•
Cloud Access Management: uses AI and ML to automatically learn, monitor and secure access to cloud
infrastructure;
•
Recommendation Engine: uses AI and ML, peer group analysis, identity attributes and access activity to
help customers decide whether access should be requested, granted or removed; and
•
SaaS Management: our cloud‐based solution that helps customers discover, manage and secure their SaaS
applications.
Technology
Our comprehensive, enterprise-grade identity security platform is the result of both years of investment and the
expertise of the Company’s management and technical teams. Taking the lessons learned from our experiences with prior
generation identity solutions, our engineers and architects designed a modern identity platform with internet scale,
comprehensive hybrid environment coverage, and openness to optimize customers’ existing technology investments.
Identity Cube Technology
Our Identity Cube technology establishes the 360-degree control essential to govern and secure digital identities in
today’s complex IT environments. Our extensive data modeling capabilities allow us to understand how each identity relates to
the full IT environment, whether on-premises or in the cloud. SailPoint’s account correlation and orphan account management
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capabilities allow IT security professionals and business managers to track and monitor the accounts that are most frequently
under attack.
Identity Cubes track all relevant information about an identity and its relationships to applications and data. They
create the “identity context” which is key to an identity-aware infrastructure in which identity information is shared across the
extended enterprise. With identity context, operational and security systems can make informed decisions about access and
perform key remediation and change requests on our open identity platform via our standardized application program interfaces
(“APIs”) and software development kits (“SDKs”).
Model-Based Governance
Our model-based governance engine sits at the center of our platform and provides a comprehensive understanding of
both the current state of which identities currently have access to what as well as the desired state of who should have access to
what. The governance engine is responsible for managing the ongoing process of aligning these two states.
Governance and control models are used to drive our policy-based reconciliation service and to define how
reconciliation and provisioning fulfillment actions are executed. These models are designed with graphical tools, enabling IT
and business users to own and define the reconciliation and fine-grained access provisioning fulfillment processes for
applications and data.
Access Modeling
Our AI-based Access Modeling is designed to continually model and adapt access to evolving business needs.
Leveraging AI, Access Modeling evaluates the access that users have, including collections of entitlements bundled into roles,
and recommends new access models. Once approved and created, these access models can be assigned to identities. Access
Modeling also continually monitors for updates to existing roles within the access model to help enforce the principle of least
privileged access.
Recommendation Engine
The patented Recommendation Engine leverages AI and ML technologies to automate mundane tasks and provide our
identity platform users with insights in order to make more informed decisions. Based on identity information and attributes
collected, the Recommendation Engine identifies and classifies access as acceptable or risky, along with the reasons for those
classifications. These recommendations are visually presented to users reviewing access, so they can quickly, and efficiently,
make decisions. Recommendations can also be used to automatically approve acceptable access.
Provisioning Broker
Our provisioning broker provides separation between identity processes at the business level (e.g., requesting access to
an application) and the actual fulfillment of that request on the target system. The provisioning broker is a specialized business
process workflow execution engine that manages long-running provisioning tasks and provides tracking, monitoring and
statistics for the end-to-end fulfillment process.
The decoupling capability of the provisioning broker maximizes our customers’ flexibility and allows for the reuse of
their existing IT investments. For example, if access to an application can only be provided manually through the opening of a
help desk ticket, the provisioning broker will send that request to the help desk and report back on the status of that request.
Likewise, if a customer utilizes a legacy provisioning system, the provisioning broker can pass off a request to that legacy
system for fulfillment. In addition, the provisioning broker provides us with a unique migration strategy for customers moving
from a legacy system to our identity security solutions.
Enterprise-Grade Cloud Gateway
To manage on-premises infrastructure, applications and data from the cloud, we employ a Cloud Gateway Server
(“CGS”), delivered as a virtual machine behind the customer’s firewall, which ensures that all SailPoint communications are
highly secure. Our CGS technology is a high availability, secure, self-managed container that allows for controlled and
automated updates of our connector infrastructure while ensuring the integrity of individual on-premises and cloud connections.
7
Our CGS also provides an innovative and patented approach to protecting our customer’s credentials. Our “zero-
knowledge encryption” technology allows us to store all of a customer’s passwords and security credentials inside the CGS
behind their firewall. As a result, we protect the confidentiality of our customers’ system and end-user credentials, even if our
cloud service provider were to be breached.
Data Ownership Assessment and Election
Verifying the business end-user who is the logical owner of information is a key challenge in managing growing
volumes of unstructured data in the enterprise. Our novel, patent-supported approach determines the rightful owner of files, so
they can be integrated into governance control processes, such as access certifications and access approvals. Our solution
leverages profile data to determine logical owners of information based on identity attributes and usage data. Once a set of
logical owners is identified, we use a crowd-sourcing approach to allow other users familiar with the data to vote on the rightful
owner of the file or file storage location. This enables organizations to efficiently identify and designate specific owners for
sensitive information stored in files and incorporate them into identity security processes.
Connectivity for the Hybrid IT Environment
Our extensive library of over 100 proprietary connectors provides interfaces to on-premises and cloud applications.
These connectors are the means by which we provide governance over target systems. We support granular management of a
wide range of systems, from mainframe security managers, including CA ACF2 and Top Secret, IBM and RACF, to traditional
enterprise applications, including Oracle E-Business Suite and SAP, and pure SaaS business applications, such as Microsoft
Office365, Salesforce, ServiceNow, Slack and Zoom. Generally, the same connectors are used for both our on-premises and
cloud-based products. This allows both solutions to leverage fully the over 400-person years we have invested in developing
these connectors.
Open and Integrated Identity Platform
Our open identity platform is the result of over a decade of investment. Recognizing identity security is at the center of
critical enterprise business and IT processes, we developed a comprehensive set of services that go beyond simple APIs. In
addition to our comprehensive API strategy, we deliver SDKs and plug-in frameworks which allow our partners and customers
to create their own integrations and extensions to our core product capabilities. For example, we leverage our open identity
platform to integrate with third-party user provisioning solutions, such as IBM Security Identity Manager and Oracle Identity
Manager, and service desk solutions, such as BMC Remedy and ServiceNow, to implement account change requests. This
enables SailPoint to govern access and provide identity context to downstream processes managed by these solutions. Another
important open identity platform integration model is with PAM solutions. SailPoint provides a framework that enables
organizations to use the same governance controls to oversee both privileged and standard account access. We also collect
activity and other information from third-party solutions to improve risk analytics and identity security processes in our
products.
Our APIs and SDKs are compliant with System for Cross-domain Identity Management (“SCIM”) and both provide
standards-based bi-directional runtime access to our identity context model. Many such integrations and extensions have
already been built by partners and certified for commercialization on our open identity platform.
Our SaaS Event Trigger Service emits actionable events that allows customers to extend identity security into their
own application ecosystems. Once subscribed to these events, SailPoint starts streaming identity events into their custom
integrations.
Seasonality
We generally experience seasonal fluctuations in demand for our products and services. Our quarterly sales are
impacted by industry buying patterns. As a result, our sales have generally been highest in the fourth quarter of a calendar year
and lowest in the first quarter.
Customers
As of December 31, 2021, we have 2,259 customers based in 65 countries. In the year ended December 31, 2021, we
generated 31% of our revenue outside of the United States. As of December 31, 2021, our revenue did not materially depend on
any single customer.
8
Sales and Marketing
Sales
We sell our platform through our direct sales organization, which is comprised of field and inside sales personnel, as
well as through channel partners. Our sales strategy often reflects a “land-and-expand” business model, in which our initial
deployment with a new customer typically addresses a limited number of use cases within a single business unit. Such initial
deployments frequently expand across departments, divisions and geographies through a need for additional users, increased
usage or extended functionality. As we expand our portfolio of offerings within our platform, we execute a growing number of
“solution” deals that include more than one of our products in the initial transaction.
Our sales force is structured by geography, customer size, status (customer or prospect) and industry. Our global sales
organization is comprised of quota-carrying sales representatives supported by sales development representatives, sales
engineers, partner managers, product and technical specialists and solution architects.
Partners constitute an essential part of our selling model. We have established a model designed to create zero conflict,
and typically include our partners in all of our training and enablement efforts. As a result, our indirect sales model, executed
through our global and regional system integrators, technology partners and value-added resellers, is a key factor in our overall
success.
9
Marketing
Our marketing strategy is focused on the following core areas: driving strong global brand awareness and
differentiation for SailPoint, leveraging digital marketing tools to engage and educate our buyers, and creating a strong and
“tuned in” pipeline for our sales force. Our data-driven digital approach to marketing is tightly aligned to the needs of our
addressable market and provides agility to leverage market opportunities in a targeted and timely fashion. Our awareness and
educational efforts focus on branding and awareness campaigns, digital and content marketing, public and analyst relations,
social media engagement and influencer relations, and thought leadership including blogs and bylines. Engagement programs
include digital campaigns and webinars, customer-submitted peer reviews, and virtual/hybrid events such as Navigate, while
pipeline maturation focuses on customer and executive advisory boards and round tables. Pipeline generation and maturation
efforts focus on efficiently and effectively moving targeted accounts through their buyer’s journey and through the SailPoint
pipeline. While digital marketing efforts are managed centrally and regionally, engagements programs are run in our three
major geographies: (i) the Americas, (ii) Europe, the Middle East and Africa (“EMEA”) and (iii) Asia-Pacific (“APAC”).
Audiences for such events are typically IT and security professionals, including chief information officers and chief information
security officers. Our global virtual Navigate user conferences demonstrate our strong commitment to enabling our customers
to succeed, while also serving as an opportunity to create pipeline for new sales to prospective customers and additional sales to
existing customers.
Professional Services and Maintenance and Customer Support
Professional Services
We are primarily focused on ensuring that our professional services partners, who perform a majority of the
implementations for our customers, are able to implement our solutions successfully. We provide “expert services” to partners
and customers for complex implementation assistance. We also lead direct implementations when requested by a customer. We
believe that our investment in professional services and in our partners will drive increased adoption of our platform.
Maintenance and Customer Support
Our customers receive one year of software maintenance and support as part of their initial purchase of our on-
premises offerings and may renew their maintenance and support agreement following the initial period. Our cloud-based
offerings include customer support. For our on-premises offerings, our maintenance provides customers with the right to
receive major releases of their purchased solutions, maintenance releases and patches and access to our technical support
services during the term of the agreement. We provide customers of our cloud-based offerings with technical support services
and all aspects of infrastructure support. We maintain a customer support organization, which includes experienced, trained
engineers who provide 24x7x365 support for critical issues. Customers receive contractual response times, telephonic support
and access to online support portals. Our customer support organization has global capabilities, a deep expertise in our solutions
and, through select support partners, is able to deliver support in multiple languages.
Customer Success Management
Our customer success strategy centers around our investment in, and ownership of, the post-sale experience for our
customers. Every customer has access to our team of Customer Success Managers (“CSMs”), whose goal is to help customers
achieve their desired return on investment and business results. Through proactive and regular engagements, the CSM team
endeavors to keep every customer satisfied and help them use their SailPoint products or services optimally. When necessary,
the CSM coordinates cross-departmental resources to remove any barrier to success. In addition, our customer success team
utilizes customer data to identify and present any cross-sell or upsell solutions aligned to a customer’s business objectives,
thereby contributing to revenue expansion and increased product penetration. By proactively managing customer relationships,
our CSM team nurtures client advocates, who become a powerful asset in closing new business.
10
Partnerships and Strategic Relationships
As a core part of our strategy, we have cultivated strong relationships with partners to help us increase our reach and
influence, while providing a broader distribution of our identity security services. We have developed a large partner network
consisting of technology partners, system integrators, a growing network of value-added resellers and our alliance partners
(Accenture, Deloitte, EY, KPMG and PwC). In 2021, approximately 76% of our new customer transactions involved our
partner network. We believe that our extensive partnership network enables us to provide the most complete identity security
solution to our customers.
Technology Partners
We have partnered with industry leaders across a spectrum of technologies that enable organizations to integrate their
entire security, mobility, cloud, and applications infrastructure into our platform so that breaches can be better identified,
mitigated and contained, and operations can be streamlined. We believe that solutions from companies such as Amazon Web
Services (“AWS”), CyberArk, Microsoft, SAP, ServiceNow and Workday that are plugged into our open identity platform
through APIs provide our customers value-added capabilities to build an identity-aware enterprise.
The SailPoint Technology Partner Program is a technology partnering network that leverages familiar standards and
methods—like SQL, SCIM and Representational State Transfer—that make it easy to share identity context and configure
identity-specific policies across disparate systems. For example, when PAM systems are integrated with our solutions,
enterprises can conduct regular audits of privileged users and automatically remediate any policy violations. Program offerings
include access to SailPoint SDKs and APIs, developer support, and cloud-based certification services. The Identity+ Alliance
comprises over 60 technology and implementation partners and has produced over 40 certified integrations.
Value-Added Resellers
Value-added resellers bring product expertise and implementation best practices to our customers globally. They
provide vertical expertise and technical advice in addition to reselling or bundling our software. Many of our reseller partners
have been trained to demonstrate and promote our identity platform. Our reseller channel ranges from large companies to
regional resellers in our markets and territories. Our reseller program is designed to scale growth, help generate new
opportunities, optimize customer experience and increase profitability as well as sales efficiency.
System Integrators
We partner with many large and global system integrators. We have partnerships with global advisory firms such as
Deloitte, EY, KPMG, and PwC, with global system integrators such as Accenture, and with many regional system integrators in
all three of our geographies. The focus of our system integrators program is to deliver pipeline growth and bookings, to help
partners drive self-sufficiency and to foster transparency and collaboration through shared assets and resources. We have
implemented joint business controls and metrics that provide a platform for discussion and partnership development and help us
optimize our program and unified value proposition.
Research and Development
Innovation is one of our core values, and it is at the heart of how we think and do business. We believe ongoing and
timely development of new products and features is imperative to maintaining our competitive position. We continue to invest
in both our cloud and on-premises solutions. Additionally, we will be opportunistic in leveraging technology acquisitions. As of
December 31, 2021, our research and development team had 468 employees.
Competition
We operate in a highly competitive market characterized by constant change and innovation. Our competitors include
large enterprise software vendors that offer identity solutions within their product portfolios, pure play identity vendors
(including new market entrants) and vendors with whom we have not traditionally competed but may either introduce new
products or incorporate features into existing products that compete with our solutions.
11
We believe the principal competitive factors in our market include:
•
Comprehensiveness of visibility to which identities have access to what across cloud and on-premises
applications and data repositories;
•
Reliability and effectiveness in defining and implementing identity security policies;
•
Flexibility to deploy identity security and administration as a SaaS solution or as a software-based solution
on-premises or in the cloud;
•
Adherence to government and industry regulations and standards;
•
Comprehensiveness and interoperability of the solution with other IT and security solutions;
•
Enterprise security, scalability and performance;
•
Ability to innovate and respond to customer needs rapidly;
•
Quality and responsiveness of support organizations;
•
Total cost of ownership;
•
Ease of use; and
•
Customer experience.
Some of our competitors have significantly greater financial, technical, and sales and marketing resources, as well as
greater name recognition, in some cases within particular geographic regions, and more extensive geographic presence than we
do. However, we believe we compete favorably with our competitors on the basis of all the factors above.
Intellectual Property
Our success depends in part on our ability to protect our intellectual property. We rely on copyrights and trade secret
laws, confidentiality procedures, employment proprietary information and inventions assignment agreements, trademarks and
patents to protect our intellectual property rights. We also license software from third parties for integration into our product
solutions, including open source software and other software available on commercially reasonable terms.
We control access to and use of our product solutions and other confidential information through the use of internal
and external controls, including contractual protections with employees, contractors, customers and partners, and our software
is protected by U.S. and international copyright and trade secret laws. We have 47 issued patents and 27 patent applications
pending in the United States relating to certain aspects of our technology. Additionally, we have three issued patents and two
patent applications pending internationally. The expiration dates of our issued patents range from 2024 to 2041. See Item 1A.
“Risk Factors” in this Annual Report for information regarding potential risks associated with our intellectual property and our
ability to protect it.
Human Capital Management
We believe that our success as a company is strongly linked to our core values:
•
Innovation – developing creative solutions to real challenges;
•
Integrity – delivering on the commitments we make;
•
Impact – measuring and rewarding results, not activity; and
•
Individuals – valuing every person at SailPoint.
These values are cornerstones of our organizational culture. Our human capital strategy includes team member
engagement efforts, career development and training opportunities and other programs designed to attract and retain top talent.
It is critical to engage our team members to maintain a positive culture, and our annual global employee engagement
survey helps us evaluate our efforts in light of our core principles. Overall team member satisfaction reached 90% each of the
last four years that we conducted this survey, and over the last 10 years, organizations such as the Austin Business Journal,
Fortune, and Glassdoor have recognized SailPoint as a “best place to work.” We focus on ensuring that our diversity, inclusion
and belonging efforts create and maintain a positive culture in which all team members can succeed and thrive. Those efforts
include implementing focused training on recognizing and removing bias from our recruitment process, broadening our talent
pool through diversity-focused talent acquisition vendors, conducting pay equity reviews during our merit and equity planning
process and designing other programs to improve indicators related to inclusion and equity in our workforce.
Our training and development efforts, built around our core values, are another key part of our human capital strategy.
Our leaders go through specific training to ensure they are leading their teams with our values at the forefront of the decisions
they make. Our annual performance review process allows team members to engage in meaningful discussions with their
managers about their performance and development goals. Additionally, our managers assess the growth potential of each team
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member through a standardized evaluation process, which provides actionable outputs to help develop and retain our high-
potential employees. We also enable our team with regular interactive sessions covering a wide range of topics including
interrupting unconscious bias, wellness, local volunteering opportunities, and best practices to use our latest technologies and
work in a hybrid environment more effectively. Through these and other training efforts, we support the development of our
crew members in a way that promotes our growth and innovation.
Offering a competitive compensation and benefits package is a critical part of our effort to attract and retain top talent.
In addition to competitive base salaries, we offer team members comprehensive health, welfare, income protection and long-
term savings benefits, the opportunity to participate in our Employee Stock Purchase Plan, and incentive equity compensation
and incentive cash plans for eligible team members. Total compensation is designed to align with SailPoint’s business
objectives and financial goals, and pay is differentiated for individuals based on relevant experience, impact, relative internal
value and company performance. Variable compensation delivers pay aligned with company and individual performance, with
more pay at risk at more senior levels. Leadership regularly discusses compensation and benefits strategies with the
compensation committee of our board of directors.
As we work to execute our growth strategy, as described above, we continue to invest in human capital resources that
will sustain and fuel that growth. As of December 31, 2021, we had a total of 1,676 employees, including 468 involved in
research and development activities, 666 in our sales and marketing organization, 343 in professional services and customer
support, and 199 in general and administrative activities. As of December 31, 2021, approximately 29% of our employees were
located outside of the United States. Ensuring that we have the right people in the right positions is essential to our strategy for
sustained growth.
Government Regulations
A wide variety of domestic and foreign laws and regulations apply to the collection, use, retention, protection,
disclosure, transfer, disposal and other processing of personal data. These data protection and privacy-related laws and
regulations are evolving and may result in regulatory and public scrutiny and escalating levels of enforcement and sanctions.
Our failure to comply with applicable laws and regulations, or to protect any personal or other customer data, could result in
enforcement actions against us, including regulatory fines, as well as claims for damages by customers and other affected
individuals, damage to our reputation and loss of goodwill (both in relation to existing customers and prospective customers),
any of which could adversely affect our business, operating results, financial performance and prospects.
Domestically, California enacted the California Consumer Privacy Act (the “CCPA”) which took effect on January 1,
2020, creating additional new consumer privacy rights, and providing for both civil penalties as well as a private right of action
for data breaches. The California Privacy Rights Act (the “CPRA”), which expands the CCPA, was passed in November 2020.
The CPRA will go into effect January 1, 2023 and provides for additional consumer privacy rights, increased penalties, and
establishes a new dedicated California data protection regulator with rule-making and audit authorities. The CCPA has
prompted a number of proposals for new federal and state-level privacy legislation. Additional states have passed privacy laws,
such as the Virginia Consumer Data Protection Act and the Colorado Privacy Act, both of which are similar to the CCPA. The
CCPA imposed additional regulatory risks and burdens on our company. Additional resources will be required to respond to
these changes in the law and coming regulations, including to implement new internal and customer supporting compliance
procedures, and potentially to offer new product features to respond to data protection requirements or related market trends.
Also domestically, the Health Insurance Portability Act of 1996, as amended by the Health Information Technology for
Economic and Clinical Health Act (“HITECH”), and their respective implementing regulations (“HIPAA”), imposes specified
requirements relating to the privacy, security and transmission of individually identifiable health information. Among other
things, HITECH makes HIPAA’s security standards directly applicable to “business associates.” We function as a business
associate for certain of our customers that are HIPAA-covered entities and service providers and, in that context, we are
regulated as a business associate for the purposes of HIPAA. The HIPAA-covered entities and service providers to which we
provide services require us to enter into HIPAA-compliant business associate agreements with them. These agreements impose
stringent data security obligations on us. Modifying the already stringent penalty structure that was present under HIPAA prior
to HITECH, HITECH created four new tiers of civil monetary penalties and gave state attorneys general new authority to file
civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs
associated with pursuing federal civil actions.
In jurisdictions outside of the United States, we may face heightened data protection and privacy requirements. For
example, our business is subject to the UK General Data Protection Regulation (the “UK GDPR”) and the European Union (the
“EU”) General Data Protection Regulation (the “EU GDPR” and, together with the UK GDPR, the “GDPR”), as we sell our
13
solutions in both the United Kingdom and the European Economic Area (the “EEA”). Among other things, the GDPR regulates
the collection, use and disclosure of certain personal data, including the transfer of personal data to third countries, such as the
United States. In July 2020, the Court of Justice of the European Union (the “CJEU”) in its Schrems II ruling invalidated the
EU-U.S. Privacy Shield framework, a self-certification mechanism that facilitated the lawful transfer of personal data from the
EEA to the United States, with immediate effect. The CJEU upheld the validity of standard contractual clauses (“SCCs”) as a
legal mechanism to transfer personal data, but companies relying on SCCs will need to carry out a transfer privacy impact
assessment, which among other things, assesses laws governing access to personal data in the recipient country and considers
whether supplementary measures that provide privacy protections additional to those provided under SCCs will need to be
implemented to ensure an ‘essentially equivalent’ level of data protection to that afforded in the EEA. The GDPR also imposes
significant fines and penalties for non-compliance and serious violations of certain requirements, and the GDPR and other
international data protection laws are subject to differing interpretations.
See Item 1A. “Risk Factors” in this Annual Report for information regarding potential risks associated with these and
other government regulations and our ability to comply therewith.
Corporate Information
Our principal executive offices are located at 11120 Four Points Drive, Suite 100, Austin, Texas 78726, and our
telephone number at that address is (512) 346-2000. Our website address is www.sailpoint.com. Information contained on, or
that can be accessed through, our website does not constitute part of this Annual Report and inclusions of our website address in
this Annual Report are inactive textual references only.
The SailPoint design logo and our other registered or common law trademarks, service marks or trade names
appearing in this Annual Report are the property of SailPoint Technologies, Inc., our wholly-owned subsidiary. Other
trademarks and trade names referred to in this Annual Report are the property of their respective owners.
Available Information
Our
website
is
located
at https://www.sailpoint.com,
and
our
investor
relations
website
is
located
at https://investors.sailpoint.com. The information posted on our website is not incorporated into this Annual Report. Our
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports
filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), are available free of charge on our investor relations website as soon as reasonably practicable after we electronically file
such material with, or furnish it to, the Securities and Exchange Commission (“SEC”). You may also access all of our public
filings through the SEC’s website at https://www.sec.gov.
Investors and other interested parties should note that we use our media and investor relations website and our social
media channels to publish important information about us, including information that may be deemed material to investors. We
encourage investors and other interested parties to review the information we may publish through our media and investor
relations website and the social media channels listed on our media and investor relations website, in addition to our SEC
filings, press releases, conference calls and webcasts.
ITEM 1A. RISK FACTORS
The nature of the business activities conducted by the Company subjects it to certain hazards and risks. The following
is a summary of some of the material risks relating to the Company’s business activities. Other risks are described in Part I,
Item 1. “Business—Competition,” Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results
of Operations.—Liquidity and Capital Resources” and Part II, Item 7A. “Quantitative and Qualitative Disclosures About
Market Risk.” These risks are not the only risks facing the Company. The Company’s business could also be affected by
additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial. If any of
these risks actually occurs, it could materially harm the Company’s business, financial condition or results of operations and
impair the Company’s ability to implement business plans. In that case, the market price of the Company’s common stock could
decline.
Risks Related to Our Financial Performance and Results
Since our inception, except for the year ended December 31, 2018, we have incurred net losses and we may not be
able to generate sufficient revenue to achieve and sustain profitability.
14
Since our inception, except for the year ended December 31, 2018, we have incurred net losses, including a net loss of
$61.6 million for the year ended December 31, 2021. We cannot assure you that we will achieve profitability in the future or
that we would be able to sustain profitability. We expect our operating expenses to continue to increase as we continue to
expand our sales and marketing efforts, invest in research and development, particularly for our cloud-based solutions, and
expand our operations in existing and new geographies and vertical markets. Further, we expect our revenue growth rate to
continue to be materially adversely impacted by our shift to subscription-based arrangements. As a result, we do not know when
we will achieve profitability, and it is possible that we continue to sustain net losses for a period.
We have experienced rapid growth in recent periods, and our recent growth rates may not be indicative of our
future growth.
We have experienced rapid growth in recent years. Our revenue grew from $288.5 million to $439.0 million from the
year ended December 31, 2019 to the year ended December 31, 2021. In future periods, we may not be able to sustain revenue
growth consistent with recent history, or at all. We believe our revenue growth depends on a number of factors, including (i) our
ability to attract new customers and retain and increase sales to existing customers; (ii) our ability to, and the ability of our
channel partners to, successfully deploy and implement our solutions, increase our existing customers’ use of our solutions and
provide our customers with excellent customer support; (iii) our ability to develop our existing solutions and introduce new
solutions; (iv) our ability to hire and retain substantial numbers of new sales and marketing, research and development and
general and administrative personnel, and expand our global operations; and (v) our ability to increase the number of our
technology partners.
If we are unable to achieve any of these requirements, our revenue growth will be adversely affected. In addition, as
discussed below, our revenue growth may be materially and adversely affected during any period of significant shifts to
subscription-based arrangements.
Our future revenues and operating results will be harmed if we are unable to acquire new customers, if our
customers do not renew their arrangements with us, or if we are unable to expand sales to our existing customers
or develop new solutions that achieve market acceptance.
To continue to grow our business, it is important that we continue to acquire new customers to purchase and use our
solutions. Our success in adding new customers depends on numerous factors, including our ability to (i) offer a compelling
identity security platform and solutions, (ii) execute an effective sales and marketing strategy, (iii) attract, effectively train and
retain new sales, marketing, professional services and support personnel in the markets we pursue, (iv) develop or expand
relationships with channel partners, including systems integrators, resellers and technology partners, (v) expand into new
geographies and vertical markets, (vi) deploy our platform and solutions for new customers and (vii) provide quality customer
support once deployed. As a result of the COVID-19 pandemic, we shifted all customer events to virtual-only experiences in
2020. In 2021, we resumed certain in-person and hybrid events, but we expect that for the foreseeable future some of our
customer events will be virtual-only or hybrid experiences. Although the level of attendance at our virtual-only and hybrid
events has been generally consistent with or greater than our in-person events, it is possible that the level of prospective
customer engagement, and thus conversion into sales, is lower at such events.
It is important to our continued growth that our customers renew their arrangements when existing contract terms
expire. Our customers have no obligation to renew their maintenance and support, SaaS, and/or term-license agreements, and
our customers may decide not to renew these agreements with a similar contract period, at the same prices and terms or with the
same or a greater number of identities. Our customer retention and expansion is difficult to accurately predict and may decline
or fluctuate as a result of a number of factors. Our ability to increase revenue also depends in part on our ability to increase the
number of identities governed with our solutions and sell more modules and solutions to our existing and new customers. If we
are unable to successfully acquire new customers, retain our existing customers, expand sales to existing customers or introduce
new solutions, our business, financial condition and operating results could be adversely affected. The adverse effect on our
financial results may be particularly acute because of the significant research, development, marketing, sales and other expenses
we will have incurred in connection with the new solutions.
Our sales cycle is long and unpredictable, and our sales efforts require considerable time and expense.
The length and unpredictability of the sales cycle for our offerings makes it difficult to identify a regular cadence to
our sales and the related revenue recognition. We and our channel partners are often required to spend significant time and
resources to better educate and familiarize potential customers with the value proposition of our platform and solutions.
Customers often view the purchase of our solutions as a strategic decision and significant investment and, as a result, frequently
15
require considerable time to evaluate, test and qualify our platform and solutions prior to purchasing our solutions. During the
sales cycle, we expend significant time and money on sales and marketing and contract negotiation activities, which ultimately
may not result in a sale. Additional factors that may influence the length and variability of our sales cycle include: (i) the
discretionary nature of purchasing and budget cycles and decisions; (ii) lengthy purchasing approval processes; (iii) the
evaluation of competing products during the purchasing process; (iv) time, complexity and expense involved in replacing
existing solutions; (v) announcements or planned introductions of new products features or functionality by our competitors or
of new solutions or modules by us; (vi) the practice of large enterprises often driving their purchasing cycles based on internal
factors rather than marketing cycles; and (viii) evolving functionality demands. If our efforts in pursuing sales and customers
are unsuccessful, or if our sales cycles lengthen, our revenue could be lower than expected, which would have an adverse effect
on our business, operating results and financial condition.
We recognize some of our revenue ratably over the term of our agreements with customers and, as a result,
downturns or upturns in sales may not be immediately reflected in our operating results.
