SailPoint, Inc. 10-K

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 $124.4 million as of January 31, 2025, which are held in cash deposits and money market funds. The carrying amount of our cash equivalents reasonably approximates fair value due to the short maturities of these instruments. Our cash and cash equivalents consist primarily of bank demand deposits and money market funds. Our investments are made for capital preservation purposes, and we do not enter into investments for trading or speculative purposes. We do not have material exposure to market risk with respect to our cash and cash equivalents, as these consist primarily of highly liquid investments purchased with original maturities of three months or less as of January 31, 2025. As of January 31, 2025, we do not believe a hypothetical 10% change in interest rates would have a material impact on the value of our cash equivalents. As of January 31, 2025, we had total indebtedness with an outstanding principal balance of $1.04 billion under our Term Loan. Borrowings under the Term Loan initially bore interest at an Adjusted Term Secured Overnight Financing Rate ("SOFR") determined by reference to the forward-looking term rate based on the SOFR as administered by the Federal Reserve Bank of New York, plus a credit spread adjustment for interest periods of one month, three months, and six months, respectively, plus in each, 6.00%. The interest rate on our Term Loan as of January 31, 2025 was 10.52% based on the Adjusted Term SOFR for a three-month interest period. Upon the repayment of our Term Loan, we have no remaining debt obligations or interest rate risk as of March 27, 2025. Foreign Currency Exchange Risk As a global company, we face exposure to adverse movements in foreign currency exchange rates. We primarily conduct business in the United States and EMEA. Our exposure is the result of operating in foreign countries, including growing our international headcount, which results in incurring expenses in local currencies while most of our sales are generated in U.S. dollars. 75 Table of Contents Fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our consolidated statements of operations. As the impact of foreign currency exchange rates has not been material to our historical operating results, to date we have not entered into derivative or hedging transactions; we may do so in the future if our exposure to foreign currency becomes more significant. As our international operations grow, we will continue to reassess our approach to managing our risk relating to fluctuations in foreign exchange rates. As of January 31, 2025, our cash and cash equivalents included $11.6 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. We manage our foreign subsidiaries as integral direct components of our operations and determined that the U.S. dollar is our functional currency. 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 managing our risk relating to fluctuations in currency rates. 76 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firm s 80 Consolidated Balance Sheets 81 Consolidated Statements of Operations 82 Consolidated Statements of Redeemable Convertible Units and P artners' Deficit (Successor) 83 Consolidated Statements of Stockholders’ Equity (Predecessor) 84 Consolidated Statements of Cash Flows 85 Notes to Consolidated Financial Statements 87 77 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of SailPoint Parent, LP Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of SailPoint Parent, LP and subsidiaries (the Company) as of January 31, 2025 and 2024, the related consolidated statements of operations, redeemable convertible units and partners’ deficit, and cash flows for the two years in the period ended January 31, 2025 and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended January 31, 2025, in conformity with U.S. generally accepted accounting principles. 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 Public Company Accounting Oversight Board (United States) (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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. 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 consolidated 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 consolidated 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. 78 Table of Contents Revenue Recognition – Allocation of Transaction Price to Performance Obligations Description of the Matter As described in Note 1 of the consolidated financial statements, the Company recognizes revenue in order to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration the company expects to be entitled to in exchange for those goods or services. The Company enters into contracts with customers that include various combinations of licenses, subscriptions, and professional services. Judgment exists in determining the timing and amount of revenue recognition for these customer contracts, which include multiple performance obligations, including the estimation of standalone selling price for each distinct performance obligation, particularly for those goods and services that are not sold separately. Given these factors, auditing management’s recognition of revenue requires judgment because of the significant management estimates required in allocating standalone selling prices. How We Addressed the Matter in Our Audit To test management’s estimation of the standalone selling prices for distinct performance obligations, our audit procedures included, among others, obtaining an understanding of the Company’s various product and service offerings and evaluating management’s application of the revenue recognition accounting requirements to determine which product and service offerings were distinct. To test management’s determination of relative standalone selling price for performance obligations, we performed audit procedures that included, among others, assessing the appropriateness of the methodology applied including the judgements and assumptions used to determine standalone selling price per service offering, testing the mathematical accuracy of the underlying data and calculations, and testing transactions to corroborate the data underlying the Company’s calculations. We also assessed the appropriateness of the related disclosures in the consolidated financial statements. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2024. Austin, Texas March 27, 2025 79 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Shareholders SailPoint Parent, LP Opinion on the financial statements We have audited the accompanying consolidated balance sheet of SailPoint Parent, LP (a Delaware limited partnership) and subsidiaries (the “Company”) (not presented herein) as of January 31, 2023 (Successor), the related consolidated statements of operations, stockholders’ equity (Predecessor), redeemable convertible units and partners’ deficit (Successor), and cash flows for the period August 16, 2022 to January 31, 2023 (Successor) and February 1, 2022 to August 15, 2022 (Predecessor), and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of its operations and its cash flows for the period August 16, 2022 to January 31, 2023 (Successor) and February 1, 2022 to August 15, 2022 (Predecessor), in conformity with accounting principles generally accepted in the United States of America. Basis for opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with 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 the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit 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 audit 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 audit provides a reasonable basis for our opinion. /s/ GRANT THORNTON LLP We have served as the Company’s auditor from 2010 to 2024. St. Louis, Missouri September 12, 2024 (except Note 1 as it relates to the unit split and the effects thereof, as to which the date is February 4, 2025 and Note 16, as to which the date is March 27, 2025) 80 Table of Contents SAILPOINT PARENT, LP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except units) January 31, 2025 January 31, 2024 Assets Current assets Cash and cash equivalents $ 121,293 $ 211,647 Accounts receivable, net of allowance 254,050 213,307 Contract acquisition costs 32,834 18,668 Contract assets, net of allowance 58,335 51,703 Prepayments and other current assets 45,870 35,752 Total current assets 512,382 531,077 Property and equipment, net 22,879 16,332 Contract acquisition costs, non-current 94,270 61,657 Contract assets, non-current, net of allowance 33,788 28,717 Other non-current assets 36,206 33,219 Goodwill 5,151,668 5,138,855 Intangible assets, net 1,560,723 1,779,875 Total assets $ 7,411,916 $ 7,589,732 Liabilities, redeemable convertible units and partners' deficit Current liabilities Accounts payable $ 3,515 $ 8,820 Accrued expenses and other liabilities 158,135 117,570 Deferred revenue 413,043 335,465 Total current liabilities 574,693 461,855 Deferred tax liabilities, non-current 136,528 206,464 Other long-term liabilities 32,128 24,954 Deferred revenue, non-current 36,399 36,575 Long-term debt, net 1,024,467 1,562,215 Total liabilities 1,804,215 2,292,063 Commitments and contingencies (Note 8) Redeemable convertible units, no par value, unlimited units authorized, 499,052,847 and 454,618,712 units issued and outstanding as of January 31, 2025 and 2024, respectively; aggregate liquidation preference of $8,100,352 and $6,861,381 as of January 31, 2025 and 2024, respectively 11,196,141 5,838,864 Partners' deficit Additional paid in capital — 37,431 Accumulated deficit (5,588,440) (578,626) Total partners' deficit (5,588,440) (541,195) Total liabilities, redeemable convertible units and partners' deficit $ 7,411,916 $ 7,589,732 See accompanying notes to consolidated financial statements. 81 Table of Contents SAILPOINT PARENT, LP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per unit amounts) Successor Predecessor Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to February 1, 2022 to January 31, 2023 August 15, 2022 Revenue Subscription $ 793,919 $ 622,830 $ 233,047 $ 227,398 Perpetual licenses 400 5,842 10,806 13,841 Services and other 67,292 70,900 32,820 34,915 Total revenue 861,611 699,572 276,673 276,154 Cost of revenue Subscription 236,581 205,053 85,044 49,440 Perpetual licenses 154 2,227 3,718 908 Services and other 68,998 69,355 28,055 32,454 Total cost of revenue 305,733 276,635 116,817 82,802 Gross profit 555,878 422,937 159,856 193,352 Operating expenses Research and development 169,730 180,778 78,223 81,261 Sales and marketing 466,903 461,187 201,331 140,939 General and administrative 107,979 113,701 51,896 115,723 Total operating expenses 744,612 755,666 331,450 337,923 Loss from operations (188,734) (332,729) (171,594) (144,571) Other income (expense), net Interest income 4,158 10,658 1,933 360 Interest expense (186,652) (187,059) (74,844) (1,492) Other income (expense), net (5,401) (3,219) (1,278) (1,873) Total other income (expense), net (187,895) (179,620) (74,189) (3,005) Loss before income taxes (376,629) (512,349) (245,783) (147,576) Income tax benefit (expense) 60,799 116,982 62,524 (1,663) Net loss $ (315,830) $ (395,367) $ (183,259) $ (149,239) Class A yield (764,549) (583,672) (250,638) Net loss attributable to Class B unitholders (1,080,379) (979,039) (433,897) Loss per unit attributable to Class B unitholders - basic and diluted $ (12.91) $ (12.13) $ (5.46) Weighted average Class B units outstanding - basic and diluted 83,716 80,746 79,535 See accompanying notes to consolidated financial statements. 82 Table of Contents SAILPOINT PARENT, LP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE UNITS AND PARTNERS' DEFICIT (In thousands) Redeemable Convertible Units Additional paid in capital Accumulated Deficit Total Partners' Deficit Successor Units Amount Balance at August 16, 2022 — $ — $ — $ — $ — Issuance of Class A Units 364,058 3,926,009 — — — Issuance of Class B Units 79,535 1,862,385 — — — Net Loss — — — (183,259) (183,259) Balance at January 31, 2023 443,593 5,788,394 — (183,259) (183,259) Issuance of Class A Units 3,152 35,095 — — — Issuance of Class B Units 689 16,648 — — — Repurchase of Class A Units (78) (863) (38) — (38) Repurchase of Class B Units (19) (410) — — — Equity-based compensation expense — — 37,469 — 37,469 Vesting of incentive units into Class B Units 1,603 — — — — Net loss — — — (395,367) (395,367) Balance at January 31, 2024 448,940 5,838,864 37,431 (578,626) (541,195) Issuance of Class A Units 36,568 407,171 — — — Issuance of Class B Units 7,989 193,150 — — — Repurchase of Class A Units (300) (3,338) (589) — (589) Repurchase of Class B Units (329) (1,583) (662) — (662) Equity-based compensation expense — — 31,714 — 31,714 Vesting of incentive units into Class B Units 2,293 — — — — Adjustment to reflect redemption value of redeemable convertible Class A Units — 3,736,278 — (3,736,278) (3,736,278) Adjustment to reflect redemption value of redeemable convertible Class B Units — 1,019,561 (67,894) (951,668) (1,019,562) Adjustment to reflect redemption value of unvested incentive units — 6,038 — (6,038) (6,038) Net loss — — — (315,830) (315,830) Balance at January 31, 2025 495,161 $ 11,196,141 $ — $ (5,588,440) $ (5,588,440) See accompanying notes to consolidated financial statements. 83 Table of Contents SAILPOINT PARENT, LP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) Preferred stock Common stock Additional paid in capital Accumulated Deficit Total Stockholders' Equity Predecessor Shares Amount Shares Amount Balance at January 31, 2022 — — 93,776 9 486,836 (87,462) 399,383 Exercise of stock options — — 156 — 2,825 — 2,825 Restricted stock units vested, net of tax settlement — — 749 — (1,534) — (1,534) Equity-based compensation expense — — — — 39,554 — 39,554 Common stock issued under employee stock purchase plan — — 134 — 5,435 — 5,435 Net loss — — — — — (149,239) (149,239) Balance at August 15, 2022 — $ — 94,815 $ 9 $ 533,116 $ (236,701) $ 296,424 See accompanying notes to consolidated financial statements. 