SailPoint, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included in Part I, Item 1A of our fiscal 2025 Form 10-K and elsewhere in this Quarterly Report. You should carefully review the risks described in our fiscal 2025 Form 10-K, in this Quarterly Report, and in other documents we file from time to time with the SEC. You should review the risk factors for a more complete understanding of the risks associated with an investment in our securities. We disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. Our fiscal year end is January 31, and our fiscal quarters end on April 30, July 31, October 31, and January 31. Our fiscal years ended January 31, 2026 and January 31, 2025 are referred to herein as "fiscal 2026" and "fiscal 2025," respectively.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report.

Previous wording

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 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. Our solutions enable organizations to establish, control, and automate policies that help them define and maintain a robust security posture and achieve regulatory compliance. Powered by AI, our solutions enable organizations to overcome the scale and complexity of managing identities in real-time across dynamic, complex IT environments. Our solutions empower organizations to maintain a robust security posture and achieve regulatory compliance.

Current wording

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. Our solutions enable organizations to establish, control, and automate policies that help them define and maintain a robust security posture and achieve regulatory compliance. Powered by AI, our solutions enable organizations to overcome the scale and complexity of managing identities in real-time across dynamic, complex IT environments. Our solutions empower organizations to maintain a robust security posture and achieve regulatory compliance. 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 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.

Previous wording

The number of customers with $250,000 or more of ARR as of October 31, 2025 increased 28% on a year-over-year basis, and the number of customers with over $1,000,000 of ARR as of October 31, 2025 increased 39% on a year-over-year basis.

Current wording

The number of customers with $250,000 or more of ARR as of April 30, 2026 increased 24% on a year-over-year basis, and the number of customers with over $1,000,000 of ARR as of April 30, 2026 increased 32% on a year-over-year basis.

Previous wording

Increase Share of Revenue Derived from SaaS. Our go-to-market motion is focused primarily on Identity Security Cloud, our SaaS offering. We define incremental ARR as the increase in ARR from the prior period to current period. While we expect that this increase in SaaS contracts will drive growth in ARR, it is also expected to have a near term negative impact on revenue growth, driven by differences in revenue recognition policies between SaaS subscriptions and term subscriptions, and gross margins, as we incur hosting costs for our SaaS offering. Our ability to increase our revenue from SaaS subscriptions will depend on a number of factors, including our customers’ specific circumstances, some of which necessitate their preference for our customer-hosted identity governance solution, IdentityIQ.

Current wording

Increase Share of Revenue Derived from SaaS. Our go-to-market motion is focused primarily on Identity Security Cloud, our SaaS offering. While we expect that an increase in SaaS contracts will drive growth in ARR, it is also expected to have a near term negative impact on revenue growth, driven by differences in revenue recognition policies between SaaS subscriptions and term subscriptions, and gross margins, as we incur hosting costs for our SaaS offering. Our ability to increase our revenue from SaaS subscriptions will depend on a number of factors, including our customers’ specific circumstances, some of which necessitate their preference for our customer-hosted identity governance solution, IdentityIQ.

Previous wording

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 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. We generated 67% and 66% of our revenue from the United States for the three and nine months ended October 31, 2025, respectively. We generated 19% of our revenue from EMEA and 14% from the rest of the world, billed primarily in U.S. dollars, for both the three and nine months ended October 31, 2025.

Current wording

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 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 three months ended April 30, 2026, we generated 64% of our revenue from the United States, 22% from Europe, the Middle East and Africa (“EMEA”), and 14% from the rest of the world. For the three months ended April 30, 2025, we generated 66% of our revenue from the United States, 21% from EMEA, and 14% from the rest of the world, billed primarily in U.S. dollars. 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.

Previous wording

Sustain Technology Leadership Through Extending Identity Security Portfolio. We recently launched new offerings in non-employee risk management, data access security, access risk management, and cloud infrastructure entitlement management. We are thoughtfully investing in AI, both to increase the capabilities of our solutions, as well as to help our customers protect their organizations while adopting AI for their own use cases. We intend to continue investing to extend our position as the leader in identity security by developing or acquiring new products and technologies and extending our portfolio into additional identity security use cases. Our future success is dependent on our ability to successfully develop, identify, market, and sell existing and new products to both new and existing customers.

