;
forg-20230331000154391612/312023Q1FALSEP1Y66.666700015439162023-01-012023-03-310001543916us-gaap:CommonClassAMember2023-04-30xbrli:shares0001543916us-gaap:CommonClassBMember2023-04-3000015439162023-03-31iso4217:USD00015439162022-12-310001543916us-gaap:CommonClassAMember2023-03-31iso4217:USDxbrli:shares0001543916us-gaap:CommonClassAMember2022-12-310001543916us-gaap:CommonClassBMember2023-03-310001543916us-gaap:CommonClassBMember2022-12-310001543916forg:SubscriptionTermLicensesMember2023-01-012023-03-310001543916forg:SubscriptionTermLicensesMember2022-01-012022-03-310001543916forg:SubscriptionSaasSupportAndMaintenanceMember2023-01-012023-03-310001543916forg:SubscriptionSaasSupportAndMaintenanceMember2022-01-012022-03-310001543916forg:PerpetualLicensesMember2023-01-012023-03-310001543916forg:PerpetualLicensesMember2022-01-012022-03-310001543916us-gaap:LicenseAndServiceMember2023-01-012023-03-310001543916us-gaap:LicenseAndServiceMember2022-01-012022-03-310001543916forg:ProfessionalServicesMember2023-01-012023-03-310001543916forg:ProfessionalServicesMember2022-01-012022-03-3100015439162022-01-012022-03-310001543916us-gaap:CommonStockMember2021-12-310001543916us-gaap:AdditionalPaidInCapitalMember2021-12-310001543916us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001543916us-gaap:RetainedEarningsMember2021-12-3100015439162021-12-310001543916us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001543916us-gaap:CommonStockMember2022-01-012022-03-310001543916us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001543916us-gaap:RetainedEarningsMember2022-01-012022-03-310001543916us-gaap:CommonStockMember2022-03-310001543916us-gaap:AdditionalPaidInCapitalMember2022-03-310001543916us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001543916us-gaap:RetainedEarningsMember2022-03-3100015439162022-03-310001543916us-gaap:CommonStockMember2022-12-310001543916us-gaap:AdditionalPaidInCapitalMember2022-12-310001543916us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001543916us-gaap:RetainedEarningsMember2022-12-310001543916us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001543916us-gaap:CommonStockMember2023-01-012023-03-310001543916us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001543916us-gaap:RetainedEarningsMember2023-01-012023-03-310001543916us-gaap:CommonStockMember2023-03-310001543916us-gaap:AdditionalPaidInCapitalMember2023-03-310001543916us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001543916us-gaap:RetainedEarningsMember2023-03-310001543916forg:ProjectFortressParentLLCMemberforg:ForgeRockIncMember2022-10-10forg:partner0001543916srt:AmericasMember2023-01-012023-03-310001543916srt:AmericasMember2022-01-012022-03-310001543916us-gaap:EMEAMember2023-01-012023-03-310001543916us-gaap:EMEAMember2022-01-012022-03-310001543916srt:AsiaPacificMember2023-01-012023-03-310001543916srt:AsiaPacificMember2022-01-012022-03-310001543916country:US2023-01-012023-03-310001543916country:US2022-01-012022-03-310001543916country:GB2023-01-012023-03-310001543916country:GB2022-01-012022-03-310001543916forg:MultiYearTermLicenseMember2023-01-012023-03-310001543916forg:MultiYearTermLicenseMember2022-01-012022-03-310001543916forg:OneYearTermLicenseMember2023-01-012023-03-310001543916forg:OneYearTermLicenseMember2022-01-012022-03-310001543916us-gaap:LicenseAndMaintenanceMember2023-01-012023-03-310001543916us-gaap:LicenseAndMaintenanceMember2022-01-012022-03-310001543916us-gaap:LicenseMember2023-01-012023-03-310001543916us-gaap:LicenseMember2022-01-012022-03-310001543916us-gaap:LicenseMember2023-03-3100015439162023-04-01us-gaap:LicenseMember2023-03-31xbrli:pure0001543916us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberforg:OneCustomerMember2023-01-012023-03-310001543916us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-03-310001543916us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-03-310001543916us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-03-310001543916us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-03-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-03-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-03-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-03-310001543916us-gaap:FairValueMeasurementsRecurringMember2023-03-310001543916us-gaap:CommercialPaperMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-03-310001543916us-gaap:CommercialPaperMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-03-310001543916us-gaap:CommercialPaperMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-03-310001543916us-gaap:CommercialPaperMemberus-gaap:FairValueMeasurementsRecurringMember2023-03-310001543916us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-03-310001543916us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-03-310001543916us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-03-310001543916us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-03-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMember2023-03-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2023-03-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMember2023-03-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2023-03-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Member2023-03-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel2Member2023-03-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMember2023-03-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2023-03-310001543916us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001543916us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310001543916us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-12-310001543916us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-12-310001543916us-gaap:FairValueMeasurementsRecurringMember2022-12-310001543916us-gaap:CommercialPaperMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001543916us-gaap:CommercialPaperMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310001543916us-gaap:CommercialPaperMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-12-310001543916us-gaap:CommercialPaperMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001543916us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001543916us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310001543916us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-12-310001543916us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMember2022-12-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2022-12-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMember2022-12-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2022-12-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Member2022-12-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel2Member2022-12-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMember2022-12-310001543916us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2022-12-310001543916us-gaap:MoneyMarketFundsMember2023-03-310001543916us-gaap:CommercialPaperMember2023-03-310001543916us-gaap:AssetBackedSecuritiesMember2023-03-310001543916us-gaap:CorporateDebtSecuritiesMember2023-03-310001543916us-gaap:USTreasuryBondSecuritiesMember2023-03-310001543916us-gaap:MoneyMarketFundsMember2022-12-310001543916us-gaap:CommercialPaperMember2022-12-310001543916us-gaap:AssetBackedSecuritiesMember2022-12-310001543916us-gaap:CorporateDebtSecuritiesMember2022-12-310001543916us-gaap:USTreasuryBondSecuritiesMember2022-12-310001543916us-gaap:SubsequentEventMember2023-04-012023-04-300001543916forg:DebtInstrumentDueMarch2019Member2023-03-310001543916forg:DebtInstrumentDueMarch2019Member2022-12-310001543916forg:DebtInstrumentDueSeptember2019Member2023-03-310001543916forg:DebtInstrumentDueSeptember2019Member2022-12-310001543916forg:DebtInstrumentDueDecember2021Member2023-03-310001543916forg:DebtInstrumentDueDecember2021Member2022-12-310001543916forg:DebtInstrumentDueMarch2020Member2023-03-310001543916forg:DebtInstrumentDueMarch2020Member2022-12-310001543916forg:ARLoanAgreementMember2021-09-012021-09-300001543916forg:ARLoanAgreementMember2021-09-300001543916us-gaap:CostOfSalesMember2023-01-012023-03-310001543916us-gaap:CostOfSalesMember2022-01-012022-03-310001543916us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-03-310001543916us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-03-310001543916us-gaap:SellingAndMarketingExpenseMember2023-01-012023-03-310001543916us-gaap:SellingAndMarketingExpenseMember2022-01-012022-03-310001543916us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-03-310001543916us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-03-310001543916forg:EquityIncentivePlan2021Memberus-gaap:CommonClassAMember2021-09-300001543916forg:EquityIncentivePlan2021Member2021-09-012021-09-300001543916forg:EquityIncentivePlan2021Member2023-03-310001543916forg:EmployeeStockPurchasePlan2021Memberus-gaap:EmployeeStockMember2021-09-300001543916forg:EmployeeStockPurchasePlan2021Memberus-gaap:EmployeeStockMember2021-09-012021-09-300001543916forg:EmployeeStockPurchasePlan2021Memberus-gaap:EmployeeStockMember2023-01-012023-03-310001543916forg:EmployeeStockPurchasePlan2021Memberus-gaap:EmployeeStockMember2022-01-012022-03-31forg:tranch0001543916srt:MinimumMemberus-gaap:RestrictedStockUnitsRSUMember2023-01-012023-03-310001543916srt:MaximumMemberus-gaap:RestrictedStockUnitsRSUMember2023-01-012023-03-310001543916us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-03-310001543916us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001543916us-gaap:RestrictedStockUnitsRSUMember2023-03-3100015439162022-01-012022-12-310001543916us-gaap:EmployeeStockOptionMember2023-03-310001543916us-gaap:EmployeeStockOptionMember2023-01-012023-03-3100015439162021-09-30forg:vote0001543916us-gaap:EmployeeStockOptionMember2023-01-012023-03-310001543916us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001543916us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-03-310001543916us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001543916forg:KKRCoIncMemberforg:ForgeRockIncMember2023-03-310001543916forg:KKRCoIncMemberforg:ForgeRockIncMember2022-03-310001543916forg:KKRCoIncMembersrt:AffiliatedEntityMember2023-01-012023-03-310001543916forg:KKRCoIncMembersrt:AffiliatedEntityMember2022-01-012022-03-310001543916forg:KKRCoIncMembersrt:AffiliatedEntityMember2023-03-310001543916forg:KKRCoIncMembersrt:AffiliatedEntityMember2022-03-31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 10-Q
______________________________
(Mark One) | | | | | |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2023
OR
| | | | | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from to |
Commission file number 001-40787
______________________________
ForgeRock, Inc.
