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Item 7. Management’s Discussion and Analysis

2026-03-19 compared with 2025-03-27 · 201 added, 259 removed, 419 unchanged (52% of the section changed)

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Our fiscal year end is January 31, and our fiscal quarters end on April 30, July 31, October 31, and January 31.

Our fiscal year ended January 31, 2025 and January 31, 2024 are referred to herein as "fiscal 2025" and "fiscal 2024," respectively, and the period from August 16, 2022 to January 31, 2023 is referred to as "Successor" and the period from February 1, 2022 to August 15, 2022 is referred to as "Predecessor." Year-to-year comparisons between fiscal 2024 to the Successor and Predecessor periods and discussions of items in such periods are not included in this Annual Report, and can be found in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our final prospectus dated February 12, 2025 and filed with the SEC pursuant to Rule 424(b)(4) on February 14, 2025.

We deliver solutions to enable comprehensive identity security for the enterprise.

We do this by unifying identity data across systems and identity types, including employee identities, non-employee identities, and machine identities.

Our fiscal year ended January 31, 2026, January 31, 2025 and January 31, 2024 are referred to herein as "fiscal 2026", "fiscal 2025", and "fiscal 2024," respectively.

This MD&A generally discusses fiscal 2026 and fiscal 2025 items and year-to-year comparisons between 2026 and 2025.

Discussions of fiscal 2024 items and year-to-year comparisons between 2025 and 2024 that are not included in this Form 10-K can be found in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on our Form 10-K for the fiscal year ended 2025.

We deliver solutions to enable adaptive identity security for the enterprise.

We do this via the SailPoint Platform that unifies identity data across systems and identity types, including employee identities, non-employee identities, machine identities, and AI agents for real-time governance.

Our SaaS and customer-hosted offerings leverage intelligent analytics to provide organizations with critical visibility into which identities currently have access to which resources, which identities should have access to those resources, and how that access is being used.

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Today, we offer a range of solutions to meet the varied needs of our customers across a broad set of deployment options including:

Identity Security Cloud, our SaaS-based cloud solution built on our unified platform, Atlas, and IdentityIQ, our customer-hosted identity security solution.

Identity Security Cloud, our SaaS-based cloud solution built on our unified SailPoint Platform, and IdentityIQ, our customer-hosted identity security solution.

These solutions are designed to enable our customers to make more effective decisions regarding access, improve security processes, and provide them with a deeper understanding of identity and access.

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This transition is substantially complete with subscription revenue, which consists primarily of SaaS, maintenance, and term subscriptions, comprising 94%, 92% and 89% of our total revenue for the year ended January 31, 2026, 2025 and 2024, respectively.

As of January 31, 2025, our ARR was $876.7 million, reflecting an increase of 29% compared to January 31, 2024.

Our go-to-market motion is focused primarily on our SaaS solution, and the growth in our ARR is primarily driven by an increase in SaaS ARR.

As of January 31, 2025, our SaaS ARR was $540.3 million, reflecting an increase of 39% as compared to $388.3 million as of January 31, 2024.

Our transformation has led to rapid growth while increasing the visibility and predictability of our financial model.

As of January 31, 2025, 2024 and 2023, our ARR was $876.7 million, $681.8 million, and $520.1 million, respectively, representing year-over-year growth of 29%, 31%, and 39%, respectively.

As of January 31, 2025, 2024, and 2023, our SaaS ARR was $540.3 million, $388.3 million, and $266.6 million, respectively, representing year-over-year growth of 39%, 46%, and 60%, respectively.

For the fiscal year ended January 31, 2025, 2024 and from the period from August 16, 2022 to January 31, 2023 (Successor) and the period from February 1, 2022 to August 15, 2022 (Predecessor):

• Our revenue was $861.6 million, $699.6 million, $276.7 million, and $276.2 million, respectively.

• Our gross profit margin was 65%, 60%, 58%, and 70%, respectively.

• Our adjusted gross profit margin was 78%, 77%, 77%, and 73%, respectively.

• Our subscription gross profit margin was 70%, 67%, 64%, and 78%, respectively.

• Our adjusted subscription gross profit margin was 84%, 84%, 83%, and 81%, respectively.

• Our operating margin was (22)%, (48)%, (62)%, and (52)%, respectively.

• Our adjusted operating margin was 15%, 8%, 3%, and (7)%, respectively.

• Our net loss was $(315.8) million, $(395.4) million, $(183.3) million, and $(149.2) million, respectively.

Adjusted gross profit margin, adjusted subscription gross profit margin, and adjusted operating margin are non-GAAP financial measures.

See “—Non-GAAP Financial Measures” for our definitions of these non-GAAP financial measures, information about how and why we use these non-GAAP financial measures, a discussion of the limitations of these non-GAAP financial measures, and a reconciliation of each of these non-GAAP financial measures to its most directly comparable financial measure calculated in accordance with GAAP.

Recent Developments

On January 31, 2025, we effected a 60.91-for-1 forward unit split and a 0.45-for-1 reverse unit split of our Class A Units and Class B Units, respectively.

All Class A Unit and Class B Unit and per unit information included in this Annual Report have been retroactively adjusted to reflect this unit split for all periods presented.

Additionally, all incentive unit and per unit information was adjusted to reflect the 0.45-for-1 reverse unit split of the Class B Units in this Annual Report.

On January 31, 2025, the board of managers of SailPoint Parent, LP approved modifications to accelerate vesting of certain incentive units, equity appreciation rights ("EARs"), and cash settled awards subject to the pricing and closing of the

IPO and immediately prior to the Corporate Conversion.

The Company expects to record an estimated equity-based compensation expense of $113.8 million.

The equity awards that will be accelerated or modified, as applicable, are held by our directors, executive officers, and employees.

On February 12, 2025, we closed our IPO of 60.0 million shares of 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.

We received net proceeds of approximately $1,249.1 million, net of the underwriting discounts, commissions and offering costs.

On February 12, 2025, in conjunction with the closing of the IPO, SailPoint Parent, LP converted into a Delaware corporation pursuant to a statutory conversion and changed its name to SailPoint, Inc.

(the "Corporate Conversion").

In conjunction with the Corporate Conversion, all of our 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 was determined pursuant to the applicable provisions of the plan of conversion.

We continue to be controlled by Thoma Bravo following the Corporate Conversion.

After giving effect to the Corporate Conversion and the closing of the IPO, Thoma Bravo controls approximately 86.2% of the voting power of the company.

In conjunction with the closing of the IPO, we settled all outstanding fees payable to Thoma Bravo.

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 directors of the board upon 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.

Our Business Model

Our customers include many of the world’s largest and most complex organizations, including large enterprises across all major verticals and governments.

The approximate number of customers at each ARR level are as follows:

As of January 31,

2,975 2,760 2,525

Customers less than $250,000 in ARR

1,995 1,980 1,910

Customers greater than $250,000 in ARR

Customers greater than $1,000,000 in ARR

The number of customers with $250,000 or more of ARR as of January 31, 2025 increased 26% on a year-over-year basis, and the number of customers with over $1,000,000 of ARR as of January 31, 2025 increased 78% on a year-over-year basis.

Most new customers purchase one of our SaaS suites, Standard, Business, or Business Plus.

For the last twelve months ending January 31, 2025, over 90% of new SaaS customers landed with a suite offering.

We believe we deliver exceptional value to our customers and as a result benefit from high customer retention.

Our go-to-market approach tends to result in a larger land, with future opportunities for expansion.

market approach tends to result in a larger land, with future opportunities for expansion.

We focus on expanding our customer relationships over time with significant up-selling and cross-selling opportunities, including suite upgrades and additional products.

In recent years, our expansion motion has grown rapidly, demonstrating the growing value proposition of our solutions.

As of January 31, 2025, our dollar-based net retention rate was 114%.

For the last twelve months ending January 31, 2026, over 95% of new SaaS customers landed with a suite offering.

For Identity Security Cloud, our SaaS-based cloud solution, and IdentityIQ, our customer-hosted solution, our customers typically enter into three-year contracts, with annual billing upfront.

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We price our IdentityIQ term subscriptions based on a number of factors, including the number of digital identities governed with the solution.

Customers also have the option to purchase additional

products and capabilities.

As of January 31, 2025, the weighted duration of our SaaS and term subscription contracts was approximately three years.

Customers also have the option to purchase additional products and capabilities.

Key Factors Affecting Our Performance

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Furthermore, we estimate that over 60% of organizations in our target market still have a fragmented identity experience or use a mostly manual process based on our internal research.

As a result, we believe that there is a significant opportunity for us to accelerate the growth of our customer base by enhancing our marketing efforts, increasing our sales capacity and productivity, and expanding and further leveraging our use of channel partners, including MSPs.