We recognize revenue from our subscription offerings ratably over the terms of our agreements with customers. As a
result, a portion of the revenue that we report in each period will be derived from the recognition of deferred revenue relating to
agreements entered into during previous periods. Consequently, a decline in new subscription sales or renewals in any one
period may not be immediately reflected in our revenue results for that period. This decline, however, will negatively affect our
revenue in future periods. Accordingly, the effect of significant downturns in sales and market acceptance of our products and
potential changes in our rate of renewals may not be fully reflected in our operating results until future periods.
We expect to continue to invest in research and development, sales and marketing, and general and administrative
functions and other areas to grow our subscription-related business. These subscription-related costs are generally expensed as
incurred (with the exception of sales commissions), as compared to the corresponding revenue, substantially all of which is
recognized ratably in future periods. We are likely to recognize the costs associated with these investments earlier than some of
the anticipated benefits and the return on these investments may develop more slowly, or may be lower, than we expect, which
could adversely affect our operating results.
Our quarterly results fluctuate significantly and may not fully reflect the underlying performance of our business.
Our quarterly revenue and operating results tend to fluctuate from period-to-period, and we believe that our quarterly
results may vary significantly in the future. These results may fluctuate as a result of a variety of factors, including the mix of
revenue and associated costs attributable to licenses, subscription and professional services, the mix of revenue attributable to
larger transactions as opposed to smaller transactions, and others discussed throughout this “Risk Factors” section, many of
which are outside of our control. Consequently, you should not rely on the results of any one quarter as an indication of future
performance. Period-to-period comparisons of our revenue and operating results may not be meaningful and, as a result, may
not fully reflect the underlying performance of our business.
Risks Related to Our Technology, Products and Security
Real or perceived errors, failures, or disruptions, including those caused by cyber-attacks, in our platform and
solutions could adversely affect our customers’ satisfaction with our solutions and harm our business and industry
reputation.
Our platform and solutions are very complex and have contained and may contain undetected defects, vulnerabilities
or errors, especially when solutions are first introduced or enhanced. Our platform and solutions are often used in connection
with large-scale computing environments with different operating systems, system management software, equipment and
networking configurations, which may cause errors or failures of products, or other aspects of the computing environment into
which our products are deployed. If our platform and solutions are not implemented or used correctly or as intended, inadequate
performance and disruption in service may result. In addition, deployment of our platform and solutions into complicated,
large-scale computing environments may expose errors, failures or vulnerabilities in our products. Any such errors, failures, or
16
vulnerabilities may not be found until after they are deployed to our customers. Some of our software and features are powered
by ML and AI, which depend on datasets and algorithms that could be flawed, including through inaccurate, insufficient,
outdated or biased data. From time to time, we have experienced errors, failures and bugs in our platform that have resulted in
customer downtime, and we cannot assure you that we will be able to mitigate future errors, failures, vulnerabilities or bugs in a
quick or cost-effective manner.
We and our third-party service providers have in the past experienced, and may in the future experience, performance
issues due to a variety of factors, including infrastructure changes, human or software errors, website or third-party hosting
disruptions or capacity constraints due to a number of potential causes including technical failures, cyber-attacks, security
incidents, natural disasters or fraud. We have also been the target of distributed denial-of-service attacks and other cybersecurity
attacks that attempt to disrupt our services. If our or our third-party service providers’ products or solutions or corporate
security are compromised, our website, professional services, customer support or SaaS solutions are unavailable, or there are
flaws in our ML and AI processes, our business could be negatively affected. Moreover, if our security measures, products,
services or third-party service providers are subject to cyber-attacks that degrade or deny the ability of users to access our
website or other products or services, our products or services may be perceived as insecure, and we may incur significant legal
and financial exposure. In particular, our cloud-based products may be especially vulnerable to interruptions, performance
problems or cyber-attacks. Furthermore, our solutions may not help detect situations in which a valid user identity has been
compromised, for example as part of a highly sophisticated cyberattack of the type described below. If we, our third-party
service providers, our partners or one or more customers were to suffer a highly publicized breach, even if our platform and
solutions perform effectively, such a breach could cause our customers or potential customers to lose trust in our identity
governance platform in general, which could cause us to suffer reputational harm, lose existing commercial relationships and
customers or deter them from purchasing additional solutions and prevent new customers from purchasing our solutions. Highly
publicized cybersecurity events have heightened consumer, legislative and regulatory awareness of these kinds of cybersecurity
risks, while further emboldening individuals or groups to target IT systems more aggressively, highlighting the vulnerability of
IT supply chains.
We continue to invest in the personnel, infrastructure and third-party best practice software solutions and services
necessary to mitigate these risks. However, if we are unable to attract and retain personnel with the necessary cybersecurity
expertise, or fail to implement sufficient safeguarding measures, we may not be able to prevent, detect, and mitigate potentially
disruptive events which could occur in the future. In some instances, we may not be able to identify the cause or causes of these
events within an acceptable period of time. Even with these investments, we may not be able to stop a complex and
sophisticated cyberattack. Such attacks can be particularly difficult to prevent or fully mitigate when they occur in the supply
chain. If we are or become a target of such an attack, we may not be able to prevent, detect and mitigate such an attack, which
could cause disruptions in service or other performance problems, hurt our reputation and our ability to attract new customers
and retain existing customers, and damage our customers’ businesses.
Since our customers use our platform and solutions for important aspects of their security environment and operational
business, any real or perceived errors, failures or vulnerabilities in our products, or disruptions in service or other performance
problems, could hurt our reputation and may damage our customers’ businesses. Furthermore, defects, errors, vulnerabilities or
failures in our platform or solutions may require us to implement design changes or software updates. Any defects,
vulnerabilities or errors in our platform or solutions, or the perception of such defects, vulnerabilities or errors, could result in:
(i) expenditure of significant financial and product development resources in efforts to analyze, correct, eliminate or work
around errors or defects; (ii) loss of existing or potential customers or channel partners; (iii) delayed or lost revenue; (iv) delay
or failure to attain market acceptance; (v) delay in the development or release of new solutions or services; (vi) negative
publicity, which will harm our reputation; (vii) an increase in collection cycles for accounts receivable or the expense and risk
of litigation; and (viii) harm to our operating results.
The contractual protections we have in our standard terms and conditions of sale, such as warranty disclaimers and
limitation of liability provisions, may not fully or effectively protect us from claims by customers, commercial relationships or
other third parties. Any insurance coverage we may have may not adequately cover all claims asserted against us or cover only
a portion of such claims. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in
litigation and the diverting of management’s time and other resources.
Interruptions with the delivery of our SaaS solutions, or third-party cloud-based systems that we use in our
operations, may adversely affect our business, operating results and financial condition.
Our continued growth depends in part on the ability of our existing customers and new customers to access our
platform and solutions at any time and within an acceptable amount of time. In addition, our ability to access certain third-party
17
SaaS solutions is important to our operations and the delivery of our customer support and professional services. We have
experienced, and may in the future experience, service disruptions, outages and other performance problems both in the
delivery of our SaaS solutions and in third-party SaaS solutions we use due to a variety of factors, including infrastructure
changes, malicious actors, human or software errors or capacity constraints. In some instances, we may not be able to identify
the cause or causes of these performance problems within an acceptable period of time. If our SaaS solutions or the third-party
SaaS solutions we depend on are unavailable or if our customers are unable to access features of our SaaS solutions within a
reasonable amount of time or at all, our business would be negatively affected.
We host our SaaS and other subscription services solutions primarily using AWS data centers. Our related operations
depend on protecting the virtual cloud infrastructure hosted in AWS by maintaining its configuration, architecture, features and
interconnection specifications, as well as the information stored in these virtual data centers and which third-party internet
service providers transmit. Although we have disaster recovery plans that utilize multiple AWS locations, any incident affecting
their infrastructure that may be caused by fire, flood, severe storm, earthquake or other natural disasters, cyber-attacks, terrorist
or other attacks, public health issues or other similar events beyond our control could negatively affect our SaaS platform. A
prolonged AWS service disruption affecting our SaaS platform for any of the foregoing or other reasons would negatively
impact our ability to serve our customers and could damage our reputation with current and potential customers, expose us to
liability, cause us to lose customers or otherwise harm our business. We may also incur significant costs for using alternative
equipment or taking other actions in preparation for, or in reaction to, events that damage the AWS services we use, which
would also likely require significant investments of time. In addition, AWS may terminate the agreement by providing 30 days’
prior written notice and may, in some cases, terminate the agreement immediately for cause upon notice. In the event that our
AWS service agreements are terminated, or there is a lapse of service, elimination of AWS services or features that we utilize,
interruption of internet service provider connectivity or damage to such facilities, we could experience interruptions in access to
our platform as well as significant delays and additional expense in arranging or creating new facilities and services and/or re-
architecting our SaaS solutions for deployment on a different cloud infrastructure service provider, which may adversely affect
our business, operating results and financial condition.
Breaches in our security, cyber-attacks or other cyber-risks could expose us to significant liabilities and cause our
business and reputation to suffer.
Our operations involve transmission and processing of our customers' and their employees’ confidential, proprietary
and sensitive information including, in some cases, personally identifiable information. We have legal and contractual
obligations to protect the confidentiality and appropriate use of customer data. Despite our security measures, our and our third-
party service providers' information technology and infrastructure may be vulnerable to security risks, including unauthorized
access to, use or disclosure of customer data, theft of proprietary information, employee error or misconduct, denial of service
attacks, loss or corruption of customer data, and computer hacking attacks or other cyber-attacks subsequently originated from
our infrastructure. Such events could expose us to substantial litigation expenses and damages, indemnity and other contractual
obligations, government fines and penalties, mitigation expenses and other liabilities. Because techniques used to obtain
unauthorized access or to sabotage systems change frequently and generally are not recognized until successfully launched
against a target, we and our third-party service providers may be unable to anticipate these techniques or reasonably implement
adequate preventative measures. For example, we may not be able to stop a complex and sophisticated cyberattack of the type
described in the risk factor above. If an actual or perceived breach of our or our third-party service providers' security occurs,
the market perception of the effectiveness of our security measures could be harmed, our brand and reputation could be
impacted, we could lose potential sales and existing customers, our ability to operate our business could be impaired, and we
may incur significant liabilities. Moreover, failure to maintain effective internal accounting controls related to data security
breaches and cybersecurity in general could impact our ability to produce timely and accurate financial statements and could
subject us to regulatory scrutiny.
If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing
regulations and changing customer needs, requirements or preferences, our platform and solutions may become
less competitive.
The market in which we compete is relatively new and subject to rapid technological change, evolving industry
standards and changing regulations, as well as changing customer needs, requirements and preferences. The success of our
business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis. In addition, as
our customers’ technologies and business plans grow more complex, we expect them to face new and increasing challenges.
Our customers require that our solution effectively identifies and responds to these challenges without disrupting the
performance of our customers’ IT systems. As a result, we must continually modify and improve our products and introduce or
acquire new products in response to changes in our customers’ IT infrastructures. We may be unable to anticipate future market
18
needs and opportunities or be unable to develop enhancements to our platform or existing solutions or new solutions to meet
such needs or opportunities in a timely manner, if at all. Even if we are able to anticipate, develop and commercially introduce
enhancements to our platform and existing solutions and new solutions, those enhancements and new solutions may not achieve
widespread market acceptance. Our enhancements or new solutions could fail to attain sufficient market acceptance for many
reasons.
Any actual or perceived failure by us to comply with our privacy commitments or legal or regulatory data protection
requirements in one or multiple jurisdictions could result in proceedings, actions or penalties against us, as well as
a loss of goodwill.
Our customers’ storage and use of data concerning, among others, their employees, contractors, customers and partners
is essential to their use of our platform and solutions. We have implemented various features intended to enable our customers
to better secure their information and comply with applicable privacy and security requirements in their collection and use of
data, but these features do not ensure their compliance and may not be effective against all potential privacy and data security
concerns.
A wide variety of domestic and foreign laws and regulations apply to the collection, use, retention, protection,
disclosure, transfer, disposal and other processing of personal data. In particular, we function as a HIPAA “business associate”
for certain of our customers and, as such, are subject to strict privacy and data security requirements. We are also subject to the
GDPR. These and other applicable data protection and privacy-related laws and regulations are evolving and may result in
regulatory and public scrutiny and escalating levels of enforcement and sanctions. See Part I, Item 1. “Business—Government
Regulations” for more information. Our failure to comply with contractual obligations or applicable laws and regulations, or to
protect any personal or other customer data, could result in enforcement actions against us, including regulatory fines or other
civil or criminal liability, as well as claims for damages, contractual or otherwise, by customers and other affected individuals,
damage to our reputation and loss of goodwill (both in relation to existing customers and prospective customers), any of which
could adversely affect our business, operating results, financial performance and prospects.
In addition, we are subject to certain contractual obligations and have made privacy commitments, including in privacy
policies, regarding our collection, use, storage, transfer, disclosure, disposal or processing of personal data. As a company that
supports customer privacy and security objectives, even the perception of a failure by us to comply with our privacy
commitments, whether or not valid, may harm our reputation, inhibit adoption of our solutions by current and future customers
or adversely impact our ability to attract and retain workforce talent. Additionally, a failure or perceived failure to comply with
privacy commitments could lead to regulator or civil claims if our commitments are found to be deceptive or otherwise
misrepresentative of our actual policies and practices.
Loss, retention or misuse of certain information and alleged violations of laws and regulations relating to privacy and data
security, and any relevant claims, may expose us to potential liability and may require us to expend significant resources on
data security and in responding to and defending such allegations and claims. In addition, future laws, regulations, standards
and other obligations, and changes in the interpretation of existing laws, regulations, standards and other obligations could
impair our customers’ ability to collect, use or disclose data relating to individuals, which could decrease demand for our
platform and solutions, increase our costs and impair our ability to maintain and grow our customer base and increase our
revenue. This includes evolutions in definitions of what constitutes “Personal Information” and “Personal Data” subject to
privacy laws, especially relating to classification of IP addresses, machine or device identification numbers, location data and
other information. Changes in the law may limit or inhibit our ability to offer certain products or features, limit the growth of
features and/or development of new products and services supported by AI or machine learning, or limit our ability to operate
or expand our business and develop technology alliance relationships that may involve the sharing of data.
Around the world, there are numerous lawsuits in process against various technology companies that process personal
data. If those lawsuits are successful, it could increase the likelihood that our company may be exposed to liability for our own
policies and practices concerning the processing of personal data and could hurt our business. Furthermore, the costs of
compliance with, and other burdens imposed by laws, regulations and policies concerning privacy and data security that are
applicable to the businesses of our customers may limit the use and adoption of our platform or solutions and reduce overall
demand for them. Privacy concerns, whether or not valid, may inhibit market adoption of our platform. Additionally, concerns
about security or privacy may result in the adoption of new legislation that restricts the implementation of technologies like
ours or requires us to make modifications to our platform, which could significantly limit the adoption and deployment of our
technologies or result in significant expense to modify our platform.
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If we are not able to maintain and enhance our brand or reputation as an industry leader and innovator, our
business and operating results may be adversely affected.
We believe that maintaining and enhancing our reputation as a leader and innovator in the market for identity and data
governance solutions is critical to our relationship with our existing customers and our ability to attract new customers. The
successful promotion of our brand attributes will depend on a number of factors, including our marketing efforts, our ability to
continue to develop high-quality features and solutions for our platform and our ability to successfully differentiate our
platform and solutions from competitive products and services. Our brand promotion activities may not be successful or yield
increased revenue. In addition, independent industry analysts often provide reports of our platform and solutions, as well as
products and services of our competitors, and perception of our platform and solutions in the marketplace may be significantly
influenced by these reports. If these reports are negative, or less positive as compared to those of our competitors’ products and
services, our reputation may be adversely affected. If we do not successfully maintain and enhance our brand and reputation,
our business and operating results may be adversely affected.
If our platform and solutions do not effectively interoperate with our customers’ existing or future IT
infrastructures, installations could be delayed or cancelled, which would harm our business.
Our success depends on the interoperability of our platform and solutions with third-party operating systems,
applications, data and devices that we have not developed and do not control. Any changes in such operating systems,
applications, data or devices that degrade the functionality of our platform or solutions or give preferential treatment to
competitive software could adversely affect the adoption and usage of our platform. We may not be successful in adapting our
platform or solutions to operate effectively with these applications, data or devices. If it is difficult for our customers to access
and use our platform or solutions, or if our platform or solutions cannot connect to a broadening range of applications, data and
devices, then our customer growth and retention may be harmed, and our business and operating results could be adversely
affected.
If our products fail to help our customers achieve and maintain compliance with certain government regulations
and industry standards, our business and operating results could be materially and adversely affected.
We believe we generate a portion of our revenues from our products and services because our customers use our
products and services as part of their efforts to achieve and maintain compliance with certain government regulations and
industry standards, and we expect that will continue for the foreseeable future. Examples of industry standards and government
regulations include the Payment Card Industry Data Security Standard; the Federal Information Security Management Act and
associated National Institute for Standards and Testing Network Security Standards; the Sarbanes-Oxley Act of 2002; Title 21
of the U.S. Code of Federal Regulations, which governs food and drugs industries; the North American Electric Reliability
Corporation Critical Infrastructure Protection Plan; the GDPR; the German Federal Financial Supervisory Authority Minimum
Requirements for Risk Management; and the Monetary Authority of Singapore’s Technology Risk Management Notices. These
industry standards may change with little or no notice, including changes that could make them more or less onerous for
businesses. In addition, governments may also adopt new laws or regulations, or make changes to existing laws or regulations,
that could affect whether our customers believe our solution assists them in maintaining compliance with such laws or
regulations. If our solutions fail to expedite our customers’ compliance initiatives, our customers may lose confidence in our
products and could switch to products offered by our competitors. In addition, if government regulations and industry standards
related to IT security are changed in a manner that makes them less onerous, our customers may view compliance as less
critical to their businesses, and our customers may be less willing to purchase our products and services. In either case, our
sales and financial results would suffer.
Risks Related to Our Strategy and Competition
A shift in our business from selling perpetual licenses to selling SaaS and term licenses could materially and
adversely affect our financial condition, operating results and liquidity, and our business, financial condition, operating
results and prospects could be materially and adversely affected if we fail to successfully manage this shift.
We believe enterprises are increasingly embracing the cloud to house their critical security infrastructure. As a result, a
growing number of enterprises are changing their approach to identity security and now prefer SaaS in place of purchasing
software via a license and independently operating their identity infrastructure. Our current product strategy reflects our belief
in this industry shift. In connection with this transition, as we sell more subscription-based arrangements, our license revenue
has been and will likely continue to be negatively impacted.
20
In a subscription-based arrangement with a customer, we typically:
•
recognize revenue (i) ratably over the term of the applicable agreement if the software is delivered as a
service, whereas we typically recognize revenue from perpetual licenses upfront upon delivering the
applicable license, or (ii) upfront if the software is purchased as a term license, but for an amount less than we
would charge for a perpetual license given the finite term of the term license; meaning in each case that for a
given customer, we will initially recognize less revenue if our software is delivered via a subscription-based
arrangement rather than as a perpetual license; and
•
invoice the customer for subscription fees annually, and at an amount less than we would charge initially for a
perpetual license, meaning that for a given customer, initially our billings and our cash flows will decrease.
As a result, during any period of significant shifts to subscription-based arrangements, our revenue and cash flows,
financial condition, operating results and liquidity may be materially and adversely affected. Additionally, if a greater
percentage of our customers purchase our solutions through subscription-based arrangements than we expect in any period, our
revenue and earnings will likely fall below expectations for that period and our cash flows may be lower than expected.
Furthermore, our business, financial condition, operating results and prospects could be materially and adversely affected if we
fail to successfully manage this industry shift, which depends upon our ability to, among other things, properly price our
subscription-based arrangements, deliver SaaS, retain our customers, and further develop or acquire related technologies and
infrastructure. If the industry shift occurs differently than we anticipate, our business, financial condition, operating results and
prospects could be materially and adversely affected.
We face intense competition in our market, both from larger, well established companies and from emerging
companies, and we may lack sufficient financial and other resources to maintain and improve our competitive
position.
The market for identity and data governance solutions is intensely competitive and is characterized by constant change
and innovation. We face competition from large, well-known enterprise software vendors that offer identity solutions within
their product portfolios, pure play identity vendors (including new market entrants) and vendors with whom we have not
traditionally competed but who may either introduce new products or incorporate features into existing products that compete
with our solutions.
Many of our competitors are larger, have greater resources and existing customer relationships, and may be able to
compete and respond more effectively than we can to new or changing opportunities, technologies, standards or customer
requirements. Our competitors may also seek to extend or supplement their existing offerings to provide identity and data
governance solutions that more closely compete with our offerings. Potential customers may also prefer to purchase, or
incrementally add solutions, from their existing suppliers rather than a new or additional supplier regardless of product
performance or features.
In addition, merger and acquisition transactions in the technology industry continue to occur, particularly transactions
involving cloud-based technologies. Accordingly, there is a greater likelihood that we will compete with other large technology
companies in the future. Continued industry consolidation may adversely impact customers’ perceptions of the viability of
small and medium-sized technology companies and consequently their willingness to purchase from those companies.
New start-up companies that innovate and competitors that are making significant investments in research and
development may invent similar or superior products and technologies that compete with our products, and our business could
be materially and adversely affected if such technologies or products are widely adopted. These competitive pressures in our
market or our failure to compete effectively may result in price reductions, fewer orders, reduced revenue and gross margins,
increased net losses, and loss of market share. Any failure to meet and address these factors could adversely affect our business,
financial condition and operating results.
If we are unable to maintain successful relationships with our channel partners, our ability to market, sell and
distribute our solutions will be limited and our business, financial condition and operating results could be
adversely affected.
We derive a significant portion of our revenue from sales influenced or made through our channel partner network and
expect these sales to continue to grow for the foreseeable future. Our channel partners provide implementation and other
services to our customers in exchange for fees paid by those customers. We may not achieve anticipated revenue growth from
our channel partners if we are unable to retain our existing channel partners and expand their sales or add additional motivated
channel partners. Our arrangements with our channel partners are generally non-exclusive, meaning they may offer customers
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the products of several different companies, including products that compete with our platform and solutions. If our channel
partners do not effectively market and sell our solutions, choose to use greater efforts to market and sell our competitors’
products or services, fail to meet the needs of our customers, or cease marketing our products or providing services to us, our
ability to grow our business and sell our solutions may be adversely affected. If we are unable to maintain our relationships
with these channel partners, our business, financial condition and operating results could be adversely affected. We also
collaborate with adjacent technology vendors to offer comprehensive solutions to our customers. If we do not effectively
collaborate with them, or if they elect to terminate their relationship with us or develop and market solutions that compete with
our solutions, our growth may be adversely affected.
We anticipate that our operations will continue to increase in complexity as we grow, which will add additional
challenges to the management of our business in the future.
Our business has experienced significant growth and is becoming increasingly complex. We increased the number of
our employees from 1,168 at December 31, 2019 to 1,676 at December 31, 2021. We have also experienced growth in the
number of customers of our solutions from 1,469 at December 31, 2019 to 2,259 at December 31, 2021. We expect this growth
to continue and for our operations to become increasingly complex. To effectively manage this growth, we have made and plan
to continue to make substantial investments to improve our operational, financial and management controls as well as our
reporting systems and procedures. Our success will depend in part on our ability to manage this complexity effectively without
undermining our corporate culture, which we believe has been central to our success. If we are unable to manage this
complexity, our business, operations, operating results and financial condition may suffer.
As our customer base continues to grow, we likely will need to expand our professional services and other personnel,
and maintain and enhance our existing partner network, to provide a high level of customer service. We also will need to
effectively manage our direct and indirect sales processes as the number and type of our sales personnel and partner network
continues to grow and become more complex and as we continue to expand into new geographies and vertical markets. This
complexity is further driven by the various ways in which we sell our solutions, including on a per identity and per module
basis through perpetual and term licenses, SaaS and other subscription services. If we do not effectively manage the increasing
complexity of our business and operations, the quality of our solutions and customer service could suffer, and we may not be
able to adequately address competitive challenges. These factors could impair our ability, and our channel partners’ ability, to
attract new customers, retain existing customers, expand our customers’ use of existing solutions and adoption of more of our
solutions and continue to provide high levels of customer service, all of which would adversely affect our reputation, overall
business, operations, operating results and financial condition.
We may acquire or invest in companies, which may divert our management’s attention and result in additional
dilution to our stockholders. We may be unable to integrate acquired businesses and technologies successfully or
achieve the expected benefits of such acquisitions, and acquisitions, particularly of development stage companies,
may adversely affect our operating results and liquidity as well as our ability to meet expectations.
Our success will depend, in part, on our ability to expand our solutions and services and grow our business in response
to changing technologies, customer demands and competitive pressures. In some circumstances, we may choose to do so
through the acquisition of, or investment in, new or complementary businesses and technologies rather than through internal
development. As a function of the industry in which we operate, we may acquire development stage companies that are not yet
profitable, and that require continued investment, which could adversely affect our results of operations and liquidity as well as
our ability to meet expectations, particularly if they were formulated prior to such acquisitions. Development stage companies
generally involve a higher degree of risk and have not been proven, require additional capital to develop, and typically do not
generate enough revenue to offset increased expenses associated therewith.
The identification of suitable acquisition or investment candidates can be difficult, time-consuming and costly, and we
may not be able to successfully complete identified acquisitions or investments. The risks we face in connection with
acquisitions and/or investments include difficulties integrating the new businesses, technologies, or personnel, distractions to
management, adverse tax consequences, claims and disputes by stockholders, and the assumption of debt or other liabilities,
among other things. The occurrence of any of these or other risks could prevent us from realizing the anticipated benefits of an
acquisition and could adversely affect our business, operating results and financial condition.
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Because our long-term success depends, in part, on our ability to expand the sales and marketing of our platform
and solutions to customers located outside of the United States, and we perform a significant portion of our
development outside of the United States, our business will be susceptible to risks associated with international
operations.
At December 31, 2021, we had customers in 65 countries and personnel in 18 countries, and we intend to continue
expanding our international sales and marketing operations. Conducting international operations requires significant
management attention and financial resources and subjects us to risks that we do not generally face in the United States. These
risks include: (i) heightened risks of unethical, unfair or corrupt business practices, actual or claimed, in certain geographies and
of improper or fraudulent sales arrangements; (ii) political instability, war, armed conflict or terrorist activities; (iii) public
health issues, including outbreaks of contagious diseases or illnesses; (iv) currency fluctuations; (v) laws imposing heightened
restrictions on data usage and increased penalties for failure to comply with applicable laws, particularly in the EU; (vi) risks
associated with trade restrictions and foreign import requirements; (vii) potentially different pricing environments, longer sales
cycles and longer accounts receivable payment cycles and collections issues; (viii) management communication and integration
problems resulting from cultural differences and geographic dispersion; (ix) increased turnover of international personnel as
compared to our domestic operations; (x) potentially adverse tax consequences, including multiple and possibly overlapping tax
structures, the complexities of foreign value added tax systems, restrictions on the repatriation of earnings and changes in tax
rates; (xi) changes in global trade policies, such as the United Kingdom’s exit from the EU, trade disputes and increased tariffs
between the United States and China, or other political, cultural or economic developments; (xii) greater difficulty in enforcing
contracts, accounts receivable collection and longer collection periods; (xiii) the uncertainty and limitation of protection for
intellectual property rights in some countries; and (xiv) increased financial accounting and reporting burdens and complexities.
We have employees and contractors in locations throughout Europe and Asia. If the global effect of Russia’s recent invasion of
Ukraine and the ensuing armed conflict escalates or expands, our ability to conduct business in these regions could be adversely
impacted, potentially resulting in delays to product development, sales and marketing, and other key business functions.
Additionally, in light of reports of an increase in Russian cyber-attacks in connection with the current armed conflict, we may
face a heightened risk of state-sponsored cyber-attacks in the near term.
Legal, Regulatory and Governance Risks
If we fail to meet contractual commitments related to response time, service level commitments or quality of
professional services, we could be obligated to provide credits for future service, or face contract termination, which
could adversely affect our business, operating results and financial condition.
Depending on the products purchased, our customer agreements contain service level agreements, under which we
guarantee specified availability of our platform and solutions. If we are unable to meet the stated service level commitments to
our customers or suffer extended periods of unavailability of our SaaS solutions or other subscription services, we may be
contractually obligated to provide affected customers with service credits or customers could elect to terminate and receive
refunds for prepaid amounts. In addition, if the quality of our professional services does not meet contractual requirements, we
may be required to re-perform the services at our expense or refund amounts paid for the services. Any failure to meet these
contractual commitments could adversely affect our revenue, operating results and financial condition and any failure to meet
service level commitments or extended service outages of our SaaS solutions or other subscription services could adversely
affect our business and reputation as customers may elect not to renew and we could lose future sales.
We use third-party licensed software in or with our solutions, and the inability to maintain these licenses or issues
with the software we license could result in increased costs or reduced service levels, which would adversely affect
our business.
Our solutions include software or other intellectual property licensed from third parties, and we otherwise use software
and other intellectual property licensed from third parties in our business. We anticipate that we will continue to rely on such
third-party software and intellectual property in the future. This exposes us to risks over which we may have little or no control.
The third-party software we currently license may not always be available, and we may not have access to alternative third-
party software on commercially reasonable terms. In addition, a third party may assert that we or our customers are in breach of
the terms of a license, which could, among other things, give such third party the right to terminate a license or seek damages
from us, or both. Our inability to obtain or maintain certain licenses or other rights or to obtain or maintain such licenses or
rights on favorable terms, or the need to engage in litigation regarding these matters, could result in delays in releases of new
solutions, and could otherwise disrupt our business, until equivalent technology can be identified, licensed or developed, if at
all. Also, to the extent that our platform and solutions depend upon the successful operation of third-party software in
conjunction with our software, any undetected errors, vulnerabilities, compromises or defects in such third-party software could
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prevent the deployment or impair the functionality of our platform, delay new feature introductions, result in a failure of our
platform and injure our reputation.
