SailPoint Returns to Public Markets with $1.38 Billion IPO

In a resurgence of the tech IPO market, SailPoint (SAIL) is set to commence trading on the Nasdaq on Thursday. The company's initial public offering (IPO) was priced at $23 per share, the upper end of its targeted range, raising $1.38 billion. SailPoint's pre-IPO valuation reached $12.6 billion, trailing its closest competitor, Okta (OKTA), which holds a valuation of $16.8 billion.

Strong Demand for Scalable, Profitable Growth

According to SailPoint founder and CEO Mark McClain, the market is eager for "growth at scale with profitability." SailPoint fits this profile, having built a substantial business with profitable operations.

Identity Management Leader with Mature Operations

SailPoint, an identity management technology firm, is no newcomer to the public markets. Its previous IPO in 2017 saw an 8.3% gain on its first day of trading. After being acquired by Thoma Bravo for $6.9 billion in 2022, SailPoint reemerges as a more mature company operationally and financially.

Strong Revenue Growth, Losses Persist

In its prospectus, SailPoint estimated annual recurring revenue of $875 million to $877 million for the year ended January 31, 2025, representing a 41% year-over-year increase. However, it has yet to disclose guidance for its fiscal year's bottom line. As of October 31, 2024, SailPoint had a net loss of $235.8 million, an improvement over the previous year's $308 million loss. McClain claims profitability on a non-GAAP basis.

Controlled Company with Significant Thoma Bravo Ownership

Post-IPO, SailPoint will be considered a controlled company with Thoma Bravo retaining approximately 88% ownership. Thoma Bravo will hold ultimate authority in board-level decisions and can nominate board members.

Positive Outlook for Tech IPOs

SailPoint's IPO marks the first major test for the tech IPO market in 2025. Renaissance Macro anticipates a "banner" year with 155 to 195 companies potentially debuting, potentially raising $40 billion to $55 billion.

Improving IPO Environment

McClain expressed optimism about the regulatory backdrop under President Trump, citing a potential shift towards a "less regulatory-oriented administration." Improved IPO activity was observed in 2024, with a 38% increase in IPOs and a 48% surge in proceeds. In 2024, 176 US IPOs raised a total of $33 billion.