84 Table of Contents SAILPOINT PARENT, LP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Successor Predecessor Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to February 1, 2022 to January 31, 2023 August 15, 2022 Cash flows from operating activities Net loss $ (315,830) $ (395,367) $ (183,259) $ (149,239) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization expense 237,248 263,638 118,838 12,366 Amortization and write-off of debt discount and issuance costs 12,685 4,152 1,748 1,017 Amortization of contract acquisition costs 24,899 11,519 2,762 16,211 (Gain) loss on disposal of property and equipment — 36 126 26 Provision for credit losses 2,534 1,662 2,554 244 Equity-based compensation expense 31,714 37,469 — 39,554 Deferred taxes (71,209) (124,919) (64,883) (967) Net changes in operating assets and liabilities, net of business acquisitions Accounts receivable (41,653) (57,397) (36,002) 14,908 Contract acquisition costs (71,678) (61,716) (32,890) (23,078) Contract assets (11,730) (21,139) (3,217) (5,364) Prepayments and other current assets (13,744) (594) (1,206) (8,553) Other non-current assets 6,006 (87) (2,257) (502) Operating leases, net 293 335 163 (792) Accounts payable (5,346) 4,232 (9,293) 4,514 Accrued expenses and other liabilities 36,565 22,634 (115,584) 43,687 Deferred revenue 72,855 65,188 53,118 4,452 Net cash used in operating activities (106,391) (250,354) (269,282) (51,516) Cash flows from investing activities Purchase of property and equipment (5,362) (2,577) (1,730) (5,295) Proceeds from sale of property and equipment 14 31 22 9 Capitalized software development costs (8,219) — — — Purchase of intangible assets — (1,900) — — Business acquisitions, net of cash acquired (15,377) (8,218) (5,824,632) — Net cash used in investing activities (28,944) (12,664) (5,826,340) (5,286) Cash flows from financing activities Proceeds from issuance of units 600,321 51,743 5,762,294 — Proceeds from issuance of long-term debt — — 1,590,000 — Payment of debt issuance costs — — (33,052) — Settlement of capped calls — — 111,376 — Proceeds from revolving line of credit 25,000 — — — Repayments to revolving line of credit (25,000) — — — Repayment of term loan (550,000) — (903,942) — Payments of deferred offering costs (2,892) — — — Payment for taxes related to net share settled restricted stock units — — — (1,534) Proceeds from employee stock purchase plan — — — 5,435 Net proceeds from exercise of stock options — — — 2,825 Repurchase of units (6,172) (1,311) — — Net cash provided by financing activities 41,257 50,432 6,526,676 6,726 Net change in cash, cash equivalents and restricted cash (94,078) (212,586) 431,054 (50,076) Cash, cash equivalents and restricted cash, beginning of period 218,468 431,054 — 444,216 Cash, cash equivalents and restricted cash, end of period $ 124,390 $ 218,468 $ 431,054 $ 394,140 85 Table of Contents Successor Predecessor Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to February 1, 2022 to January 31, 2023 August 15, 2022 Supplemental cash flow information: Cash paid for: Interest $ 152,171 $ 182,029 $ 66,018 $ 327 Income taxes, net of refunds 12,948 5,584 2,135 2,902 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 6,013 6,134 2,521 3,688 Supplemental disclosure of noncash investing and financing activities: Adjustment to reflect the redemption value of the redeemable convertible units and incentive units 4,761,878 — — — Contingent and holdback consideration included in accrued expenses and other liabilities 6,375 — — — Deferred offering costs included in accounts payable and accrued expenses and other liabilities 6,994 — — — Operating lease right of use assets obtained in exchange for lease liabilities 1,725 1,702 901 2,270 Reconciliation of cash, cash equivalents and restricted cash from the consolidated balance sheets to the consolidated statements of cash flows: Cash and cash equivalents $ 121,293 $ 211,647 $ 424,323 $ 387,429 Restricted cash within prepayments and other current assets 3,097 6,821 6,731 6,711 Total cash, cash equivalents, and restricted cash in the consolidated statements of cash flows $ 124,390 $ 218,468 $ 431,054 $ 394,140 See accompanying notes to consolidated financial statements. 86 Table of Contents SAILPOINT PARENT, LP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Description of Business and Summary of Significant Accounting Policies Organization SailPoint Parent, LP (the “Company”) was formed as a Delaware limited partnership in April 2022 and is a holding company that, through its subsidiaries, owns all of the outstanding partnership units of SailPoint Intermediate Holdings III, LP (“Holdings”), a Delaware limited partnership, that was formed in June 2022. The Company is an affiliated entity of Thoma Bravo. On August 16, 2022 (the “Closing Date” or “Merger Date”), Holdings closed on the Agreement and Plan of Merger (the “Merger Agreement”) by and among Holdings, SailPoint Technologies Holdings, Inc. (“Technologies Holdings”), and Project Hotel California Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Holdings (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub merged with and into Technologies Holdings (the “Merger”), with Technologies Holdings surviving the Merger as a wholly owned subsidiary of Holdings. The Company did not have any significant operations prior to the Merger. Subsequent to the Merger, the Company succeeded substantially all of the business of Technologies Holdings and Technologies Holdings is viewed as the predecessor to the Company (the “Predecessor”). Accordingly, these consolidated financial statements include certain historical consolidated financial and other data of the Predecessor for periods prior to the completion of the business combination. Periods subsequent to the Merger Date reflect the financial statements of the Company after the business combination (the "Successor”). The consolidated financial statements and footnotes include a black line division between the columns titled “Predecessor” and “Successor” to signify that the amounts shown for the periods prior to and following the Merger are not comparable. The Predecessor has recorded all expenses that were contingent on the closing of the Merger in the Predecessor period. See Note 5 for additional information on the Merger. The Company conducts business as SailPoint and delivers solutions to enable comprehensive identity security for the enterprise. For ease of reference, the terms “SailPoint,” or the “Company” as used in this report refer to both the Predecessor and the Successor and their respective subsidiaries. Unit Split On January 31, 2025, the Company effected a 60.91-for-1 forward unit split and a 0.45-for-1 reverse unit split of the Company’s Class A Units and Class B Units, respectively. All Class A Unit and Class B Unit and per unit information included in the accompanying consolidated financial statements and footnotes have been retroactively adjusted to reflect this unit split for all periods presented. Additionally, all incentive unit and per unit information in the consolidated financial statements and footnotes was adjusted to reflect the 0.45-for-1 reverse unit split of the Company’s Class B Units. Completion of Initial Public Offering On February 12, 2025, the Company closed its initial public offering (IPO) of 60.0 million shares of its common stock at an initial offering price to the public of $23.00 per share for an aggregate offering price of $1.380.0 million. The Company received net proceeds of approximately $1,249.1 million, net of the underwriting discounts, commissions and offering costs. Corporate Conversion Prior to February 12, 2025, the Company was a Delaware limited partnership named SailPoint Parent, LP. On February 12, 2025, concurrent with the closing of its IPO, SailPoint Parent, LP converted into a Delaware corporation pursuant to a statutory conversion and changed its name to SailPoint, Inc. The purpose of the Corporate Conversion was to reorganize the Company's corporate structure so that the entity that is offering its common stock to the public is a corporation rather than a limited partnership and so that the Company's existing equity holders own the Company's common stock rather than partnership interests in a limited partnership. In conjunction with the Corporate Conversion, all of the Company's outstanding partnership units were converted into an aggregate of 499,060,464 shares of our common stock. The number of shares of common stock issuable to holders of Class A Units and holders of Class B Units in connection with the Corporate Conversion were determined pursuant to the applicable 87 Table of Contents provisions of the plan of conversion. The Company continues to be controlled by Thoma Bravo following the Corporate Conversion. After giving effect to the Corporate Conversion and the closing of its IPO, Thoma Bravo controls approximately 86.2% of the voting power of the company. As a result of the Corporate Conversion, SailPoint, Inc. succeeded to all of the property and assets of SailPoint Parent, LP and succeeded to all of the debts and obligations of SailPoint Parent, LP. SailPoint, Inc. is governed by a certificate of incorporation filed with the Delaware Secretary of State. The consolidated financial statements and footnotes do not give effect to the Corporate Conversion. 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”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of SailPoint Parent, LP and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. 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. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events 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. Future events and their effects cannot be determined with certainty. On an ongoing basis, management evaluates these estimates judgments and assumptions. The Company bases its estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. In particular, the Company makes estimates with respect to the fair value allocation of multiple performance obligations in revenue recognition, the expected period of benefit of contract acquisition costs, the assumptions underlying the fair value used for equity-based compensation expense, and estimated useful lives and impairment of intangible assets and goodwill arising from business combinations and the assumptions underlying the fair value used for the redemption value of the redeemable convertible units. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. Actual results could differ from those estimates. Cash, Cash Equivalents and Restricted Cash The Company considers 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 $2.8 million related to the Company’s corporate headquarters lease. 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 the Company’s 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. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. 88 Table of Contents Concentration of Credit and Other Risks Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, accounts receivable, and contract assets. The Company maintains its cash in bank deposit accounts that exceeded federally insured limits as of January 31, 2025 and 2024. There was no concentration of credit risk for customers as of January 31, 2025 and 2024 as no individual entity represented more than 10% of accounts receivable and contract assets. No customer accounted for more than 10% of revenue during the year ended January 31, 2025 and 2024. No customer represented more than 10% of revenue during the Successor and Predecessor periods presented. 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 16 “Segments and Geographic Information.” Accounts Receivable and Allowance for Expected Credit Losses The Company continuously assesses the collectability of outstanding customer balances and in doing so, the Company assesses the need to maintain an allowance for expected credit losses resulting from the non-collection of customer balances. 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 the amount is not collectible. Recoveries of financial assets previously written off are recorded directly to earnings when received. Management estimates the allowance for expected credit losses using relevant available information 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. The Company reviews renewals and new businesses for factors such as past collection experience, age of the customer balances, 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, the Company evaluated its financial assets with similar risk characteristics on a collective (pool) basis. A financial asset will be measured individually only if it does not share similar risk characteristics with other financial assets. Property and Equipment Property and equipment 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. Assets to be disposed of are reported at the lower of carrying value or net realizable value. Goodwill Goodwill represents acquisition costs in excess of the fair value of the identified net assets acquired. The Company has one reporting unit for goodwill impairment purposes. Goodwill is tested for impairment annually, or more often if and when events or circumstances indicate that an impairment may exist. The Company performs the annual impairment test in the fourth quarter of each fiscal year. The Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the assessment indicates that the fair value of the reporting unit is less than its carrying amount, a quantitative assessment is performed. The Company estimates the fair value of the reporting unit and compares this amount to the carrying value of the reporting unit. If the carrying value of the reporting unit exceeds its fair value, an impairment charge is recorded. Intangible Assets Intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense is recognized in the consolidated statements of operations based on the use of the intangible asset. The Company’s intangible assets primarily consist of customer relationships, developed technology, and trade names. The Company periodically reviews the estimated remaining useful life of intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. Long-Lived Assets 89 Table of Contents Periodically, the Company evaluates the recoverability of its long-lived assets, including property and equipment and intangible assets, for possible impairment whenever events or circumstances indicate that the carrying amount of such assets or asset groups may not be recoverable. Recoverability of these assets or asset groups is measured by comparison of the carrying amount of each asset, or related asset group, to the future undiscounted cash flows the asset or asset group is expected to generate. If the undiscounted cash flows are less than the carrying amount, an impairment charge is recorded to reduce the carrying amount of the asset group to its fair value. Business Combinations The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated acquisition-date 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, the Company 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 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, the Company has not capitalized any software development costs through January 31, 2025 and all such costs have been recorded as research and development expenses as incurred in the consolidated statements of operations. Internal Use Software Development Costs Costs to develop software internally are capitalized and recorded as a component of property and equipment, net. The Company capitalizes qualifying costs associated with internally-developed software incurred during the application development stage. Costs incurred during the preliminary project and post-implementation stages, including training and maintenance, are expensed as incurred. Capitalized costs are amortized on a project-by-project basis using the straight-line method over an estimated useful life of six years and is recorded as cost of subscription revenue in the consolidated statements of operations. The Company capitalized internal use software development costs of $8.2 million for the year ended January 31, 2025. There were no amounts capitalized for the year ended January 31, 2024 and for the Successor and Predecessor periods of 2023. Amortization expense was $0.4 million for the year ended January 31, 2025 and is included in cost of subscription revenue in the consolidated statements of operations. Capitalized Implementation Costs Costs to implement cloud computing hosting arrangements are capitalized and amortized using the straight-line method over the expected term of the arrangement, including periods which are reasonably expected to be renewed. Costs include direct costs for third-party consulting services. Software maintenance and training costs are expensed in the period in which t he services are received. Capitalized costs, net of accumulated amortization, are included in prepayments and other non-current assets. The Company capitalized implementation costs of $5.8 million for the year ended January 31, 2025. Amounts for the year ended January 31, 2024, and for the Successor and Predecessor periods of 2023 were not material. Amortization expense was $1.4 million for the year ended January 31, 2025. Amortization expense for the year ended January 31, 2024, and the Successor and Predecessor periods in 2023 was not material. Deferred Offering Costs Deferred offering costs, which consist of direct incremental legal, accounting, consulting, and other fees related to the Company’s IPO are capitalized in prepayments and other current assets on the consolidated balance sheets. The deferred offering costs will be offset against IPO proceeds upon the consummation of an IPO. There were deferred offering costs of $9.7 million as of January 31, 2025. There were no deferred offering costs as of January 31, 2024 . 