Q1 2020 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Ping identity first quarter 2020 earnings call at this time participants heartland in listen only mode. After the speakers.
A question and answer session to ask the question then the session you would need to press star one on your telephone. Please be advised today's conference is being recorded if you require any other assistance. Please press star zero, how notwithstanding the conference over to your speakers today.
Thanks, everyone for joining us today and welcome to the Ping identity Conference call, where we will discuss our results for the first quarter.
Well, you're 2020 and provide initial outlook for the second quarter fiscal year 2020.
Before we begin I'd like to remind you that shortly after the market close today Ping identity issued a press release announcing its first quarter 2020 financial results.
Additionally, Ping identity published a supplemental slide presentation to accompany this call you may access the press release and presentation on the Investor Relations section of thing identity Dotcom.
With me today is hungry Duran, our CEO and founder today's discussion May include forward looking statements. Please refer to our annual report for the year ending December 31 2019.
Filed on form 10-K filed with the Securities and Exchange Commission and our quarterly report for the quarter ended March 31, 2020 filed on form 10-Q.
Filed with the Securities and Exchange Commission, where you will see a discussion of factors that could cause the company's actual results to differ materially from these statements I would also like to remind you that during the call. We will discuss some non-GAAP measures relate it to Ping identity performance you can find a reconciliation of those measures to the.
Mirrors comparable GAAP measures in our quarterly financial statements just one housekeeping item to ensure that we can addresses many analysts questions as possible during the call. We ask that you. Please limit your questions. One initial question and one follow up and with that I'll turn the call over 200 directly.
Thanks Raj.
I recognize we're all experiencing a lot of change and our experiences are all different.
For most these are very challenging times.
As we all navigate cobot 19, our best wishes or with the individuals and families impacted by the current events.
Did you are part where are you hearing to all safety guidelines to ensure our employees or a safe and protected as possible.
For customers, many of whom are facing the difficult task of transitioning their employees to a secure work from home environment, we're providing existing paying federal customers are multifactor authentication solution for six months at no charge.
For new customers, we're providing six months of free single sign on and Multifactor authentication.
These offers are just a couple of ways pain is championing our customers through this transition.
Well Cobot 19 has impacted many aspects of our world and our near term focus has shifted to helping customers secure the remote workforces our long term mission remains unchanged.
We believe the importance of identity is rising to a new level of strategic imperative and will accelerate in the quarters ahead.
Now more than ever secure identity to enable zero trust anytime anywhere work has become a necessity.
In a matter of weeks the world has come to appreciate the secure work in digital interaction must be enabled beyond the perimeter and we believe this bodes well for the future of identity security.
Despite rapidly changing conditions near quarter end typically our busiest few weeks of the quarter. We continued to close a lot of business.
That activity has continued through April.
As a result, Q1 marked a great start to the year highlighted by strong topline growth profitability cash flow and early customer adoption of pain cloud, a new cloud offering for our advanced enterprise customers.
Hey, our grew 21% year over year, culminating in total air are up $230 million.
Q1 revenue was $61.4 million, representing a 22% yorba your growth.
And subscription revenue represented 93% of total revenue.
Before diving into the quarter's results I'd like to describe how cobot 19 has impacted our business and our plans going forward with color that may not be reflected in our numbers.
Crisis can bring out the best and worst in companies and we'd like to take this opportunity to build on a foundation of trust in transparency consistent with our values.
To begin our subscription business model enterprise market focus diversified vertical customer base strong balance sheet and focus on profitable growth places us in a strong position to weather the uncertainty that cobot 19 brings.
Furthermore, we're in constant communication with our customers through our customer success and renewals teams as well as c., so and CIO round tables.
Insights from these interactions reaffirmed the strategic role of identity security prior to an increasingly during and after cobot 19.
Well, we talk about identity being mission critical or the new security perimeter or the foundation of zero Trust in hybrid and multi cloud world.
We could not have experienced the full truth in that statement until cobot 19.
Several interactions over the past month have highlighted this reality, including quotes from customers such as all not identity security projects have been frozen, while we doubled down on identity or digital is more important than ever and we see identity as the foundation.
Near the end of March several of our larger customers either expanded or accelerated their timeline for the use of multifactor authentication to a 100% remote workforce.
We had to customers in particular, who deployed multifactor authentication to over 100000 people each in less than 10 days.
These represent herculean efforts to achieve accelerated deployments of strong authentication on all digital applications and speak to the scalability time to value and power a pink solutions.
At the same time, we've experienced some delays in our larger deals leading us to believe that longer sales cycles will be the norm for larger projects until companies see a path to recovery or stabilization through the crisis.
It's important to note that the large projects, which did not close in Q1 were primarily in industries heavily impacted by cobot.
But yet have continued to move forward in April.
Given credence to the importance of identity in this new world.
On the renewals front, we found our solutions to be incredibly resilient, while a few customers in highly affected verticals are seeking flexibility and payment terms renewing for one year terms rather than multiyear were adjusting identities under license as a result of staff reductions, we're not experiencing anything that we would consider to.
To be outside of the norm.
