SailPoint Technologies Holdings, Inc.

Greetings. Welcome to SailPoint Technologies Holdings' fourth quarter 2020 earnings conference call. At this time, all participants will be in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note, this conference is being recorded. I'll now turn the conference over to Josh Harding, Vice President of Financial Planning, Analysis, and Investor Relations. Josh, you may now begin.

Good afternoon, and thank you for joining us today to discuss SailPoint's fourth quarter and full year 2020 financial results. Joining me today are SailPoint CEO and co-founder, Mark McClain, and our Chief Financial Officer, Jason Rehm. Please note that today's call will include forward-looking statements, and because these statements are based on the company's current intent, expectations, and projections, they are not guarantees of future performance. and a variety of factors could cause actual results to differ materially. Since this call will include references to non-GAAP results, which excludes special items, please reference this afternoon's press release in the investor section of SailPoint.com for further information regarding forward-looking statements and reconciliations of GAAP to non-GAAP results. And now, I'd like to turn the call over to Mark McClain.

Thanks, Josh, and thanks to each of you for joining the call today. I hope you and your families remain safe and healthy. I'm very pleased to share both our fourth quarter and fiscal year end 2020 results with you today. Our results in both periods were driven by solid execution across the business and strong demand for SailPoint's identity platform. For the full year 2020, Total revenue was approximately $365 million, representing 27% growth year on year. Total revenue for the fourth quarter was approximately $103 million, the largest quarter in our history and the first time we've exceeded $100 million in quarterly revenue. Our team and our partners executed extremely well around the globe throughout the year, and I'd like to thank each one for their contribution to our ongoing success. especially during such a tumultuous time. Now I'd like to spend a few minutes talking through some key business highlights from 2020 before shifting to our focus and strategy for 2021. SailPoint's business performed at a high level throughout 2020, despite the economic disruption related to the pandemic. We experienced significant demand and subsequent growth throughout the year as the relevancy and criticality of identity security became even more apparent. The SailPoint team responded well to this increased demand, delivering a high level of tight execution across all geographies. The events of 2020 reinforced many of the positive trends in our business, which we expect to continue going forward. For example, this past year, the rapid shift to working from anywhere drew significant attention to an issue that many companies simply hadn't fully seen before – We helped numerous companies understand the extent of risk exposure in their business due to loosely managed and largely ungoverned access. Providing access for remote workers proved to be a light bulb moment as more organizations realized they were operating under a false sense of security if they were only focused on connecting their people to technology without properly securing their access. With SailPoint serving as the foundation for securing all of their digital identities, including both human and non-human, our customers can confidently enable access to critical systems and data while eliminating business risk. As a result, throughout 2020, we saw increased demand for our solutions as more and more companies sought to dramatically improve their identity security program. This included a strong and growing interest in our SaaS solution from larger enterprises, as many of them have become increasingly comfortable shifting their identity security infrastructure into the cloud. For example, a large media and information services conglomerate chose SailPoint to help them securely enable their digital transformation. Their goal is to achieve a 360-degree view of access needs across the 25,000-plus employees and contractors that make up their workforces. This visibility into all their organization's access capabilities across every application, data, and cloud infrastructure is critical to both securing and enabling their expansive business. With SailPoint at the center of their