Prospectus Summary
PROSPECTUS SUMMARY This summary highlights selected information that is presented elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our Class A common stock. You should read this entire prospectus carefully, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. The last day of our year is December 31. Our quarters end on March 31, June 30, September 30, and December 31. Unless the context otherwise requires, the terms “ForgeRock,” “the company,” “we,” “us,” and “our” in this prospectus refer to ForgeRock, Inc. and its consolidated subsidiaries.FORGEROCK, INC.
Overview
Our vision is a world where you never log in again.
We help make the digital economy possible. ForgeRock supports billions of identities to help people simply and safely access the connected world—from shopping and banking to accessing company networks to get their work done. We make this possible through a unified and extensive identity platform to enable enterprises to provide exceptional digital user experiences without compromising security and privacy. This allows enterprises to deepen their relationships with customers and increase the productivity of their workforce and partners, while at the same time providing better security and regulatory compliance.
Digital Identity is a Massive and Growing Market and We Believe We are Well Positioned to Address This Opportunity for the Following Reasons:
benefits of our platform, they often expand their investments with ForgeRock in four different ways—through more identities, more use cases, more product modules, and more deployments. We have successfully sold our platform to a variety of C-suite level decision makers who are driving business transformation initiatives with increasing budgets year-over-year.
Enterprises Need Our Platform Now More Than Ever
Identity is foundational to the growth of enterprises in the era of digital transformation because it enables enterprises to create frictionless user experiences that are both simple and secure. Enterprises are under ever-increasing competitive pressure to deliver personalized and seamless omnichannel experiences and often compromise on experience or security to achieve these outcomes. This competitive pressure is driving enterprises to focus on identity as a key strategic initiative to provide differentiated experiences to increase loyalty with consumers and enhance productivity for employees. However, enterprises are saddled with complex, heterogeneous information technology, or IT, environments driven by the accumulation of a myriad of applications and infrastructures resulting from decentralization of IT, mergers and acquisitions, and decades of legacy systems. This often results in multiple identity repositories and complex integration challenges that can lead to disjointed and fragmented user experiences. Compounding this, the rapid growth in the number of digital identities across consumers, the workforce, and IoT and services, and the increasingly complex web of relationships between these identity types, present significant performance and scale challenges. In addition, enterprises are struggling to grapple with an ever-changing cyber threat landscape and increasing consumer fraud, which is forcing organizations to adopt an identity-centric Zero Trust security approach. Under this approach, enterprises must continuously authenticate identities connecting to its systems before and after granting initial access. Finally, increasing and evolving regulatory and compliance mandates continue to add pressure to global enterprises to satisfy these requirements.
We Purpose-Built Our Platform to Relentlessly Serve the Modern Digital Identity Needs of Enterprises
We built a modern digital identity platform, the ForgeRock Identity Platform, with a differentiated SaaS architecture and identity object modeling approach that empowers enterprises to secure, manage, and govern the identities of everything—consumers, employees and partners, application programing interfaces, or APIs, microservices, devices, and internet of things, or IoT. Our proprietary approach to customer tenant isolation in our multi-tenant SaaS environment is designed to enhance data security and sovereignty as well as improve performance. Our identity platform provides a full suite of identity management, access management, identity governance, and artificial intelligence, or AI, powered autonomous identity solutions. Our platform is deployable in a variety of configurations that can be combined, including self-managed environments, such as public and private cloud environments, and through ForgeRock Identity Cloud, our SaaS offering.
Our platform is purpose-built for the enterprise and provides mission-critical capabilities, including performance and scale, rich identity functionality, deployment flexibility, and extensive integration and interoperability. Our platform can handle large usage spikes as evidenced by our platform’s ability to support over 60,000 user-based access transactions per second per customer, or 216 million per hour. We enable enterprises to rapidly integrate and secure thousands of applications across types, deployments, and operating environments such as SaaS, mobile, microservices, web, and legacy, running in the public and private cloud, and on-premise. Together, these deep capabilities enable us to provide enterprises with a single view to manage all of their identities in one unified platform and position us as a leader in digital identity for the enterprise market.
Many of the World’s Leading Enterprises Rely on Our Platform, and We are Recognized as an Industry Leader
More than 1,300 organizations around the world leverage our platform to manage collectively over three billion identities. Our customer base includes many of the world’s leading enterprises that have very demanding consumer, workforce, and IoT and services needs, as well as enterprise-grade security requirements. ForgeRock is the only vendor recognized as a leader by both Forrester and KuppingerCole in the customer identity and access management, or CIAM, market and by Gartner in the Access Management, or AM, market.1 We believe the enterprise-grade scalability and performance of our platform, breadth of our platform capabilities, and our ability to deliver great user experiences and security makes us well-positioned to extend our leadership in the CIAM, AM, and identity governance and administration, or IGA, markets. Our platform is suited to enable enterprises to deliver both differentiated and frictionless experiences and security without a compromise between the two.
