SailPoint (SAIL) Q2 2026: SaaS ARR Jumps 37% as AI and Machine Identity Drive Platform Expansion

September 9, 2025 | By EarningsIQ Research

SailPoint delivered a robust Q2 with SaaS ARR up sharply and enterprise-scale identity security demand accelerating, as organizations confront the proliferation of machine and AI-driven identities. Record new logo wins, high attach rates on advanced modules, and deepening platform adoption signal SailPoint’s expanding role as the control plane for next-gen security. Guidance moves higher with visibility into both core and emerging product traction, though execution in a complex, evolving landscape remains key.

Summary

• AI and Machine Identity Momentum: SailPoint’s differentiated platform is capturing emerging demand from enterprises securing non-human identities and AI agents.
• Platform Attach and Upsell Strength: New customers are adopting advanced modules and higher-value suites at record rates, driving expansion and stickiness.
• Guidance Lift Reflects Durable Growth: Upward revisions to ARR, revenue, and margin guidance underscore management’s confidence in secular tailwinds and execution discipline.

Performance Analysis

SailPoint’s Q2 2026 performance reflected both strong execution and intensifying demand for identity-centric security, as enterprises modernize their security stacks to address new attack surfaces. Annual recurring revenue (ARR) reached $982 million, up 28% year-over-year, with SaaS ARR growing even faster at 37%. The mix of growth was balanced between net new customers and expansion within the installed base, but the standout was a record quarter for new logo ARR, driven by higher attach rates on advanced modules and the Business Plus suite.

Subscription revenue growth of 36% YoY and a 20.4% adjusted operating margin (up 980 basis points) highlight the positive operating leverage as SailPoint scales. The company delivered $50 million in operating cash flow, reflecting both top-line momentum and disciplined expense management. Importantly, ARR from emerging add-on modules like machine identity security and data access security more than doubled, contributing to a net revenue retention (NRR) of 114%. Management called out that new SaaS customers had a 40% attach rate on add-on modules, up sharply from 25% a year ago, underscoring the platform’s expanding reach and customer reliance.

• Enterprise-Scale Wins Accelerate: Customers with ARR over $1 million grew 48% YoY, marking SailPoint’s deepening penetration into large, complex organizations.
• Fed Sector Renewal Timing: $7 million in revenue was recognized early due to 100% renewal rates in federal contracts, impacting quarterly phasing but not ARR.
• Margin Expansion Driven by Scale: Operating leverage from larger deals and high attach rates enabled significant margin gains despite ongoing investments.

The quarter’s results validate SailPoint’s strategy of targeting both legacy platform displacements and new identity challenges, positioning the company as a foundational security partner as AI and machine identities proliferate.

Executive Commentary

Strategic Positioning

1. Identity Security as the Security Backbone

Identity security is now the core of enterprise defense, with SailPoint’s platform positioned as the control plane for both human and non-human identities. As identity becomes the primary threat vector, SailPoint’s governance-centric approach—anchored in real-time controls, AI-driven automation, and deep entitlement context—differentiates it from legacy and point solution competitors.

2. Expansion Beyond Traditional IGA

SailPoint is moving well beyond identity governance and administration (IGA), delivering an extensible platform that unifies identity, data, and security context. The company’s focus on machine identity, AI agent governance, and data access security is capturing new budget and solving emerging enterprise pain points that legacy solutions cannot address.

3. Platform Attach, Upsell, and Modernization

High attach rates on advanced modules and suite upgrades are driving expansion within both new and existing customers, with a notable uptick in large deals and modernization projects. Management highlighted a 48% YoY increase in $1M+ ARR customers and a surge in cross-sell activity, signaling that SailPoint’s platform approach is resonating at scale.

4. Competitive Differentiation and Independence

Amid industry M&A and platform roll-ups, SailPoint’s independence and deep expertise in identity governance remain key assets. The company manages over 125 million identities and maintains strong win rates against both traditional IGA players and new entrants, particularly in complex enterprise environments where scale and depth matter.