Our ability to attract new customers depends on a number of factors, including the effectiveness and pricing of our solutions, our ability to drive awareness of them, and the offerings of our competitors.

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Additionally, we are focused on continuing to migrate customers of our customer-hosted solution to our SaaS suites, which typically results in increased ARR because of the additional functionality that our SaaS suites offer.

Our focus on growing our product portfolio as well as expanding customer relationships over time through cross-selling and up-selling has driven expansion of our dollar-based net retention rate from 110% as of January 31, 2023 to 114% as of January 31, 2025.

Our ability to increase sales to existing customers will depend on a number of factors, including our customers’ satisfaction with our products, competition, pricing, and overall changes in our customers’ spending levels.

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Our go-to-market motion is focused primarily on Identity Security Cloud, our SaaS offering.

For the twelve months ended January 31, 2025, SaaS contracts comprised approximately 78% of incremental ARR, up from 75% for the twelve months ended January 31, 2023, and we expect this trend to continue in the future.

We define incremental ARR as the increase in ARR from the prior period to current period.

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Deepen our Penetration in International Markets.

We expect to continue to invest in our sales and marketing efforts and channel partner network to expand our reach and deepen our presence in existing geographies and expand into new geographies.

We expect to continue to invest in our sales and marketing efforts and channel partner network to expand our reach and deepen our presence in existing geographies and to expand into new geographies.

We believe that our global market opportunity is large and growing in response to the evolving IT and threat landscapes.

For the twelve months ended January 31, 2025, we generated 68% of our revenue from the United States, 19% from EMEA, and 13% from the rest of the world, billed primarily in U.S.

We generated 65% of our revenue from the United States, 21% of our revenue from EMEA and 14% from the rest of the world, billed primarily in U.S.

dollars, for the year ended January 31, 2026.

Our ability to deepen our penetration in international markets will depend on a number of factors, including the competitiveness of our solutions, the efficacy of our channel partner network, and our sales and marketing efforts.

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Worldwide economic and political uncertainties and negative trends, including financial and credit market fluctuations, tariffs and increasing trade protectionism, changes in government spending levels, uncertainty in the banking sector, rising interest rates, inflation and other impacts from the macroeconomic environment have, and could continue to, adversely affect our business operations or financial results.

As we continue to monitor the direct and indirect impacts of these circumstances,

the broader implications of these macroeconomic and political events on our business, results of operations and overall financial position remain uncertain.

As we continue to monitor the direct and indirect impacts of these circumstances, the broader implications of these macroeconomic and political events on our business, results of operations and overall financial position remain uncertain.

See the section titled "Risk Factors'' included under Part I, Item 1A above for further discussion of the possible impact of these factors and other risks on our business.

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In addition to our financial information prepared in accordance with GAAP, we monitor the following key business metrics to help us measure and evaluate the effectiveness of our operations.

Prior to the Take-Private Transaction, our Predecessor monitored the key business metric of ARR.

The Take-Private Transaction did not have any direct effects on ARR or our other key business metrics.

Although we believe we have a reasonable basis for each of these metrics, we caution you that these metrics are based on a combination of assumptions that may prove to be inaccurate over time.

Please see the section titled “Risk Factors” for more information.

Total Customers and Customers by ARR Level

The approximate number of customers at each ARR level are as follows:

As of January 31,

2026 2025 2024

3,235 2,975 2,760

Customers less than $250,000 in ARR

2,000 1,995 1,980

Customers greater than $250,000 in ARR

1,235 980 780

Customers greater than $1,000,000 in ARR

As of January 31, 2026, the number of customers with $250,000 or more of ARR and with over $1,000,000 of ARR increased 26% and 34%, respectively, on a year-over-year basis.

As of January 31, 2025, the number of customers with $250,000 or more of ARR and with over $1,000,000 of ARR increased 26% and 78%, respectively, on a year-over-year basis.

We expect the increase in our overall customer count to continue as customers realize the growing value proposition of our solutions.

Annual Recurring Revenue

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In recent years, we have transitioned our business to a SaaS-first subscription model.

As a result of those efforts, our SaaS ARR has more than doubled from January 31, 2023 to January 31, 2025, and the share of SaaS ARR to total ARR has increased from 51% to 62% from January 31, 2023 to January 31, 2025.

As a result of those efforts, our SaaS ARR has continued to show strong growth, and the share of SaaS ARR to total ARR has increased from 57% to 66% from January 31, 2024 to January 31, 2026.

We believe the share of ARR generated by our SaaS solution will continue to increase over time.

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Dollar-Based Net Retention Rate

We define dollar-based net retention rate as the comparison of our ARR from our subscription customers against the same metric for those subscription customers from the prior year.

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Our historical results of operations may not be comparable from period to period or going forward.

Set forth below is a brief discussion of the key factors impacting the comparability of our results of operations.

Take-Private Transaction

On August 16, 2022, we were acquired in an all-cash take-private transaction by Thoma Bravo (the "Take-Private Transaction").

As a result of the Take-Private Transaction, SailPoint Parent, LP indirectly acquired all of the capital stock of SailPoint Technologies Holdings, Inc.

("STHI"), a Delaware corporation that was previously traded on the New York Stock Exchange under the symbol “SAIL” from November 2017 until the completion of the Take-Private Transaction on August 16, 2022.

SailPoint Parent, LP was formed in connection with the Take-Private Transaction to serve as a holding company and did not have previous operations.

Accordingly, STHI is viewed as the predecessor to SailPoint Parent, LP, and the consolidated financial statements present consolidated financial information of (i) STHI as the predecessor for periods prior to the Take-Private Transaction and (ii) SailPoint, LP as the successor for periods from and after the Take-Private Transaction.

The Predecessor and Successor consolidated financial information are not comparable primarily due to the application of acquisition accounting in the Successor financial statements as of August 16, 2022 (the date on which the Take-Private Transaction was completed), which generally requires, among other things, that the identifiable assets acquired and liabilities assumed be recognized at their estimated fair values as of the date on which the Take-Private Transaction was completed and the excess of the purchase price over the fair value of such identifiable assets and liabilities be recognized as goodwill.

See Note 5 "Business Combinations" to the consolidated financial statements for more information.

Due to this application of acquisition accounting, (i) Successor’s amortization expense from acquired intangible assets is higher than Predecessor’s, which negatively impacts Successor’s cost of revenue and operating expenses (research and development expenses and sales and marketing expenses) as compared to Predecessor’s, and (ii) Successor’s amortization expense related to contract acquisition costs is lower than Predecessor’s (the fair value of the acquirer contract acquisition cost balance was determined to be nil), which positively impacts Successor’s operating expenses (sales and marketing expenses) as compared to Predecessor’s.

In addition, acquisition-related transaction costs incurred as part of the Take-Private Transaction were expensed as incurred in the Predecessor period and all transaction expenses that were contingent on the completion of the Take-Private Transaction were recorded in the Predecessor period, which positively impacted Successor’s operating expenses (general and administrative expenses) as compared to Predecessor’s.

Also, as a result of the Take-Private Transaction, (a) interest expenses materially increased due to

the Term Loan, which we entered into in connection with the Take-Private Transaction, (b) equity-based compensation increased due to cash-settled awards and incentive units, which negatively impacts Successor’s cost of revenue and operating expenses (research and development expenses, sales and marketing expenses, and general and administrative expense), (c) we incurred Thoma Bravo monitoring fees (which are annual service-fees for consultation and advice related to corporate strategy, budgeting of future corporate investments, acquisition and divestiture strategies, and debt and equity financings;

see Note 11 “Related Party Transactions” in the notes to our consolidated financial statements for more information), which negatively impacted Successor’s operating expenses (general and administrative expenses), although we incurred less costs associated with operating as a private company, and (d) the effective tax rate increased due to the change in valuation allowance in connection with the Take-Private Transaction.

The Take-Private Transaction did not, however, have any direct effects on our key business metrics (ARR, SaaS ARR, and dollar-based net retention rate).

The Take-Private Transaction also did not result in a material change of management, with four of the five current executive officers, including the Chief Executive Officer and the President, serving in the same or substantially same capacities as they did prior to the Take-Private Transaction.

Public Company and Other Costs

On February 14, 2025, we closed the IPO and became a public company.

We incur additional costs associated with operating as a public company as compared to periods prior to the IPO.

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We incurred a significant increase in equity-based compensation expense due to the conversion and vesting of equity awards issued prior to the IPO as well as the issuance of equity awards to certain employees in connection with the IPO.

We no longer incur the Thoma Bravo monitoring fees discussed above.

Impact of the Offering on Employee Incentive Plans and Operating Results

We will incur additional compensation related costs associated with modifications to outstanding EARs and incentive units and the issuance of new restricted stock units under the Omnibus Plan to certain of our employees.