______________________________
(Exact name of registrant as specified in its charter)
| | | | | |
Delaware | 33-1223363 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
201 Mission Street Suite 2900 San Francisco CA | 94105 |
(Address of Principal Executive Offices) | (Zip Code) |
(415) 599-1100
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Class A common stock | FORG | New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | |
Large accelerated filer | ☒ | Accelerated filer | o |
Non-accelerated filer | o | Smaller reporting company | o |
| | Emerging growth company | o |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ☒
As of April 30, 2023, there were 51,805,868 shares of the registrant's Class A common stock outstanding and 36,722,471 shares of the registrant's Class B common stock outstanding.
| | | | | |
|
|
| |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
|
| |
| |
| |
| |
| |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Initial Public Offering | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Signatures | |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risk and uncertainties. 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,” or “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 contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
•our proposed acquisition by entities affiliated with Thoma Bravo, L.P. (“Thoma Bravo”);
•our expectations regarding the timing and completion of the proposed acquisition by entities affiliated with Thoma Bravo;
•our future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, our ability to determine reserves and our ability to achieve and maintain future profitability;
•our future operational performance, including our expectations regarding ARR, dollar-based net retention rate, and the number of large customers;
•the sufficiency of our cash, cash equivalents and investments to meet our liquidity needs;
•the demand for our products and services or for security solutions in general, including our recently introduced SaaS offering, the ForgeRock Identity Cloud;
•our ability to attract and retain customers and partners;
•our ability to cross-sell to our existing customers;
•our ability to develop new products and features and bring them to market in a timely manner and make enhancements to our offerings;
•our ability to compete with existing and new competitors in existing and new markets and offerings;
•our expectations with respect to ongoing litigation;
•our expectations regarding the effects of existing and developing laws and regulations, including with respect to privacy, data protection and information security, as well as taxation;
•the impact of the military conflict in Ukraine and related sanctions against Russia and Belarus on our business, including inflationary pressures and interest rate risks;
•our ability to manage and insure risk associated with our business;
•our expectations regarding new and evolving markets;
•our ability to develop and protect our brand;
•our ability to maintain the security and availability of our platform and protect against data breaches and other security incidents;
•our expectations and management of future growth;
•our ability to continue to expand internationally and our exposure to fluctuations in foreign currencies;
•our expectations concerning relationships with third parties, including channel, system integrator and technology partners;
•our ability to obtain, maintain, protect, enhance, defend or enforce our intellectual property;
•our ability to utilize open source software in our platform and offerings;
•our ability to successfully acquire and integrate companies and assets;
•the attraction and retention of qualified employees and key personnel, including our direct sales force;
•our estimated total addressable market; and
•the increased expenses associated with being a public company.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcomes of the events described in these forward-looking statements are subject to risks, uncertainties, and other factors related to our proposed acquisition by entities affiliated with Thoma Bravo and those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.
PART I – FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
FORGEROCK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except par value)
| | | | | | | | | | | |
| March 31, 2023 | | December 31, 2022 |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 143,971 | | | $ | 128,803 | |
Short-term investments | 191,743 | | | 207,248 | |
Accounts receivable, net of allowance for credit losses of $664 and $444, respectively | 47,097 | | | 71,439 | |
Contract assets | 27,203 | | | 25,117 | |
Deferred commissions | 9,480 | | | 9,936 | |
Prepaid expenses and other assets | 15,891 | | | 14,810 | |
Total current assets | 435,385 | | | 457,353 | |
Deferred commissions | 20,740 | | | 20,379 | |
Property and equipment, net | 2,922 | | | 2,850 | |
Operating lease right-of-use assets | 9,816 | | | 10,190 | |
Contract and other assets | 3,784 | | | 3,408 | |
Total assets | $ | 472,647 | | | $ | 494,180 | |
Liabilities and stockholders’ equity | | | |
Current liabilities: | | | |
Accounts payable | $ | 8,564 | | | $ | 4,587 | |
Accrued compensation | 15,735 | | | 24,836 | |
Accrued expenses | 8,649 | | | 9,475 | |
Current portion of operating lease liability | 1,941 | | | 1,902 | |
Deferred revenue | 78,315 | | | 82,036 | |
Other liabilities | 2,526 | | | 2,927 | |
Total current liabilities | 115,730 | | | 125,763 | |
Long-term debt | 39,643 | | | 39,611 | |
Long-term operating lease liability | 8,790 | | | 9,207 | |
Deferred revenue | 920 | | | 1,283 | |
Other liabilities | 2,585 | | | 2,150 | |
Total liabilities | 167,669 | | | 178,014 | |
Commitments and contingencies (Note 8) | | | |
Stockholders’ equity | | | |
Class A common stock; $0.001 par value; 1,000,000 shares authorized as of March 31, 2023 and December 31, 2022, 51,507 and 49,782 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 51 | | | 50 | |
Class B common stock; $0.001 par value; 500,000 shares authorized as of March 31, 2023 and December 31, 2022, 36,722 and 37,195 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 37 | | | 37 | |
Additional paid-in capital | 654,600 | | | 641,983 | |
Accumulated other comprehensive income | 5,823 | | | 4,193 | |
Accumulated deficit | (355,533) | | | (330,097) | |
Total stockholders’ equity | 304,978 | | | 316,166 | |
Total liabilities and stockholders’ equity | $ | 472,647 | | | $ | 494,180 | |
See accompanying notes to condensed consolidated financial statements
FORGEROCK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share amounts)
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2023 | | 2022 |
Revenue: | | | |
Subscription term licenses | $ | 25,557 | | | $ | 19,659 | |
Subscription SaaS, support & maintenance | 34,101 | | | 26,185 | |
Perpetual licenses | 65 | | | 86 | |
Total subscriptions and perpetual licenses | 59,723 | | | 45,930 | |
Professional services | 3,420 | | | 2,163 | |
Total revenue | 63,143 | | | 48,093 | |
Cost of revenue: | | | |
Subscriptions and perpetual licenses | 8,322 | | | 5,853 | |
Professional services | 3,478 | | | 2,850 | |
Total cost of revenue | 11,800 | | | 8,703 | |
Gross profit | 51,343 | | | 39,390 | |
Operating expenses: | | | |
Research and development | 17,203 | | | 14,479 | |
Sales and marketing | 36,451 | | | 26,978 | |
