SailPoint, Inc.
For the period ended Jul 31, 2026. Filed Sep 10, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 31, 2026 · Filed Sep 10, 2026
SAIL$19.21+4.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-04-30; filed 2026-06-10.
0002030781-26-000011
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-07-31; filed 2026-09-10.
0002030781-26-000021
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 149 previous paragraphs and 162 current paragraphs.
104 unchanged; 34 reworded; 19 added; 11 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 18 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Recent Developments
Current report
On June 29, 2026, the Company completed the acquisition of Entro for total cash consideration of approximately $122.6 million and restricted stock consideration of approximately $7.3 million. For more information regarding the equity consideration, see Part II Item 2 of this Form 10-Q. Entro is a cloud-based platform specializing in NHI and secrets security, providing discovery and governance capabilities across over 1,200 types of credentials, tokens, and certificates within cloud and hybrid environments, including CI/CD pipelines, codebases, and container registries.
Current report
The acquisition extends the Company's Identity Security Cloud product suite and complements the recently launched SailPoint Agentic Fabric solution, which is designed to discover, govern, and secure autonomous AI agents and machine identities at enterprise scale. Together, Entro's NHI-focused security controls and SailPoint Agentic Fabric are intended to deliver an integrated identity security solution spanning human, machine, and agentic identities.
Current report
Entro's solutions are available to SailPoint customers as standalone offerings, with native platform integration ongoing. See Note 5 "Acquisitions" in the notes to our consolidated financial statements included in this Quarterly Report for additional information regarding the purchase price allocation.
Current report
Cost of Subscription Revenue. Cost of subscription revenue increased $13.7 million, or 19%, for the three months ended July 31, 2026 compared to the three months ended July 31, 2025, primarily due to an increase in software and hosting costs of $5.7 million driven by the increase in sales of SaaS subscriptions, an increase in employee-related costs of $4.4 million due to higher headcount and increased investments in existing employees, and a $2.2 million increase in equity-based compensation primarily due to new grants issued during fiscal year 2027.
Current report
Cost of Services and Other. Cost of services and other increased by $3.2 million, or 20%, for the three months ended July 31, 2026 compared to the three months ended July 31, 2025, primarily due to an increase in partner-related costs of $2.6 million driven by a greater use of partners to deliver professional services and a $0.9 million increase in equity-based compensation primarily due to new grants issued during fiscal year 2027.
Current report
Subscription. Subscription gross profit increased by $33.6 million, or 19%, during the three months ended July 31, 2026 compared to the three months ended July 31, 2025. The increase was primarily due to the growth in subscription revenue. Subscription gross margin remained consistent with the prior period.
Current report
Services and Other. Services and other gross profit decreased by $6.0 million during the three months ended July 31, 2026 compared to the three months ended July 31, 2025. The decrease in gross profit and gross profit margin was primarily due to the decrease in services and other revenue combined with an increase in the cost of delivering those services through the use of our partners.
Current report
Total gross profit increased by $27.6 million, or 16%, during the three months ended July 31, 2026 compared to the three months ended July 31, 2025. The increase was primarily due to the growth in total revenue. Total gross profit margin remained consistent with the prior period.
Current report
Research and Development Expenses. Research and development expenses increased by $14.1 million, or 29%, for the three months ended July 31, 2026 compared to the three months ended July 31, 2025. This increase was primarily driven by an $8.3 million increase in equity-based compensation due to new grants issued during fiscal year 2027, and a $5.4 million increase in employee-related costs due to continued investment in talent related to the development of our products.
Current report
General and Administrative Expenses. General and administrative expenses increased by $7.1 million, or 18%, for the three months ended July 31, 2026 compared to the three months ended July 31, 2025. This increase was primarily driven by a $3.8 million increase in equity-based compensation primarily due to new grants issued during fiscal year 2027, a $2.3 million increase in professional services fees driven by higher third-party consulting and advisory costs, and a $1.3 million increase in software and hosting costs to support the growth of our business operations.
Current report
Comparison of the Six Months Ended July 31, 2026 and 2025
Current report
Revenue
Current report
Gross Profit and Gross Margin
Current report
Total other income (expense), net increased by $22.0 million, or 108%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025. This increase was primarily due to a $23.6 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 theextinguishment 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, and a $0.9 million increase in interest income due to higher average cash and cash equivalent balances, partially offset by a $2.4 million increase in other expense related to foreign currency exchange loss.
