SailPoint Stock Falls After Strong Earnings Report. The CEO Says Not to Worry.

The cybersecurity stock is down 12% since its initial public offering in February. (Yuki Iwamura/Bloomberg)

Key Points

• SailPoint’s adjusted earnings for the fiscal third quarter were 8 cents per share, exceeding the 6 cents consensus estimate.
• Annual recurring revenue increased 28% year-over-year to $1.04 billion, slightly above Wall Street’s projection of $1.03 billion.
• Despite beating earnings, SailPoint’s stock fell, marking the second consecutive quarterly drop after an earnings beat.

Shares of SailPoint dropped Tuesday after the cybersecurity company reported better-than-expected quarterly earnings and boosted its fiscal-year outlook.

The company posted adjusted earnings of 8 cents a share for its fiscal third quarter, surpassing analysts’ consensus estimate of 6 cents. Annual recurring revenue, or ARR, rose 28% from the prior year to $1.04 billion, just ahead of Wall Street’s call for $1.03 billion.

But SailPoint stock was down 3.8% to $19.49 in midday trading Tuesday, marking the second consecutive quarter when shares tumbled after an earnings beat.

Guidance wasn’t the culprit this time around. SailPoint boosted its fiscal 2026 forecast for ARR growth to 28% from a previous range of 26% to 27%. Adjusted per-share earnings are expected to be 22 cents to 23 cents, up from 20 cents to 22 cents.

The cybersecurity company has had a strange trading year since its initial public offering in February. The stock was down 12% from its IPO price of $23 a share as of Monday’s close, but has seen big swings in either direction after beating earnings estimates each quarter.

That pattern isn’t rare in the cybersecurity industry in recent months. Last week, shares of CrowdStrike Holdings fell after the company narrowly exceeded estimates for ARR. Zscaler shares have also fallen after two consecutive earnings beats.

SailPoint executives were upbeat about the underlying state of the business on a conference call with investors Tuesday.

“I think we feel really good about the overall health of the business,” CEO Mark McClain said. “We’ve been public for three quarters now. We’ve met or exceeded all guided metrics. Heading into Q4, we have a lot of confidence.”

Write to Nate Wolf at nate.wolf@barrons.com