In the past month, we play special focus on customers experiencing increased traffic such as health care and we've given our first responder clients priority in our support center, one customer, which leverages paying in their teleconferencing service reported that paying infrastructure was fielding over 200.
Billion transactions per day and performing perfectly.
Another customer who serves K through 12 online learning also reported.
Several fold surgeon traffic.
For which the Ping infrastructure performed without incident.
Across the board customers have reported that paying has handled their surges in traffic flawlessly.
And that their investment in paying has put them in a strong position to immediately shift to work from home.
As a result at these interactions we believe paying is well positioned to weather cobot 19, and remained the enterprise leader in hybrid cloud identity.
While it's difficult to precisely forecast the long term impact on our business. One thing is for certain enterprises must be equipped to support their customers employees and partners remotely secure digital is no longer a nice to have it's a requirement.
Now I'd like to switch gears and highlight a few Q1 statistics and customer wins.
To begin we reached a notable milestone in Q1 and are proud to say, we now secure 60 of the fortune 100. Furthermore, 50% of our new customers are deploying picking the cloud further validating the unique architectural advantages of the pink solution and the flexibility we give enterprises as they manage their hybrid.
He infrastructure.
On the new customer front.
One of the largest providers of financial markets data chose pin cloud to act as the central identity service for their entire customer facing landscape.
This cloud solution Leverages, the full complement of pings advanced enterprise capabilities of single sign on multifactor authentication access and directory.
Painless chosen for our advanced technology, and our ability to provide superior flexibility security and control in the cloud.
This million dollar a our deal is testament to our cloud investments and our continued support for large enterprise deployments.
In another example, a big for accounting from expanded from leveraging paying for their workforce into their customer identity use case.
They are leveraging pink to accelerate their migration off legacy identity systems.
Before the expansion the customer was already spending approximately $1 million in air our with paying.
In a third example, a large federal agency already leveraging paying for the partner use case expanded into the customer use case.
Our utilizing pings platform for customer facing applications.
Agency will now provide secure access to citizen facing applications as volume increases.
The number of users for this deployment is expected to grow from 2 million in current state to over 40 million within the next three years.
In addition to winning new customers and expanding with existing customers. We continue to see positive proof points with our new solutions.
One of our existing financial services customers spending over 1 million in a our our expanded into our new identity data governance solution to assist in their privacy compliance efforts.
The company is creating a single view of the customer and managing privacy and consent through paying.
Allowing them to comply with strict legal and regulatory requirements at the same time.
The transaction was a strong complement to their existing Ping implementation and will serve as the foundation for privacy and compliance going forward.
Our channel and technology partners are an integral part of our success and we built a strong ecosystem as part of our go to market and product strategies in Q1, we expanded our partnership with Amazon by placing our cloud MFS solution into the ADW west marketplace.
Customers can now procure and deploy pink strong authentication to secure work from home, while adding an additional layer of security to their ADW us infrastructure.
As we look to the future expect us to continue our investment in innovation for the advanced hybrid enterprise.
In Q1, we delivered in a rate of new capabilities highlighted by offerings with simplify the deployment of the paying platform in public private where the pin cloud.
New self service capabilities, which streamline the migration off legacy to paying.
New authentication npis to secure mobile applications.
New adaptive authentication in risk services for paying I'd MFC.
New interactive dashboards to monitor usage of Ping services.
New Apiay security integrations with F. Five IB Kong Anaconda.
And new work from home integrations with zoom slack and see scalar.
These enhancements continue to highlight pings commitment to building World class solutions and meeting the needs of our customers.
In closing, we're pleased with our first quarter results. The Sterling performance of the pink platform at massive scale and the dedication in resiliency of our employees during this difficult time.
Ping remains a vital component to enterprise security and digital transformation two areas rendered even more imperative by cobot 19.
Our track record in the enterprise market gives us confidence in the outlook of the business and we remain bullish on our market opportunity.
We gain comfort in knowing that our businesses diversified along several important dimensions, including industry served geography and solutions and use cases offered.
I would now like to turn the call over to Raj Donny to walk through the quarters results in more detail Raj.
Thanks, Andre that's mentioned, we're very pleased with our Q1 results an execution given our strong balance sheet to subscription nature of our business model enterprise customer base and the diversification of our business across industries and verticals, we feel well position to navigate the turbulent economy.
We ended the first quarter with a our of $230 million representing year over year air our growth of 21%.
Growth was driven by new customers from our growth team cross selling solutions into based customers and landing big which strategic accounts.
First quarter total revenue was $61.4 million, representing 22% year over year growth.
In March we experience shorter contract durations on both new deals and renewals as customer sought to hedge against market uncertainty.
In Q1, our dollar base net retention rate was 114% calculated on a trailing 12 month basis. While this represents a 1% sequential decrease from the prior quarter. It was a byproduct of longer approval cycles on certain larger deals and process with existing customers.
Engagement from these customers remains strong as paying its been chosen as the go forward partner. However final purchase decision, making was postponed to after Q1 solely due to mounting macro uncertainty.
Unless otherwise stated for the remainder of the piano I will refer to non-GAAP metrics.
