Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries ForgeRock Announces Strong Fourth Quarter and Full Year 2022 Financial Results By: ForgeRock, Inc. via Business Wire February 27, 2023 at 16:05 PM EST ARR was $229.6 million for Q4 2022, growing 25% year-over-year Total revenue was $217.5 million in 2022, growing 23% year-over-year Subscription SaaS, Support & Maintenance revenue was $119.0 million in 2022, growing 39% year-over-year ForgeRock, Inc. (NYSE: FORG), a global leader in digital identity, today announced financial results for its fourth quarter and fiscal year ended December 31, 2022. “We ended 2022 with $230 million of ARR, representing another solid year of growth for ForgeRock,” said Fran Rosch, CEO of ForgeRock. “Our net retention rate increased in Q4 to 113% as more of our customers migrated to the ForgeRock Identity Cloud, our SaaS offering, and also expanded with us through more identities, use cases, and product modules. In 2022, we continued to innovate, introducing new products as well as infusing AI across our entire enterprise-grade platform to further strengthen our market position in the digital identity space. We are excited about our new product capabilities like Autonomous Access, as well as our roadmap ahead for 2023.” “Our revenue grew 33% in Q4 2022 and we saw our gross margin and non-GAAP gross margin expand to 82% and 83%, respectively, in 2022,” said John Fernandez, CFO of ForgeRock. “Our Subscription SaaS, Support & Maintenance revenue represented 55% of total revenue in 2022 compared to 48% in 2021, which was driven by the robust growth in the ForgeRock Identity Cloud, our SaaS offering. Our GAAP operating margin was (25)% in Q4 2022 and includes the impact of acquisition-related costs, and (22)% in Q4 2021. Our non-GAAP operating margin in Q4 2022 of (2)% was a significant improvement over the (13)% we experienced in Q4 2021 and our business continues to be on track to achieve non-GAAP operating margin profitability sometime in the back half of 2023.” Fourth Quarter 2022 Financial Highlights: ARR: Annualized Recurring Revenue was $229.6 million, an increase of 25% year-over-year. Revenue: Total revenue was $63.5 million, an increase of 33% year-over-year. Operating Loss: GAAP operating loss was $15.9 million, or (25)% of total revenue, compared to $10.4 million, or (22)% of total revenue, in the fourth quarter of 2021. Non-GAAP operating loss was $1.4 million, or (2)% of total revenue, compared to $6.1 million, or (13)% of total revenue, in the fourth quarter of 2021. Net Loss: GAAP net loss was $16.5 million, compared to $12.4 million in the fourth quarter of 2021. GAAP net loss per share was $0.19, compared to $0.15 in the fourth quarter of 2021. Non-GAAP net loss was $2.0 million, compared to $8.1 million in the fourth quarter of 2021. Non-GAAP net loss per share was $0.02, compared to $0.10 in the fourth quarter of 2021. Cash Flow: Net cash used in operations was $14.0 million, compared to $5.4 million in the fourth quarter of 2021. Free cash flow was $(14.1) million, or (22)% of total revenue, compared to $(6.1) million, or (13)% of total revenue, in the fourth quarter of 2021. Cash, cash equivalents and short-term investments were $336.1 million as of December 31, 2022. Full Year 2022 Financial Highlights: Revenue: Total revenue was $217.5 million, an increase of 23% year-over-year. Operating Loss: GAAP operating loss was $66.6 million, or (31)% of total revenue, compared to $28.4 million, or (16)% of total revenue, in 2021. Non-GAAP operating loss was $27.6 million, or (13)% of total revenue, compared to $17.8 million or (10)% of total revenue in 2021. Net Loss: GAAP net loss was $66.3 million compared to $47.8 million in 2021. GAAP net loss per share was $0.78 compared to $1.14 in 2021. Non-GAAP net loss was $27.0 million, compared to $37.0 million in 2021. Non-GAAP net loss per share was $0.32, compared to $0.89 in 2021. Cash Flow: Net cash used in operations was $45.0 million, compared to $36.8 million in 2021. Free cash flow was $(46.6) million, or (21)% of total revenue, compared to $(37.9) million, or (21)% of total revenue in 2021. ForgeRock uses certain non-GAAP financial measures, which are described further below and reconciled to the most comparable GAAP financial measure after the presentation of our GAAP financial statements. Transaction with Thoma Bravo As previously reported, the U.S. Department of Justice (the “DOJ”) has issued a Second Request in connection with its review of the proposed acquisition of ForgeRock by Thoma Bravo pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). Recently, ForgeRock and entities affiliated with Thoma Bravo entered into an agreement (the “Timing Agreement”) with the DOJ in connection with the proposed acquisition and the Second Request. Under the Timing Agreement, ForgeRock and Thoma Bravo have agreed that they will certify compliance with the Second Request no earlier than May 1, 2023, and will not consummate the proposed acquisition less than 75 days after compliance with the Second Request. The Timing Agreement does not prevent ForgeRock and Thoma Bravo from consummating the proposed acquisition sooner if the DOJ closes its investigation of the proposed acquisition before that date. The expiration or termination of the waiting period applicable to the proposed acquisition pursuant to the HSR Act (and the absence of any agreement with any governmental authority not to consummate the proposed acquisition) is the only remaining approval or regulatory condition required to consummate the closing of the proposed acquisition. Due to the Company's pending acquisition by Thoma Bravo that was announced on October 11, 2022, there will not be a conference call or live webcast to discuss these financial results. In addition, the Company has suspended its financial guidance as a result of the pending transaction. Supplemental Financial and Other Information: Supplemental financial and other information can be accessed through ForgeRock's investor relations website at investors.forgerock.com. Non-GAAP Financial Measures and Key Metrics: Besides financial results prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), ForgeRock believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, ForgeRock uses non-GAAP financial measures to evaluate its operations. We use non-GAAP financial measures to understand and evaluate our core operating performance and trends, to prepare our annual budget, to monitor and assess our liquidity, and to develop short-term and long-term operating plans. We believe that the non-GAAP financial measures we review are each a useful measure to us and to our investors because they provide consistency and comparability with our past performance and between periods, as these metrics generally eliminate the effects of the variability of certain charges and expenses that may not reflect our overall operating performance and liquidity. We believe that non-GAAP financial measures, when taken collectively with GAAP financial information, can be helpful to us and to investors because it provides consistency and comparability with past performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. ForgeRock presents non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development, non-GAAP sales and marketing, non-GAAP general and administrative, non-GAAP operating loss, non-GAAP operating margin and non-GAAP net loss per share, all of which exclude acquisition-related costs, stock-based compensation expense, and certain of which exclude the tax effect on the provision for (benefit from) income taxes related to such excluded items. ForgeRock excludes acquisition-related costs because they are unrelated to our current operations and are neither comparable to the prior period nor indicative of future results. We also exclude stock-based compensation expense as it can vary significantly from period to period based on share price and the timing, size and nature of equity awards. As such, ForgeRock and many investors and analysts exclude stock-based compensation expense to better evaluate its operating performance and cash spending levels relative to its industry sector and competitors. ForgeRock presents adjusted EBITDA, which is also a non-GAAP financial measure. We define adjusted EBITDA as GAAP operating loss, adjusted for depreciation, acquisition-related costs and stock-based compensation expense. ForgeRock excludes certain items that it believes are not good indicators of ForgeRock’s current or future operating performance. These items are depreciation, acquisition-related costs and stock-based compensation. ForgeRock excludes depreciation given its standard exclusion in EBITDA and adjusted EBITDA results. In addition, the frequency and amount of such charges can vary significantly based on the size and timing of the transactions. ForgeRock also presents free cash flow, which is a non-GAAP financial measure. We define free cash flow as net cash used in operating activities less cash used for purchases of property and equipment. ForgeRock provides free cash flow as it is a commonly used non-GAAP financial measure to indicate the amount of cash needed to fund its operations and capital expenditures. The non-GAAP financial information is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP and may be different from similarly-titled non-GAAP measures used by other companies. The principal limitation of these non-GAAP financial measures is that they exclude expenses that are required by GAAP to be recorded in our consolidated financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by our management about which expenses are excluded or included in determining these non-GAAP financial measures. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. ForgeRock also uses the key metric Annualized Recurring Revenue (“ARR”), to evaluate its operations. We believe that ARR is a key metric because it is driven by our ability to acquire new customers and to maintain and expand our relationship with existing customers. We define ARR as the annualized value of all contractual subscription agreements as of the end of the period. To the extent that we are negotiating a renewal with a customer after the expiration of the subscription, we continue to include that revenue in ARR if we are actively in discussion with such an organization for a new subscription or renewal, or until such organization notifies us that it is not renewing its subscription. We perform this calculation on an individual customer basis by dividing the total dollar amount of the customer’s contract by the total contract term stated in months and multiplying this amount by 12 to annualize. Calculated ARR for each individual customer is then aggregated to arrive at total ARR. ARR does not have a standardized meaning and therefore may not be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue, deferred revenue and remaining performance obligations computed and/or disclosed in accordance with GAAP and is not intended to be combined with or to replace any of those items. Specifically, ARR, as calculated under the definition herein, has the effect of normalizing the impact of revenue recognition for term-based subscription license agreements. ARR is calculated based upon annualized contract value and not actual GAAP revenue. Under ASC 606, for term-based subscription license agreements, we recognize approximately half of the total contract value upfront as license revenue, with the remainder attributable to maintenance and support that is recognized ratably over the license term. Annualizing actual GAAP revenue for any particular period could result in a meaningful difference from our ARR calculation, particularly when we are experiencing increases or decreases in the mix of multi-year term licenses. ARR is not a forecast and the active contracts at the date used in calculating ARR may or may not be extended by our customers. Forward-Looking Statements: This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements generally relate to future events or ForgeRock’s future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates,” “going to,” "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these words or other similar terms or expressions that concern ForgeRock’s expectations, strategy, priorities, plans or intentions. Forward-looking statements in this release include, but are not limited to the quotations of management, statements regarding the proposed acquisition by entities affiliated with Thoma Bravo, our strategy, products and financial condition. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to the pendency of the proposed acquisition by entities affiliated with Thoma Bravo or the failure to complete such transaction, our ability to attract new customers and retain and sell additional functionality and services to our existing customers, our ability to sustain and manage our growth, our ability to successfully add new features and functionality to our platform, our ability to compete effectively in an increasingly competitive market, and general market, political, economic, and business conditions, and other risks detailed in our filings with the Securities and Exchange Commission ("SEC"), including our Quarterly Report on Form 10-Q filed with the SEC on November 10, 2022 and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which will be filed with the SEC. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent our views as of the date of this press release. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release. We anticipate that subsequent events and developments could cause our views to change. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. About ForgeRock ForgeRock®, a global leader in digital identity, delivers modern identity and access management solutions for consumers, employees and things to simply and safely access the connected world. Using ForgeRock, more than 1,300 organizations around the world orchestrate, manage, and secure the complete lifecycle of identities from dynamic access controls, governance, APIs, and storing authoritative data – consumable in cloud or hybrid environments. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three months ended December 31, Year ended December 31, 2022 2021 2022 2021 Revenue: Subscription term licenses $ 28,203 $ 21,662 $ 87,292 $ 84,611 Subscription SaaS, support & maintenance 31,974 23,891 119,003 85,434 Perpetual licenses 318 810 515 1,695 Total subscriptions and perpetual licenses 60,495 46,363 206,810 171,740 Professional services 3,028 1,541 10,702 5,193 Total revenue 63,523 47,904 217,512 176,933 Cost of revenue: Subscriptions and perpetual licenses 8,865 5,223 27,768 17,535 Professional services 3,080 4,735 11,772 15,393 Total cost of revenue(1) 11,945 9,958 39,540 32,928 Gross profit 51,578 37,946 177,972 144,005 Operating expenses: Research and development(1) 16,138 12,283 61,837 43,497 Sales and marketing(1) 32,793 23,825 118,794 88,620 General and administrative(1) 14,694 12,237 57,724 40,329 Acquisition-related costs 3,809 — 6,173 — Total operating expenses 67,434 48,345 244,528 172,446 Operating loss (15,856 ) (10,399 ) (66,556 ) (28,441 ) Foreign currency gain (loss) (1,066 ) (816 ) 2,568 (3,819 ) Fair value adjustment on warrants and preferred stock tranche option — — — (10,068 ) Interest expense (903 ) (945 ) (3,577 ) (4,516 ) Other income (expense), net 1,906 24 2,971 (40 ) Interest and other expense, net (63 ) (1,738 ) 1,962 (18,443 ) Loss before income taxes (15,919 ) (12,138 ) (64,594 ) (46,884 ) Provision for income taxes 575 223 1,678 884 Net loss $ (16,494 ) $ (12,361 ) $ (66,272 ) $ (47,768 ) Net loss per share attributable to common stockholders: Basic and diluted $ (0.19 ) $ (0.15 ) $ (0.78 ) $ (1.14 ) Weighted-average shares used in computing net loss per share attributable to common stockholders: Basic and diluted 86,124 81,979 84,885 41,742 (1) Includes stock-based compensation as follows (in thousands): Three months ended December 31, Year ended December 31, 2022 2021 2022 2021 Cost of revenue $ 1,062 $ 424 $ 2,852 $ 617 Research and development 2,053 867 6,738 1,924 Sales and marketing 4,186 1,449 12,044 3,495 General and administrative 3,303 1,530 11,126 4,630 Total stock-based compensation expense $ 10,604 $ 4,270 $ 32,760 $ 10,666 CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) December 31, 2022 2021 Assets Cash and cash equivalents $ 128,803 $ 128,381 Short-term investments 207,248 241,411 Accounts receivable, net of allowance for credit losses of $444 and $34, respectively 71,439 55,999 Contract assets 25,117 19,670 Deferred commissions 9,936 8,457 Prepaid expenses and other assets 14,810 9,787 Total current assets 457,353 463,705 Deferred commissions 20,379 15,601 Property and equipment, net 2,850 2,463 Operating lease right-of-use assets 10,190 12,626 Contract and other assets 3,408 2,783 Total assets $ 494,180 $ 497,178 Liabilities and stockholders’ equity Accounts payable $ 4,587 $ 2,039 Accrued expenses 34,311 27,375 Current portion of operating lease liability 1,902 1,820 Deferred revenue 82,036 67,222 Other liabilities 2,927 2,258 Total current liabilities 125,763 100,714 Long-term debt 39,611 39,483 Long-term operating lease liability 9,207 11,037 Deferred revenue 1,283 8,172 Other liabilities 2,150 1,646 Total liabilities 178,014 161,052 Stockholders’ equity Common stock 87 83 Additional paid-in capital 641,983 593,196 Accumulated other comprehensive income 4,193 6,672 Accumulated deficit (330,097 ) (263,825 ) Total stockholders’ equity 316,166 336,126 Total liabilities and stockholders’ equity $ 494,180 $ 497,178 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Year ended December 31, 2022 2021 Operating activities: Net loss $ (66,272 ) $ (47,768 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 1,064 1,061 Noncash operating lease expense 2,449 1,931 Stock-based compensation expense 32,760 10,666 Amortization of deferred commissions 15,235 13,964 Foreign currency remeasurement loss (gain) (2,711 ) 3,032 Change in fair value of redeemable convertible preferred stock warrant liability — 5,871 Change in fair value of preferred stock tranche option liability — 4,157 Amortization of premium / discount on short-term investments 1,156 1,330 Other (169 ) 266 Changes in operating assets and liabilities: Deferred commissions (21,487 ) (23,273 ) Accounts receivable (13,371 ) (20,669 ) Contract and other non-current assets (5,104 ) (10,505 ) Prepaid expenses and other current assets (2,323 ) (6,025 ) Operating lease liabilities (1,733 ) (2,377 ) Accounts payable 2,514 701 Accrued expenses and other liabilities 7,422 10,863 Deferred revenue 5,564 19,992 Net cash used in operating activities (45,006 ) (36,783 ) Investing activities: Purchases of property and equipment (1,619 ) (1,113 ) Purchases of short-term investments (166,363 ) (277,126 ) Maturities of short-term investments 158,615 31,860 Sales of short-term investments 39,379 1,933 Net cash provided by (used in) investing activities 30,012 (244,446 ) Financing activities: Proceeds from initial public offering, net of underwriting discounts and commissions — 295,694 Payment of stock