Current wording

Sustain Technology Leadership Through Extending Identity Security Portfolio. We recently launched new offerings in agentic security, non-employee risk management, data access security, access risk management, and cloud infrastructure entitlement management. We are thoughtfully investing in AI, both to increase the capabilities of our solutions, as well as to help our customers protect their organizations while adopting AI for their own use cases. We intend to continue investing to extend our position as the leader in identity security by developing or acquiring new products and technologies and extending our portfolio into additional identity security use cases. Our future success is dependent on our ability to successfully develop, identify, market, and sell existing and new products to both new and existing customers.

Previous wording

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 the IPO. Prior to taking into effect the Corporate Conversion, the Company modified 3,036,888 incentive units and 377,077 EARs. Upon the IPO, the vested incentive units were considered redeemable. During the three months ended April 30, 2025, as a result of the modifications and the closing of the IPO, we recognized $113.8 million of equity-based compensation expense in the condensed 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.

Current wording

Our historical results of operations may not be comparable from period to period or going forward. During fiscal year 2026, 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. 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 the IPO. Upon the IPO, the vested incentive units were considered redeemable. As a result of the modifications 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, with no comparable activity in the current fiscal year. See Note 9 "Equity-Based Compensation" in the notes to our consolidated financial statements for additional information.

Previous wording

We believe ARR is a key metric to measure our business performance because it measures our ability to generate sales with new customers and to maintain and expand spend with existing customers. The way we define ARR normalizes the impact of revenue recognition differences between SaaS contracts and term subscription agreements. In recent years, ARR has grown faster than revenue, as a greater share of incremental ARR has been driven by SaaS contracts which have ratable revenue recognition compared to term subscription agreements where a portion of the contract value is recognized as revenue up-front.

Current wording

We believe ARR is a key metric to measure our business performance because it measures our ability to generate sales with new customers and to maintain and expand spend with existing customers. The way we define ARR normalizes the impact of revenue recognition differences between SaaS contracts and term subscription agreements. In recent years, ARR has grown faster than revenue, as a greater share of incremental ARR (which we define as the increase in ARR from the prior period to current period) has been driven by SaaS contracts which have ratable revenue recognition compared to term subscription agreements where a portion of the contract value is recognized as revenue upfront.

Previous wording

We define ARR as the annualized value of SaaS, maintenance, term subscription, and other subscription contracts as of the measurement date. To the extent that we are actively negotiating a renewal or new agreement with a customer after the expiration of a contract, we continue to include that contract’s annualized value in ARR until the customer notifies us that it is not renewing its contract. The amount included in our ARR calculation related to these contracts was less than 1% as of the end of each period shown in the ARR table below. We calculate ARR by dividing the active contract value by the number of days of the contract and then multiplying by 365. ARR should be viewed independently of revenue, as ARR is an operating metric and is not intended to be combined with or to replace revenue. ARR is not a forecast of future revenue, which can be impacted by ASC 606 allocations, and ARR does not consider other sources of revenue that are not recurring in nature.

Current wording

We define ARR as the annualized value of SaaS, maintenance, term subscription, and other subscription contracts as of the measurement date. To the extent that we are actively negotiating a renewal or new agreement with a customer after the expiration of a contract, we continue to include that contract’s annualized value in ARR until the customer notifies us that it is not renewing its contract. The amount included in our ARR calculation related to these contracts was less than 1% as of the dates shown in the ARR table below. We calculate ARR by dividing the active contract value by the number of days of the contract and then multiplying by 365. ARR should be viewed independently of revenue, as ARR is an operating metric and is not intended to be combined with or to replace revenue. ARR is not a forecast of future revenue, which can be impacted by ASC 606 allocations, and ARR does not consider other sources of revenue that are not recurring in nature.