90 Table of Contents Revenue Recognition The Company recognizes revenue in order to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the Company expects to be entitled in exchange for those goods or services. To achieve this, the following steps are applied: • Identify the contract with a customer • Identify the performance obligations in the contract • Determine the transaction price • Allocate the transaction price to the performance obligations in the contract • Recognize revenue when or as performance obligations are satisfied Revenue consists of fees for software-as-a-service (“SaaS”) subscriptions, perpetual and term licenses for the Company’s software products, post-contract customer support (referred to as maintenance and support) and other subscription services and professional services including training and other revenue. The Company recognizes revenue net of any applicable value added or sales tax. Subscription Revenue Subscription revenue consists of (i) fees for access to, and related support for, the SaaS offerings, (ii) fees for term subscriptions to the Company’s software solutions, (iii) fees for ongoing maintenance and support of perpetual licensed solutions and (iv) other subscription services, which includes cloud managed services, and certain professional services. Term subscriptions include the term licenses and ongoing maintenance and support. 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. Subscription revenue, including support for term licenses, is recognized straight-line over the term of the applicable agreement. Revenue related to term license performance obligations is generally recognized upfront at the point in time when the customer has taken control of the software license. Subscription arrangements generally have a term of three years and are non-cancellable. The Company typically invoices the customer in advance and in annual installments. Perpetual License Revenue Perpetual licenses provide customers with the same functionality as term licenses but differs primarily in duration of the license. Revenues from license performance obligations are generally recognized upfront at the point in time when the customer has taken control of the software license. All license transactions include maintenance and support performance obligations, which are recognized as subscription revenue. Services and Other Revenue Services and other revenue consist primarily of fees from professional services provided to customers and partners to configure and optimize the use of the Company’s solutions as well as non-subscription training services. The Company’s professional services are structured on a time-and-materials or fixed priced basis and the related revenue is recognized as the services are rendered. For time-and-material contracts, as the invoiced amount corresponds directly with the value to the customer, the Company applied the practical expedient to recognize revenue in the amount for which it has the right to invoice. For fixed price contracts, the Company uses a cost-based input method as the measure of progress toward satisfying the performance obligation. Contracts with Multiple Performance Obligations The majority of the Company’s contracts with its customers include various combinations of licenses, subscriptions and professional services. The Company accounts for individual performance obligations separately if they are distinct from other promises in the contract. If not considered distinct, the promised goods or services are combined with other goods or services and accounted for as a combined performance obligation. The transaction price is allocated to the separate performance obligations on a relative standalone selling price (“SSP”) basis. Judgement is required to determine the SSP for each distinct performance obligation. The Company typically determines SSP based on observable prices for performance obligations when sold separately. When such observable prices are not available, the Company estimates SSP based on pricing objectives, market conditions and other factors, including customer size and geography, and product and service specific factors. 91 Table of Contents Contract Balances The timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a receivable when revenue is recognized prior to invoicing and payment will become due solely based on the passage of time. A contract asset results when revenue is recognized prior to invoicing and payment is contingent upon transfer of control of another separate performance obligation. Deferred revenue is recorded when payment is received prior to the recognition of revenue. Contract assets and deferred revenue that will be realized during the succeeding 12-month period is recorded as current, and the remaining balance of deferred revenue is recorded as non-current. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 days from the date of invoice. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts generally do not include a significant financing component. Contract Acquisition Costs Sales commissions paid to the Company’s sales force and the related employer payroll taxes, collectively “contract acquisition costs,” are considered incremental and recoverable costs of obtaining a contract with a customer. The Company defers these costs and amortizes them 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 subscriptions 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 deferred and amortized over the expected period of benefit which the Company has determined to be five years. Commissions for renewals of subscription offerings are amortized over each renewal’s expected period of benefit. The Company determines the period of benefit by taking into consideration customer contracts, customer turnover rates, the life of the Company’s technology and other factors. The Company does not pay sales commissions on renewals of maintenance and support agreements related to perpetual licenses. Beginning in the year ended January 31, 2024, we ceased paying sales commissions on perpetual licenses as we focused on selling subscriptions. The portion of contract acquisition costs that the Company anticipates will be recognized within twelve months is recorded as current contract acquisition costs and the remaining portion is recorded as non-current contract acquisition costs in the consolidated balance sheets. Amortization of contract acquisition costs is included in sales and marketing expenses in the accompanying consolidated statements of operations. Cost of Revenue Cost of Subscription Revenue . Cost of subscription revenue consists primarily of employee-based costs (which consists of salaries, benefits, bonuses, and equity-based compensation and allocated overhead) of the customer support organization, contractor costs to supplement staff levels, amortization expense for developed technology acquired, amortization expense for capitalized software development costs, third party royalties, and third-party cloud-based hosting costs. Cost of Perpetual License Revenue . Cost of perpetual license revenue consists of amortization expense for developed technology acquired, and third-party royalties. Cost of Services and Other Revenue . Cost of services and other revenue consists primarily of employee-based costs of professional services and training organizations, travel-related costs and contractor costs to supplement staff levels. Research and Development Expenses Research and development expenses consist primarily of employee-based costs, software and hosting arrangement expenses, professional services expense, and amortization expense for acquired intangible assets. Sales and Marketing Expenses Sales and marketing expenses consist primarily of personnel costs and the related overhead costs to support the Company’s staff, costs for events and travel, costs of general marketing and promotional activities, payment processing fees, and allocated facilities and overhead costs. General and Administrative Expenses General and administrative expenses consist primarily of personnel costs and the related overhead costs to support the Company’s staff across the corporate functions of executive, finance, human resources, information technology, internal operations and legal, as well as third-party professional fees, bad debt expense, travel and facilities costs. 92 Table of Contents Advertising Expenses Advertising costs are expensed as incurred and are included in sales and marketing expense. Advertising expenses were approximately $25.5 million, $22.3 million, $11.9 million, and $8.1 million for the years ended January 31, 2025 and 2024, and the Successor and Predecessor periods in 2023, respectively. Redeemable Convertible Units The Class A and Class B Units are classified as mezzanine equity and outside of Partners’ deficit because they include a redemption provision upon a sale or reorganization, which are deemed liquidation events that are considered outside of the Company’s control. The Class A and Class B Units were recorded at the original issue price. The Company adjusted the carrying values of the Class A and Class B Units to the redemption value that represents the fair value associated with such deemed liquidation events as the closing of the IPO was considered probable as of January 31, 2025. See Note 12 for additional information. Certain of the Class A and Class B Units issued pursuant to individual equity agreements contain repurchase provisions allowing for the repurchase of such units, generally at fair value, at the Company’s option upon the unitholders’ termination of services to the Company. Subsequent adjustments to increase or decrease the carrying values to their respective redemption values are to be made only if and when the redemption event becomes probable. Increases to the carrying value of redeemable convertible units recognized are charged to retained earnings, or in the absence of retained earnings, to additional paid in capital, or in the absence of additional paid in capital, to accumulated deficit. Equity-Based Compensation Successor Period In connection with the Merger, unvested stock options and restricted stock units on the Closing Date were converted to contingent rights to receive an amount in cash. The cost of the cash-settled awards is expensed straight-line over the vesting period. During the years ended January 31, 2025 and 2024, service-based and performance based incentive units were granted to employees, directors, and non-employees. Equity-based compensation costs for granted units are recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period for awards with only a service condition. For units subject to performance conditions, the Company records expense based on the accelerated attribution method when the performance condition becomes probable. The Company recognizes the effect of forfeitures in equity-based compensation expense based on actual forfeitures when they occur. The fair value of the units underlying the incentive awards had been determined by the Board of Managers (the “Board”), with input from management and contemporaneous third-party valuations, as there was no public market for the Company’s units. Given the absence of a public trading market, and in accordance with the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately Held Company Equity Securities Issued as Compensation , the Board exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of the units at each option grant date using an option pricing method. The Company makes assumptions to determine the fair value of the units, including the value of the Company, expected time to liquidity, and expected volatility. The Company adjusted the carrying value of the vested and unvested incentive units to the redemption value as the closing of the IPO was considered probable as of January 31, 2025. The redemption value is equal to the fair value of the Class B Units for the proportion of service provided for the award as of January 31, 2025. Increases to the carrying value of the incentive units are charged to retained earnings, or in the absence of retained earnings, to additional paid in capital, or in the absence of additional paid in capital, to accumulated deficit. Predecessor Period The Company granted service-based stock options and restricted stock units to employees, directors, and nonemployees. The Company recognizes equity-based compensation expense for its awards on a straight-line basis over the requisite service period of the individual grants, which is generally the vesting period, based on the estimated grant date fair values. The Company estimated the fair value of stock options granted using the Black-Scholes option-pricing model, which required the Company to estimate the expected term, fair value of common stock, expected volatility, risk-free interest rate, and dividend yield. The fair value of restricted stock units were estimated on the date of grant based on the fair value of the Company’s common stock. 93 Table of Contents Equity-based compensation expense associated with the Company’s Employee Stock Purchase Plan (“ESPP”) was measured at fair-value using a Black-Scholes option-pricing model at commencement of each offering period and recognized over that offering period. Foreign Currency The Company manages its foreign subsidiaries as integral direct components of its operations. The Company has determined that its functional currency is the U.S. dollar. The Company periodically assesses the applicability of the U.S. dollar as the Company’s functional currency by reviewing the salient indicators as indicated in the authoritative guidance for foreign currency matters. Assets and liabilities denominated in other currencies are remeasured into U.S. dollars at current exchange rates for monetary assets and liabilities and at historical exchange rates for non-monetary assets and liabilities. Revenue and expense incurred in other currencies are remeasured into U.S. dollars when incurred. Remeasurement losses in currencies other than the functional currency were $3.8 million, $2.9 million, $1.0 million, and $2.0 million for the years ended January 31, 2025 and 2024, and the Successor and Predecessor periods in 2023, respectively. Income Taxes The Successor is a limited partnership and is not taxable for federal and most state income tax purposes. As a result, the Successor’s earnings or losses, to the extent not included in a taxable subsidiary, for federal and most state purposes are included in the tax returns of the individual partners. Net earnings for financial statement purposes may differ significantly from taxable income reportable to unitholders as a result of differences between the tax basis and financial basis of assets and liabilities, differences between the tax accounting and financial accounting treatment of certain items, and due to allocation requirements related to taxable income under the Company’s partnership agreement. The Successor conducts certain activities through corporate subsidiaries which are subject to federal, state, local and foreign income taxes. The Predecessor was a corporation subject to federal and state taxes. The Company and its subsidiaries account for income taxes under the asset and liability method. 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. Deferred income tax assets are reduced by a valuation allowance when, considering all sources of taxable income, in the opinion of management, it is more likely than not that some portion or all of the deferred income tax assets will not be realized. Accordingly, the need to establish such allowance is assessed periodically by considering matters such as future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. The evaluation of recoverability of the deferred tax assets requires the Company to weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 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. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority, solely based on its technical merits. The tax benefit recognized is measured as the largest amount of benefit which is greater than 50 percent likely to be realized upon settlement with the taxing authority. Leases 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 non-cancelable operating lease agreements are primarily for facilities. Right-of-use (“ROU”) assets and lease liabilities are recognized upon lease commencement at the present value of future lease payments. 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. ROU assets include adjustments related to lease incentives, and upfront lease payments. ROU assets are subject to evaluation for impairment or disposal on a basis consistent with other long-lived assets. The implicit rates within the operating leases are generally not determinable and therefore the Company uses the incremental borrowing rate at the lease commencement date to determine the present value of lease payments. The lease term includes the non-cancelable period of the lease plus any additional periods covered by an option to extend that the Company is 94 Table of Contents reasonably certain to exercise. Lease expense is recognized on a straight-line basis over the lease term. The Company does not recognize right-of-use assets and lease liabilities for leases with a term of twelve months or less. The Company accounts for lease agreements with lease and non-lease components 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. Net Loss Per Unit Successor The Company considers its redeemable convertible Class A Units to be preferred stock in the computation of basic net loss per unit because the Class A Units have dividend rights, preference upon liquidation, and do not share in the residual distributions with the Class B Units. Therefore, the Class B Units are subordinated to the Class A Units. The Class B Units are considered common stock (“common units”). Basic net loss per unit attributable to common unitholders is computed by dividing the net loss attributable to common unitholders by the weighted-average number of common units outstanding during the period, without the consideration for potential dilutive common units. For the purpose of calculating basic net loss per unit, the Company calculated the net loss attributable to common unitholders by adjusting the net loss to include the yield earned during the applicable period on Class A Units. For the year ended January 31, 2025, the Class A yield included $644.2 million of yield earned during the period and a deemed dividend of $120.4 million. The deemed dividend primarily represents the difference between the proceeds received by the Company and the fair value of the units issued to Thoma Bravo in December 2024. Refer to Note 12 for further details regarding the Class A yield. Dilutive net loss per unit is computed by giving effect to all of the Company’s potential common units outstanding of the Company’s Class B Units to the extent the potential shares are dilutive. Basic and diluted net loss per unit were the same as the inclusion of all potential units of the Company’s common units would have been anti-dilutive. As of January 31, 2025 and 2024, there were 3.9 million and 5.7 million, respectively, of unvested incentive units that could potentially dilute basic EPS in the future that were not included in the computation of diluted EPS because to do so would have been antidilutive. As of January 31, 2023, there were no antidilutive securities as the incentive units were not yet granted. Predecessor Net losses for the Predecessor period from February 1, 2022 to August 15, 2022 were entirely attributable to Predecessor shareholders. Additionally, due to the impact of the Merger, the Company’s capital structures for the Successor and Predecessor periods are not comparable. As a result, the presentation of loss per share for the periods prior to such transaction is not meaningful. Recently Adopted Accounting Pronouncements Accounting Standards Update 2023-07 In November 2023, the FASB issued ASU-2023-07, Improvements to Reportable Segment Disclosures , (“ASU 2023-07”), which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024 with early adoption permitted. Adoption of ASU 2023-07 should be applied retrospectively to all prior periods presented in the financial statements. The Company adopted this standard on a retrospective basis and did not have a material impact on its consolidated financial statements or disclosures. Refer to Note 16 for further details. Recently Issued Accounting Standards Not Yet Adopted Accounting Standards Update 2023-09 In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , (“ASU 2023-09”), which requires public business entities on an annual basis to disclose specific categories in a tabular rate reconciliation and provide additional information for reconciling items that meet a five percent quantitative threshold. Additionally, the ASU requires all entities to disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes, as well as individual jurisdictions where income taxes paid are equal to or greater than five percent of total income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2025. Early adoption is permitted and the updated guidance should be applied on a prospective basis, with a retrospective application permitted in the financial statements. The Company is currently evaluating the impact of the new standard on its consolidated financial statements and related disclosures. 95 Table of Contents Accounting Standards Update 2024-01 In March 2024, the FASB issued ASU 2024-01, Compensation-Stock Compensation (Topic 718): Scope Applications of Profits Interests and Similar Awards , (“ASU 2024-01”), which provides illustrative guidance on how to apply the scope guidance to determine whether profits interests and similar awards should be accounted for as share-based payment arrangements under Topic 718 or under other GAAP. ASU 2024-01 is effective for annual periods beginning after December 15, 2025. Early adoption is permitted and may be adopted prospectively or retrospectively. The Company is currently evaluating the impact of the new standard on its consolidated financial statements and related disclosures. Accounting Standards Update 2024-03 In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. ASU 2024-03 should be applied on a prospective basis, with a retrospective application permitted in the financial statements. The Company is currently evaluating the impact of the new standard on its consolidated financial statements and related disclosures. 96 Table of Contents 2. Revenue Recognition Disaggregation of Revenue The following table presents the Company’s revenue disaggregated by subscription product categories (in thousands): Successor Predecessor Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022 Subscription SaaS $ 444,595 $ 312,259 $ 105,451 $ 99,342 Maintenance 154,351 155,528 71,522 80,755 Term subscriptions 173,917 144,181 52,183 42,470 Other subscription services 21,056 10,862 3,891 4,831 Total Subscription 793,919 622,830 233,047 227,398 Perpetual licenses 400 5,842 10,806 13,841 Services and other 67,292 70,900 32,820 34,915 Total revenue $ 861,611 $ 699,572 $ 276,673 $ 276,154 The following table summarizes the revenue the Company recognizes at a point in time and over time (in thousands): Successor Predecessor Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022 Revenue recognized at a point in time $ 110,479 $ 106,450 $ 48,377 $ 43,020 Revenue recognized over time 751,132 593,122 228,296 233,134 Total revenue $ 861,611 $ 699,572 $ 276,673 $ 276,154 Contract Acquisition Costs A summary of the activity impacting contract acquisition costs is presented below (in thousands): Successor Predecessor Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022 Beginning Balance $ 80,325 $ 30,128 $ — $ 93,547 Additional contract acquisition costs 71,678 61,716 32,890 23,078 Amortization of contract acquisition costs (24,899) (11,519) (2,762) (16,211) Ending Balance $ 127,104 $ 80,325 $ 30,128 $ 100,414 There were no material impairments of contract acquisition costs for the years ended January 31, 2025 and 2024, and the Successor and Predecessor periods in 2023. Contract Balances Deferred revenue consists primarily of payments received in advance of revenue recognition under the Company’s contracts with customers. Revenue recognized during the reporting periods that was previously defer red was $339.6 million, $272.3 million, $60.7 million, and $153.6 million, for the years ended January 31, 2025 and 2024, and the Successor and Predecessor periods in 2023, respectively. 97 Table of Contents Remaining Performance Obligations The Company’s contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. These remaining performance obligations represent contract value that has not yet been recognized as revenue. Remaining performance obligations 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 January 31, 2025, remaining performance obligations were $1.39 billion, of which the Company expects to recognize $682.9 million as revenue over the next 12 months. 3. Allowance for Expected Credit Losses The following tables present the changes in the allowance for expected credit losses for accounts receivable measured at amortized cost (in thousands): Successor Predecessor January 31, 2025 January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022 Beginning Balance $ 1,185 $ 733 $ — $ 563 Provision for credit losses 2,507 3,604 1,376 400 Write-offs (3,500) (3,152) (643) (474) Ending Balance $ 192 $ 1,185 $ 733 $ 489 The following tables present the changes in the allowance for expected credit losses for contract assets measured at amortized cost (in thousands): Successor Predecessor January 31, 2025 January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022 Beginning Balance $ 141 $ 1,453 $ — $ 2,387 Provision for (reduction in) credit losses 27 (1,312) 1,453 (10) Ending Balance $ 168 $ 141 $ 1,453 $ 2,377 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 (in thousands): January 31, 2025 Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 81,972 $ — $ — $ 81,972 Total assets $ 81,972 $ — $ — $ 81,972 Liabilities: Contingent consideration $ — $ — $ 5,700 $ — Total liabilities $ — $ — $ 5,700 $ — 98 Table of Contents January 31, 2024 Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 181,202 $ — $ — $ 181,202 Total assets $ 181,202 $ — $ — $ 181,202 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 January 31, 2025 and 2024 and are excluded from the fair value tables above. The carrying value of debt is considered Level 1 and approximates fair value. As of January 31, 2025, the Company measured its contingent consideration associated with its Imprivata acquisition, on a recurring basis using significant unobservable inputs, classified as Level 3. The Company recorded the contingent consideration at its fair value on the acquisition date. The Company determined the fair value of contingent consideration using a probability weighted discounted cash flow method. Each reporting period thereafter, the obligation are revalued and changes in their fair values are recorded within sales and marketing expenses within the consolidated statements of operations. Changes in the fair value of the contingent consideration can result from changes in assumed discount periods and rates, and from changes pertaining to the estimated or actual achievement of the defined milestones. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the fair value and corresponding changes in fair value of the contingent consideration the Company records in any given period. As of January 31, 2025, there was not any material change in the fair value of the contingent consideration since the Imprivata acquisition date. See Note 5 for additional information on the Imprivata acquisition. The estimated fair value of the contingent consideration was determined with the following key inputs as of the acquisition date and is consistent with those as of January 31, 2025: Probability of achievement 84.2 % Expected timing of payment FY 2026 Discount rate 13.5 % There were no transfers between fair value measurement levels during the year ended January 31, 2025 and 2024. The consolidated financial statements as of January 31, 2024 do not include any nonrecurring fair value measurements relating to assets or liabilities. 5. Business Combinations Acquisition of SailPoint Technologies Holdings, Inc. On August 16, 2022, pursuant to the Merger Agreement, Holdings completed the acquisition of the Predecessor in a transaction valued at approximately $6.3 billion. Upon the Closing Date, the separate existence of Merger Sub ceased and the Predecessor survived the Merger as a wholly owned subsidiary of Holdings. Pursuant to the Merger Agreement, each share of common stock, par value $0.0001 per share, of the Predecessor (the “Common Stock”) outstanding immediately prior to the effective time of the Merger, was converted into the right to receive $65.25 per share in cash, subject to applicable withholding taxes (the “Merger Consideration”). Trading of the Predecessor’s Common Stock was suspended on the New York Stock Exchange and the Common Stock was subsequently delisted. The Company accounted for this transaction as a business combination in accordance with the acquisition method of accounting, which generally requires, among other things, that assets acquired and liabilities assumed be recognized at their estimated fair values as of the Closing Date. Acquisition-related transaction costs incurred as part of the Merger, primarily included advisory, legal and accounting fees and were expensed as incurred. 