General and administrative | 15,868 | | | 13,545 | |
Acquisition-related costs | 6,947 | | | — | |
Total operating expenses | 76,469 | | | 55,002 | |
Operating loss | (25,126) | | | (15,612) | |
Foreign currency gain (loss) | (542) | | | 435 | |
Interest expense | (1,135) | | | (899) | |
Other income, net | 1,836 | | | 68 | |
Interest and other income (expense), net | 159 | | | (396) | |
Loss before income taxes | (24,967) | | | (16,008) | |
Provision for income taxes | 469 | | | 462 | |
Net loss | $ | (25,436) | | | $ | (16,470) | |
Net loss per share attributable to common stockholders: | | | |
Basic and diluted | $ | (0.29) | | | $ | (0.20) | |
Weighted-average shares used in computing net loss per share attributable to common stockholders: | | | |
Basic and diluted | 87,463 | | | 83,766 | |
| | | |
See accompanying notes to condensed consolidated financial statements
FORGEROCK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(In thousands)
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2023 | | 2022 |
Net loss | $ | (25,436) | | | $ | (16,470) | |
Other comprehensive income (loss), net of tax: | | | |
Net unrealized gain (loss) on available-for-sale securities | 1,591 | | | (1,686) | |
Net foreign currency translation gain (loss) | 39 | | | (292) | |
Total comprehensive loss | $ | (23,806) | | | $ | (18,448) | |
See accompanying notes to condensed consolidated financial statements
FORGEROCK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
(In thousands, except share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended March 31, 2023 and 2022 |
| | Class A and Class B common stock and Common stock | | Additional paid-in capital | | Accumulated other comprehensive income | | Accumulated deficit | | Total stockholders' equity |
| | Shares | | Amount | | | | |
Balances at December 31, 2021 | | 82,648,825 | | | $ | 83 | | | $ | 593,196 | | | $ | 6,672 | | | $ | (263,825) | | | $ | 336,126 | |
Stock-based compensation expense | | — | | | — | | | 6,460 | | | — | | | — | | | 6,460 | |
Issuance of common stock under stock option plans, net | | 1,602,727 | | | 1 | | | 2,178 | | | — | | | — | | | 2,179 | |
Unrealized loss on available-for-sale securities | | — | | | — | | | — | | | (1,686) | | | — | | | (1,686) | |
Foreign currency translation adjustment | | — | | | — | | | — | | | (292) | | | — | | | (292) | |
Net loss | | — | | | — | | | — | | | — | | | (16,470) | | | (16,470) | |
Balances at March 31, 2022 | | 84,251,552 | | | $ | 84 | | | $ | 601,834 | | | $ | 4,694 | | | $ | (280,295) | | | $ | 326,317 | |
| | | | | | | | | | | | |
Balances at December 31, 2022 | | 86,977,070 | | | $ | 87 | | | $ | 641,983 | | | $ | 4,193 | | | $ | (330,097) | | | $ | 316,166 | |
Stock-based compensation expense | | — | | | — | | | 10,183 | | | — | | | — | | | 10,183 | |
Issuance of common stock under stock option plans, net | | 766,193 | | | 1 | | | 6,337 | | | — | | | — | | | 6,338 | |
Releases of restricted stock, net of tax withholding | | 485,737 | | | — | | | (3,903) | | | — | | | — | | | (3,903) | |
Unrealized gain on available-for-sale securities | | — | | | — | | | — | | | 1,591 | | | — | | | 1,591 | |
Foreign currency translation adjustment | | — | | | — | | | — | | | 39 | | | — | | | 39 | |
Net loss | | — | | | — | | | — | | | — | | | (25,436) | | | (25,436) | |
Balances at March 31, 2023 | | 88,229,000 | | | $ | 88 | | | $ | 654,600 | | | $ | 5,823 | | | $ | (355,533) | | | $ | 304,978 | |
See accompanying notes to condensed consolidated financial statements
FORGEROCK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2023 | | 2022 |
Operating activities: | | | |
Net loss | $ | (25,436) | | | $ | (16,470) | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | |
Depreciation | 256 | | | 280 | |
Noncash operating lease expense | 613 | | | 535 | |
Stock-based compensation expense | 10,183 | | | 6,460 | |
Amortization of deferred commissions | 3,916 | | | 3,991 | |
Foreign currency remeasurement loss (gain) | 552 | | | (620) | |
Amortization of premium / discount on short-term investments | (867) | | | 646 | |
Other | 421 | | | 102 | |
Changes in operating assets and liabilities: | | | |
Deferred commissions | (3,822) | | | (4,085) | |
Accounts receivable | 25,158 | | | 17,321 | |
Contract and other non-current assets | (2,275) | | | (122) | |
Prepaid expenses and other current assets | (913) | | | (893) | |
Operating lease liabilities | (634) | | | (499) | |
Accounts payable | 3,957 | | | (436) | |
Accrued expenses and other liabilities | (10,382) | | | (4,640) | |
Deferred revenue | (5,034) | | | (6,040) | |
Net cash used in operating activities | (4,307) | | | (4,470) | |
Investing activities: | | | |
Purchases of property and equipment | (285) | | | (488) | |
Purchases of short-term investments | (18,974) | | | (52,994) | |
Maturities of short-term investments | 35,763 | | | 14,452 | |
Sales of short-term investments | 579 | | | 4,836 | |
Net cash provided by (used in) investing activities | 17,083 | | | (34,194) | |
Financing activities: | | | |
Proceeds from exercises of employee stock options | 6,338 | | | 2,179 | |
Payment of offering costs | — | | | (141) | |
Employee payroll taxes paid for net shares settlement of restricted stock units | (3,903) | | | — | |
Net cash provided by financing activities | 2,435 | | | 2,038 | |
Effect of exchange rates on cash and cash equivalents and restricted cash | (50) | | | (200) | |
Net increase (decrease) in cash, cash equivalents and restricted cash | 15,161 | | | (36,826) | |
Cash, cash equivalents and restricted cash, beginning of year | 131,324 | | | 128,437 | |
Cash, cash equivalents and restricted cash, end of period | $ | 146,485 | | | $ | 91,611 | |
| | | |
Supplementary cash flow disclosure: | | | |
Short-term investments, end of period | $ | 191,743 | | | $ | 272,785 | |
Cash paid for interest | 791 | | | 524 | |
| | | |
Reconciliation of cash and cash equivalents and restricted cash: | | | |
Cash and cash equivalents | $ | 143,971 | | | $ | 91,580 | |
Restricted cash included in prepaids and other current assets | 2,514 | | | 31 | |
Total cash and cash equivalents and restricted cash | $ | 146,485 | | | $ | 91,611 | |
See accompanying notes to condensed consolidated financial statements
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Overview and Basis of Presentation
Company and Background
ForgeRock, Inc. (“ForgeRock”, the “Company”, “we” or “us”) is a modern digital identity platform transforming the way enterprises secure, manage, and govern the identities of customers, employees and partners, APIs, microservices, devices, and Internet of Things (“IoT”). Organizations adopt the ForgeRock Identity Platform as their digital identity system of record to enhance data security and sovereignty as well as improve performance. ForgeRock’s identity platform provides a full suite of identity management, access management, identity governance, and artificial intelligence (“AI”)-powered autonomous identity solutions. The Company is headquartered in San Francisco, California and has operations in Canada and the United States of America (collectively referred to as Americas), France, Germany, Norway and the United Kingdom (collectively referred to as EMEA), Australia, New Zealand and Singapore (collectively referred to as APAC). The Company was formed in Norway in 2009 and incorporated in Delaware in February 2012.
