Shares of newly listed company Ping Identity (PING) have gained 20% after it announced its quarterly results on Wednesday during aftermarket hours. The company reported sales of $61.8 million with an adjusted EPS of $0.13. Overall, the sales rose 45% year-over-year, while the EPS rose 550% from $0.02.
Analysts expected Ping to report sales of $55.03 million with an EPS of $0.01 in the third quarter. In the December quarter, Ping forecast sales between $64.7 million and $66.7 million, which was above the consensus estimates of $63.36 million. The 2019 sales will be between $239.3 million and $241.3 million compared to analysts’ estimates of $231.28 million.
What impacted Ping Identity’s sales in Q3?
Ping Identity is a cybersecurity business. The company aims to provide a secure and scalable enterprise platform to prevent security breaches and increase employee productivity.
The exponential rise in digital transactions has driven the need for authentication. As a result, there’s a growing demand for secure identity management services. There’s a need to identify and authenticate every digital transaction, which will help Ping gain traction.
Ping Identity claims to provide end-to-end security to enterprises with the flexibility for hybrid-cloud deployment. Currently, the company has a customer base of 1,300. However, the company wants to gain market share in the identity space.
Ping Identity has secured contracts with 50% of Fortune 100 companies, 12 of the largest US banks, and five out of the seven largest retailers. The company attributed the growing demand for its solutions for the ease of integration and deployment flexibility across platforms.
Notably, he company has solid growth in annual recurring sales. A 23% increase in its ARR (average recurring revenues) drove the revenue growth. In the September quarter, Ping managed to increase its ARR to $206.7 million.
Ping has valued the total available market at $25 billion. Meanwhile, the company expects the replacement of legacy identity solutions to result in higher demand. Solutions in single access security and data governance solutions will help enterprise transition away from legacy solutions.
The company is also eyeing an opportunity in Greenfield expansion. The enterprise’s need for customer identity, multifactor authentication, and API security continues to grow. Ping’s identity platform offers solutions for single sign-on, access security, multifactor authentication, API intelligence, and data governance. These solutions can be deployed as standalone or can be integrated with other solutions.
Is Ping Identity part of a crowded market?
Ping Identity has grown its sales at a robust pace. However, the company is part of an increasingly crowded market. The cybersecurity market is led by tech heavyweights including Cisco (CSCO), Palo Alto Networks (PANW), Fortinet (FTNT), Symantec (SYMC), and Check Point (CHKP).
The top five players accounted for close to 60% of the Unified Threat Management market. The segment grew 10.4% year-over-year to $3.923 billion in the second quarter, according to the IDC. Does the industry growth mean that smaller players like Ping Identity, CrowdStrike, and Okta have enough room to grow sales at a significant pace?
Ping’s CEO and founder, Andre Durand, remains optimistic and said, “Our strong third quarter results were driven by Ping Identity’s Intelligent Identity leadership in securing customer, employee, partner and IoT identities across the enterprise market, and bolstered by market-wide momentum for identity solutions that enable digital transformation and simultaneously enhance security.”
What’s next for investors?
Currently, Ping Identity stock is trading at $16.51, which is above its IPO price of $15. Shortly after the company’s quarterly results, analysts upgraded the stock’s target price. According to multiple reports from The Fly,
- Barclays analyst Saket Kalia increased Ping Identity’s target price from $21 to $22 and reiterated an “overweight” rating.
- Mizuho analyst Gregg Moskowitz raised the stock’s target price from $20 to $22 and maintained a “buy” rating.
Unlike most tech IPOs, Ping Identity is posting an adjusted profit, which is encouraging. The company’s value is $1.3 billion or 5.6x forward sales, which is reasonable for a high growth company.
Meanwhile, Ping Identity is also cash-flow positive. The company ended the third quarter with an operating cash flow of $8 million. Ping’s dollar-based net retention rate was 115%, which was the highest ever for eight quarters. By the end of 2019, the company expects its ARR to be between $222.1 million and $223.1 million.