If we fail to adequately protect our proprietary rights, our competitive position could be impaired, and we may lose
valuable assets, generate reduced revenue and incur costly litigation to protect our rights.
We rely on copyrights, trade secret laws, confidentiality procedures, employment proprietary information and
inventions assignment agreements, trademarks and patents to protect our intellectual property rights. To protect our trade secrets
and proprietary information, we rely in significant part on confidentiality arrangements with our employees, licensees,
independent contractors, advisers, channel partners, resellers and customers. These arrangements and other steps we take may
not be effective to prevent disclosure of confidential information, including trade secrets, and may not provide an adequate
remedy in the event of unauthorized disclosure of confidential information.
We may be required to spend significant resources to obtain, monitor and enforce our intellectual property rights.
Litigation brought to enforce our intellectual property could be costly, time-consuming and distracting to management and
could be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property,
which may result in the impairment or loss of portions of our intellectual property. The laws of some foreign countries do not
protect our intellectual property to the same extent as the laws of the United States, and effective intellectual property protection
and mechanisms may not be available in those jurisdictions. We may need to expend additional resources to defend our
intellectual property in these countries, and our inability to do so could impair our business or adversely affect our international
expansion.
We may be subject to intellectual property rights claims by third parties or contractual counterparties, which may be
costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies.
Companies in the software and technology industries, including some of our current and potential competitors, own
large numbers of patents, copyrights, trademarks and trade secrets and frequently enter into litigation based on allegations of
infringement, misappropriation or other violations of intellectual property rights. We have in the past and may in the future be
subject to notices that claim we have infringed, misappropriated or misused the intellectual property of our competitors or other
third parties, many of which have significantly larger and more mature patent holdings than we do or are patent holding
companies whose sole business is to assert such claims. To the extent we increase our visibility in the market, we face a higher
risk of being the subject of intellectual property claims. Additionally, we could in the future be subject to claims that we, our
employees or our contractors have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of
our competitors or other parties.
Our agreements with customers and other third parties may include indemnification provisions under which we agree to
indemnify them or otherwise be liable for losses suffered or incurred as a result of claims of intellectual property infringement
or misappropriation, damages caused by us to property or persons, or other liabilities relating to or arising from our platform,
solutions, services or other contractual obligations. Some of these indemnity agreements provide for significant or uncapped
liability for which we would be responsible, and some indemnity provisions survive termination or expiration of the applicable
agreement. Any dispute with a customer with respect to such obligations could have adverse effects on our relationship with
that customer and other existing customers and new customers and adversely affect our business and operating results.
Any intellectual property, indemnification or wrongful use or disclosure claims, with or without merit, could be time-
consuming and expensive, could require litigation and could divert our management’s attention and other resources. These
claims could also subject us to significant liability for damages, potentially including treble damages if we are found to have
willfully infringed patents or copyrights. These claims could also result in our having to stop using technology found to be in
violation of a third party’s rights. We might be required to seek a license for the intellectual property, which may not be
available on reasonable terms or at all. Even if a license is available, we could be required to pay significant royalties, which
would increase our operating expenses. As a result, we may be required to develop alternative non-infringing technology, which
could require significant effort and expense. If we cannot license or develop technology for any aspect of our business that may
ultimately be determined to infringe on or misappropriate the intellectual property rights of another party, we could be forced to
limit or stop sales of licenses to our platform and solutions and may be unable to compete effectively. We could also lose
valuable intellectual property rights or key personnel as a result of a wrongful disclosure dispute. Furthermore, we may be
subject to indemnification obligations with respect to third-party intellectual property pursuant to our agreements with our
channel partners or customers. Any of these results would adversely affect our business, operating results and financial
condition.
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Our use of “open source” software could negatively affect our ability to sell our solutions and subject us to possible
litigation.
Some aspects of our platform and solutions are built using open source software, and we intend to continue to use open
source software in the future. From time to time, we contribute software source code to open source projects under open source
licenses or release internal software projects under open source software licenses and anticipate doing so in the future. The
terms of certain open source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a
risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on
our ability to monetize our products. Additionally, we may from time to time face claims from third parties claiming ownership
of, or demanding release of, the open source software or derivative works that we developed using such software, which could
include our proprietary source code, or otherwise seeking to enforce the terms of the applicable open source software license.
These claims could result in litigation and could require us to make our software source code freely available, purchase a costly
license or cease offering the implicated services unless and until we can re-engineer them to avoid infringement or violation.
This re-engineering process could require significant additional research and development resources, and we may not be able to
complete it successfully. In addition to risks related to license requirements, use of certain open source software can lead to
greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or
controls on the origin of software and, thus, may contain security vulnerabilities or broken code. Any of these risks could be
difficult to eliminate or manage, and if not addressed, could have a negative effect on our business, operating results and
financial condition.
Our charter and bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that
stockholders may consider favorable.
Our charter and bylaws contain provisions that could delay or prevent a change in control of our company. These
provisions could also make it difficult for stockholders to elect directors who are not nominated by the current members of our
board of directors or take other corporate actions, including effecting changes in our management. These provisions include: (i)
a classified board of directors with three-year staggered terms; (ii) removal of directors only for cause; (iii) the ability of our
board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including
preferences and voting rights, without stockholder approval; (iv) allowing only our directors to fill vacancies on our board of
directors; (v) a prohibition on stockholder action by written consent; (vi) the requirement that a special meeting of stockholders
may be called only by or at the direction of our board of directors; (vii) the requirement for the affirmative vote of holders of at
least 66 2/3% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to
amend the provisions of our charter relating to the management of our business (including our classified board structure) or
certain provisions of our bylaws; (viii) the ability of our board of directors to amend the bylaws; (ix) advance notice procedures
with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at
a stockholders’ meeting; and (x) a prohibition of cumulative voting in the election of our board of directors. Our charter also
contains a provision that provides us with protections similar to Section 203 of the Delaware General Corporation Law (the
“DGCL”), and prevents us from engaging in a business combination, such as a merger, with an interested stockholder (i.e., a
person or group who acquires at least 15% of our voting stock) for a period of three years from the date such person became an
interested stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became
an interested stockholder is approved in a prescribed manner.
Our charter designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain
types of actions and proceedings by our stockholders, which could limit their ability to obtain a favorable judicial
forum for disputes with us or our directors, officers, employees or agents.
Our charter provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery
of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any
derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by
any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to
any provision of the DGCL, our charter or bylaws, or (iv) any action asserting a claim against us that is governed by the internal
affairs doctrine, in each such case subject to such Court of Chancery of the State of Delaware having personal jurisdiction over
the indispensable parties named as defendants therein. Any person or entity purchasing or otherwise acquiring any interest in
shares of our capital stock will be deemed to have notice of, and consented to, the provisions of our charter described in the
preceding sentence. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it
finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against
us and such persons.
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The enforceability of similar exclusive forum provisions in other companies’ charters has been challenged in legal
proceedings, and it is possible that, in connection with one or more actions or proceedings described above, a court could rule
that this provision in our charter is inapplicable or unenforceable. For example, the choice of forum provisions summarized
above are not intended to, and would not, apply to suits brought to enforce any liability or duty created by the Exchange Act, or
other claim for which the federal courts have exclusive jurisdiction. Additionally, there is uncertainty as to whether our choice
of forum provisions would be enforceable with respect to suits brought to enforce any liability or duty created by the Securities
Act of 1933, as amended (the “Securities Act”), or other claims for which the federal courts have concurrent jurisdiction, and in
any event stockholders will not be deemed to have waived the Company’s compliance with federal securities laws and rules and
regulations thereunder. If a court were to find these provisions of our charter inapplicable to, or unenforceable in respect of, one
or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters
in other jurisdictions, which could adversely affect our business, financial condition or operating results.
General Risk Factors
Our success depends on the experience and expertise of our senior management team and key employees. If we are
unable to hire, retain, train and motivate our personnel, our business, operating results and prospects may be
harmed.
Our success has depended, and continues to depend, on the efforts and talents of our senior management team and key
employees, including our engineers, product managers, sales and marketing personnel and professional services personnel. Our
future success will also depend upon our continued ability to identify, hire and retain additional skilled and highly-qualified
personnel, which will require significant time, expense and attention. Competition for such highly-skilled personnel is intense,
and we may need to invest significant amounts of cash and equity to attract and retain new employees. If we do not succeed in
attracting well-qualified employees or retaining and motivating existing employees, or if we lose one or more members of our
senior management team, our business, operating results and prospects could be adversely affected.
Our business depends, in part, on sales to the public sector, and significant changes in the contracting or fiscal
policies of the public sector could have an adverse effect on our business.
We derive a portion of our revenue from sales of our solutions to federal, state, local and foreign governments, and we
believe that the success and growth of our business will continue to depend in part on our successful procurement of
government contracts. Factors that could impede our ability to maintain or increase the amount of revenue derived from
government contracts include: (i) changes in fiscal or contracting policies; (ii) decreases in available government funding; (iii)
changes in government programs or applicable requirements; (iv) the adoption of new laws or regulations or changes to existing
laws or regulations; and (v) potential delays or changes in the government appropriations or other funding authorization
processes. The occurrence of any of the foregoing could cause governments and governmental agencies to delay or refrain from
purchasing our solutions or otherwise have an adverse effect on our business, operating results and financial condition.
If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results
could be adversely affected.
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the amounts reported in our consolidated
financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances, as provided in Part II, Item 7. “Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates.” The results of these estimates
form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and
expenses that are not readily apparent from other sources. Significant assumptions and estimates used in preparing our
consolidated financial statements include those related to revenue recognition, including the determination of stand-alone
selling price, the expected period of benefit for our deferred contract acquisition costs, income taxes, the carrying value of
accounts receivable, and the valuation, estimated useful lives and impairment of intangible assets and goodwill arising from
business combinations. Our operating results may be adversely affected if our assumptions change or if actual circumstances
differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities
analysts and investors, resulting in a decline in the trading price of our common stock.
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Our failure to raise additional capital or generate cash flows necessary to expand our operations and invest in new
technologies in the future could reduce our ability to compete successfully and harm our operating results.
We may need to raise additional funds, and we may not be able to obtain additional debt or equity financing on
favorable terms, if at all. If we raise additional equity financing, our security holders may experience significant dilution of
their ownership interests. If we engage in additional debt financing, we may be required to accept terms that restrict our ability
to incur additional indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or
make acquisitions. If we need additional capital and cannot raise it on acceptable terms, or at all, we may not be able to, among
other things: (i) develop and enhance our products; (ii) continue to expand our product development, sales and marketing
organizations; (iii) hire, train and retain employees; (iv) respond to competitive pressures or unanticipated working capital
requirements; or (v) pursue acquisition opportunities.
Servicing our debt may require a significant amount of cash, and we may not have sufficient cash flow from our
business to do so.
We have historically relied on the availability of some amount of debt financing. Our ability to make scheduled
payments of the principal of, to pay interest on or to refinance our indebtedness, including the $389.8 million aggregate
principal amount of 0.125% convertible senior notes due 2024 (the “Notes”) and any future borrowings under our credit
facility, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our
control, including the factors described in this “Risk Factors” section. Our business may not continue to generate cash flow
from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to
generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or
obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness
will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these
activities or engage in these activities on desirable terms. In addition, our credit facility and any of our future debt agreements
may contain restrictive covenants that prohibit us from adopting any of these alternatives.
The terms, conditions and restrictions contained in our credit agreement and our convertible notes and related
capped call transactions (the “Capped Call Transactions”) could expose us to risks that could adversely affect our liquidity
and financial condition or otherwise adversely affect our operating results.
Our credit agreement contains various covenants that, among other things, limit our and certain of our subsidiaries’
abilities to: (i) incur additional indebtedness or guarantee indebtedness of others; (ii) create additional liens on our assets; (iii)
merge, consolidate or dissolve; (iv) make loans or investments, including acquisitions; (v) sell assets; (vi) engage in sale and
leaseback transactions; (vii) pay dividends and make other distributions on our capital stock, and redeem and repurchase our
capital stock; or (viii) enter into transactions with affiliates. Our credit agreement also contains numerous affirmative covenants
and a financial covenant. Our failure to comply with these covenants could result in an event of default, which, if not cured or
waived, could result in the acceleration of our debt. Any additional debt that we incur in the future could subject us to similar or
additional covenants.
Holders of the Notes have the right to require us to repurchase their Notes upon the occurrence of a fundamental
change (as defined in the indenture governing the Notes) at a repurchase price equal to 100% of the principal amount of the
Notes to be repurchased, plus accrued and unpaid interest, if any. In such event, we may not have enough available cash or be
able to obtain financing at the time to make repurchases of the Notes surrendered therefor. In addition, our ability to repurchase
the Notes may be limited by our existing credit agreement or agreements governing our future indebtedness. Our failure to
repurchase the Notes at a time when the repurchase is required by the indenture governing the Notes would constitute a default
under such indenture. A default under the indenture or the fundamental change itself could also lead to a default under
agreements governing our existing credit facility or future indebtedness.
The conditional conversion feature of the Notes has been triggered during certain quarters and may be triggered in future
quarters, entitling holders of the Notes to convert the Notes at any time during specified periods at their option. We have
received, and we may in the future receive, requests from holders to convert all or a portion of their Notes (for more
information, see Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Liquidity and Capital Resources”). To the extent that we elect to settle a portion or all of our conversion obligation through the
payment of cash, this could adversely affect our liquidity. The conversion of some or all of the Notes will also dilute the
ownership interests of existing stockholders to the extent we satisfy our conversion obligation by delivering shares of our
common stock upon any conversion of such Notes. In addition, even if holders do not elect to convert their Notes, we could be
required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current
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rather than long-term liability, which would result in a material reduction of our net working capital. The Notes were classified
as current liabilities on the consolidated balance sheet as of December 31, 2021.
In connection with the pricing of the Notes, we entered into the privately negotiated Capped Call Transactions that are
intended to reduce the potential dilution to our common stock upon any conversion of the Notes and/or offset any potential cash
payments we are required to make in excess of the principal amount of converted Notes. The unwinding of such Capped Call
Transactions in connection with a conversion of some or all of the Notes could adversely affect the value of our common stock.
Additionally, it is possible that the accounting standards relating to the Notes and/or the Capped Call Transactions could
in the future change, and compliance with any new or updated standards could have a material adverse effect on our results,
including with respect to earnings per share.
The COVID-19 pandemic continues to affect populations and businesses worldwide and may materially affect how
we and our customers operate, and the duration and extent to which these effects may impact our future results of
operations and overall financial performance remains uncertain.
The emergence of the novel coronavirus as a global pandemic in late 2019 and the devastating effects of COVID-19
throughout 2020 and 2021 and into 2022 have caused substantial disruption to populations, including markets and economies,
worldwide. Governments and public health officials continue to recommend and impose significant regulations and restrictions
designed to protect human life, but which have simultaneously had (and are expected to continue to have) serious adverse
impacts on domestic and foreign economies. As new variants of the coronavirus continue to emerge with varying effects around
the world, it remains difficult to predict the scope and duration of the effects of the coronavirus. While we believe that the
pandemic has not had an immediate material adverse impact on our financial performance, our business may yet be negatively
impacted by the COVID-19 pandemic as the duration of the pandemic and the scope of its effects ultimately remain unknown.
The conditions caused by the COVID-19 pandemic have in some cases affected, and may continue to affect, the rate of
IT spending by our current and prospective customers, impacting some of our customers’ ability and willingness to purchase
our offerings, in some instances delaying prospective customers’ purchasing decisions, delaying the provisioning of our
offerings and causing some customers to fail to make timely payments. We have seen an immaterial number of customer
requests, and may continue to see similar requests, to lengthen payment terms or reduce the value or duration of subscription
contracts, and for those customers that prefer we provide on-site consulting services, we have generally been unable to do so
during the pandemic due to local and regional restrictions, instead providing those services virtually.
Given the nature and significance of the circumstances created by the coronavirus, we are not able to enumerate all
potential risks to our business; however, we believe that in addition to the impacts described above, other potential impacts of
the global pandemic include: (i) an increased likelihood of interruptions with the delivery of our SaaS solutions, other
subscription services or third-party cloud-based systems that we use in our operations; (ii) a decrease in the volume of sales
through our channel partners due to changes to their business models as a result of COVID-19; (iii) cybersecurity issues, as
digital technologies may become more vulnerable and experience a higher rate of cyberattacks in the current environment of
remote connectivity; (iv) risk of stockholder lawsuits arising from volatility in the trading price of our common stock and other
securities-related claims; (v) litigation risk and possible loss contingencies related to COVID-19 and its impact, including with
respect to commercial contracts, employee matters and insurance arrangements; (vi) changes to our culture and workforce to
adjust to market conditions and as a result of increased remote connectivity; (vii) potentially higher borrowing costs or we may
not be able to raise capital on terms acceptable to us or at all in the future; (viii) impairments and other accounting charges if
demand for our services and products decreases; and (ix) infections and quarantining of our employees and the personnel of our
customers, suppliers and other third parties in areas in which we operate.
The duration and extent of the impact from the COVID-19 pandemic depends on future developments, including the
effectiveness and acceptance of vaccinations and therapeutics as they are developed and distributed and the nature and number
of variants of the coronavirus that emerge, that cannot be accurately predicted at this time. If we are not able to respond to and
manage the impact of such events effectively, our business will be harmed. To the extent the COVID-19 pandemic adversely
affects our business and financial results, it may also have the effect of heightening many of the other risks set forth in these
“Risk Factors,” such as those relating to our financial performance and debt obligations.
28
The impact of various tax laws and regulations, including our failure to comply therewith, could have a negative
impact on our operating results and financial condition.
We are subject to tax laws and regulations, both in the United States and internationally, which are complex and may
change over time. Compliance with such laws and regulations may have negative impacts on our operating results and financial
condition, and our efforts to comply in a timely manner may prove inadequate. For example, (i) comprehensive U.S. federal tax
reform legislation could adversely affect our business and financial condition; (ii) changes in existing financial accounting
standards or practices, or taxation rules or practices, may harm our operating results; (iii) our business may be subject to
additional obligations to collect and remit sales tax, value-added and other taxes, and we may be subject to tax liability for past
sales; (iv) our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we
could be obligated to pay additional taxes, which would harm our operating results; and (v) our ability to use net operating
losses and other tax attributes to offset future taxable income may be subject to certain limitations. Additionally, forecasting our
estimated annual effective tax rate for financial accounting purposes is complex and subject to uncertainty, and there may be
material differences between our forecasted and actual tax rates. Any of these circumstances could have a material impact on
our results of business, financial condition and results of operations.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Our corporate headquarters in Austin, Texas consists of 164,818 square feet of space under a lease that expires in April
2029. We also have additional office space under traditional leases in Pune, India, Tel Aviv, Israel, and London, United
Kingdom and under coworking arrangements in various locations in North America, Europe and APAC.
We believe that our facilities are adequate for our current needs and anticipate that suitable additional space will be
readily available to accommodate any foreseeable expansion of our operations. For more information about our lease
commitments, see also Note 7 “Leases” in our notes to our consolidated financial statements included in this Annual Report.
Item 3. Legal Proceedings.
We are not currently a party to, nor is our property currently subject to, any material legal proceedings other than
ordinary routine litigation incidental to the business, and we are not aware of any such proceedings contemplated by
governmental authorities.
Item 4. Mine Safety Disclosures.
Not applicable.
29
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Market Information
Our common stock is listed and traded on the New York Stock Exchange under the symbol “SAIL.”
Holders of Record
As of February 22, 2022, there were 19 holders of record of our common stock including Cede & Co, a nominee for
The Depository Trust Company (“DTC”), which holds shares of our common stock on behalf of an indeterminate number of
beneficial owners. All of the shares of common stock held by brokerage firms, banks and other financial institutions as
nominees for beneficial owners are deposited into participant accounts at DTC and are considered to be held of record by Cede
& Co. as one stockholder. Because many of our shares of common stock are held by brokers and other institutions on behalf of
stockholders, we are unable to estimate the total number of beneficial stockholders represented by these record holders.
Dividend Policy
We have never declared or paid any cash dividends on our common stock. We currently intend to retain all of our
earnings to finance the growth and development of our business. Any further determination to pay dividends on our common
stock will be at the discretion of our board of directors, subject to applicable laws, and will depend on our financial condition,
results of operations, capital requirements, general business conditions and other factors that our board of directors considers
relevant. In addition, our Credit Agreement places restrictions on our ability to pay cash dividends. See Note 9 “Credit
Agreement” in our notes to our consolidated financial statements included in this Annual Report for more information regarding
terms and conditions of the Credit Agreement.
Stock Performance Graph
The following is not “soliciting material,” shall not be deemed “filed” for purposes of Section 18 of the Exchange Act
or incorporated by reference into any of our other filings under the Exchange Act or the Securities Act, except to the extent we
specifically incorporate it by reference into such filing.
The comparative performance graph assumes that $100 was invested (i) in the Company’s common stock
on November 17, 2017 (the date on which initial trading of the Company’s common stock commenced), and (ii) on October 31,
2017, in the S&P Mid Cap 400 and the S&P 600 Information Technology Index, and in each case, that all dividends were
reinvested, and shows the returns through December 31, 2021. The stock return performance on the following graph is required
by the SEC and is not necessarily intended to forecast or be indicative of future stock price performance.
30
Company/
Index
11/17/2017
12/31/2017
3/31/2018
6/30/2018
9/30/2018
12/31/2018
3/31/2019
6/30/2019
9/30/2019
12/31/2019
SAIL
$
100.00 $
111.54 $
159.15 $
188.77 $
261.69 $
180.69 $
220.92 $
154.15 $
143.77 $
181.54
S&P
MidCap
400
$
100.00 $
103.90 $
103.10 $
107.53 $
111.68 $
92.39 $
105.77 $
108.99 $
108.90 $
116.59
S&P 600
IT Index
$
100.00 $
94.32 $
93.53 $
97.94 $
102.12 $
82.13 $
97.71 $
99.70 $
101.86 $
112.95
Company/
Index
3/31/2020
6/30/2020
9/30/2020
12/31/2020
3/31/2021 6/30/2021 9/30/2021 12/31/2021
SAIL
$
117.08 $
203.62 $
304.38 $
409.54
389.54
392.85
329.85
371.85
S&P
MidCap
400
$
81.96 $
101.69 $
106.55 $
132.52
150.37
155.83
153.09
165.33
S&P 600
IT Index
$
81.70 $
101.16 $
100.74 $
142.41
150.59
159.84
154.4
172.68
31
Recent Sales of Unregistered Securities
None.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
None.
Use of Proceeds from Initial Public Offering of Common Stock
On November 16, 2017, the Registration Statement on Form S-1 (File No. 333-221036) (the “Registration Statement”)
relating to our initial public offering was declared effective by the SEC and we priced our initial public offering. Pursuant to the
Registration Statement, we registered an aggregate of 23.0 million shares of our common stock, of which 15.8 million shares
were sold by us and 7.2 million shares were sold by certain selling stockholders named therein at a price to the public of $12.00
per share (for an aggregate offering price of $276.0 million). We received net proceeds of approximately $172.0 million, after
deducting underwriting discounts and commissions of approximately $13.3 million and offering-related expenses of $4.4
million.
As of December 31, 2021, we have used $160.0 million of the proceeds from our initial public offering to repay
borrowings under our previous term loan facility and approximately $1.8 million of such proceeds to pay a related prepayment
premium; the remaining net proceeds are held in cash and have not been deployed.
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together
with the consolidated financial statements and related notes that are included in Item 8 in this Annual Report on Form 10-K
(this “Annual Report”). This discussion contains forward-looking statements that involve risks and uncertainties. Our actual
results may differ materially from those anticipated in these forward-looking statements as a result of various factors,
including, but not limited to, those set forth in the section titled “Risk Factors” in Part I, Item 1A and in other parts of this
Annual Report. Our historical results are not necessarily indicative of the results that may be expected for any period in the
future.
The Company has elected to omit a discussion and analysis of the financial condition and results of operations of
certain 2019 items and year-to-year comparisons between 2020 and 2019. Such discussion and analysis can be found in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange
Commission on February 25, 2021.
Overview
SailPoint Technologies Holdings, Inc. (“we,” “our,” the “Company” or “SailPoint”) is the leading provider of
enterprise identity security solutions. Our identity security solutions provide organizations with critical visibility into who
currently has access to which resources, who should have access to those resources and how that access is being used.
We offer both software as a service (“SaaS”) and software platforms, which provide organizations visibility and the
intelligence required to both seamlessly empower users and securely manage their access to systems, applications and data
across hybrid information technology (“IT”) environments, spanning on-premises, cloud and mobile applications and file
storage platforms. We help customers enable their businesses with more agile and frictionless IT, streamline and accelerate the
delivery of access to their businesses, enhance their security posture and better meet compliance and regulatory requirements.
Our customers include many of the world’s largest and most complex organizations, including commercial enterprises, financial
institutions and governments.
32
Our set of identity security solutions currently consists of:
•
IdentityNow: our cloud-based, multi-tenant identity security platform, which provides customers with a set of
fully integrated services for compliance, provisioning and password management for applications and data
hosted on-premises or in the cloud;
•
IdentityIQ: our on-premises identity security solution, which can be hosted in the public cloud or deployed in
a customer’s data center, that provides large, complex enterprise customers a unified and highly configurable
identity security solution; and
•
SailPoint Identity Services: delivered as multi-tenant SaaS subscription services that can be utilized in
conjunction with IdentityNow and IdentityIQ and currently consisting of:
◦
Access Insights: collects a wealth of identity information and turns that information into actionable
insights and provides business-oriented dashboards and reports to track the effectiveness of
customers’ identity programs;
◦
Access Modeling: uses artificial intelligence (“AI”) and machine learning (“ML”) to suggest roles
based on similar access between users and gives customers insights to confirm the correct access for
each role;
◦
Access Risk Management: our cloud-based access controls solution that enables our customers to
manage their risk by automating access controls for business applications with complex security
requirements;
◦
Cloud Access Management: uses AI and ML to automatically learn, monitor and secure access to
cloud infrastructure;
◦
Recommendation Engine: uses AI, ML, peer group analysis, identity attributes and access activity
to help customers decide whether access should be granted or removed; and
◦
SaaS Management: our cloud-based solution that helps customers discover, manage and secure
their SaaS applications.
Our solutions address the complex needs of global enterprises and mid-market organizations. Our success is
principally dependent on our ability to deliver compelling solutions to attract new customers and retain existing customers.
Rising security threats and evolving regulations and compliance standards for cyber security, data protection, privacy and
internal IT controls create new opportunities for our industry and require us to adapt our solutions to be successful. Maintaining
our historical growth rate is also challenging because our growth strategy depends in part on our ability to drive new customer
growth within existing geographic markets, further penetrate our existing customer base, continue to invest in our platform,
leverage and expand our network of partners, expand market and product investment across existing vertical markets, and
continue to expand our global presence, while competing against much larger companies with more recognizable brands and
financial resources. Although we seek to grow rapidly, we also focus on operating leverage and efficiency while continuing to
invest in our platform to deliver innovative solutions to our customers.
We believe enterprises are increasingly embracing the cloud to house their critical security infrastructure. As a result, a
growing number of enterprises are changing their approach to identity security and now prefer to use a SaaS solution rather
than purchase software outright and install it in their own infrastructure. This industry shift aligns well with our current product
strategy. Our product strategy is to (1) accelerate innovation within our core identity security SaaS offerings, (2) deliver
continued innovation as we execute against our vision for SailPoint identity security, and (3) ensure that as we deliver these
new innovations, they work in concert with our SaaS offerings in addition to our on-premises offerings.
IdentityNow and our SailPoint Identity Services are provided in exchange for a subscription fee and offer customers
access to these solutions and infrastructure support for the duration of their subscription agreement. Our standard subscription
agreement for our SaaS offerings has a duration of three years. For our IdentityIQ solutions, our customers either purchase a
perpetual software license, which includes one year of maintenance and support, or a term license, sold as bundled
arrangements that include the rights to a term license and maintenance and support typically for a three-year term. Accordingly,
we allocate the transaction price to each performance obligation. Our maintenance provides software maintenance as well as
access to our technical support services during the maintenance term. After the initial maintenance period, customers with
perpetual licenses may renew their maintenance and support agreement for an additional fee.
Pricing for each of our solutions is dependent on the number of digital identities of employees, contractors, business
partners, software bots and other human and non-human users that the customer is entitled to govern with the solution. We also
package and price our IdentityNow and IdentityIQ solutions into modules. Each module has unique functionalities, and our
customers are able to purchase one or more modules, depending on their needs. We also offer advanced integration modules for
key applications and systems which can be purchased in addition to our base solution modules. They are also priced based on
33
the total number of identities, as are our SailPoint Identity Services. Thus, our revenue from any customer is generally
determined by the number of identities that the customer is entitled to govern as well as the number of modules purchased by
the customer for our IdentityIQ and IdentityNow solutions and which, if any, of the SailPoint Identity Services that the
customer purchases.
In addition to our solutions, we offer professional services to our customers and partners to configure and optimize the
use of our solutions as well as training services related to the configuration and operation of our platform. Most of our
professional services activity is in support of our partners, who perform a significant majority of all initial and follow-on
implementation work for our customers. Most of our consulting services are priced on a time-and-materials basis, whereas our
training services are provided through multiple pricing models, including on a per-person basis for instructor led courses and a
flat-rate basis for our e-learning courses.