transformation, they have the multi-tenant SaaS identity platform needed to quickly deliver on their vision for comprehensive identity security across their business. Our product leadership team leveraged a strong vision and SaaS expertise to help us accelerate our ability to innovate at scale, delivering a high volume of new identity security solutions to market this year. These investments benefit all customers and have helped us to extend our industry-leading platform to be the most comprehensive SaaS identity platform in the market. A few of these recent capabilities include new SaaS-delivered AI services like access modeling, role insights, and access request recommendations. Deeper integration into critical business applications that enable remote work and the sensitive data housed within, including applications like Slack, Microsoft Teams, Zoom, and JIRA. And finally, the ability to govern and secure access to cloud infrastructure like AWS, Azure, and the Google Cloud Platform within the SailPoint Identity Platform. Turning to 2021, We believe we are well positioned to continue to build upon the strong market momentum established in 2020. Let me highlight a few of the ways we're executing against the attractive opportunity in front of us. First, we're investing to meet the growing market demand at the upper end of the market. I mentioned earlier that we expect to see more large enterprises embrace a SAS delivered approach to identity. To address this increased interest, we're laser-focused on building innovation into our SaaS platform that address the needs of global enterprise customers. This requires us to take a sophisticated yet intuitive approach to identity that supports the complexity and velocity of our customers' business environment. Second, we're reorienting our business to focus on subscription-based pricing, regardless of how a customer chooses to deploy with us. Obviously, our SaaS solutions have always been subscription-based, but we have also seen increasing demand for this pricing approach from customers deploying our software, whether on-prem or in the cloud. This decision is primarily a reflection of our customer's choice, but it will also simplify our selling, contracting, and renewals process across the company. In addition, this simplified pricing model will lead to lower upfront investment for customers and higher customer lifetime value and more predictable revenue for SailPoint. And third, We're expanding upon our market opportunity by pivoting to address adjacent market needs for customers. For example, we recently announced the acquisition of Intello, a SaaS management platform. This acquisition helps us to address an emerging need for companies who lack visibility into the entirety of their SaaS app landscape due to a sharp rise in shadow IT happening across most businesses today. This additional capability will help our customers to see and understand the full extent of their SaaS application landscape and then put the right identity security controls around who should have access and how that access is being used. This acquisition will allow our customers to securely achieve their SaaS adoption goals by ensuring they understand the risks associated with new SaaS applications, even those in the realm of shadow IT. And this new functionality will fit neatly into what companies are already doing to govern the rest of their critical business applications in SailPoint's identity platform. Taken together, we believe these strategic moves will drive incremental value for both our customers and SailPoint in 2021, and will continue to strengthen our competitive position. We will be discussing in greater depth our 2021 focus, our business strategy, and our long-term financial goals during our first-ever Analyst Day, which takes place tomorrow, February 26, 2021, beginning at 11 a.m. Eastern Time. We hope you can join us. In closing, we're very pleased with the strong performance of the business over the course of 2020 and believe that we're well-positioned for continued success in 2021. We believe our differentiated platform and an increased appreciation for the criticality of identity security's role in securing the modern enterprise will continue to drive interest and demand. We have the right team, technology, and vision to continue to grow our global footprint throughout 2021. With that, I'd like to hand it over to Jason, who will cover our financial performance in greater detail.

