ForgeRock, Inc.  FORG   $21.00-$24.00 11.0million shares Underwriters: Morgan Stanley, J.P. Morgan, Deutsche Bank, Mizuho Securities, HSBC    Co-Managers: BTIG, Cowen, Piper Sandler, Truist Securities, William Blair Proposed trade date of 9/16  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.

ForgeRock, Inc.  FORG

• 11,000,000 shares to be offered between $21.00 and $24.00 per share
• Underwriters: Morgan Stanley, J.P. Morgan, Deutsche Bank, Mizuho Securities, HSBC Co-Managers: BTIG, Cowen, Piper Sandler, Truist Securities, William Blair
• Proposed trade date of 9/16
• Rating = 3

Click here to view the prospectus.

https://www.sec.gov/Archives/edgar/data/1543916/000119312521265934/d127368ds1a.htm

Company Overview

They 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. They 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.

They 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 their 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. Their 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.

 They provide the ability to manage multiple identity types:

• Consumer. Their platform enables enterprises to provide secure digital identity experiences for their consumers. User journeys built on their platform provide recognition and personalization across channels and devices, which they believe leads to better customer acquisition, loyalty, and retention while reducing friction and fraud.
• Workforce. Their platform helps enterprises increase the productivity of their employees, partners, and contingent workers by automatically enabling access to appropriate systems during the worker lifecycle. Their platform also helps reduce enterprise risk by securing system access and governing that the provisioned access is appropriate.
• IoT and Services. Their platform helps enterprises secure non-human identities, including IoT, machine identities, bots, APIs, and microservices.

 They have an integrated set of comprehensive services to orchestrate and secure user identity journeys across four fundamental areas:

• Identity Management. Automates the identity lifecycle process, including initial set-up, provisioning, transfers, changes, privacy considerations, security protections, and departures.
• Access Management. Provides simple and secure access management, using rich context and adaptive intelligence to make continuous access decisions.
• Identity Governance. Manages and reduces risk from users having excessive or unnecessary access to applications, systems, devices, and data.
• Autonomous Identity. Provides an enterprise-wide view of access, streamlines and automates governance processes, and reduces risk related to digital identities.

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.

IPO Detail

This is the initial public offering of ForgeRock, Inc. and no public market currently exists for its common stock. ForgeRock, Inc. is offering 11,000,000 shares of common stock as described in the prospectus. The company expects the initial public offering price of its common stock to be between $21.00 and $24.00 per share. The company has applied to list its common stock on the New York Stock Exchange under the symbol “FORG.”

Following this offering, they will have two classes of authorized common stock: Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to 10 votes and is convertible into one share of Class A common stock. All shares of their capital stock (or securities convertible into or exerciseable for their capital stock) outstanding immediately prior to this offering, including all shares held by their executive officers, directors and their respective affiliates, and all shares issuable on the conversion of their outstanding convertible preferred stock, will be reclassified into shares (or securities convertible into or exerciseable for shares) of their Class B common stock immediately prior to the completion of this offering. Immediately following the completion of this offering, holders of their Class B common stock will hold approximately 98.4% of the combined voting power of their outstanding capital stock, assuming no exercise by the underwriters of their option to purchase additional shares of Class A common stock from them in this offering.

Use of Proceeds

They estimate that the net proceeds to them from the sale of shares of their Class A common stock in this offering will be approximately $225.1 million. The principal purposes of this offering are to increase their capitalization and financial flexibility, create a public market for their Class A common stock and enable access to the public equity markets for them and their stockholders.

They intend to use the net proceeds they receive from this offering for general corporate purposes, including working capital, operating expenses and capital expenditures. They also intend to use a portion of the net proceeds they receive from this offering to satisfy their anticipated tax withholding and remittance obligations, which they anticipate to be approximately $3.5 million, related to the RSU Settlement. This amount is based upon the assumed initial public offering price of $22.50 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus. Additionally, they may use a portion of the net proceeds they receive from this offering to repay amounts outstanding under their Amended and Restated Loan Agreement. The March 2019, September 2019, December 2019, and April 2020 draws under the Amended and Restated Loan Agreement (i) bear interest at the prime rate plus 2.90%, plus 3.70%, plus 4.50%, and plus 4.50%, respectively (however, in no event will the prime rate be less than 5.50%), provided that, following the completion of this offering, such draws will bear interest at a rate of 8.00% per annum, and (ii) mature in September 2025, December 2025, December 2025, April 2026, and April 2026, respectively

Competition

Market Opportunity

They view global digital identity as a massive opportunity. They believe they are poised to continue to gain market share as a leader in this attractive and growing market due to their 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). They view Gartner’s estimate as validation of the large near-term opportunity ahead of them. Within the near-term opportunity, they believe they are well-positioned to displace homegrown, legacy, and point solutions. They also believe they are well-positioned to address the enterprise fraud management market, which Forrester estimates to be $3.2 billion in 2020. Further, they believe that a substantial portion of this opportunity is available to them 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.