Pending Merger
On October 10, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Project Fortress Parent, LLC (“Parent”) and Project Fortress Merger Sub, Inc. (“Merger Sub”), pursuant to which Merger Sub will merge with and into ForgeRock (the “Merger”) and ForgeRock will continue as the surviving corporation in the Merger, as a wholly owned subsidiary of Parent. Parent and Merger Sub are entities affiliated with Thoma Bravo.
Under the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of the Company’s Class A common stock and Class B common stock (except for certain shares specified in the Merger Agreement) will be canceled and automatically converted into the right to receive cash in an amount equal to $23.25 per share, without interest.
Completion of the Merger remains subject to the satisfaction of certain terms and conditions set forth in the Merger Agreement, including (i) the absence of any order issued by any governmental entity of competent jurisdiction or any law applicable to the merger that, in each case, prevents, materially restrains, or materially impairs the consummation of the Merger; and (ii) the expiration or termination of the waiting period applicable to the Merger pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”), and the absence of any agreement with any governmental authority not to consummate the Merger.
On December 22, 2022, ForgeRock and Parent each received a request for additional information and documentary material (together, the “Second Request”) from the Department of Justice (the “DOJ”) in connection with the DOJ’s review of the Merger. The issuance of the Second Request extends the waiting period under the HSR Act until 30 days after both ForgeRock and Parent have substantially complied with the Second Request.
On January 12, 2023, the Company received approval of the Merger Agreement by the affirmative vote of ForgeRock’s stockholders holding a majority of the outstanding voting power of ForgeRock’s common stock.
In February 2023, ForgeRock and entities affiliated with Thoma Bravo entered into an agreement (the “Timing Agreement”) with the DOJ in connection with the Merger and the Second Request. Under the Timing Agreement, ForgeRock and Thoma Bravo agreed that they will certify compliance with the Second Request no earlier than May 1, 2023, and will not consummate the Merger less than 75 days after compliance with the Second Request. The Timing Agreement does not prevent ForgeRock and Thoma Bravo from consummating the Merger sooner if the DOJ closes its investigation of the Merger before that date. The expiration or termination of the waiting period applicable to the Merger pursuant to the HSR Act (and the absence of any agreement with any governmental authority not to consummate the Merger) is the only remaining approval or regulatory condition required to consummate the closing of the Merger under the Merger Agreement.
Either ForgeRock or Parent may terminate the Merger Agreement under certain circumstances, including if (1) the effective time has not occurred by October 10, 2023 (the “Termination Date”), which may be extended to January 10, 2024 if certain closing conditions related to the receipt of required regulatory approvals have not been satisfied at such time, unless ForgeRock delivers written notice to Parent prior to October 10, 2023 specifying that the Termination Date shall not be so extended or (2) a governmental authority of competent jurisdiction has issued a final non-appealable governmental order preventing the Merger.
Upon consummation of the Merger, ForgeRock will cease to be a publicly traded company and its Class A common stock will be delisted from the New York Stock Exchange.
Basis of Presentation and Principles of Consolidation
The accompanying interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The accompanying interim condensed consolidated financial statements include the accounts of ForgeRock and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.
Unaudited Interim Condensed Consolidated Financial Information
The accompanying interim condensed consolidated balance sheet as of March 31, 2023, the condensed consolidated statements of operations, comprehensive loss, and stockholders’ equity for the three months ended March 31, 2023 and 2022 and the interim condensed consolidated statements of cash flows for the three months ended March 31, 2023 and 2022 and the related footnote disclosures are unaudited. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K on file with the SEC (“Annual Report”).
The interim condensed consolidated financial statements are presented in accordance with the rules and regulations of the SEC and do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with U.S. GAAP. The condensed consolidated balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date. In management’s opinion, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and include all adjustments (consisting only of normal recurring adjustments) that are necessary to state fairly the consolidated financial position of the Company as of March 31, 2023, the results of operations for the three months ended March 31, 2023 and 2022 and cash flows for the three months ended March 31, 2023 and 2022. The results for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future period.
Use of Estimates
The Company’s condensed consolidated financial statements are prepared in accordance with U.S. GAAP as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”). These accounting principles require us to make certain estimates and assumptions. The significant estimates and assumptions include but are not limited to (i) standalone selling price (“SSP”) in revenue recognition, (ii) valuation allowance on deferred taxes, (iii) valuation of stock-based compensation and (iv) valuation of the Company’s common stock prior to the Company’s initial public offering of common stock (IPO) in September 2021. Management evaluates these estimates and assumptions on an ongoing basis and makes estimates based on historical experience and various other assumptions that are believed to be reasonable. However, because future events and their effects cannot be determined with certainty, actual results may differ from these assumptions and estimates, and such differences could be material.
The COVID-19 pandemic resulted in a sustained global slowdown of economic activity that decreased demand for certain goods and services, including possibly from the Company’s customers. While we have not experienced significant disruptions from the COVID-19 pandemic during the three months ended March 31, 2023, we are unable to accurately predict the extent to which the COVID-19 pandemic or future health epidemics may impact our business, results of operations and financial condition going forward. Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment. If the pandemic or its impact changes, the Company’s judgments or estimates will also change, and those changes could materially impact the Company’s condensed consolidated financial statements.
2. Summary of Significant Accounting Policies
Except for the policies updated below, there have been no significant changes from the significant accounting policies disclosed in “Note 2 — Summary of Significant Accounting Policies” to the consolidated financial statements included in Part II, Item 8 of the Annual Report.
Cash and Cash Equivalents
Cash consists primarily of cash on deposit with banks. Cash equivalents include highly liquid investments purchased with an original maturity date of 90 days or less from the date of purchase.
The Company monitors its credit risk by considering factors such as historical experience, credit ratings, current economic conditions, and reasonable and supportable forecasts.
Short-term Investments
Short-term investments consist primarily of money market funds, U.S. treasury bonds, commercial paper, corporate debt and asset-backed securities. The Company’s policy generally requires investments to be investment grade, with the primary objective of minimizing the potential risk of principal loss. The Company classifies its short-term investments as available-for-sale securities at the time of purchase and reevaluates such classification at each balance sheet date. The Company has classified its investments as current based on the nature of the investments and their availability for use in current operations.
