FORG - Earnings call transcript Q2 2022

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Operator

Welcome to the ForgeRock Second Quarter Earnings Conference Call.

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

Mark Kang

everyone. Hello, QX call. ForgeRock's earnings XXXX to conference Welcome

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

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

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

Fran Rosch

results. quarter Mark, Thanks, to us and thanks to XXXX joining our second everyone discuss for

growth of greater. grew QX, consecutive or in marking of year-over-year XX% Our ARR XX% sixth ARR the quarter

of began of that latter deals the as our ARR that million. expected. While lengthening In in the reason we results cycles, QX was engaged in still believe of was July, deals. macro start below part of we by our not with did primary are already end a close to deals in QX are were We in which some to part we on strong and larger sales of larger these and customers in The It we to has important to our these our our materially closed experienced ARR for growth lengthening the below our changing deals our Other have of pipeline business the climate enterprise record of resulted XX% contributed first these $X.X 'XX, and especially in opportunities. our cycles. QX is June, sales low XXXX pipeline, experience guidance QX. note the expectations that

were the more But the against we for strengthening and for saw also unexpected QX, due pound large, the FX enterprise We primarily by of impact Euro. than to sales larger lengthening by the impacted British primarily ARR results cycles and anticipated our dollar deals. our

take action taking challenging IT challenges. Given continue harder to within, spending, will companies at to that the address we likely economic ForgeRock a drive are to environment look the already

growth. efficient We the pipeline are on following: focused

in of focus size our on and to to from a pipeline continue -- sales record amount quality We the the our growth discuss and which John market. to pipeline of our pipeline, QX. increasing named targets, achieve generated bit. create track accounts a keeping improving on our and on the We're We necessary focus enterprise the target will opportunities in large high-quality enterprise Optimizing capacity. generating

coverage retention. strong has our platform a installed us investments culture resulted we go-to-market This another of foundation with opportunities effectively focus our The that in in customer success model. customer our to have base. innovation. provides our cost increase business within We to expansion Customer-centric organization to capacity the record continue business. on quarter to we ensure growing and made Driving scaling organization and support

we and business release offering. we've call, for a can call. last growth in and Even targets are challenging our this of Access, driving deliver partnerships. We on and releases we on this a Autonomous factoring confident significant product discussed macro are the more built our quickly ARR On announced climate, pipeline we

investments sometime A company we focused march remain key be continues the technology growth huge a measured in towards on Crown. In back XXXX. driver innovation. the making non-GAAP us our heard robust the you to and with as half of is profitability operating of achieving margin and opportunity, of drive growth past, the have in our may durable continued to and market-leading our Triple we our range mention ForgeRock XX% a long-term growth

management, all of by continues ForgeRock access to review workforce last Forrester critical ForgeRock of development, recognized in is called only a to combine companies. for KuppingerCole is CIAM. you report, a for and Gartner the for the Management excited the in When leader I'm technical three provider XX which deep platform. as report the ranked capabilities and following Access QX year, be identity which a highest Also, updates. published application across identity categories CIAM, our product scores provide are Gartner

called measures searching Intelligent theming, ever journey develop enhancements rates Access journeys of than and easier user and First, include major employee to to make features identity that language in journeys. success market-leading for themes, user new end while conditions UI and we journeys. series to our new for released customer for time and Key including improved and failure Key analytics tagging a dashboard compliance. trees terms new organization capability custom accelerating enhancements localized administrators, of user deliver measure orchestration the world-class it enhancements of and to enable enterprises experience out-of-the-box, that accessibility UI

and digital for apart make market-leading our of as already customer well experiences. businesses. our from digital to All customers competition improvements further trees the journey force on-ramp deliver outstanding enable and multiplier even done and these a Identity to

identity and Identity to released the version new trees provides release just the and covered ago. addition The base, and data new our our now of areas better moment offer of value innovation services to self-managed new performance market advancements environments. elastically differentiation ForgeRock scalability We empower provide Key with our to Token Leveraging These additional and from our suite without ARR, time customers our are the experiences delivered directory in OAuthX of and its ForgeRock a the we that including has architecture. to scalability, of our and X.X finishing all Identity new a XX% updates platform, which X.X our token year in Exchange towards this user our create features tracking AI and of security. enrichment our and this XX% the our capabilities, SaaS platform. several access I proprietary that been goal key because features, our already with to inception. between accelerator represents our scale well on of of we customers self-managed our SaaS and of enterprise-grade our accelerate leadership compromising single tree innovations customers offering SaaS. and innovation been competitors. allow significant to of SaaS win a improvements full we extensibility to unified to resiliency additional increased Cloud, ARR Next, platform, experience all growth code ForgeRock and nodes of security, synchronization include XX% and including tailor since identity

our the XX% self-managed. customer to of still We our SaaS of migrating innings base early ARR are with still in existing

to ARR across and both offerings Our migrate ARR during like self-managed they of represent larger fantastic some their times SaaS QX customer after X migration that We share. to had importantly, wins more times a who X our existing begin customers SaaS expansion average and SaaS. I'd seen we've to to

in new Our This solution limited capabilities. to health life. more nationwide. while its complex, X Identity rebuild people and legacy customer for selected providing to serving was costly was customers. aims reduce cost first nearing than experience. portal ForgeRock secure is a enhanced of its win more example and Cloud The and Oracle help providers customer user a It million insurer solution Their end

bookings customers. IWG, leading physical largest and domains. X,XXX provider it to when Furthermore, XX% customer security XXX more both with solutions companies safety European-based and the digital its Fortune security vending than building convenient to companies world's are office is Digital mobile and with XXX starters Next IWG introduce synchronization the authentication levers, the the new third-party the one to is multi-factor integrations collaboration spans add and and Physical comes their of work of systems. ability seamless today's providing hybrid using needs as to of to key. the automate teams. managing such provider in to and the countries. access, locations logs related refers refers with of over IWG and hybrid visitor manage own IWG security passwordless and all with services log-in,

these their As scalability. to has requirements, support cases ForgeRock business selected such, use security meet and complex their of and enterprise-grade to provide platform its IWG as

could Identity the MFA, is and onboarding, not locations modern Our United system SSO multipath employee North They replace third provisioning password XXX URLs, the of a mall featuring ForgeRock Cloud capabilities, pace several to example retailer States retailer validation recently demand. for with legacy IAM reset, with American that ForgeRock employee improve in and Canada. use, speed to associates, self-registration, keep and This of a custom including self-service will users. and security log-in purchased

statewide a and citizens for ForgeRock system make use we millions for that is safer example help fourth assistance easier applying Our to of access programs.

hundreds was resource They and with IGA able this of secure their manually, time saving ForgeRock automate access state were ForgeRock they're of to which significant As part With quarterly provided thousands and and intensive. win, handling has employees. for streamline also previously of costs. audits ForgeRock, time audits module

manufacturer for of of growth X This simplicity, well of identity. Even offering Our are ForgeRock ease SaaS them challenging X of case. makes household in consumer example ARR. intersection offering customers shift of for a cost self-managed process ago value of for tens for is the last to top drivers and our customer environment, of They're millions the appliances. a a we years reduction powerful global designer believe macro positioned we by our for customers. our our The now CIAM at SaaS use X and in is greater use purchased transitioning because one

enterprise the XXXX was leading First breaches increasing for unauthorized of We is billion Consumer Identity securing records Identity increasing to XXXX, the for cybersecurity. experience. user XX% consecutive XXXX. involving recently that threat passwords our year, Breach end-user all by released increased during account records enables sacrificing X landscape, than for accounting greater Breaches steadily more during names to XX% compromised. cause report, compromised is ForgeRock of fourth and and without and security critical access the revealing

a user-friendly revenue. and Second with turn, is Every personalized company product digital driving identity growth. digital a drive presence experience with to revenue in adoption frictionless,

security platform of enabling superior to is and a as achieve and experience, new lines bank. enterprises for digital privacy Our such customer mission-critical business

are a key orchestration this. Our enabler of identity market-leading capabilities

Third is cost reduction.

risks. to our second, and platform; compliance such by study enterprises Forrester July, governance and entitlements, security by a X legacy that total leveraging homegrown or customers enterprise-grade the CIAM we Our examined announced to performed reductions In deploying in economic to processes that ForgeRock's cost primary and by off achieve managing are to AI realize migrating impact detecting over-provision access ways: impose automate first, able significant Consulting as platform. ROI could solutions

organization Forrester development customer organizations to interviewed savings of the organization study, ForgeRock for market-leading XX identity built modernizing in just of that $XX.X see reasons avoiding of million why million identity ForgeRock single savings for and why a an the We benefit composite over to costs, savings aggregated X instances worldwide and results realized Identity and composite significant ForgeRockers value to customer and resulting our $XX discussed X platform over a reduced passionate rollout world-class incredible the in security-related we center IT ForgeRock, their legacy transforming a priority months XX% million. composite of present million X X modern than XXX% new reduction organization. with from $X experience costs are remains years. base, identity more in top I the $X continue $X.X platform. These a results in who deployment a of million less to organization the According X value Over million show in These in saw efficient strong in representatives business savings resulting are drivers that and about environment into almost $X.X savings enterprise-grade for using, over functionality, ROI demand enterprises. at cost fraud the with net every from for call years.

the we on we market. robust XX% growth of $XX are confident addressable our in We long-term and that can as drive billion capitalize durable range

which the remains to we remain drivers macroeconomic year, second challenges. of momentum, of underlying ahead the the by despite Looking our encouraged half strong

self-managed be empower Our governance choose CIAM John that, it use over our to integrated whether our and platform and to IoT all the workforce a more detail. to to software, SaaS how customers identity John? that for ability differentiator across to our for cases turn identity, through deploy in walk or access our opportunity types, With maximizes supports for to us. and want financial they us be results call the market I'll continues

John Fernandez

deliver Thank ranges loss you, non-GAAP above Fran. in rating We quarter. second were EPS the revenue, pleased results to our and non-GAAP guided

As by results for enterprise cycles primarily were significant the unexpected of FX Fran ARR deals sales impacted mentioned, our QX our headwinds. and lengthening larger

into dive and highlight confidence X give the wanted to on that our our financials, durability I us I growth march profitability. Before in towards specifics our of themes

First, the and market-leading customer rates have is is a Identity why lifetime This product served sold values. purpose. we into ForgeRock world-class enterprises a is platform mission-critical and that retention large high

the measured in sometime And through back strong we as Second, to are gross our lastly, reaching been closely in the align marching ARR of and growth, margins to remain business and half our recent operating SaaS our the our XXXX term of investments as scale most leverage transition profitability growth by business. our achieving towards non-GAAP more which support has growth our stable the operating periods. begins with long SaaS margin revenue impacted we

As have ARR year-to-date, growth approximately we or experienced FX impact year-over-year. quarters, over $XXX.X million, the up ARR QX greater. ARR was past at XXXX XX% XX% in XX% ended X of for of We year-over-year. we look Adjusting million $X our back growth

of denominated Some ending by SaaS rates. are XX. of ARR our local fluctuating our of currencies contracts as offering XX% and represented of impacted June SaaS Adoption ARR FX in international our our SaaS of from percentage ARR existing as SaaS. to purchased of customers QX XX% was be a and among in new XX% customers strong. in customers new new QX and continues

We who expanded QX on purchased times seeing times with XXX,XXX. that done X not new by they're yet. after growth SaaS ARR SaaS average, and from X Of ARR SaaS initially our customers self-managed SaaS have strong their our they are in both from customers existing offering customers. SaaS purchased purchasing Average our to us and offering, new exceeded

of to continued well SaaS. in offering of XX% tracking from ending see are SaaS the with ARR robust year finishing We goal and our our adoption we to QX, XX% of towards

customers. to on Moving

success. customers, very We customer seeing customers our investments continue results in to retention We are from of large or QX as greater. great high with experience defined ended ARR and $XXX,XXX XXX

end XXXX steadily of a large QX. and $XXX,XXX our base customer ARR The over XX% represent ARR of year-over-year, end large as Our of grew the is the average and since they for of XX% now has increased of customer ARR.

our was rate The Our ARR in net QX. retention for XXX% more QX product being from adding XXX%, up sequentially of more cases and driven customers modules. from customers use identities, is existing by expansion more

to a We big ForgeRock existing self-managed Identity the convert also to customers our Cloud. opportunity have

range net We remainder retention XXX% rate to in the year. this of for our continue stay XXX% to expect the to

the is our under different Moving a GAAP SaaS recognition growth, impacted best Revenue deals significantly SaaS for to QX. grew end Total XXX. was increasing guidance. by of revenue. in revenue revenue SaaS maintenance deals year-over-year revenue while from self-managed QX sequentially support in for and revenue year-over-year our $XX.X up reflects ARR percentage above for is growth our than as Subscription QX, was high recognition ARR. ASC which million, ratable of XX% XX%

from to XX% $X.X in services to of As revenue, our of in revenue the $X.X in level of from revenue, million SaaS to this we're primary announce last of this deals. grew was year. it revenue due XX% that QX services our in million growth delivery of pleased Professional represents QX driver of up of XXXX increasing The QX related relates to ratable of now predictability our total our to revenue year. the

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

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

higher infrastructure hosting to large SaaS by continue we and SaaS our As is to we by ASPs. incur expect in our cloud investment increasing scale see costs, offset which offering,

higher Our improved by driven revenue. primarily higher services margin significantly utilization professional professional year-over-year services and

strategically margin QX for year. our in QX that our XX% QX XX% keep $X.X to heavily Sales for revenue of SaaS was $XX important last million Also, in is This was to year year-over-year and XX% company of operating XX% expenses our year. that a operating G&A compared negative million revenue $XX were QX we total QX It's last million for resulting represents $X.X to margin This negative year. $XX.X $XX.X QX achieving loss ago. in by for in in year. Turning to remain $X.X impact to and an to last rapidly Operating was currently biggest to million revenue year. a QX of in of profitability. margin public QX expense revenue compared QX year. XX% business last XXX. of now path for operating million The XXX. last revenue a the year, marketing operating was last representing compared of investing for million QX for of and operating of of loss of while total under to in QX X% QX ASC XX% G&A impacted expense million to XX% growth revenue QX R&D versus on note growing compared compared versus last this focused impact expense the expenses. versus for our revenue was for million please recognition percentages to $XX.X in our year. not goals represents ASC We mind are

In the seasonal cash, million XX% $XX.X of XXXX in or million QX sheet year. last of quarter negative the was negative cash in second lowest with within free of the and and cash balance XX% is and very million revenue free negative equivalents strong, revenue ended quarter compared flow $XX.X each securities. flow in fiscal total total marketable year. cash Our quarter XXXX, QX, $XXX negative or In was to we

we give this year. Before I'd for additional comments turn of some should provide to guidance, context that the remainder like to

sales remain FX optimistic from our on revising factor greater for we the large While and for to we of our deals especially in guidance incremental remainder are longer annual impact ARR growth headwinds. year, enterprise this cycles,

has for On ARR, X ARR impact of estimate growth we approximately QX percentage QX to which the guidance. the and FX built point impact periods, into to both is our been

to revenue, of trough growth revenue be expect in in For we the XXXX. terms QX

sequential growth with being our expect revenue We growth. strongest to begin meaningful QX, in reacceleration quarter QX seasonal for

variability. For We in annual and we operating loss primarily operating not XXXX, the range achieve dollar now to guidance, margin are profitability range. non-GAAP remain our linear margin ability progress sometime over margin half to of our the confident then seasonal in our our and though between operating reach managing back to due be business the may

Now guidance. turning to

the midpoint. quarter representing total million, XXXX, ARR For growth $XXX at of XX% third expects to million of year-over-year ForgeRock $XXX the

$XX Our of is assuming and average midpoint. $X.XX million an annual outstanding shares Non-GAAP year-over-year XX% of to representing net approximately of $XX estimated million. to operating million, negative $XX of weighted revenue Total $X.XX, QX and loss impact. XX% loss of range the at million $XX per representing non-GAAP inclusive guidance margin negative operating FX $XX.X to share million, growth XX% of to

to And Fran outstanding of representing $X.XX the at of million now Fran? XX% Total shares to range an negative of XXXX, $XXX assuming call for representing I'll $XXX to year-over-year loss to approximately Non-GAAP $XXX at operating million per million, of net average total year-over-year million. now For expects representing midpoint. $X.XX, XX% margin million, full growth ARR $XX the $XXX XX.X XX%. of share operating million, XX% remarks. midpoint. $XX the to growth ForgeRock to turn million closing year non-GAAP the back negative loss of weighted revenue

Fran Rosch

you, Thank John.

company we the in achieve quick we for taking with to actions and to durable questions, Before open that drive targets a as to the growth our XX%. I'd like long-term are of range and robust a close of summary

pipeline. to quality the continue increasing of our improving on and the focus We size

capacity and business. growing scaling effectively coverage that to organization cost our we go-to-market our to ensure support are have We the

to retention partnerships. strong We're customer to creating within our additional base. our driving business on product continue more focus releases while We our maintain and customer to existing success gross rates opportunities expand

may the As CEO, be from call very opportunity business and ahead questions. the Operator, continue about open now we've for excited I the incredible to ForgeRock. you built

Operator

first now go Gregg We'll Please Instructions] from question [Operator take Moskowitz ahead. from Mizuho. our

Gregg Moskowitz

to First of that latter your any question is also, Are region? for Fran you're deal that the are Or regarding particular changes broad-based? pronounced in And then in seeing macro. June. the longer sales the see you territories? they began cycles more in or seeing Are any in average sizes part

Fran Rosch

product is any see not concentration of or any particular line any in of our kind of did of kind any business. challenges particular and those reflective We really industry geo really particular

deals. came of lot the we had work reflective challenges those kind we pipeline but great strong we QX it a of as the the business. a of of quarter, As into at And but enterprise saw of large we end those, was

Gregg Moskowitz

a question guess John. And then I for

color think your or continuation just I as may Any assuming how them? would your and guide. words, surfaced of of to that investors you lot worsening it in are QX a conservative wondering terrific. year be these other be of a full a In trends June relates assumptions are

Fran Rosch

Yes.

and quarters we at beneficial. color couple that XX with the QX he growth the if this for including on that, guidance over the XX continues maybe When of we're digital customers. we then touch really these of identity of had at market now We've quarters. The be foundation. I'll strong a great range, building strong add rest me, very past XX% Let couple thinks to off in the John some guidance, a year and can of recognize looked it's

continues recognized. well really be Our technology to

a the we strong saw whether And not We have pipeline cycles or customers longer those QX, it's you have pipeline, strong at cycles all quality a new our rates of our sales some went also second foundation of recognize the length spent at we we sales quantity really that looking end half. of half as the that given of feel pipeline working we into sales we both we a it with the because So But of and lot of year. our for and team we time second we equal, some additional applied that did as as FX here earlier that in for the cloud July linearity, we've well created SaaS or we a but we or -- when QX, seen to is in apply But get ForgeRock. self-managed. saw existing as we year. to at had improved impact conversion customers, record

those longer So experienced which that deals have already some of we great. those is sales closed, cycles

have We strong a pipeline.

have We capacity. the sales right

we look So things, these did do half the second for guidance create confidence the have when we year. at of that we the right

John Fernandez

Gregg, guide. think the globally FX just I ARR add and to QX, FX, reduction euro $X such we dollar. We've got million that's that against at you the into material almost pound the incorporated the that, movements And to now experienced in the against as appreciated look in of

the meaningful. So is hope very obviously, that we sense. And behind very, worst in us

incorporated I also also we've additional X in discounts, potential that discount for additional iterated that the sales and FX state I'd cycle. general for the length level again, think, of additional macro for of However, was in levels of

to that is about and our conservativeness what incorporate into hope we material obviously, way think we of and that we've again, going important norm large, this. in we and But really And saw I the the felt just focused it was guide. not the forward. thought handful prudent So around

Operator

Eric Heath Capital Next up, Markets. KeyBanc from we have

Please Your go open. ahead. is line

Eric Heath

little margins, to it the measurable taking was think I on a that approach more just of bit year. So a this spend clear you're

bit. want you're in pulling where back kind just kind maybe of focusing investing you're continue where So those a, that curious, just to of little and a you dollars

Fran Rosch

Sure. Absolutely.

really company growth. and as durable And growth in our long-term had I amazing of that's to forward. we've the stream growth an company. ForgeRock continue think first looking growth of a We think opportunity going target all, long this XX%

to into got So and invest that. build we've

We are targeting.

are And technology that. our We obviously. us a primarily companies company, for choose

that go-to-market deliver really help in with to sales to identity. need and have R&D we release ensure so customers invest we invest we continue numbers. So to cool continue capacity, scale to we to to our to We'll things can continue the better that efforts in our what our digital

We value. continue to customer to customer success our in that support get that and customers ensure invest

some to -- we're in reprioritized to So strong kind we could growth that felt key ensure experienced things areas of of that the the investments the continue of those several we past that to some some within we do we years. over company, drive things we've less protect the

John Fernandez

Yes, I take mentioned, just prudent leadership always team, add, of think all you at as prioritized we And again, careful do. I the to look we would expenses, and our it's do Fran you'll really some dollars where from flow-through as in we flow the the do completely the with around note that revenue operating to not was could. What through we were in guidance able reduction did the loss. a

customer that towards that, that X-year of we looking marketing the some half could ensure that that reaffirm importantly, really sales future, somewhere around looking in but with also obviously, running back our success, plan to importantly, XXXX. but at around and build making also R&D target we're really that sure reductions, profitability feeding of so at all did strategic we an eye And those out,

as coordinated all cycle. this So was very done that a of in review

Eric Heath

which mean, think Fran, of that I in I on largely about both the organizations terms And it's your then, does and organizations still cycle. buying making CIAM, security decision marketing include

we I all think security relatively So budgets I just are speaking. think mean safe curious, pretty

function scrutiny maybe caused side a little of kind have So more kind of might deals. a is the of bit that it marketing of

thoughts your there. curious Just

Fran Rosch

service here great the market. ForgeRock, in question. parts do a we of it's Yes, And both

our more as looked there, and we a kind Our past we of definitely those we some chose then we land through cycles a of got that sales side look, organization. champion expand this most of said, cycles. platform importantly And think or conversations, purchasing really the feel the any further for in companies "Hey, other to in and to some unit by tend of from as wins which saw sales use tend about works buying opportunities we the on potentially of land half line workforce have we where but strategic and an of us. lost platform is And our But more And the CIAM. lot right sales we what we governance also platform in focus has technology process. ForgeRock We said, looked land of That's when to in that competitors. could dynamics we're becoming kind identity what those large, great for driven had POCs, continue you're been we've But moving more latter changing and were it these not about. at the within we And maybe that quarter and business that in frequently we places." I these in that, sim this in longer do when business to some of is to champion opportunities of talking might important June, some those led well. through

We customers. continue our to engage with

Some of them have closed already.

account So vector. that top a identity feel about to takeover, with other I that even in And question, a so answer of environments, just a kind whether continues common way attack from we priority, to good guess one put consumer to being cybersecurity momentum. standpoint, be these

deepen their to more to As own in customer test. reducing relationships all as becomes self-service loyalty their these and market, experience compete important of identity can they kind well costs reduce drive as so so that companies and health making try base with

market we in both great to both CIAM areas. for growth continue feel still get workforce, we and a So and

Operator

Stanley. from Angie have we Next Song Morgan

is ahead. line Please go open. Your

Angie Song

management identity there's some been So within lately. consolidation base the

landscape? So on just could might think this impact you the current you how competitive talk

Fran Rosch

Absolutely. Yes.

the top And an how past always have comes exciting in market demonstrates And quarters, Identity interest or couple to and such in X, seen I that in when the priority X interesting investors really to really over be lot that's a market. think seeing this really talk X of think And -- of of take CIOs We people CISO, is. they kinds organization. of happy this market. think all we're really see an we're I we that and up consolidation

challenging really of and I I've and M&A, -- potentially distracting. think my a can and M&A for us involved be in in lot been career,

owners out, be companies. of new new And for can leadership, so as get budgets in, rolled change so distracting new come I these set, priorities

So MFA, and talking long journey. don't by governance across cobble how we that and solutions management that think to a using point ForgeRock, stand-alone entitlement the in into organically to have element technology public sort might time all platform. the some of ago of access these market. we these identity fully a to time management, together all some identity a have recognized other platform, our our we're focused already management, single integrated identity want using and built single really as owners SSO, of of to execute customers team, that And last in we ForgeRock, company this put opportunity of together, all grow multiple they on when development this pieces And

to continue So ability our kind it's platform. is is this interesting taking good to win market position our but our feel and everyone and noticed actions, some great else about of with we really a from

Angie Song

question. Have X hiring in follow-up other one any, any guys terms have of plans months making you seeing versus ago? you or changes been been just guys And

Fran Rosch

mentioned, we we're as higher. a growth to company, -- and We're continue we

our And in to create sales in that great that we've in, to to look focused We to we're sophisticated look innovation. pipeline could to we could the so focus to XX. continue constantly also in our machines on go-to-market X the we to that doing pulling that stay back, XX where talked a got our to we definitely grow continue capacity at to months, and than hiring We know that are capacity, we really got at that in productivity rep way we move needle. pretty sales area. going We've about the focus X greater really areas prudently X know and build and

we're other and might So where at areas we we for support you and so to investing hiring, those continuing in slow can R&D, areas focus customer success in the invest look Thank question. question. growth down

Operator

William from Ho we next, Blair. have Jonathan Right

open. ahead. Your go Please line is

Jonathan Ho

to if that And Or all of magnitude slipped just open wanted now? have I of the out. the a could there that see subsequently are deals still closed? get right are we they sense some

Fran Rosch

Yes.

we in to going pipeline our the a looking result any some close those and combination looking quarter, at are when lot to that the the targets. achieving of in go of and at beginning into us So are at we pipeline time spent the how our deals quarter, of

Of those. It's a of percent not course, it's all those.

that So larger of a for deals closing quarter. and handful us, it was these really just we of looking to forward were being part that

already them have of Some closed.

in and QX, -- We our that QX excuse is health companies me. closed in that have care large of one here already

really more as we've as well, as got a to Several go. well. but others off start. good close to So

competitors. continue As just these to closed. with this, deals of customers. I further mentioned, We our any them haven't our lost put to it's an engage to get ROI POCs helping or whether we these

John Fernandez

enough just strong. that that off a I'll linearity record some them August deals in such to add, Jon, closed July close those incredibly and actually looking we're didn't And of is

closed not So come line fact just to really on goal but is to contribute with the QX, in linearity. that think to substantial I respect the they that we've testament to record did amounts such

Jonathan Ho

do the you mix growth? then just versus to or customers get in about I versa. sense more customer retention environment, a see tougher new relative existing thinking customers you're how new from vice And maybe for shifting to want net a contribution

Fran Rosch

and retention to gross to Jonathan, John a strong perspective are base retention, then give a access quarter. customer we launched expect of continue, channel, with sell, last We've $X we whether million that cross more upsell, signed opportunity have net Can close great back and little great workforce. around workforce But really and it's more our of to can several grow got that's a both autonomous We pipeline with approach. sun add to quarter. now opportunities. think this great We customers through maybe these believe deals ARR in our to really we that we just or

SaaS to software Our initiative.

of ready poor customers. focus running we're or So logos and to in still we legacy We are that coming market. lot to that homegrown a see on that to dynamic focus growth to modernize to the really There's it need be We're continue continue we a new are the CA companies call lot that base there. opportunity. replaced. company. as new RFPs on going drop. But going think a a Oracle of embrace to strong see out platforms there's other still to technology we lot It's of still a that or

to So to we're going continue focus on both.

in Our sales customers, comes team new that are whether on ARR new logos. from existing compensated

our team new marketing to base focused is selling on as leads driving we're logos, Our but well. installed from

to way opportunities for be think great I we saying of really So long both a ForgeRock. continue guess

John Fernandez

as the relates retention, that And a of deals more are really into Yes. there it net logo a slipped opportunity acquisition. huge largest of QX, in function

new the and there's that might more contracting of a that meant through. you expect, process installed that of POC might our was we expect, you base. closed, as What of As go you percentage kind was skewed business to

over back actually, just percentage prior higher. the four the were look quarters, four quarters, However, not the the dollars prior was higher that in absolute it's

identity. upsell, moving deeper So when cross-sell last year, really having you results that built from customer and more great shows deeper success really go adding we away toward think that into or expansion, that up

multiple nice that -- well SaaS really continue Xx software ARR. deal So pleased to to of the to at is base convert again installed see to expansion. that strong, adding as X which We're showing base

pleased really really, flowed with that's that net retention. how So in overall through

gross highs continues up a Just picked and be further even note, retention to record to in QX.

Operator

Zelnick Brad have we Deutsche Bank. up from Next

open. go is Please line ahead. Your

Brad Zelnick

the And Fran. is know a We you're you, environment out know with start I I'll Maybe pro. there. all tough

environment making you You've all of Does out actually in gives they as team you double and sense you're effort to I the an to confidence you the to some adapt seeing that know prior lived given through in your new remarks, And that example? put the can environment. click, there, it go-to-market What more spoke this just possibly to your is on best is can? more that some going but expansion what's of this just make your versus prepared adjustments behind logo you're that cycles.

Fran Rosch

you. Thank

equal. You're looking in that two at me future company in spent the there back the quality. We've and And I foundation things development the is lot lot more of do by are and been give while, But I feel in that have into not We're a right. first continuing really great around a of that time half We that in QX track we not the year. only opportunity time really -- the opportunity have. a the for also are quality to here the gives the quality spent say I've And we is pipeline that a pipeline confidence, record would development a of on the really pipeline. to QX. that, confident had of from quality but every pipeline understanding created a standpoint. strong dig we've

than opportunities higher Some at convert rates others.

that account self-managed at So SaaS pipeline customers whether we from we our at list, logos are target or versus look generating CIAM convert new or our level. existing or a those higher workforce opportunities versus or know

the one conversations prospects. other looking our that and lines quality with of say that opportunities use and quarter. drives over further to larger I seeing days organization customers continue couple has of now at is would it's here But who that as And financial there the prospects, So or they deliver our a the customers past services was also done an takeoff and I in pipeline that as here are really and with grow to fine in the technology ForgeRock just I that in talk quality numbers. our confidence selected this are a brand new business pipeline company to ForgeRock I looking Silicon to and our Valley they're have

prospects. confidence having customers I by well as the numbers I'm data and So the in see a with the there, pipeline both cotinine and as the lot of that

Brad Zelnick

of John, end. it very in just QX, follow-up meaningfully, creeping deals maybe which DSOs QX story out that John. was larger up And pretty have little seems the been especially the If is at a for counterintuitive. a pushing

that's expect going is what receivables? And relates else anything in to So that explain we're terms what we seeing should collections as forward? happening of in it there payment terms

John Fernandez

interesting. really Yes. That's

of go through you our better have. debt, look would business in than filings, show I anyone you If at actual prior a level challenge bad collections we the to

record debt absolutely the bad is industry. our think for I

out comes everything of and to in wash, pay. enterprise a great just product, where so that's function really is really that so durable, customer speak, the And great that

been consistent can anything not And over with. we've DSO changes, a just on the just much that terms, XX. days anything And how terms seen very, no XX prior I've over period. payment actually think be function give I So over very payment the analysis in last to how period-over-period of had we've challenge approve I a weeks the looking those day much company. in the at XX uptick

we not more Could seen appear forward things be So those potentially, there. of it yet. very have strong going see very, but to requests

Operator

up, Eyal we Shaul have Cowen. Next from

ahead. open. line Your go Please is

Shaul Eyal

the to and Fran, I about back on question. that Brad go-to-market go point of maybe your heels the of quality want pipeline to

relations with your As are any partners, also that specific you fine-tuning about think front? on your needed changes, any that

Fran Rosch

in Yes, Shaul, When our be primary our three answer me source really great our we that important let sources. pipeline to from turn. one to is look us. they at comes Yes, continue And partners, pipeline, and

relationships. have We great

larger of and part different around transformation Deloitte, cloudification. Accenture, we initiatives these customers the providers with digital but they're PwC, with also working world. as like partners as big kind of are the of around bringing And dozens accounts they Some into partner identity us absolutely of

in part comes we good is that from love partners, already because and in from our really a that So more qualified us. there comes developing because those partner cycles larger, -- it of with pipeline faster the

those we've gets focused with identify partners partners opportunity in our do satisfaction. work customer close new generated, with to opportunities, around working organization that deliver really them we our mentioned the past, co-sell once opportunities As but then and and

year, So our important the we what's second half. be half it in generation. that's in an important And the the part first of expect important pipeline to of

generation, reps. market Primarily our comments are through second Our pipeline. the focused logo is and in account generate to where development on new MAs, our is the customers, pipeline sales flowed then set we we our marketing what focused existing on MAEs, and engagement our of ourselves. new our [indiscernible] big up with pipeline then also organization team. creating We And meetings our that create opportunities part our

in recognized other as CIAM at that But of look land we at at workforce, or do those closing CIAM, tend also shorter look more when faster than market much with tend really anywhere and a slightly we source Or look our across at rate. is quality to at sign then it's higher I we X. right So is business factors, sales rate, we we pipeline, platform to now, whether a those more close our else, cycle. mentioned, median SaaS as

the different year. of the look that in So provided that what pipeline good confidence half second a ways when of for at quality us we lot we've here in give

Shaul Eyal

maybe your It maybe in seeing a compete different it really another cyber you little think And tricky come was about attack We've question. of address. they And attack and thought that emanating mostly late plenty took mention a does front from that that manner obviously, in your -- gave a maybe place know I anything provided could that in front on that bit, been back I could on of an type that all angle May. XXXX. Cisco a think, but they there's, without identity-driven deal all that What's it direction? doubt, I thorough attack. have recent read the understand And that on because we very, we in bought very

Fran Rosch

Shaul. answer a to I'll Yes. that

passwords legitimate use enterprise whether compromised right, with people these buy credentials You're enterprise, be vectors will into still attack and be breaches. it's break up when to one most identity the they're where to of show criminals to appear leading not continues on of any the of cyber trying these the type and to or consumer side, and

just a demonstrates to that couple grow. our ago continue breach identity-related breaches we of weeks report released So

for problem companies solve there. identities. them And it's So and real with that smarter helps a out ForgeRock problem better

that see and around our of part focused companies improve we security as helping value we're proposition, on identity. So

have infrastructure, products. Now own own we, obviously, our our

here security invest to have we So in at own our ForgeRock.

We have a CSO, Russ Kirby. great

it's and in us services. to protected We with invest whether continue at We because technology is on identity people better counting processes. and around our company stay our board-level conversation security obviously ensure to

in market it's both us, of here for investment at, cybersecurity. continued kind So or ForgeRock opportunity and a

Operator

Thanks.

have We Gray Powell from BTIG.

Please Your ahead. line is open. go

Gray Wilson

too speaking, it on over Does product net going implies of half? any half am in of about first ARR looks two-third reading conservatism that correctly is sort the account the right of in year. And the about in into SaaS for if to drove I related factoring just net the math Roughly is maybe guidance, that just the second then adds seem the that SaaS the new your that I in think yes, of Or then of second guidance the mix? on side. at couple I doing much the sort the Am of my half. I ones on-prem side XX% And you? So a like additions look to there?

Fran Rosch

a color I'll then our maybe what a part SaaS think provide we SaaS. of on of they in because customers to our seen whether that rapid kind on offer can and do want math. choice to our We've we touch to be self-managed consume really little both, ForgeRock in there want SaaS identity approach we for or more of on capture that But is market. bit adoption we continues and Yes. John to our market

help continue to talked full that to no was mentioned, we're having coming kind quarter-to-quarter potential only our different always on and see of coming over QX some and both but fluctuations, you sell and this And new going from with platform. growth. overall, about of the SaaS both. year a strength in new our market, SaaS As and it's big in XX% our driver second logos we've good manage of is SaaS of era

John Fernandez

revenue on And a I Yes. of of renew. SaaS your self-managed couple core healthy right about our think looks things. coming question, We'll self-managed. toward good our pipe. and business there's the a it mix revenue continue first, from our think of to the look lot that right to there's And Talking I of is pipe, continue will both this to

have in that. beta conservatism range we on high have provided Obviously, And I'd of place. tell a probably so we is to XX% do you, a level the the there.

quite it from out it quarter-to-quarter a I that fluctuate grow, at the of toward think believe look year. move bit the will those as SaaS to will as but continue end mix dollar you factors, we And so we

Operator

Next, we have Rob Piper Owens Sandler. from

Your line open. is go Please ahead.

Robbie Owens

this and of they're I they seems following with right towards purchasing low they're for who percentage stories, could it now infrastructure customer the versus migrating buying guess the a more was customers on new are SaaS you are that, just patterns us quarter, because because SaaS and how at self-managed it self-managed. then than unpack other

why curious the way. So yours went other

Fran Rosch

SaaS. say we that do What see I growth in is would

was As over perspective, I XX% and still, offer mentioned, we And our tab. order were from the redundancy customers in an of coming choice and fluctuations off that to QX, next. again, ARR it

that opportunity AWS the still of our what's give our identity to their lot going to So do or stack, the we to see want continue forward. pipeline our Google growth rest GCP, that. and application with their to were of we but along support great in SaaS in public really our choice, in run appreciate choice. think the customers we customers of we like A out

John Fernandez

to had way the SaaS We about largest again, us. Robert, data say about, new think Yes. other new for logo we I as the mentioned earlier a great oriented mix. towards And those been talked correlated that deals driver has were

on I obviously still SaaS impacting the XX%. being the new interestingly, that So Yes, think XX% that dollar.

yes, they're to QX. new in we very affirm was So high I very point, consistent very, the the And the for part us SaaS QX. logo increased that's that and think, your and lower new really, deals, number But we ASP. in slightly strong been

Fran Rosch

to our SaaS, is the the had finish we've ARR which market second of did that with the between XX% and quarter XX% in year, we at the only And ending be that reaffirm and XX%. this continue in we will end of year

really feel to continue about SaaS we So great opportunity. that

Operator

Fran like more like over time. to looks remarks. call CEO are this turn the questions there I at closing additional no back or to Mr. It Rosch, would any for

Fran Rosch

in cloud all great We with half for Well, going a entire about we joining comprehensive our our exciting next today. be call. to forward great, the the to to It's approach really going our pipeline incredibly build, we and the very market opportunity. behalf continue full-scale the that's platform, feel Great. growth ForgeRock, support growth questions. that our of continue identity really many thanks at years. and everyone to to for in great feel feel second the our team On to confident to digital Thanks

again everyone thanks call. So to who the joined

Operator

your participation. Thank call. you today's for concludes This

You may now disconnect.

ForgeRock (FORG) 12 Aug 222022 Q2 Earnings call transcript