They 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, they have estimated their global addressable market opportunity to be approximately $71 billion. Their 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. They calculate the components of their opportunity as follows:

• Consumer: They estimate that their market opportunity in Consumer identity is approximately $41 billion. They quantify this opportunity by multiplying eMarketer estimates of the number of smartphone users in 2021; by the global average number of total downloaded apps per smartphone in 2017 according to App Annie. They then apply their average price per consumer identity across their existing deployment options. Their price per identity is based on what their existing customers have purchased today.
• Workforce: They estimate that their market opportunity in Workforce identity is approximately $27 billion. They quantify this opportunity by using a 2019 Forrester report estimate for the number of global information workers (defined as a person who uses a smartphone, PC, or tablet for work for at least one hour per day in a typical week) in 2018. They then apply their average price per workforce identity across their existing deployment options. Their price per identity is based on what their existing customers have purchased today.
• IoT: They estimate that their global market opportunity in IoT identity is approximately $3 billion. They quantify this opportunity by using IDC’s estimate of total IoT devices in 2021 and then apply their average price per IoT identity based on their existing deployment option. Their price per identity is based on what their existing customers have purchased today.

According to IDC, the majority of business ICT spend is done by enterprises, with 69% of business ICT spend from large and very large businesses and 31% of business ICT spend from small offices, small businesses, and medium businesses in 2021.

Target Markets

Innovate and advance their platform. 

• Enhance SaaS. Add more products and functionality to accelerate their ForgeRock Identity Cloud platform, which they launched in September 2020.
• Enhance Governance. Continue to add functionality to their Governance offerings, which they launched in December 2019.
• Enhance AI. Invest in AI capabilities to automate decision making and deepen the security of their platform.
• Further build their Trust Network. Further develop and expand their Trust Network to help source and support relationships, provide technology, and enhance their go-to-market.

Acquire new customers. 

• Brand awareness and lead acceleration. Continue to invest in their brand and demand-generation to further expand their pipeline.
• Partner and alliance leverage. Continue to capitalize on key strategic partnerships and alliances, such as their alliances with global system integrators, or GSIs, including Accenture, Deloitte, and PwC, to win new business.
• Multiple entry points. The extensive breadth of their platform facilitates new customer acquisition by allowing customers to choose from: (1) numerous product modules across identity management, access management, identity governance, and autonomous identity, (2) identity types across consumer, workforce, and IoT and services, and (3) deployments across their self-managed and SaaS offerings.
• New geographies. Enter new countries within their existing global regions
• New types of buyers. Address the needs of all identity constituents within the enterprise and expand adoption beyond the C-suite to developers and business unit leaders. 
• Expand into mid-market. Leverage the ease of deployment of their SaaS offering to accelerate traction in smaller enterprise and mid-market organizations.

Expand within their existing customer base.

• More identities. Increase the utilization of their platform as their customers grow their identity footprint within existing use cases, as well as adding new use cases.
• More identity types. Cross-sell additional identity types to their customers across consumer, workforce, and IoT and services.
• More product modules. Cross-sell more product modules across identity management, access management, identity governance, and autonomous identity.
• More SaaS. Leverage the flexibility of their platform to allow their customers to seamlessly add or transition to their SaaS offering
• Customer success. Maintain their focus on customer success to expand within their existing customer base.

Company's Unique Strengths

They enable enterprises to deliver exceptional user experiences without compromising security. They provide capabilities, such as passwordless and usernameless authentication that free users from the challenges and security risks associated with weak and forgotten credentials. Further, their Intelligent Access Trees enable their customers to quickly create flexible and tailored user identity journeys allowing for frictionless, seamless, and consistent omnichannel user experiences that also result in enhanced security.

They offer a full suite of capabilities that enable enterprises to secure, manage, and govern identities in a unified modern platform. Their platform includes a full suite of identity functionality across CIAM, AM, and IGA, and a differentiated identity object modeling approach that supports all identity types. Their unified platform is built to work with enterprises’ complex landscape of applications and infrastructure and fulfill their identity needs across four fundamental areas: identity management, access management, identity governance, and autonomous identity.

