Okta Nearly Doubled This Year. So Why Is SailPoint Still Below Its IPO Price?

SailPoint (NASDAQ:SAIL | SAIL Price Prediction) reported Q2 FY27 results before the open on Sept. 9, delivering its fourth consecutive EPS beat alongside a slim revenue miss. Shares are trying to shake off the funk, gaining 5.35% intraday to about $18.52, but SAIL still sits below its $22 first-session price from Feb. 13, 2025. Meanwhile, identity peer Okta (NASDAQ:OKTA) is up more than 100% year to date. That gap is the story.

AI Identity Engine Kicks Into Gear

The recurring-revenue metrics were the highlight. Total ARR reached $1.23 billion, up 25% year over year (YoY), while SaaS ARR grew 36% to $847 million. AI-driven ARR topped $70 million and made up more than 30% of net new ARR, and existing customers adopting AI solutions lifted annual spend by more than 60%.

I liked the customer-quality signals. SaaS customer count rose 16%, with ARR per SaaS customer climbing 17% to over $400,000, and dollar-based net revenue retention held at 113%. This is the exact AI identity narrative that sent CrowdStrike (NASDAQ:CRWD) and Okta sharply higher in late August.

Why the Market Still Won’t Pay Up

Revenue of $308.81 million missed the $310.26 million consensus by 0.47%. More importantly, the GAAP net loss widened to $50.36 million, a 377.26% deterioration driven by heavy equity-based compensation, and free cash flow fell 18.6% YoY to $37.41 million. Legacy lines also faded, with term subscriptions down 3%, maintenance down 8%, and services down 17%. That mix shift is healthy long term, but it dampens near-term reported revenue.

Numbers That Frame the Debate

• Adjusted EPS: 9 cents vs 8 cents expected
• Revenue: $308.81 million vs $310.26 million expected; up 16.8% YoY
• Total ARR: $1.23 billion, up 25%
• SaaS ARR: $847 million, up 36%
• RPO: $1.9 billion, up 30%
• Free Cash Flow: $37.41 million, down 18.6%
• Adjusted Operating Margin: 20.3%

You should watch the SaaS-mix headwind. CFO Brian Carolan noted that every $5 million shift from term to SaaS ARR costs roughly $10 million of in-period revenue, calling the shortfall a “rev-rec timing issue” rather than a demand problem.

McClain Stakes the FY29 Flag

CEO Mark McClain sounded confident, tying the quarter to long-term ambition: “Our strong Q2 results demonstrate the powerful compounding effect of our identity security platform and AI-driven innovations. This momentum reinforces our confidence in our long-term trajectory, keeping us firmly on track to achieve our FY’29 targets, including at least $2.1 billion of ARR.” He also framed the opportunity bluntly, saying non-human identities are “exploding across the enterprise landscape” yet mostly ungoverned.

Closing the Gap With Okta

Guidance held the line. Q3 revenue is guided to $326 million to $330 million with FY27 revenue of $1.265 billion to $1.275 billion. I’d keep an eye on AI-driven ARR conversion. Management said the AI-driven pipeline is over $200 million and has more than doubled since investor day. If that pipeline closes, the discount to Okta gets much harder to justify.

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