You can find a reconciliation of non-GAAP to GAAP numbers and the accompanying press release.
Gross margin for the first quarter was 82% and comparatively our GAAP subscription gross margin was 87%.
Total operating expenses in the first quarter were $43 million driven primarily by increases in sales and marketing.
Adjusted EBITDA in the first quarter was $8.4 million, representing a margin of 14%.
Unlevered free cash flow was $9.6 million during the quarter higher than expected, primarily due to deferred capital expenditures and favorable cash collections.
We're excited to see our new solutions received positive market feedback as well as measurably drive growth. In Q1. These include our cloud and I must say solutions and continued growth in the customer use case.
Enterprises are turning to paying to help them with their growth and customer acquisition initiatives, where existing applications can no longer meet scale in security requirements.
In addition, new customer acquisition with our growth team remains a strategic priority and we are seeing positive signs of enterprises looking towards pings identity solutions to secure work from home even in these uncertain times.
While the current environment may prolong some legacy migrations, we are seeing projects continue to gain momentum through the end of April, particularly as the remote work environment has created yet another call to modernize we can surmise from this activity that identity modernization is deemed not just struck.
TJX the vital to the business.
Looking forward our visibility into the remainder of 2020 is far less than when we last spoke in early March the pink is whether difficult times in the past our track record spans nearly two decades and has taught us the importance of investing prudently with ROI in mind.
Our business model has demonstrated a high degree of operating leverage and US. We continue to believe that our investments in key technologies and go to market initiatives will position us for strong growth when the economy recovers.
While Q1 demonstrates the elevated importance of identity, we're cognizant that the modern world has never experienced an event like cobot 19, the sheer magnitude of this pandemic and the historic uncertainty. It has created for enterprises in every vertical and geography makes it difficult to predict the future.
[music].
As a result, we believe it is prudent to withdraw our full year 2020 guidance until we have a better handle on the depth of impact and timeline for recovery.
For the quarter ending June Thirtyth, 2020, we project error or to be between 231.5 million and $234.5 million and revenue to be between 49 million and $53 million.
This revenue range incorporates approximately $4 million negative revenue impact from identifier or sponsorship and registration fees as we convert the event to a virtual format in 2020.
In addition, this anticipates shorter term license subscriptions with our customers and faster growth in our ratable revenue relative to the overall business.
This highlights the impact that contract duration and deployment mix have on GAAP revenue under assay six a six.
Under normal circumstances with longer contract durations, we would have expected revenue to come in approximately $8 million higher.
As a result, we continue to point to a our our as a key management metric for evaluating the growth of our subscription business.
Please refer to the accompanying earnings presentation for more color on the impacts of year over year revenue variances.
Finally, we expect Unlevered free cash flow to range from breakeven to $2 million. As a reminder, in Q2, we will have a 4.2 million dollar contingent payment related to our 2018 acquisition of elastic beam, which burdens unlevered free cash flow guidance.
Our guidance ranges are wider than we would normally provide primarily because the majority of our A.R.R. is booked in the last month of the quarter. We have been closely following the near term impacts to our business I noticed that similar to our own internal protocols existing customers are conducting longer reviews on express.
And then capabilities and some prospects are deferring large transformational initiatives until they feel confident in the stability of their own operations.
The us our guidance for Q2 reflects those factors.
While we could see longer sales cycles on larger transformational deals relative to historic levels, we expect customer attention to remain high as enterprises continue to rely on paying to secure their mission critical applications.
Our renewals team will work with customers on items, such as payment terms, particularly those heavily impacted by coven 19.
We remain extremely optimistic about the size and attractiveness of our market and the long term growth potential of the business, it's going to take time before we have sufficient clarity into the longer term impact of coven 19 on the global economy, and an increased confidence in our ability to fully model enterprise purchasing cycles.
Throughout the year, we will continue to make prudent investments to grow in our market further support our customers and augment our solutions. These will manifest in continuing to enable quota carrying sales reps higher product engineers and invest in customer support.
In closing, we're pleased with our first quarter results the resiliency of our enterprise customer base and the positive proof points, we're seeing from our product and sales and marketing investments.
I think remains positioned to be deep Premier security choice for large and global enterprises with respect to their digital transformation journeys, providing scalable modern and secure solutions.
With that I'll turn it over to the operator for your questions.
As a reminder to assay question you need to press Star one on your telephone to withdraw your question press. The pound key please stand by we compete capacity Kuni roster. Your first question in light of Heather Bellini with Goldman Sachs.
Hi, This is Caroline on for how their first topic I do hope that you and your families are doing well and staying healthy environment. My first question is really more about your best nation curious.
If you can give us an update about how the current environment impacts or sales and marketing investment and specifically the hiring cadence and your ability to higher wraps and also get these bats ramp.
Hi, Carolyn this is Andres I'll take that question. So we continue to make investments in the company. We have as many companies have a deferred some of our new hires except for the most critical hires we entered the year a in a good.
Position with respect to our existing sales capacity in planning not just for this year, but for next year.