Their platform manages all identity types. Under their Identity of Everything philosophy, they built their platform for consumers, the workforce, and IoT and services. Further, their platform enables their customers to understand and set policies based on the relationships between different identities. For example, a parent and child relationship where the parent must authorize transactions on behalf of the child, or a connected car with different drivers in a household with various restrictions. While each identity has different requirements, their platform can unify the enterprise architecture and security design across multiple identity types.

• For consumers, their platform enables enterprises to create personalized, simple, and secure identity journeys across multiple services and devices, regardless of where a consumer begins or continues their experience.
• For the workforce, their platform enables enterprises to increase the productivity of their workforce and partners by allowing users to login from anywhere, on any device, and quickly access necessary information with enterprise-grade security. Their platform provides foundational context designed to continuously ensure users are who they say they are as well as constantly fine tune user access based on signals and other gathered information.
• For IoT and services, since there are no biometrics or passwords that devices can use, their platform is designed to close the IoT security gap by allowing enterprises to create trusted identities to secure authenticity and authorization of IoT devices and their transactions or data streams. Their platform is differentiated in its ability to define identity objects and their attributes, and relationships between them.

Their platform delivers enterprise-grade performance and scalability to serve mission-critical needs. Since their launch in 2010, their capabilities around performance and scale, rich identity functionality, deployment flexibility, and extensive integration and interoperability have been purpose-built to meet the specific requirements of global enterprises. Their platform can handle large usage spikes as evidenced by their platform’s ability to support over 60,000 user-based access transactions per second per customer, or 216 million per hour. As of June 30, 2021, they had four customers with 100 million or more licensed identities. Their ability to serve mission-critical needs in complex environments for large customers enables them to grow their base of large customers and expand within each of them.

Their differentiated SaaS architecture facilitates strong customer data protection and high performance. They enable their customers to choose how they want to deploy their software in their complex, heterogeneous environments—whether it be a self-managed deployment in their private or public cloud environments, their SaaS offering, or a combination of both.

• Their proprietary tenant isolation approach is designed to enhance individual customers’ data security and sovereignty. They have improved upon a typical multi-tenant SaaS architecture by never commingling customer data with each other. In addition, their customers’ data resides only in locations that the customer chooses, which enables their customers to comply with data and privacy regulations, such as the GDPR in the European Union.
• Their architecture does not limit performance of individual customers. Their architecture is designed to maximize performance by not throttling or rate limiting individual customer environments. They also protect against “noisy neighbor” issues so that load from one customer will not affect another customer’s performance.
• Same codebase as their self-managed platform. Their SaaS offering leverages the same codebase as their self-managed offering, which enables them to create or modify functionality that can be released on both deployments, and enables their customers utilizing their self-managed deployment to add or migrate to their SaaS deployment more easily. They enable their customers to choose how they want to deploy their software in their complex, heterogeneous environments—whether it be a self-managed deployment in their private or public cloud environments, their SaaS offering, or a combination.
• Designed to be deployable as SaaS or in public and private cloud environments using DevOps. Their platform utilizes Kubernetes and Docker containerization and is deployable with DevOps workflows, and has been certified to run in GCP, AWS, Azure, or can be run on a customer’s private cloud.

Extensive integrations enable their platform to be the single view of identity and provide powerful extensibility in complex and heterogeneous environments. Their platform has extensive integration capabilities that enable them to integrate with the myriad of applications and infrastructures that exist within their enterprise customers’ heterogeneous IT environments. Their integration capabilities include broad support for open identity standards, APIs, SDKs, and application server agents, and they have invested in turnkey integration connectors that rapidly connect to SaaS, web, mobile, and legacy applications. They also provide Identity Gateway, an identity-aware proxy and security gateway that can bridge identity to non-standard or legacy applications, as well as secure applications and APIs from unauthorized access. Further, they provide Identity Edge Controller and Microservices Security to integrate identity into IoT devices and microservices. They are also able to leverage their Trust Network, an ecosystem of more than 120 partners, to extend their rich native functionality with additional vertical-specific authentication, biometrics, digital identity proofing, and risk management capabilities.

