Ping Identity Getting Ready For IPO

| About: Ping Identity (PING)

Summary

Denver-based Ping Identity was founded in 2002 when Identity Management wasn't even a term.

Ping Identity developed the first open source toolkit and libraries that implemented the protocols of the Liberty Alliance, which aims to standardize identity.

In 2013, they decided to switch their business model from a perpetual software license to a subscription business model and raised $80 million.

According to Allied Market Research, the global cloud Identity and Access Management (IAM) market is expected to reap in revenue of $2.8 billion by 2020 at a CAGR of 26.2% during period 2015 to 2020. Ping Identity is a key player and pioneer in this market.

Ping Identity's Offerings

Denver-based Ping Identity was founded in 2002 when Identity Management wasn't even a term. Right about the same time, Microsoft (NASDAQ:MSFT) had announced Passport for logging into Microsoft to gain access to the Internet. It was an interesting idea, but a lot of people were skeptical about it, given Microsoft's dominance in Windows. In response to this initiative, a number of companies led by Sun created an alliance called the Liberty Alliance with the vision of standardizing identity.

For the first two years, Ping Identity developed the first open source toolkit and libraries that implemented the protocols of the Liberty Alliance. Then the following two years, they turned that idea into a standalone commercial server called Ping Federate. They released the first version called Ping Federate 2.0 in 2005. Their first customer was American Express (NYSE:AXP).

In my interview with Founder and CEO Andre Durand early this month, Andre said,

"We quickly realized that it was large enterprises that were really struggling with proprietary identity. They had been sold every stack vendor's identity management product. You could integrate all the applications sold by CA, IBM, or SAP and have a single sign on inside of those stacks, but there was not a single sign on between the products."

Ping Identity therefore focused on enabling secure access to any application from any device. The rise of SaaS in 2006 followed by smartphones moved corporate applications outside the enterprise firewall and thus fueled the demand for Identity Management. This was when Ping Identity's business took off. Between 2006 and 2015, Ping Identity added 200 to 300 customers per year.

Ping Identity's Financials

Andre Durand had successfully bootstrapped his first startup to a $10 million exit. This success coupled with the strength of its vision for the identity space helped raise $3 million from General Catalyst Partners and Fidelity Ventures. After about two years, they started raising money to fuel their growth. They raised about $30 million in total between 2003 and 2012.

In 2013, they decided to switch their business model from a perpetual software license to a subscription business model and raised $80 million to manage their cash flow through the subscription shift. They have raised a total of $128 million from General Catalyst Partners, Fidelity Ventures, Appian Ventures, W Capital Partners, DFJ Growth, and Kohlberg Kravis Roberts & Co.

Their recurring revenue is expected to cross $100 million later this year. They have a good retention rate, growing more than 25% on just the existing base. Their organic annual recurring revenue growth is well over 40%. They also have a good number of recurring relationships at seven-figure price points. They currently have more than 1,500 enterprises as customers, with more than 50 percent of the Fortune 100, one quarter of the Fortune 500 and the largest brands in financial services, healthcare, and other highly regulated industries. Its customers include Boeing, Cisco, Disney, GE, Kraft Foods, TIAA-CREF, and Walgreens.

They had strong performance internationally, with nearly 20% of bookings coming from overseas. They added new data centers in Germany and ANZ, expanded offices in Boston, London, Tel Aviv, and Vancouver, added 135 employees, and plan to expand offices to San Francisco and Denver this year.

Apart from Ping Identity, there are a couple of startups in the space that are in the IPO pipeline. Okta, which was founded in 2009, has raised $230 million so far and is valued at $1.2 billion. Centrify is another IPO-ready company that has been built over 10 years. CyberArk (NASDAQ:CYBR), which was founded in 1999, had a stellar IPO in 2014. Ping Identity has managed to build strong fundamentals without the hype of unsustainable, high valuations and looks like another strong candidate for a successful IPO.