Thanks, Mark, and thank you to everyone joining us on the call today. As Mark mentioned at the beginning of the call, we're pleased with our performance in Q4 and throughout 2020. Here are some of the financial highlights that I'd like to call out with respect to Q4. First, total revenue of $103 million, representing 16% growth year-over-year and more than $8 million above the high end of our previous guidance range. Second, subscription revenue of $56 million, representing 38% growth year-over-year and $3 million above our previous guidance. This outperformance was driven by strong sales performance and by better than expected retention of our staff and maintenance customers. Third, non-GAAP operating income of $13 million, well above our expectations. This outperformance was driven by revenue well ahead of our plan and by expenses slightly under plan. While we are aggressively investing in the business, our team is disciplined and tends to find efficiencies as we execute through our plan. And lastly, we have two new metrics we'll be disclosing going forward. And we'll go into more detail on those tomorrow in our analyst day. But to give you a quick preview, we closed the year with ARR of $251 million, representing 40% year-over-year growth. And SAS revenue for the year was $67 million, an increase of 58% from 2020. In terms of execution throughout the quarter, we had a very balanced performance with all of our geographies contributing nicely to growth. Additionally, we saw a nice balance of deals in the quarter with a healthy number of good size transactions, but without any reliance on the mega deals. In Q4, we continued to see our business transition towards SaaS, with SaaS representing the highest percentage of new bookings in our history. At the same time, just as we did in Q2 and Q3, we saw our software customers continue to move towards subscription, opting for term license. In Q4, subscription arrangements, either SAS or term license, made up more than two-thirds of our new bookings in the quarter. As we move on to the rest of this call, please note that unless otherwise stated, All references to expenses and operating results are calculated on a non-GAAP basis and exclude the items outlined in the GAAP and non-GAAP reconciliations provided in today's press release. Combined gross margins in the quarter were 81%, the same as last quarter. Underneath the covers, staff gross margins improved quarter over quarter and year over year, reaching record levels. SaaS gross margins benefited from both increasing scale as well as continued focus by our DevOps and engineering teams on efficiently delivering our SaaS platform. Operating expenses were a bit below what we expected to spend in the quarter, largely by some conservative assumptions on non-headcount expense as we entered the quarter, as well as some operating efficiencies created by our team as we executed throughout the quarter. Turning towards the year in front of us, there are a few points to keep in mind as we discuss our expectations for 2021. First, we expect to continue to see strong demand for our solutions and to drive a high growth rate in our new bookings. Second, we expect for our business model to continue to shift as we accelerate in the transition towards SaaS and subscription. In fact, we are now taking a more proactive position on the subscription shift which we'll talk about in depth tomorrow during our analyst day. But as a result of the transition, I'll focus our guidance a bit differently than we have in the past. And third, we plan to aggressively invest in our business, confident in the opportunity we see in front of us, not just for 2021, but for years to come. So the first view I'll give as we initiate our 2021 guidance is around total ARR. We finished 2020 with total ARR of $251 million and expect to grow that to $333 to $339 million by the end of 2021, representing growth of 33% to 35%. Total ARR does get a little tailwind as we make the transition to subscription, but we believe it's a great indicator of the shape of our business, capturing not only new recurring bookings, but also the scale and the retention of our recurring revenue base. As a result, we'll be providing total ARR results every quarter going forward, and we'll update our annual guidance as required. In terms of revenue, our current expectations for total revenue for the full year of 2021 are in the range of $404 to $412 million. Out of the total, we expect subscription revenue to be in the range of $256 to $260 million, representing a growth rate of 30% to 32%. And to help you build your model, I'll say that we expect license revenue to be in the range of $100 to $104 million, with the remainder of our revenue coming from services and other. And you may have seen that given the focus on SAS and our go-forward plans, we're now providing SAS revenue in our reporting as well. Our current expectations for 2021 are for SAS revenue of $96 to $100 million, representing year-over-year growth of 43% to 49%. There is some conservatism in that number, which you may see as you compare it to our 2020 results of 58% growth versus 2019. There's still some short-term uncertainty around how much of our new bookings will be staffed in any given period. But we are very bullish about the growth prospects for SAS revenue over time. Lastly, on revenue, I mentioned a few minutes ago that we expect our business to accelerate its shift to subscription. And as I'm sure you're aware, that impacts the growth rate that we see in recognized revenue. In 2021, we expect that headwind to be approximately 12 points of recognized revenue growth. In other words, at our current expectations for new bookings, If the mix in 2021 was the same as it was in 2020, our revenue growth expectations would be approximately 12 points higher or in the range of 23 to 25%. In terms of profitability for the full year of 2021, we expect to be in the range of breakeven to a non-GAAP operating loss of approximately $10 million. There are a few things to keep in mind with our earnings outlook. First, We plan to aggressively ramp our investment in go-to-market capabilities and capacity and our investment in product development. Fundamentally, we're focused on building the foundation for the multibillion-dollar business that we believe SailPoint can become. Second, keep in mind that 2020 was a year in which expenses were a bit lower than you might normally expect. And as we look forward to 2021 from today, we are assuming some renewed travel and facilities expenses which were lower than planned in 2020. Lastly, our investment plan is essentially aligned with the fundamental economic growth of the business. Said differently, our earnings outlook would largely be in line with our 2020 non-GAAP operating income if you were to adjust for the incremental revenue headwind we will face in 2021 as part of our transition to a subscription model. Turning to the first quarter, We expect total revenue to be in the range of $90.5 to $92 million, representing 20% to 22% growth over Q1 of 2020. And we expect subscription revenue to be $58 to $58.5 million, or 32% to 33% growth year-over-year. And we expect to see non-GAAP operating income of break-even to $1 million. As I close, I'll say that we're proud of the performance that we delivered in Q4 and the full year of 2020. But really, we're looking forward to what we can do in the future. We believe we're well positioned in an attractive market with an exciting product portfolio and roadmap, a great team, and a business model shift well underway that we expect will deliver significant value to our investors and to our customers. And we're also looking forward to giving you more detail on our business at our analyst day tomorrow. With that, I'd now like to turn to the operator to begin the Q&A portion of the call.

Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star one from your telephone keypad and a confirmation tone to indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants that are using speaker equipment, It may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. And our first question is from the line of Matt Hedberg with RBC. Please proceed with your question.

Oh, hey, guys. Thanks for taking my questions. Congrats on the strong close to the year. You know, I guess, and thanks for the disclosures, too. Obviously, I think we're all looking forward to tomorrow's Annals Day. When we look at the SaaS mix, I think it exited the year at about a 19% mix, and I think you're guiding for the full year, 21, about 24% of total revenue being SaaS. I am curious, you know, as you progress here, are you going to start to incent reps and maybe even customers to sort of lean into SaaS a bit more? Just sort of wondering on the go-to-market side there.

Yeah, thanks, Matt, and thanks for the comments about the quarter. You know, we provided a slight incentive to reps last year, and that worked very well, a slight incentive for them to sell SaaS rather than to sell the on-prem product, and that worked very well. You know, we're dialing that back a bit this year. Look, we're always incenting sales reps to do the things that we want them to do, and obviously SaaS is our future direction, and so we're aligned there. But, no, it's not as if we have to do anything unnatural here. There's a very natural market pull in that direction. The product is a fit, and so there's sort of a synergy coming from both sides.

That's great. And then, you know, I guess on the acquisition of Intel, I think, Mark, you touched on it briefly in your prepared remarks, but maybe just a little bit more on Intel. How do you expect to integrate this into the platform? Because obviously it's a little bit different than your historic focus on just pure identity with now SaaS app management. But maybe just a little bit more detail there in terms of the integration plans and kind of the go-to-market there.

Yeah, sure, Matt, and thanks for the comments as well. Yeah, no, we found them as we were looking for some ways to accelerate our ability to cover the kind of explosion in SaaS apps. In particular, we felt like they had some kind of slick technology that enables them to see some of the less aware or unmanaged SaaS apps in the environment, kind of the shadow IT concept. The other thing, we like to add some activity data technology that allows us to kind of parse through activity data. So they had a couple of early technology wins that we felt were very attractive, and yet they themselves were getting pulled toward integration with identity tools, we found, as they had started to kind of get into their market a little bit. They're very early stage with a great young group of folks. And so, yeah, we... We see it as a nice extension and kind of analogous to what we were focused on with a little more of an explicit focus on those areas.

Thanks, guys. Thanks, Matt.

Our next question is from the line of Rob Owens with Piper Sandler. Please proceed with your questions.

Great. Thank you guys very much. And I'm going to hold it to just one question because I have a lot sort of for Jason for tomorrow. So Mark, at a high level relative to Sunburst, maybe you can talk about the role of governance when we see an attack like that and they go after identities and where customer conversations have been since. Is this a potential boon for your space and you see an uplift from it? Or is it just another security event that just raises awareness overall? Thanks.

Thanks, Rob. And Jason only minorly cringed when you said what you said. No, I'm kidding. He's fine. We're looking forward to tomorrow, too. No, look, I think it's more to the latter, Rob. While nobody's happy about what happened there, at least of all the folks at SolarWinds and FireEye and others, it was not a particular spike that we think will fundamentally shift the demand curve for us. We felt like a lot of customers are already well aware of these kinds of risks. This is obviously, as we've all now learned, what we know of it at least, a very sophisticated, coordinated attack. And it just continues to keep a spotlight on the importance of, you know, as we like to say, knowing who has access to what. And so I think it won't create a real stark shift or anything in the demand profile coming up. And like our guys haven't seen a sudden spike in interest. It's just kind of more like head nodding, like, yep, you know, there's another ugly story, and this is why we've got to keep our focus on getting our security even stronger in our business. That's the kind of reaction we hear in the field.

Sounds good. Thanks, Mark.

Thanks, Rob. Thank you. Our next question is from the line of Brent Thill with Jefferies. Please proceed with your question.