Over the past several years, our revenue mix has changed as demand for our products and services has shifted from
sales of perpetual licenses to sales of SaaS and term licenses, and in 2021, we largely completed our transition to a subscription
model, with our principal focus on selling subscription-based arrangements, including SaaS and term licenses, with revenue
from perpetual licenses representing an increasingly smaller portion of our total revenue. Although we expect to occasionally
see perpetual license transactions with new customers and ongoing expansion deals for current customers, our principal focus is
on selling subscription-based arrangements. For customers that still wish to purchase and operate non-SaaS software, we are
increasingly selling our software through subscription-based term licenses, rather than through perpetual licenses, and over
time, we expect that sales to new customers will be exclusively comprised of SaaS, term licenses and other subscriptions.
Our acceleration toward subscription-based offerings, which occurred more rapidly than anticipated, has resulted in
and is likely to continue to result in short-term revenue headwind. In particular, our transition to a subscription model has
impacted, and will continue to impact, the timing of our recognition of revenue as an increasing percentage of our sales become
recognized ratably, as well as impact our operating margins as subscription revenue becomes a larger percentage of our sales.
However, we believe that continued growth of SaaS, term-based license and maintenance and support revenue will lead to a
more predictable revenue model and increase our visibility to future period total revenues. Nevertheless, our revenue and gross
margins vary depending on the type of solution we sell, and we expect that in a primarily subscription-based model, retention
rates for our subscription customers could be slightly lower than the retention rates for support and maintenance for our
perpetual customers. As a result, a shift in the sales mix of our solutions could affect our performance relative to historical
results. Our shift to a subscription model has fluctuated between periods, and our ability to predict our revenue and margins in
any particular period has been, and may continue to be, limited.
Key Factors Affecting Our Performance
Our historical financial performance has been, and we expect our financial performance in the future to be, driven by
our ability to:
•
Add New Customers Within Existing Markets. There is significant opportunity to expand our footprint in our
existing markets through new, greenfield deployments and displacement of our competitors’ legacy solutions.
We plan to grow our sales organization, expand and leverage our channel partners and enhance our marketing
efforts.
•
Generate Additional Sales to Existing Customers. We believe that our existing customer base provides us with
a significant opportunity to drive incremental sales. In most cases, our customers initially purchase a subset of
the modules or offerings we provide based on their immediate need. We focus on generating more revenue
from the modules that our customers have already purchased from us as our customers grow the number of
identities our solutions manage and govern and as our customers deploy our solutions across other business
units or geographies within their organizations. This is especially true when it comes to our new and
expanded SaaS offerings, including AI and cloud governance. Over time, we also identify up-selling and
cross-selling opportunities and seek to sell additional modules and offerings to our existing customers.
•
Retain Customers. We believe that our ability to retain our subscription-based customer contracts is an
important component of our growth strategy and reflects the long-term value of our customer relationships. In
order to maintain high renewal rates, we invest in the quality and reliability of our solutions and our customer
service and support functions to help drive high levels of customer success.
•
Expand into New Markets. We expect to continue to invest significantly in sales, marketing and customer
service, as well as our indirect channel partner network, to expand into new geographies and vertical markets.
We believe that our market opportunity is large and growing and that the global cyber security market
represents a significant growth opportunity for us. In 2021, we generated only 31% of our revenue outside of
34
the United States. We plan to leverage our existing strong relationships with global system integrators and
channel partners to grow our presence in Europe, Asia Pacific and other international markets.
Impact of COVID-19
In light of the ongoing spread of COVID-19 in the United States and abroad, including the continued emergence of
new variants of the coronavirus, government and public health authorities continue to recommend and impose various
regulations and restrictive measures on large portions of the population, including measures directed at businesses. While
intended to protect human life, these restrictions have had and are expected to continue to have serious adverse impacts on
domestic and foreign economies of uncertain duration. We have made certain adjustments to our operations as we continue to
provide our offerings to new and existing customers in response to these measures. For example, as a result of the COVID-19
pandemic, we shifted all customer events to virtual-only experiences beginning in early 2020. In 2021, we resumed certain in-
person and hybrid events, but we expect that for the foreseeable future some of our customer events will be virtual-only or
hybrid events.
While we believe that the pandemic has not had an immediate material adverse impact on our financial performance,
our business may yet be negatively impacted by the COVID-19 pandemic as the duration of the pandemic and the long-term
scope of its effects ultimately remain unknown. For example, the conditions caused by the COVID-19 pandemic may materially
adversely affect the rate of IT spending by our current and prospective customers, including our customers’ ability or
willingness to purchase our offerings, delay prospective customers’ purchasing decisions, delay the provisioning of our
offerings, or cause customers to fail to make timely payments. We have seen an immaterial number of customer requests, and
may continue to see similar requests, to lengthen payment terms or reduce the value or duration of subscription contracts, but
this has not resulted in a material adverse impact on our renewal rates. In addition, during 2020 and the first part of 2021, we
generally were not able to provide on-site consulting services to our customers due to local and regional restrictions related to
the pandemic, and such restrictions remain in place for some of our customers. However, this has not resulted in any
meaningful adverse impact on our ability to deliver such services because a significant portion of our consulting services have
historically been provided remotely and most on-site projects transitioned to a remote delivery model.
Notwithstanding the potential and actual adverse impacts described above, as the pandemic has caused more of our
customers to shift to a virtual workforce, we believe the value and scalability of our identity platform has become even more
evident. We believe that the pandemic has not had a material adverse impact on our financial performance, and indeed, our
revenue and customer base grew throughout 2020 and 2021. We expect to continue to see healthy demand for our solutions;
nevertheless, we recognize that the uncertainty related to COVID-19 may result in increased volatility in the financial
projections we use as the basis for estimates and assumptions used in our financial statements.
The challenges posed by COVID-19 on our business and our customers’ businesses may evolve rapidly, and the speed,
trajectory and strength of a recovery in general economic conditions remains highly uncertain and could be slowed or reversed
by a number of factors, including the emergence or spread of new variants of the coronavirus and the effectiveness and
acceptance of vaccines and therapeutics for the disease as they continue to be developed and distributed. Consequently, we will
continue to evaluate our financial position and results of operations in light of future developments, particularly those relating
to COVID-19, and we will continue to monitor the global impact of the pandemic on our customers and our business. See the
section titled “Risk Factors” in Part I, Item 1A. in this Annual Report for more information regarding the possible effects of
COVID-19 on our business.
Key Business Metric
In addition to our financial information prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”), we monitor the following key metric to help us measure and evaluate the effectiveness of
our operations:
Year Ended December 31,
2021
2020
2019
Total annual recurring revenue (in thousands)
$
370,442 $
250,951 $
178,953
We use total annual recurring revenue (“Total ARR”) to monitor the growth of our recurring business as we have
shifted to a subscription model. Total ARR represents the annualized value of the active portion of SaaS, term-based license,
maintenance and support contracts and other subscription services at the end of the reporting period. We calculate Total ARR by
dividing the active contract value by the number of days in the active portion of the overall contract term and then multiplying
by 365. Total ARR should be viewed independently of revenue and deferred revenue as Total ARR is an operating metric and is
35
not intended to be combined with or replace these items. Total ARR is not a forecast of future revenue, which can be impacted
by contract start and end dates and renewal rates, and does not include revenue from perpetual licenses, training, professional
services or other sources of revenue that are not deemed to be recurring in nature.
Components of Results of Operations
Revenue
License Revenue. We generate license revenue through the sale of our on-premises software license agreements to new
customers and sales of additional licenses to the existing customers who can purchase additional users for existing licenses or
purchase new licenses. Customers may also purchase term license agreements, under which we recognize the amount allocated
to the licenses upfront. Perpetual license transactions generally include an amount for first-year maintenance and support,
which we recognize as subscription revenue. We typically recognize license revenue upon delivering the applicable license.
Over time, we will continue to expect license revenue to decrease as a percentage of our total revenue as we continue to focus
on increasing our subscription revenue as a key growth initiative.
Subscription Revenue. Our subscription revenue consists of (i) fees for access to, and related support for, our SaaS
offerings, (ii) fees for ongoing maintenance and support of our licensed solutions and (iii) other subscription services, which
includes our cloud managed services. We typically invoice subscription fees in advance, in annual installments, and recognize
subscription revenue ratably over the term of the applicable agreement. Over time, we expect subscription revenue will increase
as a percentage of total revenue as we continue to focus on increasing subscription revenue as a key growth initiative.
Services and Other Revenue. Services and other revenue consists primarily of fees from professional services provided
to our customers and partners to configure and optimize the use of our solutions as well as training services related to the
configuration and operation of our platform. Most of our professional services are priced on a time-and-materials basis and we
generally invoice customers monthly as the work is performed. We generally have standalone value for our professional
services and recognize revenue as services are performed based on an estimated fair value as a separate unit of accounting.
Most of our professional services activity is in support of our partners, who perform the significant majority of all initial and
follow-on configuration and optimization work for our customers. Over time, we expect our professional services revenue as a
percentage of total revenue to decrease as we increasingly rely on partners to help our customers deploy our software.
Cost of Revenue
Cost of License Revenue. Cost of license revenue consists of amortization expense for developed technology acquired
and third-party royalties.
Cost of Subscription Revenue. Cost of subscription revenue consists primarily of employee-based costs (which consists
of employee compensation and allocated overhead), costs of our customer support organization, contractor costs to supplement
our staff levels, amortization expense for developed technology acquired and third-party cloud-based hosting costs.
Cost of Services and Other Revenue. Cost of services and other revenue consists primarily of employee-based costs of
our professional services and training organizations, travel-related costs and contractor costs to supplement our staff levels.
Impairment of Intangible Assets. Impairment of intangible assets consists of impairments charges for developed
technology acquired. This is a component of cost of subscription revenue that is broken out for financial statement purposes.
Gross Profit and Gross Margin
Gross profit is revenue less cost of revenue, and gross margin is gross profit as a percentage of total revenue. Gross
profit has been and will continue to be affected by various factors, including the mix of our license, subscription, and services
and other revenue, the costs associated with third-party cloud-based hosting services for our SaaS offerings, contractor costs to
supplement our staff levels and the extent to which we expand our customer support and professional services and training
organizations. We expect that our overall gross margin will fluctuate from period to period depending on the interplay of these
various factors. Also, we expect our investment in technology to expand the capability of our services, enabling us to improve
our gross margin over time.
36
Operating Expenses
Research and Development Expenses. Research and development expenses consist primarily of employee-based costs,
software and hosting arrangement expenses (which includes cloud-based hosting costs related to the development of our cloud-
based solution), professional services expense and amortization expense for acquired intangible assets. We believe that
continued investment in our offerings is vital to the growth of our business, and we intend to continue to invest in product
development. We expect our research and development expenses to continue to increase on a dollar basis for the foreseeable
future, as our business grows.
General and Administrative Expenses. General and administrative expenses consist primarily of employee-based costs
for corporate personnel. In addition, general and administrative expenses include professional services expense, software and
hosting arrangement expenses and all other corporate expenses not allocated to other departments. We expect our general and
administrative expenses to increase on a dollar basis for the foreseeable future, as our business grows.
Sales and Marketing Expenses. Sales and marketing expenses consist primarily of employee-based costs, costs of
general marketing and promotional activities, professional services expense, software and hosting arrangement expenses,
amortization expense for acquired intangible assets and travel-related expenses. Sales commissions earned by our sales force
and the related payroll taxes, a primary component of “deferred contract acquisition costs”, are considered incremental and
recoverable costs of obtaining a contract with a customer which are deferred and then amortized on a straight-line basis over a
period of benefit that we have determined to be generally five years. We expect our sales and marketing expenses to increase on
a dollar basis for the foreseeable future as we continue to invest in our sales force for expansion to new geographic and vertical
markets, and we expect sales and marketing expenses to continue to be our largest operating expense category.
Allocated Overhead. We allocate shared costs, such as facilities costs (including rent, utilities and depreciation on
assets shared by all departments), information technology costs and recruiting costs, to all departments based on headcount. As
such, allocated shared costs are reflected in each cost of revenue and operating expense category.
Other Income (Expense), Net
Other income (expense), net consists primarily of interest income, interest expense and foreign currency transaction
gains and losses related to the impact of transactions denominated in a foreign currency. Interest income consists of interest
earned on our cash equivalents, which we expect to fluctuate due to cash balance and interest rates.
Interest expense consists primarily of contractual interest expense, amortization of debt discount and issuance costs,
loss on the modification and extinguishment of debt and prepayment penalties on our Credit Agreement and Notes (each as
defined below). We expect our non-cash components of interest expense to decrease on a dollar basis for the foreseeable future
due to the early adoption of Accounting Standards Update (“ASU”) 2020-06. For more information on the early adoption of
ASU 2020-06, refer to Note 1 “Description of Business and Summary of Significant Accounting Policies” in our notes to our
consolidated financial statements included in this Annual Report.
As we have expanded our international operations, our exposure to fluctuations in foreign currencies has increased and
we expect this trend to continue.
Income Tax (Expense) Benefit
Our provision for income taxes consists of U.S. and state income taxes and income taxes in certain foreign
jurisdictions in which we conduct business. Our income tax rate varies from the federal statutory rate due to foreign
withholding taxes; changing tax laws, regulations and interpretations in multiple jurisdictions in which we operate; changes to
the financial accounting rules for income taxes; unanticipated changes in tax rates; differences in accounting and tax treatment
of our stock-based compensation and research and development credits. We expect this fluctuation in income tax rates, as well
as its potential impact on our results of operations, to continue.
Seasonality
We generally experience seasonal fluctuations in demand for our products and services. Our quarterly sales are
impacted by industry buying patterns. As a result, our sales have generally been highest in the fourth quarter of a calendar year
and lowest in the first quarter. Although these seasonal factors are common in the technology industry, historical patterns should
not be considered a reliable indicator of our future sales activity or performance.
37
Results of Operations
The following table sets forth our results of operations for the periods presented:
Year Ended December 31,
2021
2020
2019
(In thousands)
Revenue
Licenses
$
113,004 $
120,874 $
102,800
Subscription
273,197
196,817
143,390
Services and other
52,753
47,563
42,325
Total revenue
438,954
365,254
288,515
Cost of revenue
Licenses
5,212
4,467
4,239
Subscription (1)
58,790
37,644
26,877
Services and other (1)
50,486
38,517
34,359
Impairment of intangible assets
744
5,119
—
Total cost of revenue
115,232
85,747
65,475
Gross profit
323,722
279,507
223,040
Operating expenses
Research and development (1)
98,255
71,191
56,120
General and administrative (1)
48,979
37,783
39,816
Sales and marketing (1)
235,564
169,656
136,537
Total operating expenses
382,798
278,630
232,473
Income (loss) from operations
(59,076)
877
(9,433)
Other income (expense), net
Interest income
775
2,019
2,468
Interest expense
(2,680)
(18,612)
(5,041)
Other income (expense), net
(467)
33
(1,082)
Total other expense, net
(2,372)
(16,560)
(3,655)
Loss before income taxes
(61,448)
(15,683)
(13,088)
Income tax (expense) benefit
(186)
4,920
4,588
Net loss
$
(61,634) $
(10,763) $
(8,500)
(1)
Includes stock-based compensation expense as follows:
Year Ended December 31,
2021
2020
2019
(In thousands)
Cost of revenue - subscription
$
3,688 $
1,758 $
1,142
Cost of revenue - services and other
3,733
1,963
1,379
Research and development
12,827
6,282
3,517
General and administrative
10,563
6,802
5,990
Sales and marketing
20,946
12,252
6,686
Total stock-based compensation expense
$
51,757 $
29,057 $
18,714
38
The following table sets forth the results of operations for each of the periods presented as a percentage of total
revenue:
Year Ended December 31,
2021
2020
2019
Revenue
Licenses
26 %
33 %
35 %
Subscription
62
54
50
Services and other
12
13
15
Total revenue
100
100
100
Cost of revenue
Licenses
1
1
2
Subscription
13
10
9
Services and other
12
11
12
Impairment of intangible assets
—
1
—
Total cost of revenue
26
23
23
Gross profit
74
77
77
Operating expenses
Research and development
22
19
20
General and administrative
11
10
14
Sales and marketing
54
47
47
Total operating expenses
87
76
81
Income (loss) from operations
(13)
1
(4)
Other income (expense), net
Interest income
—
1
1
Interest expense
(1)
(6)
(2)
Other income (expense), net
—
—
—
Total other expense, net
(1)
(5)
(1)
Loss before income taxes
(14)
(4)
(5)
Income tax (expense) benefit
—
1
2
Net loss
(14) %
(3) %
(3) %
Comparison of the Years Ended December 31, 2021 and 2020
Revenue
Year Ended December 31,
2021
2020
variance $
variance %
(In thousands, except percentages)
Revenue
Licenses
$
113,004 $
120,874 $
(7,870)
(7) %
Subscription
SaaS
112,720
66,913
45,807
68 %
Maintenance and support
153,621
126,792
26,829
21 %
Other subscription services
6,856
3,112
3,744
120 %
Total subscription
273,197
196,817
76,380
39 %
Services and other
52,753
47,563
5,190
11 %
Total revenue
$
438,954 $
365,254 $
73,700
20 %
License Revenue. License revenue decreased by $7.9 million, or 7%, for the year ended December 31, 2021 compared
to the year ended December 31, 2020 primarily due to SaaS offerings becoming a larger portion of new sales. During the years
ended December 31, 2021 and 2020, license revenue from new customers was $67.2 million and $76.8 million, and license
revenue from existing customers was $45.8 million and $44.1 million for the respective periods.
39
Subscription Revenue. Subscription revenue increased by $76.4 million, or 39%, for the year ended December 31,
2021 compared to the year ended December 31, 2020 primarily due to an increase in SaaS revenue as we continue to see strong
momentum in our SaaS business and an increase in ongoing maintenance and support revenue from our increased installed
base. During the years ended December 31, 2021 and 2020, SaaS and other subscription services revenue from new customers
was $25.3 million and $13.7 million, and SaaS and other subscription services revenue from existing customers was $94.3
million and $56.4 million for the respective periods. During the years ended December 31, 2021 and 2020, maintenance and
support revenue from new customers was $9.5 million and $8.3 million, and maintenance and support revenue from existing
customers was $144.1 million and $118.5 million for the respective periods.
Services and Other Revenue. Services and other revenue increased by $5.2 million, or 11% for the year ended
December 31, 2021 compared to the year ended December 31, 2020. This increase is primarily a result of an increase in the
number of customers using our consulting and training services.
Geographic Regions. Our customers in the United States contributed the largest portion of our revenue in each year
ended December 31, 2021 and 2020 because we have more market momentum related to our larger and more established sales
force, sales pipeline and brand recognition and awareness in the United States as compared to our other regions. Revenue is
classified by the following major geographic areas: (i) United States, (ii) Europe, the Middle East and Africa (“EMEA”) and
(iii) rest of the world. We continue to invest in increasing the size of our international sales force and strengthening partnerships
with global system integrators and resellers worldwide, and as a result, our international revenues are growing as a percentage
of total revenues. For the year ended December 31, 2021, revenue in the United States, EMEA and the rest of the world
increased year-over-year.
The following table sets forth our consolidated total revenue by geography and the respective percentage of total
revenue for the periods presented:
Year Ended December 31,
2021
2020
$
% of
revenue
$
% of
revenue
(In thousands, except percentages)
United States
$
302,524
69 % $
263,332
72 %
EMEA (1)
80,838
18 %
62,249
17 %
Rest of the World (1)
55,592
13 %
39,673
11 %
Total revenue
$
438,954
100 % $
365,254
100 %
40
(1)
No single country outside of the United States represented more than 10% of our revenue.
Gross Profit and Gross Margin
Year Ended December 31,
2021
2020
variance $
variance %
(In thousands, except percentages)
Gross profit
Licenses
$ 107,792 $ 116,407 $
(8,615)
(7) %
Subscription
Subscription
214,407
159,173
55,234
35 %
Impairment of intangible assets
(744)
(5,119)
4,375
(85) %
Total subscription
213,663
154,054
59,609
39 %
Services and other
2,267
9,046
(6,779)
(75) %
Total gross profit
$ 323,722 $ 279,507 $
44,215
16 %
Gross margin
Licenses
95 %
96 %
Subscription
78 %
78 %
Services and other
4 %
19 %
Total gross margin
74 %
77 %
Licenses. License gross profit decreased by $8.6 million, or 7%, during the year ended December 31, 2021 compared
to the year ended December 31, 2020. The decrease in gross profit was the result of decreased license revenues with only minor
increases in third party royalties. Gross margin remained materially consistent with the prior period.
Subscription. Subscription gross profit increased by $59.6 million, or 39%, during the year ended December 31,
2021 compared to the year ended December 31, 2020. The increase was primarily the result of increased subscription revenues,
as described above, partially offset by an approximately $16.8 million increase in cost in revenue compared to the prior period.
The increase in cost of revenue during the year ended December 31, 2021 was driven by a $10.5 million increase in employee-
based costs due to increases in headcount and related allocated overhead to support the growth of our SaaS offerings and
ongoing maintenance and support for our expanding installed customer base, an $8.7 million increase in cloud-based hosting
costs to further support the scalability of our SaaS offerings and a $2.0 million increase in amortization expense for developed
technology acquired, partially offset by a decrease of $4.4 million in impairment of intangible assets.
Services and Other. Services and other gross profit decreased by $6.8 million, or 75%, during the year ended
December 31, 2021 compared to the year ended December 31, 2020. The decrease in gross profit is primarily attributable to a
$12.0 million increase in cost of services provided compared to the prior period, partially offset by increased revenues due to
customer growth. The increase in cost of services provided during the year ended December 31, 2021 was primarily driven by
an $9.4 million increase in employee-based costs to support an increasing number of customers and a $3.1 million increase in
partner costs due to higher partner utilization in our professional services and training organization.
Operating Expenses
Year Ended December 31,
2021
2020
variance $
variance %
(In thousands, except percentages)
Operating expenses
Research and development
$
98,255 $
71,191 $
27,064
38 %
General and administrative
48,979
37,783
11,196
30 %
Sales and marketing
235,564
169,656
65,908
39 %
Total operating expenses
$
382,798 $
278,630 $
104,168
37 %
41
Research and Development Expenses. Research and development expenses increased by $27.1 million, or 38%, for the
year ended December 31, 2021 compared to the year ended December 31, 2020. This increase was primarily driven by a $25.3
million increase in employee-based costs to optimize and expand our product offerings as well as pursue innovation in identity
security. Substantially all of the remaining increase in research and development expenses was the result of a $2.1 million
increase in software and hosting arrangement expenses, partially offset by a $0.4 million decrease in professional services
expense.
General and Administrative Expenses. General and administrative expenses increased by $11.2 million, or 30%, for
the year ended December 31, 2021 compared to the year ended December 31, 2020. This increase was primarily driven by a
$4.3 million increase in professional service fees associated with our acquisitions of Intello Inc. and ERP Maestro, Inc. and
consulting services, a $3.8 million increase in employee-based costs for stock-based compensation, a $2.3 million increase in
provision for credit losses and a $0.7 million increase in software and hosting expenses.
Sales and Marketing Expenses. Sales and marketing expenses increased by $65.9 million, or 39%, for the year ended
December 31, 2021 compared to the year ended December 31, 2020. This increase was primarily driven by a $60.0 million
increase in employee-based costs, including commissions, to support increased penetration into our existing customer base and
expansion into new industry verticals and geographic markets, as well as a $0.9 million increase in professional services
expense relating primarily to advisory services, a $2.7 million increase in software and hosting arrangement expenses primarily
to support increased headcount and a $1.8 million increase in intangible amortization.
Interest Income and Interest Expense
Interest Income
Interest income decreased by $1.2 million for the year ended December 31, 2021 compared to the year ended
December 31, 2020. This decrease was primarily due to a decrease in interest rates on our money market accounts and a
decrease in our cash balance.
Interest Expense
Interest expense decreased by $15.9 million for the year ended December 31, 2021 compared to the year ended
December 31, 2020. This decrease was primarily due to lower amortization expense related to the Notes as a result of our
adoption of ASU 2020-06, which eliminated the embedded conversion feature of the Notes. See Note 1 “Description of
Business and Summary of Significant Accounting Policies” in our notes to our consolidated financial statements included in
this Annual Report for more information regarding the adoption of ASU 2020-06.
Income Tax (Expense) Benefit
The Company recorded an income tax expense of $0.2 million for the year ended December 31, 2021 compared to an
income tax benefit of $4.9 million for the year ended December 31, 2020, leading to a net expense increase of $5.1 million
year-over-year. This is primarily due to current year losses and an increase in valuation allowance. We recognize deferred tax
assets to the extent that we believe these assets are more likely than not to be realized and continue to maintain a valuation
allowance to reduce our deferred tax assets to the amount realizable. The total valuation allowance is $47.3 million and is
primarily related to loss and credit carryforwards.
The effective tax rate for the years ended December 31, 2021 and 2020 were (0.3)% and 31.4%, respectively. The
main drivers for the differences in the rates from the prior period to the current period are related to an increase in pre-tax book
loss, the impact of stock compensation and the increase in valuation allowance. Our tax expense to date relates primarily to
state as well as foreign income taxes. For further information, refer to Note 15 “Income Taxes” in our notes to our consolidated
financial statements included in this Annual Report.
We operate in several tax jurisdictions and are subject to taxes in each country or jurisdiction in which we conduct
business. Earnings from our non-U.S. activities are subject to local country income tax and may be subject to U.S. income tax if
such earnings are distributed to the U.S.
We do not consider the earnings of our foreign subsidiaries, with the exception of India, to be permanently reinvested
in foreign jurisdictions. We continue to invest and grow our research and development activities in India and have no plans to
repatriate undistributed earnings held in India back to the U.S. parent company.
42
Liquidity, Capital Resources and Cash Requirements
As of December 31, 2021, we had $435.4 million of cash and cash equivalents (of which $7.5 million is held in our
foreign subsidiaries) and $75.0 million of availability under the Credit Agreement. As of December 31, 2021, we had $182.6
million in net working capital, which we define as current assets less current liabilities, excluding deferred revenue. As of
December 31, 2020, we had $510.3 million of cash and cash equivalents (of which $4.8 million is held in our foreign
subsidiaries) and $75.0 million of availability under the Credit Agreement. As of December 31, 2020, we had $278.7 million in
net working capital. The decrease in cash and cash equivalents and net working capital is due primarily to cash paid for the
acquisitions of Intello Inc. and ERP Maestro Inc. See Note 5 "Business Combinations" in our notes to our consolidated financial
statements included in this Annual Report for more information regarding these business acquisitions.
On March 11, 2019, SailPoint Technologies, Inc., as borrower, and certain of our other wholly owned subsidiaries
entered into a credit agreement (as amended, the “Credit Agreement”). In September 2019, the Company amended the Credit
Agreement in connection with the issuance and sale of the Notes. Such amendment included a decrease in the commitments for
revolving credit loans from an initial $150.0 million to $75.0 million, with a $15.0 million letter of credit sublimit, which
amount can be increased or decreased under specified circumstances and is subject to certain financial covenants. Borrowings
pursuant to the Credit Agreement may be used for working capital and other general corporate purposes, including for
acquisitions permitted under the Credit Agreement. The Credit Agreement is scheduled to mature on March 11, 2024. We had
no outstanding revolving credit loan balance and we were in compliance with all applicable covenants as of December 31,
2021. See Note 9 “Credit Agreement” in our notes to our consolidated financial statements included in this Annual Report for
more information regarding terms and conditions of the Credit Agreement.
In September 2019, we issued $400.0 million aggregate principal amount of 0.125% convertible senior notes due 2024
(the “Notes”) in a private offering (the “Offering”) to qualified institutional buyers. The net proceeds from the Offering were
approximately $391.2 million, after deducting discounts and commissions and other fees and expenses payable by the Company
in connection with the Offering. In conjunction with the issuance of the Notes, and exercise in full of the initial purchasers’
option, the Company used approximately $37.1 million of the net proceeds to pay the cost of the privately negotiated capped
call transactions (the “Capped Call Transactions”) to reduce our exposure to additional cash payments above principal balances
in the event of a cash conversion of the Notes. The Notes will mature on September 15, 2024, unless earlier redeemed,
repurchased or converted. The Notes bear interest at a fixed rate of 0.125% per year payable semiannually in arrears on March
15 and September 15 of each year. As of December 31, 2021, we had an aggregate of $1.3 million in contractual interest
payments, of which $0.5 million are due within the next 12 months.
As of December 31, 2021, the Notes are convertible at the option of the holders. We have the ability to settle
conversions of the Notes in cash, shares of our common stock, or a combination of cash and shares of our common stock at our
own election. The impact of the Notes on our liquidity will depend on whether we elect to settle any conversion in shares of our
common stock or a combination of cash and shares. It is our current intent to settle conversions of the Notes through
combination settlement, which involves repayment of the principal portion in cash and any excess of the conversion value over
the principal amount in shares of our common stock. During the year ended December 31, 2021, the Company settled
conversion requests in the aggregate principal amount of $10.2 million and terminated corresponding Capped Call Transactions.
In connection with these transactions, we paid $10.2 million in cash to the converting holders for the principal amount, issued
to the converting holders 181,629 shares of the Company's common stock with a fair value of approximately $10.1 million, and
received 37,301 shares of the Company's common stock bearing a fair value of $1.9 million, pursuant to the terminated Capped
Call Transactions. As of the date of this filing, no other holders of the Notes have submitted requests for conversion. See Note
10 “Convertible Senior Notes and Capped Call Transactions” in our notes to our consolidated financial statements included in
this Annual Report for more information regarding terms and conditions of the Notes and Capped Call Transactions.
As of December 31, 2021, we had in aggregate $18.2 million in contractual commitments associated with agreements
that are enforceable and legally binding, of which $12.3 million are due within the next 12 months. Such amounts do not
include obligations under contracts that we can cancel without significant penalty and purchase orders as the purchase orders
represent authorizations to purchase rather than binding agreements. We also anticipate that we may spend a minimum of $48
million over the next three years for hosting services under a preferred pricing hosting arrangement that is in anticipation of the
growth in our SaaS business. Forecasts are subject to change, and accordingly, so is our anticipated use of the preferred pricing.
