; ForgeRock, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Segment and Revenue Disclosures

v3.23.1
Segment and Revenue Disclosures
 3 Months Ended
Mar. 31, 2023
Revenue from Contract with Customer [Abstract]  
Segment and Revenue Disclosures 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.