10-Q 1 ping-20220331x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________________________

FORM 10-Q

_____________________________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

or

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: 001-39056

_____________________________________________________________________________________________________________________________________

Logo

Description automatically generated with medium confidence

PING IDENTITY HOLDING CORP.

(Exact Name of Registrant as Specified in Its Charter)

_____________________________________________________________________________________________________________________________________

Delaware

81-2933383

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification Number)

1001 17th Street, Suite 100

Denver, Colorado 80202

(Address of Principal executive offices, including zip code)

(303) 468-2900

(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:

Common Stock, $0.001 par value per share

PING

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

Non-accelerated filer

Smaller reporting company

Emerging growth company

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes   No  

On April 29, 2022, the Registrant had 85,285,543 shares of common stock, $0.001 par value, outstanding.

PING IDENTITY HOLDING CORP.

FORM 10-Q

For the Quarter Ended March 31, 2022

TABLE OF CONTENTS

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited)

3

Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021

3

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021

4

Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2022 and 2021

5

Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021

6

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021

7

Notes to Condensed Consolidated Financial Statements

8

Forward-Looking Statements

25

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

28

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

43

Item 4.

Controls and Procedures

44

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

45

Item 1A.

Risk Factors

45

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

45

Item 3.

Defaults Upon Senior Securities

45

Item 4.

Mine Safety Disclosures

45

Item 5.

Other Information

45

Item 6.

Exhibits

45

Signatures

47

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PING IDENTITY HOLDING CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(unaudited)

March 31, 

December 31, 

    

2022

    

2021

Assets

Current assets:

Cash and cash equivalents

$

213,286

$

220,607

Accounts receivable, net of allowances of $526 and $610 at March 31, 2022 and December 31, 2021, respectively

 

74,265

 

82,969

Contract assets, current (net of allowance)

61,468

67,540

Deferred commissions, current

10,829

10,460

Prepaid expenses

21,084

16,654

Other current assets

 

2,055

 

2,914

Total current assets

 

382,987

 

401,144

Noncurrent assets:

Property and equipment, net

 

8,955

 

9,396

Goodwill

 

527,933

 

528,548

Intangible assets, net

 

183,289

 

190,077

Contract assets, noncurrent (net of allowance)

5,565

3,457

Deferred commissions, noncurrent

19,411

19,380

Deferred income taxes, net

 

3,089

 

6,201

Operating lease right-of-use assets

12,937

13,709

Other noncurrent assets

 

8,962

 

6,121

Total noncurrent assets

 

770,141

 

776,889

Total assets

$

1,153,128

$

1,178,033

Liabilities and stockholders' equity

 

  

 

Current liabilities:

 

  

 

Accounts payable

$

9,665

$

4,528

Accrued expenses and other current liabilities

 

9,822

 

10,305

Accrued compensation

 

16,796

 

29,258

Deferred revenue, current

70,446

71,957

Operating lease liabilities, current

4,372

4,330

Current portion of long-term debt (net of issuance costs)

 

1,882

 

1,132

Total current liabilities

 

112,983

 

121,510

Noncurrent liabilities:

 

  

 

Deferred revenue, noncurrent

 

4,298

 

5,584

Long-term debt (net of issuance costs)

 

290,680

 

291,154

Deferred income taxes, net

 

777

 

4,240

Operating lease liabilities, noncurrent

13,077

14,140

Total noncurrent liabilities

 

308,832

 

315,118

Total liabilities

 

421,815

 

436,628

Commitments and contingencies (Note 14)

 

  

 

Stockholders' equity:

 

  

 

Preferred stock; $0.001 par value; 50,000,000 shares authorized at March 31, 2022 and December 31, 2021; no shares issued or outstanding at March 31, 2022 or December 31, 2021

Common stock; $0.001 par value; 500,000,000 shares authorized at March 31, 2022 and December 31, 2021; 84,016,147 and 83,754,449 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

84

84

Additional paid-in capital

 

835,454

 

824,455

Accumulated other comprehensive income (loss)

 

(181)

 

652

Accumulated deficit

 

(104,044)

 

(83,786)

Total stockholders' equity

 

731,313

 

741,405

Total liabilities and stockholders' equity

$

1,153,128

$

1,178,033

3

The accompanying notes are an integral part of these condensed consolidated financial statements.