Proven track record of innovation. They have consistently set the standard of innovation in the identity market, anticipating major market trends and introducing new capabilities to support them. They are a pioneer of the development of advanced capabilities such as Identity of Everything, to secure and manage any identity object and its attributes, and the relationships between them. In 2016, they introduced Continuous Security to enable an identity-centric Zero Trust security model. Also in 2016, they introduced consumer privacy and consent features understanding that privacy would emerge as a major concern for consumers. In 2018, they introduced Intelligent Access Trees, their rich, low-code user journey orchestration capability. Also, they released ForgeRock Identity Platform deployable on public cloud and multi-cloud environments with DevOps (including GCP, AWS, and Azure). In 2019, they launched ForgeRock Identity Governance, enabling enterprises to manage and reduce risk from users having excessive or unnecessary access to applications and systems. In 2020, they introduced their enterprise-grade SaaS offering, ForgeRock Identity Cloud, with their proprietary tenant isolation technology, which is designed to provide enhanced data security in multi-tenant cloud environments. Also, they also introduced support for the FIDO2 Webauthn passwordless standard that has now been widely adopted by the major web browsers. They also launched their AI-based Autonomous Identity solution that utilizes proprietary algorithms to help organizations streamline and automate error-prone, human-based identity processes. They intend to continue investing to extend their leadership in the CIAM, AM, and IGA markets by developing or acquiring new products and technologies.

Management team with deep identity domain expertise. Their management team’s collective experience and deep knowledge of the identity space allows them to maintain their position as an innovation leader. Their management team previously held leadership roles in identity at security and software companies, such as Oracle, Symantec (now Broadcom), and VeriSign. They are a driving force behind their vision, mission, culture, and focus on customer success. Their leadership enables them to continuously deliver products that enterprises need and want. They are also critical in building upon their culture which they believe is vital to their success.

Company's Unique Risks

They have a history of losses, and they expect to incur losses for the foreseeable future. They have incurred net losses in each year since their inception, including net losses of $36.9 million, $41.8 million, $36.0 million, and $20.1 million in 2019 and 2020 and for the six months ended June 30, 2020 and 2021, respectively. As of June 30, 2021, they had an accumulated deficit of $236.2 million. They expect to continue to incur net losses for the foreseeable future

If they fail to innovate in response to rapid technological change, evolving industry standards, and changing customer needs, requirements, or preferences, their business, financial condition, and results of operations could be adversely affected.

If they or their third-party service providers experience a data security breach or network incident that allows, or is perceived to allow, unauthorized access to their platform or their customers’ data, their reputation, business, financial condition, and results of operations could be adversely affected.

The global COVID-19 pandemic has harmed and could continue to harm their business, financial condition, and results of operations.  The COVID-19 pandemic has disrupted and may continue to disrupt the operations of their customers and partners, particularly their customers in industries, including travel and entertainment, that have been especially impacted by the pandemic. Other disruptions or potential disruptions resulting from the COVID-19 pandemic include restrictions on their personnel and the personnel of their partners to travel and access customers for training, delays in product development efforts, and additional government requirements or other incremental mitigation efforts that may further impact their business, financial condition, and results of operations. The extent to which the COVID-19 pandemic continues to impact their business and results of operations will also depend on future developments that are highly uncertain and cannot be predicted

Their international operations and continued international expansion subject them to additional costs and risks, which could adversely affect their business, financial condition, and results of operations. They generated 56%, 52%, 51%, and 50% of their revenue outside the United States in 2019 and 2020 and for the six months ended June 30, 2020 and 2021, respectively. Their growth strategy depends, in part, on their continued international expansion. They are continuing to adapt to and develop strategies to address international markets, but there is no guarantee that such efforts will be successful.

If their platform or offerings do not effectively interoperate with their customers’ existing or future IT infrastructures, their business would be harmed.

They track certain operational metrics with internal systems and tools and do not independently verify such metrics. Certain of their operational metrics are subject to inherent challenges in measurement, and any real or perceived inaccuracies in such metrics may adversely affect their business and reputation.

If they are unable to build and maintain successful relationships with their partners, their business, financial condition, results of operations and results of operations could be adversely affected. They employ a go-to-market business model whereby a meaningful portion of their revenue is generated by sales through their strategic global channel partners, including global strategic consulting firms and global systems integrators, that further expand the reach of their direct sales force into additional geographies, sectors and industries. They provide certain of their partners with specific training and programs to assist them in selling access to their platform, and their deal cycles are sometimes protracted due to their partners’ involvement. If their partners are unsuccessful in marketing and selling access to their platform, it would limit their expansion into certain geographies, sectors and industries.

If they cannot license rights to use technologies on reasonable terms, they may not be able to commercialize new products in the future. In the future, they may identify additional third-party intellectual property that they may need to license to conduct their business, including to develop or commercialize new products or services. However, such licenses may not be available on acceptable terms or at all. 