The Power of Our Platform, Combined with Our Focus on the Enterprise, Has Driven Expanding Customer Adoption and Rapid Growth Our ability to serve their mission-critical needs combined with our focus on customer success enables us to grow our customer base and significantly expand our relationships with customers over time. As of June 30, 2021, 43% of our customers purchased ForgeRock for consumer (including IoT and services) and workforce use cases.
Our business has experienced rapid growth. In 2019 and 2020 and for the six months ended June 30, 2020 and 2021, our total revenue was $104.5 million, $127.6 million, $55.4 million, and $84.8 million, respectively, representing a year-over-year growth rate of 22% and 53%, respectively. In the same periods, we incurred net losses of $36.9 million, $41.8 million, $36.0 million, and $20.1 million, respectively. In 2019 and 2020 and for the six months ended June 30, 2020 and 2021, our annualized recurring revenue, or ARR, was $106 million, $136 million, $119 million, and $155 million, respectively, representing a year-over-year growth rate of 29% and 30%, respectively. We generate substantially all of our revenue from subscriptions, with 96% and 97% of our total revenue coming from subscriptions in 2020 and for the six months ended June 30, 2021, respectively.
Our gross margin was 84%, 83%, 81%, and 83% in 2019 and 2020 and for the six months ended June 30, 2020 and 2021, respectively. Our non-GAAP gross margin was 84%, 83%, 81%, and 83% in 2019 and 2020 and for the six months ended June 30, 2020 and 2021, respectively.
Despite investing for growth, we have driven improved operating leverage, demonstrating the strength of our business model as we scale. Our operating loss as a percentage of revenue was (35)%, (25)%, (43)%, and (11)% in 2019 and 2020 and for the six months ended June 30, 2020 and 2021, respectively. Our non-GAAP operating loss as a percentage of revenue was (32)%, (20)%, (37)%, and (7)% in 2019 and 2020 and for the six months ended June 30, 2020 and 2021, respectively. We continue to invest in our growth to capture an attractive, large and growing market opportunity. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for additional information.
Industry Background
We believe identity is the foundation of business growth and expansion in the era of digital transformation and represents a ubiquitous security perimeter. Identity done well is a key enabler for enterprises to achieve higher customer satisfaction and loyalty and better employee productivity. Conversely, identity done poorly can severely inhibit enterprises’ growth through poor customer experiences, user productivity issues, and elevated security risks. We believe the following industry trends are accelerating the need for a modern and comprehensive digital identity platform:
Enterprises Must Digitally Transform to Remain Competitive and Identity is a Key Enabler
Enterprises are Challenged with the Rapid Proliferation of Identities to Manage
Cyber Threats are Increasing in Scale and Sophistication and Identity is a Key Attack Vector
Enterprises Must Comply with Growing and Continually Evolving Regulatory Requirements
and personal data and user privacy are key focal points of regulation, such as the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act, the Health Insurance Portability and Accountability Act of 1996, or HIPAA, the California Consumer Privacy Act, or CCPA, the General Data Protection Regulation, or GDPR, and the Gramm-Leach-Bliley Act, or GLBA, and these types of regulations continue to proliferate globally.
IT Environments are Becoming Increasingly Complex
Limitations of Other Identity Solutions
Existing homegrown, legacy, and point solutions struggle to meet the identity needs of today’s enterprises. Many homegrown and point solutions were designed to solve a limited identity use case and are difficult to secure, maintain, and scale and thus quickly become inadequate. Legacy identity solutions were initially developed 15-20 years ago, when IT environments were less complex and security and compliance challenges were far less demanding. All of these other solutions frequently fail to address modern identity requirements in today’s complex, heterogenous IT environments given various limitations:
The ForgeRock Identity Platform
We provide a leading modern identity platform that enables enterprises to secure, manage, and govern the identities of everything—consumers, employees and partners, APIs, microservices, devices, and IoT. More than 1,300 organizations around the world leverage our platform to create seamless and secure digital experiences for collectively over three billion identities.
The ForgeRock Identity Platform includes a full suite of identity management, access management, identity governance, and AI-powered autonomous identity capabilities to serve the CIAM, AM, and IGA needs of enterprises. Our platform is deployable in a variety of configurations that can be combined, including self-managed environments, such as public and private cloud environments, and through ForgeRock Identity Cloud.