On January 31, 2025, the Board approved modifications to accelerate the vesting of certain incentive units, EARs, and cash settled awards subject to the pricing and closing of th e IPO.

Upon the IPO, the vested incentive units were considered redeemable.

As a result of the modification s and the closing of the IPO during our fiscal year 2026, we recognized $113.8 million of equity-based compensation expense in the consolidated statement of operations, which was comprised of $61.5 million, $12.6 million, and $39.8 million of expense for the modified incentive units, EARs, and cash settled awards, respectively.

D uring February 2025, we issued 16,483,859 RSUs primarily in connection with our IPO under the SailPoint, Inc.

Omnibus Incentive Plan (the “Omnibus Plan”) to certain of our employees, including our executive officers, and directors of the Board.

These RSUs will vest predominately over two to four years based on continued service.

See Note 12 "Equity-Based Compensation" in the notes to our consolidated financial statements for additional information.

On February 12, 2025, in conjunction with the IPO, SailPoint Parent, LP converted into a Delaware corporation pursuant to a statutory conversion and changed its name to SailPoint, Inc.

(the "Corporate Conversion").

In conjunction with the Corporate Conversion, all of our outstanding partnership units were converted into an aggregate of 499,060,464 shares of our common stock.

Following the closing of the IPO, we no longer incur Thoma Bravo monitoring fees.

During the first quarter of fiscal year 2027, we issued 20,799,064 RSUs to certain of our employees, including executive officers.

Stock-based compensation expense is estimated to be $289.7 million and will be recognized over four years based on continued service.

Components of Results of Operations

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Revenue related to term subscription performance obligations, excluding support for term subscriptions, is recognized upfront at the point in time when the customer has taken control of the software license.

Over time, we expect subscription revenue will increase as a percentage of total revenue as we continue to

focus on increasing our subscription revenue, specifically our SaaS offering, as a key strategic priority.

Perpetual License Revenue

Revenues from perpetual license performance obligations are recognized upfront at the point in time when the customer has taken control of the software license.

All perpetual license transactions include maintenance and support performance obligations which are included in subscription revenue.

We expect perpetual license revenue as a percentage of total revenue to continue to decrease over time as we focus on increasing our subscription revenue.

Over time, we expect subscription revenue will increase as a percentage of total revenue as we continue to focus on increasing our subscription revenue, specifically our SaaS offering, as a key strategic priority.

Services and Other Revenue

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Our professional services are structured on a time-and-materials or fixed priced basis, and the related revenue is recognized as the services are rendered.

Over time, we expect our professional services revenue as a percentage of total revenue to decrease as we increasingly rely on partners to help our customers deploy our software.

Services and other revenue also consists of revenues from perpetual license performance obligations and is recognized upfront at the point in time when the customer has taken control of the software license.

All perpetual license transactions include maintenance and support performance obligations which are included in subscription revenue.

For the year ended January 31, 2026, the Company has begun presenting perpetual license revenue as part of services and other revenue due to amounts no longer being significant and has recast prior year amounts accordingly.

Over time, we expect our professional services revenue as a percentage of total revenue to decrease as we increasingly rely on partners to help our customers deploy our software and on our focus on increasing subscription revenue.

Cost of Revenue

Cost of Subscription Revenue

Cost of subscription revenue consists primarily of third-party cloud-based hosting costs, software, amortization expenses for developed technology acquired, equity-based compensation, employee-related costs (which we define as salaries, benefits, bonuses, and allocated overhead) for providing subscriptions, third party royalties, and contractor costs to supplement staff levels.

Cost of subscription revenue consists primarily of third-party cloud-based hosting costs, software, amortization expenses for developed technology acquired, amortization expense for capitalized software development costs, equity-based compensation, employee-related costs (which we define as salaries, benefits, bonuses and allocated overhead) for providing subscriptions, third party royalties, facilities costs and contractor costs to supplement staff levels.

We expect third-party cloud-based hosting costs to increase as our SaaS subscriptions continue to grow.

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-related costs of professional services and training organizations, equity-based compensation, travel-related costs, and contractor costs to supplement staff levels.

Impairment of Intangible Assets

Impairment of intangible assets consists of impairment charges for developed technology acquired.

Cost of services and other revenue consists primarily of (1) employee-related costs of professional services and training organizations, equity-based compensation, travel-related costs, facilities costs and contractor costs to supplement staff levels;

and (2) amortization expense for developed technology acquired and third-party royalties related to perpetual licenses.

As of the year ended January 31, 2026, the Company has begun presenting cost of perpetual license revenue as part of cost of services and other revenue due to amounts no longer being significant and has recast prior year amounts accordingly.

Gross Profit and Gross Profit Margin

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We expect that our overall gross profit margin will fluctuate from period to period depending on the mix of these various factors.

Our gross profit margin may decrease in the short term as we transition to generating an increasing share of our revenue from our SaaS offering.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of employee-related costs, equity-based compensation, software and hosting arrangement expenses, professional services expense, and amortization expense for acquired intangible assets.

Research and development expenses consist primarily of employee-related costs, equity-based compensation, software and hosting arrangement expenses, facilities costs, professional services expense, and amortization expense for acquired intangible assets.

We believe that continued investment in our offerings is vital to the growth of our business, and we intend to continue to invest in product development.

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Sales and Marketing Expenses

Sales and marketing expenses consist primarily of employee-related costs, equity-based compensation, costs for events and travel, costs of general marketing and promotional activities, payment processing fees and amortization expense for acquired intangible assets, and contract acquisition costs.

Sales and marketing expenses consist primarily of employee-related cost (which includes commissions), equity-based compensation, costs for events and travel, facilities costs, costs of general marketing and promotional activities, payment processing fees and amortization expense for acquired intangible assets, and contract acquisition costs.

We expect our sales and marketing expenses to increase on an absolute basis for the foreseeable future as we continue to invest in our sales force for expansion to new geographic and vertical markets.

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Interest income consists primarily of interest received on cash equivalents, which we expect will fluctuate based on our cash balances and interest rates.

In the Predecessor period, interest expense consists primarily of contractual interest expense on the $400.0 million aggregate principal amount of 0.125% Convertible Senior Notes issued by STHI in September 2019 and the Credit Agreement, along with amortization of debt discount and issuance costs.

In the Successor period, interest expense consists primarily of contractual interest on our Term Loan plus amortization of debt issuance costs.

We expect interest expense to decrease due to the repayment of our Term Loans.

Income Tax Benefit (Expense)

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Our quarterly sales are impacted by industry buying patterns.

As a result, our sales have generally been highest in the fourth calendar quarter and lowest in the first calendar quarter.

As a result, our sales have generally been highest in the fourth fiscal quarter and lowest in the first fiscal quarter.

Although these seasonal factors are common in the technology industry, historical patterns should not be considered a reliable indicator of our future sales activity or performance.

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The period-to-period comparison of results is not necessarily indicative of results for future periods.

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

Year Ended January 31

2026 2025 2024

Subscription $ 1,010,198 94 % $ 793,919 92 % $ 622,830 89 %

Perpetual licenses 400 — 5,842 1 10,806 4 13,841 5

Services and other 61,218 6 67,692 8 76,742 11

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302,367 28 236,581 28 205,053 29

Perpetual licenses (3)

154 — 2,227 — 3,718 1 908 —

Services and other (2)

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Income tax benefit (expense) 55,945 5 60,799 7 116,982 17

$ (315,830) (37) % $ (395,367) (57) % $ (183,259) (66) % $ (149,239) (54) %

Net loss $ (270,054) (25) % $ (315,830) (37) % $ (395,367) (57) %

Class A yield $ (23,786) $ (764,549) $ (583,672)

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)

Net loss attributable to common stockholders and Class B unitholders $ (293,840) $ (1,080,379) $ (979,039)

Net loss per share attributable to common stockholders and Class B unitholders, basic and diluted (1)

$ (0.54) $ (12.91) $ (12.13)

Weighted average Class B Units outstanding—basic and diluted (1)

544,159 83,716 80,746

_______________

Certain percentages may not foot due to rounding.

(1) Amounts for the period during February 2025 prior to the Corporate Conversion have been retrospectively adjusted to give effect to the Corporate Conversion described in Note 1 in this Annual Report.

These amounts do not consider the shares of common stock sold in our IPO or the Class A Units considered preferred shares that were converted into common stock and issued upon the closing of our IPO.

We did not retrospectively adjust for the effect of the Corporate Conversion for periods prior to fiscal year 2026.

