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Ping: Cloud And Safety. Value And Growth


  • PING is a recently IPO'd company with a good growth outlook and solid financial position.
  • The company offers a value proposition in the cybersecutity/cloud niche.
  • This company is well positioned to continue to achieve double digit growth and increase its profitability.

Thesis Summary

Ping Identity Holding Corp. (NYSE:PING) is a recently IPO'd company in the cybersecurity sector focused on cloud and customer use solutions. It has a proven track record of profitability, a unique value proposition, and an attractive growth outlook. Although we don't have much historical data to make a complete assessment, I believe the company is undervalued and it offers an attractive investment opportunity.

Company Overview

PING was recently IPO'd, back in September at an initial price of $20. Since then, the shares achieved highs of $27 upon encouraging fourth-quarter results. The price has fallen much in line with overall markets during the past couple of weeks.

The company provides cybersecurity solutions at an enterprise level and has been especially successful in implementing cloud-based solutions. While there is not much historical information on the company, we can at least assess the performance over the last year. Let's begin with revenue:

Source: 10-Q

As we can see in the Income Statement, Ping has two m<in sources of revenue; Subscriptions and Professional services. Like many companies offering software solutions, Ping sells its product through subscription packages of varying lengths. The company has a very healthy revenue growth of around 14%. In terms of ARR (Annual Recurring Revenue), the company has achieved 23% growth.

As far as profitability, the company has maintained a similar gross margin, ~84%, with costs increasing at the same rate as revenues. The EBITDA margin is 21.23% but the company is now just about getting to the break-even point, with EPS coming in at 0.01 in the last months of 2019.

Moving onto the balance sheet, the IPO has not lead to a great expansion of the BS, instead. Most of the funding received went towards reducing long-term debt.

Source: 10-Q

The post-IPO balance sheet is very healthy

This article was written by

James Foord profile picture

I am an economist and financial writer specialising in building robust and truly diversified portfolios that will preserve and increase wealth in the long term. 

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Comments (11)

Sss3d profile picture
I think P/S is $1.8B market cap valuation divided by $250m yearly revenue or 7.5 PS and not 0.07. Help me understand if my math is wrong!
Stop The Printer profile picture
The beer virus is doing an absolute number on this stock!
Manzanita Research profile picture
I bought more PING on today's dip. I originally bought it at 17 around the time of the IPO and sold all at 28. I bought back a smaller position at 24 and sold half of it at 29. With this dip I was able to bring my position size up and average down for my third time trading PING. I have no idea what'll happen the next few months... could easily go lower, but I am confident a year from now PING at worst be at current prices and at best new highs in the 40s. Just IMO.
Millennial_Tyler profile picture
some very good timing
Manzanita Research profile picture
Nice article. PING has been very frustrating to own since their prior ER which included a strong revenue beat and guidance. Though it hit new highs after that it has steadily been in a downtrend even before the market turned south. The growth may not be exhilarating but given they have just achieved a profit and have one of the lowest P/S ratios in the sector I am dumbfounded why this stock just won't rise. Perhaps getting the IPO lockup expiration out of the way on 3/17/2020 will clear the deck? I can't figure it out but holding on for now.
Millennial_Tyler profile picture
Their guidance left a lot to be desired. They may just be very conservative and this will pay off big time next qtr but its hard to go crazy on the stock when you arent predicting the numbers you would expect for the industry they are in. I'm Long the stock its just difficult to buy the dip after listening to earnings. However I cant say i'm concerned about the investment as its likely the safest play.
@The Value Trend , thank you for your piece. I quite enjoyed it. Ping is one of the best kept secrets of the 2019 class of IPOs. @Manzanita Research, after yesterday and this morning's obscene selloff of Ping, I backed up the truck and loaded up on more shares. I've been in since they went public as I have colleagues who swear by the company's necessity in the workplace. I can't speak to any exact reason why this one hasn't popped but the patient will be rewarded. It's absolutely clear to me that their market penetration is solid and growing steadily but they remain under the radar of many equity investors. This is purely conjecture but perhaps the fact that they aren't in Silicon Valley could be part of it? In any case, I very much believe that Ping's valuation is bound to change. Their product suite is robust, nimble and easily adaptable in the identity management space and is best looked at the way one looks at utilities. They are necessary , as is the case with cybersecurity in general, in any market environment as the risk mitigation is far to important to a company's stability. To my mind, given the potential improvised work scenarios due to the Corona virus in the coming months, they will only stand to benefit from more necessary deployment for security reasons. @Millennial_Tyler, I simply think they're conservative. Personally, I'd rather they blow the lid off with a surprise blowout than disappoint due to short term hubris.
Millennial_Tyler profile picture
@Expanding Universe I'm in the same boat as you and did end up adding some yesterday. Just trying to justify the market reaction.
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