So we feel good about that we have monitored closely our ability to essentially operate in a remote work environment with our prospects and customers.
And it turns out paying was largely remote before co bid.
So we've actually had fairly insignificant.
Interruption with respect to how we do business or engaged with either prospects for customers.
Got it that's helpful. And then my follow up is more on but the net its Andrei I'm kind of curious do you see or see any changes in terms of Charnaux and then you know how much of that is how much of the down take is attributed to covert 19 versus perhaps customers.
Landing with a larger set of products that might which might make it a little bit harder to expand later.
Yes. The Carol this is a this is Roger I'll take that one basically retention remains incredibly high right dipping platform has proven to be incredibly resilient and.
And we expect retention to be high going forward as well as it has historically I would say that.
The dislike downtick and net retention rate in Q1 was.
Directly attributable to a couple of based deals that that just went into a longer procurement cycle to be honest. So so you know I think in the past we have had larger lands.
That would have.
That would have impacted your net retention rate, but specific to Q1.
It was it was these deals in as Andres mentioned, a you know those deals are continuing to progress and even in highly impacted industries, we're seeing a ton of.
Customer engagement and contracts going into.
Deep until legal process in Q2.
That's helpful. Thank you so much.
HM.
Your next question in light of Matt had correct with RBC.
Hi, guys. Thanks for taking my question.
Maybe raj.
Thanks for the clarity you know in your prepared remarks and in your slide deck about the really the differences between air our revenue for you guys that was super helpful. Obviously assay six so six can make your revenue lot more volatile than our large which was effectively inline with our Q2 estimate that said I want to keep can you frame up sort of what your assumptions are for the high and low.
Into your guidance in terms of some form of recovery.
Sure. So so were so really the the high and low end our are really related to the duration and deployment mix right. So so we're also assuming like like we said the about $8 million of it is a is from the deal.
Great and then deployment next part of the 66 equation and on a duration normalized basis. You know we would we would have about an 8 million dollar higher revenue.
I'd say you know there's a there's a couple of factors in terms of just being prudent in terms of when the deals when larger deals close. So in affected industries were just assuming that a and highly impacted industries I should say.
You know, we're assuming that you know deals may slip a quarter or two and.
You know, what and non impacted not as highly impacted industries.
We may see at 30 to 60 day slip. So so that's where we sort of has been a little cautious imprudent around when those deals from a timing perspective at the quarter, but these are all deals where we have significant engagement you know whether they're highly impacted industries are not.
The customer engagement remain Super high just underpins the importance of identity security in the digital world and and really just a matter of of when not if they close.
That's that's Super helpful Lodge, and then Andre.
Half of new customers choosing pin cloud is super impressive.
Is there any way for you to think about how how how how cold it impacted that mix and you might this be a new normal for even post coal that that you see a majority of customers choosing king cloud.
Yes, so we've actually been seeing a growing trend for quarters.
And to be clear customers can deploy paying in public or private cloud under their control.
They can also choose to consume.
Being platform in the pain cloud and I know that that.
Maybe that gets a little bit confusing, but that choice or cloud your way as we describe it as one of the kind of the unique.
Mixability and control options that we offer large enterprises, what I was saying there was that as we look forward and as as I queried our sales engineers on the deployment.
Reference.
Customers going forward, what what he reported.
Does that north of 50% of our customers are either consuming paying our SAS offerings or they are deploying to paying platform in Amazon or azure or Google cloud.
Under their control in their tenants.
We believe that that is a long lived trend.
We are doing a lot to enable our customers.
To do that and I'm really pleased with the investments that we've made in the last year.
Is accelerating in the market adoption of our offerings in the cloud.
Super helpful. Thanks Hunter.
Thank you Matt.
Your next question line of Sackey can do with Barclays capital.
Hey, I think Thats me Hey, its second Kelly from Barclays. Thanks for thanks for taking my questions here.
I wondered maybe maybe first for you you touched on this a little bit in your prepared remarks, but just to ask at the expressly.
Can you talk about what your perspective customers are saying about their desire to modernize some of their legacy identity systems in light of co bid meeting for those customers that are still using I see a site minder or an oracle identity manager do you feel like they're more or less willing to explore that type of project in the new.
[music] environment.
Well I'll speak from the half a dozen or so conversations I've had maybe over the course of the last 30 days I've held.
At least a couple fee so round tables and I've had a.
Another half a dozen two dozen conversations with fios.
Universally.
They have a big reflected the quote.
That they recognized identity is more critical than ever.
To the new digital World and to the foundation of security, where clearly the perimeter as defined by the corporate network.
As you know kind of fundamentally accelerated in this work from home environment.
So there seems to be a clear.
Logic path, if you will between the current events the current environment.
The importance of connection to an identity Foundation.
That gets them to zero Trust.
Gets them to better interactions digital and mobile interactions with customers.
No inside of that.
I think you'd probably best understood.
By the purchasing behavior obese company.
We had.
We've had several fairly large projects.
That are had been started months ago.
In the general realm of modernizing legacy identity infrastructure.
As I reported in Raj reported towards the end of Q1, a those projects went through call it and additional level of scrutiny inside the company that temporarily delayed their closure.