(2) Includes equity-based compensation expense as follows:

Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022

Year Ended January 31,

2026 2025 2024

(In thousands)

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(3) Includes amortization expense of acquired intangible assets as follows:

Year Ended January 31, 2025 Year Ended January 31, 2024 August 16, 2022 to January 31, 2023 February 1, 2022 to August 15, 2022

Year Ended January 31,

2026 2025 2024

(In thousands)

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Subscription $ 106,476 $ 103,329 $ 100,820

Perpetual licenses 154 2,147 3,383 562

Services and other

Operating expenses

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Total amortization expense $ 202,068 $ 230,308 $ 257,029

(4) Net losses for the Predecessor period for the period from February 1, 2022 to August 15, 2022 was entirely attributable to Predecessor shareholders.

Additionally, due to the impact of the Take-Private Transaction, 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 the Take-Private Transaction is not meaningful.

Comparison of the Years Ended January 31, 2026 and 2025

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Total subscription 1,010,198 793,919 216,279 27 %

Perpetual licenses 400 5,842 (5,442) (93) %

Services and other 61,218 67,692 (6,474) (10) %

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Subscription Revenue.

Subscription revenue increased by $171.1 million, or 27%, for the year ended January 31, 2025 compared to the year ended January 31, 2024 primarily due to an increase in SaaS revenue and term subscription revenue due to our focus on selling subscriptions to new and existing customers.

Perpetual License Revenue.

License revenue decreased by $5.4 million, or (93)%, for the year ended January 31, 2025 compared to the year ended January 31, 2024 primarily due to our emphasis on transitioning our sales effort from perpetual license solutions to subscriptions.

Subscription revenue increased by $216.3 million, or 27%, for the year ended January 31, 2026 compared to the year ended January 31, 2025 primarily due to an increase in SaaS revenue and term subscription revenue from our focus on selling subscriptions to new customers and expanding our footprint with existing customers.

Services and Other Revenue.

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Subscription $ 302,367 $ 236,581 $ 65,786 28 %

Perpetual licenses 154 2,227 (2,073) (93) %

Services and other 78,258 69,152 9,106 13 %

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Cost of Subscription Revenue.

Cost of subscription revenue increased $31.5 million, or 15%, for the year ended January 31, 2025 compared to the year ended January 31, 2024 primarily due to an increase in software and hosting costs of $18.6 million from the increase in sales of SaaS subscriptions, an increase in employee-related costs of $7.3 million, primarily due to increases in headcount and investments in existing employees to support the growth in the business, an increase in third-party royalties of $1.9 million, an increase in amortization of intangibles of $2.5 million and an increase in amortization of capitalized software of $0.4 million.

Cost of Perpetual Licenses .

Cost of licenses decreased $2.1 million, or (93)%, for the year ended January 31, 2025 compared to the year ended January 31, 2024 primarily due to a decrease in our license revenue.

Cost of subscription revenue increased $65.8 million, or 28%, for the year ended January 31, 2026 compared to the year ended January 31, 2025 primarily due to an increase in employee-related costs of $25.5 million due to higher headcount and increased investments in personnel, an increase in software and hosting costs of $19.7 million from the increase in sales of SaaS subscriptions, an increase of $12.6 million related to acceleration of equity-based awards from the completion of our IPO and the issuance of new equity-based awards, an increase in amortization of intangibles of $3.1 million from the Savvy and Imprivata acquisitions, an increase in third-party royalties of $1.5 million from growth in our business, an increase in partner costs of $1.4 million from growth in our business, and an increase in amortization of capitalized software of $1.4 million due to overall increase in capitalizable projects when compared to the prior period.

Cost of Services and Other.

Cost of services and other decreased by $0.4 million, or (1)%, for the year ended January 31, 2025 compared to the year ended January 31, 2024.

The cost of services and other revenue remained consistent with the prior period.

Cost of services and other increased by $9.1 million, or 13%, for the year ended January 31, 2026 compared to the year ended January 31, 2025, primarily due to employee-related costs of $7.0 million from the acceleration of equity-based awards from the completion of our IPO and the issuance of new equity-based awards and an increase in partner costs of $2.1 million.

Gross Profit and Gross Margin

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Subscription $ 707,831 $ 557,338 $ 150,493 27 %

Perpetual licenses 246 3,615 (3,369) (93) %

Services and other (17,040) (1,460) (15,580) **

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Subscription 70 % 70 %

Perpetual licenses 62 % 62 %

Services and other (28) % (2) %

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Subscription gross profit increased by $150.5 million, or 27%, during the year ended January 31, 2026 compared to the year ended January 31, 2025.

The increase was primarily due to the growth in subscriptions.

Subscription gross profit margin was 70% for the year ended January 31, 2025 and 67% for the year ended January 31, 2024.

The change was primarily due to the increased SaaS revenue and term subscription revenue from our focus on selling subscriptions to new and existing customers.

Perpetual Licenses.

License gross profit decreased by $3.4 million, or (93)%, during the year ended January 31, 2025 compared to the year ended January 31, 2024.

The decrease in gross profit was primarily due to an increase in selling subscription-based products as compared to licenses.

Perpetual license gross profit margin remained materially consistent with the prior period.

The increase was primarily due to the growth in subscription revenue.

Subscription gross profit margin remained consistent with the prior period.

Services and Other .

Services and other gross profit decreased by $3.3 million, or (210)%, during the year ended January 31, 2025 compared to the year ended January 31, 2024.

The decrease in gross profit is primarily due lower revenue from professional services and training as a result of the shift toward selling these services on a subscription basis.

Services and other gross profit decreased by $15.6 million during the year ended January 31, 2026 compared to the year ended January 31, 2025.

The decrease in gross profit is primarily due to an increase in employee-related costs and the acceleration of equity-based awards from the completion of our IPO and the issuance of new equity-based awards and lower revenue from professional services and training as a result of the shift toward selling these services on a subscription basis.

Services and other gross profit margin was (28)% for the year ended January 31, 2026 and (2)% for the year ended January 31, 2025.

The change was primarily due to the decrease in services and other revenue with costs remaining consistent.

The change was primarily due to employee-related costs related to acceleration of equity-based awards from the completion of our IPO and the issuance of new awards and the decrease in services and other revenue.

Total gross profit increased by $134.9 million, or 24%, during the year ended January 31, 2026 compared to the year ended January 31, 2025.

The increase is primarily due to the growth in total revenue.

Total gross profit margin was 65% for the year ended January 31, 2025 and 60% for the year ended January 31, 2024.

The increase was primarily due to the increased subscription revenue.

Total gross profit margin remained materially consistent with the prior period.

Operating Expenses

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Research and Development Expenses.

Research and development expenses decreased by $11.0 million, or (6)%, for the year ended January 31, 2025 compared to the year ended January 31, 2024.

This decrease was primarily driven by a $7.5

million decrease in employee-based costs due mainly to the capitalization of internal-use software development costs and a $7.2 million decrease in equity-based compensation as a greater number of cash-settled awards are now fully vested.

The decrease was offset by a $1.7 million increase in professional service fees.

and a $1.6 million increase in software and hosting costs.

Research and development expenses increased by $53.2 million, or 31%, for the year ended January 31, 2026 compared to the year ended January 31, 2025.

This increase was primarily driven by a $29.9 million increase in equity-based compensation due to the acceleration of awards from the completion of our IPO and the issuance of new equity-based awards, a $14.6 million increase in employee-based costs due to continued investment in talent related to the development of our products and a $6.5 million increase in software and hosting costs from initiatives to continue to grow our business.

Sales and Marketing Expenses.

Sales and marketing expenses increased by $107.9 million, or 23%, for the year ended January 31, 2026 compared to the year ended January 31, 2025.

This increase was primarily driven by a $39.6 million increase in employee-based costs to support increased penetration into our existing customer base and expansion into new industry verticals and geographic markets, a $3.3 million increase in advertising and promotion costs, and a $3.7 million increase in travel expenses and an $1.6 million increase in software and hosting costs.

This increase was partially offset by a $13.9 million decrease in equity-based compensation as a greater number of cash-settled awards are now fully vested, a $27.6 million decrease in intangible amortization attributable to certain intangible assets acquired in the Take-Private Transaction reaching full amortization and a $0.9 million decrease in professional services fees.

This increase was primarily driven by a $65.1 million increase in equity-based compensation due to the acceleration of awards from the completion of our IPO and the issuance of new equity-based awards, a $58.4 million increase in employee-based costs to support increased penetration into our existing customer base and expansion into new industry verticals and geographic markets, a $7.8 million increase in advertising and promotion costs from Navigate and other initiatives aimed at expanding the business, a $2.8 million increase in travel expenses from an increased headcount, a $1.9 million increase in software and hosting costs from initiatives to continue to grow our business, a $1.6 million increase for the fair value remeasurement of the contingent consideration related to the Imprivata acquisition, and a $1.2 million increase in professional services fees from consulting fees.