Available-for-sale debt securities are recorded at fair value each reporting period. Unrealized gains and losses on these investments are reported as a separate component of accumulated other comprehensive income (loss) in the condensed consolidated balance sheets until realized. Unrealized gains and losses for any short-term investments that management intends to sell or it is more likely than not that management will be required to sell prior to their anticipated recovery are recorded in other income (expense), net. The Company segments its portfolio based on the underlying risk profiles of the securities and has a zero-loss expectation for U.S. treasury and U.S. government agency securities. The Company regularly reviews the securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such as credit ratings, issuer-specific factors, current economic conditions, and reasonable and supportable forecasts. The Company did not record any material credit losses during the three months ended March 31, 2023 and 2022. As of March 31, 2023, and December 31, 2022, no allowance for credit losses in short-term investments was recorded.
Interest income is reported within Interest and other income (expense), net in the condensed consolidated statements of operations. Realized gains and losses are determined based on the specific identification method and are reported in Interest and other income (expense), net in the consolidated statements of operations.
Accounts Receivable, Contract Assets and Allowances
Accounts receivable are recorded at the invoiced amount, net of allowances for expected credit losses. Effective January 1, 2022, the Company reports accounts receivable and contract assets net of an allowance for expected credit losses in accordance with Accounting Standards Codification Topic 326, Financial Instruments – Credit Losses (“ASC 326”), while prior period amounts continue to be reported in accordance with previously applicable GAAP. These allowances are based on the Company’s assessment of the collectability of accounts by considering the age of each outstanding invoice, the collection history of each customer, and an evaluation of current expected risk of credit loss based on current conditions and reasonable and supportable forecasts of future economic conditions over the life of the receivable. We assess collectability by reviewing accounts receivable on an aggregated basis where similar characteristics exist and on an individual basis when we identify specific customers with known disputes or collectability issues. Amounts deemed uncollectible are recorded as an allowance for expected credit losses in the condensed consolidated balance sheets with an offsetting decrease in deferred revenue or a charge to sales and marketing expense in the condensed consolidated statements of operations.
Third Party Hosted Services
The Company relies on the technology, infrastructure, and software applications, including software-as-a-service offerings, of third parties in order to host or operate certain key products and functions of its business. Our customers rely on these third-party hosted services retaining a high level of uptime. Through March 31, 2023, the Company has not incurred any significant service level credits to its customers.
Collaborative Arrangements
The Company has entered into collaborative arrangements with three partners in order to develop future versions of and enhance the features and functionality of its identity software and SaaS services. These arrangements have been determined to be within the scope of ASC 808, Collaborative Arrangements, as the parties are active participants and exposed to the risks and rewards of the collaborative activity. These arrangements also include research, development and commercial activities. The terms of the Company’s collaborative arrangements include (i) revenue on sales of licensed products, (ii) royalties on net sales of licensed products, and (iii) reimbursements for research and development expenses. In the three months ended March 31, 2023 and 2022, the Company recognized revenue of $2.1 million and $1.3 million, respectively and immaterial amounts of royalty expenses related to collaborative arrangements.
Recently Adopted Accounting Pronouncements
In June 2016, the FASB issued Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326) (“ASU 2016-13”), which changes the existing incurred loss impairment model for financial assets held at amortized cost. The new model uses a forward-looking expected loss method to calculate credit loss estimates. ASU 2016-13 also modified the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in earlier recognition of credit losses. ASU 2016-13 and its amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, though early adoption was permitted. The Company adopted the requirements of ASU 2016-13 as of January 1, 2022 on a modified retrospective basis. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.
In December 2019, the FASB issued ASU No 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 removes certain exceptions to the general principles in Topic 740. ASU 2019-12 is effective for fiscal years beginning January 1, 2022, with early adoption permitted. The Company adopted ASU 2019-12 on January 1, 2022. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, which requires business entities to disclose information about certain government assistance including government grants and money contributions they receive. Such disclosure requirements include the nature of the transactions and the related accounting policy used, the line items on the balance sheet and income statement that are affected and the amounts applicable to each financial statement line item and significant terms and conditions of the transactions. ASU 2021-10 was effective for annual periods beginning after December 15, 2021 and was to be applied either prospectively or retrospectively. The Company adopted ASU 2021-10 on January 1, 2022. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
3. Segment and Revenue Disclosures
Segment Reporting:
The Company operates in a single operating segment. An operating segment is defined as a component of an enterprise for which discrete financial information is available and is regularly reviewed by the chief operating decision maker (CODM). The Company’s CODM is its Chief Executive Officer as he is responsible for making decisions regarding resource allocation and assessing the Company’s performance.
Revenue by geographic region is based on the delivery address of the customer and is summarized in the below table (in thousands):
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2023 | | 2022 |
Americas | $ | 34,112 | | | $ | 24,751 | |
EMEA | 24,172 | | | 17,101 | |
APAC | 4,859 | | | 6,241 | |
Total revenue | $ | 63,143 | | | $ | 48,093 | |
The Company’s revenue from the United States was $30.3 million for the three months ended March 31, 2023. The Company’s revenue from the United States was $22.4 million for the three months ended March 31, 2022. The Company’s revenue from the United Kingdom was $7.3 million for the three months ended March 31, 2023. The Company’s revenue from the United Kingdom was $4.8 million for the three months ended March 31, 2022. No other individual country exceeded 10% of the Company’s total quarterly revenue.
Disaggregation of Revenue
The principal category the Company uses to disaggregate revenues is the nature of the Company’s products and services as presented in the condensed consolidated statements of operations, the total of which is reconciled to the condensed consolidated revenue from the Company’s single reportable segment. In the following table, revenue is presented by software license and service categories (in thousands):
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2023 | | 2022 |
Revenue: | | | |
Multi-year term licenses | $ | 15,264 | | | $ | 8,186 | |
1-year term licenses | 10,293 | | | 11,473 | |
Total subscription term licenses | 25,557 | | | 19,659 | |
Subscription SaaS, support & maintenance | 34,101 | | | 26,185 | |
| | | |
Perpetual licenses | 65 | | | 86 | |
Total subscriptions and perpetual licenses | 59,723 | | | 45,930 | |
Professional services | 3,420 | | | 2,163 | |
Total revenue | $ | 63,143 | | | $ | 48,093 | |
Contract Assets and Deferred Revenue
Contract assets and deferred revenue from contracts with customers were as follows (in thousands):
| | | | | | | | | | | |
| March 31, 2023 | | December 31, 2022 |
Contract assets | $ | 27,472 | | | $ | 25,242 | |
Deferred revenue | 79,235 | | | 83,319 | |
Generally, the Company invoices its customers at the time a customer enters into a binding contract. However, the Company may offer invoicing and payment installments for certain multi-year arrangements. In these instances, timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets are recorded when revenue is recognized prior to invoicing. Contract assets are transferred to accounts receivable upon customer invoicing. Beginning of the period contract asset amounts transferred to accounts receivable during the period were $7.1 million and $6.4 million for the three months ended March 31, 2023 and 2022, respectively.
Deferred revenue is recorded when invoicing occurs before revenue is recognized. Revenue recognized that was included in the deferred revenue balance at the beginning of the period was $36.6 million and $28.4 million for the three months ended March 31, 2023 and 2022, respectively.
Remaining Performance Obligations
Remaining performance obligations (“RPO”) represents transaction price allocated to still unsatisfied or partially satisfied performance obligations. Those obligations are recorded as deferred revenue or contractually stated or committed orders under multi-year billing plans for subscription and perpetual licenses, Software as a Service (“SaaS”) and support & maintenance contracts for which the associated deferred revenue has not yet been recorded.
