Software Sector: SailPoint Adds AI ARR, Renewal Cautions Persist
SailPoint expanded its recurring-revenue definitions, and software providers retained explicit limits on those metrics and warnings about cloud adoption.
The SaaS subscription provider SailPoint, Inc. (SAIL) expanded its disclosed recurring-revenue definitions in September to include “AI-driven ARR,” covering its Agentic Suites, SailPoint Agentic Fabric and Agentic add-on modules. The company said the measure had previously been called AI ARR at its June investor day. Its definition includes expired contracts under active renewal or replacement negotiations until the customer gives notice of nonrenewal.
SailPoint retained that same treatment for SaaS ARR, together with its June qualification that ARR “does not have a standardized meaning” and is not a revenue forecast. Rubrik, Inc. (RBRK), which reports subscription and cloud ARR, also repeated its June limitations in September. Those metrics exclude anticipated reductions from nonrenewals or service cancellations and rely on internal, unaudited data from nonfinancial systems. The additional AI category at SailPoint accompanied continued qualifications about what recurring-revenue measures capture.
Other providers maintained an explicit predictive role for ARR. The software subscription provider Bentley Systems Inc. (BSY) continued to describe ARR, considered alongside its recurring-revenue dollar-based net retention rate, as a “leading indicator of revenue growth” in May and August. Its calculation includes annualized recognized revenue from the preceding three months for certain consumption-based subscriptions. The software subscription provider Vertex, Inc. (VERX) also retained its description of ARR as an indicator of future subscription revenue, using the most recent month's recurring subscription revenue as its calculation base.
The enterprise-software provider Rimini Street, Inc. (RMNI) reported annualized recurring revenue of $413 million at June 30, compared with $401 million at March 31. Its revenue retention rate also increased between the March and June trailing twelve-month periods, reaching 90% in June. The company continued to present recurring-revenue figures excluding support for Oracle PeopleSoft products in both periods, preserving that distinction as the reported measures rose.
The commerce platform operator Commerce.com, Inc. (CMRC) reported net revenue retention of 95.8% for the trailing twelve months ended June 30, compared with 95.4% at March 31. Its retention calculation uses billings and allocated partner revenue from the same customer cohort across successive twelve-month periods, excluding customers added after the earlier period. Commerce.com also retained its Subscription ARR definition, which includes platform fees, invoiced growth adjustments, feed management subscriptions and recurring professional services.
Cloud adoption remained an explicit condition for future growth. The cloud-software provider Guidewire Software, Inc. (GWRE) repeated its June adoption warning in September: market acceptance had increased, and further expansion among existing and new customers remains necessary. Cost, security, reliability, customer preferences and restrictive regulation can constrain that expansion. Adoption or renewals falling short of expectations could reduce purchases, renewal rates, ARR and revenue.
The software company Autodesk, Inc. (ADSK) described a concrete gap in its migration strategy. Sales of AutoCAD, AutoCAD LT and individual flagship products had at times decreased without corresponding increases in Industry Collections or cloud-functionality revenue, or purchases of Industry Collections seats. Autodesk is taking steps to accelerate customers' expansion into broader offerings and cloud functionality, and says continuation of that gap would adversely affect operating results.
Autodesk also warned that subscription revenue recognition can delay the financial effect of weaker renewals. Most quarterly revenue comes from subscriptions entered into during previous quarters, with contracts typically lasting one to three years. A decline in new or renewed subscriptions may therefore reach reported revenue in later quarters; significant downturns in sales, market acceptance and changes in attrition may take future periods to be fully reflected in operating results.