Their business is subject to a wide range of laws and regulations, many of which are evolving, and failure to comply with such laws and regulations could harm their business, financial condition, and results of operations.

They are an “emerging growth company” and the reduced disclosure requirements applicable to emerging growth companies may make their Class A common stock less attractive to investors.

The dual-class structure of their common stock will have the effect of concentrating voting control with those stockholders who held their capital stock (or options or other securities convertible into or exercisable for their capital stock) prior to the completion of this offering, which will limit your ability to influence the outcome of important transactions, including a change in control. Their Class B common stock has 10 votes per share, and their Class A common stock, which is the stock they are offering in this initial public offering, has one vote per share. Following this offering, their directors, executive officers, and holders of more than 5% of their common stock, and their respective affiliates, will hold in the aggregate 85.5% of the combined voting power of their Class A common stock and Class B common stock. Because of the 10-to-one voting ratio between their Class B common stock and Class A common stock, the holders of their Class B common stock collectively will continue to control a majority of the combined voting power of their common stock and will therefore, if acting together, be able to control all matters submitted to their stockholders for approval.

They cannot predict the impact their dual class structure may have on the market price of their Class A common stock. They cannot predict whether their dual class structure will result in a lower or more volatile market price of their Class A common stock or in adverse publicity or other adverse consequences. For example, certain index providers have restrictions on including companies with multiple-class share structures in certain of their indexes.

Bottom Line

Their business has experienced rapid growth. In 2019 and 2020 and for the six months ended June 30, 2020 and 2021, their 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, they 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, their 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. They generate substantially all of their revenue from subscriptions, with 96% and 97% of their total revenue coming from subscriptions in 2020 and for the six months ended June 30, 2021, respectively. Their gross margin was 84%, 83%, 81%, and 83% in 2019 and 2020 and for the six months ended June 30, 2020 and 2021, respectively. Their 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.

They 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 their platform to create seamless and secure digital experiences for collectively over three billion identities. Their platform enables enterprises to provide secure digital identity experiences for their consumers. User journeys built on their platform provide recognition and personalization across channels and devices, which they believe leads to better customer acquisition, loyalty, and retention while reducing friction and fraud. Their platform helps enterprises increase the productivity of their employees, partners, and contingent workers by automatically enabling access to appropriate systems during the worker lifecycle. Their platform helps enterprises secure non-human identities, including IoT, machine identities, bots, APIs, and microservices. Their Identity Management automates the identity lifecycle process, including initial set-up, provisioning, transfers, changes, privacy considerations, security protections, and departures. Their Access Management provides simple and secure access management, using rich context and adaptive intelligence to make continuous access decisions. Their Identity Governance manages and reduces risk from users having excessive or unnecessary access to applications, systems, devices, and data. Their Autonomous Identity provides an enterprise-wide view of access, streamlines and automates governance processes, and reduces risk related to digital identities. 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.

They believe they are poised to continue to gain market share as a leader in this attractive and growing market due to their 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). They also believe they are well-positioned to address the enterprise fraud management market, which Forrester estimates to be $3.2 billion in 2020. Further, they believe that a substantial portion of this opportunity is available to them 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. They 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, they have estimated their global addressable market opportunity to be approximately $71 billion. They estimate that their market opportunity in Consumer identity is approximately $41 billion. They estimate that their market opportunity in Workforce identity is approximately $27 billion. They estimate that their global market opportunity in IoT identity is approximately $3 billion.

They intend ti innovate and advance their platform by adding more products and functionality to accelerate their ForgeRock Identity Cloud platform, continuing to add functionality to their Governance offerings, investing in AI capabilities to automate decision making and deepen the security of their platform, and furthering development and expanding their Trust Network to help source and support relationships, provide technology, and enhance their go-to-market. They plan to acquire new customers by continuing to invest in their brand and demand-generation to further expand their pipeline and to capitalize on key strategic partnerships and alliances. The extensive breadth of their platform facilitates new customer acquisition. They intend to enter new countries within their existing global regions and to address the needs of all identity constituents within the enterprise and expand adoption beyond the C-suite to developers and business unit leaders. They also intend to leverage the ease of deployment of their SaaS offering to accelerate traction in smaller enterprise and mid-market organizations. They intend to expand within their existing customer base by increasing the utilization of their platform as their customers grow their identity footprint within existing use cases, as well as adding new use cases., cross-selling additional identity types to their customers across consumer, workforce, and IoT and services and more product modules. They plan to leverage the flexibility of their platform to allow their customers to seamlessly add or transition to their SaaS offering.