Hey, guys. This is Joe on for Brent. Thanks for the question. It's great to hear about the increased traction with SaaS from the large enterprises. What's reduced that friction? Is it more of a feature-rich solution now? I know full parity might not be the way to think about it, but are you where you want it to be, or is it more just the sales force is more confident leading with SaaS?

I actually joked, Mark, I'd say it's all three factors. I think you articulated two clearly and sort of implied a third. It is a market pull from customers. It is an increasing strength of the product, the SaaS product, to be kind of relatively equivalent from a use case coverage, and it's a comfort level in our field and our partners to bring that solution to the large-scale enterprises. So it's really all three converging to create a very good environment for us to win there.

Okay, and then really appreciate the extra color as it relates to the model. I'm just curious, of that I think 100 to 104 in license, what's the mix? Are you continuing to sell perpetual going forward? I was a little unclear with that. What's the expected mix with term there? And then as we think about the SAS line, you gave fantastic guidance for next year. How much of that is implied transition for maintenance customers today that you're trying to upsell?

So Joe, this is Jason. Let me take that in reverse order. There's no transition in our model. We have an installed base of Identity IQ customers that represents our maintenance stream that is a happy customer base. We're not going to try and move them. If they want to move at some point, if they're looking to move to SAS or if it's a customer with an older deployment that thinks the easiest way to upgrade is to move to the SAS offering, then we'll be there for them and we'll make that happen. But there's no transition program. So nothing in our numbers from that perspective. The other part of your question was around license. And our license Revenue does have both perpetual license and the upfront portion of term license that gets recognized at the beginning of a contract per 606 accounting rules. And we'll talk a little bit more about that tomorrow. We are definitely moving more towards subscription and more towards term license and more proactively than we did last year.

Okay. Great to hear. Very helpful. Thanks.

Thank you. Our next question is from the line of Brian Essex with Goldman Sachs. Please proceed with your question.

Hi, good afternoon, and thank you for taking the question. I guess I was wondering if I could, you know, dive into, you know, license guidance. You know, great to see ARR number and subscription revenue guidance. That's fantastic. On the license side, what's your visibility into, you know, that trajectory? You know, what do you see in the pipeline? Is that based on renewals, or is it more you know, new, you know, enterprise traction pipeline, maybe just a little bit of color there.

Yeah, the license guidance is more based on new. There are under 606, if we renew a term license, we will get some license revenue again up front in the renewal portion of the contract. But we just don't have that many, you know, old term license contracts that are up for renewal. That wasn't something we were doing a lot in the business three years ago. In terms of visibility, look, that's no change necessarily there. Other than I would say directionally, as we've progressed in the business, particularly in the last year and a half with Matt Mills, but just generally maturing as a business, we've put more instrumentation, we've put more focus, and we've put more resources around our sales pipeline and around visibility into what's happening going forward. But at the end of the day, it's a pipeline and a forecast. There's nothing structural necessarily there that's that much different.

Got it. And then maybe just to follow up, is there any change in the way that you're incentivizing the sales force and the channel with regard to selling identity now versus identity IQ and any progress in terms of channel relationships that are notable?

Yeah, I'll talk about the incentives, and Mark, if you want to jump in about the channel and partner relationships. As I mentioned before, you know, look, we have obviously always some incentive in terms of which direction we want people to go, but in terms of selling SAS or in terms of selling term versus perpetual, that's not something we need to put incentives in any meaningful way to drive those results. We're really talking about pull from the market here with customers actually these days really more interested in a subscription arrangement. It's really how they're buying software and technology these days, and so it just fits with their buying patterns.

And, Brian, to the channel part of that, I'd say in general the great majority of our partners have been actively buying getting their people spec'd up on our SaaS product identity now. They're more and more comfortable selling SaaS products themselves in the marketplace. You know, they are balancing the need to keep a stable group of folks who can do the services work around our identity IQ because, again, those are large deployments and they stretch out over many years in some cases as customers expand and get into new divisions and such. So they have a lot of bench strength on Identity IQ, and they're building bench strength identity now, but they're all seeing the momentum we are in the market, and they've kind of rejiggered their teams to get ready for that sort of a momentum even increasing in 21. So, yeah, in general, they're seeing the same thing, and their pipelines that we're seeing is that the bulk of the pipeline is beginning to shift to SaaS.