As of December 31, 2021, we had $2.5 million of tax liabilities related to our uncertain tax positions. We cannot
reasonably estimate the period which this obligation may be incurred, if at all.
The Company has operating lease obligations for our offices, primarily our corporate headquarters in Austin, Texas,
that consists of future non-cancelable minimum rental payments in the aggregate amount of $38.7 million. As of December 31,
43
2021, we had an outstanding letter of credit in the amount of $6.0 million, which is classified as restricted cash, primarily
related to our corporate headquarters. For more information on our operating leases, refer to Note 7 “Leases” in our notes to our
consolidated financial statements included in this Annual Report.
We believe that existing cash and cash equivalents, any positive cash flows from operations and available borrowings
under our Credit Agreement will be sufficient to support working capital, capital expenditure and other cash requirements for at
least the next 12 months and, based on our current expectations, for the foreseeable future thereafter. Our future capital
requirements, both near-term and long-term, will depend on many factors, including our growth rate, the timing and extent of
spending to support research and development efforts, the continued expansion of sales and marketing activities, the
introduction of new solutions and product enhancements, the continuing market acceptance of our offerings and services, the
costs of any future acquisitions in complementary businesses and technologies and the impact of the COVID-19 pandemic to
our and our customers', vendors' and partners' businesses. To the extent existing cash and cash equivalents are not sufficient to
fund future activities, we may borrow under our Credit Agreement or seek to raise additional funds through equity, equity-
linked or debt financings. Any additional equity financing may be dilutive to our existing stockholders. We may enter into
agreements or letters of intent with respect to potential investments in, or acquisitions of, complementary businesses, services
or technologies, which could also require us to seek additional equity financing, incur indebtedness or use cash resources. In the
event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at
all. If we are unable to raise additional capital when desired, or if we cannot expand our operations or otherwise capitalize on
our business opportunities because we lack sufficient capital, our business, operating results and financial condition would be
adversely affected.
Since inception, we have financed operations primarily through license fees, SaaS subscription fees, maintenance and
support fees, consulting and training fees, borrowings under our prior credit agreement and, to a lesser degree, the sale of our
equity securities. Our principal uses of cash are funding operations, capital expenditures, and making strategic business
acquisitions. Over the past several years, revenue has increased significantly from year to year and, as a result, cash flows from
customer collections have increased. However, operating expenses have also increased significantly as we have invested in
growing our business. Our operating cash requirements may increase in the future as we continue to invest in key initiatives to
drive the Company’s long-term growth.
Summary of Cash Flows
The following table summarizes our cash flows for the periods presented:
Year Ended December 31,
2021
2020
2019
(In thousands)
Net cash provided by (used in) operating activities
$
(957) $
57,949 $
50,091
Net cash used in investing activities
(75,021)
(3,973)
(38,906)
Net cash provided by financing activities
1,498
12,548
361,699
Net increase (decrease) in cash, cash equivalents and
restricted cash
$
(74,480) $
66,524 $
372,884
44
Cash Flows from Operating Activities
During 2021, cash used in operating activities was $1.0 million, which consisted of a net loss of $61.6 million,
adjusted by non-cash charges of $96.0 million and a net decrease of $35.3 million in our net operating assets and liabilities. The
non-cash charges are primarily comprised of stock-based compensation of $51.8 million, depreciation and amortization expense
of $22.4 million, amortization of debt discount and issuance costs of $2.0 million, provision for credit losses of $3.0 million and
amortization of contract acquisition costs of $20.2 million, partially offset by a net decrease in operating leases of $0.7 million
and a reduction in deferred tax liabilities of $3.5 million. The decrease in our net operating assets and liabilities was primarily a
result of an increase in deferred contract acquisition costs of $60.8 million which has accelerated as subscription sales continue
to grow, an increase in prepayments and other assets of $27.4 million primarily for increased contract assets, an increase in
accounts receivable of $34.6 million due to the timing of receipts of payments from customers, partially offset by an increase in
deferred revenue of $57.7 million due to the timing of billings and cash received in advance of revenue recognition primarily
for subscription and support services, an increase in accrued expenses of $28.3 million due primarily to accrual of additional
commissions and bonuses and an increase in accounts payable of $1.3 million due to timing of cash disbursements.
During 2020, cash provided by operating activities was $57.9 million, which consisted of a net loss of $10.8 million,
adjusted by non-cash charges of $76.7 million and a net decrease of $8.0 million in our net operating assets and liabilities. The
non-cash charges are primarily comprised of depreciation and amortization expense of $18.3 million, amortization of debt
discount and issuance costs of $17.8 million, amortization of contract acquisition costs of $13.7 million, loss on disposal of
fixed assets of $0.2 million, provision for credit losses of $0.6 million, impairment of intangible assets of $5.1 million and
stock-based compensation of $29.1 million, partially offset by a net decrease in operating leases of $0.4 million and a reduction
in deferred tax liabilities of $7.6 million. The decrease in our net operating assets and liabilities was primarily a result of an
increase in deferred contract acquisition costs $32.6 million, an increase in prepayments and other assets of $18.1 million, an
increase in accounts receivable of $6.8 million due to the timing of receipts of payments from customers and a decrease in
income taxes payable of $1.0 million, partially offset by an increase in deferred revenue of $32.7 million due to the timing of
billings and cash received in advance of revenue recognition primarily for subscription and support services, an increase in
accrued expenses of $16.3 million due primarily to accrual of additional commissions and bonuses and an increase in accounts
payable of $1.5 million due to timing of cash disbursements.
Cash Flows used in Investing Activities
During 2021, cash used in investing activities was $75.0 million, consisting primarily of $71.0 million in cash paid for
business acquisitions, net, and $4.1 million in purchases of property and equipment.
During 2020, cash used in investing activities was $4.0 million, consisting primarily of $3.9 million in purchases of
property and equipment.
Cash Flows from Financing Activities
During 2021, cash provided by financing activities was $1.5 million, consisting of $10.1 million of proceeds from
issuance of equity related to share issues pursuant to our Employee Stock Purchase Plan and $7.6 million of the proceeds from
exercise of stock options, partially offset by $10.2 million in payments for partial conversion of the Notes and $6.1 million in
vesting of restricted stock units, primarily related to tax payments funded in the form of net issuances.
During 2020, cash provided by financing activities was $12.5 million, consisting of $7.4 million of proceeds from
issuance of equity related to share issues pursuant to our Employee Stock Purchase Plan and $6.0 million of the proceeds from
exercise of stock options, partially offset by $0.8 million in vesting of restricted stock units, primarily related to tax payments
funded in the form of net issuances for certain executive officers.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with GAAP. The preparation of these financial
statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities,
revenue, costs and expenses and related disclosures. Our estimates are based on our historical experience and on various other
factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
judgments and estimates under different assumptions or conditions and any such differences may be material. To the extent that
there are differences between our estimates and actual results, our future financial statement presentation, financial condition,
results of operations and cash flows will be affected.
45
We believe that the accounting policies associated with fair value allocation of multiple performance obligation in
revenue recognition, the expected period of benefit of deferred contract acquisition costs, income taxes, and the valuation,
impairment and estimated useful lives of long-lived assets and goodwill arising from business combinations are the most
significant areas involving management's judgments and estimates. Therefore, these are considered to be our critical accounting
policies and estimates. For further information on all of our significant accounting policies, see Note 1 “Description of Business
and Summary of Significant Accounting Policies” in our notes to our consolidated financial statements included in this Annual
Report.
Revenue Recognition
Revenue consists of fees for perpetual and term licenses for our software products, SaaS subscriptions, post-contract
customer support (referred to as maintenance and support), other subscription services, professional services which includes
training and other revenue. We derive license revenue through the sale of our on-premises software license agreements. We
typically recognize license revenue upon delivering the applicable license. We derive subscription revenue through the sale of
our SaaS subscription, maintenance and support and other subscription services offerings. We typically recognize subscription
revenue ratably over the contract term. We derive services and other revenue primarily through the sale of professional services.
We typically recognize services and other revenue over time as the services are performed.
We apply judgment regarding contracts with multiple product and service obligations to determine whether each
product or service is capable of being a distinct performance obligation in the contract. If products and services are not distinct,
they are combined until a single distinct obligation is created. Determining whether products and services are considered
distinct performance obligations that should be accounted for separately versus together may require significant judgment. We
have contracts with customers that may have multiple performance obligations, including some or all of the following: software
licenses, SaaS subscriptions, maintenance and support, other subscription services and professional services.
Judgment is required to determine the standalone selling price (“SSP”) for each distinct performance obligation. We
use a single amount to estimate SSP for items that are not sold separately. We use a range to determine SSP based on the selling
price of the products and services when sold separately. The SSP range is used to allocate the total transaction price to each
performance obligation in a contract and to apply a discount that will be allocated based on the relative SSP of the various
products and services.
When we do not have a directly observable SSP for a particular product or service, we estimate SSP by our overall
pricing objectives, taking into consideration market factors, pricing practices including historical discounting, historical
standalone sales of similar products, customer demographics, geographic locations, and the number and types of users within
our contracts. The determination of SSP using the adjusted market assessment approach is made by the Company’s
management.
Although our SSP has not changed materially from 2020 to 2021, we may modify our go-to-market practices in the
future, which may result in changes to SSP for one or more of our performance obligations. Any such changes to SSP could
impact the pattern and timing of revenue recognition for identical arrangements executed in future periods but will not change
the total revenue recognized for any given arrangement.
The Company generally has standalone value for our professional services and recognize revenue as services are
performed based on an estimated fair value as a separate performance obligation.
We allocate the transaction price to each performance obligation identified in the contract on a relative SSP basis and
recognize revenue when or as we satisfy a performance obligation by transferring control of a product or service to a customer.
Deferred Contract Acquisition Costs
Sales commissions paid to our sales force and the related employer payroll taxes, collectively “deferred contract
acquisition costs,” are considered incremental and recoverable costs of obtaining a contract with a customer. The Company
capitalizes and amortizes deferred contract acquisition costs over an expected period of benefit. The Company has determined
the expected period of benefit to be five years. The expected period of benefit was determined by taking into consideration our
customer contracts, customer turnover rates, the life of our technology and other factors. In addition, the Company pays sales
commissions for renewals of term licenses and subscription offerings at a lower rate, which is therefore not commensurate with
commissions paid on an initial sale and are amortized over each renewal’s period of benefit. The Company periodically reviews
the amortization periods of its deferred contract acquisition costs and will update such amortization period when there is a
46
significant change in its expected timing of transfer to the customer of the products or services. Such changes in the
amortization period could materially affect amortization amounts of deferred contract acquisition costs.
Income Taxes
We account for uncertain tax positions based on those positions taken or expected to be taken in a tax return. We
determine if the amount of available support indicates that it is more likely than not that the tax position will be sustained on
audit, including resolution of any related appeals or litigation processes. We then measure the tax benefit as the largest amount
that is more than 50% likely to be realized upon settlement. We adjust reserves for our uncertain tax positions due to changing
facts and circumstances. To the extent that the final outcome of these matters is different than the amounts recorded, such
differences will impact our tax provision in our consolidated statements of operations in the period in which such determination
is made.
Deferred tax assets are regularly assessed to determine the likelihood they will be realized from future taxable income.
Valuation allowances are established if it is more likely than not that some or all of the deferred tax assets will not be realized.
In evaluating our ability to realize deferred tax assets, we consider all available positive and negative evidence including
historical and projected pre-tax book earnings, scheduled reversals of deferred tax liabilities, and the impact of any feasible and
prudent tax planning strategies.
Goodwill, Intangibles, and Other Long-Lived Assets
We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible
assets acquired based on their estimated fair values on the acquisition date. The excess of the fair value of purchase
consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Recognized goodwill
pertains in part to the value of the expected synergies to be derived from combining the operations of the businesses we acquire
including the value of the acquired workforce. Such valuations require management to make significant estimates and
assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets may include,
but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market
participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions
believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from
estimates. It is possible that the judgments and estimates described above could change in future periods.
We use estimates, assumptions, and judgments when assessing the recoverability of goodwill and acquired intangible
assets. We test for impairment on an annual basis, or more frequently if a significant event or circumstance indicates
impairment. We also evaluate the estimated remaining useful lives of acquired intangible assets for changes in circumstances
that warrant a revision to the remaining periods of amortization. For purposes of assessing potential impairment of goodwill, we
estimate the fair value of the reporting unit, based on our market capitalization, and compare this amount to the carrying value
of the reporting unit. If we determine that the carrying value of the reporting unit exceeds its fair value, an impairment charge
would be required. We have determined that we operate as one reporting unit and may first assess qualitative factors to
determine whether the existence of events or circumstances indicate that an impairment test on goodwill is required. Goodwill
is tested on an annual basis as of October 31, or sooner if an indicator of impairment occurs. The Company internally monitors
business and market conditions for evidence of triggering events for goodwill and acquired intangible assets. Such events or
changes in circumstances include, but are not limited to, a significant decrease in the fair value of the underlying asset or asset
group, a significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in its
physical condition, an accumulation of costs and resources in excess of the original expectation, or a significant change in the
operations of the acquired assets or use of an asset or asset group. Changes in these estimates and assumptions could materially
affect the determination of fair value and goodwill impairment for our reporting unit.
During the year ended December 31, 2021, the Company recorded an impairment charge of $0.7 million related to
certain developed technology assets due to a decrease in the fair value of the underlying assets. During the year ended
December 31, 2020, the Company recorded an impairment charge of $5.1 million related to certain developed technology assets
due to our strategic decision to discontinue further investment and enhancements in the standalone existing technology.
Recent Accounting Pronouncements
For a description of our recently adopted accounting pronouncements and recently issued accounting standards not yet
adopted, see Note 1 “Description of Business and Summary of Significant Accounting Policies” in our notes to our consolidated
financial statements included in this Annual Report.
47
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may
impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily
a result of fluctuations in interest rates and foreign currency exchange rates. We do not hold or issue financial instruments for
trading purposes.
Interest Rate Risk
We had cash and cash equivalents and restricted cash of $442.2 million as of December 31, 2021, which are held in
cash deposits and money market funds. Due to the short-term nature of these instruments, we believe that we do not have
material risk of exposure to changes in the fair value of our cash and cash equivalents as a result of changes in interest rates. As
of December 31, 2021, we do not believe a hypothetical 10% change in interest rates would have a material impact on the value
of our cash equivalents.
We did not have any investments in marketable securities as of December 31, 2021.
In September 2019, we issued and sold the Notes in the Offering to qualified institutional buyers. The fair value of the
Notes is subject to interest rate risk, market risk and other factors due to the conversion feature. The fair value of the Notes will
generally increase as our common stock price increases and will generally decrease as our common stock price decreases. The
interest and market value changes affect the fair value of the Notes but do not impact our financial position, cash flows or
results of operations due to the fixed nature of the debt obligation. Additionally, we carry the Notes at face value less
unamortized debt issuance costs on our balance sheets, and we present the fair value for required disclosure purposes only.
Foreign Currency Exchange Risk
Our reporting currency is the U.S. dollar. Due to our international operations, we have foreign currency risk related to
operating expenses denominated in currencies other than the U.S. dollar, primarily the British pound, Euro, Israeli shekel,
Indian rupee, Australian dollar, Singapore dollar and Canadian dollar. As of December 31, 2021, our cash and cash equivalents
included $7.5 million held in currencies other than the U.S. dollar. Decreases in the value of the U.S. dollar relative to other
currencies may negatively affect our operating results as expressed in U.S. dollars. These amounts are included in other income
(expense), net on our consolidated statements of operations.
Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates
because, although substantially all of our revenue is generated in U.S. dollars, our expenses are generally denominated in the
currencies of the jurisdictions in which we conduct our operations, which are primarily in the United States, Europe and Asia.
Our results of operations and cash flows could therefore be adversely affected in the future due to changes in foreign exchange
rates. We do not believe that a hypothetical 10% change in the value of the U.S. dollar relative to other currencies would have a
material effect on our results of operations or cash flows, and to date, we have not engaged in any hedging strategies with
respect to foreign currency transactions. As our international operations grow, we will continue to reassess our approach to
manage our risk relating to fluctuations in currency rates, and we may choose to engage in the hedging of foreign currency
transactions in the future.
48
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 248)
49
Consolidated Balance Sheets as of December 31, 2021 and 2020
52
Consolidated Statements of Operations for the Years Ended December 31, 2021, 2020 and 2019
53
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2021, 2020 and 2019
54
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
55
Notes to Consolidated Financial Statements
56
49
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
SailPoint Technologies Holdings, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of SailPoint Technologies Holdings, Inc. (a Delaware
corporation) and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of
operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the
related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles
generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in
the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”), and our report dated February 28, 2022 expressed an unqualified opinion.
Change in Accounting Principle
As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for its
Convertible Senior Notes outstanding at January 1, 2021 due to the adoption of Accounting Standard Update 2020-06,
Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.
Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on
the accounts or disclosures to which it relates.
Revenue Recognition – Identification of Performance Obligations and Allocation of the Transaction Price to Multiple
Performance Obligations
As described further in Notes 1 and 2 to the consolidated financial statements, the Company’s revenues consist of fees for
software as a service (“SaaS”), perpetual and term licenses for software products, post-contract customer support (referred to as
maintenance), and professional services which includes training and other revenue. The Company has contracts with customers
that may have multiple performance obligations. When multiple promised products and services are included within one
contract, management applies judgment to determine whether promised products and services are capable of being distinct and
50
distinct in the context of the contract. Additionally, the Company establishes the standalone selling price for each of its
performance obligations to allocate transaction price. Management applies judgment and considers many factors including past
transactions, market conditions and internally approved pricing guidelines related to the identification of performance
obligations and their allocation of transaction price. We identified management’s identification of distinct performance
obligations and their allocation of transaction price as a critical audit matter principally due to the volume of contracts that
contain multiple products or services and the complexity and estimation involved.
The principal considerations for our determination that the identification of performance obligations and allocation of the
transaction price to multiple performance obligations is a critical audit matter include the volume of contracts that contain
multiple products or services and the complexity and estimation involved in the identification of distinct performance
obligations and determination of appropriate allocation of transaction price based on their established standalone selling prices
for all distinct performance obligations. Auditing the related revenue requires both extensive audit effort and a high degree of
auditor judgement.
Our audit procedures related to the identification of performance obligations and allocation of total transaction price included
the following, among others:
•
We obtained an understanding and evaluated the appropriateness of management’s process and methodology as it
relates to the identification of distinct performance obligations in its contracts with customers. This included
evaluating management’s determination of whether the promises are distinct.
•
For each distinct performance obligation, we obtained management’s analysis to establish standalone selling price and
performed the following procedures:
◦
Evaluated the reasonableness of available data and factors used in management’s determination, including
considering other sources of information that would be relevant to the analysis.
◦
Tested the completeness and accuracy of the data used in management’s determinations.
•
We selected a sample of contracts and performed the following procedures:
◦
Obtained and evaluated management’s identification of the performance obligations within the contract with
the customer.
◦
Recalculated the allocation of transaction price based on the established standalone selling price for each
distinct performance obligation.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2010.
St. Louis, Missouri
February 28, 2022
51
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
SailPoint Technologies Holdings, Inc.
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of SailPoint Technologies Holdings, Inc. (a Delaware corporation)
and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in the 2013 Internal Control—
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our
opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31,
2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2021, and our
report dated February 28, 2022 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over
financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
St. Louis, Missouri
February 28, 2022
52
SAILPOINT TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of
December 31, 2021 December 31, 2020
(In thousands, except per share data)
Assets
Current assets
Cash and cash equivalents
$
435,445 $
510,289
Restricted cash
6,719
6,355
Accounts receivable, net of allowance
147,156
112,255
Deferred contract acquisition costs
25,966
15,592
Prepayments and other current assets
49,446
25,904
Income taxes receivable
506
123
Total current assets
665,238
670,518
Deferred tax asset - non-current
4,047
—
Property and equipment, net
17,151
19,443
Right-of-use assets, net
23,806
27,048
Deferred contract acquisition costs, non-current
68,725
38,510
Other non-current assets, net of allowance
17,974
15,016
Goodwill
289,430
241,103
Intangible assets, net
73,469
63,962
Total assets
$
1,159,840 $
1,075,600
Liabilities and stockholders’ equity
Current liabilities
Accounts payable
$
6,097 $
4,753
Accrued expenses and other liabilities
89,972
59,460
Income taxes payable
1,413
978
Convertible senior notes, net
385,172
326,672
Deferred revenue
218,937
165,995
Total current liabilities
701,591
557,858
Deferred tax liability - non-current
—
1,329
Long-term operating lease liabilities
28,817
33,080
Deferred revenue - non-current
25,193
18,723
Total liabilities
755,601
610,990
Commitments and contingencies (Note 8)
Stockholders’ equity
Common stock, $0.0001 par value, authorized 300,000 shares, issued and
outstanding 93,764 shares as of December 31, 2021 and 91,386 shares as of
December 31, 2020
9
9
Preferred stock, $0.0001 par value, authorized 10,000 shares, no shares issued and
outstanding as of December 31, 2021 and December 31, 2020
—
—
Additional paid in capital
481,910
484,012
Accumulated deficit
(77,680)
(19,411)
Total stockholders' equity
404,239
464,610
Total liabilities and stockholders’ equity
$
1,159,840 $
1,075,600
See accompanying notes to consolidated financial statements.
53
SAILPOINT TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
2021
2020
2019
(In thousands, except per share data)
Revenue
Licenses
$
113,004 $
120,874 $
102,800
Subscription
273,197
196,817
143,390
Services and other
52,753
47,563
42,325
Total revenue
438,954
365,254
288,515
Cost of revenue
Licenses
5,212
4,467
4,239
Subscription
58,790
37,644
26,877
Services and other
50,486
38,517
34,359
Impairment of intangible assets
744
5,119
—
Total cost of revenue
115,232
85,747
65,475
Gross profit
323,722
279,507
223,040
Operating expenses
Research and development
98,255
71,191
56,120
General and administrative
48,979
37,783
39,816
Sales and marketing
235,564
169,656
136,537
Total operating expenses
382,798
278,630
232,473
Income (loss) from operations
(59,076)
877
(9,433)
Other income (expense), net
Interest income
775
2,019
2,468
Interest expense
(2,680)
(18,612)
(5,041)
Other income (expense), net
(467)
33
(1,082)
Total other expense, net
(2,372)
(16,560)
(3,655)
Loss before income taxes
(61,448)
(15,683)
(13,088)
Income tax (expense) benefit
(186)
4,920
4,588
Net loss
$
(61,634) $
(10,763) $
(8,500)
Net loss available to common stockholders
$
(61,634) $
(10,763) $
(8,500)
Net loss per share
Basic
$
(0.67)
(0.12) $
(0.10)
Diluted
$
(0.67) $
(0.12) $
(0.10)
Weighted average shares outstanding
Basic
92,664
90,512
88,907
Diluted
92,664
90,512
88,907
See accompanying notes to consolidated financial statements.
54
SAILPOINT TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Common Stock
Additional
paid in
capital
Retained
earnings
(accumulated
deficit)
Stockholders'
equity
Number
of shares
Par
value
(In thousands)
Balance at December 31, 2018
87,512 $
9 $
377,473 $
211 $
377,693
Exercise of stock options
730
—
3,053
—
3,053
Restricted stock units vested, net of tax settlement
322
—
(351)
—
(351)
Stock-based compensation expense
—
—
18,714
—
18,714
Incentive units vested
724
—
37
—
37
Common stock issued under employee stock purchase plan
388
—
5,649
—
5,649
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
—
—
(11,852)
—
(11,852)
Net loss
—
—
—
(8,500)
(8,500)
Balance at December 31, 2019
89,676 $
9 $
442,407 $
(8,289) $
434,127
Cumulative effect adjustment from the adoption of ASC 326, net of
tax
—
—
—
(359)
(359)
Exercise of stock options
763
—
5,967
—
5,967
Restricted stock units vested, net of tax settlement
566
—
(797)
—
(797)
Stock-based compensation expense
—
—
29,057
—
29,057
Common stock issued under employee stock purchase plan
381
—
7,378
—
7,378
Net loss
—
—
—
(10,763)
(10,763)
Balance at December 31, 2020
91,386 $
9 $
484,012 $
(19,411) $
464,610
Cumulative effect adjustment from the adoption of ASU 2020-06
—
—
(65,517)
3,365
(62,152)
Exercise of stock options
609
—
7,615
—
7,615
Restricted stock units vested, net of tax settlement
1,347
—
(6,056)
—
(6,056)
Stock-based compensation expense
—
—
51,757
—
51,757
Common stock issued under employee stock purchase plan
277
—
10,099
—
10,099
Partial conversion of convertible senior notes
182
—
—
—
—
Settlement of capped calls related to partial conversion of convertible
senior notes
(37)
—
—
—
—
Net loss
—
—
—
(61,634)
(61,634)
Balance at December 31, 2021
93,764 $
9 $
481,910 $
(77,680) $
404,239
See accompanying notes to consolidated financial statements.
55
SAILPOINT TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
2021
2020
2019
(In thousands)
Operating activities
Net loss
$
(61,634) $
(10,763) $
(8,500)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense
22,376
18,290
14,992
Amortization of debt discount and issuance costs
2,038
17,787
4,691
Amortization of contract acquisition costs
20,210
13,684
10,130
(Gain) loss on disposal of fixed assets
35
158
(4)
Provision for credit losses
3,015
586
178
Impairment of intangible assets
744
5,119
—
Stock-based compensation expense
51,757
29,057
18,714
Operating leases, net
(707)
(415)
477
Deferred taxes
(3,463)
(7,553)
(7,268)
Net changes in operating assets and liabilities, net of assets acquired and liabilities
assumed in business acquisitions
Accounts receivable
(34,579)
(6,772)
(5,072)
Deferred contract acquisition costs
(60,799)
(32,634)
(17,330)
Prepayments and other current assets
(23,378)
(9,119)
(3,392)
Other non-current assets
(3,978)
(8,875)
(4,798)
Accounts payable
1,344
1,529
(1,630)
Accrued expenses and other liabilities
28,335
16,262
11,786
Income taxes
51
(1,077)
(149)
Deferred revenue
57,676
32,685
37,266
Net cash provided by (used in) operating activities
(957)
57,949
50,091
Investing activities
Purchase of property and equipment
(4,060)
(3,945)
(6,173)
Proceeds from sale of property and equipment
39
29
39
Purchase of intangibles
(40)
(57)
(379)
Business acquisitions, net of cash acquired
(70,960)
—
(32,393)
Net cash used in investing activities
(75,021)
(3,973)
(38,906)
Financing activities
Payment of debt issuance costs
—
—
(9,572)
Proceeds from issuance of convertible senior notes
—
—
400,000
Purchases of capped calls
—
—
(37,080)
Payments for partial conversion of convertible senior notes
(10,160)
—
—
Taxes associated with net issuances of shares upon vesting of restricted stock units
(6,056)
(797)
(351)
Proceeds from employee stock purchase plan contributions
10,099
7,378
5,649
Exercise of stock options
7,615
5,967
3,053
Net cash provided by financing activities
1,498
12,548
361,699
Net increase (decrease) in cash, cash equivalents and restricted cash
(74,480)
66,524
372,884
Cash, cash equivalents and restricted cash, beginning of period
516,644
450,120
77,236
Cash, cash equivalents and restricted cash, end of period
$
442,164 $
516,644 $
450,120
Supplemental disclosure of cash flow information:
Cash paid for interest
$
811 $
641 $
180
Cash paid for income taxes, net of refunds
$
3,660 $
2,587 $
2,658
Conversion of prepaid incentive units to common stock
$
— $
— $
37
See accompanying notes to consolidated financial statements.
56
SAILPOINT TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business and Summary of Significant Accounting Policies
SailPoint Technologies Holdings, Inc., (“we,” “our” or the “Company”) was incorporated in the state of Delaware on
August 8, 2014, in preparation for the purchase of SailPoint Technologies, Inc. The purchase occurred on September 8, 2014
and our certificate of incorporation was amended and restated as of such date. SailPoint Technologies, Inc. was formed July 14,
2004 as a Delaware corporation. The Company designs, develops, and markets identity security software that helps
organizations govern user access to critical systems and data. The Company currently markets its products and services
worldwide.
Basis of Presentation
The accompanying consolidated financial statements, which include the accounts of the Company and its wholly
owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States of
America (“GAAP”). The consolidated financial statements include the accounts of SailPoint Technologies Holdings, Inc. and
its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Certain items have been reclassified in the prior year financial statements to conform to the presentation and
classifications used in the current year. These reclassifications had no net effect on the Company’s consolidated operating
results, financial position or cash flows.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
Management periodically evaluates such estimates and assumptions for continued reasonableness. In particular, we make
estimates with respect to the fair value allocation of multiple performance obligations in revenue recognition, the expected
period of benefit of deferred contract acquisition costs, the collectability of accounts receivable, stock-based compensation
expense, fair value of the Notes (as defined below), recognition and measurement of income tax positions, realizability of
deferred tax assets and the valuation, and estimated useful lives and impairment of intangible assets and goodwill arising from
business combinations. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic
evaluation. Actual results could differ from those estimates.
Judgment is required to determine the standalone selling price (“SSP”) for each distinct performance obligation. We
use a single amount to estimate SSP for items that are not sold separately. We use a range to determine SSP based on the selling
price of the products and services when sold separately. The SSP range is used to allocate the total transaction price to each
performance obligation in a contract and to apply a discount that will be allocated based on the relative SSP of the various
products and services. When we do not have a directly observable SSP for a particular product or service, we estimate SSP by
our overall pricing objectives, taking into consideration market factors, pricing practices including historical discounting,
historical standalone sales of similar products, customer demographics, geographic locations, and the number and types of users
within our contracts. The determination of SSP using the adjusted market assessment approach is made by the Company’s
management.We allocate the transaction price to each performance obligation identified in the contract on a relative SSP basis
and recognize revenue when or as we satisfy a performance obligation by transferring control of a product or service to a
customer.