99 Table of Contents The valuation of the assets acquired and liabilities assumed was based on estimated fair values at the Closing Date. The allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed reflect various fair value estimates and analyses, including work performed by third-party valuation specialists. The purchase price for the Predecessor consisted of the following (in thousands): Cash consideration for SailPoint common stock $ 6,160,575 Rollover equity 26,100 Liability for vested options 52,092 Fair value of restricted stock units and options exchanged 30,654 Total purchase price $ 6,269,421 Reconciliation of cash contributions for the Predecessor (in thousands): Capital contribution $ 5,950,502 Rollover equity 26,100 Total capital contribution 5,976,602 Thoma Bravo transaction costs (188,208) Total net capital contribution 5,788,394 Non-cash contribution (26,100) Net cash contribution 5,762,294 Debt proceeds (Note 9) 398,281 Total cash consideration for SailPoint common stock $ 6,160,575 The purchase price has been allocated to the fair value of the individual assets acquired and liabilities assumed as follows (in thousands): Cash and cash equivalents $ 394,140 Accounts receivable 233,490 Contract assets, current 39,817 Prepayments and other current assets 26,379 Property and equipment 21,805 Contract assets, non-current 16,388 Other non-current assets 31,567 Goodwill 5,086,091 Intangible assets, 2,122,500 Accounts payable (13,410) Accrued expenses and other liabilities (130,125) Convertible senior notes (903,942) Deferred revenue (218,599) Deferred tax liabilities, non-current (384,694) Other long-term liabilities (23,883) Deferred revenue, non-current (28,103) Total fair value of assets acquired and liabilities assumed $ 6,269,421 The Company recorded definite-lived intangible assets related to the customer relationships, developed technology, and trade name. Fair value was determined using the multi-period excess earnings method and relief from royalty method, under the income approach. The Company applied judgment which involved the use of significant assumptions with respect to 100 Table of Contents revenue growth rates, customer attrition rate, discount rate, and terminal growth rate in relation to the customer relationships and developed technology. The fair values of the identifiable intangible assets acquired on the Closing Date were as follows: Amount Estimated Useful Life (In thousands) (In years) Customer relationships $ 1,061,000 10-16 Developed technology 697,000 7 Trade name 243,000 18 Other 121,500 2 Total identifiable intangible assets $ 2,122,500 Transaction costs were expensed as incurred and recorded to general and administrative expenses on the consolidated statements of operations. The Company incurred transaction costs associated with the Merger Agreement of $1.0 million and $72.2 million in the Successor and Predecessor periods in 2023, respectively. Transaction costs of $71.3 million that were paid on the Merger Date were recorded in the Predecessor period and included as an assumed liability. Transaction-related bonuses of $4.8 million were also recorded to general and administrative expenses on the consolidated statements of operations in the Predecessor period and were paid after the Closing Date. 2025 Acquisitions Imprivata On December 13, 2024, the Company acquired the Identity Governance and Administration business of Imprivata, a digital identity company for life- and mission-critical industries that is majority owned by Thoma Bravo, for a cash payment at closing of $10.7 million and up to an additional cash amount of $7.4 million related to contingent consideration subject to the achievement of certain customer contract assignments or migrations. The contingent consideration is recorded in the consolidated balance sheets in accrued expenses and other liabilities at a fair value of $5.7 million and as a non-cash investing activity in the consolidated statement of cash flows. The remaining contingent consideration is payable eight months after the closing date. See Note 4 for additional information on the fair value of the contingent consideration. The following table summarizes the preliminary purchase price allocation as of the date of acquisition (in thousands): Accounts receivable $ 1,572 Goodwill 9,247 Intangible assets 9,800 Deferred revenue (4,236) Total fair value of assets acquired and liabilities assumed $ 16,383 The preliminary fair value estimates and assumptions regarding certain tangible assets acquired and liabilities assumed, and the valuation of intangible assets acquired are subject to change as additional information is obtained during the measurement period. The goodwill arising from the acquisition is deductible for tax purposes. The fair value of the developed technology was estimated using a market approach. The fair value of customer relationships was estimated using the excess earnings method. The following table presents the fair values and useful lives of the identifiable intangible assets acquired: Amount Estimated Useful Life (In thousands) (In years) Developed technology $ 1,600 3 Customer relationships 8,200 4 Total identifiable intangible assets $ 9,800 101 Table of Contents Double Zero On April 9, 2024 (“Acquisition Date”), the Company acquired all of the outstanding stock of Double Zero Security, Inc. (“Double Zero”), a third-party provider of digital-identity threat detection and response for secure enterprise access. The aggregate consideration transferred in connection with this acquisition was $5.4 million, net of cash acquired, and $0.8 million was related to certain indemnities ("Holdback Consideration"). The Holdback Consideration is recorded in the consolidated balance sheets in accrued expenses and other liabilities. The Company paid $0.1 million of the Holdback Consideration 60 days after the Acquisition Date and the remaining Holdback Consideration is payable on the one-year anniversary of the Acquisition Date. The following table summarizes the preliminary purchase price allocation as of the date of acquisition (in thousands): Cash and cash equivalents $ 9 Accounts receivable 25 Prepayments and other current assets 18 Deferred tax assets, non-current 860 Goodwill 3,566 Intangible assets 1,360 Accounts payable (41) Accrued expenses and other liabilities (108) Deferred revenue (311) Total fair value of assets acquired and liabilities assumed $ 5,378 The fair value of the developed technology was estimated using a market approach. 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 $ 1,360 6 2024 Acquisitions Osirium On October 30, 2023, the Company acquired all of the outstanding stock of Osirium Technologies PLC (“Osirium”), a SaaS company delivering privileged access management, privileged endpoint management, and IT process automation solutions. The aggregate consideration paid in connection with this acquisition was $8.2 million, net of cash acquired. 102 Table of Contents The following table summarizes the preliminary purchase price allocation as of the date of acquisition (in thousands): Cash and cash equivalents $ 534 Accounts receivable 562 Prepayments and other current assets 304 Goodwill 8,276 Intangible assets 2,361 Accounts payable (250) Accrued expenses and other liabilities (813) Deferred tax liabilities, non-current (590) Deferred revenue (1,632) Total fair value of assets acquired and liabilities assumed $ 8,752 The fair value of the developed technology was estimated using a market approach. The following table presents the fair values and useful lives of the identifiable intangible assets acquired: Amount Estimated Useful Life (In thousands) (In years) Developed technology $ 2,361 6 Other 2023 Acquisitions SecZetta On January 12, 2023, the Company acquired all of the outstanding stock of SecZetta Inc. (“SecZetta”), a leading provider of third-party identity risk solutions. The aggregate consideration paid in connection with this acquisition was $58.2 million, net of cash acquired. The following table summarizes the final purchase price allocation as of the date of acquisition (in thousands): Cash and cash equivalents $ 6,712 Accounts receivable 1,306 Prepayments and other current assets 643 Goodwill 35,180 Intangible assets 25,830 Accounts payable (221) Accrued expenses and other liabilities (723) Deferred tax assets, non-current 1,582 Deferred revenue (5,400) Total fair value of assets acquired and liabilities assumed $ 64,909 The following table presents the fair values and useful lives of the identifiable intangible assets acquired: Amount Estimated Useful Life (In thousands) (In years) Developed technology $ 19,750 6 Customer relationships 5,900 4 Trade name 180 2 Total identifiable intangible assets $ 25,830 103 Table of Contents The fair value of developed technology and trade names were estimated using the relief from royalty method utilizing assumptions for annual obsolescence, royalty rates, tax rate, and discount rate. The fair value of customer relationships was estimated using the replacement cost method, 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. Additional Acquisition Related Information The operating results of the acquired companies are included in the Company’s 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 excluding the Merger, individually and in the aggregate, were not material to the Company’s consolidated statements of operations. 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. Unless otherwise noted above, goodwill arising from these acquisitions are not deductible for tax purposes. 6. Goodwill and Intangible Assets The changes in the carrying amounts of goodwill for the year ended January 31, 2025 and 2024 were as follows (in thousands): Balance at January 31, 2023 $ 5,129,967 Goodwill acquired 8,276 Measurement period adjustments 612 Balance at January 31, 2024 5,138,855 Goodwill acquired 12,813 Measurement period adjustments — Balance at January 31, 2025 $ 5,151,668 The measurement period adjustments for the years ended January 31, 2025 and 2024 were not significant. There were no impairments of goodwill during any of the periods presented. Intangible Assets Total cost and amortization of intangible assets comprised of the following: January 31, 2025 Weighted Average Useful Life January 31, 2024 Weighted Average Useful Life Intangible assets, net (In thousands) (In years) (In thousands) (In years) Customer relationships $ 1,075,100 14.7 $ 1,066,900 14.7 Developed technology 722,071 6.9 719,111 7.0 Trade names 243,180 18 243,180 18 Other 123,400 2.1 123,400 2.1 Total intangible assets 2,163,751 2,152,591 Less: accumulated amortization (603,028) (372,716) Total intangible assets, net $ 1,560,723 $ 1,779,875 104 Table of Contents Total accumulated amortization of intangible assets is comprised of the following (in thousands): Accumulated amortization January 31, 2025 January 31, 2024 Customer relationships $ (195,197) $ (115,538) Developed technology (252,548) (148,771) Trade names (33,368) (19,782) Other (121,915) (88,625) Total accumulated amortization $ (603,028) $ (372,716) There were no impairments for intangible assets during the years ended January 31, 2025 or 2024. Amortization expense for the periods presented was as follows (in thousands): Successor Predecessor January 31, 2025 January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022 Cost of revenue Subscription $ 103,329 $ 100,820 $ 42,422 $ 4,603 Perpetual licenses 154 2,147 3,383 562 Operating expenses Research and development 380 32 — 367 Sales and marketing 126,445 154,030 69,882 3,526 Total amortization expense $ 230,308 $ 257,029 $ 115,687 $ 9,058 The total estimated future amortization expense of intangible assets as of January 31, 2025 is as follows (in thousands): Year Ending January 31, 2026 $ 199,579 2027 199,503 2028 198,032 2029 197,095 2030 146,115 Thereafter 620,399 Total remaining amortization expense $ 1,560,723 7. Leases As of January 31, 2025, the Company’s leases, primarily relating to office leases, have remaining lease terms of less than 1 year to 5 years. Certain leases include early termination and/or extension options; however, exercises of these options are at the Company’s sole discretion. As of January 31, 2025, the Company determined it is not reasonably certain it will exercise the options to extend its leases or terminate them early. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of January 31, 2025 and 2024, the Company had no financing leases. The Company measures its lease liabilities at the net present value of the remaining lease payments. The Company’s incremental borrowing rate is estimated to approximate the interest rate on similar terms and payments and in economic environments where the leased asset is located. As of January 31, 2025 and 2024, the Company’s weighted-average discount rate was 9.26%, and 9.40%, respectively. As of January 31, 2025 and 2024, the Company’s weighted-average remaining lease term was 4.14 years and 5.04 years, respectively. 105 Table of Contents Operating lease costs for the periods presented were as follows (in thousands): Successor Predecessor January 31, 2025 January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022 Lease cost Operating lease cost $ 6,383 $ 6,492 $ 3,072 $ 2,925 Variable lease cost 2,003 2,514 1,216 1,322 Short-term lease cost 1,161 932 332 460 Total lease cost $ 9,547 $ 9,938 $ 4,620 $ 4,707 The undiscounted annual future minimum lease payments are summarized by year in the table below (in thousands): Year Ending January 31, 2026 $ 6,374 2027 6,646 2028 5,937 2029 6,128 2030 1,731 Total minimum lease payments 26,816 Less: interest (4,398) Total present value of operating lease liabilities $ 22,418 8. Commitments and Contingencies As of January 31, 2025, the Company had in aggregate $243.6 million in contractual purchase commitments associated with agreements that are enforceable and legally binding, of which $103.2 million are due within the next 12 months. Such amounts do not include obligations under contracts that the Company can cancel without significant penalty or purchase orders as the purchase orders represent authorizations to purchase rather than binding agreements. Included in the aggregate contractual purchase commitments as of January 31, 2025 is the remaining commitment with a cloud storage provider that has a term of July 2023 through June 2028. Under the terms of the contract, the Company committed to spend $54.0 million, $59.0 million, $62.0 million, $65.0 million, and $67.5 million in contract years one, two, three, four, and five, respectively, for a total of $307.5 million. If the Company does not meet the minimum purchase obligation during any of those years, it will be required to pay the difference. As of January 31, 2025, the Company had spent $54.0 million of the first year commitment and $44.3 million of the second year commitment. 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 the Company’s 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 the Company’s cloud customers warranting certain levels of uptime reliability and performance and permitting those customers to receive credits in the event that the Company fails to meet those levels. To date, the Company has not incurred any material costs as a result of these commitments, and the Company expects the time between any potential claims and issuance of the credits to be short. As a result, the Company has not accrued any liabilities related to these commitments in the Company’s 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 the Company and its subsidiaries. Although the outcome of these legal proceedings cannot be predicted with certainty and no assurances can 106 Table of Contents be provided, based upon current information, the Company does 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 the Company’s consolidated financial statements. 