This increase was partially offset by a $31.3 million decrease in intangible amortization attributable to certain intangible assets reaching full amortization.

General and Administrative Expenses.

General and administrative expenses decreased by $5.7 million, or (5)%, for the year ended January 31, 2025 compared to the year ended January 31, 2024.

This decrease was primarily driven by a $15.4 million decrease in equity-based compensation as a greater number of cash-settled awards are now fully vested.

This decrease was partially offset by a $1.3 million increase in employee-related costs due to higher headcount and increased investments in existing employees, a $3.5 million increase in professional service fees, a $2.8 million increase in provision for credit losses, a $1.4 million increase in software and hosting costs and a $0.6 million increase in travel expense.

General and administrative expenses increased by $92.5 million, or 86%, for the year ended January 31, 2026 compared to the year ended January 31, 2025.

This increase was primarily driven by a $93.8 million increase in equity-based compensation due to the acceleration of awards from the completion of our IPO and the issuance of new equity-based awards, a $6.0 million increase in employee-related costs due to higher headcount and increased investments in existing employees, a $3.3 million increase in provision for credit losses due to higher write offs based on higher accounts receivable balances throughout the year, a $2.1 million increase in software and hosting costs from initiatives to continue to grow our business, and a $1.0 million increase in travel expenses primarily related to the IPO.

This increase was partially offset by a $14.9 million decrease in professional service fees primarily attributed to the termination of the advisory services agreement with Thoma Bravo upon the closing of our IPO.

Other Income (Expense), Net

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Total other income (expense), net $ (18,513) $ (187,895) $ 169,382 (90) %

Other expense increased by $8.3 million, or 5%, for the year ended January 31, 2025 compared to the year ended January 31, 2024.

This increase was primarily due to a $6.5 million decrease in interest income due to a reduction in our cash and cash equivalents and a $2.2 million increase in other expense related to foreign currency exchange loss.

Income Tax (Expense) Benefit

Total other income (expense) decreased by $169.4 million, or 90%, for the year ended January 31, 2026 compared to the year ended January 31, 2025.

This decrease was primarily due to a $162.0 million net decrease in interest expense due to the full repayment of our Term Loans and termination of our 2022 Revolving Credit Facility, which includes $16.7 million for the extinguishment of debt related to the remaining balance of the deferred financing costs of our Term Loans and debt issuance costs for our 2022 Revolving Credit Facility, a $6.6 million increase in interest income due to an increase in our cash and cash equivalents, and a $0.7 million decrease in other expense related to foreign currency exchange loss.

Income Tax Benefit

Year Ended January 31,

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(In thousands, except percentages)

Income tax benefit (expense) $ 60,799 $ 116,982 $ (56,183) (48) %

Income tax benefit $ 55,945 $ 60,799 $ (4,854) (8) %

The Company recorded an income tax benefit of $55.9 million for the year ended January 31, 2026 compared to an income tax benefit of $60.8 million for the year ended January 31, 2025, leading to a net benefit decrease of $4.9 million, or 8%, year-over-year.

The decrease is primarily due to a decrease in current year pre-tax book losses and change in valuation allowance.

We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized and continue to maintain a valuation allowance to reduce our deferred tax assets to the amount realizable.

The total valuation allowance is $32.3 million and is primarily related to interest expense, loss and credit carryforwards.

The effective tax rate for the years ended January 31, 2025 and 2024 were 16.1% and 22.8%, respectively.

The main drivers for the differences in the rates from the prior period to the current period are related to an increase in foreign taxes on earnings, decrease in research and development tax credits, and increase in valuation allowance.

Our tax expense to date relates primarily to state as well as foreign income taxes.

The decrease is primarily due to certain non-deductible equity-based compensation and non-deductible executive officer compensation that is partially offset by the decrease in valuation allowance.

For further information, refer to Note 14 “Income Taxes” in our notes to our consolidated financial statements included in this Annual Report.

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We urge you to review the reconciliations of our non-GAAP financial measures to the comparable GAAP financial measures included below and not to rely on any single financial measure to evaluate our business.

We believe excluding items that neither relate to the ordinary course of business nor reflect our underlying business performance, such as equity-based compensation, the amortization of acquired intangible assets, and acquisition-related expenses, enables management and investors to compare our underlying business performance from period-to-period.

Accordingly, we believe these adjustments facilitate a useful evaluation of our current operating performance and comparison to our past operating performance and provide investors with additional means to evaluate cost and expense trends.

We believe excluding items that do not reflect our ongoing, core operating or business performance, such as equity-based compensation, payroll taxes related to awards that were accelerated upon the closing of our IPO, payroll taxes related to RSUs, amortization of acquired intangible assets, and acquisition-related expenses (including fair value adjustments to acquisition-contingent consideration), enables management and investors to compare our underlying business performance from period-to-period.

Accordingly, we believe these adjustments facilitate a useful evaluation of our current operating

performance and comparison to our past operating performance and provide investors with additional means to evaluate cost and expense trends.

In addition, we also believe these adjustments enhance comparability of our financial performance against those of other technology companies.

Adjusted Gross Profit and Adjusted Gross Profit Margin

We define adjusted gross profit and adjusted gross profit margin as excluding equity-based compensation expense, amortization of acquired intangible assets, acquisition related expenses (credits), Thoma Bravo monitoring fees (which are annual service-fees as described in Note 11 “Related Party Transactions” in the notes to our consolidated financial statements), and restructuring expenses.

We define adjusted gross profit and adjusted gross profit margin as excluding equity-based compensation expense, payroll taxes related to awards that were accelerated upon the closing of our IPO and payroll taxes related to RSUs, all of which were issued after the closing of the IPO, amortization of acquired intangible assets, acquisition related expenses and restructuring expenses.

The following table reflects the reconciliation of adjusted gross profit to gross profit and adjusted gross profit margin to gross profit margin:

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

Year Ended January 31,

2026 2025 2024

(In thousands, except percentages)

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Equity-based compensation expense 35,227 13,771 12,447

Payroll taxes for IPO-accelerated awards and RSUs

Amortization of acquired intangible assets 106,478 103,483 102,967

Acquisition-related expenses and Thoma Bravo monitoring fees — 58 — —

Acquisition-related expenses

Restructuring — — 94

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Our adjusted gross profit margin (adjusted gross profit as a percentage of revenue) has remained generally consistent in recent periods and reflects the high value-added nature of our offerings.

Our adjusted gross profit margin may decrease in the short term as we transition to generating more revenue from our SaaS offering, for which we incur hosting costs.

Adjusted Subscription Gross Profit and Adjusted Subscription Gross Profit Margin

We define adjusted subscription gross profit and adjusted subscription gross profit margin as excluding equity-based compensation expense, amortization of acquired intangible assets, impairment of intangible assets, acquisition related expenses (credits), Thoma Bravo monitoring fees (which are annual service-fees as described in Note 11 “Related Party Transactions” in the notes to our consolidated financial statements), and restructuring expenses.

We define adjusted subscription gross profit and adjusted subscription gross profit margin as excluding equity-based compensation expense, payroll taxes related to awards that were accelerated upon the closing of our IPO and payroll taxes related to RSUs, all of which were issued after the closing of the IPO, amortization of acquired intangible assets, which includes impairment, acquisition related expenses and restructuring expenses.

The following table reflects the reconciliation of adjusted subscription gross profit to subscription gross profit and adjusted subscription gross profit margin to subscription gross profit margin:

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

Year Ended January 31,

2026 2025 2024

(In thousands, except percentages)

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Equity-based compensation expense 19,754 7,119 6,675

Payroll taxes for IPO-accelerated awards and RSUs 683 — —

Amortization of acquired intangible assets 106,476 103,329 100,820

Acquisition-related expenses and Thoma Bravo monitoring fees — 58 — —

Acquisition-related expenses

Restructuring — — 85

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Our adjusted subscription gross profit margin (adjusted subscription gross profit as a percentage of subscription revenue) has remained generally consistent in recent periods and reflects the high value-added nature of our offerings.

Our adjusted subscription gross profit margin is expected to decrease in the short term as we transition to generating more revenue from our SaaS offering, for which we incur hosting costs.

Adjusted Income from Operations and Adjusted Operating Margin

We define adjusted income from operations as income (loss) from operations excluding equity-based compensation expense, amortization of acquired intangible assets which includes impairment charges, impairment of intangible assets, acquisition-related expenses, benefit from amortization related to acquired contract acquisition costs, Thoma Bravo monitoring fees (which were annual service-fees for consultation and advice related to corporate strategy, budgeting of future corporate investments, acquisition and divestiture strategies, and debt and equity financings as described in Note 11 “Related Party Transactions” in the notes to our consolidated financial statements), and restructuring expenses.