PING IDENTITY HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(unaudited)

Three Months Ended
March 31, 

    

2022

    

2021

Revenue:

 

  

Subscription

$

80,200

$

64,216

Professional services and other

 

4,491

 

4,728

Total revenue

 

84,691

 

68,944

Cost of revenue:

Subscription (exclusive of amortization shown below)

13,388

9,414

Professional services and other (exclusive of amortization shown below)

 

6,759

 

5,583

Amortization expense

 

8,516

 

5,809

Total cost of revenue

28,663

20,806

Gross profit

 

56,028

 

48,138

Operating expenses:

 

  

 

  

Sales and marketing

 

30,941

 

25,549

Research and development

 

20,467

 

21,702

General and administrative

 

16,231

 

14,455

Depreciation and amortization

 

4,388

 

4,365

Total operating expenses

 

72,027

 

66,071

Loss from operations

 

(15,999)

 

(17,933)

Other expense:

 

  

 

  

Interest expense

 

(3,636)

 

(396)

Other expense, net

 

(804)

 

(872)

Total other expense

 

(4,440)

 

(1,268)

Loss before income taxes

 

(20,439)

 

(19,201)

Benefit for income taxes

 

181

 

3,267

Net loss

$

(20,258)

$

(15,934)

Net loss per share:

Basic and diluted

$

(0.24)

$

(0.20)

Weighted-average shares used in computing net loss per share:

Basic and diluted

 

83,822

 

81,339

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

PING IDENTITY HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(unaudited)

Three Months Ended
March 31, 

2022

2021

Net loss

$

(20,258)

$

(15,934)

Other comprehensive income (loss), net of tax:

 

  

 

  

Foreign currency translation adjustments

 

(833)

 

250

Total other comprehensive income (loss)

 

(833)

 

250

Comprehensive loss

$

(21,091)

$

(15,684)

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

PING IDENTITY HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(unaudited)

Three Months Ended March 31, 2022:

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Comprehensive

Accumulated

Stockholders'

    

Shares

    

Amount

    

Capital

    

Income (Loss)

    

Deficit

    

Equity

Balances at December 31, 2021

83,754,449

$

84

$

824,455

$

652

$

(83,786)

$

741,405

Net loss

(20,258)

(20,258)

Stock-based compensation

 

 

7,701

 

 

 

7,701

Reclassification of liability-classified awards upon settlement

2,541

2,541

Exercise of stock options, net of tax withholding

106,434

838

838

Vesting of restricted stock, net of tax withholding

155,264

 

 

(81)

 

 

 

(81)

Foreign currency translation adjustments, net of tax

 

 

 

(833)

 

 

(833)

Balances at March 31, 2022

84,016,147

$

84

$

835,454

$

(181)

$

(104,044)

$

731,313

Three Months Ended March 31, 2021:

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Comprehensive

Accumulated

Stockholders'

    

Shares

    

Amount

    

Capital

    

Income

    

Deficit

    

Equity

Balances at December 31, 2020

81,163,896

$

81

$

739,051

$

1,373

$

(19,395)

$

721,110

Net loss

(15,934)

(15,934)

Stock-based compensation

16,300

16,300

Reclassification of liability-classified awards upon settlement

3,089

3,089

Exercise of stock options, net of tax withholding

198,105

 

 

1,770

 

 

 

1,770

Vesting of restricted stock, net of tax withholding

113,175

 

 

(565)

 

 

 

(565)

Foreign currency translation adjustments, net of tax

 

 

 

250

 

 

250

Balances at March 31, 2021

81,475,176

$

81

$

759,645

$

1,623

$

(35,329)

$

726,020

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

PING IDENTITY HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

Three Months Ended
March 31, 

    

2022

2021

Cash flows from operating activities

 

  

  

Net loss

$

(20,258)

$

(15,934)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

Depreciation and amortization

 

12,904

 

10,174

Stock-based compensation expense

 

8,128

 

16,939

Amortization of deferred commissions

3,316

2,329

Amortization of deferred debt issuance costs

318

62

Operating leases, net

(249)

(142)

Deferred taxes

 

(286)

 

(3,546)

Other

 

96

 

(10)

Changes in operating assets and liabilities:

 

 

Accounts receivable

 

8,574

 

16,640

Contract assets

 

4,006

 

4,128

Deferred commissions

 

(3,716)

 

(2,934)

Prepaid expenses and other current assets

 

(3,891)

 

2,466

Other assets

 

(3,707)

 

(820)

Accounts payable

 

5,274

 

(2,013)

Accrued compensation

(10,583)

(1,865)

Accrued expenses and other

 

(413)

 

1,659

Deferred revenue

 

(2,797)

 

(3,046)

Net cash provided by (used in) operating activities

 

(3,284)

 

24,087

Cash flows from investing activities

 

  

 

  

Payments for business acquisitions, net of cash acquired

(4)

Purchases of property and equipment and other

 

(809)

 

(953)

Capitalized software development costs

 

(4,908)

 

(3,974)

Net cash used in investing activities

 

(5,721)

 

(4,927)

Cash flows from financing activities

 

  

 

  

Payment of acquisition-related holdbacks

 

 

(993)

Proceeds from stock option exercises

 

1,093

 

1,770

Payment for tax withholding on equity awards

(81)

(565)

Payment of long-term debt

 

 

(110,000)

Net cash provided by (used in) financing activities

 

1,012

 

(109,788)

Effect of exchange rates on cash and cash equivalents and restricted cash

 

717

 

(111)

Net decrease in cash and cash equivalents and restricted cash

 

(7,276)

 

(90,739)

Cash and cash equivalents and restricted cash

 

  

 

  

Beginning of period

 

220,889

 

146,499

End of period

$

213,613

$

55,760

Supplemental disclosures of cash flow information:

 

  

 

  

Cash paid for interest

$

3,320

$

339

Cash paid for taxes

 

554

 

215

Noncash activities:

 

  

 

  

Purchases of property and equipment, accrued but not yet paid

$

210

$

42

Reclassification of liability-classified awards upon settlement

2,541

3,089

Lease liabilities arising from right-of-use assets

 

134

 

Reconciliation of cash and cash equivalents and restricted cash within the consolidated balance sheets to the amounts shown in the statements of cash flows above:

Cash and cash equivalents

$

213,286

$

55,003

Restricted cash included in other noncurrent assets

 

327

 

757

Total cash and cash equivalents and restricted cash

$

213,613

$

55,760

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

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PING IDENTITY HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1.       Overview and Basis of Presentation

Organization and Description of Business

Ping Identity Holding Corp. and its wholly owned subsidiaries, referred to herein as the “Company,” is headquartered in Denver, Colorado with international locations principally in Canada, the United Kingdom, France, Australia, Israel and India. The Company, doing business as Ping Identity Corporation (“Ping Identity”), provides customers, employees and partners with secure access to any service, application or application programming interface (“API”), while also managing identity and profile data at scale.

Basis of Presentation and Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated. The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All amounts are reported in U.S. dollars. Certain amounts for the three months ended March 31, 2021 have been reclassified to conform with current period presentation.

Unaudited Interim Condensed Consolidated Financial Information

The accompanying interim condensed consolidated balance sheet as of March 31, 2022, the condensed consolidated statements of operations, of comprehensive loss, of cash flows and of stockholders’ equity for the three months ended March 31, 2022 and 2021 and the related footnote disclosures are unaudited. The condensed consolidated balance sheet data as of December 31, 2021 was derived from audited financial statements, but does not include all disclosures required by GAAP. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in management’s opinion, include all adjustments necessary to state fairly the consolidated financial position of the Company as of March 31, 2022, the results of operations for the three months ended March 31, 2022 and 2021 and cash flows for the three months ended March 31, 2022 and 2021. The results for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future period.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, determining the fair values of assets acquired and liabilities assumed in business combinations, valuing stock-based compensation awards and assessing the probability of the awards meeting vesting conditions, recognizing revenue, establishing allowances for expected credit losses based on expected credit losses and the collectability of financial assets, determining useful lives for finite-lived assets, assessing the recoverability of long-lived assets, determining the value of right-of-use assets and lease liabilities, accounting for income taxes and related valuation allowances against deferred tax assets, determining the amortization period for deferred commissions and assessing the

8

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PING IDENTITY HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

accounting treatment for commitments and contingencies. 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. Actual results may differ from these estimates due to risks and uncertainties, including those related to the novel Coronavirus Disease 2019 (“COVID-19”) pandemic.

2.       Summary of Significant Accounting Policies

The Company’s significant accounting policies are discussed in “Note 2 — Summary of Significant Accounting Policies” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes to these policies that have had a material impact on the Company’s condensed consolidated financial statements and related notes for the three months ended March 31, 2022. The following describes the impact of certain policies.

Recent Accounting Pronouncements

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU No. 2021-08"). ASU No. 2021-08 will require companies to apply the definition of a performance obligation under ASC Topic 606 to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers that are acquired in a business combination. Under current GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU No. 2021-08 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. The impact is dependent on the size and frequency of future acquisitions and does not affect contract assets or contract liabilities related to acquisitions completed in a year prior to the adoption date.

3.       Revenue Recognition and Deferred Commissions

The Company recognizes revenue under Accounting Standards Codification Topic 606 (“ASC 606”), Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.

Disaggregation of Revenue

The following table presents revenue by category:

Three Months Ended
March 31, 

2022

2021

Subscription term-based licenses:

Multi-year subscription term-based licenses

$

32,782

$

23,838

1-year subscription term-based licenses

11,528

17,344

Total subscription term-based licenses

44,310

41,182

Subscription SaaS

20,181

11,986

Maintenance and support

15,709

11,048

Total subscription revenue

80,200

64,216

Professional services and other

 

4,491

 

4,728

Total revenue

$

84,691

$

68,944

9

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PING IDENTITY HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following table presents revenue by geographic region, which is based on the delivery address of the customer, and is summarized by geographic area:

Three Months Ended
March 31, 

2022

2021

United States

$

65,763

$

53,871

International

 

18,928

 

15,073

Total revenue

$

84,691

$

68,944

Other than the United States, no other individual country exceeded 10% of total revenue for the three months ended March 31, 2022 or 2021.

Contract Balances

Contract assets represent amounts for which the Company has recognized revenue, pursuant to its revenue recognition policy, for contracts that have not yet been invoiced to customers where there is a remaining performance obligation, typically for multi-year arrangements. In multi-year agreements, the Company generally invoices customers on an annual basis on each anniversary of the contract start date. Amounts anticipated to be billed within one year of the balance sheet date are recorded as contract assets, current; the remaining portion is recorded as contract assets, noncurrent in the condensed consolidated balance sheets. The change in the total contract asset balance relates to entering into new multi-year contracts and billing on existing contracts. The opening and closing balances of contract assets were as follows:

Three Months Ended
March 31, 

2022

2021

Beginning balance

$

70,997

$

73,791

Ending balance

67,033

69,681

Change

$

(3,964)

$

(4,110)

Contract liabilities consist of customer billings in advance of revenue being recognized. The Company primarily invoices its customers for subscription arrangements annually in advance, though certain contracts require invoicing for the entire subscription in advance. Amounts anticipated to be recognized within one year of the balance sheet date are recorded as deferred revenue, current; the remaining portion is recorded as deferred revenue, noncurrent in the condensed consolidated balance sheets. The opening and closing balances of contract liabilities included in deferred revenue were as follows:

Three Months Ended
March 31, 

2022

2021

    

Beginning balance

$

77,541

$

52,398

Ending balance

74,744

49,352

Change

$

(2,797)

$

(3,046)

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PING IDENTITY HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The change in deferred revenue relates primarily to invoicing customers and recognizing revenue in conjunction with the satisfaction of performance obligations. Revenue recognized during the three months ended March 31, 2022 and 2021 that was included in the deferred revenue balances at the beginning of the respective periods was as follows:

Three Months Ended
March 31, 

    

2022

2021

Deferred revenue recognized as revenue

$

37,769

$

25,935

Remaining Performance Obligations

Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and noncancelable amounts to be invoiced. As of March 31, 2022, the Company had $294.8 million of transaction price allocated to remaining performance obligations, of which 81% is expected to be recognized as revenue over the next 24 months, with the remainder to be recognized thereafter.

Deferred Commissions

The following table summarizes the account activity of deferred commissions for the three months ended March 31, 2022 and 2021:

Three Months Ended
March 31, 

2022

2021

Beginning balance

$

29,840

$

15,929

Additions to deferred commissions

3,716

2,934

Amortization of deferred commissions

 

(3,316)

 

(2,329)

Ending balance

$

30,240

$

16,534

Deferred commissions, current

$

10,829

$

6,819

Deferred commissions, noncurrent

19,411

9,715

Total deferred commissions

$

30,240

$

16,534

4. Allowances for Expected Credit Losses

The following table presents the changes in allowance for expected credit losses for financial assets measured at amortized cost:

    

Accounts
Receivable

    

Contract
Assets

Three Months Ended March 31, 2022

(in thousands)

Beginning balance

$

610

$

156

Provision for credit losses, net of recoveries

 

138

 

(42)

Write-offs

 

(222)

 

Ending balance

$

526

$

114

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PING IDENTITY HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

5.       Fair Value of Financial Instruments

For financial assets and liabilities that are measured at fair value on a recurring basis at each reporting period, the Company uses a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs. A financial instrument’s classification within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The Company invests primarily in money market funds, which are measured and recorded at fair value on a recurring basis and are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The fair value of these financial instruments were as follows:

March 31, 2022

    

Level 1

    

Level 2

    

Level 3

    

Total

(in thousands)

Cash and cash equivalents:

Money market funds

$

166,030

$

$

$

166,030

December 31, 2021

    

Level 1

    

Level 2

    

Level 3

    

Total

(in thousands)

Cash and cash equivalents:

Money market funds

$

181,009

$

$

$

181,009

The carrying amounts of the Company’s accounts receivable, accounts payable and other current liabilities approximate their fair values due to their short maturities. The carrying value of the Company’s long-term debt approximates its fair value based on Level 2 inputs as the principal amounts outstanding are subject to variable interest rates that are based on market rates (see Note 9).

6.       Property and Equipment

Property and equipment consisted of the following:

March 31, 

December 31, 

2022

    

2021

    

(in thousands)

Computer equipment

$

8,202

$

8,117

Furniture and fixtures

4,381

4,331

Purchased computer software

785

785

Leasehold improvements

8,870

8,670

Other

448

448

Property and equipment, gross

22,686

22,351

Less: Accumulated depreciation

(13,731)

(12,955)

Property and equipment, net

$

8,955

$

9,396

Depreciation expense was $0.9 million for the three months ended March 31, 2022 and March 31, 2021.

12

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PING IDENTITY HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

7.       Business Combinations

Singular Key, Inc. Acquisition

On September 27, 2021, the Company acquired 100% of the voting equity interest in Singular Key, Inc. (“Singular Key”). Singular Key is a provider of no-code identity and security orchestration. Singular Key streamlines the integration of identity services, providing a no-code method of creating workflows across multiple identity platforms, including identity verification, fraud, risk, access management, privileged access and identity governance into a unified identity fabric. The purpose of this acquisition was to accelerate the Company’s entry into the identity orchestration arena.

The total purchase price was $73.2 million, net of cash acquired, which consisted of the following:

    

Fair Value

    

(in thousands)

Cash, net of cash acquired

$

40,314

 

Common stock issued

 

32,871

 

Total

$

73,185

 

The fair value of the 1,260,885 common shares issued as consideration was determined based on the lowest trading price of a Ping Identity common share on the New York Stock Exchange on the acquisition date of September 27, 2021.

The following table summarizes the allocation of the purchase price, based on the estimated fair value of the assets acquired and liabilities assumed at the acquisition date:

    

September 27, 2021

    

Useful Life

(in thousands)

Fair value of net assets acquired

 

  

 

  

Developed technology

$

21,480

 

4 years

Goodwill

 

56,864

 

Indefinite

Other assets

 

75

 

  

Total assets acquired

 

78,419

 

  

Other liabilities

 

(39)

 

  

Deferred tax liability

(5,195)

Total liabilities assumed

 

(5,234)

 

  

Net assets acquired

$

73,185

 

  

Goodwill is primarily attributable to the workforce acquired and the expected synergies arising from integrating Singular Key into the PingOne Cloud Platform. The integration of Singular Key capabilities is expected to enable customers to improve deployment speed, accelerate cloud migration, reduce costs and lower the risk associated with vendor lock-in. None of the goodwill is deductible for tax purposes.

SecuredTouch, Inc. Acquisition

On June 20, 2021, the Company acquired 100% of the voting equity interest in SecuredTouch, Inc. (“SecuredTouch”). SecuredTouch is a leader in fraud and bot detection and mitigation, which leverages behavioral biometrics, artificial intelligence, machine learning, and deep learning to provide identity, risk, and fraud teams early visibility into potential malicious activity happening across digital properties. The purpose of this acquisition was to accelerate the Company’s cloud-delivered intelligent-identity solutions that combat malicious behavior such as bots, emulators, and account takeover.

13

Table of Contents

PING IDENTITY HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The total purchase price was $39.7 million, net of cash acquired and a $0.2 million post-closing purchase price adjustment. The purchase price required to be paid by Ping Identity was reduced by $0.2 million as a result of changes to SecuredTouch’s originally estimated working capital balances.

The following table summarizes the allocation of the purchase price based on the estimated fair value of the assets acquired and liabilities assumed at the acquisition date:

    

June 20, 2021

    

Useful Life

(in thousands)

Fair value of net assets acquired

 

  

 

  

Developed technology

$

8,300

 

4 years

Goodwill

 

30,804

 

Indefinite

Deferred tax asset

1,216

Other assets

 

157

 

  

Total assets acquired

 

40,477

 

  

Deferred revenue

(337)

Other liabilities

 

(483)

 

  

Total liabilities assumed

 

(820)

 

  

Net assets acquired

$

39,657

 

  

Goodwill is primarily attributable to the workforce acquired and the expected synergies arising from integrating SecuredTouch into the Ping Intelligent Identity Platform to provide customers a more comprehensive offering that extends past traditional workforce use case and accelerates Ping’s cloud-delivered intelligent identity solutions that combat malicious behavior. None of the goodwill is deductible for tax purposes.

Additional Acquisition Related Information

The operating results of Singular Key and SecuredTouch are included in the Company’s condensed consolidated statements of operations from their respective dates of acquisition.  

8.       Goodwill and Intangible Assets

The changes in the carrying amount of the Company’s goodwill balance from December 31, 2021 to March 31, 2022 were as follows (in thousands):

Beginning balance

$

528,548

Foreign currency translation adjustment

(615)

Ending balance

$

527,933

14

Table of Contents

PING IDENTITY HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Company’s intangible assets as of March 31, 2022 were as follows:

March 31, 2022

Gross

Accumulated

Net Carrying

    

Amount

    

Amortization

    

Value

(in thousands)

Developed technology

 

$

145,939

 

$

(75,102)

 

$

70,837

Customer relationships

 

 

95,124

 

 

(43,223)

 

 

51,901

Trade names

 

 

56,793

 

 

(32,512)

 

 

24,281

Product backlog

617

(338)

279

Capitalized internal-use software

 

54,836

 

 

(19,624)

 

 

35,212

Other intangible assets

 

 

1,535

 

 

(756)

 

 

779

Total intangible assets

 

$

354,844

 

$

(171,555)

 

$

183,289

The Company’s intangible assets as of December 31, 2021 were as follows:

December 31, 2021

    

Gross

    

Accumulated

    

Net Carrying

    

Amount

    

Amortization

    

Value

(in thousands)

Developed technology

$

146,142

 

$

(69,802)

 

$

76,340

Customer relationships

 

95,131

 

 

(41,326)

 

 

53,805

Trade names

 

56,778

 

 

(31,093)

 

 

25,685

Product backlog

 

634

(287)

347

Capitalized internal-use software

 

50,934

 

 

(17,760)

 

 

33,174

Other intangible assets

 

1,481

 

 

(755)

 

 

726

Total intangible assets

$

351,100

 

$

(161,023)

 

$

190,077

The Company capitalized $5.2 million and $4.2 million of internal-use software costs during the three months ended March 31, 2022 and 2021, respectively, which included $0.3 million and $0.2 million of stock-based compensation costs, respectively.

Amortization expense for the three months ended March 31, 2022 and 2021 was $12.0 million and $9.3 million, respectively.

As of March 31, 2022, expected amortization expense for intangible assets subject to amortization for the next five years is as follows:

Year Ending December 31, 

    

March 31, 2022

(in thousands)

2022 (remaining nine months)

$

36,129

2023

 

45,885

2024

 

42,376

2025

 

30,020

2026

 

11,601

Thereafter

 

17,278

Total

$

183,289

     

9.       Debt

2019 Credit Agreement

In December 2019, Roaring Fork Intermediate, LLC and Ping Identity Corporation, each a wholly-owned subsidiary of Ping Identity Holding Corp, and certain of their subsidiaries (together, the “Credit Parties”)

15

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PING IDENTITY HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

entered into a credit agreement (the “2019 Credit Agreement”) with the financial institutions identified therein as lenders, including Bank of America, N.A., as administrative agent, and BofA Securities, Inc. and RBC Capital Markets as joint lead arrangers. Borrower and Holdings are wholly-owned indirect subsidiaries of the Company. The 2019 Credit Agreement provided for a senior revolving line of credit in a principal committed amount of $150.0 million (the “2019 Revolving Credit Facility”), with the option to request incremental term loan facilities in a minimum amount of $10 million for each facility if certain conditions are met. The 2019 Revolving Credit Facility had a maturity date of December 12, 2024. Obligations under the 2019 Credit Agreement were secured by substantially all of the assets of the Credit Parties.

The 2019 Revolving Credit Facility bore interest at the option of the Borrower at a rate per annum equal to either (i) a base rate, which is equal to the greater of (a) the prime rate, (b) the federal funds effective rate plus 0.5% and (c) the adjusted LIBO rate for a one month interest period plus 1%, or (ii) the adjusted LIBO rate equal to the LIBO rate for the interest period multiplied by the statutory reserve rate, plus in the case of each of clauses (i) and (ii), the Applicable Rate (as defined in the 2019 Credit Agreement), which ranges from (i) 0.25% to 1.0% per annum for base rate loans and (ii) 1.25% to 2.0% per annum for LIBO rate loans, in each case, depending on the senior secured net leverage ratio. The Borrower also paid a commitment fee during the term of the 2019 Credit Agreement ranging from 0.20% to 0.35% of the average daily amount of the ava