Shares of SailPoint Inc. dropped more than 7% today despite the cybersecurity provider reporting better-than-expected results for the second quarter. 

The selloff may have been caused by the company’s mixed guidance. SailPoint raised its full-year forecast, but its sales projection for the current quarter missed expectations.

SailPoint provides software that companies use to manage employee access to their business applications. When employees change roles or take on a new project, the applications they use to perform their work often change. SailPoint can automatically update a worker’s access permissions to account for those changes.

The company’s platform also eases other cybersecurity tasks. It includes a password manager that workers can use to store their login credentials, as well as reset them on a self-service basis when necessary. For administrators, SailPoint offers an artificial intelligence assistant that generates pointers on how to use its platform.

It generated $264 million in revenue during the three months ended July 31, 33% more than a year earlier. Analysts had expected $240.58 million. SailPoint’s top line growth was mainly driven by its core subscription software-as-a-service business, which saw sales climb 36% on a year-over-year basis.

“SailPoint delivered strong second-quarter results that exceeded all previously guided metrics, driven by 37% year-over-year SaaS ARR growth and record cash flow from operations,” said SailPoint Chief Executive Officer Mark McClain.

The company attributed its expectation-topping revenue growth partly to increased demand from large customers. According to SailPoint, the number of organizations that spend more than $1 million annually on its software jumped 48% in the second quarter to 185.

Overall, the software maker had 3,105 customers at the end of the second quarter. Many of those customers boosted their spending over the past year. SailPoint’s net revenue retention rate, a metric that tracks fluctuations in revenue from existing users, stood at 114% as of July 31.

The company generated adjusted income from operations of $54 million, more than double the $21 million it posted a year ago. That translated into adjusted earnings of $0.07 per share. The consensus estimate projected six cents per share.

SailPoint expects to generate $269 million to $271 million in revenue during the current quarter, well below the $277.62 million that analysis had expected. However, the company upgraded its guidance for the full fiscal year. SailPoint now expects to deliver earnings of up to 20 cents per share on $1.05 billion in revenue.

Today’s quarterly report is the second the company has released since its February debut on the Nasdaq. SailPoint raised $1.38 billion from investors by selling 60 million shares. The offering gave the software maker a market capitalization of $12.8 billion, nearly double what it was worth in 2022. 

Image: SailPoint