Introducing ForgeRock ($FORG)

ForgeRock ($FORG) https://www.forgerock.com is a digital identity platform that just went public two days ago. FORG focuses on enterprise-level customers (defined as clients with more than 100K ARR).

From the S-1 https://www.sec.gov/Archives/edgar/data/1543916/000119312521… : ForgeRock is a modern digital identity platform transforming the way enterprises secure, manage, and govern the identities of customers, employees and partners, APIs, microservices, devices, and Internet of Things (IoT). Organizations adopt the ForgeRock Identity Platform as their digital identity system of record to enhance data security and sovereignty as well as improve performance. ForgeRock’s identity platform provides a full suite of identity management, access management, identity governance, and artificial intelligence (AI)-powered autonomous identity solutions.

Their vision is to have a world where you don’t have to ever log in. https://www.forgerock.com/blog/forgerock-now-public-company

Even though this is a recent IPO the company is 11 years old. ForgeRock was first founded in 2010 in Norway by a group of former Sun Microsystems employees after Sun was acquired by Oracle Corporation. After the acquisition, the software was scheduled for phase-out in favor of Oracle’s in-house product, so the founders started their own company to fork the code and continue developing Sun’s software.

They just recently (2019) switched to the SaaS model, and they experience acceleration in their growth and in all other metrics since doing so.

CEO gets a decent ranking on glassdoor and employees seem to like working there. https://www.glassdoor.com/Reviews/ForgeRock-Reviews-E954290…

But not so well on https://www.comparably.com/companies/forgerock

Here’s a direct comparison between Okta and ForgeRock on Gartner https://www.gartner.com/reviews/market/access-management/com…

The management team has several years of combined experience https://www.forgerock.com/about-us/leadership

Fran Rosch, the CEO, has 20+ years of experience building and leading high-performing enterprise security and identity management teams. He joined ForgeRock from Symantec, where he was EVP & GM of the company’s $2B+ Consumer Digital Safety segment, a continuation of his success as senior vice president of Authentication and Identity Management Services.

The original founder of Sun Microsystems remains as an advisor to the board https://www.forgerock.com/about-us/investors

Since going SaaS in 2019 the revenue growth has been accelerating nicely:


2019	        $104.5 million
2020 		$127.6 million 	             22% YoY
2021 		$84.8 million (first half)   53% YoY

Since going SaaS the subscription revenue represented 96% of total revenue in 2020 and 97% for the first half of 2021.

Gross margin remains strong as shown below:


2019   84%
2020   83%
2021   83%(first half)

Dollar-based net retention rate (DBNRR) is not the best but improving:


2019 	105%
2020  	112%
2021    113% 

Despite investing for growth, FORG has driven improved operating leverage:


2019 	(35)% or (32%) for Non-GAAP
2020  	(25)% or (20%) for Non-GAAP
2021    (11)% or (7%)  for Non-GAAP

FORG defines a large customer as a customer with $100,000 or greater ARR. They have 353 large customers as of June 30, 2021, which represents a 17% increase compared to June 30, 2020. These 353 customers in aggregate represented 88% of the total ARR as of June 30, 2021, and no single customer accounted for more than 3% of the total ARR as of June 30, 2021.

I currently don’t have a position but I wanted to learn more and since several people held Okta, your input would be greatly appreciated.

Pavlos

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re: “ForgeRock ($FORG) https://www.forgerock.com is a digital identity platform that just went public two days ago. FORG focuses on enterprise-level customers (defined as clients with more than 100K ARR).”

@Pavlos: Thanks for bringing this to the board. It hit one of my screens and I looked into it briefly yesterday. I quickly dismissed it due to the revenue not growing fast enough to meet this board’s expectations.

Here are the quarterly revenue numbers (in millions):


        Q1    Q2    Q3    Q4
2019  28.1  20.7  23.8  31.1
2020  26.0  29.4  32.1  32.1
2021  40.9  44.0  

Unfortunately, there was minimal growth in 2019 and 2020. It has accelerated in 2021, but nowhere near the levels of growth seem by other players in the cyber security realm. This is especially concerning since it is off of a relatively small base.

They also advertise 30% ARR growth in their investor information in the S-1. This is clearly below the levels expected here.

For reference, here’s the S-1/A:
https://investors.forgerock.com/financial-information/sec-fi…

Page 103 has the quarterly revenue breakdown.

Daws

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