9. Credit Agreement and Debt Credit Agreement In connection with the Merger Agreement, on the Closing Date, Merger Sub entered into a new Credit Agreement (the "Credit Agreement"). The Credit Agreement provides for (i) a six-year $125.0 million senior secured revolving credit facility, including a letter of credit sub-facility of up to $5.0 million (the “Revolving Credit Facility”) and (ii) a seven-year $1.59 billion term loan facility (the “Term Loans”). The Revolving Credit Facility matures in August 2028 and the Term Loans mature in August 2029. The proceeds from the Term Loans were used to finance a portion of the purchase consideration and fees and expenses relating to the acquisition of the Company and the establishment of the Credit Agreement, and for working capital and general corporate purposes. Borrowings under the Revolving Credit Facility may be used to provide ongoing working capital as well as for other general corporate purposes of the Company. On the Closing Date, the Company became the borrower under the Credit Agreement. The Company (i) incurred deferred financing costs of $21.6 million related to the issuance of the Term Loans that were recorded as a reduction to the outstanding debt balances as of the Merger Date and (ii) incurred deferred financing costs of $2.6 million related to the issuance of the Revolving Credit Facility. The remaining unamortized balance of $1.5 million, and $2.0 million are included in other non-current assets on the accompanying consolidated balance sheets as of January 31, 2025 and 2024 . These costs are being amortized to interest expense over the life of the Term Loans and the life of the Revolving Credit Facility using the effective interest method and on a ratable basis, respectively. Amortization of debt issuance costs were $4.4 million, $4.2 million and $1.7 million in the year ended January 31, 2025, 2024 and Successor period in 2023, respectively. The Credit Agreement contains covenants that, among other things and subject to certain exceptions and qualifications, restrict the ability of the Company and the ability of certain of its subsidiaries to incur or guarantee additional indebtedness or issue disqualified stock or certain preferred stock; pay dividends and make other distributions or repurchase stock; make certain investments; create or incur liens; sell assets; create restrictions affecting the ability of restricted subsidiaries to make distributions, loans or advances or transfer assets to the Company or the restricted subsidiaries; enter into certain transactions with the Company’s affiliates; designate restricted subsidiaries as unrestricted subsidiaries; and merge, consolidate or transfer or sell all or substantially all of the Company’s assets. The Company is subject to quarterly financial covenants relating to maintaining a minimum liquidity and annual recurring revenue ratio as defined in the Credit Agreement. All obligations under the Term Loans and Revolving Credit Facility are unconditionally guaranteed by Holdings and each of the existing and future direct and indirect material, wholly-owned domestic subsidiaries of the Company, subject to certain exceptions. Obligations outstanding under the Credit Agreement are secured by perfected first priority pledges of and security interests in (i) the equity interests of the Company held by its direct parent and (ii) substantially all of the assets of the Company and each subsidiary guarantor (subject to customary exceptions as more fully described in the Credit Agreement), including equity interests of each subsidiary guarantor under the Credit Agreement. Borrowings under the Term Loans will bear interest, initially, at a rate equal to, at the Company’s option, either: • a base rate determined by reference to the highest of (i) the Federal Funds Rate (determined for any day as the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System of the United States arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the business day next succeeding such day) plus 0.50% , (ii) the rate of interest in effect for such day as published by The Wall Street Journal as its “prime rate”, (iii) to the extent ascertainable, one month Adjusted Term SOFR (determined as set forth below) plus 1.00% , and (iv) 1.75% plus, in any such case, 5.25% ; or • Adjusted Term SOFR determined by reference to the forward-looking term rate based on the secured overnight financing rate as administered by the Federal Reserve Bank of New York, plus a credit spread adjustment for interest periods of one month, three months, and six months, respectively, plus, in each case, 6.25% . From and after the delivery by the Company to the administrative agent for the Credit Agreement of financial statements for the first fiscal quarter ended after the effective date of the Credit Agreement, the applicable margin over the base rate or Adjusted Term SOFR for the Term Loans will be in the range of 6.00% and 6.25% (for SOFR loans) and 5.00% and 107 Table of Contents 5.25% (for base rate loans) based on a pricing grid as determined by reference to the applicable Annual Recurring Revenue Net Leverage Ratio (as defined in the Credit Agreement) for the most recent four fiscal quarter period for which financial statements have been delivered. As of January 31, 2025, the Term Loans bear interest at a rate of 10.52% based on the Adjusted Term SOFR for a three month interest period. In addition, the Company will be required to pay a commitment fee on any unused portion of the Revolving Credit Facility at a rate of 0.50% per annum. The Company will also pay customary letter of credit fees, including a fronting fee equal to 0.25% per annum of the dollar equivalent of the maximum amount available to be drawn under all outstanding letters of credit, as well as customary issuance and administration fees. These fees are recorded as interest expense on the consolidated statement of operations. On November 8, 2024, the Company drew $25.0 million on the Revolving Credit Facility in preparation for a business acquisition. On December 23, 2024, the Company entered into a purchase agreement with Thoma Bravo, pursuant to which Thoma Bravo purchased 36,548,286.44 Class A Units and 7,984,676.29 Class B Units for an aggregate purchase price of $600.0 million. In connection with Thoma Bravo’s purchase, certain of the Company's directors and other equityholders exercised their preemptive rights under the Company's partnership agreement and purchased a total of 19,567.57 Class A Units and 4,274.91 Class B Units for an aggregate purchase price of approximately $0.3 million. The Company used $575.0 million of the proceeds from such to repay $550.0 million and $25.0 million of the Term Loan and Revolving Credit Facility, respectively. The Company recorded an $8.3 million loss from extinguishment of debt related to debt issuance costs for the Term Loan and is recorded within interest expense on the consolidated statement of operations. The Company fully repaid its outstanding balance on its Term loan and recorded a loss from extinguishment of debt related to the remaining balance of debt issuance costs for the Term Loan during the first quarter of fiscal 2026. See Note 19 for additional information. The Company may voluntarily repay and reborrow outstanding loans under the Revolving Credit Facility at any time without a premium or a penalty. The Company had no outstanding Revolving Credit Facility balance as of January 31, 2025. The Company was in compliance with all applicable covenants as of January 31, 2025. The net carrying amount of the Term Loans for the Successor periods presented is as follows (in thousands): January 31, 2025 January 31, 2024 Principal $ 1,040,000 $ 1,590,000 Unamortized issuance costs (15,533) (27,785) Net carrying amount $ 1,024,467 $ 1,562,215 Total interest expense recognized related to the Term Loans for the year ended January 31, 2025, 2024 and the Successor period in 2023 was $186.2 million , $186.6 million and $74.6 million , respectively, consisting of contractual interest expense of $174.0 million, amortization of debt issuance costs of $3.9 million and $8.3 million loss from the extinguishment of debt for the year ended January 31, 2025, contractual interest expense of $182.9 million and amortization of debt issuance costs of $3.7 million for the year ended January 31, 2024, and contractual interest expense of $73.1 million and amortization of debt issuance costs of $1.5 million for the Successor period in 2023. Prior Credit Agreement On March 11, 2019, SailPoint Technologies, Inc., as borrower (the “Borrower”), and certain 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 “Prior Credit Agreement”). The Prior Credit Agreement was 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 was supported by a security interest in substantially all of the Loan Parties’ personal property and assets. The Company incurred total debt issuance costs of $0.8 million in connection with the Credit Agreement. These costs are being amortized to interest expense over the life of the Credit Agreement using the effective interest method. Amortization of debt issuance costs were $0.1 million for the Predecessor period in 2023, and were recorded in interest expense on the accompanying consolidated statements of operations. 108 Table of Contents In connection with the Merger Agreement, on the Closing Date, the Company terminated the existing Prior Credit Agreement. Unamortized debt issuance costs of $0.3 million were determined to not have a fair value under ASC 805 as of the Merger Date and were therefore not recognized by the Company in the Successor period. 10. Convertible Senior Notes and Capped Call Transactions In September 2019, the Company issued $400.0 million aggregate principal amount of 0.125% Convertible Senior Notes due in 2024 (the “Notes”) 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 Notes were issued pursuant to an indenture (the “Indenture”), by and between the Company and U.S. Bank National Association, as trustee. 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 senior unsecured obligations of the Company and interest was payable semiannually on March 15 and September 15, in arrears at a fixed rate of 0.125% per year. Pursuant to the terms of the Indenture, a supplemental indenture was required to be entered into in connection with the consummation of the Merger. In connection with the Merger Agreement, on the Closing Date, SailPoint Technologies Holdings, Inc. and U.S. Bank Trust Company, National Association (previously known as “U.S. Bank National Association”), as trustee (the “Trustee”), entered into the First Supplemental Indenture (the “Supplemental Indenture”) to the Indenture between the Company and the Trustee, relating to the Notes. The Supplemental Indenture provides that, from and after the effective time of the Merger, for all conversions of the Notes, (i) the consideration due upon conversion of each $1,000 principal amount of Notes will be solely cash in an amount equal to the conversion rate then in effect on the conversion date (as may be increased pursuant to the terms of the Indenture), multiplied by $65.25 and (ii) the Company will satisfy its conversion obligation by paying cash to converting holders of the Notes on the second business day immediately following the relevant conversion date. During the Successor period in 2023, the Company settled the conversion of the remaining $903.9 million in aggregate principal amount of the Notes with cash. Transaction costs related to the issuance of the Notes were $8.8 million and were being amortized to interest expense using the effective interest method. Unamortized debt issuance costs of $3.6 million were determined to not have a fair value under ASC 805 as of the Merger Date and were therefore not recognized by the Company in the Successor period. Interest expense related to the amortization of debt issuance costs was $0.9 million for the Predecessor period in 2023. Contractual interest expense was $0.1 for the Predecessor period in 2023. Capped Call Transactions In connection with the Merger, SailPoint Technologies Holdings, Inc. entered into a termination agreement with each Capped Call Counterparty pursuant to which the Capped Call Transactions with such Capped Call Counterparty terminated upon the Closing Date in exchange for an agreed cash payment from such Capped Call Counterparty payable on the Closing Date. The Company received cash payments during the Successor period in 2023 of $111.4 million for settlement of the Capped Call Transactions. 11. Related Party Transactions The Company is an affiliate of Thoma Bravo. The Company engaged in ordinary sales transactions of $0.8 million, $1.0 million and $0.4 million and ordinary purchase transactions of $2.1 million, $2.1 million and $0.7 million for the years ended January 31, 2025, 2024 and the Successor period of 2023, respectively, with entities affiliated with Thoma Bravo. In conjunction with the Merger, the Company entered into an advisory services agreement with an affiliate of Thoma Bravo for consultation and advice related to corporate strategy, budgeting of future corporate investments, acquisition and divestiture strategies, and debt and equity financings. Under this agreement the Company shall pay an annual amount of $15.0 million, payable quarterly in advance. Thoma Bravo may elect to receive a lesser amount or elect to make such amount contingent on 109 Table of Contents the occurrence of certain events. The Company made payments of $7.5 million , $11.3 million and $9.4 million under this agreement in the years ended January 31, 2025, 2024 and the Successor period in 2023, respectively. The Company expensed $15.0 million, $15.0 million and $6.9 million in the years ended January 31, 2025, 2024 and the Successor period in 2023, respectively, which is included in general and administrative expenses in the Company ’ s consolidated statements of operations . The Company has $8.8 million and $1.2 million included in accrued expenses and other liabilities in the consolidated balance sheets as of January 31, 2025 and January 31, 2024, respectively. In conjunction with the closing of the IPO, the Company settled all outstanding fees payable to Thoma Bravo and its advisory services agreement was terminated. On December 13, 2024, the Company acquired Imprivata, which is majority owned by Thoma Bravo, See Note 5 for additional information. On December 23, 2024, the Company entered into a purchase agreement with Thoma Bravo, pursuant to which Thoma Bravo purchased 36,548,286.44 Class A Units and 7,984,676.29 Class B Units for an aggregate purchase price of $600.0 million. In connection with Thoma Bravo’s purchase, certain of the Company's directors and other equityholders exercised their preemptive rights under the Company's partnership agreement and purchased a total of 19,567.57 Class A Units and 4,274.91 Class B Units for an aggregate purchase price of approximately $0.3 million. Under the terms of the Credit Agreement, an entity affiliated with Thoma Bravo provided $50.0 million of the Term Loans as part of the syndicate of lenders on August 16, 2022. As a result, th e Company made interest payments of $4.8 million, $5.7 million and $2.1 million and incurred interest expense of $5.9 million , $5.9 million and $2.4 million to the affiliate of Thoma Bravo for the year ended January 31, 2025, 2024 and Successor period of 2023, respectively. As of January 31, 2025 and 2024, the total principal balance owed to the affiliate of Thoma Bravo was $32.7 million and $50.0 million, respectively , and the total accrued interest was $0.9 million and $0.3 million as of January 31, 2025 and 2024, respectively. The outstanding principal balance owed to the affiliate of Thoma Bravo was fully repaid upon the repayment of the Company's term loan. The Company did not have any related party balances or incur any material related party transactions as of and during the Predecessor period of 2023. 