Current report
Income Tax (Expense) Benefit
Current report
The Company recorded an income tax benefit of $12.1 million for the six months ended July 31, 2026 compared to an income tax benefit of $48.3 million for the six months ended July 31, 2025, leading to a net benefit decrease of $36.2 million, or 75%, year-over-year. The decrease is primarily due to the net discrete tax benefit for the change in valuation allowance for interest expense and Texas R&D tax credit carryforwards from changes in tax law in the six months period ended July 31, 2025.
Current report
Our adjusted gross profit margin for the three and six months ended July 31, 2026 and 2025 has remained generally consistent and reflects the high value-added nature of our offerings.
Current report
The Company expects to satisfy cash requirements under the above agreements with cash flow from operations.
Removed paragraphs (11)
Previous report
Recent Developments: Launch of SailPoint Agentic Fabric
Previous report
In May 2026, we announced the launch of SailPoint Agentic Fabric, a new solution designed to address one of the fastest-growing challenges in enterprise security: securing AI agents and other non-human identities at scale. AI agents and other non-human identities now vastly outnumber human identities at many organizations. We see this shift happening on our own platform—non-human identities accounted for approximately 40% of our identity growth during the three months ended April 30, 2026.
Previous report
The rapid growth of non-human identities has created a critical new risk profile. Autonomous agents can make independent decisions, execute code, and access highly sensitive data at machine speed. Because they are often spun up outside of traditional IT purview, they can operate with excessive, unmanaged privileges. Consequently, the blast radius of a compromised agent can be extensive.
Previous report
Agentic Fabric is designed to address this identity challenge and extend our Identity Security Cloud model to provide agentic governance and protection, helping organizations to manage and secure every identity type—human or non-human—across the enterprise. By combining discovery, visibility, governance, authorization, and protection in a unified platform, SailPoint can help organizations maintain control over security, compliance, and accountability as they accelerate AI adoption. Agentic Fabric’s identity-centric approach is designed to connect identities, access, and activity, giving organizations the context needed to understand what AI agents can access, who is responsible for them, and how to govern them at scale. We believe Agentic Fabric represents a meaningful, incremental go-to-market opportunity for us and will enable us to capitalize on the rapid growth of non-human identities. We have begun to experience accelerating demand across our AI and machine identity portfolio and expect our agentic pipeline to continue to grow.
Previous report
Cost of Revenue
Previous report
Operating Expenses
Previous report
Other Income (Expense), Net
Previous report
Cost of Revenue
Previous report
Operating Expenses
Previous report
Other Income (Expense), Net
Previous report
Our adjusted gross profit margin has remained generally consistent in recent periods and reflects the high value-added nature of our offerings.
Reworded paragraphs (34)
Previous wording
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 annual recurring revenue ("ARR") level are as follows:
Current wording
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 total customers and customers at each annual recurring revenue ("ARR") level are as follows:
Previous 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.
Current wording
The number of customers with $250,000 or more of ARR as of July 31, 2026 increased 22% on a year-over-year basis, and the number of customers with over $1,000,000 of ARR as of July 31, 2026 increased 27% on a year-over-year basis.
Previous wording
For Identity Security Cloud, our pricing is tiered and based on the suite, with the option for the customer to purchase additional products and capabilities a-la-carte. 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.
Current wording
For Identity Security Cloud, our pricing is tiered and based on the suite, with the option for the customer to purchase additional products and capabilities à la carte. 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.
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. 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.
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 and six months ended July 31, 2026, we generated 66% and 65% of our revenue from the United States, 20% and 21% from Europe, the Middle East and Africa ("EMEA"), and 13% and 14% from the rest of the world, respectively. For the three and six months ended July 31, 2025, we generated 64% and 65% of our revenue from the United States, respectively, 22% of our revenue from EMEA and 13% from the rest of the world for both periods, respectively. 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
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.
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 69% as of July 31, 2026 from 63% as of July 31, 2025. We believe the share of ARR generated by our SaaS solution will continue to increase over time.
Previous 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.