We were all.
Extremely interested obviously and whether or not they would resume and with the level of urgency or priority with which they would resume whether or not they would shrink.
And we've been really pleasantly surprised.
I guess reinforcement if you will have what we've been saying about the mission critical nature of identity.
But those projects are continuing now I have not necessarily heard what was the result of co bid.
You know we're going to go directly accelerate this one project and maybe maybe those conversations have yet to occur and are coming I would expect that they are.
Frankly.
And I just haven't been Privy to them yet it's only been about four maybe five weeks in total in so many companies were absorbed in the first three or four weeks just executing the tactics of getting their workforce remote.
Got it that makes a lot of fence entre maybe maybe for my follow up for you Raj.
You mentioned in the prepared remarks that some new contracts on.
You know and renewals opted for shorter durations, which clearly.
As as more of an impact on revenue.
So I guess as you think about the Q2 revenue guide.
How are you thinking about the multiyear I guess, how do you forecast the multiyear component.
And maybe just just connected to that how are you sort of thinking about the terms subscription revenue versus cloud subscription revenue in Q2 as it makes sense.
Yeah definitely high socket.
So.
So from a revenue perspective. This is this is exactly why we've been fairly consistent all along and saying that.
Our our as the go to metric for Us and.
The best measure for the health and growth of the subscription business.
Our revenue wasn't in Q1 was also impacted by shorter terms and we sort of use that as a as a guide for how we modeled Q2. So we saw more customers going to a two one year deals knowing that.
Oh that you know identity security is super important. The this is like on the top three priorities and of every CIO and see so so that's the deals were moving forward, we did see some some contract duration.
Contraction just to get deals approved internally at customers.
As the as the visibility got higher right and everybody started to as the procurement cycle and started to get more scrutinize. So.
So we're assuming that that there's more that there is is there were just will be a a continued tilt towards a one year deals and that mix is what's causing that that revenue drop in Q2, now as I mentioned earlier.
On a on the duration normalized basis, we would expect.
Revenue to be about $8 million higher and that most of that is duration and a small part of that is as the.
Just a more ratable revenue that we're seeing the growth in the ratable revenue in the pace at which it's growing as you'll see in the SEC filings.
And your next question went on for Walter Pritchard with Citi.
Hi, Thanks, two questions just one as it relates to sort of already been asked on cloud but.
Just if you think it if you look at the deal cycles, the propensity to get pushed and customer is able to sort of bye.
Pieces of the project in cloud versus on Prem was there any difference there in the in the propensity for those deals to be to be pushed or put on hold.
On crowd out around it.
Yeah. This is Andre speaking here Walter I don't think we've seen any any difference in behavior around a preference.
For deployment model I mean, we've we've been building ahead of the journey of the adoption of cloud in large complex hybrid.
Enterprises now for years.
And the shift has been gradual I can't say that we've seen an acceleration.
In one deployment type over another.
Many times in our large enterprises they'll take months if not quarters.
And the modernization of a legacy system that might have been in place for 15, 20 years and they've got very legitimate reasons for where and how they want to consume.
The identity, so where do you capabilities that we give them.
And and so yeah, I don't we haven't noticed or certainly I have not seen anything that would drastically change what we're experiencing on deployment preference.
Got it and then just an update if anything around if you have anything around the M.S.A. penetration in your base I know, you're not giving specific numbers, but any sort of order of magnitude or or general sense as to what what a with what we've seen here has driven in terms and the say.
Pick up.
Yeah, nothing has been a certainly are one of our most successful SAS offerings. The companies have added to.
Their identity capabilities or they're paying platform.
And Weve.
We're not giving numbers or percentages, but suffice to say.
We've got really good penetration, there's still a ways to go but we're we're talking hundreds and hundreds of enterprises now are leveraging ping I'd.
I think it's just ask a different way it would have you seen a big uptick with covidien or not necessarily that was already sort of underway in place.
It was underway a long before coated I think if there's one thing we saw its that deployments that were scheduled for.
Maybe months, if not quarters accelerated into weeks and I reported on two of those we had to customers in particular, who deployed each over 100000, I'd m. assays to their remote workforce and both of them did it roughly less than 10 days. So we saw a massive acceleration of that.
Now we have offered a a free six months of our EMEA Fay and we've had hundreds of companies register off for that offering and ER and.
You know I would say hundreds as well now that are kind of been opened trials if that makes sense no not really a trial per se.
This was our way of offering to the industry and ability to get their remote workforce productive and secure and so you know we offer that six months.
Free of any strings that was an unlimited user unlimited applications.
Usage of the peak I'd MFS solution.
But we've seen we've seen good adoption of that.
Great. Thank you.
And your next question line of Phil Winslow with Wells Fargo.
Yeah. Thanks, taking my question was good.
Just want to Echo hit you in your family.
Well I just wanted to focus on its in the push out you're talking about unaffected industries. Obviously you came in towards the high end to be re our guidance. Despite I'm wondering if we go to spend from Georgia for sides of the push out and when you're talking about the effect is industries energy.
Retail.