We define adjusted income from operations as income (loss) from operations excluding equity-based compensation expense, payroll taxes related to awards that were accelerated upon the closing of our IPO and payroll taxes related to RSUs, all of which were issued after the closing of the IPO, amortization of acquired intangible assets which includes impairment charges, benefit from amortization related to acquired contract acquisition costs, acquisition-related expenses (including fair value adjustments to acquisition-contingent consideration), Thoma Bravo monitoring fees (which were annual service-fees for consultation and advice related to corporate strategy, budgeting of future corporate investments, acquisition and divestiture strategies, and debt and equity financings as described in Note 10 “Related Party Transactions” in the notes to our consolidated financial statements), and restructuring expenses.

The Thoma Bravo monitoring fees were incurred pursuant to a services agreement, and we do not expect to receive similar services in the future or enter into a similar arrangement again in the future.

The following table reflects the reconciliation of adjusted income (loss) from operations to operating income (loss):

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

Year Ended January 31,

2026 2025 2024

(In thousands, except percentages)

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Equity-based compensation expense 309,800 99,569 134,819

Payroll taxes for IPO-accelerated awards and RSUs 8,157 — —

Amortization of acquired intangible assets 202,068 230,308 257,029

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Restructuring — — 3,541

Adjusted income (loss) from operations $ 132,744 $ 54,250 $ 8,413 $ (19,088)

Adjusted income from operations

$ 194,255 $ 132,744 $ 54,250

Adjusted operating margin 18 % 15 % 8 %

(1) In accordance with U.S.

GAAP reporting requirements, the Company has written off its contract acquisition costs at the time of the Take-Private Transaction.

GAAP reporting requirements, the Company has written off its contract acquisition costs at the time of its acquisition by Thoma Bravo in August 2022.

Therefore, U.S.

GAAP commissions expense related to contract acquisition costs after the Take-Private Transaction will not reflect the commissions expense that would have been reported if the contract acquisition costs were not written off.

GAAP commissions expense related to contract acquisition costs after its acquisition by Thoma Bravo will not reflect the commissions expense that would have been reported if the contract acquisition costs were not written off.

Accordingly, the Company believes that presenting the approximate amount of acquisition-related commission expenses (so that the full amount of commission expense is included) provides a more appropriate representation of commission expense in a given period and, therefore, provides readers of the Company’s financial statements with a more consistent basis for comparison across accounting periods.

Our adjusted operating margin increased in the year ended January 31, 2025 compared to prior periods, primarily due to the growth in our overall business and increased operating leverage.

Our adjusted operating margin increased in the year ended January 31, 2025 compared to the year ended January 31, 2024, primarily due to the growth in our overall business and increased operating leverage.

Our adjusted income from operations and adjusted operating margin increased for the year ended January 31, 2026 compared to the year ended January 31, 2025, primarily due to the growth in our overall business and increased operating leverage.

Free Cash Flow

We define free cash flow as net cash provided by (used in) operating activities, less cash used for purchases of property and equipment, and capitalized software development costs.

We use free cash flow as a measure of financial progress in our business, as it balances operating results, cash management, and capital efficiency.

We believe information regarding free cash flow provides investors and others with an important perspective on the cash available to make strategic acquisitions and investments, to fund ongoing operations, and to fund other capital expenditures.

Free cash flow can be volatile and is sensitive to many factors, including changes in working capital and timing of capital expenditures.

Working capital at any specific point in time is subject to many variables including the discretionary timing of expense payments and fluctuations in foreign exchange rates.

The following table summarizes our free cash flow for the periods presented:

Year Ended January 31,

2026 2025 2024

(in thousands)

GAAP net cash provided by (used in) operating activities

$ 70,580 $ (106,391) $ (250,354)

Purchase of property and equipment

(5,980) (5,362) (2,577)

Capitalized software development costs

(12,850) (8,219) —

Free cash flow

$ 51,750 $ (119,972) $ (252,931)

Our free cash flow for the year ended January 31, 2026 increased when compared to the year ended January 31, 2025, primarily due to higher revenue growth and a decrease in interest expense from the repayment of our Term Loans.

Free cash flow for the year ended January 31, 2026 includes $78.5 million of cash paid to settle equity related awards, cash awards and their associated payroll taxes upon the closing of our IPO, $36.7 million in cash paid for interest expense related to our 2022 Credit Agreement and $9.3 million of cash paid for fees under our advisory services agreement with Thoma Bravo, which was terminated upon the closing of our IPO.

Liquidity, Capital Resources and Cash Requirements

Since the inception of SailPoint Parent, LP, our primary sources of liquidity are cash flows from operations, issuance of Class A Units, Class B Units, debt financing, and issuance of our common stock in the IPO.

Our primary uses of liquidity are contractual interest payments related to our Term Loan (prior to the repayment thereof), operating expenses, working capital requirements, and capital expenditures.

In November 2024, we drew $25.0 million on our Revolving Credit Facility in preparation for a business acquisition with the remainder for general corporate purposes.

The acquisition was completed in December 2024.

In December 2024, we issued Class A Units and Class B Units to Thoma Bravo for an aggregate purchase price of $600.0 million, and in January 2025, upon exercise of their preemptive rights pursuant to our partnership agreement, we issued Class A Units and Class B Units to certain of our directors and other equityholders for an aggregate purchase price of approximately $0.3 million.

We used $550.0 million and $25.0 million of such proceeds to repay a portion of the borrowings outstanding under our Term Loan and Revolving Credit Facility, respectively, in December 2024 and plan to use the remainder for general corporate purposes.

On February 19, 2025, we repaid $690.0 million of the Term Loan from the proceeds of the IPO.

On March 3, 2025, we repaid the remaining balance of $350.0 million of the Term Loan.

Cash flows from operations have been historically negative as we continue to develop and expand our products and services and increase our sales and marketing efforts.

Although we may have quarterly results where cash flows from operations are positive due to timing of license renewals or other factors, we expect to continue to incur cash flow outflow in the foreseeable future.

As of January 31, 2025, our principal source of liquidity was cash and cash equivalents totaling $121.3 million and our Revolving Credit Facility as described further below.

We have restricted cash of $3.1 million as of January 31, 2025, primarily related to a letter of credit for one of our leases.

We believe our existing cash and cash equivalents and amounts available under our Credit Facility will be sufficient to meet our liquidity, capital expenditures, and anticipated working capital requirements to fund our operations for at least the next 12 months.

We believe we have sufficient sources of funding to meet our business requirements for the next 12 months and in the longer term.

Our primary sources of liquidity are cash flows from operations and proceeds from the IPO, which are supplemented by our undrawn 2025 Revolving Credit Facility.

As of January 31, 2026, we had cash and cash equivalents totaling $358.1 million.

Our primary uses of liquidity are operating expenses, working capital requirements, capital expenditures and acquisitions.

On February 14, 2025, the Company received net proceeds of approximately $1,248.2 million, net of the underwriting discounts, commissions and offering costs, upon the closing of its IPO.

On February 19, 2025, we repaid $690.0 million of the Term Loans from the proceeds of the IPO.

On March 3, 2025, we repaid the remaining balance of $350.0 million of the Term Loans.

Although cash flows from operations had been historically negative, for the year ended January 31, 2026, we had positive cash flows from operations.

We expect to continue to incur positive cash flows from operations in the foreseeable future.

Our future capital requirements will depend on many factors, including but not limited to our revenue growth rate, timing of cash receipt and payments, and the timing and extent of spending to support strategic initiatives.

We may also enter into arrangements to acquire or invest in complementary businesses, services, and technologies.

To the extent existing cash and cash equivalents are not sufficient to fund future activities, we may borrow under our Credit Agreement or seek to raise additional funds through equity, equity-linked or debt financings.

To the extent existing cash and cash equivalents are not sufficient to fund future activities, we may borrow under our 2025 Revolving Credit Facility or seek to raise additional funds through equity, equity-linked or debt financings.

We may enter into agreements or letters of intent with respect to potential investments in, or acquisitions of, complementary businesses, services or technologies, which could also require us to seek additional equity financing, incur indebtedness or use cash resources.

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If we are unable to raise additional capital when desired, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, operating results and financial condition would be adversely affected.

Revolving Credit Facility

2025 Credit Agreement

On June 25, 2025, we entered into the 2025 Credit Agreement, which provides for a five -year $250.0 million secured revolving credit facility, including a letter of credit sub-facility of up to $10.0 million .

The 2025 Revolving Credit Facility matures on June 25, 2030.

Borrowings under the 2025 Revolving Credit Facility may be used to provide ongoing working capital as well as for other general corporate purposes of the Company.