offering costs (145 ) (6,038 ) Proceeds from exercises of employee stock options 12,237 4,902 Proceeds from issuance of common stock under employee stock purchase plan 6,961 — Proceeds from issuance of redeemable convertible preferred stock — 19,951 Employee payroll taxes paid for net shares settlement of restricted stock units (3,154 ) (3,877 ) Principal repayments on debt — (120 ) Net cash provided by financing activities 15,899 310,512 Effect of exchange rates on cash and cash equivalents and restricted cash 1,982 (888 ) Net increase in cash, cash equivalents and restricted cash 2,887 28,395 Cash, cash equivalents and restricted cash, beginning of year 128,437 100,042 Cash, cash equivalents and restricted cash, end of period $ 131,324 $ 128,437 Supplementary cash flow disclosure: Short-term investments, end of period $ 207,248 $ 241,411 Cash paid for interest 3,244 3,629 Cash paid for income taxes 1,245 769 Deferred offering costs accrued but not yet paid — (145 ) Conversion of redeemable convertible preferred stock to common stock — 263,178 Reconciliation of cash and cash equivalents and restricted cash: Cash and cash equivalents $ 128,803 $ 128,381 Restricted cash included in prepaids and other current assets 2,521 56 Total cash and cash equivalents and restricted cash $ 131,324 $ 128,437 FORGEROCK, INC. NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS TO GAAP RESULTS Non-GAAP Gross Profit and Non-GAAP Gross Margin Gross profit is defined as GAAP revenue less cost of revenue and gross margin is GAAP gross profit as a percentage of total revenue. We define non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin adjusted to exclude stock-based compensation expense, as presented below (in thousands, except percentages): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Gross Profit $ 51,578 $ 37,946 $ 177,972 $ 144,005 Add: stock-based compensation included in cost of revenue 1,062 424 2,852 617 Non-GAAP gross profit $ 52,640 $ 38,370 $ 180,824 $ 144,622 Gross margin 81 % 79 % 82 % 81 % Non-GAAP gross margin 83 % 80 % 83 % 82 % Non-GAAP Research and Development We define non-GAAP research and development as GAAP research and development adjusted to exclude stock-based compensation expense, as presented below (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Research and development $ 16,138 $ 12,283 $ 61,837 $ 43,497 Less: Stock-based compensation 2,053 867 6,738 1,924 Non-GAAP research and development $ 14,085 $ 11,416 $ 55,099 $ 41,573 Non-GAAP Sales and Marketing We define non-GAAP sales and marketing as GAAP sales and marketing adjusted to exclude stock-based compensation expense, as presented below (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Sales and marketing $ 32,793 $ 23,825 $ 118,794 $ 88,620 Less: Stock-based compensation 4,186 1,449 12,044 3,495 Non-GAAP sales and marketing $ 28,607 $ 22,376 $ 106,750 $ 85,125 Non-GAAP General and Administrative We define non-GAAP general and administrative as GAAP general and administrative adjusted to exclude stock-based compensation expense, as presented below (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 General and administrative $ 14,694 $ 12,237 $ 57,724 $ 40,329 Less: Stock-based compensation 3,303 1,530 11,126 4,630 Non-GAAP general and administrative $ 11,391 $ 10,707 $ 46,598 $ 35,699 Non-GAAP Operating Loss and Non-GAAP Operating Margin We define non-GAAP operating loss and non-GAAP operating margin as GAAP operating loss and GAAP operating margin adjusted to exclude stock-based compensation expense and acquisition-related costs, as presented below (in thousands, except percentages): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Operating loss $ (15,856 ) $ (10,399 ) $ (66,556 ) $ (28,441 ) Add: Stock-based compensation 10,604 4,270 32,760 10,666 Add: Acquisition-related costs 3,809 — 6,173 — Non-GAAP operating loss $ (1,443 ) $ (6,129 ) $ (27,623 ) $ (17,775 ) Operating margin (25 ) % (22 ) % (31 ) % (16 ) % Non-GAAP operating margin (2 ) % (13 ) % (13 ) % (10 ) % Adjusted EBITDA We define adjusted EBITDA as operating loss adjusted to exclude depreciation, stock-based compensation expense and acquisition-related costs, as presented below (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Operating loss $ (15,856 ) $ (10,399 ) $ (66,556 ) $ (28,441 ) Add: Depreciation 252 266 1,064 1,061 Add: Stock-based compensation 10,604 4,270 32,760 10,666 Add: Acquisition-related costs 3,809 — 6,173 — Adjusted EBITDA $ (1,191 ) $ (5,863 ) $ (26,559 ) $ (16,714 ) Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per Share, Basic and Diluted We define non-GAAP net loss as GAAP net loss adjusted to exclude stock-based compensation expense and acquisition-related costs, including the tax effect of stock-based compensation expense on the provision for (benefit from) income taxes as presented below (in thousands, except per share amounts): We define non-GAAP net loss per share, basic, as non-GAAP net loss divided by GAAP weighted-average shares used to compute net loss per share, basic. We define non-GAAP net loss per share, diluted, as non-GAAP net loss divided by GAAP weighted average shares used to compute net loss per share, basic, adjusted for (i) the dilutive effect of employee equity awards, excluding the impact of unrecognized stock-based compensation expense and (ii) warrants; unless these adjustments are anti-dilutive. Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net loss $ (16,494 ) $ (12,361 ) $ (66,272 ) $ (47,768 ) Add: Stock-based compensation 10,604 4,270 32,760 10,666 Add: Acquisition-related costs 3,809 — 6,173 — Tax effect on the provision for income taxes 97 40 295 76 Non-GAAP net loss $ (1,984 ) $ (8,051 ) $ (27,044 ) $ (37,026 ) Non-GAAP net loss per share, basic and diluted $ (0.02 ) $ (0.10 ) $ (0.32 ) $ (0.89 ) Free Cash Flow We define free cash flow as net cash provided by (used in) operating activities less cash used for purchases of property and equipment as presented below (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net cash used in operating activities $ (14,002 ) $ (5,427 ) $ (45,006 ) $ (36,783 ) Purchases of property and equipment (145 ) (654 ) (1,619 ) (1,113 ) Free cash flow $ (14,147 ) $ (6,081 ) $ (46,625 ) $ (37,896 ) View source version on businesswire.com: https://www.businesswire.com/news/home/20230227005713/en/Contacts Investor Relations: investors@forgerock.com Media Contacts: Kristen Batch, ForgeRock kristen.batch@forgerock.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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ForgeRock Announces Strong Fourth Quarter and Full Year 2022 Financial Results By: ForgeRock, Inc. via Business Wire February 27, 2023 at 16:05 PM EST ARR was $229.6 million for Q4 2022, growing 25% year-over-year Total revenue was $217.5 million in 2022, growing 23% year-over-year Subscription SaaS, Support & Maintenance revenue was $119.0 million in 2022, growing 39% year-over-year ForgeRock, Inc. (NYSE: FORG), a global leader in digital identity, today announced financial results for its fourth quarter and fiscal year ended December 31, 2022. “We ended 2022 with $230 million of ARR, representing another solid year of growth for ForgeRock,” said Fran Rosch, CEO of ForgeRock. “Our net retention rate increased in Q4 to 113% as more of our customers migrated to the ForgeRock Identity Cloud, our SaaS offering, and also expanded with us through more identities, use cases, and product modules. In 2022, we continued to innovate, introducing new products as well as infusing AI across our entire enterprise-grade platform to further strengthen our market position in the digital identity space. We are excited about our new product capabilities like Autonomous Access, as well as our roadmap ahead for 2023.” “Our revenue grew 33% in Q4 2022 and we saw our gross margin and non-GAAP gross margin expand to 82% and 83%, respectively, in 2022,” said John Fernandez, CFO of ForgeRock. “Our Subscription SaaS, Support & Maintenance revenue represented 55% of total revenue in 2022 compared to 48% in 2021, which was driven by the robust growth in the ForgeRock Identity Cloud, our SaaS offering. Our GAAP operating margin was (25)% in Q4 2022 and includes the impact of acquisition-related costs, and (22)% in Q4 2021. Our non-GAAP operating margin in Q4 2022 of (2)% was a significant improvement over the (13)% we experienced in Q4 2021 and our business continues to be on track to achieve non-GAAP operating margin profitability sometime in the back half of 2023.” Fourth Quarter 2022 Financial Highlights: ARR: Annualized Recurring Revenue was $229.6 million, an increase of 25% year-over-year. Revenue: Total revenue was $63.5 million, an increase of 33% year-over-year. Operating Loss: GAAP operating loss was $15.9 million, or (25)% of total revenue, compared to $10.4 million, or (22)% of total revenue, in the fourth quarter of 2021. Non-GAAP operating loss was $1.4 million, or (2)% of total revenue, compared to $6.1 million, or (13)% of total revenue, in the fourth quarter of 2021. Net Loss: GAAP net loss was $16.5 million, compared to $12.4 million in the fourth quarter of 2021. GAAP net loss per share was $0.19, compared to $0.15 in the fourth quarter of 2021. Non-GAAP net loss was $2.0 million, compared to $8.1 million in the fourth quarter of 2021. Non-GAAP net loss per share was $0.02, compared to $0.10 in the fourth quarter of 2021. Cash Flow: Net cash used in operations was $14.0 million, compared to $5.4 million in the fourth quarter of 2021. Free cash flow was $(14.1) million, or (22)% of total revenue, compared to $(6.1) million, or (13)% of total revenue, in the fourth quarter of 2021. Cash, cash equivalents and short-term investments were $336.1 million as of December 31, 2022. Full Year 2022 Financial Highlights: Revenue: Total revenue was $217.5 million, an increase of 23% year-over-year. Operating Loss: GAAP operating loss was $66.6 million, or (31)% of total revenue, compared to $28.4 million, or (16)% of total revenue, in 2021. Non-GAAP operating loss was $27.6 million, or (13)% of total revenue, compared to $17.8 million or (10)% of total revenue in 2021. Net Loss: GAAP net loss was $66.3 million compared to $47.8 million in 2021. GAAP net loss per share was $0.78 compared to $1.14 in 2021. Non-GAAP net loss was $27.0 million, compared to $37.0 million in 2021. Non-GAAP net loss per share was $0.32, compared to $0.89 in 2021. Cash Flow: Net cash used in operations was $45.0 million, compared to $36.8 million in 2021. Free cash flow was $(46.6) million, or (21)% of total revenue, compared to $(37.9) million, or (21)% of total revenue in 2021. ForgeRock uses certain non-GAAP financial measures, which are described further below and reconciled to the most comparable GAAP financial measure after the presentation of our GAAP financial statements. Transaction with Thoma Bravo As previously reported, the U.S. Department of Justice (the “DOJ”) has issued a Second Request in connection with its review of the proposed acquisition of ForgeRock by Thoma Bravo pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). Recently, ForgeRock and entities affiliated with Thoma Bravo entered into an agreement (the “Timing Agreement”) with the DOJ in connection with the proposed acquisition and the Second Request. Under the Timing Agreement, ForgeRock and Thoma Bravo have agreed that they will certify compliance with the Second Request no earlier than May 1, 2023, and will not consummate the proposed acquisition less than 75 days after compliance with the Second Request. The Timing Agreement does not prevent ForgeRock and Thoma Bravo from consummating the proposed acquisition sooner if the DOJ closes its investigation of the proposed acquisition before that date. The expiration or termination of the waiting period applicable to the proposed acquisition pursuant to the HSR Act (and the absence of any agreement with any governmental authority not to consummate the proposed acquisition) is the only remaining approval or regulatory condition required to consummate the closing of the proposed acquisition. Due to the Company's pending acquisition by Thoma Bravo that was announced on October 11, 2022, there will not be a conference call or live webcast to discuss these financial results. In addition, the Company has suspended its financial guidance as a result of the pending transaction. Supplemental Financial and Other Information: Supplemental financial and other information can be accessed through ForgeRock's investor relations website at investors.forgerock.com. Non-GAAP Financial Measures and Key Metrics: Besides financial results prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), ForgeRock believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, ForgeRock uses non-GAAP financial measures to evaluate its operations. We use non-GAAP financial measures to understand and evaluate our core operating performance and trends, to prepare our annual budget, to monitor and assess our liquidity, and to develop short-term and long-term operating plans. We believe that the non-GAAP financial measures we review are each a useful measure to us and to our investors because they provide consistency and comparability with our past performance and between periods, as these metrics generally eliminate the effects of the variability of certain charges and expenses that may not reflect our overall operating performance and liquidity. We believe that non-GAAP financial measures, when taken collectively with GAAP financial information, can be helpful to us and to investors because it provides consistency and comparability with past performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. ForgeRock presents non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development, non-GAAP sales and marketing, non-GAAP general and administrative, non-GAAP operating loss, non-GAAP operating margin and non-GAAP net loss per share, all of which exclude acquisition-related costs, stock-based compensation expense, and certain of which exclude the tax effect on the provision for (benefit from) income taxes related to such excluded items. ForgeRock excludes acquisition-related costs because they are unrelated to our current operations and are neither comparable to the prior period nor indicative of future results. We also exclude stock-based compensation expense as it can vary significantly from period to period based on share price and the timing, size and nature of equity awards. As such, ForgeRock and many investors and analysts exclude stock-based compensation expense to better evaluate its operating performance and cash spending levels relative to its industry sector and competitors. ForgeRock presents adjusted EBITDA, which is also a non-GAAP financial measure. We define adjusted EBITDA as GAAP operating loss, adjusted for depreciation, acquisition-related costs and stock-based compensation expense. ForgeRock excludes certain items that it believes are not good indicators of ForgeRock’s current or future operating performance. These items are depreciation, acquisition-related costs and stock-based compensation. ForgeRock excludes depreciation given its standard exclusion in EBITDA and adjusted EBITDA results. In addition, the frequency and amount of such charges can vary significantly based on the size and timing of the transactions. ForgeRock also presents free cash flow, which is a non-GAAP financial measure. We define free cash flow as net cash used in operating activities less cash used for purchases of property and equipment. ForgeRock provides free cash flow as it is a commonly used non-GAAP financial measure to indicate the amount of cash needed to fund its operations and capital expenditures. The non-GAAP financial information is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP and may be different from similarly-titled non-GAAP measures used by other companies. The principal limitation of these non-GAAP financial measures is that they exclude expenses that are required by GAAP to be recorded in our consolidated financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by our management about which expenses are excluded or included in determining these non-GAAP financial measures. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. ForgeRock also uses the key metric Annualized Recurring Revenue (“ARR”), to evaluate its operations. We believe that ARR is a key metric because it is driven by our ability to acquire new customers and to maintain and expand our relationship with existing customers. We define ARR as the annualized value of all contractual subscription agreements as of the end of the period. To the extent that we are negotiating a renewal with a customer after the expiration of the subscription, we continue to include that revenue in ARR if we are actively in discussion with such an organization for a new subscription or renewal, or until such organization notifies us that it is not renewing its subscription. We perform this calculation on an individual customer basis by dividing the total dollar amount of the customer’s contract by the total contract term stated in months and multiplying this amount by 12 to annualize. Calculated ARR for each individual customer is then aggregated to arrive at total ARR. ARR does not have a standardized meaning and therefore may not be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue, deferred revenue and remaining performance obligations computed and/or disclosed in accordance with GAAP and is not intended to be combined with or to replace any of those items. Specifically, ARR, as calculated under the definition herein, has the effect of normalizing the impact of revenue recognition for term-based subscription license agreements. ARR is calculated based upon annualized contract value and not actual GAAP revenue. Under ASC 606, for term-based subscription license agreements, we recognize approximately half of the total contract value upfront as license revenue, with the remainder attributable to maintenance and support that is recognized ratably over the license term. Annualizing actual GAAP revenue for any particular period could result in a meaningful difference from our ARR calculation, particularly when we are experiencing increases or decreases in the mix of multi-year term licenses. ARR is not a forecast and the active contracts at the date used in calculating ARR may or may not be extended by our customers. Forward-Looking Statements: This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements generally relate to future events or ForgeRock’s future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates,” “going to,” "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these words or other similar terms or expressions that concern ForgeRock’s expectations, strategy, priorities, plans or intentions. Forward-looking statements in this release include, but are not limited to the quotations of management, statements regarding the proposed acquisition by entities affiliated with Thoma Bravo, our strategy, products and financial condition. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to the pendency of the proposed acquisition by entities affiliated with Thoma Bravo or the failure to complete such transaction, our ability to attract new customers and retain and sell additional functionality and services to our existing customers, our ability to sustain and manage our growth, our ability to successfully add new features and functionality to our platform, our ability to compete effectively in an increasingly competitive market, and general market, political, economic, and business conditions, and other risks detailed in our filings with the Securities and Exchange Commission ("SEC"), including our Quarterly Report on Form 10-Q filed with the SEC on November 10, 2022 and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which will be filed with the SEC. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent our views as of the date of this press release. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release. We anticipate that subsequent events and developments could cause our views to change. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. About ForgeRock ForgeRock®, a global leader in digital identity, delivers modern identity and access management solutions for consumers, employees and things to simply and safely access the connected world. Using ForgeRock, more than 1,300 organizations around the world orchestrate, manage, and secure the complete lifecycle of identities from dynamic access controls, governance, APIs, and storing authoritative data – consumable in cloud or hybrid environments. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three months ended December 31, Year ended December 31, 2022 2021 2022 2021 Revenue: Subscription term licenses $ 28,203 $ 21,662 $ 87,292 $ 84,611 Subscription SaaS, support & maintenance 31,974 23,891 119,003 85,434 Perpetual licenses 318 810 515 1,695 Total subscriptions and perpetual licenses 60,495 46,363 206,810 171,740 Professional services 3,028 1,541 10,702 5,193 Total revenue 63,523 47,904 217,512 176,933 Cost of revenue: Subscriptions and perpetual licenses 8,865 5,223 27,768 17,535 Professional services 3,080 4,735 11,772 15,393 Total cost of revenue(1) 11,945 9,958 39,540 32,928 Gross profit 51,578 37,946 177,972 144,005 Operating expenses: Research and development(1) 16,138 12,283 61,837 43,497 Sales and marketing(1) 32,793 23,825 118,794 88,620 General and administrative(1) 14,694 12,237 57,724 40,329 Acquisition-related costs 3,809 — 6,173 — Total operating expenses 67,434 48,345 244,528 172,446 Operating loss (15,856 ) (10,399 ) (66,556 ) (28,441 ) Foreign currency gain (loss) (1,066 ) (816 ) 2,568 (3,819 ) Fair value adjustment on warrants and preferred stock tranche option — — — (10,068 ) Interest expense (903 ) (945 ) (3,577 ) (4,516 ) Other income (expense), net 1,906 24 2,971 (40 ) Interest and other expense, net (63 ) (1,738 ) 1,962 (18,443 ) Loss before income taxes (15,919 ) (12,138 ) (64,594 ) (46,884 ) Provision for income taxes 575 223 1,678 884 Net loss $ (16,494 ) $ (12,361 ) $ (66,272 ) $ (47,768 ) Net loss per share attributable to common stockholders: Basic and diluted $ (0.19 ) $ (0.15 ) $ (0.78 ) $ (1.14 ) Weighted-average shares used in computing net loss per share attributable to common stockholders: Basic and diluted 86,124 81,979 84,885 41,742 (1) Includes stock-based compensation as follows (in thousands): Three months ended December 31, Year ended December 31, 2022 2021 2022 2021 Cost of revenue $ 1,062 $ 424 $ 2,852 $ 617 Research and development 2,053 867 6,738 1,924 Sales and marketing 4,186 1,449 12,044 3,495 General and administrative 3,303 1,530 11,126 4,630 Total stock-based compensation expense $ 10,604 $ 4,270 $ 32,760 $ 10,666 CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) December 31, 2022 2021 Assets Cash and cash equivalents $ 128,803 $ 128,381 Short-term investments 207,248 241,411 Accounts receivable, net of allowance for credit losses of $444 and $34, respectively 71,439 55,999 Contract assets 25,117 19,670 Deferred commissions 9,936 8,457 Prepaid expenses and other assets 14,810 9,787 Total current assets 457,353 463,705 Deferred commissions 20,379 15,601 Property and equipment, net 2,850 2,463 Operating lease right-of-use assets 10,190 12,626 Contract and other assets 3,408 2,783 Total assets $ 494,180 $ 497,178 Liabilities and stockholders’ equity Accounts payable $ 4,587 $ 2,039 Accrued expenses 34,311 27,375 Current portion of operating lease liability 1,902 1,820 Deferred revenue 82,036 67,222 Other liabilities 2,927 2,258 Total current liabilities 125,763 100,714 Long-term debt 39,611 39,483 Long-term operating lease liability 9,207 11,037 Deferred revenue 1,283 8,172 Other liabilities 2,150 1,646 Total liabilities 178,014 161,052 Stockholders’ equity Common stock 87 83 Additional paid-in capital 641,983 593,196 Accumulated other comprehensive income 4,193 6,672 Accumulated deficit (330,097 ) (263,825 ) Total stockholders’ equity 316,166 336,126 Total liabilities and stockholders’ equity $ 494,180 $ 497,178 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Year ended December 31, 2022 2021 Operating activities: Net loss $ (66,272 ) $ (47,768 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 1,064 1,061 Noncash operating lease expense 2,449 1,931 Stock-based compensation expense 32,760 10,666 Amortization of deferred commissions 15,235 13,964 Foreign currency remeasurement loss (gain) (2,711 ) 3,032 Change in fair value of redeemable convertible preferred stock warrant liability — 5,871 Change in fair value of preferred stock tranche option liability — 4,157 Amortization of premium / discount on short-term investments 1,156 1,330 Other (169 ) 266 Changes in operating assets and liabilities: Deferred commissions (21,487 ) (23,273 ) Accounts receivable (13,371 ) (20,669 ) Contract and other non-current assets (5,104 ) (10,505 ) Prepaid expenses and other current assets (2,323 ) (6,025 ) Operating lease liabilities (1,733 ) (2,377 ) Accounts payable 2,514 701 Accrued expenses and other liabilities 7,422 10,863 Deferred revenue 5,564 19,992 Net cash used in operating activities (45,006 ) (36,783 ) Investing activities: Purchases of property and equipment (1,619 ) (1,113 ) Purchases of short-term investments (166,363 ) (277,126 ) Maturities of short-term investments 158,615 31,860 Sales of short-term investments 39,379 1,933 Net cash provided by (used in) investing activities 30,012 (244,446 ) Financing activities: Proceeds from initial public offering, net of underwriting discounts and commissions — 295,694 Payment of stock offering costs (145 ) (6,038 ) Proceeds from exercises of employee stock options 12,237 4,902 Proceeds from issuance of common stock under employee stock purchase plan 6,961 — Proceeds from issuance of redeemable convertible preferred stock — 19,951 Employee payroll taxes paid for net shares settlement of restricted stock units (3,154 ) (3,877 ) Principal repayments on debt — (120 ) Net cash provided by financing activities 15,899 310,512 Effect of exchange rates on cash and cash equivalents and restricted cash 1,982 (888 ) Net increase in cash, cash equivalents and restricted cash 2,887 28,395 Cash, cash equivalents and restricted cash, beginning of year 128,437 100,042 Cash, cash equivalents and restricted cash, end of period $ 131,324 $ 128,437 Supplementary cash flow disclosure: Short-term investments, end of period $ 207,248 $ 241,411 Cash paid for interest 3,244 3,629 Cash paid for income taxes 1,245 769 Deferred offering costs accrued but not yet paid — (145 ) Conversion of redeemable convertible preferred stock to common stock — 263,178 Reconciliation of cash and cash equivalents and restricted cash: Cash and cash equivalents $ 128,803 $ 128,381 Restricted cash included in prepaids and other current assets 2,521 56 Total cash and cash equivalents and restricted cash $ 131,324 $ 128,437 FORGEROCK, INC. NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS TO GAAP RESULTS Non-GAAP Gross Profit and Non-GAAP Gross Margin Gross profit is defined as GAAP revenue less cost of revenue and gross margin is GAAP gross profit as a percentage of total revenue. We define non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin adjusted to exclude stock-based compensation expense, as presented below (in thousands, except percentages): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Gross Profit $ 51,578 $ 37,946 $ 177,972 $ 144,005 Add: stock-based compensation included in cost of revenue 1,062 424 2,852 617 Non-GAAP gross profit $ 52,640 $ 38,370 $ 180,824 $ 144,622 Gross margin 81 % 79 % 82 % 81 % Non-GAAP gross margin 83 % 80 % 83 % 82 % Non-GAAP Research and Development We define non-GAAP research and development as GAAP research and development adjusted to exclude stock-based compensation expense, as presented below (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Research and development $ 16,138 $ 12,283 $ 61,837 $ 43,497 Less: Stock-based compensation 2,053 867 6,738 1,924 Non-GAAP research and development $ 14,085 $ 11,416 $ 55,099 $ 41,573 Non-GAAP Sales and Marketing We define non-GAAP sales and marketing as GAAP sales and marketing adjusted to exclude stock-based compensation expense, as presented below (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Sales and marketing $ 32,793 $ 23,825 $ 118,794 $ 88,620 Less: Stock-based compensation 4,186 1,449 12,044 3,495 Non-GAAP sales and marketing $ 28,607 $ 22,376 $ 106,750 $ 85,125 Non-GAAP General and Administrative We define non-GAAP general and administrative as GAAP general and administrative adjusted to exclude stock-based compensation expense, as presented below (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 General and administrative $ 14,694 $ 12,237 $ 57,724 $ 40,329 Less: Stock-based compensation 3,303 1,530 11,126 4,630 Non-GAAP general and administrative $ 11,391 $ 10,707 $ 46,598 $ 35,699 Non-GAAP Operating Loss and Non-GAAP Operating Margin We define non-GAAP operating loss and non-GAAP operating margin as GAAP operating loss and GAAP operating margin adjusted to exclude stock-based compensation expense and acquisition-related costs, as presented below (in thousands, except percentages): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Operating loss $ (15,856 ) $ (10,399 ) $ (66,556 ) $ (28,441 ) Add: Stock-based compensation 10,604 4,270 32,760 10,666 Add: Acquisition-related costs 3,809 — 6,173 — Non-GAAP operating loss $ (1,443 ) $ (6,129 ) $ (27,623 ) $ (17,775 ) Operating margin (25 ) % (22 ) % (31 ) % (16 ) % Non-GAAP operating margin (2 ) % (13 ) % (13 ) % (10 ) % Adjusted EBITDA We define adjusted EBITDA as operating loss adjusted to exclude depreciation, stock-based compensation expense and acquisition-related costs, as presented below (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Operating loss $ (15,856 ) $ (10,399 ) $ (66,556 ) $ (28,441 ) Add: Depreciation 252 266 1,064 1,061 Add: Stock-based compensation 10,604 4,270 32,760 10,666 Add: Acquisition-related costs 3,809 — 6,173 — Adjusted EBITDA $ (1,191 ) $ (5,863 ) $ (26,559 ) $ (16,714 ) Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per Share, Basic and Diluted We define non-GAAP net loss as GAAP net loss adjusted to exclude stock-based compensation expense and acquisition-related costs, including the tax effect of stock-based compensation expense on the provision for (benefit from) income taxes as presented below (in thousands, except per share amounts): We define non-GAAP net loss per share, basic, as non-GAAP net loss divided by GAAP weighted-average shares used to compute net loss per share, basic. We define non-GAAP net loss per share, diluted, as non-GAAP net loss divided by GAAP weighted average shares used to compute net loss per share, basic, adjusted for (i) the dilutive effect of employee equity awards, excluding the impact of unrecognized stock-based compensation expense and (ii) warrants; unless these adjustments are anti-dilutive. Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net loss $ (16,494 ) $ (12,361 ) $ (66,272 ) $ (47,768 ) Add: Stock-based compensation 10,604 4,270 32,760 10,666 Add: Acquisition-related costs 3,809 — 6,173 — Tax effect on the provision for income taxes 97 40 295 76 Non-GAAP net loss $ (1,984 ) $ (8,051 ) $ (27,044 ) $ (37,026 ) Non-GAAP net loss per share, basic and diluted $ (0.02 ) $ (0.10 ) $ (0.32 ) $ (0.89 ) Free Cash Flow We define free cash flow as net cash provided by (used in) operating activities less cash used for purchases of property and equipment as presented below (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net cash used in operating activities $ (14,002 ) $ (5,427 ) $ (45,006 ) $ (36,783 ) Purchases of property and equipment (145 ) (654 ) (1,619 ) (1,113 ) Free cash flow $ (14,147 ) $ (6,081 ) $ (46,625 ) $ (37,896 ) View source version on businesswire.com: https://www.businesswire.com/news/home/20230227005713/en/Contacts Investor Relations: investors@forgerock.com Media Contacts: Kristen Batch, ForgeRock kristen.batch@forgerock.com
ARR was $229.6 million for Q4 2022, growing 25% year-over-year Total revenue was $217.5 million in 2022, growing 23% year-over-year Subscription SaaS, Support & Maintenance revenue was $119.0 million in 2022, growing 39% year-over-year
ForgeRock, Inc. (NYSE: FORG), a global leader in digital identity, today announced financial results for its fourth quarter and fiscal year ended December 31, 2022. “We ended 2022 with $230 million of ARR, representing another solid year of growth for ForgeRock,” said Fran Rosch, CEO of ForgeRock. “Our net retention rate increased in Q4 to 113% as more of our customers migrated to the ForgeRock Identity Cloud, our SaaS offering, and also expanded with us through more identities, use cases, and product modules. In 2022, we continued to innovate, introducing new products as well as infusing AI across our entire enterprise-grade platform to further strengthen our market position in the digital identity space. We are excited about our new product capabilities like Autonomous Access, as well as our roadmap ahead for 2023.” “Our revenue grew 33% in Q4 2022 and we saw our gross margin and non-GAAP gross margin expand to 82% and 83%, respectively, in 2022,” said John Fernandez, CFO of ForgeRock. “Our Subscription SaaS, Support & Maintenance revenue represented 55% of total revenue in 2022 compared to 48% in 2021, which was driven by the robust growth in the ForgeRock Identity Cloud, our SaaS offering. Our GAAP operating margin was (25)% in Q4 2022 and includes the impact of acquisition-related costs, and (22)% in Q4 2021. Our non-GAAP operating margin in Q4 2022 of (2)% was a significant improvement over the (13)% we experienced in Q4 2021 and our business continues to be on track to achieve non-GAAP operating margin profitability sometime in the back half of 2023.” Fourth Quarter 2022 Financial Highlights: ARR: Annualized Recurring Revenue was $229.6 million, an increase of 25% year-over-year. Revenue: Total revenue was $63.5 million, an increase of 33% year-over-year. Operating Loss: GAAP operating loss was $15.9 million, or (25)% of total revenue, compared to $10.4 million, or (22)% of total revenue, in the fourth quarter of 2021. Non-GAAP operating loss was $1.4 million, or (2)% of total revenue, compared to $6.1 million, or (13)% of total revenue, in the fourth quarter of 2021. Net Loss: GAAP net loss was $16.5 million, compared to $12.4 million in the fourth quarter of 2021. GAAP net loss per share was $0.19, compared to $0.15 in the fourth quarter of 2021. Non-GAAP net loss was $2.0 million, compared to $8.1 million in the fourth quarter of 2021. Non-GAAP net loss per share was $0.02, compared to $0.10 in the fourth quarter of 2021. Cash Flow: Net cash used in operations was $14.0 million, compared to $5.4 million in the fourth quarter of 2021. Free cash flow was $(14.1) million, or (22)% of total revenue, compared to $(6.1) million, or (13)% of total revenue, in the fourth quarter of 2021. Cash, cash equivalents and short-term investments were $336.1 million as of December 31, 2022. Full Year 2022 Financial Highlights: Revenue: Total revenue was $217.5 million, an increase of 23% year-over-year. Operating Loss: GAAP operating loss was $66.6 million, or (31)% of total revenue, compared to $28.4 million, or (16)% of total revenue, in 2021. Non-GAAP operating loss was $27.6 million, or (13)% of total revenue, compared to $17.8 million or (10)% of total revenue in 2021. Net Loss: GAAP net loss was $66.3 million compared to $47.8 million in 2021. GAAP net loss per share was $0.78 compared to $1.14 in 2021. Non-GAAP net loss was $27.0 million, compared to $37.0 million in 2021. Non-GAAP net loss per share was $0.32, compared to $0.89 in 2021. Cash Flow: Net cash used in operations was $45.0 million, compared to $36.8 million in 2021. Free cash flow was $(46.6) million, or (21)% of total revenue, compared to $(37.9) million, or (21)% of total revenue in 2021. ForgeRock uses certain non-GAAP financial measures, which are described further below and reconciled to the most comparable GAAP financial measure after the presentation of our GAAP financial statements. Transaction with Thoma Bravo As previously reported, the U.S. Department of Justice (the “DOJ”) has issued a Second Request in connection with its review of the proposed acquisition of ForgeRock by Thoma Bravo pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). Recently, ForgeRock and entities affiliated with Thoma Bravo entered into an agreement (the “Timing Agreement”) with the DOJ in connection with the proposed acquisition and the Second Request. Under the Timing Agreement, ForgeRock and Thoma Bravo have agreed that they will certify compliance with the Second Request no earlier than May 1, 2023, and will not consummate the proposed acquisition less than 75 days after compliance with the Second Request. The Timing Agreement does not prevent ForgeRock and Thoma Bravo from consummating the proposed acquisition sooner if the DOJ closes its investigation of the proposed acquisition before that date. The expiration or termination of the waiting period applicable to the proposed acquisition pursuant to the HSR Act (and the absence of any agreement with any governmental authority not to consummate the proposed acquisition) is the only remaining approval or regulatory condition required to consummate the closing of the proposed acquisition. Due to the Company's pending acquisition by Thoma Bravo that was announced on October 11, 2022, there will not be a conference call or live webcast to discuss these financial results. In addition, the Company has suspended its financial guidance as a result of the pending transaction. Supplemental Financial and Other Information: Supplemental financial and other information can be accessed through ForgeRock's investor relations website at investors.forgerock.com. Non-GAAP Financial Measures and Key Metrics: Besides financial results prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), ForgeRock believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, ForgeRock uses non-GAAP financial measures to evaluate its operations. We use non-GAAP financial measures to understand and evaluate our core operating performance and trends, to prepare