Our tradition, what percentage of your customer base.
Does that represented just have a windfall for that.
Well were.
So we're very well diversified across all end market. So we don't have a concentration and customers are or geos or anything like that so you know, we and the platform as completely vertically agnostic, which helps with that diversification. So.
So in terms of of the push out you know there was.
Or you know a couple that were more and kind of travel and entertainment related but but there were also a couple that were just larger deals and maybe not so impacted industries that that you know just had to go through multiple cycles now those are all going through.
Those cycles of approvals and as we mentioned earlier.
Yeah, we have really strong traction in the month of April and through today on some of those is as they come down the pike, but but just given that most of our businesses is done in line with enterprise procurement cycles.
Which tend to be more in the last month of the quarter I'm. We're we're sort of being cautious about one were one we're projecting the timing of those getting signed.
Right and obviously that the secondly, the directly impacted verticals the ones that you would expect like travel for example, indoor hospitality. It turns out that those are actually on a smaller piece of our overall air our customer base.
Great. Thanks, Evan just have all been that when you think about your pipeline. Obviously, we've talked about doesn't pass you've got the BDC business, but also to be an employee partner oriented business in any sort of anything you'd call out and sort of the relative or just what I would put us in change going to be to see world or call. It would be to be line.
You know one of the things we immediately did outside of kind of assess our own plans for the year.
And any adjustments or changes we felt were prudent given what we were seeing we also took a look look at our priorities for the year and ER and.
I happy to report really nothing changed in our priorities all the priorities that we are important to us in September and October in December when we're going in the planning cycle.
Remained intact. Once we had an assessment of both the short and long term implications of co bid both to our business into the industry macro environment at large.
I would say near term there has been more emphasis on it immediate productivity of workforce in remote environments.
I would say long term there is an emphasis on identity as a foundation for digital engagement of customers.
The the desire to provide identity controls for partners that have access to corporate resources. You know that has always been a remote user use case. So there's nothing about that use case that changes as a result of of what we've experienced last month or two.
Great. Thanks.
Your next question in light of Jonathan Ho with William Blair.
Hi, Good afternoon can you talk a little bit about perhaps the professional services side and are you running into any challenges around onsite deployments or can most of this really be done remotely at this point.
Professional services has been a key strength for paying for some time and a and I'm also happy to report here that Ur cobot has not changed either the utilization rates the the engagements.
Professional services or frankly, our ability to perform services many of our professional services have been.
Providing service to customers remotely or really from a work from home environment for some time and it's actually kind of one of the key strengths. We just recently did almost kind of a top to bottom of any impact of co bid to pro serve and ER, we haven't seen any loss of productivity there, it's really business as usual.
Got it and then just in terms of on I guess, you talked about a new customer initiative to offer free single sign on an M.S.A. It can you talk a little bit about the initial customer response, there and maybe what this could do for both.
New customer pipeline build as well as when rates. Thank you.
Yeah.
Well, we launched that effort kind of mid March and since then as I said, we've had several hundred sign ups and ER and over we've got over 150 open trials at this time. So this was the this was a global campaign now we only we only ran that actively probably for the first three or four week.
We wanted to get something out there that cups customers a indoor prospects could immediately take advantage of.
I think we've probably seen the ways.
Of interest everyone had to respond so quickly to changing conditions, but we're we're we were really pleased that a we had something that we could offer companies that could help them in their rapid adoption of work for home and where we're pleased with the number of companies that have taken us up.
Got it how that translates beyond the six months you know is TBD up frankly it. It it wasn't done really is a free trial. If it turns out that those that are technology provides value to those customers long term, we will be happy to serve them beyond the six months.
But we're just as happy if we get a resolution to co bid and things kind of go back to some semblance of normal and if they didnt need us beyond that period of time, we'd be happy with that as well.
Great. Thank you.
Your next question a line of Michael Turits with Raymond James.
Hey, good evening hundred first for you.
Please go to work from home and then they need to plug in one sense. Okay. So.
Simply put the demand for access.
Has to have gone up and a lot of the channel has said they are seeing strong demand for that in general.
Why wouldn't you.
And some of your direct competitors be more of an immediate beneficiary is it are they the deploying more old fashion, you know second Patrick to factor tokens cool well why is it not accruing to more quickly.
I think a lot of these larger <unk> as I reported the enterprises that have deployed pain.
All reported that when this occurred.
They were in a really good position to quickly shift in many of them had already enabled.
Call kind of part time work from home initiatives, where they would have been employees, maybe one day a week work from home. So they had already addressed the issue of provisions computers and trusted devices and they already had strong authentication and single sign on a in place.
I think in <unk> in the enterprise market or the large enterprise market.
Providing secure access.
It is not as simple as you know say turning on a conferencing services such as soon.
So at least for US what we saw was validation that.
Identity enables zero trust and work from anywhere on any device.
We saw customers immediately Ics experience in mass the benefit of having deployed in integrated the pink platform across their hybrid infrastructure.
Of older systems that need to be modernized.
We're somewhere in the pipeline impacted by co bid, but then subsequently.