Current wording
Our dollar-based net retention rate has decreased to 113% as of July 31, 2026 from 114% as of July 31, 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
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.
Current wording
Cost of services and other revenue consists primarily of (i) 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 (ii) amortization expense for developed technology acquired and third-party royalties related to perpetual licenses.
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.
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 Description of Business and Summary of Significant Accounting Policies in the notes to our consolidated financial statements included 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 $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.
Current wording
Subscription Revenue. Subscription revenue increased by $47.3 million, or 19%, for the three months ended July 31, 2026 compared to the three months ended July 31, 2025, primarily due to an increase in SaaS 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 $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.
Current wording
Services and Other Revenue. Services and other revenue decreased by $2.8 million, or 17%, for the three months ended July 31, 2026 compared to the three months ended July 31, 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
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.
Current wording
Total other income (expense), net increased by $2.9 million, or 271%, for the three months ended July 31, 2026 compared to the three months ended July 31, 2025. This increase was primarily due to a $1.4 million net decrease in interest expense due to the extinguishment of debt related to the remaining balance of debt issuance costs for our 2022 Revolving Credit Facility in the prior year, a $1.1 million increase in interest income due to higher average cash and cash equivalent balances, and a $0.4 million decrease in other expense related to foreign currency exchange loss.
Previous 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.
Current wording
The Company recorded an income tax benefit of $6.8 million for the three months ended July 31, 2026 compared to an income tax benefit of $31.3 million for the three months ended July 31, 2025, leading to a net benefit decrease of $24.5 million, or 78%, year-over-year. The decrease was primarily due to the net discrete tax benefit for the change in valuation allowance for interest expense and Texas R&D credit carryforwards from changes in tax law in the three months period ended July 31, 2025.
Previous wording
For further information, refer to Note 11 “Income Taxes” in our notes to our condensed consolidated financial statements included in this Quarterly Report.
Current wording
For further information, refer to Note 11 “Income Taxes” in the notes to our condensed consolidated financial statements included in this Quarterly Report.
Previous 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.
Current wording
Cost of Subscription Revenue. Cost of subscription revenue increased $18.4 million, or 13%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025 primarily due to an increase in employee-related costs of $10.0 million due to higher headcount and increased investments in personnel, an increase in software and hosting costs of $9.8 million driven by the increase in sales of SaaS subscriptions, an increase in amortization of intangibles of $1.5 million an increase in amortization of capitalized software of $1.0 million, and an increase in third-party royalties of $0.9 million. The overall increase was partially offset by a $4.5 million decrease in equity-based compensation related to the acceleration of awards from the completion of our IPO.
Previous 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.
Current wording
Cost of Services and Other. Cost of services and other decreased by $5.3 million, or 12%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025, primarily due to a decrease in equity-based compensation resulting from the acceleration of equity-based awards from the completion of our IPO.
Previous 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.
Current wording
Subscription. Subscription gross profit increased by $79.4 million, or 25%, during the six months ended July 31, 2026 compared to the six months ended July 31, 2025. The increase was primarily due to the growth in subscription revenue. Subscription gross profit margin was 71% for the six months ended July 31, 2026 and 68% for the six months ended July 31, 2025. The increase was primarily due to the overall increase in subscription revenue.
Previous 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.
Current wording
Services and Other. Services and other gross profit increased by $1.7 million, or 14%, during the six months ended July 31, 2026 compared to the six months ended July 31, 2025. The increase in gross profit was primarily due to the decrease in equity-based compensation related to acceleration of equity-based awards from the completion of our IPO. Services and other gross profit margin remained materially consistent with the prior period.
Previous 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.
Current wording
Total gross profit increased by $81.0 million, or 27%, during the six months ended July 31, 2026 compared to the six months ended July 31, 2025. The increase is primarily due to the growth in total revenue. Total gross profit margin was 66% for the six months ended July 31, 2026 and 62% for the six months ended July 31, 2025. Total gross profit margin increased due to our growth in total revenue and lower equity-based compensation related to acceleration of equity-based awards from the completion of our IPO.
Previous 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.
