SailPoint, Inc.SAIL
SailPoint, Inc. Income Taxes Disclosure
Income Taxes
Provision for income taxes consists of U.S. and state income taxes and income taxes in certain foreign jurisdictions in which the Company conducts business.
The following table presents consolidated loss before income taxes (in thousands):
| Year Ended January 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| Domestic | $ | (350,605) | $ | (384,171) | $ | (519,395) | |||||||||||
| Foreign | 24,606 | 7,542 | 7,046 | ||||||||||||||
| Total loss before income taxes | $ | (325,999) | $ | (376,629) | $ | (512,349) | |||||||||||
The provision (benefit) expense for income taxes consisted of the following (in thousands):
| Year Ended January 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| Current | |||||||||||||||||
| Federal | $ | 1,667 | $ | 353 | $ | 1,711 | |||||||||||
| State | 973 | 935 | 301 | ||||||||||||||
| Foreign | 11,181 | 8,430 | 5,895 | ||||||||||||||
| Total current | 13,821 | 9,718 | 7,907 | ||||||||||||||
| Deferred | |||||||||||||||||
| Federal | (68,351) | (56,759) | (106,764) | ||||||||||||||
| State | (3,467) | (12,718) | (17,448) | ||||||||||||||
| Foreign | 2,052 | (1,040) | (677) | ||||||||||||||
| Total deferred | (69,766) | (70,517) | (124,889) | ||||||||||||||
| Provision (benefit) expense for income taxes | $ | (55,945) | $ | (60,799) | $ | (116,982) | |||||||||||
The significant components of the Company’s deferred taxes are as follows (in thousands):
| January 31, 2026 | January 31, 2025 | ||||||||||
| Deferred tax assets: | |||||||||||
| Research and development and other credits | $ | 38,327 | $ | 30,173 | |||||||
| Capitalized research expenditures | 33,266 | 75,425 | |||||||||
| Net operating loss carryforward | 66,866 | 36,359 | |||||||||
| Disallowed interest carryforward | 87,783 | 97,827 | |||||||||
| Deferred revenue | 55,025 | 39,543 | |||||||||
| Stock compensation | 3,304 | 3,252 | |||||||||
| Operating lease liabilities | 4,372 | 5,488 | |||||||||
| Accrued expenses | 10,437 | 9,292 | |||||||||
| Other | 9,700 | 8,363 | |||||||||
| Total deferred tax assets | 309,080 | 305,722 | |||||||||
| Less valuation allowance for deferred tax assets | (20,308) | (32,265) | |||||||||
| Net deferred tax asset | 288,772 | 273,457 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Fixed assets | (1,609) | (1,922) | |||||||||
| Operating lease ROU assets | (4,098) | (5,291) | |||||||||
| Capitalized commissions | (13,760) | (17,217) | |||||||||
| Intangible assets | (324,951) | (377,356) | |||||||||
| Total deferred tax liabilities | (344,418) | (401,786) | |||||||||
| Net deferred tax (liabilities) assets | $ | (55,646) | $ | (128,329) | |||||||
As of January 31, 2026, the Company has federal, state and foreign net operating loss carryforwards of $227.3 million, $205.1 million and $31.5 million, respectively. Approximately $0.2 million of the federal net operating loss
carryforwards will begin to expire in 2037 and $227.1 million do not expire. The state net operating loss carryforwards will begin to expire in 2029, if not utilized. The foreign net operating losses do not expire.
As of January 31, 2026, the Company has federal and state research and development credit carryforwards of $30.4 million and $8.6 million, respectively. The federal and state research and development credits will begin to expire in 2027 and 2033, respectively, if not utilized.
The Company assessed all available positive and negative evidence to determine whether it expects that sufficient future taxable income will be generated to allow it to realize its existing deferred tax assets. The Company determined that it is more likely than not to realize a portion of the benefits of its U.S. federal and state interest expense carryforward. The Company decreased the valuation allowance to $20.3 million from $32.3 million as of January 31, 2026 and 2025, respectively.