Evolved to the top of the priority Q and those deals continue but again I don't think that I don't think that identity or single sign on M. essay and the large enterprise space.
You don't deploy those technologies at the scale and Brett.
Of these hybrid enterprises in a week.
And so if you're referring to why why would you see like an immediate bump.
I think what I would expect.
Is that.
All things digital transformation.
All things mobile experiences.
All things Zero Trust.
Which is about.
From anywhere on any device and gain access to appropriate resources wherever those resources reside in the cloud or on Prem in legacy.
All of those initiatives I believe once we these companies are kind of through that their near term pain points.
I believe all of those will accelerate.
And then if somebody is what I'm sorry, yes.
Yeah, sorry about that that makes a lot of sounds to me that that would the bigger transmission projects that could be yet to come.
Hi, Thanks, Andrea and then raws, what you've got to follow up with you can you talk about the the I know you. Obviously don't have they had a god for the year, but can you talk about the puts and takes and sort of impact on cash flow personally I just want to clarify that as you go to shorter term term deals.
I think you're building annually. So I would assume there's no impact to cash flow. There and then is there any impact in terms of extension payment terms or bad debt or anything in terms of accommodating.
Customer finances.
So far there hasn't been a.
A material amount Michael it's a it's been a you know without a handful of requests and of customers are really hurting and partner or partners and we're working with them to to see them through this on a short term basis.
Until they regained their footing, but it's not it's not material to us and we are fortunate to have a strong balance sheet to be able to help our partners out in that regard in terms of of cash flow overall.
Yeah, we're not we're not commenting on full year, but I think what you'll see here is as you know we're taking a temporary pause like all responsible companies have done to sort of assess priorities and figure out where the where the highest ROI and numerous.
In years time to value as for all our investments and so we're doing that are our management team has all over that and we've with sort of done that more often running so after the sort of temporary pause, which will likely cause a cause our cash flows to increased slightly in the near term we will.
So we fully expect to go back to our to leaning into our sales and marketing investments to take advantage of.
You know the large market opportunity ahead of us.
Your next question a line of Brad Zelnick with credit Suisse.
Great. Thank you. So much are fitting me in I've got two one for entre and one for Roger Andrea a lot of what we're hearing out there suggest customers are leaning into the cloud.
Even more so during these crazy times in cloud based identity solutions.
So how does that impact your competitive positioning and.
Perhaps what you are leading with when you're going into opportunities now.
Well as you've heard we've.
But making significant investments for several years in our cloud offerings.
Our cloud your way allows our enterprise customers to consume our south offering.
Or deploy the paying platform in their tenet of Amazon, Google cloud or Azure.
And as I also kind of commented earlier, we're now seeing whereas we have a number of customers. If you look in the rear view mirror, who have deployed identity in their data center.
As we look through the windshield, we have north of 50% of our customers deploying the pain platform in the cloud and that's.
Some combination of our south.
For the Dev ops capability of our platform deployed.
On the public cloud so I anticipate that it's it's not like we've seen a rapid shift to that we've seen a gradual shift to that we've been investing in our Dev ops offering for the better part of the last year, a pretty aggressively in into the pain cloud offering that builds upon that offering.
Which I reported that large financial services customer that just selected the pain cloud.
No it might just be the nature of their congrats to you.
But.
They've got really complex.
Challenges they tend to focus on the problems that they're looking to solve primarily and a even when they lean into a preference on deployment model. Our flexibility is proving out to be kind of a key differentiating asset for pain.
That makes sense and maybe just if I could for Raj.
Roger appreciate your operating with limited visibility right now like the rest of the world, but as you do your own scenario analysis, how should we think about the lower bounce on that expansion in the factors and insensitivity and moving the needle one way or the other on that metric.
So yeah, Brad the on the reason why we why the Antarctica slightly lower as I mentioned earlier, just because of a handful of based deals that were that went back into approval cycle cycles, you know and our sort of being worked through here in Q.
To you know, we continue to close business and the retention of our customers and engagement remains really high so.
So I just think that you know, it's it's difficult to predict deal timing, but but the retention aspect of that is is really solid and we're seeing.
You know extremely high retention rates. So so it's all going to be a matter of Oh timing of when these deals close like I said, you know seemed a lot in them that lot of engagement deals deep in the legal process. So we're hopeful that that weve sort of seeing can see some stay.
Stabilization there, but it's it's just it's really a timing issue.
Your next question sign off guard, possibly Stifel.
Okay, great. Thanks for taking my questions Andre.
Based on some of the commentary in prepared remarks, I want to see if you were seeing a pickup in discussions around see I am and I am convergence just based on some of the deal to we've talked about.
Well, we as we reported before our our business and our belief system is that one platform should serve all identity types. That's been part of our belief system since the beginning of the company.
And our a our AR has roughly reflected the balance in our business between the workforce and the customer use case, what you referred to as a customer identity and access management use case.
Now we believed that our platform and our is ideally suited to address.
Some of the new demands around privacy for the existing demands of extreme scale.
That many of the our large customers have deployed paying for in the customer use case.