Current wording
Research and Development Expenses. Research and development expenses increased by $8.5 million, or 7%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025. This increase was primarily driven by a $11.2 million increase in employee-related costs due to continued investment in talent related to the development of our products and a $1.9 million increase in software and hosting costs, partially offset by a $4.1 million decrease in equity-based compensation due to the acceleration of awards from the completion of our IPO.
Previous 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.
Current wording
Sales and Marketing Expenses. Sales and marketing expenses increased by $14.3 million, or 5%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025. This increase was primarily driven by a $32.4 million increase in employee-related costs to support increased penetration into our existing customer base and expansion into new industry verticals and geographic markets, a $6.8 million increase in advertising and promotion costs and a $2.3 million increase in travel expenses This increase was partially offset by a $26.3 million decrease in equity-based compensation due to the acceleration of awards from the completion of our IPO.
Previous wording
General and Administrative Expenses. General and administrative expenses decreased by $35.8 million, or 44%, for the three months ended April 30, 2026 compared to the three months ended April 30, 2025. This decrease was primarily driven by a $32.9 million decrease in equity-based compensation related to the acceleration of equity-based awards from the completion of our IPO, a $2.8 million decrease in employee-based costs due to lower contract labor costs, a $2.4 million decrease in provision for credit losses compared to prior year, and a $0.3 million decrease in professional services fees. This decrease was partially offset by a $1.9 million increase in software and hosting costs.
Current wording
General and Administrative Expenses. General and administrative expenses decreased by $28.8 million, or 24%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025. This decrease was primarily driven by a $29.1 million decrease in equity-based compensation due to the acceleration of awards from the completion of our IPO, a $3.9 million decrease in employee-related costs due to lower contract labor and reduced third-party consulting spend, and a $1.9 million decrease in provision for credit losses. This decrease was partially offset by a $3.2 million increase in software and hosting costs to support the growth of our business operations and a $2.0 million increase in professional service fees driven by higher third-party consulting and advisory costs.
Previous wording
Our adjusted subscription gross profit margin for the three months ended April 30, 2026 and 2025 has remained generally consistent and reflects the high value-added nature of our offerings.
Current wording
Our adjusted subscription gross profit margin for the three and six months ended July 31, 2026 and 2025 has remained generally consistent and reflects the high value-added nature of our offerings.
Previous wording
Our adjusted income from operations and adjusted operating margin increased for the three months ended April 30, 2026 compared to the three months ended April 30, 2025, primarily due to the growth in our overall business and increased operating leverage.
Current wording
Our adjusted income from operations and adjusted operating margin for the three and six months ended July 31, 2026 and 2025 has remained generally consistent and reflects the high value-added nature of our offerings.
Previous wording
Our free cash flow for the three months ended April 30, 2026 increased when compared to the three months ended April 30, 2025, primarily due to a lower net operating loss from higher revenue growth compared to the prior period. Free cash flow for the three months ended April 30, 2025 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, $36.6 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.
Current wording
Our free cash flow for the six months ended July 31, 2026 increased when compared to the six months ended July 31, 2025, primarily due to a lower loss from operations as a result of higher revenue growth compared to the prior period. Free cash flow for the six months ended July 31, 2025 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
Previous wording
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 April 30, 2026, we had cash and cash equivalents totaling $390.8 million. Our primary uses of liquidity are operating expenses, working capital requirements, capital expenditures and acquisitions.
Current wording
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 July 31, 2026, we had cash and cash equivalents totaling $309.9 million. Our primary uses of liquidity are operating expenses, working capital requirements, capital expenditures, and acquisitions.
Previous wording
Although cash flows from operations have been historically negative, in each fiscal quarter since the three months ended July 31, 2025 through the three months ended April 30, 2026, we have had positive cash flows from operations. We expect to continue to incur positive cash flows from operations in the foreseeable future.
Current wording
Although cash flows from operations have historically been negative, we had positive cash flow from operations for the year ended January 31, 2026 and for the six months ended July 31, 2026. We expect to continue to incur positive cash flows from operations in the foreseeable future.
Previous wording
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. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. 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.
Current wording
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. Also, we may continue to 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. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. 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.
Previous wording
As of April 30, 2026, we had $390.8 million of cash and cash equivalents, $250.0 million of availability under the 2025 Credit Agreement, and $734.8 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, $250.0 million of availability under the 2025 Credit Agreement, and $723.4 million in net working capital. The change in cash and cash equivalents and net working capital was driven primarily bya lower net operating loss from higher revenue growth.