Previous wording

ARR does not have a standardized meaning and is not necessarily comparable to similarly titled measures presented by other companies. Our ARR has grown in each of the past three years, reflecting growth in new customers as well as expanded sales to existing customers. The following table presents our ARR as of the dates noted below (dollars in millions):

Current wording

ARR does not have a standardized meaning and is not necessarily comparable to similarly titled measures presented by other companies. The following table presents our ARR as of the dates noted below (dollars in millions):

Previous wording

In recent years, we have transitioned our business to a SaaS-first subscription model. As a result of those efforts, the share of SaaS ARR to total ARR has increased to 64% as of October 31, 2025 from 60% as of October 31, 2024. We believe the share of ARR generated by our SaaS solution will continue to increase over time.

Current wording

In recent years, we have transitioned our business to a SaaS-first subscription model. As a result of those efforts, the share of SaaS ARR to total ARR has increased to 67% as of April 30, 2026 from 62% as of April 30, 2025. We believe the share of ARR generated by our SaaS solution will continue to increase over time.

Previous wording

We define SaaS ARR as the annualized value of SaaS contracts as of the measurement date. To the extent that we are actively negotiating a renewal or new agreement with a customer after the expiration of a contract, we continue to include that contract’s annualized value in SaaS ARR until the customer notifies us that it is not renewing its contract. The amount included in our ARR calculation related to these contracts was less than 1% as of the end of each period shown in the SaaS ARR table below. We calculate SaaS ARR by dividing the active SaaS contract value by the number of days of the contract and then multiplying by 365.

Current wording

We define SaaS ARR as the annualized value of SaaS contracts as of the measurement date. To the extent that we are actively negotiating a renewal or new agreement with a customer after the expiration of a contract, we continue to include that contract’s annualized value in SaaS ARR until the customer notifies us that it is not renewing its contract. The amount included in our ARR calculation related to these contracts was less than 1% as of the dates shown in the SaaS ARR table below. We calculate SaaS ARR by dividing the active SaaS contract value by the number of days of the contract and then multiplying by 365.

Previous wording

Our dollar-based net retention rate has remained consistent at 114% as of both October 31, 2025 and October 31, 2024. We continue to focus on growing our product portfolio as well as expanding customer relationships over time through cross-selling and up-selling.

Current wording

Our dollar-based net retention rate has decreased to 113% as of April 30, 2026 from 115% as of April 30, 2025. We continue to focus on growing our product portfolio, increasing our SaaS mix, and expanding customer relationships over time through cross-selling and up-selling.

Previous wording

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. For the purposes of calculating our dollar-based net retention rate, we define a subscription customer as a separate legal entity that has entered into a distinct subscription agreement. Our dollar-based net retention rate reflects customer expansion, contraction, and churn. We calculate our dollar-based net retention rate as of period end by starting with the ARR from all subscription customers as of 12 months prior to such period end, or prior period ARR. We then calculate the ARR from these same subscription customers as of the current period end, or current period ARR. We then divide the current period ARR by the prior period ARR to arrive at our dollar-based net retention rate. The dollar-based net retention rate at the end of any period is the weighted average of the dollar-based net retention rates as of the end of each of the trailing four quarters. The following table presents our dollar-based net retention rate as of the dates noted below:

Current wording

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. For the purposes of calculating our dollar-based net retention rate, we define a subscription customer as a separate legal entity that has entered into a distinct subscription agreement. Our dollar-based net retention rate reflects customer expansion, contraction, and churn. We calculate our dollar-based net retention rate as of period end by starting with the ARR from all subscription customers as of 12 months prior to such period end “prior period ARR”). We then calculate the ARR from these same subscription customers as of the current period end (“current period ARR”). We then divide the current period ARR by the prior period ARR to arrive at our dollar-based net retention rate. The dollar-based net retention rate at the end of any period is the weighted average of the dollar-based net retention rates as of the end of each of the trailing four quarters. The following table presents our dollar-based net retention rate as of the dates noted below:

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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 we focus on increasing subscription revenue.

Previous wording

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

Current wording

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.

Previous wording

Gross profit is revenue less cost of revenue, and gross profit margin is gross profit as a percentage of total revenue. Gross profit has been and will continue to be affected by various factors, including the mix of our revenue, the costs associated with third-party cloud-based hosting services and software for our SaaS offering, and the extent to which we expand our customer support, professional services, and training organizations. 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.