Got it. Very helpful. Thank you.

You bet. Thanks. Thank you. Our next question is from the line of Hamsa Fadwala with Morgan Stanley. Pleased to see you with your question.

Hey guys, thank you for taking my question and I hope you guys are all doing well down there in Texas. So just I wanted to ask a couple questions. I'm sorry if this was touched upon earlier, but just on the license revenue decline this quarter, I appreciate the fast transition, you know, really, you know, accelerating, but Any color you can give around sort of, you know, why that decline at perhaps more material pace than some of us might have been expecting, given the fact that, you know, three-quarters year-to-date, you know, it's definitely been growing quite strong.

Thanks, Hamza. This is Jason. And down here in Texas, we're warmer this week than we were last week. Thank you. Excellent. And it's brighter at night than it was last week. No, on the license side, look, that's something we've been signaling for a long time, and we expect that to decline over time. Now, we don't expect it to go away. We think there's a segment of the market for whom Identity IQ is the right product, but Identity now is capable of serving every segment of the market. We talked before about well, identity now might not be able to serve the high end or it might not be able to serve the largest, et cetera. It's there. It's there, right? It is a product that can serve any part of the market. Now, there are certain customers who might want their data on-prem or who might need to have single tenancy for regulatory reasons or for their own security policy reasons, whatever it might be, and identity IQ is there for them. But fundamentally, Our growth is coming from identity now, and you should expect for identity IQ to be declining. We're going to go into more detail on that tomorrow and give you a picture of what that looks like in 2021 and versus 2020 and what that looks like over the next few years in our current expectations. But that's definitely the view that you should have is that that is becoming a smaller piece of the business.

That's helpful. We'll wait until tomorrow morning then. Thank you. Thank you.

Thanks.

Thank you. As a reminder, you may press star 1 if you'd like to ask a question at this time. The next question is from the line of Andrew Nowinski with TA Davidson. Please proceed with your question.

Great. Thank you, and congrats on another great quarter. So you talked about the market shifting to SaaS, and I'd imagine that's loosening up some of the customers that are running legacy solutions from the likes of Oracle, CA, and IBM. And I know you also talked about AI possibly being the feature that starts to convince those customers to move to a better platform like SailPoint. So I'm curious if you've seen any sort of change or increase in your competitive displacements relative to prior quarters.

Hey, Andy, thanks. It's Mark. Frankly, no, really. It's still a good, solid, steady drumbeat. I think, you know, we would say we see good momentum in the field, customers engaging with our field that have those legacy platforms. So it's still a good, steady drumbeat. We have never seen a sudden uptick from all the many things that might have created such COVID, you know, SolarWinds, any other things, but yeah, the, the technology capabilities and our SAS product, including the AI capabilities, which I think really are a step function forward from, from the kind of traditional capabilities of their legacy products. All that seems to create a lot of interest in dialogue and some set of those customers are moving quarter by quarter by quarter, but there hasn't been a, a notable uptick in the rate of that.

Oh, okay. Yet to come. It sounds like, um, maybe then, uh, Also hearing from channel partners about how the remote work environment may have increased the need for an IGA solution, providing customers with better visibility to who has access to what applications. So I'm wondering if you could just discuss kind of your, you know, how that has impacted growth, if at all, and maybe just rank order your key growth drivers that you're seeing right now.

Yeah, the way we think of it, Andy, is a metaphor a couple times. Hopefully it's helpful. In some ways, customers before the pandemic were somewhat aware of their lack of great visibility and control over true security of who had access, right? The whole digital transformation movement has been a lot about increasing new access to new systems because customers are buying and or building all these new systems to drive their business forward. And so there was a rapid enablement, a rapid gaining or granting, excuse me, of access. And behind that was maybe a bit of concern as to how well controlled it was. So what we sort of described the effect of the pandemic, which again was, you know, drove people to be remote and working from home or working from anywhere, was it's sort of like shining a spotlight on cobwebs in a corner. The cobwebs were there. The light just exposed them. But now that they're exposed, people feel an urgency to deal with it. And I think it's more that The pandemic and the working from home phenomenon sort of caused people to go, wow, I do need to deal with the fact that I don't have great visibility and control. It didn't necessarily change dramatically just because of working from anywhere. Yeah, one of the things we don't want to give people the pressure of is, you know, people used to have five access points and now they have 50. That's not what happened. But they might have gone from five to eight and they now had access to those eight from a less secure fundamental environment at home. And that caused people to be worried about exposure and risk. It's been a general tailwind for the business, not a sudden surge like Zoom experienced, for instance, but a good tailwind, but more along the lines of accelerating a trend that was already visible, and it just made it better. Great. Thank you. Keep up the good work, guys. Thank you, Andy. Appreciate it.