Due to the COVID-19 pandemic, there is ongoing uncertainty and significant disruption in the global economy and
financial markets. We are not aware of any specific event or circumstances that would require an update to our estimates,
judgments or assumptions or a revision to the carrying value of our assets or liabilities as of the date of issuance of these
financial statements. These estimates, judgments and assumptions may change in the future, as new events occur or additional
information is obtained.
Cash, Cash Equivalents and Restricted Cash
We consider all highly liquid investments with an original maturity of three months or less from date of purchase to be
cash equivalents. The Company is required to maintain cash collateral for an unconditional standby letter of credit in the
amount of $6.0 million related to the Company’s corporate headquarters lease as well as a small amount of restricted cash to
guarantee rent payments in a foreign subsidiary.
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Fair Value of Financial Instruments
Assets and liabilities recorded at fair value in the financial statements are categorized based upon the level of judgment
associated with the inputs used to measure their fair value. Hierarchical levels which are directly related to the amount of
subjectivity associated with the inputs to the valuation of these assets or liabilities are as follows:
•
Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active
markets.
•
Level 2: Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities,
quoted prices in markets that are not active or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or liabilities.
•
Level 3: Unobservable inputs reflecting our own assumptions incorporated in valuation techniques used to
determine fair value. These assumptions are required to be consistent with market participant assumptions
that are reasonably available.
Concentration of Credit and Other Risks
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash
equivalents and accounts receivable. The Company maintains its cash in bank deposit accounts that, at times, may exceed
federally insured limits. There was no concentration of credit risk for customers as of December 31, 2021 and 2020 as no
individual entity represented more than 10% of the balance in accounts receivable. Management considers concentration of
credit risk to be minimal with respect to accounts receivable due to the positive historical collection experience of the Company
and despite the geographic concentrations related to the Company’s customers. No customer represented more than 10% of
revenue during the years ended December 31, 2021, 2020 and 2019. The Company does not experience concentration of credit
risk in foreign countries as no foreign country represents more than 10% of the Company’s consolidated revenues or net assets.
The Company’s revenue by geographic region based on the customer’s location is presented in Note 17 “Geographic
Information”
Accounts Receivable and Allowance for Expected Credit Losses
The Company continuously assesses the collectability of outstanding customer invoices and in doing so, the Company
assesses the need to maintain an allowance for expected credit losses resulting from the non-collection of customer receivables.
The allowance for expected credit losses is a valuation account that is deducted from the financial asset’s amortized cost basis
to present the net amount expected to be collected on contracts with customers. Accounts receivable and contract assets are
written off when management believes non-collectability is confirmed. Recoveries of financial assets previously written off
shall be recorded directly to earnings when received.
Management estimates the allowance balance using relevant available information, from internal and external sources,
relating to past events, current conditions and reasonable and supportable forecasts over a financial asset’s contractual term. The
Company’s historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to
historical loss information are made from qualitative and quantitative factors if economic conditions at the reporting date reflect
stronger or weaker economic performance than the historical data implies based on management’s expectations of economic
conditions on certain indicators of the Company, industry and economy. We review factors such as past collection experience,
age of the accounts receivable balance, significant trends in current balances, internal operations and macroeconomic
conditions. The Company evaluates these economic conditions and makes adjustments to historical loss information for certain
economic risk factors.
In development of the expected credit loss model, we evaluated our financial assets with similar risk characteristics on
a collective (pool) basis for their respective estimated and expected credit loss allowance. A financial asset will be measured
individually only if it does not share similar risk characteristics with other financial assets. We believe that historical credit loss
patterns by aging bucket and invoice type for accounts receivable are the most significant risk characteristics. Additionally, we
analyze renewals and new business separately due to varying historical loss patterns. The Company expected credit loss is
determined for the contractual life of the financial asset, for which accounts receivable and contract assets can be viewed as one
financial asset. However, a low percentage of our contract assets do not convert to accounts receivable. Therefore, we consider
all contract assets as a single pool.
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For periods prior to the adoption of Accounting Standards Codification (“ASC”) 326, Financial Instruments - Credit
Losses ("ASC 326"), the Company determined that an allowance for doubtful accounts was not required for the periods
presented.
Property and Equipment, Net
Property and equipment, net, is stated at cost less accumulated depreciation. Depreciation is recorded using the
straight-line method over the estimated useful lives of the respective assets, generally three years to five years. Leasehold
improvements are depreciated over the shorter of the estimated useful life of the asset or the related lease term. Repairs and
maintenance costs are expensed as incurred.
Property and equipment is reviewed for impairment whenever events or circumstances indicate their carrying value
may not be recoverable. When such events or circumstances arise, an estimate of future undiscounted cash flows produced by
the asset, or the appropriate grouping of assets, is compared to the asset’s carrying value to determine if an impairment exists. If
the asset is determined to be impaired, the impairment loss is measured based on the excess of the carrying value over the assets
fair value. Assets to be disposed of are reported at the lower of carrying value or net realizable value.
Goodwill
Goodwill represents the excess of acquisition cost over the fair value of net tangible and identified net assets acquired.
Goodwill is not amortized, but rather tested for impairment annually, or more often if and when events or circumstances
indicate that the carrying value may not be recoverable. For purposes of assessing potential impairment, we estimate the fair
value of the reporting unit, based on our market capitalization, and compare this amount to the carrying value of the reporting
unit. If we determine that the carrying value of the reporting unit exceeds its fair value, an impairment charge would be
required. We have determined that we operate as one reporting unit and may first assess qualitative factors to determine whether
the existence of events or circumstances indicate impairment test on goodwill is required. Goodwill is tested on an annual basis
as of October 31, or sooner if an indicator of impairment occurs. The Company internally monitors business and market
conditions for evidence of triggering events.
Intangible Assets, Net
Intangible assets are amortized on a straight-line basis over their estimated useful lives. The Company's intangible
assets primarily consist of customer lists, developed technology, and trade names and marks. The Company periodically
reviews the estimated remaining useful life of our intangible assets and whether events or changes in circumstances warrant a
revision to the remaining period of amortization. Periodically, the Company evaluates the recoverability of its long-lived assets,
including intangible assets, for possible impairment whenever events or circumstances indicate that the carrying amount of such
assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset,
or related asset group, to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows
used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced
to fair value.
Business Combinations
We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible
assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values
of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant
estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets
may include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from
a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon
assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may
differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments
to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the
measurement period, any subsequent adjustments are recorded to earnings.
Software Development Costs
Software development costs for products intended to be sold, leased or otherwise marketed are expensed as incurred
until technological feasibility has been established, at which time such costs are capitalized until the product is available for
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general release to customers. Technological feasibility is established when a product design and working model have been
completed and the completeness of the working model and its consistency with the product design have been confirmed by
testing. To date, the establishment of technological feasibility of the Company’s products and general release of such software
have substantially coincided. As a result, we have not capitalized any software development costs through December 31, 2021
and all such costs have been recorded as research and development expenses as incurred in the consolidated statements of
operations.
Capitalized Software and Cloud-computing Arrangements
The Company evaluates whether the cloud-computing arrangement (“CCA”) includes a license to internal-use
software. If the CCA includes a software license, the Company accounts for the software license as an intangible asset.
Acquired software licenses are recognized and measured at cost, which includes the present value of the license obligation if
the license is to be paid for over time. If the CCA does not include a software license, the Company accounts for the
arrangement as a service contract (or hosting arrangement) and hosting costs are generally expensed as incurred.
The Company evaluates upfront costs including implementation, set-up or other costs (collectively, implementation
costs) for hosting arrangements under the internal-use software framework. Costs related to preliminary project activities and
post implementation activities are expensed as incurred, whereas costs incurred in the development stage are generally
capitalized. Capitalized implementation costs of $0.4 million are recorded in prepayments and other current assets and $0.2
million are recorded in other non-current assets and amortized over the expected term of the arrangement, which includes
consideration of the non-cancellable contractual term and reasonably certain renewal options. During the year ended
December 31, 2021, the Company’s capitalized implementation costs related to hosting arrangements were not material.
Comprehensive Income (Loss)
The Company has not entered into transactions that require presentation as other comprehensive income (loss). Total
comprehensive income (loss) is equal to net income (loss) for all periods presented.
Revenue Recognition
Revenue consists of fees for perpetual and term licenses for the Company’s software products, post-contract customer
support (referred to as maintenance and support), software as a service (“SaaS”) subscriptions, other subscription services and
professional services including training and other revenue. The following describes the nature of the Company’s primary types
of revenues and the revenue recognition policies as they pertain to the types of transactions the Company enters into with its
customers.
License Revenue
License revenue includes perpetual and term license fees which provide customers with the same functionality and
differ mainly in the duration over which the customer benefits from the use of software. Both revenues from perpetual and term
license performance obligations are generally recognized upfront at the point in time when the software license has been
delivered. All perpetual license transactions generally include maintenance and support at no additional charge for the first year.
We allocate a portion of the total contract value based on stand-alone selling price and recognize subscription revenue over the
term.
Subscription Revenue
Our subscription revenue consists of (i) fees for access to, and related support for, our SaaS offerings, (ii) fees for
ongoing maintenance and support of our licensed solutions and (iii) other subscription services, which includes our cloud
managed services. We typically invoice subscription fees in advance in annual installments and recognize subscription revenue
ratably over the term of the applicable agreement. Maintenance and support contracts generally have a term of one year and
SaaS contracts usually have a term of one to three years, which is initially deferred and recognized ratably over the life of the
contract. Maintenance and support agreements consist of fees for providing software updates on a when and if available basis
and for providing technical support for software products for a specified term. We believe that our when and if available
software updates and technical support each have the same pattern of transfer to the customer and are substantially the same.
Therefore, we consider these to be a single distinct performance obligation. Revenue allocated to maintenance and support
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agreements are recognized ratably over the contract term beginning on the delivery date of each offering. Expenses related to
our subscriptions are recognized as incurred. Unearned subscription revenue is included in deferred revenue. The Company’s
subscription arrangements are generally non-cancelable and do not contain refund-type provisions. In instances that
subscription arrangements are deemed cancellable, which is rare, the Company will adjust the transaction price and period for
revenue recognition accordingly to be reflective of the contract term in accordance with ASC 606, Revenue from Contracts with
Customers (“ASC 606”).
Services and Other Revenue
Services and other revenue consist primarily of fees from professional services provided to our customers and partners
to configure and optimize the use of our solutions as well as training services related to the configuration and operation of our
platform. The Company’s professional services contracts are either on a time-and-materials (input) or consumption-based
(output) on a fixed fee or prepaid basis.
For services that are contracted for at a fixed price, progress is generally measured based on hours incurred as a
percentage of the total estimated hours required for complete satisfaction of the related performance obligations. For services
that are contracted on a time-and-materials or prepaid basis, progress is generally based on actual hours expended. These input
methods (e.g. hours incurred or expended) are considered a faithful depiction of our efforts to satisfy services contracts as they
represent the performance obligation consumed by the customer and performed by the entity and therefore reflect the transfer of
services to a customer under such contracts.
Services revenues are generally recognized over time as the services are performed. Revenues for fixed price services
and prepaids are generally recognized over time applying input methods to estimate progress to completion. Revenues for
consumption-based services are generally recognized as the services are performed. Training revenues are recognized as the
services are performed over time.
Deferred Contract Acquisition Costs
Sales commissions paid to our sales force and the related employer payroll taxes, collectively “deferred contract
acquisition costs,” are considered incremental and recoverable costs of obtaining a contract with a customer. The Company
capitalizes and amortizes incremental costs of obtaining a contract, such as certain sales commission costs and related payroll
taxes, over the expected period of benefit provided. The Company typically pays sales commissions for both initial and follow-
on sales of perpetual licenses, inclusive of initial maintenance and support, term licenses and SaaS subscriptions. Initial
commissions are allocated to each performance obligation within the contract. The portion allocated to the perpetual license
element is expensed at the time the license is delivered. Commissions allocated to the remaining elements are capitalized and
amortized over an expected period of benefit. The Company has determined the expected period of benefit to be five years. In
addition, the Company pays sales commissions for renewals of term licenses and subscription offerings at a lower rate as they
are not commensurate with the initial contract term. These renewal commissions are amortized over each renewal’s benefit
term. The Company does not pay sales commissions on renewals of maintenance and support agreements related to perpetual
licenses.
The portion of deferred contract acquisition costs that we anticipate will be recognized within twelve months is
recorded as current deferred contract acquisition costs and the remaining portion is recorded as non-current deferred contract
acquisition costs in the consolidated balance sheets. We determined the period of benefit by taking into consideration our
customer contracts, customer turnover rates, the life of our technology and other factors. The Company applied the practical
expedient to expense costs as incurred if the expected amortization period is one year or less. Amortization of deferred contract
acquisition costs is included in sales and marketing expenses in the accompanying consolidated statements of operations.
Contract Balances
Deferred revenue
We typically invoice our customers for subscription fees in advance on either an annual, two- or three-year basis, with
payment due at the start of the subscription term. For subscription fees, which includes SaaS, maintenance and support and
other subscription services, the timing of payments is typically upfront. Therefore, a contract liability or deferred revenue is
created because payment is made in advance of performance and these performance obligations are satisfied over time. Timing
may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to our
contracts with customers. Our standard payment terms are generally net 30 days but may vary. Liabilities are recorded for
amounts that are collected in advance of the satisfaction of performance obligations. Invoice amounts for non-cancelable
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services starting in future periods are included in contract assets and deferred revenue, which are netted together resulting in
either deferred revenue or a contract asset balance. The portion of deferred revenue that we anticipate will be recognized within
twelve months is recorded as current deferred revenue and the remaining portion is recorded as non-current deferred revenue in
the consolidated balance sheets.
Contract assets
Contract assets relate to the Company’s rights to consideration for performance obligations satisfied but not billed at
the reporting date on contracts. Contract assets are transferred to accounts receivable when the rights become unconditional.
Contract assets are included in prepayments and other current assets and other non-current assets in the consolidated balance
sheets, net of an allowance for expected credit losses.
Cost of Revenue
Cost of License Revenue. Cost of license revenue consists of amortization expense for developed technology acquired
and third-party royalties.
Cost of Subscription Revenue. Cost of subscription revenue consists primarily of employee-based costs (which consists
of salaries, benefits, bonuses and stock-based compensation and allocated overhead), costs of our customer support
organization, contractor costs to supplement our staff levels, amortization expense and impairments charges for developed
technology acquired and third-party cloud-based hosting costs.
Cost of Services and Other Revenue. Cost of services and other revenue consists primarily of employee-based costs of
our professional services and training organizations, travel-related costs and contractor costs to supplement our staff levels.
Impairment of Intangible Assets. Impairment of intangible assets consists of impairments charges for developed
technology acquired. This is a component of cost of subscription revenue that was broken out for financial statement purposes.
Research and Development Expenses
Research and development expenses consist primarily of employee-based costs, software and hosting arrangement
expenses (which includes cloud-based hosting costs related to the development of our cloud-based solution), professional
services expense and amortization expense for acquired intangible assets.
Advertising Expenses
Advertising costs are expensed as incurred and are included in sales and marketing expense. Advertising expenses
were approximately $11.2 million, $10.7 million and $11.3 million for the years ended December 31, 2021, 2020 and 2019,
respectively.
Stock-Based Compensation
The Company measures stock-based compensation expense for equity instruments granted to employees and board
members based upon the estimated fair value of the award at the date of grant adjusted for actual forfeitures. The Company
estimates the fair value of stock options granted using the Black-Scholes option-pricing model, which requires us to estimate
the expected term, fair value of common stock, expected volatility, risk-free interest rate, and dividend yield.
The risk-free interest rate is based on the U.S. treasury yield curve for the term consistent with the life of the stock
options as of the date of grant. The Company has elected to apply the “shortcut approach” in developing the estimate of
expected term for “plain vanilla” stock options by using the mid-point between the vesting date and contractual termination
date. The Company has not paid and does not anticipate paying cash dividends on its common stock in the foreseeable future;
therefore, the expected dividend yield is assumed to be zero.
During 2019, the Company began to determine volatility by introducing the Company’s own historical volatility
measurements once two years of historical data became available in the public market. The Company used a blend of the
Company’s volatility and industry peers to arrive at a volatility consistent with the life of the options. During 2021 and 2020,
the Company continued to increase the weighting factor of the Company’s own volatility as additional time periods became
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available. Beginning from the fourth quarter of fiscal year 2021, the Company began to use its own sufficient historical trading
prices to calculate the expected volatility and no longer places any weighting on industry peers.
Stock-based compensation expense resulting from this valuation is recognized in the consolidated statements of
operations on a straight-line basis over the period during which an employee provides the requisite service in exchange for the
award. The Company analyzes the facts and circumstances of each equity instrument to determine if modification accounting is
required. When a modification is triggered, the revised fair value is calculated, and additional stock-based compensation is
recognized over the remaining service period of the modified instrument.
Restricted stock units (“RSUs”) are generally subject to forfeiture if employment terminates prior to the vesting date.
We expense the cost of the RSUs, which is determined to be the fair market value of the shares of common stock underlying the
RSUs on the date of grant, ratably over the period during which the vesting restrictions lapse.
In November 2017, the Company’s board of directors adopted the Employee Stock Purchase Plan (the “ESPP”). The
ESPP became effective November of 2017, after the date our registration statement was declared effective by the SEC. The first
offering period opened July 1, 2018 and permitted eligible employees to purchase shares by authorizing payroll deductions
from 1% to 15% of employee’s eligible compensation during the offering period, which is generally six-months, with an annual
cap of $25,000 in fair market value, determined at the grant date. Unless an employee has previously withdrawn from the
offering, his or her accumulated payroll deductions will be used to purchase shares after the closing of the offering period at a
price equal to 85% of the closing price of the shares at the opening or closing of the offering period, whichever is lower.
ESPP purchase rights have an expected volatility consistent with our volatility estimates that are used to value our
stock options. The expected term represents the period of time the ESPP purchase rights are expected to be outstanding and
approximates the offering period. Stock-based compensation expense associated with ESPP purchase rights is recognized on a
straight-line basis over the offering period.
Foreign Currency Translation
The functional currency of our non-U.S. subsidiaries is the U.S. dollar; therefore, all gains and losses on currency
transactions are expensed as incurred.
Income Taxes
The Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and
liabilities are recognized for expected future tax consequences of temporary differences between the carrying amounts and the
tax bases of assets and liabilities. Valuation allowances are provided if it is more likely than not that some or all of the deferred
tax assets will not be realized.
The Company accounts for uncertainty of income taxes based on a “more-likely-than-not” threshold for the
recognition and de-recognition of tax positions, which includes the accounting for interest and penalties relating to tax
positions.
Convertible Senior Notes
The Company accounts for the 0.125% Convertible Senior Notes due 2024 (the “Notes”; see Note 10) in accordance
with FASB ASC Subtopic 470-20, Debt with Conversion and Other Options. Pursuant to ASC Subtopic 470-20, as amended by
Accounting Standards Update (“ASU”) 2020-06, issuers of certain convertible debt instruments, such as the Notes, that have a
net settlement feature and may be settled wholly or partially in cash upon conversion are required to be accounted for wholly as
debt. See Recently Adopted Accounting Pronouncements below for a discussion on the adoption of ASU 2020-06. Prior to the
adoption of ASU 2020-06, the Company separately accounted for the liability and equity components of the instrument. The
carrying amount of the liability component of the instrument was computed by estimating the fair value of a similar liability
without the conversion option. The amount of the equity component was then calculated by deducting the fair value of the
liability component from the principal amount of the instrument. The difference between the principal amount and the liability
component represents a debt discount that is amortized to interest expense over the respective terms of the Notes using an
effective interest rate method.
Leases
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The Company accounts for a contract as a lease when it has the right to control the asset for a period of time while
obtaining substantially all of the assets’ economic benefits. The Company’s leases are primarily for office space. At the
inception or modification of an arrangement, we determine whether the arrangement is or contains a lease based on the unique
facts and circumstances present and if so, the classification of the lease.
Right-of-use (“ROU”) assets and lease liabilities are recognized at the present value of future lease payments over the
lease term. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the
obligation to make lease payments arising from the lease. The implicit rates within our operating leases are generally not
determinable and therefore we use the incremental borrowing rate (“IBR”) at the lease commencement date to determine the
present value of lease payments. The determination of our IBR requires judgment. We determine our IBR for each lease using
our estimated borrowing rate, adjusted for various factors including level of collateralization and term to align with the terms of
the lease. ROU assets include any upfront lease payments made and exclude lease incentives. The Company leases its facilities
under non-cancelable operating lease agreements. We have lease agreements with lease and non-lease components which we
account for as a single lease component. The Company’s non-lease components are primarily related to property taxes,
insurance and maintenance costs, which are typically variable in nature, and are expensed in the period incurred. Certain of
these facility leases contain predetermined fixed escalations of the minimum rentals, and the Company recognizes expense for
these leases on a straight-line basis over the full term of the lease arrangement. Certain of our leases include options to extend
or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset and lease
liability when it is reasonably certain we will exercise that option. An option to terminate is considered unless it is reasonably
certain we will not exercise the option. We elected the practical expedient to not recognize operating lease right-of-use assets
and operating lease liabilities that arise from short-term leases with an initial term of 12 months or less and recognize the
associated lease payments in the consolidated statements of operations on a straight-line basis over the lease term. The
depreciable life of related leasehold improvements is based on the shorter of the estimated life of the asset or the lease term.
Net Income (Loss) Per Share
Basic net income (loss) per share attributable to common stockholders is calculated by dividing the net income (loss)
attributable to common stockholders for the period, defined as net income (loss), by the weighted-average number of shares of
common stock outstanding during the period, without consideration of potentially dilutive securities. Diluted earnings per share
includes the dilutive effect of common stock equivalents and is calculated using the weighted-average number of common stock
and the common stock equivalents outstanding during the reporting period. In periods when the Company recognizes a net loss,
the Company excludes the impact of outstanding stock awards and shares related to the Notes from the diluted loss per share
calculation as their inclusion would have an anti-dilutive effect.
Recently Adopted Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06, Accounting for
Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial
instruments with characteristics of liability and equity, including convertible instruments and contracts in an entity’s own
equity. Among other changes, ASU 2020-06 removes from GAAP the liability and equity separation model for convertible
instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an
embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized as interest
expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1)
a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and
Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Among other potential impacts, this change
will reduce reported interest expense, increase reported net income, and result in a reclassification of certain conversion feature
balance sheet amounts from stockholders’ equity to liabilities as it relates to the Notes. Additionally, ASU 2020-06 requires the
application of the as if-converted method to calculate the impact of convertible instruments on diluted earnings per share. ASU
2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years
beginning after December 15, 2020, and can be adopted on either the fully retrospective or modified retrospective basis.
The Company early adopted ASU 2020-06 effective January 1, 2021 using the modified retrospective approach, which
requires a cumulative adjustment to be recorded to accumulated deficit. Adoption of ASU 2020-06 resulted in a material effect
on the consolidated balance sheet as the Company no longer separately presents in equity an embedded conversion feature. The
impact to the consolidated balance sheet was an increase of the Notes by $66.8 million, a decrease of our deferred tax liability
by $4.6 million, a decrease of our additional paid in capital by $65.5 million and a decrease of our accumulated deficit by $3.4
million. Interest expense recognized was reduced by approximately $17.1 million as a result of accounting for the convertible
debt instrument as a single liability measured at its amortized cost. This adoption did not have a material impact on the
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Company's consolidated statement of cash flows. The Company will prospectively utilize the as if-converted method to
calculate the impact of convertible instruments on diluted earnings per share.
Recently Issued Accounting Standards Not Yet Adopted
In October 2021, the FASB issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from
Contracts with Customers, which requires application of ASC 606, Revenue from Contracts with Customers, to recognize and
measure contract assets and liabilities from contracts with customers acquired in a business combination. ASU 2021-08 creates
an exception to the general recognition and measurement principle in ASC 805, Business Combinations, and will result in
recognition of contract assets and contract liabilities consistent with those recorded by the acquiree immediately before the
acquisition date. The guidance is effective for us beginning January 1, 2023 and interim periods therein, with early adoption
permitted.
2. Revenue Recognition
Disaggregation of revenue
The following table presents the Company’s revenue by timing of revenue recognition during the reporting periods to
understand the risks of timing of transfer of control and cash flows:
Licenses
SaaS (1)
Maintenanc
e and
Support (1)
Other
Subscription
Services(1)
Total
Subscription
Services
and Other
(In thousands)
Year Ended December 31, 2021
Revenue recognized at a point in
i
$ 113,004 $
— $
— $
— $
— $
—
Revenue recognized over time
— 112,720
153,621
6,856
273,197
52,753
Total revenue
$ 113,004 $ 112,720 $
153,621 $
6,856 $
273,197 $
52,753
Year Ended December 31, 2020
Revenue recognized at a point in
i
$ 120,874 $
— $
— $
— $
— $
—
Revenue recognized over time
—
66,913
126,792
3,112
196,817
47,563
Total revenue
$ 120,874 $ 66,913 $
126,792 $
3,112 $
196,817 $
47,563
Year Ended December 31, 2019
Revenue recognized at a point in
i
$ 102,800 $
— $
— $
— $
— $
—
Revenue recognized over time
—
42,432
100,435
523
143,390
42,325
Total revenue
$ 102,800 $ 42,432 $
100,435 $
523 $
143,390 $
42,325
(1) Subscription revenue is further disaggregated into SaaS, Maintenance and Support and Other Subscription Services
revenue in the table above.
Contract Balances
A summary of the activity impacting our contract balances during the reporting periods is presented below:
Contract Acquisition Costs
Year Ended December 31,
2021
2020
(In thousands)
Beginning Balance
$
54,102 $
35,152
Additional deferred contract acquisition costs
60,799
32,634
Amortization of deferred contract acquisition costs
(20,210)
(13,684)
Ending Balance
$
94,691 $
54,102
65
There were no material impairments of deferred contract acquisition costs for the years ended December 31, 2021,
2020 and 2019.
Deferred Revenue
Year Ended December 31,
2021
2020
(In thousands)
Beginning Balance
$
184,718 $
152,033
Increase, net
59,412
32,685
Ending Balance
$
244,130 $
184,718
Deferred revenue, which is netted with unbilled amounts at the contract level, is a contract liability, consists primarily
of payments received in advance of revenue recognition under the Company’s contracts with customers and is recognized as the
revenue recognition criteria are met. Revenue recognized during the 2021, 2020 and 2019 reporting periods that was
previously deferred was $203.4 million, $147.5 million and $113.0 million, respectively. The difference between the opening
and closing balances of the Company’s contract assets and deferred revenue primarily results from the timing difference
between the Company’s performance and the customer billings.
Contract assets primarily relate to unbilled amounts, which are netted with deferred revenue at the contract level, and
typically result from sales contracts when revenue recognized exceeds the amount billed to the customer, and the right to
payment is subject to more than the passage of time. Contract assets are transferred to accounts receivable when the rights
become unconditional and the customer is billed. Contract assets are included in prepayments and other current assets and other
non-current assets in the consolidated balance sheets. During the years ended December 31, 2021 and 2020, amounts
reclassified from contract assets to accounts receivable were $20.2 million and $6.2 million, respectively.
Remaining performance obligations
Our contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date.
These remaining performance obligations represent contract revenue that has not yet been recognized and is included in
deferred revenues, the balance of which includes both invoices that have been issued to customers but have not been recognized
as revenues and amounts that will be invoiced and recognized as revenue in future periods. As of December 31, 2021, amounts
allocated to these additional performance obligations are $559.9 million, of which we expect to recognize $299.7 million as
revenue over the next 12 months with the remaining balance recognized thereafter over the period from 2023 to 2028. The
additional performance obligations include $80.8 million of current unbilled receivables and $234.8 million of long-term
unbilled receivables.
3. Allowance for Expected Credit Losses
The following tables present the changes in the allowance for expected credit losses for financial assets measured at
amortized cost:
Accounts Receivable
Year Ended December 31,
2021
2020
(In thousands)
Beginning Balance
$
376 $
—
Adoption of ASC 326
—
407
Provision for credit losses
1,095
757
Write-offs
(907)
(788)
Ending Balance
$
564 $
376
66
Contract Assets
Year Ended December 31,
2021
2020
(In thousands)
Beginning Balance
$
50 $
—
Adoption of ASC 326
—
65
Provision for (reduction in) credit losses
2,336
(15)
Write-offs
—
—
Ending Balance
$
2,386 $
50
As of December 31, 2021, SailPoint evaluated economic conditions and made adjustments to historical loss
information for certain economic risk factors, such as COVID-19. Recoveries of financial assets previously written off are
recorded directly to earnings when received, which were $0.4 million and $0.2 million for the years ended December 31, 2021
and 2020, respectively. Total bad debt expense recognized prior to our adoption of ASC 326 for the year ended December 31,
2019 was $0.2 million.
4. Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present information about the Company’s financial assets that are measured at fair value on a
recurring basis:
As of December 31, 2021
Level 1
Level 2
Level 3
Total
(In thousands)
Assets:
Cash equivalents:
Money market funds
$
24,996
—
— $
24,996
Total cash equivalents
$
24,996
—
— $
24,996
As of December 31, 2020
Level 1
Level 2
Level 3
Total
(In thousands)
Assets:
Cash equivalents:
Money market funds
$
511,229
—
— $
511,229
Total cash equivalents
$
511,229
—
— $
511,229
The Company’s carrying amounts of financial instruments, including cash, accounts receivable, accounts payable, and
accrued expenses are considered Level 1 and approximate their fair values due to their short maturities as of December 31,
2021 and 2020 and are excluded from the fair value tables above.