We provide the ability to manage multiple identity types:
We have an integrated set of comprehensive services to orchestrate and secure user identity journeys across four fundamental areas:
ForgeRock is the only vendor recognized as a leader by both Forrester and KuppingerCole in the CIAM market and by Gartner in the AM market.2
Why Leading Enterprises Choose ForgeRock
Our Opportunity
We view global digital identity as a massive opportunity. We believe we are poised to continue to gain market share as a leader in this attractive and growing market due to our extensive enterprise-grade platform that can integrate with any application and operating environment.
According to Gartner, the Worldwide Identity Access Management market is estimated to reach $11.6 billion in 2021 (excluding privileged access management, which Gartner estimates at $1.9 billion). We view Gartner’s estimate as validation of the large near-term opportunity ahead of us. Within the near-term opportunity, we believe we are well-positioned to displace homegrown, legacy, and point solutions. We also believe we are well-positioned to address the enterprise fraud management market, which Forrester estimates to be $3.2 billion in 2020. Further, we believe that a substantial portion of this opportunity is available to us in the near term, as companies migrate away from legacy technology solutions that cannot provide the functionality, flexibility, or performance necessary in today’s digital world.
We believe that identity is not only a functional tool to be used by IT, DevOps, and security professionals, but also a strategic initiative for global enterprises to meet the increasing need for personalized and omnichannel experiences. Thus, we have estimated our global addressable market opportunity to be approximately $71 billion. Our opportunity includes Identity and Access Management, and Identity Governance and Administration solutions that are applied to consumer, workforce, and IoT and services identity types. According to IDC, the majority of business Information and Communications Technology, or ICT, spend is done by enterprises, with 69% of business ICT spend from large and very large business and 31% of business ICT spend from small offices, small business, and medium businesses in 2021. For more information, see the section titled “Business—Our Opportunity”.
Our Growth Strategy
Risk Factors Summary
Our business is subject to numerous risks and uncertainties, including those discussed in the section titled “Risk Factors” immediately following this prospectus summary. These risks include, but are not limited to, the following:
Channels for Disclosure of Information
Investors, the media, and others should note that, following the completion of this offering, we intend to announce material information to the public through filings with the Securities and Exchange Commission, or the SEC, the investor relations page on our website, press releases, public conference calls, webcasts, and our corporate blog at www.forgerock.com/blog.
The information disclosed by the foregoing channels could be deemed to be material information. As such, we encourage investors, the media, and others to follow the channels listed above and to review the information disclosed through such channels.
Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website.
Corporate Information
We were formed in October 2009 as ForgeRock AS under the laws of Norway. In February 2012, we underwent a reorganization and incorporated as ForgeRock, Inc. under the laws of the state of Delaware. Our principal executive offices are located at 201 Mission Street, Suite 2900, San Francisco, California 94105, and our telephone number is (415) 599-1100. Our website address is www.forgerock.com. Information contained on, or that can be accessed through, our website does not constitute part of this prospectus and inclusions of our website address in this prospectus are inactive textual references only.
“ForgeRock,” our logo and our other registered or common law trademarks, service marks or trade names of ForgeRock appearing in this prospectus are the property of ForgeRock, Inc. Other trademarks and trade names referred to in this prospectus are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks and trade names.
Emerging Growth Company Status
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements that are otherwise applicable generally to public companies. The reduced reporting requirements include:
We may take advantage of these provisions until we are no longer an emerging growth company. We would cease to be an “emerging growth company” upon the earliest to occur of: (i) the last day of the year in which we have more than $1.07 billion in annual revenue; (ii) the date we qualify as a large accelerated filer, with at least $700 million of equity securities held by non-affiliates; (iii) the date on which we have, in any three-year period, issued more than $1.0 billion in non-convertible debt securities; and (iv) the last day of the year ending after the fifth anniversary of this offering. We may choose to take advantage of some but not all of these reduced reporting burdens. We have taken advantage of certain reduced reporting burdens in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.
In addition, the JOBS Act provides that an “emerging growth company” can delay adopting new or revised accounting standards until those standards apply to private companies. We have elected to use the extended transition period under the JOBS Act. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.
See the section titled “Risk Factors—Risks Related to Ownership of Our Class A Common Stock—We are an “emerging growth company” and the reduced disclosure and/or delayed accounting standards adoption requirements applicable to emerging growth companies may make our Class A common stock less attractive to investors.”