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ForgeRock files for IPO as identity and access management business grows
ForgeRock filed its form S-1 with the Securities and Exchange Commission (SEC) this morning as the identity management provider takes the next step toward its IPO.
The company did not provide initial pricing for its shares, which will trade on the New York Stock Exchange under the symbol FORG. The IPO is being led by Morgan Stanley and J.P. Morgan Chase & Co., with the company being valued as high as $4 billion, according to Bloomberg, which is a significant uplift over the $730 million post-money value that PitchBook had for the company after its last round in 2020.
With the ever-increasing volume of cybersecurity attacks against organizations of all sizes, the need to secure and manage user identities is of growing importance. Based in San Francisco, ForgeRock has raised $233 million in funding across multiple rounds. The company’s last round was a $93.5 million Series E announced in April 2020, which was led by Riverwood Capital alongside Accenture Ventures. At that time, CEO Fran Rosch told TechCrunch that the round would be the last before an IPO, which was also what former CEO Mike Ellis told us after the startup’s $88 million Series D in September 2017.
While the timing of its IPO might have been unclear over the last few years, the company has been on a positive trajectory for growth. In its S-1, ForgeRock reported that as of June 30, its annual recurring revenue (ARR) was $155 million, representing 30% year-over-year growth.
While revenue is growing, losses are narrowing as the company reported a $20 million net loss down from $36 million a year ago. There certainly is a whole lot of room to grow, as the company estimates that the total global addressable market for identity services to be worth $71 billion.
Among the many competitors that ForgeRock faces is Okta, which went public in 2017 and has been growing in the years since. In March, Okta acquired cloud identity startup Auth0 for $6.5 billion in a deal that raised a few eyebrows. Another competitor is Ping Identity, which went public in 2019 and is also growing, reporting on August 4 that its ARR hit $279.6 million in its quarter ended June 30, for a 19% year-over-year gain. There have also been a few big exits in the space over the years, including Duo Security, which was acquired by Cisco for $2.35 billion in 2018.
“ForgeRock has a good access management tool and they continue to be a strong player in customer identity and access management (CIAM),” commented Michael Kelley, senior research director at Gartner.
Kelley noted that in 2020, ForgeRock converted most of its core access management services to a SaaS delivery model, which helped the company catch up with the rest of the market that already offered access management as SaaS. Also last year the company expanded into identity governance, introducing a brand new identity, governance and administration (IGA) product.
“I think one of the more interesting products that ForgeRock offers is ForgeRock Trees, which is a no-code/low-code orchestration tool for building complex authentication and authorization journeys for customers, which is particularly helpful in the CIAM market,” Kelly added.
ForgeRock was founded in 2010, but its roots go back even further to an open-source single sign-on project known as OpenSSO that was created by Sun Microsystems in 2005. When Oracle acquired Sun Microsystems in early 2010, a number of its open-source efforts were left to languish, which is what led a number of former Sun employees to start ForgeRock.
Over the last decade, ForgeRock has expanded significantly beyond just providing a single sign-on to providing an identity platform that can handle consumer, enterprise and IoT use-cases. The company’s platform today handles identity and access management as well as identity governance.
The ability to scale is a key selling point that ForgeRock makes in the S-1, noting that its platform can handle over 60,000 user-based access transactions per second per customer.
“As of June 30, 2021, we had four customers with 100 million or more licensed identities, the company stated in the S-1. “Our ability to serve mission-critical needs in complex environments for large customers enables us to grow our base of large customers and expand within each of them. “
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Private equity firms can offer enterprise startups a viable exit option
Four years ago, Ping Identity was at a crossroads. A venerable player in the single sign-on market, its product was not a market leader, and after 14 years and $128 million in venture capital, it needed to find a new path.
While the company had once discussed an IPO, by 2016 it began putting out feelers for buyers. Vista Equity Partners made a $600 million offer and promised to keep building the company, something that corporate buyers wouldn’t guarantee. Ping CEO and co-founder Andre Durand accepted Vista’s offer, seeing it as a way to pay off his investors and employees and exit the right way. Even better, his company wasn’t subsumed into a large entity as likely would have happened with a typical M&A transaction.