As of March 31, 2023, total remaining non-cancellable performance obligations under the Company’s subscriptions and perpetual license contracts with customers was approximately $218.2 million. Of this amount, the Company expects to
recognize revenue of approximately $125.5 million, or 57%, over the next 12 months, with the balance to be recognized as revenue thereafter.
The Company excludes the transaction price allocated to RPOs that have original expected durations of one year or less such as professional services and training.
Contract Costs
The following table summarizes the account activity of deferred commissions for the three months ended March 31, 2023 and 2022:
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2023 | | 2022 |
Beginning balance | $ | 30,315 | | | $ | 24,058 | |
Additions to deferred commissions | 3,821 | | | 4,085 | |
Amortization of deferred commissions | (3,916) | | | (3,991) | |
Ending balance | $ | 30,220 | | | $ | 24,152 | |
| | | | | | | | | | | |
| March 31, 2023 | | December 31, 2022 |
Deferred commissions, current | $ | 9,480 | | | $ | 9,936 | |
Deferred commissions, noncurrent | 20,740 | | | 20,379 | |
Total deferred commissions | $ | 30,220 | | | $ | 30,315 | |
Concentrations of Credit Risk, Significant Customers and Third Party Hosted Services
Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments and accounts receivable. Cash and cash equivalents and short-term investments are currently held in two financial institutions and, at times, may exceed federally insured limits.
Major Customers
As of March 31, 2023 one customer represented 12% of accounts receivable. As of December 31, 2022, no single customer represented greater than 10% of accounts receivable. The Company does not require collateral to secure trade receivable balances. For the three months ended March 31, 2023 and 2022, no single customer represented greater than 10% of revenue.
4. Fair Value Measurements
ASC 820, Fair Value Measurements (“ASC 820”), defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs.
The standard describes a fair value hierarchy based on the following three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last unobservable:
Level 1 – Quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The following table represents the fair value hierarchy for the Company’s financial assets and liabilities held by value on a recurring basis (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2023 |
| Level 1 | | Level 2 | | Level 3 | | Total |
Assets: | | | | | | | |
Money market funds | $ | 106,319 | | | $ | — | | | $ | — | | | $ | 106,319 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Total cash equivalents | 106,319 | | | — | | | — | | | 106,319 | |
Commercial paper | — | | | 64,110 | | | — | | | 64,110 | |
Asset-backed securities | — | | | 16,802 | | | — | | | 16,802 | |
Corporate debt securities | — | | | 68,528 | | | — | | | 68,528 | |
U.S. treasury bonds | — | | | 42,303 | | | — | | | 42,303 | |
Total short-term investments | — | | | 191,743 | | | — | | | 191,743 | |
Total cash equivalents and short-term investments | $ | 106,319 | | | $ | 191,743 | | | $ | — | | | $ | 298,062 | |
| | | | | | | |
| December 31, 2022 |
| Level 1 | | Level 2 | | Level 3 | | Total |
Assets: | | | | | | | |
Money market funds | $ | 91,376 | | | $ | — | | | $ | — | | | $ | 91,376 | |
Total cash equivalents | 91,376 | | | — | | | — | | | 91,376 | |
Commercial paper | — | | | 47,840 | | | — | | | 47,840 | |
Asset-backed securities | — | | | 17,198 | | | — | | | 17,198 | |
Corporate debt securities | — | | | 98,798 | | | — | | | 98,798 | |
U.S. treasury bonds | — | | | 43,412 | | | — | | | 43,412 | |
Total short-term investments | — | | | 207,248 | | | — | | | 207,248 | |
Total cash equivalents and short-term investments | $ | 91,376 | | | $ | 207,248 | | | $ | — | | | $ | 298,624 | |
All of the Company’s money market funds are classified as Level 1 in the fair value hierarchy as the valuation is based on observable inputs that reflect quoted prices for identical assets or liabilities in active markets. For certain of the Company’s financial instruments, including cash held in banks, accounts receivable, accounts payable and accrued expense, the carrying amounts approximate fair value due to their short maturities, and are, therefore, excluded from the fair value tables above.
5. Cash Equivalents and Short-Term Investments
The amortized cost, unrealized loss and estimated fair value of the Company’s cash equivalents and short-term investments as of March 31, 2023 and December 31, 2022 were as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2023 |
| Amortized Cost | | Unrealized Gain | | Unrealized Loss | | Estimated Fair Value |
Cash equivalents: | | | | | | | |
Money market funds | $ | 106,319 | | | $ | — | | | $ | — | | | $ | 106,319 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Total cash equivalents | 106,319 | | | — | | | — | | | 106,319 | |
Short-term investments | | | | | | | |
Commercial paper | 64,069 | | | 104 | | | (63) | | | 64,110 | |
Asset-backed securities | 17,080 | | | — | | | (278) | | | 16,802 | |
Corporate debt securities | 68,832 | | | 9 | | | (313) | | | 68,528 | |
U.S. treasury bonds | 42,735 | | | 1 | | | (432) | | | 42,303 | |
Short-term investments | 192,716 | | | 113 | | | (1,086) | | | 191,743 | |
Total | $ | 299,035 | | | $ | 113 | | | $ | (1,086) | | | $ | 298,062 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2022 |
| | | | | | | |
| Amortized Cost | | Unrealized Gain | | Unrealized Loss | | Estimated Fair Value |
Cash equivalents: | | | | | | | |
Money market funds | $ | 91,376 | | | $ | — | | | $ | — | | | $ | 91,376 | |
| | | | | | | |
Total cash equivalents | 91,376 | | | — | | | — | | | 91,376 | |
Short-term investments | | | | | | | |
Commercial paper | 47,840 | | | — | | | — | | | 47,840 | |
Asset-backed securities | 17,623 | | | — | | | (425) | | | 17,198 | |
Corporate debt securities | 99,599 | | | 1 | | | (802) | | | 98,798 | |
U.S. treasury bonds | 44,154 | | | — | | | (742) | | | 43,411 | |
Short-term investments | 209,216 | | | 1 | | | (1,969) | | | 207,248 | |
Total | $ | 300,592 | | | $ | 1 | | | $ | (1,969) | | | $ | 298,624 | |
All short-term investments were designated as available-for-sale securities as of March 31, 2023 and December 31, 2022.
The following table presents the contractual maturities of the Company’s short-term investments as of March 31, 2023 and December 31, 2022 (in thousands):
| | | | | | | | | | | |
| March 31, 2023 |
| Amortized Cost | | Estimated Fair Value |
Due within one year | $ | 170,626 | | | $ | 169,923 | |
Due between one to five years | 22,090 | | | 21,820 | |
Total | $ | 192,716 | | | $ | 191,743 | |
| | | | | | | | | | | |
| December 31, 2022 |
| Amortized Cost | | Estimated Fair Value |
Due within one year | $ | 209,216 | | | $ | 207,248 | |
Due between one to five years | — | | | — | |
Total | $ | 209,216 | | | $ | 207,248 | |
As of March 31, 2023, the Company did not have any unsettled purchases or unsettled maturities of short-term investments. The following table presents the breakdown of the short-term investments that have been in a continuous unrealized loss position aggregated by investment category, as of March 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2023 |
| Less than 12 months | | More than 12 months | | Total |
| Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
Cash equivalents: | | | | | | | | | | | |
Money market funds | $ | 106,319 | | | $ | — | | | $ | — | | | $ | — | | | $ | 106,319 | | — | | $ | — | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Total cash equivalents | 106,319 | | | — | | | — | | | — | | | 106,319 | | | — | |
Short-term investments | | | | | | | | | | | |
Commercial paper | 64,110 | | | (63) | | | — | | | — | | | 64,110 | | | (63) | |
Asset-backed securities | 5,206 | | | (33) | | | 11,596 | | | (245) | | | 16,802 | | | (278) | |
Corporate debt securities | 36,271 | | | (73) | | | 32,257 | | | (240) | | | 68,528 | | | (313) | |
U.S. treasury bonds | 16,193 | | | (54) | | | 26,110 | | | (378) | | | 42,303 | | | (432) | |
Short-term investments | 121,780 | | | (223) | | | 69,963 | | | (863) | | | 191,743 | | | (1,086) | |
Total | $ | 228,099 | | | $ | (223) | | | $ | 69,963 | | | $ | (863) | | | $ | 298,062 | | | $ | (1,086) | |
The Company had short-term investments with a market value of $191.7 million in unrealized loss positions as of March 31, 2023. Gross unrealized losses from available-for-sale securities were $1.1 million as of March 31, 2023 and realized losses from available-for-sale securities that were reclassified out of accumulated other comprehensive income were $0.6 million for the three months ended March 31, 2023.
For available-for-sale debt securities that have unrealized losses, the Company evaluates whether (i) the Company has the intention to sell any of these investments, (ii) it is not more likely than not that the Company will be required to sell any of these available-for-sale debt securities before recovery of the entire amortized cost basis and (iii) the decline in the fair value of the investment is due to credit or non- credit related factors. Subsequent to the balance sheet date, the Company sold all of its marketable securities and converted them into money market funds and U.S. treasury bonds. The sale of securities was completed in April and resulted in a realized loss of $0.6 million.
6. Leases
The Company primarily has operating leases for office space. The leases expire on various dates between 2022 and 2029, some of which could include options to extend the lease. Options to extend the lease term are included in the lease term when it is reasonably certain that ForgeRock will exercise the extension option. Leases with a term of one year or less are not recognized on the Company’s condensed consolidated balance sheets, while the associated lease payments are recorded in the condensed consolidated statements of operations on a straight-line basis over the lease term. The Company’s leases do not contain material variable rent payments, residual value guarantees, covenants or other restrictions.
The following table summarizes the components of lease expense, which are included in operating expenses in the Company’s condensed statements of operations and comprehensive loss (in thousands):
| | | | | |
| Three Months Ended March 31, 2023 |
Operating lease expense | $ | 707 | |
Variable lease expense | 188 | |
Total lease expense | $ | 895 | |
Variable lease payments include amounts relating to common area maintenance, real estate taxes and insurance and are recognized in the condensed consolidated statements of operations and comprehensive loss as incurred.
The following table summarizes supplemental information related to leases:
| | | | | |
| Three Months Ended March 31, 2023 |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases (in thousands) | $ | 639 |
Weighted-average remaining lease term (years) | |
Operating leases | 6.1 |
Weighted-average discount rate | |
Operating leases | 5.5 | % |
The following table summarizes the maturities of lease liabilities as of March 31, 2023 (in thousands):
| | | | | |
2023 (9 months remaining) | $ | 2,509 | |
2024 | 2,148 | |
2025 | 1,922 | |
2026 | 1,759 | |
2027 | 1,774 | |
Thereafter | 3,062 | |
Total future minimum lease payments | 13,174 | |
Less: Imputed interest | (2,443) | |
Present value of future minimum lease payments | 10,731 | |
Less: Current portion of operating lease liability | (1,941) | |
Long-term operating lease liability | $ | 8,790 | |
7. Debt
The following table presents total debt outstanding (in thousands, except interest rates):
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2023 | | December 31, 2022 |
| Amount | | Interest Rate | | Amount | | Interest Rate |
$10.0 million March 2019 | $ | 10,000 | | | 8.00 | % | | $ | 10,000 | | | 8.00 | % |
$10.0 million September 2019 | 10,000 | | | 8.00 | % | | 10,000 | | | 8.00 | % |
$10.0 million December 2021 | 10,000 | | | 8.00 | % | | 10,000 | | | 8.00 | % |
$10.0 million March 2020 | 10,000 | | | 8.00 | % | | 10,000 | | | 8.00 | % |
| | | | | | | |
Less: debt discount | (357) | | | | | (389) | | | |
Total debt, net of debt discount | 39,643 | | | | | 39,611 | | | |
Less: current portion | — | | | | | — | | | |
Total long-term debt | $ | 39,643 | | | | | $ | 39,611 | | | |
In September 2021, the Company executed an amendment to the Amended Restated Plain English Growth Capital Loan and Security Agreement with TriplePoint Venture Growth BDC Corp. (“TriplePoint”) and TriplePoint Capital LLC (the “A&R Loan Agreement”), which amends and restates the Loan and Security Agreement entered into in March 2016 with TriplePoint. The payments on all cash advances are interest only. The A&R Loan Agreement became effective once the registration statement in connection with the initial public offering was declared effective on September 16, 2021. The key provisions of the amendment include: (1) a covenant requiring the maintenance of a $20.0 million cash balance when an event of default exits, (2) change in the interest rate for outstanding term loan to be eight percent (8.00%) per annum on the existing loans, (3) extension of the maturity dates by twenty-four months, (4) change in the prepayment penalties and (5) and a change in the end-of-term interest payments. The principal will be due at the end of the term of the respective advance. The A&R Loan Agreement is secured by substantially all the Company’s assets, excluding its intellectual property, which was subject to a negative pledge. The A&R Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Company, including, among other things, restrictions on indebtedness, liens, investments, dividends and other distributions.
The A&R Loan Agreement was accounted for as a modification and not an extinguishment as the terms of the Company’s outstanding debt were not substantially different from the original terms. The Company amortizes the debt issuance costs as interest expense using the effective interest method over the remaining term of the loan.
As of March 31, 2023 and December 31, 2022, accrued interest for the end-of-term payments was $2.4 million and $2.0 million, respectively. The annualized effective interest rate on debt was 9.77% and 9.01% for the three months ended March 31, 2023 and year ended December 31, 2022, respectively. As of March 31, 2023, the Company was in compliance with the covenants set forth in the A&R Loan Agreement.
Future principal payments on outstanding borrowings as of March 31, 2023 are as follows:
| | | | | |
Years ending: | |
2023 (9 months remaining) | $ | — | |
2024 | — | |
2025 | — | |
2026 | — | |
2025 | 30,000 | |
2026 | 10,000 | |
Total | $ | 40,000 | |
8. Commitments and Contingencies
Letters of Credit
As of March 31, 2023 and December 31, 2022, the Company had outstanding letters of credit under an office lease agreement that totaled $0.6 million, which primarily guaranteed early termination fees in the event of default. The letters of credit are not collateralized.
Purchase Commitments
In the ordinary course of business, the Company enters into various purchase commitments primarily related to third-party cloud hosting and data services, information technology operations and marketing events. Total noncancellable purchase commitments as of March 31, 2023 were approximately $42.5 million as follows:
| | | | | |
2023 | $ | 17,519 |
2024 | 25,000 |
| $ | 42,519 | |
Acquisition-Related Costs and Contingencies
The completion of the Merger with Thoma Bravo remains subject to customary closing conditions. As part of the Merger, the Company has incurred $6.9 million in merger-related expenses for the three months ended March 31, 2023 and expects to incur additional costs through the closing of the transaction, including approximately $26.5 million that are primarily contingent on consummation of the Merger. These expenditures include banker fees, legal fees and other third-party professional fees.