Current wording
As of July 31, 2026, we had $309.9 million of cash and cash equivalents, $250.0 million of availability under the 2025 Credit Agreement, and $659.4 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, $250.0 million of availability under the 2025 Credit Agreement, and $723.4 million in net working capital. The change in cash and cash equivalents and net working capital was driven primarily bya lower loss from operations as a result of higher revenue growth, offset by cash used to acquire Entro.
Previous wording
During the three months ended April 30, 2026, cash provided by operating activities was $38.2 million, which consisted of a net loss of $74.7 million, adjusted by non-cash charges of $126.3 million and a net cash outflow of $13.4 million from changes in our net operating assets and liabilities. The non-cash charges are primarily comprised of equity-based compensation of $69.1 million, depreciation and amortization expense of $53.1 million, amortization of contract acquisition costs of $12.6 million, amortization of debt discount and issuance costs of $0.1 million, and provision for credit losses of $1.0 million, partially offset by deferred taxes of $9.8 million. The net cash outflow from changes in operating assets and liabilities was primarily a result of a decrease in accrued expenses and other liabilities of $44.5 million due to the timing of cash disbursements primarily related to bonuses and commissions, a decrease in deferred revenue of $19.9 million, an increase in deferred contract acquisition costs of $18.5 million due to an increase in our sales, an increase in contract assets of $3.7 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 $13.0 million. The outflows were partially offset by a decrease in accounts receivable of $78.4 million due to the timing of receipts of payments from customers and an increase in accounts payable of $7.7 million due to the timing of invoicing and payments made to vendors.
Current wording
During the six months ended July 31, 2026, cash provided by operating activities was $83.2 million, which consisted of a net loss of $125.0 million, adjusted by non-cash charges of $253.1 million and a net cash outflow of $44.8 million from changes in our net operating assets and liabilities. The non-cash charges are primarily comprised of equity-based compensation of $137.4 million, depreciation and amortization expense of $106.7 million, amortization of contract acquisition costs of $28.6 million, provision for credit losses of $2.4 million, amortization of debt discount and issuance costs of $0.3 million, partially offset by deferred taxes of $22.4 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 $66.1 million due to an increase in our sales, an increase in prepayments and other current assets of $15.7 million, an increase in contract assets of $7.9 million primarily due to growth in our revenue and the timing of invoices and payments, a decrease in deferred revenue of $11.8 million, and a decrease in accrued expenses and other liabilities of $8.2 million due to the timing of cash disbursements primarily related to bonuses and commissions. The outflows were partially offset by a decrease in accounts receivable of $57.5 million due to the timing of receipts of payments from customers and an increase in accounts payable of $7.6 million due to the timing of invoicing and payments made to vendors.
Previous wording
During the three months ended April 30, 2025, cash used in operating activities was $96.8 million, which consisted of a net loss of $187.3 million, adjusted by non-cash charges of $159.8 million and a net cash outflow of $69.3 million from changes in our net operating assets and liabilities. The non-cash charges are primarily comprised of depreciation and amortization expense of $52.1 million, equity-based compensation of $105.7 million, amortization of contract acquisition costs of $8.2 million, amortization of debt discount and issuance costs, including the early write-off of issuance costs related to the repayment of the Term Loans of $15.6 million, and provision for credit losses of $3.6 million, partially offset by deferred taxes of$25.3 million. The net cash outflow from changes in operating assets and liabilities was primarily a result ofan increase in deferred contract acquisition costs of$9.5 million due to an increase in our sales, an increase in contract assets of$3.8 million primarily due to growth in our revenue and the timing of invoices and payments, an increase in prepayments and other assets, current and non-current, of $14.9 million primarily due to the implementation of cloud computing arrangements, a decrease in deferred revenueof$11.1 million due to the timing of billings and cash received in advance of revenue recognition primarily for subscription and support services, and a decrease in accrued expenses and other liabilities of$90.6 milliondue to the timing of cash disbursements primarily related to bonuses and commissions, the settlement of vested EARs and cash-settled awards, interest payments, and fees paid to Thoma Bravo. The outflows were partially offset by a decrease in accounts receivable of$60.0 million due to the timing of receipts of payments from customers.