They provide capabilities, such as passwordless and usernameless authentication that free users from the challenges and security risks associated with weak and forgotten credentials, and offer a full suite of capabilities that enable enterprises to secure, manage, and govern identities in a unified modern platform. Under their Identity of Everything philosophy, they built their platform for consumers, the workforce, and IoT and services. Further, their platform enables their customers to understand and set policies based on the relationships between different identities. Their platform enables enterprises to increase the productivity of their workforce and partners by allowing users to login from anywhere, on any device, and quickly access necessary information with enterprise-grade security. Since their launch in 2010, their capabilities around performance and scale, rich identity functionality, deployment flexibility, and extensive integration and interoperability have been purpose-built to meet the specific requirements of global enterprises. They have improved upon a typical multi-tenant SaaS architecture by never commingling customer data with each other. Their architecture is designed to maximize performance by not throttling or rate limiting individual customer environments. Their SaaS offering leverages the same codebase as their self-managed offering, which enables them to create or modify functionality that can be released on both deployments, and enables their customers utilizing their self-managed deployment to add or migrate to their SaaS deployment more easily. Their platform has extensive integration capabilities that enable them to integrate with the myriad of applications and infrastructures that exist within their enterprise customers’ heterogeneous IT environments. They are also able to leverage their Trust Network, an ecosystem of more than 120 partners, to extend their rich native functionality with additional vertical-specific authentication, biometrics, digital identity proofing, and risk management capabilities. They are a pioneer of the development of advanced capabilities such as Identity of Everything, to secure and manage any identity object and its attributes, and the relationships between them. They intend to continue investing to extend their leadership in the CIAM, AM, and IGA markets by developing or acquiring new products and technologies. Their management team previously held leadership roles in identity at security and software companies, such as Oracle, Symantec (now Broadcom), and VeriSign.

They have incurred net losses in each year since their inception, including net losses of $36.9 million, $41.8 million, $36.0 million, and $20.1 million in 2019 and 2020 and for the six months ended June 30, 2020 and 2021, respectively. As of June 30, 2021, they had an accumulated deficit of $236.2 million. They expect to continue to incur net losses for the foreseeable future. If they fail to innovate in response to rapid technological change, evolving industry standards, and changing customer needs, requirements, or preferences, their business, financial condition, and results of operations could be adversely affected. If they or their third-party service providers experience a data security breach or network incident that allows, or is perceived to allow, unauthorized access to their platform or their customers’ data, their reputation, business, financial condition, and results of operations could be adversely affected. The COVID-19 pandemic has disrupted and may continue to disrupt the operations of their customers and partners, particularly their customers in industries, including travel and entertainment, that have been especially impacted by the pandemic. They generated 56%, 52%, 51%, and 50% of their revenue outside the United States in 2019 and 2020 and for the six months ended June 30, 2020 and 2021, respectively. Their growth strategy depends, in part, on their continued international expansion. They are continuing to adapt to and develop strategies to address international markets, but there is no guarantee that such efforts will be successful. If their platform or offerings do not effectively interoperate with their customers’ existing or future IT infrastructures, their business would be harmed. Certain of their operational metrics are subject to inherent challenges in measurement, and any real or perceived inaccuracies in such metrics may adversely affect their business and reputation. They employ a go-to-market business model whereby a meaningful portion of their revenue is generated by sales through their strategic global channel partners, including global strategic consulting firms and global systems integrators, that further expand the reach of their direct sales force into additional geographies, sectors and industries. If their partners are unsuccessful in marketing and selling access to their platform, it would limit their expansion into certain geographies, sectors and industries. In the future, they may identify additional third-party intellectual property that they may need to license to conduct their business, including to develop or commercialize new products or services. However, such licenses may not be available on acceptable terms or at all.  Their business is subject to a wide range of laws and regulations, many of which are evolving, and failure to comply with such laws and regulations could harm their business, financial condition, and results of operations. They are an “emerging growth company” and the reduced disclosure requirements applicable to emerging growth companies may make their Class A common stock less attractive to investors. Following this offering, their directors, executive officers, and holders of more than 5% of their common stock, and their respective affiliates, will hold in the aggregate 85.5% of the combined voting power of their Class A common stock and Class B common stock. They cannot predict whether their dual class structure will result in a lower or more volatile market price of their Class A common stock or in adverse publicity or other adverse consequences. For example, certain index providers have restrictions on including companies with multiple-class share structures in certain of their indexes.