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Ping Identity: Not Addressing Fundamental Problems

Karreta Advisors profile picture
Karreta Advisors


  • Ping Identity has been experiencing weakening key performance metrics throughout FY12/2020.
  • In spite of the tailwinds from remote working and SaaS adoption, the company only managed to grow its customers by 4% YoY.
  • With the gap widening further versus key peer Okta, we are sellers of the shares.

Investment thesis

Ping Identity (NYSE:PING) has been seeing weakening key performance indicators, and management does not appear to have a strategy to address them. The gap is widening versus key peer Okta (OKTA) and with a comparatively lower growth profile we are sellers of the shares.

Our objective

In this piece we want to assess the following:

  • The company's level of competitiveness in terms of customer success.
  • Outlook for the medium term.

We will take each one in turn.

Low client adds

Accelerated adoption of SaaS and hybrid cloud solutions has been a by-product of the pandemic as remote working became widespread. Consequently, demand for IDaaS (identity-as-a-service) has been a second derivative.

With the shift from license to subscription revenues impacting revenue recognition, Ping Identity's key performance indicator is ARR (annual recurring revenue) growth. With higher hurdles YoY, we see the growth rate reach 15% YoY in Q4 FY12/2020.

Quarterly ARR growth trend

Ping Identity ARR growth trend

Source: Company, created by author

ARR growth of 15% is not a bad metric in isolation. However, with growth falling YoY for every quarter during FY12/2020, one feels that the market opportunity during the year has not been capitalized.

Although this is not a like-for-like comparison, key competitor Okta discloses current remaining performance obligations (RPO). Current RPO illustrates amounts invoiced to clients for subscriptions for the next 12 months. This is different from ARR with respect to being a tighter number. Current RPO is mostly cash received upfront as deferred revenue, versus what you can expect as annual recurring revenue based on a snapshot (including upsells and churn at the time) which is annualized. When we compare the figures from Q4 FY12/2020, we see Ping Identity's growth is significantly lower than Okta at 42% growth YoY.

Q4 FY12/2020 Ping Identity ARR growth YoY versus Okta's current

This article was written by

Karreta Advisors profile picture
We are an independent research house. We look at global stocks, favoring those with sustainable growth and recognized or emerging as a high quality franchise at suitable valuations. We primarily serve institutional investors.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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