5. Accelerated Application Management and Ecosystem Leverage

Innovations like Accelerated Application Management and the pending Savvy asset acquisition are designed to reduce application sprawl, speed onboarding, and enhance risk detection. The company’s open partner ecosystem, exemplified by a new HCL Technologies partnership, expands SailPoint’s reach and relevance across geographies and verticals.

Key Considerations

SailPoint’s Q2 demonstrates a business scaling into new opportunity vectors, but also entering a more complex competitive and technological landscape. Investors should weigh platform breadth, operational discipline, and the ability to execute on emerging use cases against the risks of market convergence and evolving threats.

Key Considerations:

• Emergence of AI and Machine Identity: SailPoint is capturing early leadership in governing machine and AI agent identities, a segment experiencing exponential growth as enterprises automate workflows.
• Quality of Customer Wins: Growth is driven by larger, more complex customers, with high ARR per logo and increased module attach rates, supporting durable expansion and lower churn risk.
• Platform Depth vs. Point Solutions: SailPoint’s depth in entitlement data and governance distinguishes it from new entrants focused on connectivity or privilege management alone.
• Macro and Fed Sector Exposure: While the company’s mission-critical positioning limits macro sensitivity, quarterly revenue phasing can be impacted by federal contract timing and large deal renewals.
• Execution on Innovation and Integration: The ability to successfully launch and monetize new modules (e.g., agent identity security, machine identity) and integrate acquired assets will be pivotal in sustaining growth and differentiation.

Risks

Competitive intensity is rising, with both platform roll-ups and new entrants targeting identity governance and security convergence. Execution risk remains as SailPoint integrates new modules, manages complex migrations, and navigates evolving customer requirements—especially in AI and machine identity. Revenue phasing may remain lumpy due to large deal timing and federal sector seasonality, while macro headwinds could delay modernization projects in more cautious enterprise environments.

Forward Outlook

For Q3 2026, SailPoint guided to:

• ARR crossing $1.029 billion, up 26.5% YoY
• Revenue of $270 million, up 15% YoY
• Adjusted subscription gross margin of 82%, and operating margin of 16%

For full-year 2026, management raised guidance:

• ARR outlook to $1.11 billion, up 26.6% YoY
• Revenue to $1.055 billion, up 22.4% YoY
• Adjusted operating income to $179 million, or 17% margin
• Adjusted EPS to $0.21

Management cited:

• Strong pipeline visibility and record free cash flow
• Continued momentum in new logo wins and module expansion

Takeaways

SailPoint is executing on a clear strategy to become the enterprise control plane for identity security, extending its lead as AI and machine-driven identities reshape the security landscape.

• Platform Expansion Drives Durable Growth: High attach rates and large enterprise wins validate SailPoint’s extensible platform approach and support margin expansion.
• Execution on Innovation Remains Key: Success in launching and scaling new modules, particularly in AI agent and machine identity, will determine SailPoint’s ability to maintain its leadership as the market evolves.
• Watch for Competitive and Integration Risks: Investors should monitor the impact of industry consolidation, new entrants, and the company’s ability to integrate acquisitions and deliver on product roadmaps.

Conclusion

SailPoint’s Q2 showcased the company’s momentum in capturing secular identity security demand, with SaaS and advanced modules fueling both growth and operating leverage. With guidance raised and innovation on deck, SailPoint is positioned as a mission-critical partner for enterprises navigating the next wave of AI and machine-driven security challenges.

Industry Read-Through

The rapid growth in machine and AI identity governance signals a step-change in enterprise security priorities, with SailPoint’s results affirming that identity is now the primary control plane for risk mitigation. Vendors across cybersecurity, cloud, and automation must adapt to the new reality where dynamic, real-time controls, deep entitlement context, and platform extensibility are table stakes. Industry consolidation and convergence will accelerate, but depth, scalability, and integration across identity, data, and security remain the differentiators for winning at enterprise scale.

SAIL Technology Cybersecurity SaaS Identity AI Machine Identity Platform