As it turned out, the IPO-or-acquisition question wasn’t an either/or proposition. Vista continued to invest in the company, using small acquisitions like UnboundID and Elastic Beam to fill in its roadmap, and Ping went public last year. The company’s experience shows that private equity offers a reasonable way for mature enterprise startups with decent but not exceptional growth — like the 100% or more venture firms tend to favor — to exit, pay off investors, reward employees and still keep building the company.
But not everyone that goes this route has a tidy outcome like Ping’s. Some companies get brought into the P/E universe where they replace the executive team, endure big layoffs or sell off profitable pieces and stop investing in the product. But the three private equity firms we spoke to — Vista Equity, Thoma Bravo and Scaleworks — all wanted to see their acquisitions succeed, even if they each go about it differently.
Viable companies with good numbers
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Ping Identity files for $100M IPO on Nasdaq to trade as ‘PING’
Some eight months after it was reported that Ping Identity’s owners Vista Equity had hired bankers to explore a public listing, today Ping Identity took the plunge: the Colorado-based online ID management company has filed an S-1 form indicating that it plans to raise up to $100 million in an IPO on the Nasdaq exchange under the ticker “Ping.”
While the initial S-1 filing doesn’t have an indication of price range, Ping is said to be looking at a valuation of between $2 billion and $3 billion in this listing.
The company has been around since 2001, founded by Andre Durand (who is still the CEO), and it was acquired by Vista in 2016 for about $600 million — at a time when a clutch of enterprise companies that looked like strong IPO candidates were going the private equity route and staying private instead.
But more recently, there has been a surge in demand for better IT security linked to identity and authentication management, so it seems that Vista Equity is selling up. The PE firm is taking advantage of the fact that the market’s currently very strong for tech IPOs, but there is so much M&A in enterprise right now (just yesterday VMware acquired not one but two companies, Carbon Black for $2.1 billion and Pivotal for $2.7 billion) that I can’t help but wonder if something might move here too.
The S-1 reveals a number of details on the company’s financials, indicating that it’s currently unprofitable but on a steady growth curve. Ping had revenues of $112.9 million in the first six months of 2019, versus $99.5 million in the same period a year before. Its loss has been shrinking in recent years, with a net loss of $3.1 million in the first six months of this year versus $5.8 million a year before (notably in 2017 overall it was profitable with a net income of $19 million. It seems that the change is due to acquisitions and investing for growth).
Its annual run rate, meanwhile, was $198 million for the first six months of the year, compared to $159.6 million in the same period a year ago.
The area of identity and access management has become a cornerstone of enterprise IT, with companies looking for efficient and secure ways to centralise how not just their employees, but their customers, their partners and various connected devices on their networks can be authenticated across their cloud and on-premise applications.
The demand for secure solutions covering all the different aspects of a company’s IT stack has grown rapidly over recent years, spurred not just by an increased move to centralised applications served through the cloud, but also by the drastic rise in breaches where malicious hackers have exploited vulnerabilities and loopholes in companies’ sign-on screens.
Ping has been one of the bigger companies building services in this area and tackling all of those use cases, competing with the likes of Okta, OneLogin, AuthO, Cisco and dozens more off-the-shelf and custom-built solutions.
The company offers its services on an SaaS basis, covering services like secure sign-on, multi-factor authentication, API access security, personalised and unified profile directories, data governance and AI-based security policies. It claims to be the pioneer of “Intelligent Identity,” using AI to help its system analyse user, device and network behavior to better identify potentially malicious activity.
More to come.
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Ping Identity acquires stealthy API security startup Elastic Beam
At the Identiverse conference in Boston today, Ping Identity announced that it has acquired Elastic Beam, a pre-Series A startup that uses artificial intelligence to monitor APIs and help understand when they have been compromised.