Current wording

Gross profit is revenue less cost of revenue, and gross profit margin is gross profit as a percentage of total revenue. Gross profit has been and will continue to be affected by various factors, including the mix of our revenue, the costs associated with third-party cloud-based hosting services and software for our SaaS offering, and the extent to which we expand our customer support, professional services, and training organizations. We expect that our overall gross profit margin will fluctuate from period to period depending on the mix of these various factors.

Previous wording

Sales and marketing expenses consist primarily of employee-related costs, 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.

Current wording

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

Previous wording

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 also expect to incur higher equity-based compensation-related costs as we operate as a public company, including with respect to the issuance of new RSUs under the Omnibus Plan to certain of our employees, which will result in an increase in costs of revenue, research and development expenses, sales and marketing expenses, and general and administrative expenses.

Current wording

We also expect to incur higher equity-based compensation, which will result in an increase in costs of revenue, research and development expenses, sales and marketing expenses, and general and administrative expenses.

Previous wording

Other income (expense), net consists primarily of interest income and interest expense. Interest income consists primarily of interest received on cash equivalents, which we expect will fluctuate based on our cash balances and interest rates. We expect interest expense to decrease due to the repayment of our Term Loans.

Current wording

Other income (expense), net consists primarily of interest income and interest expense. Interest income consists primarily of interest received on cash equivalents, which we expect will fluctuate based on our cash balances and interest rates. We expect interest expense to be insignificant unless we begin to utilize our 2025 Revolving Credit Facility.

Previous wording

We generally experience seasonal fluctuations in demand for our products and services. 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. 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.

Current wording

We generally experience seasonal fluctuations in demand for our products and services. Our quarterly sales are impacted by industry buying patterns. 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.

Previous wording

The following table sets forth our results of operations for the periods presented and as a percentage of revenue(1) (in thousands, except for percentages, per share and per unit data)(2). The period-to-period comparison of results is not necessarily indicative of results for future periods.

Current wording

The following table sets forth our results of operations for the periods presented and as a percentage of revenue(1) (in thousands, except for percentages and per share amounts)(2). The period-to-period comparison of results is not necessarily indicative of results for future periods.

Previous wording

(2) 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 Quarterly 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.

Current wording

(2) 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 Quarterly 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.

Previous wording

Subscription Revenue. Subscription revenue increased by $48.5 million, or 22%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024 primarily due to an increase in SaaS revenue and term subscription revenue from our shift in focus on selling subscriptions to new customers and expanding our footprint with existing customers.

Current wording

Subscription Revenue. Subscription revenue increased by $50.5 million, or 23%, for the three months ended April 30, 2026 compared to the three months ended April 30, 2025 primarily due to an increase in SaaS revenue and term subscription revenue from our shift in focus on selling subscriptions to new customers and expanding our footprint with existing customers.

Previous wording

Services and Other Revenue. Services and other revenue decreased by $1.6 million, or 9% for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. This decrease is primarily a result of a shift toward selling a higher proportion of professional services and training on a subscription basis.

Current wording

Services and Other Revenue. Services and other revenue decreased by $0.8 million, or 5% for the three months ended April 30, 2026 compared to the three months ended April 30, 2025. This decrease was primarily a result of a strategic shift toward selling a higher proportion of professional services and training on a subscription basis.

Previous wording

Cost of Subscription Revenue. Cost of subscription revenue increased $16.2 million, or 27%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024 primarily due to an increase in employee-related costs of $8.8 million due to higher headcount and increased investments in existing employees, an increase in software and hosting costs of $3.7 million from the increase in sales of SaaS subscriptions, an increase of $1.4 million related to equity-based awards, an increase in amortization of intangible assets of $1.0 million, an increase in third-party royalties of $0.3 million, an increase in partner costs of $0.5 million, and an increase in amortization of capitalized software of $0.4 million.