So as a result of that we've been leaning into that and as we reported in the for customers that report I think three of them at least were Siam or customer related expansions indoor new deals.
So we're very bullish on it our platform is really robust.
Proven at scale that is really kind of uncontested. If you will as I reported we had one customer report to us during kind of the cobot height.
Ping platform with servicing and I mean, well over 200 billion I've been very conservative that well over 200 billion transactions a day.
That's sort of scale is is fairly unique our ability to service that truly unique thing so looking forward I.
I think as I've said work from home, probably as a near term.
Focus for a lot of companies I think longer term all things digital and mobile engagement of customers is going to hit the board rooms, and the strategic priorities around that we believe is going to accelerate digital transformation. So we think our timing there and our investments historically.
The success that we've seen historically in the acceleration around Siam is gonna placed us in ice position going forward.
That's a that's really helpful on them just more broadly in terms of the environment have you seen any sort of shifts in competition here you've seen a a few standalone vendors kind of go out the market and raising capital here in the past few weeks just curious if you saw that sort of changes there.
Nothing major the competitive landscape has been.
Largely formed now for several years.
People know, where they are strong and ER Ping continues to be really the gold standard for large.
Enterprises with either hybrid I T or multi cloud environments that have a you know sophisticated integration challenges and are looking for a technology proven that scale with the flexibility that we provide so.
And markets are smart they figure out pretty quick.
Which partners and which technologies in which approaches are.
Appropriate for them to evaluate a this is very much kind of we live in a self service world in the evaluation of what solutions and approaches are and there I think our reputation proceeds us and other success and hard work that we've had with lot of customers and partnering with them for many of them over a decade.
As they've gone through this journey continues to put us in a really strong position I mean, if anything I I think those boundaries are probably becoming more solidified. If you will certainly we continue to be very focused on our large enterprises as we reported really proud to now sort of over 60, well 60 per se.
Oh, the a fortune 100 and ER.
And you know look we will continue to focus on those global accounts.
Your next question in light of Greg Mccallum Mizuho.
Hi, Thank you and good afternoon, guys I'll keep it to one just given the time constraints. So you spoke earlier Andre about the growing demand for M&A, but I'm wondering if you could elaborate on what you're seeing in terms of overall multi product adoption rates and how this is changing or could change in the current environment.
We introduced we became a multiproduct company several years back and and it has now selling multiple products indoor solutions has become more the norm than the exception.
Inside of paying and you know we saw that two or three years ago as the products matured, we started not simply expanding or cross selling new products into the base. We started lending big with multiple products solutions on day, one nothing in the character in nature of that multi.
Product land or the multi products expand has changed if anything.
We're probably getting better at it I think the sales team you know with a every seller as they kind of get underneath some successes that sell multiple products and how the products integrate and how they solve problems for customers I mean, if if anything we've become better at at the selling multiple products.
We did launch two new solutions to really accelerate that the customer 360 and workforce Threesixty solutions.
A really a combination of our most successful.
Products.
Packaged together pre integrated to solve the centralized authentication challenge for many of these large enterprises are what some of our enterprise is called the global authentication authority. This is the one place that all customers are all partners are all employees will authenticate to that didn't gives them. So.
Secure access to all applications across their hybrid environment.
This solution deployed in the customers cloud or in pings cloud and it's the solution that has been already proven at hundreds of global unfortunate 1000 enterprises over the course of the last several years, we're just making it easier for them to start out with our.
Really kind of our most.
Popular products and capabilities and deploy those solutions much quicker on day one.
Your final question come from the line Health Gray Powell with T V P hygiene.
Alright, great. Thank you for were coming I really appreciate it I don't want to focusing too much on the name of outside but I'm going to stop a couple of quick follow ups or.
What kind of uplift the key to customers bill when they add on enough pay if they want you can get before and then just to follow us on the other question I was there a significant benefits.
Q a are in Q1 from the acceleration.
For with the promotions that you were doing it gets something that you feel like it's more on the comp.
I think that the what we don't give out the relative price points between the products.
It's it's fair to say that M. essay is a relatively it is valued call. It in the same realm as our single sign on solution and so it would not be uncommon that if the customers leverage leveraging us just for single sign on and they then upgrader.
We cross sell or and I say solution that.
That that there are materially increase as a result of MFS.
Russ you have something out there yeah, hey, great. So I'm just in terms of the the pace I mean, we've talked before about.
Our SaaS products, including I must say growing at a significantly faster clip than the overall our are the business. We we actually saw that same trend continue in Q1. So.
So you know that products and has has always done really well relative to the overall pace of the business and and we just saw continued to do that.
I think as a result, I think the three trial, it's still TBD.
On the impact of the free trial in Q1 to future business and I say business.
Really what we saw initially in the first few weeks was rapid deployment of pre existing licenses that they had planned to rollout over a quarter or two they rolled out in a matter of days.
Got it okay. That's really helpful. Thank you very much.
And I went out right away for to management.
Thank you so I want to thank everyone for joining today's earnings call, particularly given the times.
We wish you all the best in health and safety and what can you continue to provide updates on the business as the year progresses. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
[music].