By Andrew Bary
When SailPoint, a leader in identity security software, went public in February 2025, it looked like a big win for Thoma Bravo, a technology investment firm that has been active in taking software companies private.
SailPoint's IPO was priced at $23 a share and then moved higher, resulting in a doubling of the value of Thoma Bravo's roughly 85% stake in the company to around $11 billion.
But Thoma Bravo's paper profits have evaporated with the post -- IPO drop in SailPoint stock, which has nearly been cut in half to $12.25 a share on Friday's close.
Thoma Bravo manages about $183 billion and controls such tech companies as Anaplan, Dayforce and Medallia.
The fall in SailPoint reflects the selloff in software stocks amid AI concerns. The iShares Expanded Tech-Software Sector ETF is off about 20% this year.
SailPoint stock has lagged the software ETF this year, falling about 40%, including a drop of nearly 20% this week, as investors reacted to what some analysts said was disappointing guidance for the company's fiscal year ending in January 2027 as part of its quarterly earnings release.
Thoma Bravo owns about 480 million shares of SailPoint and has a cost basis of just under $13 a share, based on the IPO prospectus.
The firm sold a small amount of stock at the IPO but hasn't unloaded a share since then despite an expiration of lockup restrictions, Barron's calculates.
Thoma Bravo took SailPoint private in a $6.9 billion deal in 2022, paying a nearly 50% premium for the software firm's stock. Thoma Bravo would have done better to simply invest in the iShares Technology Software ETF $(IGV)$ which has risen by about a third since the SailPoint deal was announced.
On Wednesday, SailPoint reported a 28% increase in annual recurring revenue in its fiscal fourth quarter. Adjusted income from operations was $61 million, up from $46 million in the year-earlier quarter.
"SailPoint posted solid results to end the year, with modest ARR acceleration, however the magnitude of the beat was lower and FY/27 guidance generally came in below expectations," wrote RBC Capital Markets analyst Matthew Hedberg.
In a statement, Thoma Bravo said: "SailPoint delivered strong results which demonstrated the quality of its fundamentals, business model and execution.
"This underscores the accelerating demand for SailPoint's platform as identity security increasingly becomes core infrastructure in the AI era, " the firm continued.
The company, like many in software, had modest adjusted quarterly profits after adding back a few items, notably stock-based compensation, which is treated as an expense based on generally accepted accounting principles (GAAP).
But SailPoint is unprofitable on a GAAP basis after its hefty stock comp of about $300 million last year, or roughly 30% of revenue.
Software investors historically were willing to tolerate an addback of stock comp to arrive at an adjusted earnings figure because stock comp is a noncash expense.
But there is a growing realization that stock compensation is a real expense -- and is mandated as a cost by GAAP -- and that lower GAAP earnings are a better financial measure than the adjusted figure.
Leading tech companies have largely embraced traditional GAAP accounting with stock market leader Nvidia the latest company to end the stock comp addback in its adjusted earnings.
Write to Andrew Bary at andrew.bary@barrons.com
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March 20, 2026 17:31 ET (21:31 GMT)
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