Current wording
During the six months ended July 31, 2025, cash used in operating activities was $46.9 million, which consisted of a net loss of $197.9 million, adjusted by non-cash charges of $240.2 million and a net cash outflow of $89.2 million from changes in our net operating assets and liabilities. The non-cash charges are primarily comprised of depreciation and amortization expense of $104.5 million, equity-based compensation of $154.1 million, amortization of contract acquisition costs of $17.5 million, amortization of debt discount and issuance costs, including the early write-off of issuance costs related to the repayment of the Term Loans of $17.1 million, and provision for credit losses of $4.3 million and fair value adjustments to contingent consideration of $1.6 million, partially offset by deferred taxes of$58.9 million. The net cash outflow from changes in operating assets and liabilities was primarily a result ofan increase in deferred contract acquisition costs of$26.6 million due to an increase in our sales, an increase in prepayments and other current assets of $21.2 million, an increase in contract assets of$13.7 million primarily due to growth in our revenue and the timing of invoices and payments and a decrease in accrued expenses and other liabilities of$74.9 milliondue to the timing of cash disbursements primarily related to bonuses and commissions, the settlement of vested EARs and cash-settled awards, interest payments, and fees paid to Thoma Bravo. The outflows were partially offset by a decrease in accounts receivable of$46.3 million due to the timing of receipts of payments from customers.
Previous wording
During the three months ended April 30, 2026, cash used in investing activities was $5.7 million, consisting primarily of $4.8 million for capitalized software development costs and $1.0 million in purchases of property and equipment.
Current wording
During the six months ended July 31, 2026, cash used in investing activities was $131.5 million, consisting primarily of $118.2 million for business acquisitions, $10.4 million for capitalized software development costs, and $2.9 million in purchases of property and equipment.
Previous wording
During the three months ended April 30, 2025, cash used in investing activities was $3.9 million, consisting primarily of$1.7 million for capitalized software development costsand$2.2 million in purchases of property and equipment.
Current wording
During the six months ended July 31, 2025, cash used in investing activities was $7.9 million, consisting primarily of$4.7 million for capitalized software development costsand$3.2 million in purchases of property and equipment.
Previous wording
During the three months ended April 30, 2026, there was no cash provided by financing activities.
Current wording
During the six months ended July 31, 2026, there was no cash provided by financing activities.
Previous wording
During the three months ended April 30, 2025, cash provided by financing activities was $210.6 million primarily due to the proceeds from our IPO, net of underwriting discounts and commissions of $1.3 billion, partially offset by the repayment of our Term Loans of $1.0 billion, and payments of deferred offering costs of $8.4 million.
Current wording
During the six months ended July 31, 2025, cash provided by financing activities was $207.7 million primarily due to the proceeds from our IPO, net of underwriting discounts and commissions, of $1.3 billion, partially offset by the repayment of our Term Loans of $1.0 billion, payments of deferred offering costs of $8.6 million, and payments of debt issuance costs related to our 2025 Credit Agreement of $2.7 million.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Sales and Marketing Expenses. Sales and marketing expenses increased by $24.6 million, or 19%, for the three months ended July 31, 2026 compared to the three months ended July 31, 2025. This increase was primarily driven by an $18.0 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 equity-based compensation primarily due to new grants issued during fiscal year 2027, a $2.2 million increase in travel expenses, and a $2.0 million increase in advertising and promotion costs.
Current report — wording carried from elsewhere
Subscription Revenue. Subscription revenue increased by $97.8 million, or 21%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025, primarily due to an increase in SaaS revenue from our shift in focus on selling subscriptions to new customers and expanding our footprint with existing customers.
Current report — wording carried from elsewhere
Services and Other Revenue. Services and other revenue decreased by $3.6 million, or 12%, for the six months ended July 31, 2026 compared to the six months ended July 31, 2025. This decrease is primarily a result of a strategic shift toward selling a higher proportion of professional services and training on a subscription basis.
Current report — wording carried from elsewhere
For further information, refer to Note 11 "Income Taxes" in the notes to our condensed consolidated financial statements included in this Quarterly Report.
Current report — wording carried from elsewhere
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.