our annual budget, to monitor and assess our liquidity, and to develop short-term and long-term operating plans. We believe that the non-GAAP financial measures we review are each a useful measure to us and to our investors because they provide consistency and comparability with our past performance and between periods, as these metrics generally eliminate the effects of the variability of certain charges and expenses that may not reflect our overall operating performance and liquidity. We believe that non-GAAP financial measures, when taken collectively with GAAP financial information, can be helpful to us and to investors because it provides consistency and comparability with past performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. ForgeRock presents non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development, non-GAAP sales and marketing, non-GAAP general and administrative, non-GAAP operating loss, non-GAAP operating margin and non-GAAP net loss per share, all of which exclude acquisition-related costs, stock-based compensation expense, and certain of which exclude the tax effect on the provision for (benefit from) income taxes related to such excluded items. ForgeRock excludes acquisition-related costs because they are unrelated to our current operations and are neither comparable to the prior period nor indicative of future results. We also exclude stock-based compensation expense as it can vary significantly from period to period based on share price and the timing, size and nature of equity awards. As such, ForgeRock and many investors and analysts exclude stock-based compensation expense to better evaluate its operating performance and cash spending levels relative to its industry sector and competitors. ForgeRock presents adjusted EBITDA, which is also a non-GAAP financial measure. We define adjusted EBITDA as GAAP operating loss, adjusted for depreciation, acquisition-related costs and stock-based compensation expense. ForgeRock excludes certain items that it believes are not good indicators of ForgeRock’s current or future operating performance. These items are depreciation, acquisition-related costs and stock-based compensation. ForgeRock excludes depreciation given its standard exclusion in EBITDA and adjusted EBITDA results. In addition, the frequency and amount of such charges can vary significantly based on the size and timing of the transactions. ForgeRock also presents free cash flow, which is a non-GAAP financial measure. We define free cash flow as net cash used in operating activities less cash used for purchases of property and equipment. ForgeRock provides free cash flow as it is a commonly used non-GAAP financial measure to indicate the amount of cash needed to fund its operations and capital expenditures. The non-GAAP financial information is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP and may be different from similarly-titled non-GAAP measures used by other companies. The principal limitation of these non-GAAP financial measures is that they exclude expenses that are required by GAAP to be recorded in our consolidated financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by our management about which expenses are excluded or included in determining these non-GAAP financial measures. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. ForgeRock also uses the key metric Annualized Recurring Revenue (“ARR”), to evaluate its operations. We believe that ARR is a key metric because it is driven by our ability to acquire new customers and to maintain and expand our relationship with existing customers. We define ARR as the annualized value of all contractual subscription agreements as of the end of the period. To the extent that we are negotiating a renewal with a customer after the expiration of the subscription, we continue to include that revenue in ARR if we are actively in discussion with such an organization for a new subscription or renewal, or until such organization notifies us that it is not renewing its subscription. We perform this calculation on an individual customer basis by dividing the total dollar amount of the customer’s contract by the total contract term stated in months and multiplying this amount by 12 to annualize. Calculated ARR for each individual customer is then aggregated to arrive at total ARR. ARR does not have a standardized meaning and therefore may not be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue, deferred revenue and remaining performance obligations computed and/or disclosed in accordance with GAAP and is not intended to be combined with or to replace any of those items. Specifically, ARR, as calculated under the definition herein, has the effect of normalizing the impact of revenue recognition for term-based subscription license agreements. ARR is calculated based upon annualized contract value and not actual GAAP revenue. Under ASC 606, for term-based subscription license agreements, we recognize approximately half of the total contract value upfront as license revenue, with the remainder attributable to maintenance and support that is recognized ratably over the license term. Annualizing actual GAAP revenue for any particular period could result in a meaningful difference from our ARR calculation, particularly when we are experiencing increases or decreases in the mix of multi-year term licenses. ARR is not a forecast and the active contracts at the date used in calculating ARR may or may not be extended by our customers. Forward-Looking Statements: This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements generally relate to future events or ForgeRock’s future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates,” “going to,” "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these words or other similar terms or expressions that concern ForgeRock’s expectations, strategy, priorities, plans or intentions. Forward-looking statements in this release include, but are not limited to the quotations of management, statements regarding the proposed acquisition by entities affiliated with Thoma Bravo, our strategy, products and financial condition. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to the pendency of the proposed acquisition by entities affiliated with Thoma Bravo or the failure to complete such transaction, our ability to attract new customers and retain and sell additional functionality and services to our existing customers, our ability to sustain and manage our growth, our ability to successfully add new features and functionality to our platform, our ability to compete effectively in an increasingly competitive market, and general market, political, economic, and business conditions, and other risks detailed in our filings with the Securities and Exchange Commission ("SEC"), including our Quarterly Report on Form 10-Q filed with the SEC on November 10, 2022 and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which will be filed with the SEC. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent our views as of the date of this press release. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release. We anticipate that subsequent events and developments could cause our views to change. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. About ForgeRock ForgeRock®, a global leader in digital identity, delivers modern identity and access management solutions for consumers, employees and things to simply and safely access the connected world. Using ForgeRock, more than 1,300 organizations around the world orchestrate, manage, and secure the complete lifecycle of identities from dynamic access controls, governance, APIs, and storing authoritative data – consumable in cloud or hybrid environments. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three months ended December 31, Year ended December 31, 2022 2021 2022 2021 Revenue: Subscription term licenses $ 28,203 $ 21,662 $ 87,292 $ 84,611 Subscription SaaS, support & maintenance 31,974 23,891 119,003 85,434 Perpetual licenses 318 810 515 1,695 Total subscriptions and perpetual licenses 60,495 46,363 206,810 171,740 Professional services 3,028 1,541 10,702 5,193 Total revenue 63,523 47,904 217,512 176,933 Cost of revenue: Subscriptions and perpetual licenses 8,865 5,223 27,768 17,535 Professional services 3,080 4,735 11,772 15,393 Total cost of revenue(1) 11,945 9,958 39,540 32,928 Gross profit 51,578 37,946 177,972 144,005 Operating expenses: Research and development(1) 16,138 12,283 61,837 43,497 Sales and marketing(1) 32,793 23,825 118,794 88,620 General and administrative(1) 14,694 12,237 57,724 40,329 Acquisition-related costs 3,809 — 6,173 — Total operating expenses 67,434 48,345 244,528 172,446 Operating loss (15,856 ) (10,399 ) (66,556 ) (28,441 ) Foreign currency gain (loss) (1,066 ) (816 ) 2,568 (3,819 ) Fair value adjustment on warrants and preferred stock tranche option — — — (10,068 ) Interest expense (903 ) (945 ) (3,577 ) (4,516 ) Other income (expense), net 1,906 24 2,971 (40 ) Interest and other expense, net (63 ) (1,738 ) 1,962 (18,443 ) Loss before income taxes (15,919 ) (12,138 ) (64,594 ) (46,884 ) Provision for income taxes 575 223 1,678 884 Net loss $ (16,494 ) $ (12,361 ) $ (66,272 ) $ (47,768 ) Net loss per share attributable to common stockholders: Basic and diluted $ (0.19 ) $ (0.15 ) $ (0.78 ) $ (1.14 ) Weighted-average shares used in computing net loss per share attributable to common stockholders: Basic and diluted 86,124 81,979 84,885 41,742 (1) Includes stock-based compensation as follows (in thousands): Three months ended December 31, Year ended December 31, 2022 2021 2022 2021 Cost of revenue $ 1,062 $ 424 $ 2,852 $ 617 Research and development 2,053 867 6,738 1,924 Sales and marketing 4,186 1,449 12,044 3,495 General and administrative 3,303 1,530 11,126 4,630 Total stock-based compensation expense $ 10,604 $ 4,270 $ 32,760 $ 10,666 CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) December 31, 2022 2021 Assets Cash and cash equivalents $ 128,803 $ 128,381 Short-term investments 207,248 241,411 Accounts receivable, net of allowance for credit losses of $444 and $34, respectively 71,439 55,999 Contract assets 25,117 19,670 Deferred commissions 9,936 8,457 Prepaid expenses and other assets 14,810 9,787 Total current assets 457,353 463,705 Deferred commissions 20,379 15,601 Property and equipment, net 2,850 2,463 Operating lease right-of-use assets 10,190 12,626 Contract and other assets 3,408 2,783 Total assets $ 494,180 $ 497,178 Liabilities and stockholders’ equity Accounts payable $ 4,587 $ 2,039 Accrued expenses 34,311 27,375 Current portion of operating lease liability 1,902 1,820 Deferred revenue 82,036 67,222 Other liabilities 2,927 2,258 Total current liabilities 125,763 100,714 Long-term debt 39,611 39,483 Long-term operating lease liability 9,207 11,037 Deferred revenue 1,283 8,172 Other liabilities 2,150 1,646 Total liabilities 178,014 161,052 Stockholders’ equity Common stock 87 83 Additional paid-in capital 641,983 593,196 Accumulated other comprehensive income 4,193 6,672 Accumulated deficit (330,097 ) (263,825 ) Total stockholders’ equity 316,166 336,126 Total liabilities and stockholders’ equity $ 494,180 $ 497,178 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Year ended December 31, 2022 2021 Operating activities: Net loss $ (66,272 ) $ (47,768 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 1,064 1,061 Noncash operating lease expense 2,449 1,931 Stock-based compensation expense 32,760 10,666 Amortization of deferred commissions 15,235 13,964 Foreign currency remeasurement loss (gain) (2,711 ) 3,032 Change in fair value of redeemable convertible preferred stock warrant liability — 5,871 Change in fair value of preferred stock tranche option liability — 4,157 Amortization of premium / discount on short-term investments 1,156 1,330 Other (169 ) 266 Changes in operating assets and liabilities: Deferred commissions (21,487 ) (23,273 ) Accounts receivable (13,371 ) (20,669 ) Contract and other non-current assets (5,104 ) (10,505 ) Prepaid expenses and other current assets (2,323 ) (6,025 ) Operating lease liabilities (1,733 ) (2,377 ) Accounts payable 2,514 701 Accrued expenses and other liabilities 7,422 10,863 Deferred revenue 5,564 19,992 Net cash used in operating activities (45,006 ) (36,783 ) Investing activities: Purchases of property and equipment (1,619 ) (1,113 ) Purchases of short-term investments (166,363 ) (277,126 ) Maturities of short-term investments 158,615 31,860 Sales of short-term investments 39,379 1,933 Net cash provided by (used in) investing activities 30,012 (244,446 ) Financing activities: Proceeds from initial public offering, net of underwriting discounts and commissions — 295,694 Payment of stock offering costs (145 ) (6,038 ) Proceeds from exercises of employee stock options 12,237 4,902 Proceeds from issuance of common stock under employee stock purchase plan 6,961 — Proceeds from issuance of redeemable convertible preferred stock — 19,951 Employee payroll taxes paid for net shares settlement of restricted stock units (3,154 ) (3,877 ) Principal repayments on debt — (120 ) Net cash provided by financing activities 15,899 310,512 Effect of exchange rates on cash and cash equivalents and restricted cash 1,982 (888 ) Net increase in cash, cash equivalents and restricted cash 2,887 28,395 Cash, cash equivalents and restricted cash, beginning of year 128,437 100,042 Cash, cash equivalents and restricted cash, end of period $ 131,324 $ 128,437 Supplementary cash flow disclosure: Short-term investments, end of period $ 207,248 $ 241,411 Cash paid for interest 3,244 3,629 Cash paid for income taxes 1,245 769 Deferred offering costs accrued but not yet paid — (145 ) Conversion of redeemable convertible preferred stock to common stock — 263,178 Reconciliation of cash and cash equivalents and restricted cash: Cash and cash equivalents $ 128,803 $ 128,381 Restricted cash included in prepaids and other current assets 2,521 56 Total cash and cash equivalents and restricted cash $ 131,324 $ 128,437 FORGEROCK, INC. NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS TO GAAP RESULTS Non-GAAP Gross Profit and Non-GAAP Gross Margin Gross profit is defined as GAAP revenue less cost of revenue and gross margin is GAAP gross profit as a percentage of total revenue. We define non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin adjusted to exclude stock-based compensation expense, as presented below (in thousands, except percentages): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Gross Profit $ 51,578 $ 37,946 $ 177,972 $ 144,005 Add: stock-based compensation included in cost of revenue 1,062 424 2,852 617 Non-GAAP gross profit $ 52,640 $ 38,370 $ 180,824 $ 144,622 Gross margin 81 % 79 % 82 % 81 % Non-GAAP gross margin 83 % 80 % 83 % 82 % Non-GAAP Research and Development We define non-GAAP research and development as GAAP research and development adjusted to exclude stock-based compensation expense, as presented below (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Research and development $ 16,138 $ 12,283 $ 61,837 $ 43,497 Less: Stock-based compensation 2,053 867 6,738 1,924 Non-GAAP research and development $ 14,085 $ 11,416 $ 55,099 $ 41,573 Non-GAAP Sales and Marketing We define non-GAAP sales and marketing as GAAP sales and marketing adjusted to exclude stock-based compensation expense, as presented below (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Sales and marketing $ 32,793 $ 23,825 $ 118,794 $ 88,620 Less: Stock-based compensation 4,186 1,449 12,044 3,495 Non-GAAP sales and marketing $ 28,607 $ 22,376 $ 106,750 $ 85,125 Non-GAAP General and Administrative We define non-GAAP general and administrative as GAAP general and administrative adjusted to exclude stock-based compensation expense, as presented below (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 General and administrative $ 14,694 $ 12,237 $ 57,724 $ 40,329 Less: Stock-based compensation 3,303 1,530 11,126 4,630 Non-GAAP general and administrative $ 11,391 $ 10,707 $ 46,598 $ 35,699 Non-GAAP Operating Loss and Non-GAAP Operating Margin We define non-GAAP operating loss and non-GAAP operating margin as GAAP operating loss and GAAP operating margin adjusted to exclude stock-based compensation expense and acquisition-related costs, as presented below (in thousands, except percentages): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Operating loss $ (15,856 ) $ (10,399 ) $ (66,556 ) $ (28,441 ) Add: Stock-based compensation 10,604 4,270 32,760 10,666 Add: Acquisition-related costs 3,809 — 6,173 — Non-GAAP operating loss $ (1,443 ) $ (6,129 ) $ (27,623 ) $ (17,775 ) Operating margin (25 ) % (22 ) % (31 ) % (16 ) % Non-GAAP operating margin (2 ) % (13 ) % (13 ) % (10 ) % Adjusted EBITDA We define adjusted EBITDA as operating loss adjusted to exclude depreciation, stock-based compensation expense and acquisition-related costs, as presented below (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Operating loss $ (15,856 ) $ (10,399 ) $ (66,556 ) $ (28,441 ) Add: Depreciation 252 266 1,064 1,061 Add: Stock-based compensation 10,604 4,270 32,760 10,666 Add: Acquisition-related costs 3,809 — 6,173 — Adjusted EBITDA $ (1,191 ) $ (5,863 ) $ (26,559 ) $ (16,714 ) Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per Share, Basic and Diluted We define non-GAAP net loss as GAAP net loss adjusted to exclude stock-based compensation expense and acquisition-related costs, including the tax effect of stock-based compensation expense on the provision for (benefit from) income taxes as presented below (in thousands, except per share amounts): We define non-GAAP net loss per share, basic, as non-GAAP net loss divided by GAAP weighted-average shares used to compute net loss per share, basic. We define non-GAAP net loss per share, diluted, as non-GAAP net loss divided by GAAP weighted average shares used to compute net loss per share, basic, adjusted for (i) the dilutive effect of employee equity awards, excluding the impact of unrecognized stock-based compensation expense and (ii) warrants; unless these adjustments are anti-dilutive. Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net loss $ (16,494 ) $ (12,361 ) $ (66,272 ) $ (47,768 ) Add: Stock-based compensation 10,604 4,270 32,760 10,666 Add: Acquisition-related costs 3,809 — 6,173 — Tax effect on the provision for income taxes 97 40 295 76 Non-GAAP net loss $ (1,984 ) $ (8,051 ) $ (27,044 ) $ (37,026 ) Non-GAAP net loss per share, basic and diluted $ (0.02 ) $ (0.10 ) $ (0.32 ) $ (0.89 ) Free Cash Flow We define free cash flow as net cash provided by (used in) operating activities less cash used for purchases of property and equipment as presented below (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net cash used in operating activities $ (14,002 ) $ (5,427 ) $ (45,006 ) $ (36,783 ) Purchases of property and equipment (145 ) (654 ) (1,619 ) (1,113 ) Free cash flow $ (14,147 ) $ (6,081 ) $ (46,625 ) $ (37,896 ) View source version on businesswire.com: https://www.businesswire.com/news/home/20230227005713/en/
Investor Relations: investors@forgerock.com Media Contacts: Kristen Batch, ForgeRock kristen.batch@forgerock.com