The Company had no outstanding 2025 Revolving Credit Facility balance and was in compliance with all applicable covenants as of January 31, 2026.

See Note 9 “Credit

Agreement and Debt” in the notes to our consolidated financial statements included in this Annual Report for more information regarding the terms and conditions of the 2025 Credit Agreement.

2022 Credit Agreement

On August 16, 2022, we entered into the 2022 Credit Agreement.

The Credit Agreement provides for (i) a six-year $125.0 million senior secured Revolving Credit Facility, including a letter of credit subfacility of up to $5.0 million and (ii) a seven-year $1.6 billion Term Loans.

On February 19, 2025, we repaid $690.0 million of the Term Loan from the proceeds of the IPO.

On March 3, 2025, we repaid the remaining balance of $350.0 million of the Term Loan.

As of March 27, 2025, we have no borrowings outstanding under the Revolving Credit Facility.

The Revolving Credit Facility matures in August 2028.

Borrowing under the Revolving Credit Facility may be used to provide ongoing working capital as well as for other general corporate purposes of the Company.

We are required to pay a commitment fee on any unused portion of the Revolving Credit Facility at a rate of 0.50% per annum.

We 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.

We may voluntarily repay and reborrow outstanding loans under the Revolving Credit Facility at any time without a premium or a penalty.

The Credit Agreement contains covenants that, among other things and subject to certain exceptions and qualifications, restrict our ability and the ability of certain of our 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;

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 our affiliates;

designate restricted subsidiaries as unrestricted subsidiaries;

and merge, consolidate, transfer or sell all or substantially all of our 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).

The Company was in compliance with all applicable covenants as of January 31, 2025 and for each period presented herein.

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.

The 2022 Credit Agreement provides for (i) a six-year $125.0 million senior secured Revolving Credit Facility, including a letter of credit subfacility of up to $5.0 million and (ii) the Term Loans.

After the closing of the IPO, we fully repaid our Term Loans and recorded an extinguishment of debt related to the remaining balance of the associated deferred financing costs of $15.3 million .

On June 25, 2025, the 2022 Credit Agreement was terminated upon the closing of the 2025 Credit Agreement.

The remaining unamortized deferred financing costs for the 2022 Revolving Credit Facility of $1.4 million was recorded as a loss from extinguishment of debt for the year ended January 31, 2026 .

The extinguishment of debt associated with the Term Loans and with the 2022 Revolving Credit Facility is recorded within interest expense on the consolidated statements of operations.

Summary of Cash Flows

As of January 31, 2025, we had $121.3 million of cash and cash equivalents (of which $11.6 million is held in our foreign subsidiaries), $125.0 million of availability under the Credit Agreement, and $350.7 million in net working capital, which we define as current assets less current liabilities, excluding deferred revenue.

As of January 31, 2026 , we had $358.1 million of cash and cash equivalents (of which $25.4 million was held in our foreign subsidiaries), $250.0 million of availability under the 2025 Credit Agreement, and $723.4 million in net working capital, which we define as current assets less current liabilities, excluding deferred revenue.

As of January 31, 2025, we had $121.3 million of cash and cash equivalents (of which $11.6 million was held in our foreign subsidiaries), $125.0 million of availability under the 2022 Credit Agreement, and $350.7 million in net working capital.

The decrease in cash and cash equivalents and net working capital is due primarily to the interest paid on the Term Loan and operating losses.

The increase in cash and cash equivalents and net working capital is due primarily to the proceeds received upon the closing of our IPO and increase in cash provided by operations.

The following table summarizes our cash flows for the periods presented:

January 31, 2025 January 31, 2024

Year Ended January 31,

2026 2025 2024

(in thousands)

Net cash used in operating activities $ (106,391) $ (250,354)

Net cash provided by (used in) operating activities $ 70,580 $ (106,391) $ (250,354)

Net cash used in investing activities (35,556) (28,944) (12,664)

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Cash Flows from Operating Activities

During the year ended January 31, 2025, cash used in operating activities was $106.4 million, which consisted of a net loss of $315.8 million, adjusted by non-cash charges of $237.9 million and a net decrease of $28.4 million in our net operating assets and liabilities.

The non-cash charges are primarily comprised of depreciation and amortization expense of $237.2 million, equity-based compensation of $31.7 million, amortization of contract acquisition costs of $24.9 million, amortization of debt discount and issuance costs, including the early write-off of issuance costs related to the repayment of the Term Loan, of $12.7 million and provision for credit losses of $2.5 million, partially offset by deferred taxes of $71.2 million.

The net cash outflow from changes in operating assets and liabilities was primarily a result of an increase in deferred contract acquisition costs of $71.7 million due to an increase in our sales, an increase in accounts receivable of $41.7 million due to the timing of receipts of payments from customers, an increase in contract assets of $11.7 million primarily due to growth in our revenue and the timing of invoices and payments, an increase in prepayments and other current assets of $13.7 primarily due to our marketing efforts, an increase of $6.0 million of other non-current assets due to the implementation of cloud computing arrangements and a decrease in accounts payable of $5.3 million primarily due to the timing of vendor invoices and payments.

The outflows were offset by an increase in deferred revenue of $72.9 million due to an increase in billings for subscriptions, an increase in accrued expenses and other liabilities of $36.6 million due to the timing of cash disbursements primarily related to interest payments, commissions and fees due to Thoma Bravo.

For the year ended January 31, 2024, net cash used in operating activities was $250.4 million, which resulted from net loss of $395.4 million, adjusted for non-cash charges of $193.6 million and net cash outflows of $48.5 million from changes in operating assets and liabilities.

Non-cash charges primarily consisted of depreciation and amortization expense of $263.6 million, equity-based compensation expense of $37.5 million, amortization of contract acquisition costs of $11.5 million, and amortization of debt discount and issuance costs of $4.2 million, offset by a change in deferred taxes of $124.9 million.

The net cash outflow from changes in operating assets and liabilities was primarily driven by an increase in contract acquisition costs of $61.7 million due to an increase in our sales, and an increase in accounts receivable of $57.4 million and an increase in contract assets of $21.1 million as a result of the growth in our revenue and the timing of invoices and payments.

These outflows were offset by an increase in deferred revenue of $65.2 million as a result of the growth in our sales and the timing of invoices, and an increase in accrued expenses and other liabilities of $22.6 million and in accounts payable of $4.2 million as a result of higher expenditures to support our growth and the timing of vendor invoices and payments.

During the year ended January 31, 2026, cash provided by operating activities was $70.6 million, which consisted of a net loss of $270.1 million, adjusted by non-cash charges of $456.6 million and a net cash outflow of $115.9 million from changes in our net operating assets and liabilities.

The non-cash charges are primarily comprised of equity-based compensation of $254.9 million, depreciation and amortization expense of $210.8 million, amortization of contract acquisition costs of $39.2 million, amortization of debt discount and issuance costs, including the early write-off of issuance costs related to the repayment of the Term Loans and termination of the 2022 Revolving Credit Facility of $17.4 million, provision for credit losses of $5.4 million and fair value adjustments to contingent consideration of $1.6 million, partially offset by deferred taxes of $72.7 million.

The net cash outflow from changes in operating assets and liabilities was primarily a result of an increase in accounts receivable of $86.1 million due to the timing of receipts of payments from customers, an increase in deferred contract acquisition costs of $77.6 million due to an increase in our sales, a decrease in accrued expenses and other liabilities of $33.6 million due to the timing of cash disbursements primarily related to bonuses and commissions, the settlement of vested EARs and cash settled awards, and interest payments and fees paid to Thoma Bravo, an increase in contract assets of $19.7 million primarily due to growth in our revenue and the timing of invoices and payments, and an increase in prepayments and other current assets of $8.0 million due to our marketing efforts and initiatives to grow our business.

The outflows were partially offset by an increase in deferred revenue of $105.4 million due to the increase in billings.

During the year ended January 31, 2025, cash used in operating activities was $106.4 million, which consisted of a net loss of $315.8 million, adjusted by non-cash charges of $237.9 million and a net cash outflow of $28.4 million from changes in our net operating assets and liabilities.

The non-cash charges are primarily comprised of depreciation and amortization expense of $237.2 million, equity-based compensation of $31.7 million, amortization of contract acquisition costs of $24.9 million, amortization of debt discount and issuance costs of $12.7 million and provision for credit losses of $2.5 million, p artially offset by deferred taxes of $71.2 million .

million primarily due to growth in our revenue and the timing of invoices and payments, an increase in prepayments and other current assets of $13.7 million primarily due to our marketing efforts, an increase of $6.0 million of other non-current assets due to the implementation of cloud computing arrangements and a decrease in accounts payable of $5.3 million primarily due to the timing of vendor invoices and payments.