12. Partners’ Deficit The Company operates under the terms and conditions of the amended and restated SailPoint Parent, LP Limited Partnership Agreement (the “Partnership Agreement”) dated August 16, 2022. The partnership interests are represented by Class A and Class B Units. Under the Partnership Agreement, there is an unlimited number of Class A and Class B Units that may be issued. The Company’s Board has the sole authority and right to manage the business and affairs of the Company and to make all decisions and take all actions for the Company, except for certain exceptions defined within the Partnership Agreement. On August 16, 2022, the Company issued 362.5 million Class A Units and 79.2 million Class B Units for an aggregate net proceeds of $5.8 billion, and the proceeds from such issuance was used to fund the Merger. On August 16, 2022, in connection with the Merger, a former shareholder of the Predecessor rolled over their equity interest into the Company in the amount of $26.1 million for 1.6 million Class A Units and 0.3 million Class B Units. In August 2022, as part of the Merger, the Board approved the SailPoint Parent, LP Co-Invest Agreement (the “Co-Invest Agreement”) to incentivize employees and to align the employees and management with the owners of the business. The Co-Invest Agreement offers employees the one-time opportunity to invest in the Company by purchasing units directly from the Company for cash. Under the Co-Invest Agreement, the purchase price was $16.42 for one Class A Unit and a number of Class B Units, based on a ratio of one Class A Unit to 0.2185 Class B Units. The Company determined the Co-Invest Agreement was not compensatory as the units were issued at fair value. In March 2023, the Company issued 3.2 million Class A Units and 0.7 million Class B Units for an aggregate purchase price of $51.7 million pursuant to Co-Invest Agreements. On December 23, 2024, SailPoint Parent, LP (the “Company” or “SailPoint”) entered into a purchase agreement with Thoma Bravo, pursuant to which Thoma Bravo purchased Class A Units and Class B Units for an aggregate purchase price of $600.0 million. In addition, on January 7, 2025, in connection with Thoma Bravo’s purchase, certain of the Company’s directors and other equityholders exercised their preemptive rights under our partnership agreement and purchased Class A Units and Class B Units for an aggregate purchase price of approximately $0.3 million. The Company used $575.0 million of the proceeds from such transaction to repay $550.0 million and $25.0 million of the Term Loan and Revolving Credit Facility (which was drawn down by the Company on November 8, 2024), respectively, and plans to use the remainder for general corporate purposes. Redeemable Convertible Units Redeemable convertible units consisted of the following as of the following dates: 110 Table of Contents January 31, 2025 Units issued and outstanding Aggregate liquidation preference Net carrying value (In thousands) Class A Units 403,400 $ 8,100,352 $ 8,100,352 Class B Units (1) 91,761 — 3,095,789 Total redeemable convertible units 495,161 $ 8,100,352 $ 11,196,141 (1) The net carrying value includes the redemption value of unvested incentive units that will convert to Class B units. January 31, 2024 Units issued and outstanding Aggregate liquidation preference Net carrying value (In thousands) Class A Units 367,132 $ 6,861,381 $ 3,960,241 Class B Units 81,808 — 1,878,623 Total redeemable convertible units 448,940 $ 6,861,381 $ 5,838,864 The cumulative unpaid Class A yield earned was $1,477.9 million and $834.3 million as of January 31, 2025 and 2024 respectively. The cumulative unpaid Class A yield earned per unit was $3.66 and $2.27 as of January 31, 2025 and 2024, respectively. The issued and outstanding units disclosed on the consolidated balance sheet includes all legally outstanding units, which are different from the number of units considered outstanding in the table above due to the timing of incentive units vesting. The following are the relevant terms related to the Class A and Class B Units: Class A Yield The Class A unitholders are entitled to a cumulative preferred return at the per annum rate of 9% (“Class A Yield”), compounded on a quarterly basis, on the sum of unpaid yield (“Unpaid Yield”) plus unreturned capital (“Unreturned Capital”). Unpaid Yield represents the amount equal to the excess of the aggregate Class A Yield accrued on such Class A Units for all prior periods, over the aggregate amount of prior distributions made by the Company related to such Class A Yield. Unreturned Capital is the aggregate contributions made in exchange for Class A Units reduced by distributions made by the Company to such unitholders for all prior periods. At each reporting date, the Company evaluates whether the Class A Units are considered currently redeemable or probable of becoming redeemable upon a deemed liquidation event. The Company does not record the cumulative yield in the consolidated financial statements until the Company determines that such units are probable of becoming redeemable. As of January 31, 2025, the Class A and Class B Units are currently redeemable as the deemed liquidation events that would give rise to the redemption of the units were considered probable. As of January 31, 2024, the Class A and Class B Units were not currently redeemable as the deemed liquidation events that would give rise to the redemption of the units were not probable. The Board may in its discretion make distributions at any time or from time to time. Class B Yield The Class B unitholders are not entitled to any yield or dividend. Liquidation Rights The Class A unitholders are entitled to liquidation preference over Class B unitholders. The distribution will first be made to settle Unpaid Yield, and then to settle Unreturned Capital. Any remaining amounts shall be distributed pro rata among holders of Class B Units based on the outstanding Class B Units held at the time of such distribution. Therefore, all Class A 111 Table of Contents unitholders have first priority with regard to any distributions made by the Company to its unitholders. The Class B unitholders then have the residual interests in the Company. Redemption Rights In accordance with the terms and conditions of the Partnership Agreement, the Class A and Class B Units are contingently redeemable upon occurrence of a sale or reorganization, which are deemed liquidation events that are considered outside of the Company’s control. Upon redemption, each Class A and Class B unitholder shall receive in exchange for each unit, the same cash value of consideration and the same portion of the aggregate consideration as if a liquidation event occurred and a distribution was made pursuant to the liquidation rights. As of January 31, 2025, the Class A Units and Class B Units were considered redeemable as the closing of the IPO was considered probable. The Company recognized the increase to the redemption value of both Class A and Class B units as a charge to its additional paid in capital and accumulated deficit. Repurchase Rights In accordance with the terms and conditions of certain investor agreements, Co-Invest Agreements, or other incentive unit agreements entered into between the Company and its unitholders, the Class A and Class B Units are subject to repurchase at the election of the Company, Thoma Bravo, or another related party upon the unitholder’s termination or in connection with a sale of the Company. The repurchase price for each Class A Unit is the fair market value of such unit as of the date of repurchase; provided, however, that if the unitholder is terminated for cause, the repurchase price shall be the lesser of the unitholder’s original cost for such unit and the fair market value of such unit. The repurchase price for each Class B Unit is the fair market value of such unit as of the date of repurchase. Conversion Rights The Class A and Class B Units are contingently convertible upon occurrence of a reorganization in anticipation of a public offering. In connection with such event, the Board will determine what securities or other property the units will be converted to or exchanged for. Voting Rights The majority of the Class A and Class B Units are owned by funds managed by Thoma Bravo (“TB Funds”). TB Funds have control of the Board through their election rights, and the TB Funds also have certain approval rights as defined within Partnership Agreement including, but not limited to authorizing any distributions upon any securities of the Company and authorizing the issuance of any notes or debt securities. 13. Equity-Based Compensation Successor Period In August 2022, as part of the Merger, the Board approved the SailPoint Parent, LP Incentive Equity Plan (the “Plan”) and the SailPoint Parent, LP Co-Invest Agreement (the “Co-Invest Agreement”) to incentivize employees and to align the employees and management with the owners of the business. The Plan provides for the grant of options, profits interest, equity appreciation rights and other forms of awards to employees and non-employees granted or denominated in units of Parent. Under the Plan, 10,972 million Class B Units (“Incentive Units”) were reserved for issuance. The Plan allows for awards to generally vest over four years based on continued service to the Company and/or its affiliates. Equity -based compensation costs for granted units are recognized as expense on a straight-line basis over the requisite service period as the services performed. The Co-Invest Agreement offers employees the one-time opportunity to co-invest in the Company by purchasing units directly from the Company for cash. Under the Co-Invest Agreement, the purchase price was $16.42 for one Class A Unit and a number of Class B Units, based on a ratio of one Class A Unit to 0.2185 Class B Units. The Company determined the Co-Invest Agreement was not compensatory in nature as the terms are no more favorable than those available to all holders of the same class of equity, therefore it does not give rise to recognizable compensation cost. 112 Table of Contents Incentive Units The following table summarizes incentive equity unit activity for the periods presented: Number Weighted Average Grant Date Fair Value (In thousands) (Per unit) Non-vested at January 31, 2024 5,678 $ 17.25 Granted 1,007 19.68 Vested (2,293) 17.66 Forfeited (501) 17.06 Non-vested at January 31, 2025 3,891 $ 17.93 The total fair value of the Incentive Units vested during the year ended January 31, 2025 was $39.1 million. Total unrecognized equity-based compensation expense for service based awards as of January 31, 2025 is $66.3 million which will be recognized over the remaining weighted average vesting period of 2.2 years. Included in the table above are performance-based Incentive Units that include certain service conditions in the award agreement. The Company did not issue any performance-based Incentive Units during the year ended January 31, 2025. During the year ended January 31, 2024, the Company granted 1.8 million performance-based Incentive Units to certain executives. The service condition for these awards is satisfied by providing service to the Company based on the defined service period under the award agreement. The executive will vest in the performance-based Incentive Unit upon the achievement of certain target financial performance metrics as defined in the award agreement. The Board will determine the target financial performance metric each fiscal year. During the years ended January 31, 2025 and 2024, the Company recognized $6.1 million and $11.1 million, respectively, of expense as achievement of the performance condition was met. As of January 31, 2025, the Incentive Units were considered redeemable as the closing of the IPO was considered probable. During the years ended January 31, 2025 and 2024, the Company also granted equity appreciation rights awards under the Plan that are required to be settled in cash. The awards are classified as liabilities and are remeasured each reporting period. The liability is included in other long-term liabilities on the consolidated balance sheets and is included in the consolidated statement of operations as equity-based compensation expense. Cash-Settled Awards Immediately prior to the Closing Date all vested stock options and restricted stock units were converted into a right to receive an amount in cash, without interest, equal to the excess, if any, of the Merger Consideration of $65.25 less any per-share exercise price (not applicable to restricted stock units) multiplied by the total number of shares of Common Stock underlying the vested stock option or restricted stock unit. In connection with the Merger, $1.0 million of expense related to the restricted stock units was accelerated upon the Closing Date and recorded in the Predecessor period in 2023. Immediately prior to the Closing Date unvested equity awards were converted into the contingent right to receive an amount in cash, without interest, equal to the excess, if any, of the Merger Consideration of $65.25 less any per-share exercise price (not applicable to restricted stock units) multiplied by the total number of shares of Common Stock underlying the unvested stock option or restricted stock unit. The cash-settled awards generally remain subject to the same terms and conditions as were applicable to such awards immediately prior to the Closing Date and generally will vest and become payable at the same time as the unvested stock option or unvested restricted stock unit would have vested. As of January 31, 2025, the total unrecognized compensation expense related to non-vested cash-settled awards granted is $41.7 million and is expected to be recognized over a weighted average period of 1.1 years. Predecessor Period Prior to the Merger Date, the Company granted stock options and restricted stock units to employees, directors, officers and consultants of the Company and its subsidiaries under the 2015 Stock Option Plans (defined below) and the 2017 113 Table of Contents Long Term Incentive Plan (defined below). Prior to the Merger Date, the Company also had an Employee Stock Purchase Plan (defined below) that permitted eligible employees to purchase common shares as discount. In connection with the Merger, the 2015 Stock Option Plans, the 2017 Long-Term Incentive Plan, and the Employee Stock Purchase Plan were terminated as of the Closing Date. 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”). 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. 2017 Long Term Incentive Plan In November 2017, the Company’s Board of Directors 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. Options and RSUs granted under the 2017 Plan generally vest over terms of one to four years based on continued service. The fair value for the Company’s stock options granted and the 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: Predecessor February 1, 2022 to August 15, 2022 Stock Options Expected dividend rate —% Expected volatility 50.8% Risk-free interest rate 2% Expected term (in years) 6.25 ESPP Expected dividend rate —% Expected volatility 47.9% Risk-free interest rate 0.1% Expected term (in years) 0.50 Stock Options The total fair value of stock options vested was $4.8 million for the Predecessor period in 2023. The weighted average grant date fair value of stock options granted was $20.15 for the Predecessor period in 2023. Restricted Stock Units The total fair value of restricted stock units vested was $29.5 million for the Predecessor period in 2023. The weighted-average grant date fair value of restricted stock units granted was $44.38 for the Predecessor period in 2023. Employee Stock Purchase Plan In November 2017, the Company’s Board of Directors adopted the ESPP. The ESPP became effective November of 2017, after the date the Company’s 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 $25,000.0 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. Expense associated with ESPP purchase rights is recognized on a straight-line basis over the offering period. 114 Table of Contents During the Predecessor period in 2023, approximately 0.1 million shares of common stock have been purchased or distributed pursuant to the ESPP. Equity-based Compensation Expense A summary of the Company’s equity-based compensation expense, which includes stock options, incentive units, RSUs, the ESPP and cash-settled awards, is presented below (in thousands): Successor Predecessor Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022 Incentive equity units $ 31,714 $ 37,469 $ — $ — Equity appreciation rights 10,253 3,982 — — Stock options — — — 3,822 RSUs — — — 34,495 ESPP — — — 1,237 Cash-settled awards 57,602 93,368 59,033 — Total equity-based compensation expense $ 99,569 $ 134,819 $ 59,033 $ 39,554 A summary of the Company’s equity-based compensation expense as recognized in the consolidated statements of operations is presented below (in thousands): Successor Predecessor Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022 Cost of revenue - subscription $ 7,119 $ 6,675 $ 3,276 $ 2,246 Cost of revenue - services and other 6,652 5,772 2,744 1,921 Research and development 23,139 30,373 14,775 11,222 Sales and marketing 38,387 52,292 21,480 14,393 General and administrative 24,272 39,707 16,758 9,772 Total equity-based compensation expense $ 99,569 $ 134,819 $ 59,033 $ 39,554 On January 31, 2025, the Board of Managers of the Company approved modifications to accelerate vesting of certain Incentive Units, Equity Appreciation Rights, and cash settled awards subject to the pricing and closing of the IPO and immediately prior to the corporate conversion. The Company did not recognize any additional expense as January 31, 2025 and expects to record an estimated equity-based compensation expense of $113.8 million upon the close of the IPO. The equity awards that will be accelerated or modified, as applicable, are held by our directors, executive officers, and employees. 