Employee Benefit Plans
The Company has a 401(k) Savings Plan (“the 401(k) Plan”) which qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. The 401(k) Plan and other pension plans that the Company provides or is mandated to provide are all defined contribution plans. During the three months ended March 31, 2023 and 2022, the Company’s 401(k) and other pension plan contributions were $1.4 million and $1.1 million, respectively.
Warranties and Guarantees
The Company’s software and software-as-a-service (“SaaS”) offerings are generally warrantied to perform materially in accordance with the Company’s documentation under normal use and circumstances. To date, the Company has not incurred significant costs and has not accrued a liability in the accompanying condensed consolidated financial statements as a result of these obligations.
The Company has entered into service-level agreements with a majority of its customers defining levels of support response times and SaaS uptimes, as applicable. In a very small percentage of the Company's arrangements, the Company allows customers to terminate their agreements if the Company fails to meet those levels. In such instances, the customer would be entitled to a refund of prepaid unused subscription or support & maintenance fees. To date, the Company has not experienced any significant failures to meet defined support response times or SaaS uptimes pursuant to those agreements and has not accrued any liabilities related to these agreements in the condensed consolidated financial statements.
The Company has not been obligated to make any payments for contingent indemnification obligations in respect to third-party claims, and no liabilities have been recorded for these obligations as of March 31, 2023.
Legal Matters
From time to time, the Company may be a party to various legal proceedings and claims that arise in the ordinary course of business. The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company maintains insurance to cover certain actions and believes that resolution of such claims, charges, or litigation will not have a material impact on the Company’s financial position, results of operations, or liquidity.
9. Income Taxes
For the three months ended March 31, 2023 and 2022, the Company recorded a tax provision of $0.5 million and $0.5 million, respectively. The effective tax rate differs from the U.S. federal statutory income tax rate of 21% primarily as a result of not recognizing deferred tax assets for domestic and certain foreign jurisdictions due to a full valuation allowance against deferred tax assets.
10. Stock-based Compensation
A summary of the Company’s stock-based compensation expense as recognized on the condensed consolidated statements of operations is presented below (in thousands):
| | | | | | | | | | | |
| Three months ended March 31, |
| 2023 | | 2022 |
Cost of revenue | $ | 1,005 | | | $ | 517 | |
Research and development | 2,010 | | | 1,400 | |
Sales and marketing | 3,940 | | | 2,258 | |
General and administrative | 3,228 | | | 2,285 | |
Total stock-based compensation | $ | 10,183 | | | $ | 6,460 | |
2021 Equity Incentive Plan
In September 2021, the Company’s board of directors adopted the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) as a successor to the 2012 Equity Incentive Plan (the “2012 Plan”) with the purpose of granting stock-based awards to employees, directors, officers and consultants such as stock options, restricted stock awards and restricted stock units (RSUs). The Company’s compensation committee administers the 2021 Plan. A total of 7,276,000 shares of Class A common stock were initially available for issuance under the 2021 Plan. In addition, the shares reserved for issuance under the 2021 Plan will also include a number of shares of Class A common stock equal to the number of shares of Class B common stock subject to awards granted under the 2012 Plan that, on or after the termination of the 2012 Plan, expire or otherwise terminate without having been exercised in full or are forfeited to or repurchased by the Company (provided that the maximum number of shares that may be added to the 2021 Plan pursuant to this sentence is 14,913,309 shares). The number of shares of the Company’s Class A common stock available for issuance under the 2021 Plan is subject to an annual increase on the first day of each fiscal year beginning on January 1, 2022, equal to the lesser of: (i) 8,085,000 shares; (ii) 5% of the outstanding shares of all classes of the Company’s common stock as of the last day of the immediately preceding year; or (iii) such other amount as the Company’s board of directors may determine. As of March 31, 2023, there were 5,919,969 stock-based awards issued and outstanding and 9,404,214 shares available for issuance under the 2021 Plan.
2012 Equity Incentive Plan
The 2012 Plan, which was amended in March 2021, was terminated in September 2021, in connection with the adoption of the 2021 Plan, and stock-based awards are no longer granted under the 2012 Plan. However, the 2012 Plan will continue to govern the terms and conditions of the outstanding awards previously granted thereunder. As of March 31, 2023, the Company has not issued any stock appreciation rights.
2021 Employee Stock Purchase Plan
In September 2021, the Company’s board of directors adopted and the stockholders approved the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which became effective concurrent with the completion of the IPO, and established an initial reserve of 1,617,000 shares of common stock. The 2021 ESPP provides for annual increases in the number of shares available for issuance on the first day of each fiscal year beginning on January 1, 2022, equal to the lesser of: (i) 1,617,000 shares; (ii) 1% of the outstanding shares of all classes of the Company’s common stock as of the last day of the immediately preceding year; or (iii) such other amount determined by the plan administrator. No shares were purchased in the three months ended March 31, 2023 and 2022 under the 2021 ESPP.
Except for the initial offering period, the ESPP provides for a 12-month offering period beginning November 15 and May 15 of each year, and each offering period will consist of two six-month purchase periods. The initial offering period began on October 1, 2021 and ended on November 15, 2022. On each purchase date, eligible employees will purchase the shares at a price per share equal to 85% of the lesser of (1) the fair market value of the Company’s common stock on the offering date, or (2) the fair market value of its common stock on the purchase date. If such fair market value decreases from the offering date to the applicable purchase date, the offering period will terminate after the purchase of shares and all participants will be automatically enrolled in the next offering period (a “rollover event”). The first purchase period of the initial offering period began on October 1, 2021 and ended on May 15, 2022 after the first purchase was completed as a result of a rollover event.
As per the Merger Agreement, the last purchase under the 2021 ESPP occurred on November 15, 2022.
Restricted Stock Units
The Company grants RSUs that generally vest over one to four years. The total grant-date fair value of RSUs granted was $7.9 million and $23.0 million during the three months ended March 31, 2023 and 2022, respectively.
A summary of the Company’s unvested RSUs and activity for the three months ended March 31, 2023 is as follows:
| | | | | | | | | | | |
| Shares | | Weighted Average Grant Date Fair Value |
Outstanding as of December 31, 2022 | 6,100,343 | | | $ | 20.16 | |
Granted | 393,537 | | | 20.15 | |
Released | (485,737) | | | 16.07 | |
Canceled | (88,174) | | | 20.61 | |
Outstanding at March 31, 2023 | 5,919,969 | | | 20.48 | |
As of March 31, 2023, there was $110.5 million of total unrecognized compensation, which will be recognized over the remaining weighted-average vesting period of 3.2 years using the straight-line method.
Stock Options
A summary of the Company’s stock option activity and related information for the three months ended March 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Number of Awards Outstanding | | Weighted- Average Exercise Price | | Weighted Average Remaining Contractual Term (Years) | | Aggregate Intrinsic Value (in thousands) |
Balance at December 31, 2022 | 10,194,694 | | | $ | 5.81 | | | 6.2 | | $ | 173,953 | |
Options granted | — | | | — | | | | | |
Options exercised | (644,012) | | | 3.80 | | | | | |
Options forfeited | (45,253) | | | 11.60 | | | | | |
Balance at March 31, 2023 | |