Our next question is from the line of Joshua Tilton with Berenberg Capital. Please receive your questions.

Hey guys, thanks for taking my questions. The first one, and apologies if I missed this, but in regards to the term contribution, was there any meaningful contribution this quarter to license revenue from term?

Yeah, we had a fair amount of term license in the quarter in our new bookings. It's consistent with what we saw in Q2 and Q3 of 2020. There was strong customer interest in term license, and that's something we were comfortable with and capable of doing. And so, yeah, we did have term license contribution as well.

And then just to follow up on that, I guess some of the feedback that we've received from the channel is basically the on-premise business would have done even better in 2020 if there wasn't COVID. So given that you guys kind of gave us a similar message around the on-premise business going into 2020 last year, and then it obviously meaningfully outperforms. I guess what gives you the confidence today that this is the year of SaaS and that identity IQ is going to start to decline?

So there's kind of two questions in there, Joshua. One is confidence around identity now, and the other one, I guess, is confidence in a different sense around identity IQ direction. On identity now, look, we get the confidence from all sorts of places, but particularly starting with the product and its capability and the success that we've had selling that to and deploying with very large, complex customers and the feedback that we've gotten from them as they use the product. So, you know, it – You know, as Mark answered one of the questions earlier around SaaS, you know, is it the market, is it the product, is it the, you know, is it your confidence? It's all of those, right? And so I think, you know, all those together tell a story that makes us very confident that, you know, last year was a year of SaaS, like the acceleration that we saw in the SaaS business, you know, relative to historical trends was certainly there. And I think this year will be another year of SaaS. Now, the question around identity IQ is a little bit different. And last year we had, you know, sort of the dynamic that the pipeline going into the year was built during a time when SAS was not, you know, the lead product for us. And even during the early parts of 2020, it did not have the sort of level of confidence around SAS that we do now. confidence and identity now that we have currently. So, you know, what we closed, even at the end of the year when our confidence level was really high in SAS, what we closed was built during a time when that wasn't necessarily the case, right? And so, you know, I wouldn't take last year's results as indicative of the direction that identity IQ was going. As you look at this year, we've given you the guidance of what we believe is going to happen. This is not hedging one direction or another on the mix of Identity Now versus Identity IQ. Look, our pipeline, as you would imagine, going into the year and throughout the course of the year, is larger than the bookings we need to meet our expectations. And within that pipeline, there's both SaaS and on-prem software. it can always happen that the mix ends up shifting one direction or another based on that pipeline and based on the new pipeline that we built throughout the year. But our current expectation is for what, you know, for what we've guided to. And then long-term, you know, as I think I said to Tom's question, look, we believe that the identity IQ portion of our business will be declining. Now, it'll be there, we think, for as far forward as we can see at this point. There will be some portion of our new bookings and some portion, obviously, of our install base and recurring revenue base that's identity IQ related. But not only is that a smaller piece going forward of the business every year, but we believe it actually will be declining year over year as well.

Thank you very much. Look forward to tomorrow. Thanks.

Thank you. At this time, we've reached the end of the question and answer session. I'll now turn the call back to Mark McLean for closing remarks.

Well, again, thank you to everyone. We anticipated tonight might be a little trimmer because we've got a full day or half day, I guess it is roughly, planned with you all tomorrow and those that can join us. Appreciate those that could dial in tonight for sort of the quarter-end and year-end results, but we'll look forward to a much deeper, longer conversation tomorrow. Thanks for taking the time to join us tonight, and we will talk to you tomorrow, those who can join us. Thanks again.

Bye now. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.