FORG - Earnings call transcript Q4 2021

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Operator

Welcome to ForgeRock's Fourth Quarter Earnings Conference Call.

As a reminder, this call is being recorded. I would like to turn the call over to Mark Kang, ForgeRock’s Head of Investor Relations. Please go ahead.

Mark Kang

Hello, everyone. and XXXX QX conference ForgeRock’s to full earnings year call. Welcome

EVP are call our CEO and with the Fran Chief Global me Officer Fernandez, On John today Rosch, Operations. and of Financial of ForgeRock

begin, includes statements securities today laws. we our the meaning forward-looking I’d you within remind Before that to discussion of the federal like

XX-Q our We market customer results those in enhancements offerings Forward-looking factors could differ statements our indicated by to indicated SEC are actual on statements. the November factors slides including on full non-GAAP for related reconciled included XXXX statements other current of that, to those and report hand matters. All today’s filings, future our cause results, offerings, that to for could our press the XXXX our from website. expected year and by quarterly filed call differ for on Actual offerings to to Fran. I Investor risk with available materially release some With these encourage the will over the have include SEC from demand forward-looking to numbers offerings Relations forward-looking our review Form in we results results and statements. XX, our referenced in our that our you for call and QX

Fran Rosch

a was for ARR record that ARR earnings a our in quarter. public as and ForgeRock a call off company. acceleration thanks second a net and amount our Mark was momentous joining new rate, Thanks, year for everyone with generated growth XXXX of in capped strong

the growth sequential XX% in acceleration in in QX Our compared fiscal XXXX, QX XXXX. XX% a and ARR of significant XX% to grew

win ARR driven demand enterprise most for are by and demanding business are for to many as platform, that results ForgeRock to we said, we the of largest consistent we continue would strong to is world's an represented are Our acceleration record ForgeRock our year-over-year. our bringing added to grade the identity and of growth today, seeing rapid product for total the SaaS our SaaS market at in with representing traction expectations. availability. XX% number we $XXX,XXX Identity offering QX, large in Adoption of first of of exceeding our ARR to or pleased XXXX. We greater XXX, This the customer enterprise customers offering total XX% Cloud full a Cloud of enterprises. the of Identity end provide strong underscores ForgeRock around SaaS after its adoption and ARR year announce disclosure We that fit previously

supports momentum in achievements XXXX, raised our and Our ForgeRock into heading we've the growth. the XXXX for view bar that

we ARR We are can to in potential north XXXX further acceleration of with continue in grow this our the market. exciting confident XX% for

platform demand our is have and We than enterprise platform identity a the for leading stronger ever. built

$XX plan our platforms gains. our homegrown a across huge market point solutions to workforce strengths and to identity, plays We replacement massive and and market a All also this CIAM, IoT opportunity. contributes share billion where and platform legacy represent

key four the of highlights want revisit growth. quarter, some into diving of of drivers I Before to the our fourth

As we market growing and the to identity. dynamics see XXXX, to look continuing for core these market on larger and ahead we is to capitalize share, our gain strategy,

we have have this We purpose Are made a What platform lifecycle. identity for do the omni-channel personalized and identities, differentiated? with companies seamless First, enterprises built the to for employees, one platform solutions. experiences. and easy we internet priority. We customers partners, cover scale for makes platform multiple don't it have point our cobble deliver that at right and our digital top And broadest consumers, to make IoT. together for all transformation enterprises,

Our of it. unified the takes platform complexity out

choice want solution. deploy IAM companies their where they many Second,

the or full SaaS serve to in ability to self-managed, hybrid address market. customers really us a Our environment enables

control enterprise Third, architecture, customers why reason for expand ForgeRock. we their high increasingly more an globally. enterprise give a Fourth, with choose is customers growth on important customers have and attractive resides, becoming our performance for where SaaS data land We is and differentiated key a over scale, focus data security which opportunity.

being new recognition. our productivity is acquisition product customer driven New increased and engine, by industry -market innovation, go-to analyst’s of

to Our validation expand to past, have you convert product industry driven opportunity is may [ph] research. manage from customers existing We've opportunity mention In by heard And Triple customers cases the to Crown. more Identity at use Cloud. modules. the our we big self being and receive continued third-party identities, have us the ForgeRock a

provider for CIAM. identity the Gartner's and only by for leader ForgeRock access to management, continues recognized as a KuppingerCole be Forrester,

recognition Just is and market earned a and highest has months many analysts report, best for at are across leading our the several which platform When excited with XX published heart of Gartner Management, ranked three a you ago, a that report culture, deep a Capabilities platform. Customers workforce, application categories share new combine identity to ForgeRock Access scores the wins over companies. Critical past notable CIAM, few quarter. which review the believe of all we identity year. the in are are technical called the I'm We positioned market for in are we the from development,

offering. providers to calls and the with selected momentum as Healthpartners use saw to partners community. care efficiencies drive for its opportunity Nationwide organization health architecture, unique health to leverage and consumer business, eliminating seeing that and customers new partnership Health is ability members, the an at improve and Identity address and ForgeRock the reducing specifically the Society, patients mission look largest features a wellbeing its take to the well such a experience net HealthPartners in non-profit in and helpdesk identity duplicate improve governed, rapid innovative driving ForgeRock's grow with as such accounts. as enhancing Cloud, due HealthPartners and HealthPartners user success. Building members cases, SaaS with to we're Both let's are in us. for First, our US

for QX. the UKs with others of one is of providers Society UK. and mortgages selected its and ForgeRock organization our both it the Identity and banking banking Nationwide Cloud building Nationwide savings million improves essential enhances deal, mortgage and across close people members, largest HIPAA compliance retail accounts and helping current this Our is authenticates XX divisions, mortgages, well largest as Building divisions. its to as the it how as in in

connects XXXX unified countries, Our SaaS SaaS next this that to customers payments payroll, end-to-end including for service, pay employee of financial have examples manage existing The on-demand offers With SaaS pay platform. to over company a including Visa, companies our great global to our more Intuit. customers and in payroll company few of all are offering, processes, XXX part migrate services software as initiative. than Medtronic and decided

while to on-prem its is their the ForgeRock's phase applications solution a to and to to of hybrid to expects more for As and identities has customers of operate XX,XXX all and decision A employees, continuing or a not TCO ForgeRock confident address the choose expand, parallel patches ability XXX,XXX customer ForgeRock cloud ForgeRock's company the to continues functions. performance reduce their company minimize overhead to upgrades, during scalability, When simultaneously customers. the fourth since impacting for security Cloud, Identity for transfer meet managing user SaaS broaden on-prem and business and migrate transition customer The and TCO for company and employees in With cloud IAM. to reduce automation to challenges requirements. their applications its offering. the in example, also lower reduce has Identity the was support and cloud through nearly a influence to ForgeRock's typical and been its migration existing in than company's looking been the to and model to This to capabilities XXXX, chose Cloud based decided with it ForgeRock's more ability the support customer risk experience running ForgeRock to environment. needs

that proud of extremely the world's customers significant banks We largest are became of QX. in two announce ForgeRock to

CA highlighted cases. enterprise and consumer order particular customer platform. This model stable of exhaustive its that migrate to earlier. industry business infrastructure, the the because very the deliver fraud, fifth ease and reduce experiences of complex of an compliance, user platform leadership. customer strength to and ForgeRock needed identity innovations their exceptional bank selected the with needed provide of flexibility, for our to and a use large base That's improve to custom-built this regulatory I off our multiple For banking chose continue this This ForgeRock banks devices Siteminder reasons flexible provide their key the more and with market, large, our example, legacy customer for to for review maintain in deployment customer to security

First, deployment our across of complex ability to customers give environments. choice

CIAM. in leadership Second, our

largest without world's on that Third, scales using code, our frictionless the the our to customers meet enterprises. for fourth, experiences demands compromising and the full our ability identity design code no to And platform reduction. identity trees, fraud identity low of security suite

the For was was globe the visibility next regulatory its and process significant time employee and help and replace of needs to example, with same thousands is process enterprise customer baking plan provision of governance across support which realize human identities. with next. and all reconcile our hundreds onboarding of and the solution to in manual, will customer the of chose millions Initially, with for to to help They identities costly. This selected order business. ForgeRock compliance. to existing the savings extremely address of customer applications applications. this Streamlining customer Currently, of ForgeRock ensure is ForgeRock consuming identities lines the non-human employees identity improve cost

businesses. autonomous the offers roles Emeritus purchased following services during individuals, and our seeing financial Like the time-intensive, entitlements was services managing as wide example also manually, identity and which traction and families and range AI customer refer we are products insurance of with a is And ongoing quarter. [ph] to is many identity. financial and autonomous organizations, Emeritus offering, costly. We a to an which that of

rapidly weeks. assessment quickly produce order the In less company identity data. clean its two show ForgeRock was efficiently able how more with in Emeritus to than could autonomous an and to

QX, automating value a was and make helps by in way before. in risk. or value This time This an the of helps identity, identity as lower such great example the AI standards high capability OAuth resilience, much automated making with leading powerful advancing our Connect. risk on the focused more impressed analyst a customer data capabilities money across platform identifying our low, I Specifically, and We relationships offering, couldn't these more be with IAM the labeling and new making. wins as provides of industries. over identity, on decision OAuthX, at in medium self-manage autonomous trees faster Emeritus and supportive scalability and [ph] market them time XX as to and excellent even Emeritus OpenID decisions pleased identity our which large orchestration features and our to is as SaaS organizations save and of well deepening autonomous broad range than which SaaS by and released

are our and Looking AI ahead XXXX, in areas of pace we of innovation to SaaS. extending

will fraud and improving time the at identity same We are months. several AI-driven It middle success a our IPs, building users. attempts, legitimate credential and on identity in of our travelers, the customers autonomous phishing the gives governance AI-driven third the XXXX, bots, into access will large in into users We're because to features solution cloud actors identity compliance scores been jobs we innovating choose identity bad year it identify attacks, we'll guidelines. regulatory help architecture and the lifecycle product, and to identity we've be security enterprise management, next account and and governance processes, possible that order they and solution a governance, fraud time modern in need real converged introducing suspicious stuffing, for the stop release their automates ForgeRock Cloud ensures to our native the man with used signals now protection XXXX, at users a experience the needs. will solution commonly Since new Later Identity in provides and takeover while risk existing having identity to of perimeter. MFA of the in solution. do management, our access a and scale Core

call want I four John, in Before to our of beyond. over revisit the drivers growth XXXX turn and I to

and growth us. large will extremely are for the enterprise-grade identity, ARR durable market which well continue on sustainable opportunity We positioned to capitalise for to drive and growing

platform right the First, of we have types identity. for identity for enterprises all modern

our give of choice. deployment Second, we the customers power

our opportunity growth. market growth in Third, combination. our to differentiated platform the fueling a And is SaaS is land expand us our dynamics business best fourth, go tremendous that attractive which organization, architecture. give confidence and we These winning a have supported class [ph] four by right

Our bar XXXX our growth. this our in the achievements view and we for momentum year fiscal supports that into heading raised

company. north further of to scale grow XXXX, we even as expect our XX% in ARR We

We market. are leader in this massive

the With business to call have partners in turn gain more to our right further and that, John? results of people We and detail. through I'll the walk the John platform, to continue technology, acceleration over our market share. financial

John Fernandez

Thank a fourth operating year our you, high Total our revenue public that quarter million, Fran. a XX% as I'm results $XXX.X was pleased ended last note. all year-over-year negative for to metrics. to XX% our from guidance increase XX% of announce across year our and on the first We negative company an non-GAAP improved year-over-year, year. margin exceeded

performance, which impacted our our metric our I self-managed ARR normalized ASC versus as adoption, is we and are and of results is get numbers revenue deals upfront grow appropriately from focus business. quarter, especially the revenue. business ratable revenue measure to the especially ARR. our XXX, this, revenue growth that recognized the by on recognized rapid business which best remind SaaS Due believe by as that the amount we experiencing Before for SaaS ratably I is rapidly to growth we into want its to run we you It's our

XX% As ARR year-over-year. end of was up of the QX, million $XXX.X

and of represented at Our enterprise Identity full of existing new the new new rapid greater first QX. and than was remains quarter new more in identities, SaaS XX% ARR in strong self-managed new coming purchased ARR giving this customer customers discussed of who this customers year, XX%, our ARR with large customers to adoption QX, customers new growth QX. QX our to end our XX% or SaaS our It of quarter, SaaS of the same new who ARR versus ARR. the was from offering more value offering, QX. product Average SaaS SaaS customers SaaS of ARR SaaS more and purchased for SaaS ARR after such year within saw our lower the ForgeRock of traction from more and chose the market choice more choosing percentage who QX customers SaaS purchased SaaS product The availability. SaaS customers XXX,XXX. XX% see in its existing our as of and software great is strong through cases, In in that modules, Fran offering earlier, offering, versus customers driven At some which use from customers expansion This banks base, have we our deals our offering. self-managed Cloud this and quarter resulted a including by SaaS XX% fit time, purchased new and large from demonstrating compares or our

world's that We includes continue very customer to a base the grow of many leading strong brands.

our Our defined identities. large QX leverage over ARR manage or billion customers, customers greater. software XXX with X as to with We of XXXk customers ended

QX, our versus our XX% the of of end year-over-year, ARR as Our of acceleration large and an large customers QX. XX% represented grew base customers

rate consistent at remained for QX net retention XXX%. Our

$XX.X for Also we million, in land revenue with several over new tend has relative of QX ARR higher Total XXXk year-over-year. average ARR new of new new to on quarters, in from new mix customers an larger for to a that due of the the basis. Our increase was acquisition increase ARR, logo exceeded XX% XXXX customers. past been customers demonstrating an

maintenance QX. of of to support our XX% year-over-year support revenue total revenue subscription our business and SaaS in outpace maintenance revenue represented As license. to XX% we Subscription and our transition in SaaS subscription grew growth more the we expect meaningfully SaaS, and

only compensation discussed to point out Non items, restructuring GAAP be to in turning XXXX. non-GAAP charges forward. impairment I discussing periods that stock will going all I'd like exclude results and for results based expense profitability Before and and

reconciliations release QX press results was gross Our was gross million non-GAAP and contains our and $XX.X results. our GAAP margin XX%. to profit

cloud increase As to will in see investment infrastructure continue higher in we incur we hosting and costs. our offering, SaaS scale

Turning compared QX QX percent in primarily represents for marketing to now This of expense revenue year. $XX.X $XX.X compared and in XX% last million, XX% represents million revenue to last productivity. of in was for XX% of was to in last compared Sales QX expenses. year. The R&D total by driven an QX million QX to revenue year. total versus improvement This increase of $XX.X XX% sales QX $X.X million QX was in for in expense of last year. QX operating

believe our We without We enterprise journeys, focused areas our and learning will in to QX XX% leadership SaaS versus in machine security. G&A $XX.X products offering, on capabilities, year. our revenue and compromising create investment AI last million, differentiation product continue of XX% was in experience advancing in innovation our empower million to market trees as and identity. $X.X QX cement G&A the expense to greater continued identity orchestration customer invest in that was of revenue our further year. compared our customers such last

Our expenses of negative to we $X.X negative in margin XXXX, in versus Operating QX year a XX,XXX versus points loss XXXX. to below for ago. year public XX%. in primarily But of incur year to our million improved XX% the increased was company percentage year-over-year G&A just Operating loss breakeven that full began XX QX margin ago. expenses new a due QX was a

million sheet, to Turning the we cash, ended $XXX.X cash quarter and in balance the securities. marketable equivalents with

of platform, to business our XXXX. We technology, in are at confident we the our growing that and we people rate continue XX% future. And market ARR believe we opportunity in the rate a this can north have grow at

to managing our are profitability, growth. while bar our path for raising also We

term, product, operating our leverage, technology progress annual linear our for priorities expect a and are quarterly basis. our XXXX go-to-market in including be in not though that on investment Our and demonstrate may Longer organization. to areas we key drive improvements growth,

I'd the for for fiscal performance to turn XXXX. some provide we guidance, Before our comments like expected

and revenue. SaaS revenue, exceed For SaaS ratable our our growth to continues is our expectations, revenue

As see business support of we variability to term growth. you in SaaS, our our will outpace revenue license SaaS maintenance revenue growth shift our more revenue, meaningfully should as our

of revenue second ending half XX% growth ending to in In We be to XX% expect begin ARR. we ARR XXXX. to of the reaccelerating XXXX, SaaS expect [ph]

approximately we revenue the XXXX of in seasonality, XX% expect half the In year. terms of currently second revenue of

we margin, XXXX with remain operating relatively consistent XXXX. For expect to

business invest as our in our operating in confident are the profitability, We business on to is of XXXX. path we growth core even in

We a XXXX, the the of and for margin operating expect half non-GAAP be annual XXXX to perspective in second from profitable period.

quarter For share expect outstanding $XXX million the total of year-over-year million. net average of loss weighted operating and the $XXX $X.XX, to to XX% midpoint. loss growth shares million million first of we at representing to per non-GAAP $XX ARR XXXX, million, approximately to of Total million revenue of $XX.X assuming million, of $X.XX ending non-GAAP $XX.X $XX $XX.X

share my assuming $XXX For to total concludes loss closing at of $X.XX of Fran? year-over-year and for remarks expect revenue representing the million, midpoint. average million, million. per $XX year operating back That non-GAAP approximately $XX of to million full loss $XXX million now $X.XX, for of to net Fran $XXX XX% outstanding semi-weighted we Total XXXX, of the I'll $XXX turn non-GAAP to million growth shares to QX. ARR And $XX call the remarks. million,

Fran Rosch

grow bar metric And approximately which I'll QX Thank XXXX, our XX% XXXX. points as for had company consensus. open the raised our XX% current the percentage is measure in it's of we QX. we you, an our We've We for above business our And guidance amazing midpoint my Q&A. Sass points ARR X expectations to our in business. we performance, We XX% our final close ARR growth as accelerated growth And by best growth from of on on run ARR. John. the rapidly before with especially to

with Our year questions. now the SaaS our to to we And expectations. business expect for XX% XX% SaaS continues to call exceed of may end Operator, you this ARR. open

Operator

caller take Stanley. from Hamza Fodderwala with [Operator Morgan Instructions] Thank you. first We'll our

Hamza Fodderwala

evening… Hey, Good guys.

Fran Rosch

Hamza. Hello,

Hamza Fodderwala

taking Thanks for doing? you question. my How are

Fran Rosch

Great.

Hamza Fodderwala

So for you. Fran, maybe first question

that expecting. little QX, in growth of bit lot kind last and strong, just It three outlook if your you ARR stronger a the the really inflected environment us a you're look think broader you seem things know, at demand could like seeing. about I'm were a and I if than enterprise in peers. curious talk the months, of to does I six was You

rather? how you So a the just comment ARR more over confidence bit XX% that for next you growth could have that gives things curious for little year, guide year, trended if and recently this or on to pipeline, this

Fran Rosch

Yeah, the have that thank of that, ARR feel to great very is everybody see work and And lot it acceleration company driven guide for by things. you. to do it you two hard certainly get by of know, and And proud in was there. we XXXX. in a that And really confident we

is digital been demand, I going long the think, a transformation on time. general market obviously for

accelerated more I of remote doing financial everything in workers almost gone digital. is worker. every has everything services, think COVID, are consumers really a and where it And healthcare, terms become more Banking, online.

seems workforce, cloud, have to our lot identity we're by So uniqueness for platform lifecycle, and think a that I driven doing unique seeing single also platform. But pipeline. we're single taken for ability demand. work to by resonating. is market The the and our to of technology in on the AI the think, external really consumer we've approach platform be the our the of IoT, full I driven this it's enterprise And

completed So the is year. combination we there's guide our the the in that's market technology confidence last as as factors, advancements a driving and which our well

Hamza Fodderwala

strong were surprised then more you versus surprised were just growth the which It And the But was one if that in board. we I most? think than the like across guess seems about CIAM, just to you other? workforce there ones things

Fran Rosch

across in in strong as We was well it saw that really workforce. both. CIAM, growth strong think I know, You

continue trends ForgeRock a leading well-known. and you think opportunity, had We market that really little really bit is more that's think CIAM, of know, great we see platform. technology. great I to I really in CIAM a the And landing

kind on our land of cross-sell ability we're workforce a So side. to that of upsell lot there. And seeing and then

and the a fastest AI So governance, of work it I governance think smarter done pattern. the make actually done part work But that's we've of we've around really was there. the that in growing our the in to to portfolio kind bring solution,

can we shared we've our really and CIAM past, across single both. And as really see that the converged identities. we world to or A their really that, one because see in other. purpose manage we're workforce. other customers built So of we're in multiple with where as of good the use are enterprise maybe looking of us separate the And all or lot don't for products many platforms where the growth this course, that's for two a unique, really market, really, platform know, you started

So it's really both.

Hamza Fodderwala

you. Thank it. Got

Fran Rosch

Thank, Hamza.

Operator

move And Mizuho. you. Thank we'll with Gregg to on next, Moskowitz

Fran Rosch

Gregg. Hello,

Unidentified Analyst

Mike actually it's just Gregg. taking a taking, off… guys, for Thanks questions. the Maybe for Hey, start on

Fran Rosch

Mike. Hi,

Unidentified Analyst

business, to current shell locked Ukraine or invasion? impact [ph] as it know, relates or expected any and your or the You from

Fran Rosch

know, our that you and So, events, you we've to just people in know, certainly, involved them, go and all unfold resolution AV quick I those take the of [ph] to Ukraine, watched that. are you you for, hearts are know, know, the really hoping all that, two think, out in

partners that's don't big employees customers, on our either have So We that kind We or of Ukraine any a see or Russia. don't impact in business. perspective. or

don't we business. at our see So impact any on direct all

of conflicts. these countries between and bombs. has cyber you know, big this highlighted part are has tanks about, just But longer conflicts think really become no that, I a clearly,

continue a a security, got is that. so reminder invest big customers, to to and identity and ourselves to that in as to they've part And our of

our our ensure this environment platforms, they're with So the kind we're ForgeRock and the we value of to that full customers own security, in that working getting have. course, and looking, capability beef to of up of

perspective on So kind of our that's that.

those on and - as impact have our impact, we in vulnerabilities, business and far As no our material other services. and as little very products

of So with kind appropriate, and customers as our we've moving forward. communicated are

Unidentified Analyst

you. the go-to-market then follow making strong sales are initiatives your know, Got for guide. in broader any to my maybe to incentives, you or, to up, ARR Thanks. And helpful. you see That's I changes XXXX? guess, good

Fran Rosch

making not changes. We're any big

architecture and customers, keep customers focused team traction new whether to really brand a of sales our SaaS, that that expand or SaaS and pleased continue on to comes the focused see is as Our cross opportunity From new cover to the on hear unique forward. existing portions our of we're want we'll going we resonating sure that really that you all choice. to continue that really ForgeRock option market. have that private the know, both and in still that make customers or with from you [indiscernible] know push run want or and But upsell, we we're land customer cloud SaaS, in that. platform on and ARR, market either the so our We we're choice

kind So customer a more choice of a making really of ForgeRock. versus

Unidentified Analyst

All right…

Operator

you. Thank

Deutsche Patrick take we'll Next Bank. Colville with

Fran Rosch

Patrick. Hey,

Patrick Colville

mean, so is where healthy question strong and fiscal guide, Thank about great so 'XX very for on ARR, question taking you your the was, see to above and that. the I the congrats much My [indiscernible] really I and so to inaugural think that year. IPO

with is Just just sequential 'XX fiscal it I conservatism. you how fiscal layer of is 'XX if seen on a I guide. conservative rates of we've you in ton that ask to know, guys And the being kind reason the growth

us please? that kind help just facet So understand of

Operator

One please. moment,

Fran Rosch

you Operator, can hear us, okay?

Operator

can. proceed. I Yes, Please

Fran Rosch

issue. an Okay, audio we're having

going we're to mind sorry. switch you So I'm to us hear here. other over our question? Can Did repeating now? the guys do Patrick, line you

Patrick Colville

Of course. Yeah.

strong definitely above I bogey for I 'XX the community. investment and on was a think was So guide of where what very XQ the really healthy ARR, kind on a congrats guess, fiscal

question guess to is, is very that level the of of my what is baked kind see. that's I So conservatism forecast? into that positive

Fran Rosch

half our we six You start And, greater and and the In year, year. look of than know, I good think pipeline look we MAs We we XX XX had good feel really latter confident had We the in we’ve the months, growth primarily. [ph] guide XX. given. productivity. our pipeline growth. the and at of year, of the categories to zero And at pipeline to at MA our look we into that six

for of cohorts, one a our pretty in MAs graduating cohorts. good how what their have productivity each are those those We is feel into

know, gives to you that period. also seeing information productivity us of we're great our functionality improved throughout lot continue that the of think great it's pipeline, this you We're And that confidence releasing of, It's, we course, matter a [ph] guide. year, that really year. help in the seeing we'll guys drive go in growth. new market. trade really a of market a update We're engine. us we So will early to good But

it's factors give confidence So in us that that guide. many that

Patrick Colville

is investment last But suggests quickly? being much So, swung Great, levels and of If around the the second what's negative My very kind thinking you of the growth, community just fiscal XX, profitability the mistaken, high fiscal the over question you can XX% which on guys focus is towards you the that's I'm pendulum year-on-year. margin, guys more kind there? down know, you not - for line definitely helpful. metric top the a Would a know, quarter then are important first most looking kind year over at Thank showing. - is, operating very we of you. of profitability, is the given focus. slightly know, profitability negative you months, three

Patrick. throughout of Have right, I help the Fernandez got I of us is John just year? cut numbers, my [ph] that the Sure, in A that, John. investment? guess, arc - Sure. understand level terms why So This

So help. maybe a couple would comments

year of for midpoint know, QX about XX%. the is guide, losing profitability for And XX%. you midpoint So is the revenue

of through dynamics that play happening. we So a couple

we've we the rec, that a intended which positive for right company, growing right, is our what are around to execute upon. So first business SaaS rev huge, strong ratable foremost, and quickly exactly

And top end ratable said put more bookends less we'd We SaaS. the ended of being XX%. in is our impacted. the manage self XX% year more revenue around So couple at of that of We upfront. how line becoming a

So again, ratable rec. more rev

to was And recognized some important QX of XX%. second the QX, We got estimate the of we thought as you back the XXXX Also, and look end ARR which XX% in our XX% of also of revenue approximately guidance, ending at year. help at as originally we provide be SaaS. to at we're XX% we've the half end year, that'll year was looking now

as so to margin margin are on these this expect especially a be full temporarily first be half And margin profitable from impacted, to progress growth, step but making company's - the the that, cumulatively of around periods those, And annual huge take we're to non-GAAP ourselves we the operating that we top only out, not So the this the at factors operating but operating XXXX perspective promote the opportunities to obviously the look year, we take to Fran making plus look same line to XXXX, our for second year investments of in up of QX of I year, half, when in a touched the think we're to with QX this has some XXXX beyond. expect our one basis, support on really and ballpark along setting market. if in year, we operating to we're an all then other advantage be in further of and causing leverage,

Fran Rosch

growth invest of bar going continuing we said, to accelerating And, we're Yeah, raised as into that you really thanks, know, seeing company, growth. for that and the wisely continue to John. you

and scalability the suite in drive bringing continue [ph] cloud. innovation, investment the to more full around, of and know, around terry's more know, you the So technology, governance to cloud, things product you AI

a So leverage, gen. market. partner so sales mentioned, teams, be our things our or team, lead and we'll we're of investing seeing scaling in go lot to investing, John or marketing improving there be

So drive it's balanced to continue kind to of a the growth. approach

Patrick Colville

Thank questions. All much you for right, taking that's very clear. my so

Fran Rosch

do Thanks. Operator, we question? another have

Operator

with Gray Powell BTIG. to on move We'll

Gray Powell

for taking questions. Great, my thanks

Fran Rosch

Gray. Hey,

Gray Powell

it how's results. So going? hey, And the congratulations on on yeah,

good it there. for the So guess see to questions, I disclosures SaaS and really was the traction updated my two

I Is total And I grow right just confident XXXX? how around math XXX% I the the have to total it over net it? half and new the ARR. it then of right. the will about implies way of correct, think that this mix year, I'm think by your account end are SaaS for But make to on think ARR doing you ARR of that to of So SaaS XX% XX% on sure kind

Fran Rosch

Yeah.

hey, So Gray.

where's So, we a which look, of of confidence your triangulation in points. question, the know, I think SaaS, from first you was, your have great part lot

We close, that of continuing consistently, And build and pipeline SaaS to fantastic. sales see even in to enterprises within know have at SaaS. really, are been our shorter, we the and considerably products. really think the around the and obviously, in been inception SaaS I world, look from wins we of Our SaaS, some pipeline cycles, largest just that's that respect the

So we have a lot growth. consistent of confidence around that, and the

very, pleased very So there on the SaaS.

so XX%, ending. XX% And the you're correct in

in end growth, the segmentation additional calls, to provide planning at are year. know, I prior the we revenue relates it to, of As SaaS you mentioned, the as

we some we that earnings opportunity the way only point not also as in is attract is but well. And new to will, about choosing install scripts, ForgeRock, are which great many to that the a of do So last we see go into to our base. people SaaS do great customers many, is, talked as

happy we to to program functionality. We longer moving infrastructure They into SaaS. have the at the look cloud. run called a are software with no that and as want - very look Where ForgeRock customers

driver that strong really So SaaS our ARR we'll to growth end the the ending XX% confident by of platform of that that's another and year. of why feel in see that XX% so get we continued to

Gray Powell

Understood. That makes you sense. lot Thank very much. a of

Fran Rosch

Thanks.

Operator

move Jonathan We'll to with Ho you. on Blair. William Thank

Jonathan Ho

well? wanted an product to this with with the we and of Hi, opportunity well. particularly either improve I me retention see start as net persisting or to afternoon, of for should there my let the Is also echo introductions? think XXXX, and congratulations how sort new good about this as number some just trend

Fran Rosch

Yeah, Johnson, thanks.

retention again, first continue net foremost, we and to large couple key on original of the So, the on land deal. points just

one. number that's So

considerable saw we the tell at a customer a and in XXXX, retention. at this retention, We class point that. And you looked last level. And best year, at in will are customer success. from of very made form that just we've we investment huge at are customer we already I a seen As payoff we in where

the retention given share new, in minimal we upside to a at at So acquisition, we're customer quarters. that interesting what our about logo actually was point, acquired from we as that and look prior in in the new there thing when think acquired logos think eight is already at real is we've that's best we QX, perspective, an I this a most class new level. QX, In

new, and the the skewed And toward to how stay existing, for basis penetration. we're near was was market on the of split thus, So which between the new pie it you or of up in term. going XXX%, plus really in minus great range say know, I'd

get use going a more - several think there, self happening to modules buy there be upside. looked new lot and the we products specifically base have some Now, there's absolutely well to as could also and of the more to SaaS as software opportunity. actually existing and And to market cases, at products SaaS several will our on manage users we've $XXX and for move able SaaS, to to new opportunity from last But around the self that to point, that the initiative ability that to things about we've more million impact manage. your be XXX% point some launched, introduction, that an provide got

together, I and upside. think So provide in all XXX% of those the us confidence some factors

Jonathan Ho

that your your prevention Thank And built sort just do much that it. from there available. Got you any new an roughly And opportunity upside the product today? may become is opportunity, regarding of then in guidance of to for be what see, you. fraud upsell how timing the generally in product

Fran Rosch

opportunity sell. be at that on we as will will and an able additional - to the ForgeRock do platform, We looking additional module be upsell which

we've Our had. based embedded orchestration whole have This and behavior, ever intelligent that with the AI ability capability to and had always decisions on signals orchestration brings collect really to make module device that help trees user risk. our that the on customers in and journey that

about From half of in do [ph] HGA release the to standpoint, plan a release really first we're excited So year. we this it.

So we an can really at been model built great not forward. we've it's the drive it company really we good growth our this, opportunity. some it's to think just so And on. continue into a going working think It's for help area

we extending over product XXXX. You in primarily the the authentication we're the our AI first and that Around space. governance back now know, workforce, CIAM launched and

design several well worked So really that it I had think received. We it's customers to us. going partner with be on

so So going for year. opportunity we've be it's to this customer got really input exciting good in, an us

Jonathan Ho

Thank you.

Fran Rosch

you. Thank

Operator

we'll you. with question next a Sandler. Thank And from Piper Owens Rob take

Fran Rosch

Rob. Hey,

Rob Owens

for industries? customers any how about was - for what you're thanks the the question. opt should good self taking six Thanks about pipe to of think seeing from or reason requirements of my months is afternoon. there? Great, manage SaaS, last that regulatory for as the rhyme Where kind XXXX? And you talk traditional shift kind managed And we potential Thanks. there front, experience for that for more taking self in up

Fran Rosch

still the right? we still our companies are positioned really or approach. want there uniquely to managed customers we're go SaaS. So that - serve or public want great, into self cloud And use cloud managed choice, private because who feel in their go By self having that's to

control, countries around are Or drivers own some around think the I is the we maybe data, better have there them because controlling their things. in who couple that very are - to facilities to So There's the protection. feel okay, a other move infrastructure know, to different certain requirements. companies regulatory just all ready field of better all keep and culturally large opportunity world cloud. serve One that's to aren't They of that the have companies them. you gives

gives we Right a ForgeRock services, they think options. signed they to the everybody that platform you when to to quarter, they about, last Now their as more, and going a move. still company that up love these to said great, be eventually will more two talked able that really ability with ready know, weren't identity all they're and large at be but we they're our go cloud. now, to service. said We make them They financial ready the looked

When that come a third new from customers thirds it convert. they into expect that this about customers, pipeline. two as a we about of as will we're year to task SaaS, About our from and pipelines customers is existing our it's go third strong last a software well, kind of to SaaS comes year important. install our and idea of came So that base we from feel

program, really easy move move identity we see creating move strong rolled data, customers to cloud, directly also it including makes cloud accelerators. their helping accelerators so their created them them. We've to the with can help decision. - call trees, move self setting on from are lot managed more ways what TCO to for customers make These a move structure we pipeline. So software that a we for to that tools, identity We've calculators, and configurations their SaaS easy a really to truly make where ROI an our it out

we to think continue time. it'll over So grow

Rob Owens

you. color. Thank the Appreciate

Fran Rosch

you. Thank

Operator

with on you. next, Auty Thank to we'll Sterling JPMorgan. move And

Sterling Auty

Yeah, thanks. for Thanks guys. squeezing Hi, me in. Hi, guys.

your the tip deals, the coming question cases past be new of on new type kind of MFA much is most from of in versus around use of would spear cases? how over the single governance use So logos, of that quarter, sign

Fran Rosch

ForgeRock, chooses land So platform. just their of frequently. for enterprise. tip And lot most the a choosing us, we front of that's we're or because the of kind is the door not MFA, But for CIAM. to And where of access. when tend spear someone a It's they're

customers help easy MFA, onboard, process provisioning through new that come easy when all a they back for through really it process registration to of So make they're a can from platform. authentication, looking really this platform that whole easy

the of whole tip it's platform. the spear, is the CIAM So but usually

is saw, other us identity governance. the we And autonomous the great AI done we expect to opportunity work of spear product that we've around a of to tip for The our ton land. that continue is

platform, So two lines, movement. or more platform CIAM modules, really customers, software workforce to then But SaaS CIAM exciting, at motions. of the the our land course, those is are business full and [ph] of more to our workforce whether it's full span or selling customers, motion kind our to

expand some have the the and kind full to move portfolio really and team we around plays really to our they sales for cloud. clear around land CIAM, governance that and So of

Sterling Auty

follow Great. And investment then that just you're making. one the up, incremental

at look between maybe models are, you where kind the of infrastructure in split is of COGS cloud we think versus, our sales we investment of line? the would know, should that extra R&D, - year most and how even next going if So how where in guidance about for marketing, terms and

Fran Rosch

balanced pretty a it's think I investment. mean, I Yeah,

of around more obviously more But in is to investment, all it's engine. on release balanced our area. bringing probably innovation and where in details. That's biggest know, you products engineers accelerate - investment R&D. investing we're So a to the And, that our

So good there. growth

to services We some customer in and and do our organization. continue investment success, our support

add more we it's variable a customer of of expense onboarding customers, kind continue base. to the As around that and success supporting

marketing, around invest in to team. go awareness, market sales then market continue We our full [ph] to our region our and full

it over balanced pretty it's investment a comes to much that. cloud. When So

that And You we'll know, make infrastructure continue a SaaS really gross good we've John's scalable efficient, really see economies we done a some has lot strong, of us this think scale. about year given some talked as to going margins. that forward,

that. kind would you to want of add maybe John, So

John Fernandez

right, the side, On QX, we XX%. gross at ended non-GAAP margin

our lot said, a the we after early sure product. we're on first did the just I platform right? As to innings, we said, That still we cloud full are cloud year mean, Fran leveraging efficiently were of spend. our that make

of a got things deck we've more so And further efficient. much make to that on lot

think think we year, we of that toward our we the so compression can see XXX of actually we'll And around end QX XXX end the but basis off at we this strong XX%. to as out really non-GAAP point look margins, XX% year

across costs. level disproportionate spread any the and I It is, grow efficiency really think of just reinforcing business even that this board mentioned, isn't really so the for Fran hosting well as year. there cloud

Sterling Auty

Understood. Thank you.

Operator

with Shaul we Thank Cowen one have you. last do from Eyal Company. & question And

Fran Rosch

Me? Hey, you? are Shaul, how

Shaul Eyal

for good, Thank for on on I'm you outlook fiscal in 'XX. the squeezing the congrats quarter me and guys. and good. I'm

commentary have know first know, did we you XXXX meet you from again, that was business, of that what So you Or The just that the about I And came hiring And maybe maybe as maybe booked front? Greenfield? SaaS, can some displacement or is also guys your seen if and kind you plan. more overall SaaS just, specifically think on quarter displacements? Greenfield? What my about on Fran strictly during opportunity. the of or think question that John don’t Fran, guys new part quantify, some the John, qualitative business I you

Fran Rosch

we services one about, was were first as on to new on running to for modern. enterprises, customer. more we example, a and you we generally And they the we're point, in of upgrade that to the large customer Siteminder sell that So the displacing enterprises something know, on CA already because some the place usually deployment, financial talked legacy a identity bring looking system when there's

replacing amount of modern we are see legacy those we where a of a So some players with fair platform. that,

So displacement of that's one. kind approach

frictionless be doesn't we around years. see identity to technology they companies, and be created a But realizing also that to for that needs be of flexibility our scale there, solutions homegrown, running displacement may a business, lot also and homegrown on compromising workforce I've done over homegrown that security. displace of that consolidate. lot they may they're of for We without identity customers looking of one consumer, the might And point have the to meet able they're one and the

of So grows it's kind a across lot of and of the board. something, displacement it

know, initial higher shorter Our SaaS we lands, you cloud. know, people because great, with you seeing, there's sales John to our We're said, more have SaaS want go cycles, to offering. as is

product to managed that covers a really great. having self is So those customers give to of But and it's approach, the our stay choice, been opportunity and with want great. we who them love also a both

important. regards opportunity. really at that So as I'd we say challenge, people, that's talent, look is what our we see. And about a kind hiring, critically retaining look our hiring as we and of best at it But new look at a hiring to don't it's just what we With talent really as players. developing

a So talent that of from know better from the And always perspective. we that of diversity, kind company right talent course, because that a always makes a focus a on leadership we making as at sure looking us team are perspective. we

this it a lot track here. on so are far we year, of So focus on

February. As end we

do. are lot a we We we XXX% on hiring our got on to hiring are of And plan.

absolutely the on track. it's So and for - focus we're a big big company, a

Shaul Eyal

much. Thank so Got you it.

Fran Rosch

up? customers, for close we'll us any so the I'll Any the everybody to thrilled you just the and thanks phone get right. Okay. ForgeRock's say, on ahead call Well, soon. All you thank our with follow company. then you much. progress to of and of thank say all of go to here. talk And the We're the helping any Want

Operator

Thank participation. your teleconference. appreciate today’s you. concludes that And We does do

may You disconnect. now

ForgeRock (FORG) 2 Mar 222021 Q4 Earnings call transcript