Current wording

Cost of Subscription Revenue. Cost of subscription revenue increased $4.7 million, or 6%, for the three months ended April 30, 2026 compared to the three months ended April 30, 2025 primarily due to an increase in employee-related costs of $5.6 million due to higher headcount and increased investments in existing employees, an increase in software and hosting costs of $4.1 million from the increase in sales of SaaS subscriptions, an increase in amortization of intangible assets of $0.8 million, an increase in third-party royalties of $0.7 million, and an increase in amortization of capitalized software of $0.4 million. This increase was partially offset by a decrease of $6.7 million in equity-based compensation related to the acceleration of equity-based awards from the completion of our IPO and a decrease in partner costs of $0.3 million.

Previous wording

Cost of Services and Other. Cost of services and other increased by $10.5 million, or 20%, for the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024, primarily due to the acceleration of equity-based awards from the completion of our IPO and the issuance of new equity-based awards.

Current wording

Cost of Services and Other. Cost of services and other decreased by $8.5 million, or 31%, for the three months ended April 30, 2026 compared to the three months ended April 30, 2025, primarily due to a decrease of $8.4 million in equity-based compensation related to the acceleration of equity-based awards upon the completion of our IPO.

Previous wording

Subscription. Subscription gross profit increased by $32.3 million, or 21%, during the three months ended October 31, 2025 compared to the three months ended October 31, 2024. The increase was primarily due to the growth in subscription revenue. Subscription gross profit margin was 71% for the three months ended October 31, 2025 and 72% for the three months ended October 31, 2024. The change was materially consistent with the prior period.

Current wording

Subscription. Subscription gross profit increased by $45.8 million, or 33%, during the three months ended April 30, 2026 compared to the three months ended April 30, 2025. The increase was primarily due to the growth in subscription revenue. Subscription gross profit margin was 70% for the three months ended April 30, 2026 and 65% for the three months ended April 30, 2025. The increase was primarily due to the overall increase in subscription revenue, which was partially offset by the decrease in employee-related costs related to acceleration of equity-based awards from the completion of our IPO.

Previous wording

Services and Other. Services and other gross profit decreased by $2.4 million during the three months ended October 31, 2025 compared to the three months ended October 31, 2024. The decrease in gross profit and gross profit margin is primarily due to lower revenue from professional services and training as a result of the shift toward selling these services on a subscription basis, with cost remaining higher due to higher equity based compensation from the prior year.

Current wording

Services and Other. Services and other gross profit increased by $7.7 million during the three months ended April 30, 2026 compared to the three months ended April 30, 2025. The increase in gross profit and gross profit margin was primarily due to the decrease in employee-related costs related to acceleration of equity-based awards from the completion of our IPO.

Previous wording

Total gross profit increased by $29.7 million, or 19%, during the three months ended October 31, 2025 compared to the three months ended October 31, 2024. The increase is primarily due to the growth in total revenue. Total gross profit margin was 66% for the three months ended October 31, 2025 and 67% for the three months ended October 31, 2024. Total gross profit margin was materially consistent with the prior period.

Current wording

Total gross profit increased by $53.5 million, or 42%, during the three months ended April 30, 2026 compared to the three months ended April 30, 2025. The increase was primarily due to the growth in total revenue. Total gross profit margin was 65% for the three months ended April 30, 2026 and 55% for the three months ended April 30, 2025. Total gross profit margin increased primarily due to the overall increase in subscription revenue, which was partially offset by the decrease in employee-related costs related to acceleration of equity-based awards from completion of our IPO.

Previous wording

Research and Development Expenses. Research and development expenses increased by $12.0 million, or 30%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. This increase was primarily driven by a $6.5 million increase in employee-based costs due to continued investment in talent related to the development of our products, a $3.8 million increase in equity-based compensation from the issuance of equity-based awards upon the closing of the IPO, and a $1.7 million increase in software and hosting costs.

Current wording

Research and Development Expenses. Research and development expenses decreased by $5.6 million, or 8%, for the three months ended April 30, 2026 compared to the three months ended April 30, 2025. This decrease was primarily driven by a $12.4 million decrease in equity-based compensation related to the acceleration of equity-based awards from the completion of our IPO, partially offset by a $5.8 million increase in employee-based costs due to continued investment in talent related to the development of our products, and a $1.0 million increase in software and hosting costs.