See Note 10 “Convertible Senior Notes and Capped Call Transactions” for the carrying amount and estimated fair
value of our Notes as of December 31, 2021.
5. Business Combinations
2021 Acquisitions
Intello
On February 22, 2021, the Company acquired Intello Inc. (“Intello”), a Delaware corporation, pursuant to an
Agreement and Plan of Merger whereby Intello became a wholly owned subsidiary of the Company. Intello is an early-stage
SaaS management company that helps organizations discover, manage, and secure SaaS applications. The aggregate
consideration paid in connection with this acquisition was $42.9 million, net of cash acquired.
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The following table summarizes the final purchase price allocation as of the date of acquisition:
As of
February 22, 2021
(In thousands)
Cash and cash equivalents
$
1,143
Accounts receivable
146
Prepayments and other current assets
43
Property and equipment, net
17
Goodwill
32,425
Intangible assets
12,300
Accrued expenses and other liabilities
(97)
Deferred tax liability - non-current
(1,409)
Deferred revenue
(536)
Total fair value of assets acquired and liabilities assumed
$
44,032
The following table presents the estimated fair values and useful lives of the identifiable intangible assets acquired:
Amount
Estimated
Useful Life
(In thousands)
(In years)
Developed technology
$
9,500
5
Customer lists
$
2,800
3
The fair value of developed technology was estimated using the relief from royalty method (Level 3) utilizing
assumptions for annual obsolescence, royalty rates, tax rate and discount rate. The fair value of customer lists was estimated
using the replacement cost method (Level 3), which utilized assumptions for the cost to recreate the relationships, such as the
timing and resources required, distributor's profit mark-up and opportunity cost.
ERP Maestro
On March 15, 2021, the Company acquired ERP Maestro, Inc. (“ERP Maestro”), a Florida corporation, pursuant to an
Agreement and Plan of Merger whereby ERP Maestro became a wholly owned subsidiary of the Company. ERP Maestro is an
early-stage SaaS governance, risk and compliance solution that provides separation-of-duty controls monitoring for an
organization’s most critical applications. The aggregate consideration paid in connection with this acquisition was $28.1
million, net of cash acquired.
The following table summarizes the final purchase price allocation as of the date of acquisition:
As of
March 15, 2021
(In thousands)
Cash and cash equivalents
$
924
Accounts receivable
850
Prepayments and other current assets
59
Property and equipment, net
152
Right-of-use assets
223
Goodwill
15,902
Intangible assets
13,900
Accrued expenses and other liabilities
(503)
Deferred tax liability - non-current
(1,314)
Deferred revenue
(1,200)
Total fair value of assets acquired and liabilities assumed
$
28,993
68
The following table presents the estimated fair values and useful lives of the identifiable intangible assets acquired:
Amount
Estimated
Useful Life
(In thousands)
(In years)
Developed technology
$
10,000
5
Customer lists
$
3,900
3
The fair value of developed technology was estimated using the replacement cost method (Level 3) utilizing
assumptions for the cost to replace, such as the workforce, timing and resources required, annual obsolescence, as well as a
theoretical developer’s profit margin and entrepreneurial incentive and opportunity cost. The fair value of customer lists was
estimated using the replacement cost method (Level 3), which utilized assumptions for the cost to recreate the customer
relationships, such as the timing and resources required, distributor's profit mark-up and opportunity cost and customer age.
2019 Acquisitions
Orkus
On October 15, 2019, the Company acquired 100% of the equity interest in Orkus, Inc. (“Orkus”), a Delaware
corporation engaged in the development and license of software products to assist customers in monitoring and controlling
access and authorization across hybrid cloud assets. Total consideration related to the acquisition was $16.5 million in cash, of
which $2.0 million was to be paid upon the lapse of an indemnification period of 12 months and 24 months of the acquisition
date. As of December 31, 2021, all consideration has been paid. As of December 31, 2020, $1.0 million of the holdback amount
is reflected within accrued expenses and other liabilities on the consolidated balance sheets.
The following table summarizes the final purchase price allocation as of the date of acquisition:
As of
October 15, 2019
(In thousands)
Cash and cash equivalents
$
—
Prepayments and other current assets
34
Right-of-use assets
90
Goodwill
7,637
Intangible assets
9,760
Accounts payable
(21)
Accrued expenses and other liabilities
(133)
Deferred tax liability - non-current
(861)
Total fair value of assets acquired and liabilities assumed
$
16,506
The following table presents the estimated fair values and useful lives of the identifiable intangible assets acquired:
Amount
Estimated
Useful Life
(In thousands)
(In years)
Developed technology
$
9,760
5
The fair value of developed technology was estimated using the replacement cost method (Level 3), which utilized
assumptions for the cost to replace, such as the workforce, timing and resources required, as well as a theoretical developer’s
profit margin and entrepreneurial incentive and opportunity cost.
Overwatch.ID
On October 15, 2019, the Company acquired 100% of the equity interest in Overwatch.ID, Inc. (“Overwatch.ID”), a
Delaware corporation engaged in the development and license of software products focused on access controls security for
cloud applications, cloud computing, hybrid IT environments, and on-premises infrastructure. The consideration related to the
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acquisition was $20.9 million in cash, of which $3.0 million was to be paid upon the lapse of an indemnification period of 12
months and 18 months of the acquisition date. As of December 31, 2021, all consideration has been paid. As of December 31,
2020, $1.5 million of the holdback amount is reflected within accrued expenses and other liabilities on the consolidated balance
sheets.
The following table summarizes the final purchase price allocation as of the date of acquisition:
As of
October 15, 2019
(In thousands)
Cash and cash equivalents
$
45
Accounts receivable
66
Prepayments and other current assets
103
Deferred tax asset - non-current
687
Right-of-use assets
175
Goodwill
14,107
Intangible assets
6,610
Accounts payable
(256)
Accrued expenses and other liabilities
(185)
Deferred revenue
(466)
Total fair value of assets acquired and liabilities assumed
$
20,886
The following table presents the estimated fair values and useful lives of the identifiable intangible assets acquired:
Amount
Estimated
Useful Life
(In thousands)
(In years)
Developed technology
$
6,610
5
The fair value of developed technology was estimated using the replacement cost method (Level 3), which utilized
assumptions for the cost to replace, such as the workforce, timing and resources required, as well as a theoretical developer’s
profit margin and entrepreneurial incentive and opportunity cost.
Additional Acquisition Related Information
The operating results of the acquired companies are included in our consolidated statements of operations from the
respective dates of acquisition. Pro forma results of operations have not been presented because the effects of these acquisitions,
individually and in the aggregate, were not material to our consolidated statements of operations. During the years ended
December 31, 2021 and December 31, 2019, acquisition related costs were $2.2 million and $1.0 million, respectively, which
include legal, accounting and consulting professional service fees and have been included primarily in general and
administrative expenses on the consolidated statement of operations.
These acquisitions have been accounted for as business combinations. Assets acquired and liabilities assumed have
been recorded at their estimated fair values as of the respective acquisition date. The Company finalized the purchase price
within the required one-year measurement period as of the dates of acquisition.
The Company believes that for each acquisition, the acquired companies will provide opportunities for growth through
investing in additional products and capabilities, among other factors. This contributed to a purchase price in excess of the
estimated fair value of each acquired company’s net identifiable assets acquired and, as a result, goodwill was recorded in
connection with each acquisition. The excess of the purchase price over the tangible assets, identifiable intangible assets and
assumed liabilities was recorded as goodwill. Goodwill arising from these acquisitions are not deductible for tax purposes.
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6. Goodwill and Intangible Assets
Goodwill
The following table reflects goodwill activity for the year ended December 31, 2021:
(In thousands)
Balance, December 31, 2020
$
241,103
Goodwill acquired
47,307
Measurement period adjustments
1,020
Balance, December 31, 2021
$
289,430
All goodwill balances are subject to annual goodwill impairment testing. As of October 31, 2021, 2020 and 2019, the
Company performed a qualitative analysis and concluded that no impairment for goodwill was required. There
were no impairments of goodwill during the years ended December 31, 2021, 2020 and 2019.
Intangible Assets
Total cost and amortization of intangible assets comprised of the following:
As of
Weighted Average
Useful Life
December 31,
2021
December 31,
2020
Intangible assets, net
(In years)
(In thousands)
Customer lists
14.6
$
49,200 $
42,500
Developed technology
8.6
66,260
51,760
Trade names and trademarks
17
24,500
24,500
Other
4.8
2,976
3,746
Total intangible assets
142,936
122,506
Less: Accumulated amortization
(69,467)
(58,544)
Total intangible assets, net
$
73,469 $
63,962
Periodically, the Company evaluates intangible assets for triggering events for indications of possible impairment.
During the year ended December 31, 2021, the Company recorded an impairment charge of $0.7 million related to certain
developed technology assets due to a decrease in the fair value of the underlying assets. Due to our strategic decision to
discontinue further investment and enhancements in the standalone existing technology, we recorded an impairment charge of
$5.1 million related to certain developed technology assets during the year ended December 31, 2020. There
were no impairments for intangible assets during the year ended December 31, 2019.
Amortization expense for the periods presented is as follows:
Year Ended December 31,
2021
2020
2019
(In thousands)
Cost of revenue - licenses
$
3,674 $
4,031 $
4,032
Cost of revenue - subscription
5,539
3,549
1,076
Research and development
674
703
647
Sales and marketing
6,101
4,274
4,273
Total amortization expense
$
15,988 $
12,557 $
10,028
71
The total estimated future amortization expense of these intangible assets as of December 31, 2021 is as follows:
Year Ending December 31,
(In thousands)
2022
$
16,719
2023
16,557
2024
12,674
2025
8,175
2026
4,968
Thereafter
14,376
Total amortization expense
$
73,469
7. Leases
Operating Leases
As of December 31, 2021, our leases, primarily relating to office leases, have remaining lease terms of less than 1
year to 8 years. Certain leases include early termination and/or extension options; however, exercises of these options are at the
Company’s sole discretion. As of December 31, 2021, the Company determined it is not reasonably certain it will exercise the
options to extend its leases or terminate them early. Our lease agreements do not contain any material residual value guarantees
or material restrictive covenants. As of December 31, 2021 and 2020, we have no financing leases.
The rates implicit in the Company’s leases are not readily determinable. Therefore, in order to value the Company’s
lease liabilities, the Company uses an IBR which reflects the fixed rate at which the Company could borrow a similar amount in
the same currency, for the same term, and with similar collateral as in the lease at the commencement date. As of December 31,
2021, the Company measures its lease liabilities at the net present value of the remaining lease payments discounted at the
weighted average discount rate of 4.14%. The Company's IBR is estimated to approximate the interest rate on similar terms and
payments and in economic environments where the leased asset is located. The weighted average remaining term of the
Company’s operating leases is 6.9 years.
Operating lease costs for the periods presented were as follows:
Year Ended
December 31, 2021 December 31, 2020
(In thousands)
Lease cost
Operating lease cost
$
5,097 $
5,155
Variable lease cost
2,521
2,434
Short-term lease cost
782
395
Total lease cost
$
8,400 $
7,984
Facilities costs (including rent and utilities) are considered shared costs and are allocated to departments based on
headcount. As such, allocated shared costs are reflected in each cost of revenue and operating expense category.
Other supplemental cash flow information related to operating leases for the periods presented is as follows:
Year Ended
December 31, 2021 December 31, 2020
(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
$
6,199 $
5,181
Right-of-use assets obtained in exchange for lease liabilities
Operating leases
$
472 $
106
72
The undiscounted annual future minimum lease payments are summarized by year in the table below:
Year Ending December 31,
(In thousands)
2022
$
6,128
2023
5,210
2024
5,033
2025
4,890
2026
5,036
Thereafter
12,357
Total minimum lease payments
$
38,654
Less: interest
(5,042)
Total present value of operating lease liabilities
$
33,612
8. Commitments and Contingencies
As of December 31, 2021, we had in aggregate $18.2 million in contractual commitments associated with agreements
that are enforceable and legally binding, of which $12.3 million are due within the next 12 months. Such amounts do not
include obligations under contracts that we can cancel without significant penalty and purchase orders as the purchase orders
represent authorizations to purchase rather than binding agreements.
Indemnification Arrangements
In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to provide
indemnification of varying scope and terms to customers, business partners and other parties with respect to certain matters,
including, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties,
and other liabilities with respect to our products and services and business. In these circumstances, payment may be conditional
on the other party making a claim pursuant to the procedures specified in a particular contract. The Company includes service
level commitments to our cloud customers warranting certain levels of uptime reliability and performance and permitting those
customers to receive credits in the event that we fail to meet those levels.
To date, the Company has not incurred any material costs as a result of these commitments, and we expect the time
between any potential claims and issuance of the credits to be short. As a result, we have not accrued any liabilities related to
these commitments in our consolidated financial statements.
Litigation Claims and Assessments
The Company is subject to claims and suits that may arise from time to time in the ordinary course of business. In
addition, some legal actions, claims and governmental inquiries may be instituted or asserted in the future against us and our
subsidiaries. Although the outcome of our legal proceedings cannot be predicted with certainty and no assurances can be
provided, based upon current information, we do not believe the liabilities, if any, which may ultimately result from the
outcome of such matters, individually or in the aggregate, will have a material adverse impact on our consolidated financial
statements.
9. Credit Agreement
On March 11, 2019, SailPoint Technologies, Inc., as borrower (the “Borrower”), and certain of our other wholly
owned subsidiaries entered into a credit agreement (as amended, restated, amended and restated, supplemented or otherwise
modified from time to time through the date hereof, the “Credit Agreement”). The Credit Agreement is guaranteed by SailPoint
Technologies Intermediate Holdings, LLC, a wholly owned subsidiary, and the Borrower’s material domestic subsidiaries (the
“Guarantors” and, together with the Borrower, the “Loan Parties”) and is supported by a security interest in substantially all of
the Loan Parties’ personal property and assets.
In September 2019, the Company amended the Credit Agreement in connection with the issuance and sale of the
Notes. Such amendment included a decrease in the commitments for revolving credit loans from $150.0 million to $75.0
million, with a $15.0 million letter of credit sublimit, which amount can be increased or decreased under certain circumstances
and is subject to certain financial covenants. In addition, the Credit Agreement provides for the ability to incur uncommitted
term loan facilities if, among other things, the Senior Net Leverage Ratio (as defined in the Credit Agreement), calculated
giving pro forma effect to the requested term loan facility, is no greater than 3.50 to 1.00. Borrowings pursuant to the Credit
73
Agreement may be used for working capital and other general corporate purposes, including acquisitions permitted under the
Credit Agreement. The Credit Agreement contains certain customary representations and warranties and affirmative and
negative covenants. The Credit Agreement has established priority for the lenders party over all assets of the Company.
The interest rates applicable to revolving credit loans under the Credit Agreement are at the Company’s option. The
Company pays an unused commitment fee during the term of the Credit Agreement ranging from 0.20% to 0.30% per annum
based on the Senior Secured Net Leverage Ratio. Borrowings under the Credit Agreement are scheduled to mature
on March 11, 2024.
The Company had no outstanding revolving credit loan balance under the Credit Agreement as of December 31, 2021
and 2020. The Company was in compliance with all applicable covenants as of December 31, 2021.
The Company incurred total debt issuance costs of $0.8 million in connection with the Credit Agreement, which the
net balance is included in other non-current assets on the accompanying consolidated balance sheets as of December 31, 2021
and 2020. These costs are being amortized to interest expense over the life of the Credit Agreement on a straight-line basis.
Amortization of debt issuance costs for the years ended December 31, 2021, 2020 and 2019 were $0.2 million, $0.2 million and
$0.1 million, respectively, and were recorded in interest expense on the accompanying consolidated statements of operations.
10. Convertible Senior Notes and Capped Call Transactions
In September 2019, the Company issued and sold $400.0 million aggregate principal amount of 0.125% Convertible
Senior Notes due 2024 in a private offering (the “Offering”) to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”). The net proceeds from the Offering were approximately $391.2
million, after deducting discounts and commissions and other fees and expenses payable by the Company in connection with
the Offering. The Company used $37.1 million of the net proceeds from the Offering to pay the cost of the privately negotiated
capped call transactions (the “Capped Call Transactions”) it entered into with the initial purchasers of the Notes or their
respective affiliates and another financial institution.
The Notes were issued pursuant to an indenture (the “Indenture”), by and between the Company and U.S. Bank
National Association, as trustee. The Notes are senior unsecured obligations of the Company and will mature on September 15,
2024, unless earlier redeemed, repurchased or converted. The Notes bear interest at a fixed rate of 0.125% per year payable
semiannually in arrears on March 15 and September 15 of each year.
The Notes will be convertible at the option of the holders at any time prior to the close of business on the business day
immediately preceding March 15, 2024, only under the following circumstances:
•
during any calendar quarter commencing after the calendar quarter ending on December 31, 2019 (and only
during such calendar quarter), if the last reported sale price of the Company’s common stock, for at
least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on,
and including, the last trading day of the immediately preceding calendar quarter is greater than or equal
to 130% of the conversion price on each applicable trading day;
•
during the five business day period after any five consecutive trading day period (the “measurement period”)
in which the trading price (as defined in the Indenture) per $1,000 principal amount of the Notes for each
trading day of the measurement period was less than 98% of the product of the last reported sale price of
common stock and the conversion rate for the Notes on each such trading day;
•
if the Company calls any or all of the Notes for redemption, at any time prior to the close of business on the
scheduled trading day immediately preceding the redemption date; and
•
upon the occurrence of specified corporate events as set forth in the Indenture.
On or after March 15, 2024 until the close of business on the second scheduled trading day immediately preceding the
maturity date, holders may convert all or any portion of their Notes, in multiples of $1,000 principal amount, at the option of
the holder regardless of the foregoing circumstances.
Upon conversion, the Company may satisfy its conversion obligation by paying and/or delivering, as the case may be,
cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election, in the manner
and subject to the terms and conditions provided in the Indenture. It is the Company’s current intent to settle the principal
amount of the Notes with cash. The Notes are convertible at an initial conversion rate of approximately 35.1849 shares of
common stock per $1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately
74
$28.42 per share of common stock, subject to adjustment upon the occurrence of specified events in accordance with the terms
of the Indenture.
In addition, following certain corporate events that occur prior to the maturity date or if the Company delivers a notice
of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its
Notes in connection with such a corporate event or notice of redemption, as the case may be. For example, upon the occurrence
of a make-whole fundamental change, as defined in the Indenture, the Company will, in certain circumstances, increase the
conversion rate by a number of additional shares for a holder that elects to convert its Notes in connection with such make-
whole fundamental change or during the relevant redemption period.
The Company may not redeem the Notes prior to September 20, 2022. The Company may redeem for cash all or any
portion of the Notes, at its option, on or after September 20, 2022, if the last reported sale price of common stock has been at
least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30
consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day
preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal
amount of the Notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. No sinking
fund is provided for the Notes, which means that the Company is not required to redeem or retire the Notes periodically.
If the Company undergoes a fundamental change (as defined in the Indenture), holders may require the Company to
repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal
amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change
repurchase date.
The Indenture includes customary covenants and sets forth certain events of default after which the Notes may be
declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the
Company after which the Notes become automatically due and payable. The Company was in compliance with all applicable
covenants as of December 31, 2021.
For at least 20 trading days during the period of 30 consecutive trading days ended September 30, 2020, the last
reported sale price of the Company’s common stock was equal to or exceeded 130% of the conversion price of the Notes on
each applicable trading day. This conversion trigger has been met each quarter since then, including the quarter ended
December 31, 2021. As a result, the Notes continue to be convertible at the option of the holders during the fiscal quarter ended
December 31, 2021 and remained classified as current liabilities on the consolidated balance sheet as of December 31, 2021.
During the year ended December 31, 2021, upon the request of certain holders, the Company settled the conversion of
the $10.2 million in aggregate principal amount of the Notes (the “2021 Converted Notes”) with cash and settled all other
amounts owed to the respective holders through the issuance of 181,629 shares of the Company's common stock with an
aggregate fair value of approximately $10.1 million. The Company recognized an immaterial amount related to the acceleration
of unamortized debt issuance costs related to these early note conversions, which was recorded in interest expense on the
accompanying consolidated statements of operations. As of the date of this filing, no other holders of the Notes have submitted
requests for conversion.
Transaction costs related to the issuance of the Notes were $8.8 million and are being amortized to interest expense at
an effective interest method rate of 0.57% over the term of the Notes.
As of December 31, 2021, the Notes have a remaining life of 33 months.
The net carrying amount of the liability and equity components of the Notes for the periods presented is as follows:
75
As of
December 31, 2021 December 31, 2020
(In thousands)
Liability component
Principal
$
389,840 $
400,000
Unamortized discount (1)
—
(68,270)
Unamortized issuance costs (1)
(4,668)
(5,058)
Net carrying amount
$
385,172 $
326,672
Equity component, net of issuance costs (1)
$
— $
86,764
(1)
See Note 1 “Description of Business and Summary of Significant Accounting Policies” for more information
regarding the effect of adoption of ASU 2020-06.
The interest expense recognized related to the Notes for the periods presented is as follows:
Year Ended
December 31, 2021 December 31, 2020
(In thousands)
Contractual interest expense
$
484 $
664
Amortization of debt discount (1)
—
16,272
Amortization of debt issuance costs (2)
1,872
1,349
Total
$
2,356 $
18,285
(1)
See Note 1 “Description of Business and Summary of Significant Accounting Policies” for more information
regarding the effect of adoption of ASU 2020-06.
(2)
Amortization of debt issuance costs includes the acceleration of unamortized debt issuance costs related to the
partial conversion of the Notes.
As of December 31, 2021, the total estimated fair value of the Notes was $692.7 million. The fair value was
determined based on the closing trading price per $100 of the Notes as of the last day of trading for the period. The fair value of
the Notes is primarily affected by the trading price of our common stock and market interest rates. The fair value of the Notes is
considered Level 2 within the fair value hierarchy and was determined based on inputs that are observable in the market or that
could be derived from, or corroborated with, observable market data, such as the quoted price of the Notes in an over-the-
counter market.
Capped Call Transactions
In September 2019, in connection with the pricing of the Notes and in connection with the initial purchasers’ exercise
in full of their option to purchase additional Notes, the Company entered into privately negotiated Capped Call Transactions
with the initial purchasers or their respective affiliates and another financial institution. The Capped Call Transactions are
generally expected to reduce potential dilution to common stock upon any conversion of the Notes and/or offset any potential
cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with
such reduction and/or offset subject to a cap. The Capped Call Transactions have an initial strike price of $28.42 per share,
which corresponds to the initial conversion price of the Notes and is subject to certain adjustments, and an initial cap price of
$41.34 per share, which is subject to certain adjustments. For accounting purposes, the Capped Call Transactions are separate
transactions and not part of the terms of the Notes. As the Capped Call Transactions are considered indexed to our own stock
and are considered equity classified, they are recorded in stockholders’ equity and are not accounted for as derivatives. The cost
of $37.1 million incurred in connection with the Capped Call Transactions was recorded as a reduction to additional paid in
capital.
76
The Capped Call Transactions initially covered, subject to anti-dilution adjustments substantially similar to those
applicable to the Notes, approximately 14.1 million shares of common stock. In connection with the settlement of the 2021
Converted Notes during the year ended December 31, 2021, the Company terminated a pro rata amount of the Capped Call
Transactions pursuant to the terms thereof. As a result of this pro rata termination, the Company received 37,301 shares of its
common stock with an aggregate value of approximately $1.9 million based on the trading price of our common stock at that
time. As of December 31, 2021, the Capped Call Transactions cover, subject to anti-dilution adjustments, 13.7 million shares of
our common stock.
11. Related Party Transactions
The Company did not have any related party balances or incur any material related party transactions as of and during
the years ended December 31, 2021, 2020 and 2019.
12. Stockholders' Equity
In November 2017, the board of directors and stockholders approved the Amended and Restated Certificate of
Incorporation to increase the authorized capital stock to 310 million shares, consisting of 300 million shares of common stock
and 10 million shares of preferred stock, each with par value of $0.0001 per share.
Common Stock
The Company’s Amended and Restated Certificate of Incorporation authorizes issuance of 300 million shares of
common stock with a par value of $0.0001 per share. The common stock confers upon its holders the right to participate in the
general meetings of the Company, to vote at such meetings (each share represents one vote), to elect board members and to
participate in any distribution of dividends, payments of the Company’s debts, other payments required by law, or other
property and amounts payable upon shares of preferred stock, including the distribution of surplus assets upon liquidation
equally on a per share basis. The rights of the holders of common stock will be subject to, and may be adversely affected by, the
rights of holders of any preferred stock that may be issued in the future.
Preferred Stock
The company is authorized, subject to any limitations prescribed by law, without stockholder approval, to issue up to
an aggregate of 10 million shares of preferred stock, in one or more series, each series to have such rights, preferences and
limitations, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences as
determined by the board of directors. As of December 31, 2021, the Company does not have any shares of preferred stock
outstanding and currently has no plans to issue shares of preferred stock.
13. Stock-Based Compensation
2015 Stock Option Plans
In 2015, the Company adopted (i) the Amended and Restated 2015 Stock Option and Grant Plan and (ii) the 2015
Stock Incentive Plan (together the “2015 Stock Option Plans”) under which it may grant incentive stock options (“ISOs”),
nonqualified stock options for the right to purchase shares of common stock and restricted stock units (“RSUs”). The 2015
Stock Option Plans reserve 5.0 million shares of common stock for issuance pursuant to ISOs, 0.5 million shares of common
stock for issuance pursuant to RSUs and 0.25 million shares of common stock for issuance under the 2015 Stock Incentive
Plan. Under the 2015 Stock Option Plan, ISOs may not be granted at less than fair market value on the date of the grant and
generally vest over a four-year period based on continued service. Options generally expire ten years after the grant date.
As of December 31, 2021, 0.7 million shares were available for issuance under the 2015 Stock Option Plans, including
approximately 36 thousand shares available for issuance under the 2015 Stock Incentive Plan. The Company currently uses
authorized and unissued shares to satisfy share award exercises.
2017 Long Term Incentive Plan
In November 2017, the Company’s Board of Directors (the “Board”) adopted the 2017 Long Term Incentive Plan (the
“2017 Plan”) under which it may grant stock options to purchase shares of common stock and RSUs. As of December 31, 2021,
the Company had reserved 22.1 million shares of common stock available for issuance under the 2017 Plan to employees,
77
directors, officers and consultants of the Company and its subsidiaries. The number of shares of common stock available for
issuance under the 2017 Plan will be increased on each January 1 hereafter by 4.4 million shares of common stock. Options and
RSUs granted under the 2017 Plan generally vest over terms of one to four years based on continued service and generally
expire ten years after the grant date. Common stock subject to an award that expires or is canceled, forfeited, exchanged, settled
in cash or otherwise terminated without delivery of shares, and shares withheld or surrendered to pay the exercise price of, or to
satisfy the withholding obligations with respect to an award, will become available for future grants under the 2017 Plan.
As of December 31, 2021, 13.5 million shares were available for issuance under the 2017 Plan. The Company
currently uses authorized and unissued shares to satisfy share award exercises.
The fair value for the Company’s stock options granted and Employee Stock Purchase Plan ("ESPP") purchase rights,
as discussed further below, during the periods presented were estimated at grant date using a Black-Scholes option-pricing
model using the following weighted average assumptions:
December 31, 2021 December 31, 2020 December 31, 2019
Stock Options
Expected dividend rate
—%
—%
—%
Expected volatility
47.3%- 50.8%
50.0% - 56.2%
38.8% - 46.0%
Risk-free interest rate
0.80% - 1.14%
0.36% - 1.53%
1.39% - 2.59%
Expected term (in years)
6.25
6.25
6.25
ESPP
Expected dividend rate
—%
—%
—%
Expected volatility
47.9% - 50.8%
48.1% - 56.2%
39.8% - 48.1%
Risk-free interest rate
0.04% - 0.09%
0.10% - 1.57%
1.62% - 2.44%
Expected term (in years)
0.50
0.50
0.42 0.50
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Stock Options
The following table summarizes stock option activity for the periods presented:
Number
of Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
(In thousands
)
(Per share)
(Years)
(In thousands
)
Balances at December 31, 2018
2,817 $
6.64
8.0 $
47,589
Granted
1,068 $
26.63
Exercised
(730) $
4.18
Forfeited
(369) $
16.31
Balances at December 31, 2019
2,786 $
13.67
7.7 $
31,489
Options vested and expected to vest at December 31, 2019
2,786 $
13.67
7.7 $
31,489
Options vested and exercisable at December 31, 2019
1,143 $
6.17
6.4 $
19,964
Balances at December 31, 2019
2,786 $
13.67
7.7 $
31,489
Granted
617 $
25.30
Exercised
(763) $
7.82
Forfeited
(236) $
20.35
Balances at December 31, 2020
2,404 $
17.85
7.7 $
85,064
Options vested and expected to vest at December 31, 2020
2,404 $
17.85
7.7 $
85,064
Options vested and exercisable at December 31, 2020
1,064 $
12.00
6.7 $
43,889
Balance at December 31, 2020
2,404 $
17.85
7.7 $
85,064
Granted
304 $
60.57
Exercised
(609) $
12.50
Forfeited
(198) $
26.39
Balances at December 31, 2021
1,901 $
25.52
7.0 $
46,895
Options vested and expected to vest at December 31, 2021
1,901 $
25.52
7.0 $
46,895
Options vested and exercisable at December 31, 2021
1,097 $
16.70
6.2 $
34,711
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The following table summarizes the status of the Company’s non-vested stock options for the periods presented:
Number of
Shares
Weighted
Average
Grant Date
Fair Value
(In thousands)
(Per share)
Non-vested at December 31, 2018
1,728 $
5.47
Granted
1,068 $
11.36
Vested
(781) $
5.35
Forfeited
(370) $
7.60
Non-vested at December 31, 2019
1,645 $
8.88
Granted
617 $
13.44
Vested
(686) $
8.36
Forfeited
(236) $
9.44
Non-vested at December 31, 2020
1,340 $
11.17
Granted
304 $
29.51
Vested
(642) $
10.54
Forfeited
(198) $
12.90
Non-vested at December 31, 2021
804 $
18.18
The Company expects all outstanding stock options at December 31, 2021 to fully vest. The total fair value of shares
vested during the years ended December 31, 2021, 2020 and 2019 was $6.8 million, $5.7 million and $4.2 million, respectively.
The total unrecognized compensation expense related to non-vested stock options granted is $12.5 million and is
expected to be recognized over a weighted average period of 2.2 years as of December 31, 2021.
Incentive Unit Plan
In 2014 and 2015, the Company granted shares of the Company’s common stock (the “incentive units”) to certain
members of management pursuant to restricted stock agreements.
The incentive units were granted with an exercise price equal to the fair market value on the date of grant, are subject
to vesting, and if exercised in advance of vesting were subject to the Company’s right to repurchase until vested.
The Company did not grant any additional incentive units during the years ended December 31, 2021, 2020 or 2019.
During the year ended December 31, 2019, all of the remaining 0.7 million incentive units were vested with a weighted average
grant date fair value of $0.05 per share. Therefore, as of December 31, 2021, there is no further unrecognized compensation
expense or intrinsic value related to non-vested incentive units.
80
Restricted Stock Units
The following provides a summary of the RSU activity for the Company for the periods presented:
Number of
Shares
Weighted
Average
Grant Date
Fair Value
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
(In thousands
)
(Per share)
(Years)
(In thousands
)
Balances at December 31, 2018
1,148 $
15.40
1.8 $
26,967
Granted
1,363 $
27.22
Vested
(336) $
15.94
Forfeited
(294) $
20.47
Balances at December 31, 2019
1,881 $
23.08
1.6 $
44,386
Units expected to vest at December 31, 2019
1,881 $
23.08
1.6 $
44,386
Balances at December 31, 2019
1,881 $
23.08
1.6 $
44,386
Granted
2,113 $
24.13
Vested
(589) $
22.26
Forfeited
(270) $
23.63
Balances at December 31, 2020
3,135 $
23.90
1.4 $
166,927
Units expected to vest at December 31, 2020
3,135 $
23.90
1.4 $
166,927
Balances at December 31, 2020
3,135 $
23.90
1.4 $
166,927
Granted
2,544 $
53.47
Vested
(1,467) $
27.71
Forfeited
(581) $
35.84
Balances at December 31, 2021
3,631 $
41.17
1.4 $
175,508
Units expected to vest at December 31, 2021
3,631 $
41.17
1.4 $
175,508
The Company expects all outstanding RSUs to fully vest. The total unrecognized compensation expense related to
RSUs was $132.6 million as of December 31, 2021 and is expected to be recognized over a weighted average period of 2.7
years.
Employee Stock Purchase Plan
The Company initially reserved 1.8 million shares of common stock for issuance under the ESPP. The number of
shares available for issuance under the ESPP will increases each January 1 by 0.9 million shares of common stock. The ESPP
will continue in effect unless terminated prior thereto by the Company’s Board or Compensation Committee, each of which has
the right to terminate the ESPP at any time.
As of December 31, 2021, 3.2 million shares were available for issuance under the ESPP. During the years ended
December 31, 2021, 2020 and 2019, approximately 0.3 million, 0.4 million and 0.4 million shares of common stock have been
purchased or distributed pursuant to the ESPP, respectively.
81
A summary of the Company’s stock-based compensation expense, which includes stock options, incentive units, RSUs
and the ESPP, is presented below:
Year Ended December 31,
2021
2020
2019
(In thousands)
Stock options
$
6,544 $
5,725 $
4,958
Incentive units
—
—
351
RSUs
41,690
20,819
11,213
ESPP
3,523
2,513
2,192
Total stock-based compensation expense
$
51,757 $
29,057 $
18,714
A summary of the Company’s stock-based compensation expense as recognized on the consolidated statements of
operations is presented below:
Year Ended December 31,
2021
2020
2019
(In thousands)
Cost of revenue - subscription
$
3,688 $
1,758 $
1,142
Cost of revenue - services and other
3,733
1,963
1,379
Research and development
12,827
6,282
3,517
General and administrative
10,563
6,802
5,990
Sales and marketing
20,946
12,252
6,686
Total stock-based compensation expense
$
51,757 $
29,057 $
18,714
14. Balance Sheet Related Items
Property and Equipment, Net
The cost and accumulated depreciation of property and equipment are as follows:
As of December 31,
2021
2020
(In thousands)
Computer equipment
$
15,431 $
12,691
Furniture and fixtures
4,626
4,392
Leasehold improvements
14,948
14,761
Other
1,583
1,534
Total property and equipment
$
36,588 $
33,378
Less: accumulated depreciation
(19,437)
(13,935)
Total property and equipment, net
$
17,151 $
19,443
Depreciation expense was $6.4 million, $5.7 million and $5.0 million for the years ended December 31, 2021, 2020
and 2019, respectively. There were no impairments of our property and equipment for the years ended December 31, 2021,
2020 and 2019.
Prepayments and Other Current Assets and Other Non-Current Assets
Prepayments and other current assets and other non-current assets include the balance of contract assets, prepaid
expenses, and other assets. The current portion of these assets is included in prepayments and other current assets and the non-
current portion is included in other non-current assets, both of which are contained within the accompanying consolidated
balance sheets.
82
Prepayments and other current assets consisted of the following:
As of December 31,
2021
2020
(In thousands)
Contract assets
31,640
10,679
Prepaid expenses
13,746
12,411
Other
4,060
2,814
Total prepayments and other current assets
$
49,446 $
25,904
Other non-current assets consisted of the following:
As of December 31,
2021
2020
(In thousands)
Contract assets
16,991
14,225
Prepaid expenses
597
132
Other
386
659
Total other non-current assets
$
17,974 $
15,016
Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following:
As of December 31,
2021
2020
(In thousands)
Commissions
$
27,578 $
15,169
Bonus
24,753
20,525
Operating lease liabilities - current
4,795
4,435
Payroll and related benefits
10,505
6,163
Indemnification holdbacks
—
2,500
Other
22,341
10,668
Total accrued expenses and other liabilities
$
89,972 $
59,460
15. Income Taxes
Income Taxes
Provision for income taxes consists of U.S. and state income taxes and income taxes in certain foreign jurisdictions in
which the Company conducts business.
The following table presents consolidated loss before income taxes:
Year Ended December 31,
2021
2020
2019
(In thousands)
Domestic
$
(64,507) $
(15,159) $
(11,289)
Foreign
3,059
(524)
(1,799)
Total loss before income taxes
$
(61,448) $
(15,683) $
(13,088)
83
The provision expense (benefit) for income taxes consisted of the following:
Year Ended December 31,
2021
2020
2019
(In thousands)
Current
Federal
$
— $
— $
—
State
116
399
845
Foreign
3,417
1,999
1,820
Total current
3,533
2,398
2,665
Deferred
Federal
(2,488)
(6,242)
(5,731)
State
(932)
(940)
(1,354)
Foreign
73
(136)
(168)
Total deferred
(3,347)
(7,318)
(7,253)
Provision expense (benefit) for income taxes
$
186 $
(4,920) $
(4,588)
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the
Company’s deferred taxes are as follows:
As of December 31,
2021
2020
(In thousands)
Deferred tax assets:
Research and development and other credits
$
18,099 $
12,346
Net operating loss carryforward
39,998
10,370
Disallowed interest carryforward
2,262
—
Deferred revenue
15,225
11,574
Stock compensation
5,687
4,959
Operating lease liabilities
8,102
9,170
Accrued expenses
5,684
5,094
Convertible debt premium
4,905
6,878
Other
209
187
Total deferred tax assets
100,171
60,578
Less valuation allowance for deferred tax assets
(47,321)
(7,435)
Net deferred tax asset
52,850
53,143
Deferred tax liabilities:
Depreciable and amortizable assets
(3,096)
(3,471)
Operating lease ROU assets
(5,723)
(6,601)
Prepaid expenses
(23,120)
(13,331)
Convertible senior notes
—
(16,405)
Intangibles
(16,864)
(14,664)
Total deferred tax liabilities
(48,803)
(54,472)
Net deferred tax asset (liability)
$
4,047 $
(1,329)
As of December 31, 2021, the Company has federal, state and foreign net operating loss carryforwards of $138.0
million, $81.2 million and $21.7 million, respectively. Approximately $12.6 million of the federal net operating loss
carryforwards will begin to expire in 2033 and $125.4 million do not expire. The state net operating loss carryforwards will
begin to expire in 2029, if not utilized. The foreign net operating losses do not expire.
84
As of December 31, 2021, the Company has federal and state research and development credit carryforwards of $15.6
million and $4.7 million, respectively. The federal and state research and development credits will begin to expire in 2025 and
2034, respectively, if not utilized.
The use of certain loss and credit carryforwards is subject to an annual limitation, which may cause them to expire
unused. Management has determined that the annual limitation will result in the expiration of approximately $13.2 million and
$0.8 million of net operating losses and research and development carryforwards, respectively.
Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The Company's ability to realize its deferred tax
assets, in each jurisdiction, is dependent upon the generation of future taxable income. The Company has a valuation allowance
of $47.3 million and $7.4 million as of December 31, 2021 and 2020, respectively, related to loss and credit carryforwards. The
increase in valuation allowance is primarily due to acquiring and generating net operating loss carryforwards and the decrease
in objectively verifiable future taxable income for convertible senior notes upon early adoption of ASU 2020-06.
The following table reconciles the Company’s effective tax rate to the federal statutory tax rate:
Year Ended December 31,
2021
2020
2019
U.S. federal taxes at statutory rate
21.0 %
21.0 %
21.0 %
State taxes, net of federal benefit
5.0
5.4
4.1
Foreign tax rate differentials
(0.4)
(1.0)
(0.8)
Foreign tax on earnings
(1.7)
(4.4)
(5.2)
Research and development credits
7.8
19.4
14.4
Nondeductible officer compensation
(3.5)
(0.5)
(0.9)
Stock-based compensation
13.6
11.5
16.9
Change in valuation allowance
(38.7)
(16.3)
(11.3)
Other
(3.4)
(3.7)
(3.1)
Total
(0.3) %
31.4 %
35.1 %
The reconciliation of unrecognized tax benefits is as follows:
Year Ended Year Ended December 31,
2021
2020
2019
(In thousands)
Beginning Balance
$
2,506 $
2,307 $
2,287
Additions based on tax positions related to prior year
—
31
—
Reductions based on tax positions related to prior year
(1,078)
(229)
(204)
Additions based on tax positions related to current year
1,025
397
224
Ending Balance
$
2,453 $
2,506 $
2,307
Included in the balance of unrecognized tax benefits as of December 31, 2021, 2020 and 2019 is $0.8 million, $2.5
million and $2.3 million, respectively, of tax benefits that, if recognized, would affect the Company's effective tax rate.
The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense.
During the years ended December 31, 2021, 2020 and 2019 the Company did not record any material interest or penalties.
The Company files income tax returns in the U.S. federal, states, and foreign jurisdictions. The Company is no longer
subject to U.S. federal income tax examinations for years before 2018 and is no longer subject to state, local and foreign
income tax examinations by tax authorities for years before 2015. The Company is currently under audit for income tax in a
single foreign jurisdiction. The audit is ongoing and is not expected to materially impact the consolidated financial statements.
The global intangible low-taxed income (“GILTI”) provisions will be applied providing an incremental tax on low
taxed foreign income. The GILTI provisions require us to include in our U.S. income tax return foreign subsidiary earnings in
excess of an allowable return on the foreign subsidiary’s tangible assets. For the years ended December 31, 2021 and 2020, the
85
Company determined it was in an aggregated net loss position with respect to its controlled foreign corporations. Thus, there is
no GILTI tax liability as of December 31, 2021 or 2020.
16. Net Loss Per Share Attributable to Common Stockholders
Basic and diluted net loss per share is computed by dividing net loss attributable to common stockholders by the
weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated using our
weighted average outstanding common shares including the dilutive effect of stock awards and shares related to the Notes. In
periods when the Company recognizes a net loss, the Company excludes the impact of outstanding stock awards and shares
related to the Notes from the diluted loss per share calculation as their inclusion would have an anti-dilutive effect.
The following table sets forth the calculation of basic and diluted net loss per share for the periods presented:
Year Ended December 31,
2021
2020
2019
(In thousands, except per share data)
Numerator
Net loss
$
(61,634) $
(10,763) $
(8,500)
Net loss available to common stockholders
$
(61,634) $
(10,763) $
(8,500)
Denominator
Weighted average shares outstanding
Basic
92,664
90,512
88,907
Diluted
92,664
90,512
88,907
Net loss attributable to common stockholders per share
Basic
$
(0.67) $
(0.12) $
(0.10)
Diluted
$
(0.67) $
(0.12) $
(0.10)
The following weighted average outstanding shares of common stock equivalents were excluded from the computation
of the diluted net loss per share attributable to common stockholders for the periods presented because their effect would have
been anti-dilutive:
Year Ended December 31,
2021
2020
2019
(In thousands)
Stock options to purchase common stock
2,245
2,738
3,037
RSUs issued and outstanding
3,536
3,027
1,899
ESPP
84
115
15
Convertible senior notes
10,182
1,311
—
Total
16,047
7,191
4,951
As we expect to settle the principal amount of the Notes in cash and any excess in shares of the Company’s common
stock, the Company uses the if-converted method for calculating any potential dilutive effect of the conversion spread on
diluted net income per share, if applicable. The conversion spread of approximately 13.7 million shares will have a dilutive
impact on diluted net income per share of common stock when the average market price of our common stock for a given
period exceeds the conversion price of $28.42 per share.
The denominator for diluted net income per share does not include any effect from the Capped Call Transactions the
Company entered into concurrently with the issuance of the Notes as this effect would be anti-dilutive. In the event of
conversion, if shares are delivered to the Company under the capped call, they will offset the dilutive effect of the shares that
the Company would issue under the Notes.
86
17. Geographic Information
Operating segments are defined as components of an enterprise about which separate financial information is available
that is evaluated regularly by the chief operating decision makers in deciding how to allocate resources and in assessing
performance. Our chief operating decision makers allocate resources and assess performance based on financial information
presented at a consolidated level. Accordingly, the Company determined that we operate as one reportable segment.
The following is a summary of consolidated revenues within geographic areas for the periods presented:
Year Ended December 31,
2021
2020
2019
(In thousands)
United States
$
302,524 $
263,332 $
204,500
EMEA (1)
80,838
62,249
54,315
Rest of the World (1)
55,592
39,673
29,700
Total revenue
$
438,954 $
365,254 $
288,515
(1)
No single country outside of the United states represented more than 10% of our revenue.
18. Employee Benefit Plans
The Company has established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code
(the “401(k) Plan”). The 401(k) Plan covers substantially all employees who meet minimum age and service requirements and
allows participants to defer a percentage of their annual compensation as defined in the 401(k) Plan. The Company matches
portions of employees' voluntary contributions. Additional employer contributions in the form of profit sharing may also be
made at the Company's discretion. The Company recorded expense of $2.2 million for matching contributions to the 401(k)
Plan for the year ended December 31, 2021.
87
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are
designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC and to
ensure that information required to be disclosed is accumulated and communicated to management, including our principal
executive officer (“PEO”) and principal financial officer (“PFO”), to allow timely decisions regarding disclosure. Our
management, with the participation of our PEO and PFO, has evaluated the effectiveness of our disclosure controls and
procedures as of December 31, 2021 and, based on such evaluation, our PEO and PFO have concluded that our disclosure
controls and procedures were effective as of such date.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting
as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with U.S. generally accepted accounting principles.
In connection with the preparation of this Annual Report, our management assessed the effectiveness of our internal
control over financial reporting as of December 31, 2021. In making this assessment, it used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework
(2013 framework). Based on such assessment, our management concluded that, as of December 31, 2021, our internal control
over financial reporting was effective based on those criteria.
Grant Thornton LLP, an independent registered public accounting firm, has issued an attestation report on our internal
control over financial reporting. This report is included within Part II, Item 8 of this Annual Report under the heading “Report
of Independent Registered Public Accounting Firm.”
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting as defined in Exchange Act Rule
13a-15(d) and 15d-15(d) during the quarter ended December 31, 2021 that materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
88
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information called for by this item will be included in our definitive proxy statement with respect to our 2022
Annual Meeting of Stockholders to be filed with the SEC and is incorporated herein by reference.
Item 11. Executive Compensation
The information called for by this item will be included in our definitive proxy statement with respect to our 2022
Annual Meeting of Stockholders to be filed with the SEC and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information called for by this item will be included in our definitive proxy statement with respect to our 2022
Annual Meeting of Stockholders to be filed with the SEC and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information called for by this item will be included in our definitive proxy statement with respect to our 2022
Annual Meeting of Stockholders to be filed with the SEC and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The information called for by this item will be included in our definitive proxy statement with respect to our 2022
Annual Meeting of Stockholders to be filed with the SEC and is incorporated herein by reference.
89
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this Annual Report:
1. Financial Statements
Our consolidated financial statements are listed in the “Index to Consolidated Financial Statements” under Part II, Item
8 of this Annual Report.
2. Financial Statement Schedules
All schedules have been omitted as the required information is either included in the consolidated financial statements
or notes thereto, or not required, or not applicable.
3. See Item 15(b)
(b) Exhibits:
Exhibit
Number
Description
2.1***
Agreement and Plan of Merger, by and among SailPoint Technologies, Inc., Whaler Merger Sub, Inc., Orkus, Inc.,
and Aspect Ventures II, L.P., dated as of October 7, 2019 (incorporated by reference to Exhibit 2.1 to the
Company’s Current Report on Form 8-K, filed with the SEC on October 16, 2019).
2.2***
Agreement and Plan of Merger, by and among SailPoint Technologies, Inc., Osprey Merger Sub, Inc.,
Overwatch.ID, Inc., and Shareholder Representative Services LLC, dated as of October 10, 2019 (incorporated by
reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K, filed with the SEC on October 16, 2019).
3.1
Third Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit
3.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017).
3.2
Second Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the
Company’s Annual Report on Form 10-K for the year ended December 31, 2017).
4.1
Form of common stock certificate of the Company (incorporated by reference to Exhibit 4.1 to Amendment No. 2
to the Company’s Registration Statement on Form S-1, filed with the SEC on November 6, 2017).
4.2
Indenture, dated as of September 24, 2019, between SailPoint Technologies Holdings, Inc. and U.S. Bank National
Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K,
filed with the SEC on September 25, 2019).
4.3
Form of 0.125% Convertible Senior Notes due 2024 (incorporated by reference to Exhibit 4.1 to the Company’s
Current Report on Form 8-K, filed with the SEC on September 25, 2019).
4.4
Description of Securities of the Company (incorporated by reference to Exhibit 4.4 to the Company's Annual
Report on Form 10-K for the year ended December 31, 2019).
10.1
Lease, dated October 2, 2017, by and between BDN Four Points Land LP and SailPoint Technologies, Inc.
(incorporated by reference to Exhibit 10.24 to the Company’s Registration Statement on Form S-1, filed with the
SEC on October 20, 2017).
10.2+
Form of Indemnification Agreement between the Company and each of its directors and executive officers
(incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1, filed with the
SEC on October 20, 2017).
10.3+
SailPoint Technologies Holdings, Inc. 2017 Long Term Incentive Plan. (incorporated by reference to Exhibit 10.10
to the Company’s Registration Statement on Form S-1, filed with the SEC on May 21, 2018).
10.4+
Form of Notice of Grant of Stock Option under the SailPoint Technologies Holdings, Inc. 2017 Long Term
Incentive Plan (incorporated by reference to Exhibit 10.6 to Amendment No. 2 to the Company’s Registration
Statement on Form S-1, filed with the SEC on November 6, 2017).
90
Exhibit
Number
Description
10.5+
Form of Stock Option Agreement under the SailPoint Technologies Holdings, Inc. 2017 Long Term Incentive Plan
(incorporated by reference to Exhibit 10.8 the Company’s Annual Report on Form 10-K for the year ended
December 31, 2018).
10.6+
Form of Notice of Stock Option Exercise under the SailPoint Technologies Holdings, Inc. 2017 Long Term
Incentive Plan (incorporated by reference to Exhibit 10.8 to Amendment No. 2 to the Company’s Registration
Statement on Form S-1, filed with the SEC on November 6, 2017).
10.7+
Form of Notice of Grant of Restricted Stock Units under the SailPoint Technologies Holdings, Inc. 2017 Long
Term Incentive Plan (incorporated by reference to Exhibit 10.9 to Amendment No. 2 to the Company’s
Registration Statement on Form S-1, filed with the SEC on November 6, 2017).
10.8+
Form of Restricted Stock Unit Agreement under the SailPoint Technologies Holdings, Inc. 2017 Long Term
Incentive Plan (incorporated by reference to Exhibit 10.11 the Company’s Annual Report on Form 10-K for the
year ended December 31, 2018).
10.9+
Amended and Restated Senior Management and Restricted Stock Agreement, dated November 5, 2017, by and
among SailPoint Technologies Holdings, Inc., SailPoint Technologies, Inc. and Mark McClain (incorporated by
reference to Exhibit 10.12 to Amendment No. 3 to the Company’s Registration Statement on Form S-1, filed with
the SEC on November 14, 2017).
10.10+
Amendment No. 1 to Amended and Restated Senior Management and Restricted Stock Agreement, dated as of
April 2, 2019, by and among the Company, SailPoint Technologies, Inc. and Mark McClain (incorporated by
reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019).
10.11+
Form of Amended and Restated Restricted Stock Agreement by and among SailPoint Technologies Holdings, Inc.
and [Purchaser] (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2017).
10.12+
Form of Early Exercise Incentive Stock Option Agreement under the SailPoint Technologies, Holdings, Inc.
Amended and Restated 2015 Stock Option Plan (incorporated by reference to Exhibit 10.17 to Amendment No. 2
to the Company’s Registration Statement on Form S-1, filed with the SEC on November 6, 2017).
10.13+
SailPoint Technologies Holdings, Inc. Amended and Restated 2015 Stock Option and Grant Plan (incorporated by
reference to Exhibit 10.19 to Amendment No. 2 to the Company’s Registration Statement on Form S-1, filed with
the SEC on November 6, 2017).
10.14+
Form of Non-qualified Stock Option Agreement under the SailPoint Technologies Holdings, Inc. 2015 Stock
Option and Grant Plan (Time and Performance Vesting) (incorporated by reference to Exhibit 10.20 to
Amendment No. 2 to the Company’s Registration Statement on Form S-1, filed with the SEC on November 6,
2017).
10.15+
Form of Non-qualified Stock Option Agreement under the SailPoint Technologies Holdings, Inc. 2015 Stock
Option and Grant Plan (Time-Based Vesting) (incorporated by reference to Exhibit 10.25 to Amendment No. 2 to
the Company’s Registration Statement on Form S-1, filed with the SEC on November 6, 2017).
10.16+
Form of Incentive Stock Option Agreement under the SailPoint Technologies Holdings, Inc. 2015 Stock Option
and Grant Plan (Time and Performance Vesting) (incorporated by reference to Exhibit 10.26 to Amendment No. 2
to the Company’s Registration Statement on Form S-1, filed with the SEC on November 6, 2017).
10.17+
Form of Incentive Stock Option Agreement under the SailPoint Technologies Holdings, Inc. 2015 Stock Option
and Grant Plan (Time-Based Vesting) (incorporated by reference to Exhibit 10.27 to Amendment No. 2 to the
Company’s Registration Statement on Form S-1, filed with the SEC on November 6, 2017).
10.18+
Form of Restricted Stock Agreement under the SailPoint Technologies Holdings, Inc. 2015 Stock Option and
Grant Plan (Time-Based Vesting) (incorporated by reference to Exhibit 10.29 to Amendment No. 2 to the
Company’s Registration Statement on Form S-1, filed with the SEC on November 6, 2017).
10.19+
SailPoint Technologies Holdings, Inc. 2015 Stock Incentive Plan (incorporated by reference to Exhibit 10.30 to
Amendment No. 2 to the Company’s Registration Statement on Form S-1, filed with the SEC on November 6,
2017).
91
Exhibit
Number
Description
10.20+
Form of Notice of Option Grant under the SailPoint Technologies Holdings, Inc. 2015 Stock Incentive Plan
(incorporated by reference to Exhibit 10.31 to Amendment No. 2 to the Company’s Registration Statement on
Form S-1, filed with the SEC on November 6, 2017).
10.21+
Form of Notice of Grant of Restricted Share Units under the SailPoint Technologies Holdings, Inc. 2015 Stock
Incentive Plan (incorporated by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the
year ended December 31, 2018).
10.22+
Form of Restricted Share Unit Agreement under the SailPoint Technologies Holdings, Inc. 2015 Stock Incentive
Plan (incorporated by reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the year
ended December 31, 2018).
10.23+
SailPoint Technologies Holdings, Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.25
to the Company's Annual Report on Form 10-K for the year ended December 31, 2020).
10.24+
Form of Notice of Grant of Restricted Stock Units (Non-Employee Directors) under the SailPoint Technologies
Holdings, Inc. 2017 Long Term Incentive Plan (incorporated by reference to Exhibit 10.35 to Amendment No. 2 to
the Company’s Registration Statement on Form S-1, filed with the SEC on November 6, 2017).
10.25+
Form of Restricted Stock Unit Agreement (Non-Employee Directors) under the SailPoint Technologies Holdings,
Inc. 2017 Long Term Incentive Plan (incorporated by reference to Exhibit 10.36 to Amendment No. 2 to the
Company’s Registration Statement on Form S-1, filed with the SEC on November 6, 2017).
10.26+* Summary of Non-Employee Director Compensation.
10.27+* SailPoint Technologies Holdings, Inc. Severance Pay Plan, dated November 6, 2018.
10.28
Credit Agreement, dated as of March 11, 2019, among the Company, SailPoint Technologies, Inc., the other loan
parties party thereto, the lenders party thereto, Citibank, N.A., as administrative agent, sole lead arranger and sole
bookrunner, and Royal Bank of Canada and Bank of America, N.A., as co-documentation agents (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on March 15, 2019).
10.29
Amendment No. 1 to Credit Agreement, dated as of September 18, 2019, among the Company, SailPoint
Technologies, Inc., the other loan parties party thereto, the lenders party thereto, Citibank, N.A., as administrative
agent, and certain lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K, filed with the SEC on September 18, 2019).
10.30
Form of Capped Call Confirmation (incorporated by reference to Exhibit 10.2 to the Company’s Current Report
on Form 8-K, filed with the SEC on September 25, 2019).
10.31+
Form of Confidential Separation Agreement and General Release of Claims, by and between SailPoint
Technologies, Inc. and [Officer] (incorporated by reference to Exhibit 10.35 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2020).
10.32+
Offer Letter, dated May 3, 2019, by and between SailPoint Technologies, Inc. and Jason Ream (incorporated by
reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019).
10.33+
Offer Letter, dated August 19, 2019, by and between SailPoint Technologies, Inc. and Matt Mills (incorporated by
reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30,
2019).
10.34+* Offer Letter, dated March 6, 2020, by and between SailPoint Technologies, Inc. and Grady Summers.
10.35+* Offer Letter, dated February 1, 2017, by and between SailPoint Technologies, Inc. and Chris Schmitt.
10.36+* Offer Letter, dated August 30, 2021, by and between SailPoint Technologies, Inc. and Cam McMartin.
92
Exhibit
Number
Description
21.1*
List of subsidiaries of the Company.
23.1*
Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm.
31.1*
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities
Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities
Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because
its XBRL tags are embedded within the Inline XBRL document.
101.SCH* Inline XBRL Taxonomy Extension Schema Document.
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
*
Filed herewith.
**
Furnished herewith (such certification shall not be deemed “filed” for purposes of Section 18 of the Exchange Act,
except to the extent that the Company specifically incorporates it by reference).
***
Certain schedules and exhibits have been omitted in accordance with Item 601(a)(5) of Regulation S-K. A copy of any
omitted schedule and/or exhibit will be furnished to the SEC on request.
+
Management contract or compensatory plan or arrangement.
Item 16. Form 10-K Summary
None.
93
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SailPoint Technologies Holdings, Inc.,
Date: February 28, 2022
By:
/s/ Mark McClain
Mark McClain
Chief Executive Officer and Director
Date: February 28, 2022
By:
/s/ Cam McMartin
Cam McMartin
Interim Chief Financial Officer and
Director
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by
the following persons on behalf of the registrant in the capacities and on the dates indicated.
Name
Title
Date
/s/ Mark McClain
Chief Executive Officer and Director
(Principal Executive Officer)
February 28, 2022
Mark McClain
/s/ Cam McMartin
Interim Chief Financial Officer and
Director
(Principal Financial Officer and
Principal Accounting Officer)
February 28, 2022
Cam McMartin
/s/ William Gregory Bock
Director
February 28, 2022
William Gregory Bock
/s/ Ronald J. Green
Director
February 28, 2022
Ronald J. Green
/s/ Heidi Melin
Director
February 28, 2022
Heidi Melin
/s/ Tracey E. Newell
Director
February 28, 2022
Tracey E. Newell
/s/ James Michael Pflaging
Director
February 28, 2022
James Michael Pflaging
/s/ Sudhakar Ramakrishna
Director
February 28, 2022
Sudhakar Ramakrishna
/s/ Michael J. Sullivan
Director
February 28, 2022
Michael J. Sullivan