it being a fairly slow news day, we thought we would take this opportunity to
profile a recent IPO that has done quite well but most people are probably not
familiar with: SailPoint Technologies (SAIL 26.27, +0.42, +1.62%), which is a provider of
cybersecurity software. SAIL made its IPO debut in November 2017. The deal
priced at $12, above its expected range of $9-11. It opened at $14.90 and is
now trading above $26, so it has made a nice move.
SailPoint is a cybersecurity company based in Austin, TX that focuses on enterprise identity governance software. The goal is to empower customers to securely govern the digital identities of employees, contractors, business partners, and other users, and manage their constantly changing access rights to enterprise applications and data. Its open identity platform provides companies 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.
Its current set of offerings consists of three products. IdentityIQ is its on-premises identity governance platform, while IdentityNow is its cloud-based, multi-tenant governance suite, which is delivered as a subscription. SecurityIQ is its on-premises data access governance platform that secures access to data stored in file servers, collaboration portals, mailboxes and cloud storage systems.
Today, enterprise environments are more open and interconnected with their business partners, contractors, vendors, and customers. Well-funded cyber attackers 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. 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.
More than 80% of hacking-related breaches involve the misuse of identity credentials, leveraging stolen and/or weak passwords. The consequences of a data breach can be extremely damaging, with companies facing significant costs to remediate the breach and repair brand and reputation 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. As a result of these trends, enterprises are struggling to efficiently manage and secure their digital identities.
SailPoint believes that its open identity platform is a critical, foundational layer of a modern cyber security strategy that complements traditional perimeter and endpoint-centric security systems, which on their own are increasingly insufficient to secure companies. Its sales strategy consists of both direct sales and indirect sales through resellers, such as Optiv, and system integrators, including Accenture, Deloitte, KPMG, and PwC.
On May 9, SAIL reported Q1 results with revenue rising 40% year/year to $49.7 mln. SAIL considers its subscription revenue to be the recurring portion of its revenue base. As such, this is a key metric to watch. Subscription revenue in Q1 jumped 54% year/year to $23.0 mln. SAIL reported a small non-GAAP profit in Q1 at $0.02 even though a loss was expected, so that was a good sign. SailPoint now has 984 customers.
SAIL notes that as the amount of data created and shared by business users increases and regulations like the European General Data Protection Act elevate the discussion around identity controls over that data, companies are realizing that identity governance must include managing access to data stored in files. SailPoint's goal is to secure and enable the digital identities of all users, across all applications and all data. That includes unstructured data found in emails, intranets and cloud storage applications. It needs to have the same level of oversight and governance as structured data found in applications.
In sum, SailPoint has a number of attractive qualities. The company sounds like it's a big player in its market niche within the cybersecurity framework. In fact, SailPoint pioneered the field of identity governance. We also like the top line growth and subscription revenue as a percentage of total revenue has been growing nicely. With that said, cybersecurity stocks can be pretty hit-or-miss
- OUR VIEW
- LEARNING CENTER