The outflows were offset by an increase in deferred revenue of $72.9 million due to an increase in billings for subscriptions and an increase in accrued expenses and other liabilities of $36.6 million due to the timing of cash disbursements primarily related to interest payments, commissions and fees due to Thoma Bravo.

Cash Flows used in Investing Activities

During year ended January 31, 2025, cash used in investing activities was $28.9 million, consisting primarily of $15.4 million in net cash paid for business acquisitions, $8.2 million for capitalized software development costs and $5.4 million in purchases of property and equipment.

Cash used in investing activities for the year ended January 31, 2024 was $12.7 million, primarily consisting of $8.2 million used for a business acquisition and $2.6 million for the purchase of property and equipment.

During the year ended January 31, 2026, cash used in investing activities was $35.6 million, consisting primarily of $16.7 million for asset acquisitions, $12.9 million for capitalized software development costs and $6.0 million in purchases of property and equipment.

During the year ended January 31, 2025, cash used in investing activities was $28.9 million, consisting primarily of $15.4 million in net cash paid for business acquisitions, $8.2 million for capitalized software development costs, and $5.4 million in purchases of property and equipment.

Cash Flows from Financing Activities

During year ended January 31, 2025, cash provided by financing activities was $41.3 million primarily due to the issuance of Class A Units and Class B Units of $600.0 million to Thoma Bravo, offset by the repayment of our Term Loan of $550.0 million, payments of deferred offering costs of $2.9 million and the repurchase of Class A Units and Class B Units of $6.2 million.

Cash provided by financing activities for the year ended January 31, 2024 was $50.4 million, reflecting $51.7 million of proceeds from the issuance of Class A Units and Class B Units, offset by $1.3 million for the repurchase of Class A Units and Class B Units.

During the year ended January 31, 2026, cash provided by financing activities was $202.0 million primarily due to the proceeds from our IPO, net of underwriting discounts and commissions of $1,259.7 million, partially offset by the repayment of our Term Loans of $1,040.0 million, payments of deferred offering costs of $8.6 million, payments of holdback and contingent consideration of $6.4 million and payments of debt issuance costs related to our 2025 Credit Agreement of $2.7 million.

During the year ended January 31, 2025, cash used in financing activities was $41.3 million, primarily due to the issuance of Class A Units and Class B Units of $600.0 million to Thoma Bravo, offset by the repayment of our Term Loans of $550.0 million, payments of deferred offering costs of $2.9 million and the repurchase of Class A Units and Class B Units of $6.2 million.

Material Cash Commitments

Under the Credit Facilities, the principal amount of the Term Loan of $1.04 billion as of January 31, 2025 is due in August 2029.

On February 19, 2025, we repaid $690.0 million of its Term Loan from the proceeds of its IPO, resulting in a revised principal amount due of $350.0 million.

On March 3, 2025, we repaid the remaining principal balance of $350.0 million.

We have no remaining debt obligations as of March 26, 2025.

As of January 31, 2025, we 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.

Included in the aggregate contractual purchase commitments is the remaining commitment with a cloud storage provider that has a term of July 2023 through June 2028.

In June 2023, we entered into a contract with a cloud hosting provider and under the terms of the agreement we are 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 we do not meet the minimum purchase obligation during any of those years, we are required to pay the difference.

As of January 31, 2025, we spent $54.0 million of the first-year commitment and $44.3 million of the second year commitment.

As of January 31, 2026, the Company had in aggregate $196.3 million in contractual purchase commitments associated with agreements that are enforceable and legally binding, of which $113.4 million are due within the next 12 months.

Included in the aggregate contractual purchase commitments as of January 31, 2026 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.

The Company met the minimum spend requirements for years one, two and three.

As of January 31, 2026, the Company has made payments of $177.0 million under the agreement.

On February 1, 2026, a new amendment to the agreement was entered into with the cloud storage provider, which terminated the previous arrangement.

The new arrangement has a term of February 1, 2026 through January 31, 2031.

Under the terms of the new arrangement, the Company committed to spend $107.0 million, $127.0 million, $147.0 million, $162.0 million and $178.0 million in contract years one, two, three, four and five, respectively, for a total of $721.0 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, 2026, we had in aggregate $18.1 million in future minimum lease payments for operating lease obligations, of which $6.7 million are due within the next 12 months.

We have restricted cash of $3.2 million as of January 31, 2026 primarily related to an unconditional standby letter of credit for our corpora te headquarters.

We did not have any material off-balance sheet arrangements during the periods presented or as of January 31, 2026.

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Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material.

We evaluate our assumptions, judgments, and estimates on a regular basis.

We evaluate our

assumptions, judgments, and estimates on a regular basis.

To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

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Revenue Recognition

Revenue consists of fees for SaaS subscriptions, term, and perpetual licenses for our software products, post-contract customer support, and other subscription services and professional services including training and other revenue.

Subscription, including support for term and perpetual licenses, is recognized ratably over the term of the applicable agreement.

Revenue consists of fees for SaaS subscriptions and term licenses for our software products, post-contract customer support, and other subscription services and professional services including training and other revenue.

Subscription, including support for term licenses, is recognized ratably over the term of the applicable agreement.

Revenue related to term and perpetual license performance obligations is generally recognized upfront at the point in time when the customer has taken control of the software license.

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The majority of our contracts with customers include various combinations of licenses, subscriptions, and professional services.

Therefore, significant judgement is required to determine whether products and services are considered distinct performance obligations that should be accounted for separately or as a combined performance obligation.

Therefore, significant judgment is required to determine whether products and services are considered distinct performance obligations that should be accounted for separately or as a combined performance obligation.

We allocate the transaction price to each performance obligation in the contract on a relative standalone selling price (“SSP”) basis.

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If the carrying value of the reporting unit exceeds its fair value, an impairment charge is recorded.

There were no impairments of goodwill recognized during the fiscal year ended January 31, 2025, 2024 and the period from August 16, 2022 to January 31, 2023 (Successor) and the period from February 1, 2022 to August 15, 2022 (Predecessor).

There were no impairments of goodwill recognized during the fiscal years ended January 31, 2026, 2025, and 2024.

We evaluate long-lived assets, including finite-lived intangible assets, property and equipment, and other assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be recoverable.

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Sales commissions paid to our sales force and the related employee costs, collectively “contract acquisition costs,” are considered incremental and recoverable costs of obtaining a contract with a customer.

We typically pay sales commissions for both initial and follow-on sales of perpetual licenses, inclusive of initial maintenance and support, term subscriptions, and SaaS subscriptions.

We typically pay sales commissions for both initial and follow-on sales of term subscriptions and SaaS subscriptions.

Sales commissions paid for follow-on sales are typically not commensurate with those paid for initial sales.

Beginning in the year ended January 31, 2024, we ceased paying sales commissions on perpetual licenses as we focused on selling subscriptions.

We capitalize incremental costs of obtaining a contract with a customer and amortize the costs over the expected period of benefit provided of five years.

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Equity-Based Compensation

We have granted our employees equity-based incentive awards.

These awards are in the form of incentive units and cash-settled awards for Successor.

In connection with the Take-Private Transaction, unvested stock options and restricted stock units on August 16, 2022 were converted to contingent rights to receive an amount in cash.

Since the IPO, the Company predominantly grants service-based restricted stock units (“RSUs”) 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 fair value of RSUs is estimated on the date of grant based on the fair value of the Company’s common stock.

The Company recognizes the effect of forfeitures in equity-based compensation expense based on actual forfeitures when they occur.

Prior to the IPO, we granted our employees equity-based incentive awards.

We measure equity-based compensation expense for all equity-based awards granted based on the estimated fair value of those awards on the date of grant.

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Incentive Unit Valuations

The fair value of stock-based awards issued by the Predecessor is based on the fair value of the stock as of the grant date using market information.

For the Successor, the fair value of our Class B Units underlying our equity-based awards has historically been determined by our Board, with input from management and contemporaneous third-party valuations, as there was no public market for our Class B Units.

We believe that our Board has the relevant experience and expertise to determine the fair value of our Class B Units.

Upon the completion of our IPO, we ceased issuing incentive equity units and all outstanding and unvested incentive equity units were converted to RSAs.

The fair value of our Class B Units underlying our equity-based awards was determined by our Board, with input from management and contemporaneous third-party valuations, as there was no public market for our Class B Units.

We believe that our Board had the relevant experience and expertise to determine the fair value of our Class B Units.

Given the absence of a public trading market of our Class B Units, and in accordance with the American Institute of Certified Public Accounting and Valuation Guide, Valuation of Privately-Held Company Equity Securities Issued as Compensation, our Board exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of our Class B Units at each incentive unit grant date, including:

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis