ForgeRock Announces Third Quarter 2021 Financial Results
ForgeRock reported strong financial results for Q3 2021, with Annualized Recurring Revenue (ARR) reaching $164.0 million, a 30% year-over-year increase. Total revenue grew 38% to $44.2 million. However, the company posted a GAAP net loss of $15.3 million, compared to $7.8 million in Q3 2020. Operating losses also widened slightly. ForgeRock expects Q4 2021 ARR between $175.0 million and $176.0 million with projected revenues of $46.5 million to $47.5 million.
- ARR grew 30% year-over-year to $164.0 million.
- Total revenue increased 38% year-over-year to $44.2 million.
- Customers with ARR of $100K or greater grew 18% year over year.
- GAAP net loss increased to $15.3 million from $7.8 million in Q3 2020.
- Non-GAAP operating loss widened to $5.7 million, compared to $4.9 million in Q3 2020.
-
ARR grew
30% year-over-year to$164.0 million -
Revenue grew
38% year-over-year to$44.2 million
“We are very pleased with the results we achieved in our first quarter as a public company, highlighted by strong ARR and revenue growth," said
Third Quarter 2021 Financial Highlights:
-
ARR: Annualized Recurring Revenue was
, an increase of$164.0 million 30% year-over-year. -
Revenue: Total revenue was
, an increase of$44.2 million 38% year-over-year. -
Operating Loss: GAAP operating loss was
, or (20)% of total revenue, compared to$8.8 million , or (21)% of total revenue, in the third quarter of 2020. Non-GAAP operating loss was$6.7 million , or (13)% of total revenue, compared to$5.7 million , or (15)% of total revenue, in the third quarter of 2020.$4.9 million -
Net Loss: GAAP net loss was
, compared to$15.3 million in the third quarter of 2020. GAAP net loss per share was$7.8 million compared to$0.44 in the third quarter of 2020. Non-GAAP net loss was$0.32 , compared to$12.1 million in the third quarter of 2020. Non-GAAP net loss per share was$6.0 million , compared to$0.35 in the third quarter of 2020.$0.25 -
Cash Flow: Net cash used in operations was
compared to$2.0 million in the third quarter of 2020. Free cash flow was$5.7 million ( , or (5)% of total revenue, compared to$2.2) million ( , or (18)% of total revenue, in the third quarter of 2020.$5.8) million -
Cash, cash equivalents and short-term investments were
as of$378.1 million September 30, 2021 .
“Our strong third quarter results were highlighted by the growth we are seeing in our large enterprise customer base and our ongoing traction with the ForgeRock Identity Cloud,” said
Financial Outlook:
For the fourth quarter of 2021,
-
Total ARR of
to$175.0 million , representing$176.0 million 29% year-over-year growth; -
Total revenue of
to$46.5 million ;$47.5 million -
Non-GAAP operating loss of
to$9.0 million ; and$8.0 million -
Non-GAAP net loss per share of
to$0.14 , assuming weighted-average shares outstanding of approximately 82.3 million.$0.12
For the full year 2021,
-
Total revenue of
to$175.5 million ;$176.5 million -
Non-GAAP operating loss of
to$20.5 million ; and$19.5 million -
Non-GAAP net loss per share of
to$0.96 , assuming weighted-average shares outstanding of approximately 41.8 million.$0.94
These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.
Conference Call Information:
Supplemental Financial and Other Information:
Supplemental financial and other information can be accessed through
Non-GAAP Financial Measures and Key Metrics:
The non-GAAP financial information is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP and may be different from similarly-titled non-GAAP measures used by other companies. The principal limitation of these non-GAAP financial measures is that they exclude expenses that are required by GAAP to be recorded in our consolidated financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by our management about which expenses are excluded or included in determining these non-GAAP financial measures. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.
ARR does not have a standardized meaning and therefore may not be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue, deferred revenue and remaining performance obligations computed and/or disclosed in accordance with GAAP and is not intended to be combined with or to replace any of those items. Specifically, ARR, as calculated under the definition herein, has the effect of normalizing the impact of revenue recognition for term-based subscription license agreements. ARR is calculated based upon annualized contract value and not actual GAAP revenue. Under ASC 606, for term-based subscription license agreements, we recognize approximately half of the total contract value upfront as license revenue, with the remainder attributable to maintenance and support that is recognized ratably over the license term. Annualizing actual GAAP revenue for any particular period could result in a meaningful difference from our ARR calculation, particularly when we are experiencing increases or decreases in the mix of multi-year term licenses. ARR is not a forecast and the active contracts at the date used in calculating ARR may or may not be extended by our customers.
Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the federal securities laws, including but not limited to the quotations of management, the section titled “Financial Outlook,” and statements regarding our strategy and the market for our products and services. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to our ability to attract new customers and retain and sell additional functionality and services to our existing customers, our ability to sustain and manage our growth, our ability to successfully add new features and functionality to our platform, our ability to compete effectively in an increasingly competitive market, and general market, political, economic, and business conditions, including the impact of COVID-19, and other risks detailed in our filings with the
Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent our views as of the date of this press release. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release. We anticipate that subsequent events and developments could cause our views to change. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
About
ForgeRock®, a global leader in digital identity, delivers modern identity and access management solutions for consumers, employees and things to simply and safely access the connected world. Using
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
(In thousands, except per share amounts) |
|||||||
(Unaudited) |
|||||||
|
|||||||
|
Three months ended |
||||||
|
2021 |
|
|
2020 |
|
||
Revenue: |
|
|
|
||||
Subscription term licenses |
$ |
19,364 |
|
|
$ |
16,102 |
|
Subscription SaaS, support & maintenance |
22,940 |
|
|
14,910 |
|
||
Perpetual licenses |
183 |
|
|
158 |
|
||
Total subscriptions and perpetual licenses |
42,487 |
|
|
31,170 |
|
||
Professional services |
1,739 |
|
|
953 |
|
||
Total revenue |
44,226 |
|
|
32,123 |
|
||
Cost of revenue: |
|
|
|
||||
Subscriptions and perpetual licenses |
4,517 |
|
|
2,976 |
|
||
Professional services |
3,977 |
|
|
2,069 |
|
||
Total cost of revenue (1) |
8,494 |
|
|
5,045 |
|
||
Gross profit |
35,732 |
|
|
27,078 |
|
||
Operating expenses: |
|
|
|
||||
Research and development (1) |
10,827 |
|
|
9,432 |
|
||
Sales and marketing (1) |
22,509 |
|
|
18,135 |
|
||
General and administrative (1) |
11,188 |
|
|
6,214 |
|
||
Total operating expenses |
44,524 |
|
|
33,781 |
|
||
Operating loss |
(8,792 |
) |
|
(6,703 |
) |
||
Foreign currency gain (loss) |
(2,684 |
) |
|
2,699 |
|
||
Fair value adjustment on warrants and preferred stock tranche option |
(2,729 |
) |
|
(2,415 |
) |
||
Interest expense |
(1,195 |
) |
|
(1,201 |
) |
||
Other, net |
339 |
|
|
(65 |
) |
||
Interest and other expense, net |
(6,269 |
) |
|
(982 |
) |
||
Loss before income taxes |
(15,061 |
) |
|
(7,685 |
) |
||
Provision for income taxes |
205 |
|
|
124 |
|
||
Net loss |
$ |
(15,266 |
) |
|
$ |
(7,809 |
) |
|
|
|
|
||||
Net loss per share attributable to Class A and Class B common stockholders: |
|
|
|
||||
Basic and diluted |
$ |
(0.44 |
) |
|
$ |
(0.32 |
) |
Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders: |
|
|
|
||||
Basic and diluted |
34,680 |
|
|
24,039 |
|
||
|
|
|
|
||||
(1) Includes stock-based compensation as follows (in thousands): |
|
|
|
||||
|
Three months ended |
||||||
|
2021 |
|
|
2020 |
|
||
|
|
|
|
||||
Cost of revenue |
$ |
26 |
|
|
$ |
35 |
|
Research and development |
564 |
|
|
167 |
|
||
Sales and marketing |
1,078 |
|
|
619 |
|
||
General and administrative |
1,441 |
|
|
583 |
|
||
Total stock-based compensation expense |
$ |
3,109 |
|
|
$ |
1,404 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(In thousands, except share and per share data) |
|||||||
(Unaudited) |
|||||||
|
|||||||
|
|
|
|
||||
Assets |
|
|
|
||||
Cash and cash equivalents |
$ |
197,221 |
|
|
$ |
99,953 |
|
Short-term investments |
180,872 |
|
|
— |
|
||
Accounts receivable, net of allowances of |
36,071 |
|
|
35,372 |
|
||
Contract assets |
23,079 |
|
|
11,167 |
|
||
Deferred commissions |
6,267 |
|
|
5,923 |
|
||
Prepaid expenses and other assets |
7,224 |
|
|
3,802 |
|
||
Total current assets |
450,734 |
|
|
156,217 |
|
||
Deferred commissions |
12,242 |
|
|
8,825 |
|
||
Property and equipment, net |
2,106 |
|
|
2,535 |
|
||
Operating lease right-of-use assets |
4,358 |
|
|
— |
|
||
Contract and other assets |
1,543 |
|
|
817 |
|
||
Total assets |
$ |
470,983 |
|
|
$ |
168,394 |
|
|
|
|
|
||||
Liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) |
|
|
|
||||
Accounts payable |
$ |
878 |
|
|
$ |
1,370 |
|
Accrued compensation |
15,319 |
|
|
13,891 |
|
||
Accrued expenses |
5,927 |
|
|
3,179 |
|
||
Current portion of long-term debt |
— |
|
|
58 |
|
||
Current portion of operating lease liability |
1,766 |
|
|
— |
|
||
Deferred revenue |
49,890 |
|
|
50,341 |
|
||
Other liabilities |
2,700 |
|
|
10,192 |
|
||
Total current liabilities |
76,480 |
|
|
79,031 |
|
||
Long-term debt |
39,451 |
|
|
39,338 |
|
||
Long-term operating lease liability |
2,876 |
|
|
— |
|
||
Deferred revenue |
7,300 |
|
|
5,162 |
|
||
Other liabilities |
1,568 |
|
|
3,538 |
|
||
Total liabilities |
127,675 |
|
|
127,069 |
|
||
|
|
|
|
||||
Redeemable convertible preferred stock |
— |
|
|
231,503 |
|
||
|
|
|
|
||||
Stockholders’ equity (deficit): |
|
|
|
||||
Common stock |
82 |
|
|
24 |
|
||
Additional paid-in capital |
587,371 |
|
|
20,602 |
|
||
Accumulated other comprehensive income |
7,322 |
|
|
5,253 |
|
||
Accumulated deficit |
(251,467 |
) |
|
(216,057 |
) |
||
Total stockholders’ equity (deficit) |
343,308 |
|
|
(190,178 |
) |
||
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) |
$ |
470,983 |
|
|
$ |
168,394 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(In thousands) |
|||||||
(Unaudited) |
|||||||
|
|||||||
|
Three months ended |
||||||
|
2021 |
|
2020 |
||||
Operating activities: |
|
|
|
||||
Net loss |
$ |
(15,266 |
) |
|
$ |
(7,809 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
||||
Depreciation |
259 |
|
|
281 |
|
||
Noncash operating lease expense |
249 |
|
|
— |
|
||
Restructuring and impairment charges |
— |
|
|
356 |
|
||
Stock-based compensation expense |
3,109 |
|
|
1,404 |
|
||
Amortization of deferred commissions |
3,203 |
|
|
3,281 |
|
||
Foreign currency remeasurement loss |
2,640 |
|
|
(2,688 |
) |
||
Change in fair value of redeemable convertible preferred stock warrant liability |
2,689 |
|
|
399 |
|
||
Change in fair value of preferred stock tranche option liability |
— |
|
|
2,014 |
|
||
Accretion of premium/ amortization of discount on short-term investments |
237 |
|
|
(4 |
) |
||
Other non-cash |
15 |
|
|
444 |
|
||
Changes in operating assets and liabilities: |
|
|
|
||||
Deferred commissions |
(4,789 |
) |
|
(4,315 |
) |
||
Accounts receivable |
1,043 |
|
|
1,476 |
|||
Contract and other non-current assets |
(4,324 |
) |
|
(1,440 |
) |
||
Prepaid expenses and other current assets |
3,080 |
|
|
493 |
|
||
Operating lease liabilities |
(414 |
) |
|
— |
|
||
Accounts payable |
682 |
|
|
(558 |
) |
||
Accrued expenses and other liabilities |
1,339 |
|
|
1,908 |
|
||
Deferred revenue |
4,213 |
|
|
(978 |
) |
||
Net cash used in operating activities |
(2,035 |
) |
|
(5,736 |
) |
||
Investing activities: |
|
|
|
||||
Purchases of property and equipment |
(118 |
) |
|
(83 |
) |
||
Purchases of short-term investments |
(138,132 |
) |
|
— |
|
||
Sales of short-term investments |
15,700 |
|
|
— |
|
||
Net cash used in investing activities |
(122,550 |
) |
|
(83 |
) |
||
Financing activities: |
|
|
|
||||
Proceeds from initial public offering, net of underwriting discounts and commissions |
295,694 |
|
|
— |
|
||
Payment of offering costs |
(4,076 |
) |
|
— |
|
||
Proceeds from exercises of employee stock options |
719 |
|
|
128 |
|
||
Employee payroll taxes paid for net shares settlement of restricted stock units |
(3,528 |
) |
|
— |
|
||
Proceeds from issuance of debt, net of issuance costs |
— |
|
|
115 |
|
||
Principal repayments on debt |
(74 |
) |
|
— |
|
||
Net cash provided by financing activities |
288,735 |
|
|
243 |
|
||
Effect of exchange rates on cash and cash equivalents and restricted cash |
(390 |
) |
|
252 |
|
||
Net decrease in cash, cash equivalents and restricted cash |
163,760 |
|
|
(5,324 |
) |
||
Cash, cash equivalents and restricted cash, beginning of year |
33,484 |
|
|
106,687 |
|
||
Cash, cash equivalents and restricted cash, end of year |
$ |
197,244 |
|
|
$ |
101,363 |
|
|
|
|
|
||||
Reconciliation of cash and cash equivalents and restricted cash: |
|
|
|
||||
Cash and cash equivalents |
$ |
197,221 |
|
|
$ |
101,307 |
|
Restricted cash included in prepaids and other current assets |
23 |
|
|
56 |
|
||
Total cash and cash equivalents and restricted cash |
$ |
197,244 |
|
|
$ |
101,363 |
|
|
|||||||
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS TO GAAP RESULTS |
|||||||
|
|||||||
Non-GAAP Gross Profit and Non-GAAP Gross Margin |
|||||||
|
|
|
|
||||
Gross profit is defined as GAAP revenue less cost of revenue and gross margin is GAAP gross profit as a percentage of total revenue. We define non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin adjusted to exclude stock-based compensation expense, and restructuring and impairment charges (if applicable) as presented below (in thousands, except percentages): |
|||||||
|
|
|
|
||||
|
Three months ended |
||||||
|
2021 |
|
2020 |
||||
|
|
|
|
||||
Gross profit |
$ |
35,732 |
|
|
$ |
27,078 |
|
Stock-based compensation |
26 |
|
|
35 |
|
||
Non-GAAP gross profit |
$ |
35,758 |
|
|
$ |
27,113 |
|
|
|
|
|
||||
Gross margin |
81 |
% |
|
84 |
% |
||
Non-GAAP gross margin |
81 |
% |
|
84 |
% |
||
|
|
|
|
||||
|
|||||||
|
|
|
|
||||
We define non-GAAP research and development as GAAP research and development adjusted to exclude stock-based compensation expense, and restructuring and impairment charges (if applicable) as presented below (in thousands): |
|||||||
|
|
|
|
||||
|
Three months ended |
||||||
|
2021 |
|
2020 |
||||
|
|
|
|
||||
Research and development |
$ |
10,827 |
|
|
$ |
9,432 |
|
Less: stock-based compensation |
564 |
|
|
167 |
|
||
Non-GAAP research and development |
$ |
10,263 |
|
|
$ |
9,265 |
|
|
|
|
|
||||
Non-GAAP Sales and Marketing |
|||||||
|
|
|
|
||||
We define non-GAAP sales and marketing as GAAP sales and marketing adjusted to exclude stock-based compensation expense, and restructuring and impairment charges (if applicable) as presented below (in thousands): |
|||||||
|
|
|
|
||||
|
Three months ended |
||||||
|
2021 |
|
2020 |
||||
|
|
|
|
||||
Sales and marketing |
$ |
22,509 |
|
|
$ |
18,135 |
|
Less: stock-based compensation |
1,078 |
|
|
619 |
|
||
Non-GAAP sales and marketing |
$ |
21,431 |
|
|
$ |
17,516 |
|
|
|
|
|
||||
Non-GAAP General and Administrative |
|||||||
|
|
|
|
||||
We define non-GAAP general and administrative as GAAP general and administrative adjusted to exclude stock-based compensation expense, and restructuring and impairment charges (if applicable) as presented below (in thousands): |
|||||||
|
|
|
|
||||
|
Three months ended |
||||||
|
2021 |
|
2020 |
||||
|
|
|
|
||||
General and administrative |
$ |
11,188 |
|
|
$ |
6,214 |
|
Less: stock-based compensation |
1,441 |
|
|
583 |
|
||
Less: restructuring and impairment charges |
— |
|
|
356 |
|
||
Non-GAAP general and administrative |
$ |
9,747 |
|
|
$ |
5,275 |
|
|
|
|
|
||||
Non-GAAP Operating Loss and Non-GAAP Operating Margin |
|||||||
|
|
|
|
||||
We define non-GAAP operating loss and non-GAAP operating margin as GAAP operating loss and GAAP operating margin adjusted to exclude stock-based compensation expense, and restructuring and impairment charges (if applicable) as presented below (in thousands, except percentages): |
|||||||
|
|
|
|
||||
|
Three months ended |
||||||
|
2021 |
|
2020 |
||||
|
|
|
|
||||
Operating loss |
$ |
(8,792 |
) |
|
$ |
(6,703 |
) |
Stock-based compensation |
3,109 |
|
|
1,404 |
|
||
Restructuring and impairment charges |
— |
|
|
356 |
|
||
Non-GAAP operating loss |
$ |
(5,683 |
) |
|
$ |
(4,943 |
) |
|
|
|
|
||||
Operating margin |
(20 |
)% |
|
(21 |
)% |
||
Non-GAAP operating margin |
(13 |
)% |
|
(15 |
)% |
||
|
|
|
|
||||
Adjusted EBITDA |
|||||||
|
|
|
|
||||
We define adjusted EBITDA as operating loss adjusted to exclude depreciation, stock-based compensation expense, and restructuring and impairment charges (if applicable) as presented below (in thousands): |
|||||||
|
|
|
|
||||
|
Three months ended |
||||||
|
2021 |
|
2020 |
||||
|
|
|
|
||||
Operating loss |
$ |
(8,792 |
) |
|
$ |
(6,703 |
) |
Depreciation |
259 |
|
|
281 |
|
||
Stock-based compensation |
3,109 |
|
|
1,404 |
|
||
Restructuring and impairment charges |
— |
|
|
356 |
|
||
Adjusted EBITDA |
$ |
(5,424 |
) |
|
$ |
(4,662 |
) |
|
|
|
|
||||
Non-GAAP Net Loss and Non-GAAP Net Loss per Share, Basic and Diluted |
|||||||
|
|
|
|
||||
We define non-GAAP net loss as GAAP net loss adjusted to exclude stock-based compensation expense, including the tax effect of stock-based compensation expense on the provision for (benefit from) income taxes as presented below (in thousands, except per share amounts): |
|||||||
|
|
|
|
||||
We define non-GAAP net loss per share, basic, as non-GAAP net loss divided by GAAP weighted-average shares used to compute net loss per share, basic. |
|||||||
|
|
|
|
||||
We define non-GAAP net loss per share, diluted, as non-GAAP net loss divided by GAAP weighted average shares used to compute net loss per share, basic, adjusted for (i) the dilutive effect of employee equity awards, excluding the impact of unrecognized stock-based compensation expense and (ii) warrants; unless these adjustments are anti-dilutive. |
|||||||
|
|
|
|
||||
|
Three months ended |
||||||
|
2021 |
|
2020 |
||||
|
|
|
|
||||
Net loss |
$ |
(15,266 |
) |
|
$ |
(7,809 |
) |
Stock-based compensation |
3,109 |
|
|
1,404 |
|
||
Restructuring and impairment charges |
— |
|
|
356 |
|
||
Tax effect on the provision for (benefit from) income taxes |
14 |
|
|
9 |
|
||
Non-GAAP net loss |
$ |
(12,143 |
) |
|
$ |
(6,040 |
) |
|
|
|
|
||||
Non-GAAP net loss per share, basic and diluted |
$ |
(0.35 |
) |
|
$ |
(0.25 |
) |
|
|
|
|
||||
|
|
|
|
||||
Free Cash Flow |
|||||||
|
|
|
|
||||
We define free cash flow as net cash provided by (used in) operating activities less cash used for purchases of property and equipment as presented below (in thousands): |
|||||||
|
|
|
|
||||
|
Three months ended |
||||||
|
2021 |
|
2020 |
||||
|
|
|
|
||||
Net cash used in operating activities |
$ |
(2,035 |
) |
|
$ |
(5,736 |
) |
Purchases of property and equipment |
(118 |
) |
|
(83 |
) |
||
Free cash flow |
$ |
(2,153 |
) |
|
$ |
(5,819 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20211110006172/en/
Investor Relations Contacts:
investors@forgerock.com
Media Contacts:
kristen.batch@forgerock.com
stacey.hurwitz@forgerock.com
dillon.townsel@edelman.com
Source:
FAQ
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