Ping also announced a new product, PingIntelligence for APIs, based on the Elastic Beam technology. They did not disclose the sale price.
The product itself is a pretty nifty piece of technology. It automatically detects all the API IP addresses and URLs running inside a customer. It then uses artificial intelligence to search for anomalous behavior and report back when it finds it (or it can automatically shut down access depending on how it’s configured).
“APIs are defined either in the API gateway because that facilitates creation or implemented on an application server like node.js. We created a platform that could bring a level of protection to both,” company founder Bernard Harguindeguy told TechCrunch.
It may seem like an odd match for Ping, which after all, is an enterprise identity company, but there are reasonable connections here. Perhaps the biggest is that CEO Andre Durand wants to see his company making increasing use of AI and machine learning for identity security in general. It’s also worth noting that his company has had an API security product in its portfolio for over five years, so it’s not a huge stretch to buy Elastic Beam.
With this purchase, Ping has not only acquired some advanced technology, it has also acqui-hired a team of AI and machine learning experts that could help inject the entire Ping product line with AI and machine learning smarts. “Nobody should be surprised who has been watching that Ping will drive machine learning AI and general intelligence into our identity platform,” Durand said.
Harguindeguy certainly sees the potential here. “I think we can over time bring a high level of monitoring and intelligence to Ping to understand whether an identity may have been used by someone else or being misused somehow,” he said.
Elastic Beam interface. Photo: Elastic Beam website
Harguindeguy will join Ping Identity as Senior Vice President of Intelligence along with his entire team. Neither company would divulge the exact number of employees, but Durand did acknowledge it fell somewhere between the 11 and 50 mentioned in the company Crunchbase profile. The original team consisted of around 10 according to Harguindeguy and they have been hiring for some time, so fair to say more than 11, but less than 50.
Harguindeguy says they were pursued by more than one company (although he wouldn’t say who those other companies were), but he felt that Ping provided a good cultural match for his company and could take them where they wanted to go faster than they could on their own, even with Series A money.
“We realized this is going to be really big. How do we go after the market really strongly really fast? We saw that we could fuse this really fast with Ping and have strong go to market with them,” he said.
Durand acknowledged that Ping, which was itself acquired by Vista Equity Partners for $600 million two years ago, couldn’t have made such an acquisition without the backing of a larger firm like this. “There was there was no chance we could have done either UnboundID (which the company acquired in August 2016) or Elastic Beam on our own. This was purely an artifact of being part of the Vista family portfolio,” he said.
PingIntelligence for APIs, the product based on Elastic Beam’s technology, is currently in private preview. It should be generally available some time later this year.
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Ping Identity expands mission to customers with UnboundID acquisition
Ping Identity announced its first acquisition since being acquired by Vista Equity Partners in June for $600 million, grabbing Austin-based UnboundID for an undisclosed purchase price. The purchase, which Ping CEO Andre Durand says wouldn’t have been possible before the acquisition, expands his company’s mission beyond protecting pure business identity to customer identity and… Read More
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Ping shapes new identity after $600 million acquisition
When I walked into a conference room last Tuesday at the Cloud Identity Summit in New Orleans to interview Ping Identity CEO Andre Durand, it was my first chat with him since the company had been sold the week before for $600 million (as reported by The Information), a tidy exit for the 14 year old company.
I had questions, lots of questions. After all, in conversations with Durand and CFO… Read More
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The Enterprise Silo Problem Stubbornly Persists
I’ve been writing about the enterprise for a long time, and back in the day when I was covering content management, there was forever talk about busting down content silos and putting the content to work across the company. It was a nice idea, but in practice it rarely happens. What I learned this week, as I attended the Cloud Identity Summit in San Diego, was that identity was also… Read More
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New Ping Identity Platform Includes Apple Watch Authentication
Ping Identity announced a platform approach to identity management today at the Cloud Identity Summit in San Diego that includes the ability to get your second authentication factor using an Apple Watch.
The idea behind the platform is to put identity at the center of the security model and enable users — whether employees, partners or customers — to have access to applications… Read More
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