The following table reconciles the Company's effective tax rate to the federal statutory tax rate under the updated requirements of ASU 2023-09.
| Year Ended January 31, 2026 | |||||||||||
$ | % | ||||||||||
| U.S. federal taxes at statutory rate | $ | (68,460) | 21.0 | % | |||||||
State and local income taxes, net of federal benefit (1) | (2,494) | 0.8 | |||||||||
| Foreign tax effects | |||||||||||
| Brazil | 3,783 | (1.2) | |||||||||
| Other | 4,013 | (1.2) | |||||||||
| Effects of changes in tax laws or rates enacted in the current period | — | — | |||||||||
| Effect of cross-border tax laws: | 1,786 | (0.6) | |||||||||
| Tax credits: | |||||||||||
| Research and development credits | (7,394) | 2.3 | |||||||||
| Non-taxable or non-deductible items: | |||||||||||
| Equity compensation | 15,135 | (4.6) | |||||||||
| Non-deductible officer compensation | 16,880 | (5.2) | |||||||||
Other | 463 | (0.1) | |||||||||
| Changes in valuation allowances | (21,262) | 6.5 | |||||||||
| Change in unrecognized tax benefits | 2,108 | (0.7) | |||||||||
| Other | (503) | 0.2 | |||||||||
| Total tax provision and effective tax rate | $ | (55,945) | 17.2 | % | |||||||
(1) State taxes in California, New Jersey, Illinois, New York, New York City and District of Columbia made up the majority (greater than 50%) of the tax effect in this category
As previously disclosed for the years January 31, 2025 and 2024, prior to the adoption of ASU 2023-09, the following table reconciles the Company’s effective tax rate to the federal statutory tax rate:
| Year Ended January 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| U.S. federal taxes at statutory rate | 21.0 | % | 21.0 | % | |||||||
State and local income taxes, net of federal benefit | 3.3 | 3.1 | |||||||||
| Foreign tax rate differentials | (0.3) | (0.1) | |||||||||
| Foreign tax on earnings | (1.0) | (0.5) | |||||||||
| Research and development credits | 1.6 | 2.2 | |||||||||
| Equity-based compensation | (1.8) | (1.6) | |||||||||
| Change in valuation allowance | (6.3) | — | |||||||||
| Change in unrecognized tax benefits | (0.3) | (0.9) | |||||||||
| Other | (0.1) | (0.4) | |||||||||
| Total | 16.1 | % | 22.8 | % | |||||||
Judgment is required in evaluating the Company’s uncertain tax positions and determining the Company’s provision for income taxes. The reconciliation of unrecognized tax benefits is as follows (in thousands):
As of January 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| Beginning Balance | $ | 50,497 | $ | 50,386 | $ | 40,402 | |||||||||||
| Additions based on tax positions related to prior year | 617 | — | 6,635 | ||||||||||||||
| Reductions based on tax positions related to prior year | (28) | — | — | ||||||||||||||
| Additions based on tax positions related to current year | 2,689 | 1,708 | 3,349 | ||||||||||||||
Settlements | — | (1,597) | — | ||||||||||||||
| Ending Balance | $ | 53,775 | $ | 50,497 | $ | 50,386 | |||||||||||
Included in the balance of unrecognized tax benefits as of January 31, 2026, 2025, and 2024 is $49.5 million, $48.7 million and $48.6 million, respectively, of tax benefits that, if recognized, would affect the Company’s effective tax rate.
The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. During the years ended January 31, 2026, 2025 and 2024, the Company did not record any material interest or penalties.
The Company files income tax returns in U.S. federal, state, and foreign jurisdictions. The Company has net operating loss carryforwards and tax credits for the U.S. federal and certain state jurisdictions allowing the statute of limitations to remain open for all years. The foreign jurisdiction’s statute of limitations is closed for tax years before 2022.
Deferred income taxes have not been recognized on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are indefinitely reinvested outside the U.S. Determination of the unrecognized deferred tax liability related to the outside basis difference in investments in the foreign subsidiaries is not practicable. If the Company repatriated its foreign earnings, any deferred income taxes for the estimated U.S. income tax, foreign income tax, and applicable withholding taxes is not material.
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.