14. Balance Sheet Related Items Property and Equipment The cost and accumulated depreciation of property and equipment are as follows (in thousands): 115 Table of Contents January 31, 2025 January 31, 2024 Computer equipment $ 12,845 $ 8,961 Capitalized software development costs 8,219 — Furniture and fixtures 3,629 3,517 Leasehold improvements 12,759 11,770 Other 1,229 1,207 Total property and equipment 38,681 25,455 Less: accumulated depreciation and amortization (15,802) (9,123) Total property and equipment, net $ 22,879 $ 16,332 Depreciation and amortization expense was $6.6 million, $6.6 million, $3.2 million, and $3.3 million for the years ended January 31, 2025 and 2024, and the Successor and Predecessor periods in 2023, respectively. Prepayments and Other Current Assets and Other Non-Current Assets Prepayments and other current assets consisted of the following (in thousands): January 31, 2025 January 31, 2024 Prepaid expenses $ 23,966 $ 23,794 Restricted cash 3,097 6,821 Income tax receivables 2,348 597 Deferred offering costs 9,710 — Other 6,749 4,540 Total prepayments and other current assets $ 45,870 $ 35,752 Other non-current assets consisted of the following (in thousands): January 31, 2025 January 31, 2024 Prepaid expenses $ 4,691 $ 797 Deferred tax assets, non-current 8,199 6,066 Right-of-use assets, net 21,627 24,223 Other 1,689 2,133 Total other non-current assets $ 36,206 $ 33,219 116 Table of Contents Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following (in thousands): January 31, 2025 January 31, 2024 Commissions $ 31,365 $ 26,771 Bonus 31,647 35,300 Operating lease liabilities - current 4,586 3,921 Payroll and related benefits 10,250 9,494 Cash-settled awards 6,416 8,567 Interest payable 29,829 8,054 Income taxes payable 333 2,896 Thoma Bravo advisory fees 8,750 1,250 Other 34,959 21,317 Total accrued expenses and other liabilities $ 158,135 $ 117,570 Other Long-Term Liabilities Other long-term liabilities consisted of the following (in thousands): January 31, 2025 January 31, 2024 Long-term operating lease liabilities $ 17,832 $ 20,800 Equity appreciation rights 14,296 4,154 Total other long-term liabilities $ 32,128 $ 24,954 15. 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 and its taxable subsidiaries conduct business. The following table presents consolidated loss before income taxes (in thousands): Successor Predecessor Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022 Domestic $ (384,171) $ (519,395) $ (250,574) $ (147,142) Foreign 7,542 7,046 4,791 (434) Total loss before income taxes $ (376,629) $ (512,349) $ (245,783) $ (147,576) 117 Table of Contents The provision (benefit) expense for income taxes consisted of the following (in thousands): Successor Predecessor Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022 Current Federal $ 353 $ 1,711 $ (36) $ — State 935 301 70 88 Foreign 8,430 5,895 2,320 2,551 Total current 9,718 7,907 2,354 2,639 Deferred Federal (56,759) (106,764) (55,978) (207) State (12,718) (17,448) (10,683) (602) Foreign (1,040) (677) 1,783 (167) Total deferred (70,517) (124,889) (64,878) (976) Provision (benefit) expense for income taxes $ (60,799) $ (116,982) $ (62,524) $ 1,663 The significant components of the Company’s taxable subsidiaries' deferred taxes are as follows (in thousands): January 31, 2025 January 31, 2024 Deferred tax assets: Research and development and other credits $ 30,173 $ 28,669 Capitalized research expenditures 75,425 62,384 Net operating loss carryforward 36,359 55,904 Disallowed interest carryforward 97,827 66,025 Deferred revenue 39,543 40,526 Stock compensation 3,252 2,297 Operating lease liabilities 5,488 6,127 Accrued expenses 9,292 8,255 Other 8,363 123 Total deferred tax assets 305,722 270,310 Less valuation allowance for deferred tax assets (32,265) (8,330) Net deferred tax asset 273,457 261,980 Deferred tax liabilities: Fixed assets (1,922) (2,485) Operating lease ROU assets (5,291) (6,000) Capitalized commissions (17,217) (19,692) Intangible assets (377,356) (434,201) Total deferred tax liabilities (401,786) (462,378) Net deferred tax (liabilities) assets $ (128,329) $ (200,398) As of January 31, 2025, the Company’s taxable subsidiaries have federal, state and foreign net operating loss carryforwards of $80.8 million, $188.3 million and $36.1 million, respectively. Approximately $0.2 million of the federal net operating loss carryforwards will begin to expire in 2037 and $80.6 million do not expire. The state net operating loss carryforwards will begin to expire in 2027, if not utilized. The foreign net operating losses do not expire. As of January 31, 2025, the Company’s taxable subsidiaries have federal and state research and development credit carryforwards of $24.8 million and $7.0 million, respectively. The federal and state research and development credits will begin to expire in 2026 and 2034, respectively, if not utilized. 118 Table of Contents The Partnership’s tax basis of net assets and liabilities exceeds the book basis by $825.3 million and $541.2 million as of January 31, 2025 and 2024, respectively. The primary difference between financial reporting basis and tax basis is related to the deficit in retained earnings. The Company assessed all available positive and negative evidence to determine whether it expects that sufficient future taxable income will be generated to allow it to realize its existing deferred tax assets. The Company determined that it is not more likely than not to realize a portion of the benefits of its U.S. federal and state interest expense carryforward. The Company’s taxable subsidiaries have increased the valuation allowance to $32.3 million from $8.3 million as of January 31, 2025 and 2024, respectively. The following table reconciles the Company’s effective tax rate to the federal statutory tax rate: Successor Predecessor Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022 U.S. federal taxes at statutory rate 21.0 % 21.0 % 21.0 % 21.0 % State taxes, net of federal benefit 3.3 3.1 4.0 3.7 Foreign tax rate differentials (0.3) (0.1) (0.2) (0.1) Foreign tax on earnings (1.0) (0.5) (0.4) (0.8) Research and development credits 1.6 2.2 2.2 2.3 Nondeductible officer compensation — — — (0.5) Equity-based compensation (1.8) (1.6) — 1.0 Change in valuation allowance (6.3) — (0.2) (27.3) Change in unrecognized tax benefits (0.3) (0.9) (0.2) (0.2) Other (0.1) (0.4) (0.6) (0.1) Total 16.1 % 22.8 % 25.6 % (1.0) % Judgment is required in evaluating the Company’s uncertain tax positions and determining the Company’s provision for income taxes. The reconciliation of unrecognized tax benefits is as follows (in thousands): Successor Predecessor Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022 Beginning Balance $ 50,386 $ 40,402 $ 2,988 $ 2,620 Additions based on tax positions related to prior year — 6,635 — — Reductions based on tax positions related to prior year — — — — Additions based on tax positions related to current year 1,708 3,349 37,671 368 Settlements (1,597) — (257) — Ending Balance $ 50,497 $ 50,386 $ 40,402 $ 2,988 Included in the balance of unrecognized tax benefits as of January 31, 2025, 2024 and 2023 is $48.7 million, $48.6 million and $38.8 million, respectively, of tax benefits that, if recognized, would affect the Company’s effective tax rate. The Company does not have any significant uncertain tax positions as of January 31, 2025 for which it is reasonably possible that the positions will increase or decrease within the next twelve months. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. During the years ended January 31, 2025 and 2024, and the Successor and Predecessor periods in 2023, the Company did not record any material interest or penalties. 119 Table of Contents The Company files income tax returns in U.S. federal, state, and foreign jurisdictions. The Company has net operating loss carryforwards and tax credits for the U.S. federal and certain state jurisdictions allowing the statute of limitations to remain open for all years. The foreign jurisdiction ’ s statute of limitations is closed for tax years before 2018. Deferred income taxes have not been recognized on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are indefinitely reinvested outside the U.S. Determination of the unrecognized deferred tax liability related to the outside basis difference in investments in the foreign subsidiaries is not practicable. If the Company repatriated its foreign earnings, any deferred income taxes for the estimated U.S. income tax, foreign income tax, and applicable withholding taxes is not material. 16. Segments and Geographic Information Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker, or CODM. The CODM is comprised of the Company's Chief Executive Officer, Chief Financial Officer and President. The Company's CODM reviews financial information presented on a consolidated basis for the purposes of making operating decisions, allocating resources, and evaluating financial performance. Accordingly, the Company determined that it operates in one reportable segment. The Predecessor also determined that it operates in one reportable segment. The measure used by our CODM for evaluating the Company's overall performance and inform resource allocation to support strategic priorities is net loss. Significant expense categories regularly provided to the CODM are those disclosed in the consolidated statements of operations. The following is a summary of consolidated revenues within geographic areas determined by the billing address of the customer for the periods presented (in thousands): Successor Predecessor Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022 United States $ 586,466 $ 472,830 $ 188,716 $ 183,714 EMEA 166,691 143,023 56,846 58,243 Rest of the World 108,454 83,719 31,111 34,197 Total revenue $ 861,611 $ 699,572 $ 276,673 $ 276,154 No single country other than the United States represented more than 10% of the Company's revenue or total long-lived assets. Substantially all of the Company’s long-lived assets were held in the United States as of January 31, 2025 and 2024. 17. 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 may also be made at the Company’s discretion. The Company recorded expense of $7.1 million, $6.4 million, $2.7 million, and $3.3 million, for the years ended January 31, 2025 and 2024, and the Successor and Predecessor periods in 2023, respectively, for matching contributions to the 401(k) Plan. 120 Table of Contents 18 . Condensed Financial Information of Registrant (Parent Company Only) SAILPOINT PARENT, LP Parent Company Only Condensed Balance Sheets (in thousands, excepts units) January 31, 2025 January 31, 2024 Assets Current assets Cash and cash equivalents $ — $ — Total current assets — — Investment in subsidiary 5,607,701 5,297,669 Total assets $ 5,607,701 $ 5,297,669 Liabilities, redeemable convertible units and partners' deficit Current liabilities Total current liabilities $ — $ — Total liabilities — — Redeemable convertible units, no par value, unlimited units authorized, 499,052,847 and 454,618,712 units issued and outstanding as of January 31, 2025 and 2024, respectively; aggregate liquidation preference of $8,100,352 and $6,861,381 as of January 31, 2025 and 2024, respectively 11,196,141 5,838,864 Partners' deficit Additional paid in capital — 37,431 Accumulated deficit (5,588,440) (578,626) Total partners' deficit (5,588,440) (541,195) Total liabilities, redeemable convertible units and partners' deficit $ 5,607,701 $ 5,297,669 121 Table of Contents SAILPOINT PARENT, LP Parent Company Only Condensed Statements of Operations (in thousands) Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to January 31, 2023 Revenue Total revenue $ — $ — $ — Cost of revenue: Total cost of revenue — — — Gross profit — — — Operating expenses: Total operating expenses — — — Income from operations — — — Other expense: Total other expense — — — Equity in net loss of subsidiary (315,830) (395,367) (183,259) Net loss $ (315,830) $ (395,367) $ (183,259) Description of Business and Basis of Presentation Organization SailPoint Parent, LP, which is controlled by the TB Funds, became the ultimate parent of Technologies Holdings in August 2022 and is referred to as the “Parent” herein. The Parent has no operations or significant assets or liabilities other than its investment in Technology Holdings through its subsidiaries. Accordingly, the Parent is primarily dependent upon distributions from its subsidiary for funding. However, Holdings and Technologies Holdings’ ability to pay dividends or lend to the Parent is limited under the Credit Agreement. All obligations under the Credit Agreement are guaranteed by Holdings. The Credit Agreement contains certain affirmative, negative, and financial covenants, including limitations on dividends and distributions, sales of assets, and other similar activities. Because of these qualitative restrictions, substantially all of the assets of the Parent’s subsidiaries are restricted. See Note 9 for additional information. Basis of Presentation These condensed financial statements have been presented on a “parent-only” basis. Under a parent-only presentation, the Parent’s investment in subsidiary is presented under the equity method of accounting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. As such, these parent-only financial statements should be read in conjunction with the accompanying notes to the consolidated financial statements of the Parent. During the year ended January 31, 2025, the Parent generated cash from financing activities of $600.3 million related to related to proceeds for the issuance of Class A and B units. The cash received of $600.3 million was used to invest in Technologies Holdings. During the year ended January 31, 2024, the Parent generated cash from financing activities of $51.7 million related to proceeds for the issuance of Class A and B units. The cash received of $51.7 million was used to invest in Technologies Holdings. During the Successor period in 2023, the Parent generated net cash from financing activities of $5.8 billion related to proceeds for the issuance of Class A and B Units. The Parent invested the cash of $5.8 billion for the acquisition of Technologies Holdings. 122 Table of Contents A condensed statement of cash flows was not presented because the Parent has no other material operating, investing, or financing cash flow activities for the year ended January 31, 2025, 2024 and the successor period in 2023. During the year ended January 31, 2025, the Parent recorded additional paid in capital of $31.7 million related to the Incentive Units issued under the Plan. On behalf of the Parent, Technology Holdings repurchased Class A and Class B Units of the Parent for $6.2 million, which resulted in a reduction of investment in subsidiary. During the year ended January 31, 2024, the Parent recorded additional paid in capital of $37.5 million related to the Incentive Units issued under the Plan. On behalf of the Parent, Technology Holdings repurchased Class A and Class B Units of the Parent for $1.3 million, which resulted in a reduction of investment in subsidiary. 19. Subsequent Events The Company evaluated subsequent events through March 27, 2025. These events, other than those discussed in Note 1, are as follows: On February 19, 2025, the Company repaid $690.0 million of its Term Loan from the proceeds of its IPO. On March 3, 2025, the Company repaid the remaining balance of $350.0 million of its Term loan and will record an estimated $15.3 million loss from extinguishment of debt related to debt issuance costs. During February 2025, the Company issued 16,483,859 restricted stock units primarily in connection with our IPO under a new SailPoint, Inc. Omnibus Incentive Plan (the "Omnibus Incentive Plan") to certain of its employees, including our executive officers, and certain members of the board in connection with the closing of the IPO. Stock-based compensation expense is estimated to be $388.4 million and will be recognized subsequent to the date of the closing of the IPO over the vesting terms, which are predominately two or four year terms. 123 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.