Previous wording

Sales and Marketing Expenses. Sales and marketing expenses increased by $22.7 million, or 20%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. This increase was primarily driven by a $16.2 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 $7.3 million increase in equity-based compensation from the issuance of equity-based awards upon the closing of the IPO, a $1.1 million increase in advertising and promotion costs, a $0.4 million increase in software and hosting costs, and a $0.1 million increase in travel expenses. This increase was partially offset by a $2.0 million decrease in intangible asset amortization attributable to certain intangible assets reaching full amortization and a $0.5 million decrease in professional services fees.

Current wording

Sales and Marketing Expenses. Sales and marketing expenses decreased by $10.3 million, or 6%, for the three months ended April 30, 2026 compared to the three months ended April 30, 2025. This decrease was primarily driven by a $31.0 million decrease in equity-based compensation related to the acceleration of equity-based awards from the completion of our IPO, partially offset by a $14.4 million increase in employee-related costs to support deeper penetration into our existing customer base and expansion into new industry verticals and geographic markets, a $4.7 million increase in advertising and promotion costs, a $0.6 million increase in software and hosting costs, a $0.4 million increase in professional services fees and a $0.1 million increase in travel expenses.

Previous wording

Total other income (expense) decreased by $47.7 million, or 102%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. This decrease was primarily due to a $46.3 million net decrease in interest expense due to the full repayment of our Term Loans and a $2.0 million increase in interest income due to an increase in our cash and cash equivalents, partially offset by a $0.6 million increase in other expense related to foreign currency exchange loss. The overall decrease resulted in other income of $0.8 million for the three months ended October 31, 2025.

Current wording

Total other income (expense), net decreased by $19.1 million, or 99%, for the three months ended April 30, 2026 compared to the three months ended April 30, 2025. This decrease was primarily due to a $22.1 million net decrease in interest expense due to the full repayment of our Term Loans in the prior year, which included a$15.3 million loss on the extinguishment of debt and$6.7 million in related interest expense, partially offset by a $2.8 million increase in other expense related to foreign currency exchange loss.

Previous wording

The Company recorded an income tax benefit of $4.8 million for the three months ended October 31, 2025 compared to an income tax benefit of $11.9 million for the three months ended October 31, 2024, leading to a net benefit decrease of $7.1 million, or 60%, year-over-year. The decrease is primarily due to certain non-deductible equity-based compensation and non-deductible executive officer compensation.

Current wording

The Company recorded an income tax benefit of $5.4 million for the three months ended April 30, 2026 compared to an income tax benefit of $17.0 million for the three months ended April 30, 2025, leading to a net benefit decrease of $11.6 million, or 68%, year-over-year. The decrease was primarily due to the decrease in loss before income taxes and discretely recorded tax expense for equity-based compensation in the three months ended April 30, 2026.

Previous wording

Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry because they may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP and exclude expenses that may have a material impact on our reported financial results. In particular, interest expense, which is excluded from adjusted income from operations, has been a significant recurring expense in our business. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. 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.

Current wording

Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry because they may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP and exclude expenses that may have a material impact on our reported financial results. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. 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.

Previous wording

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.

Current wording

Our non-GAAP financial measures exclude 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). We believe these adjustments enable management and investors to compare our underlying business performance from period to period and provide investors with additional means to evaluate cost and expense trends. We also believe these adjustments enhance comparability of our financial performance against those of other technology companies. Accordingly, we believe the presentation of our non-GAAP financial measures provides useful information to investors regarding our financial condition and results of operations. In addition, we use adjusted income (loss) from operations for budgeting and planning purposes, including with respect to our corporate bonus plan.

Previous wording

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, which includes impairment, acquisition related expenses, and restructuring expenses.

Current wording

We define adjusted gross profit as gross profit 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, amortization of acquired intangible assets, which includes impairment charges, impairment of intangible assets, acquisition-related expenses and restructuring expenses.. We define adjusted gross profit margin as adjusted gross profit divided by total revenue.

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

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