SailPoint Inc. (NASDAQ:SAIL) stock fell sharply on Tuesday after the identity security software company issued a fiscal second-quarter outlook that pointed to slowing growth, overshadowing first-quarter results that topped Wall Street expectations.

Identity Security Demand Lifts Revenue, Earnings

For the fiscal first quarter ended April 30, SailPoint reported annual recurring revenue (ARR) of $1.163 billion, up 26% from a year earlier. SaaS ARR increased 36% to $781 million.

Total revenue rose 22% to $280.1 million, exceeding analysts’ estimate of $276.0 million. Subscription revenue increased 23% to $265.8 million.

Adjusted gross margin expanded 30 basis points to 76.6%.

The company posted a GAAP operating loss of $79.8 million, improving from a loss of $185.0 million in the year-ago period. Adjusted income from operations increased to $37.8 million from $23.6 million, while adjusted operating margin expanded to 13.5% from 10.2%.

SailPoint earned 5 cents per share on an adjusted basis, topping analysts’ estimate of 4 cents per share.

The company ...