Q2 2021 Ping Identity Holding Corp Earnings Call

Ladies and gentlemen, thank you for standing by and welcome the the Ping identity Q2, 2021earnings conference call.

At this time all participants are in listen only mode. After the speaker presentation, there will be a question and answer session.

Ask the question. During this time, you will need to press star 1 on your telephone keypad.

Also please be advised that today's conference is being recorded.

Require any further assistance please press star zero.

I would now like to hand, the conference over to your Speaker today, Mr. David Banks head of Investor Relations. Thank you. Please go ahead.

Thanks, everyone for joining us today and welcome to the Ping identity Conference call, where we'll discuss the results for the second quarter provide outlook for the third quarter and update our outlook for the full year 2021.

Shortly after the market closed today, we issued a press release announcing our second quarter 2021 financial results. In addition to the financial results, we'll be presenting of lives supplemental set of slides through the webcast portal.

These will be published to our website following the call.

You may access the press release and presentation on the Investor Relations section of Ping identity Dot com.

With me today is Andre Durand, our CEO and Raj Dani our CFO. Today's discussion may include forward looking statements. Please refer to our annual report on form 10-K for 2020, and our quarterly report on form 10-Q for the quarter ended June 32021 filed for.

The Securities and Exchange Commission.

There 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 certain non-GAAP measures related to Ping Identity's performance.

You can find the reconciliation of those measures to the most closely comparable GAAP measures in our second quarter press release and the slides, we're posting on our website.

To ensure we can address as many analyst questions as possible during the call. We ask that you. Please limit your questions to 1 plus a follow up we will end the call. After 60 minutes with that I'll turn the call over to Andre.

Thank you David Q2 was a strong quarter from several perspectives, we drove further momentum against all of our key performance metrics driven by solid execution and many outstanding sales wins.

Annual recurring revenue grew by 19%, including a contribution from secured touch which we acquired in June.

Revenue of $78.9 million grew 34% year over year, reflecting terrific sales results and lengthening contract durations.

Our dollar based net retention rate improved 2 points to 111% from Q1 and.

And we generated $15 million of Unlevered free cash flow.

While we're excited about the improvement in growth and financial performance that Raj will cover in more detail later, we're equally excited about the progress made against several other key strategic initiatives within the business.

In June we hosted our 12th annual identity industry conference of Denver.

During my keynote I announced several new products and capabilities, including the acquisition of secured touch last month and are intended to help enterprises combat fraud in their customer facing use cases.

As the spotlight on identity has intensified conversations with our customers are moving higher broader and with the sense of urgency that is more palpable than ever before.

Identity is now recognized as the centerpiece of security Trust privacy and the delivery of great customer experiences all foundational the digital transformation initiatives.

The accentuating the shift in mindset is the proliferation of recent breaches, which many believe could have been avoided with better identity security.

But as identity becomes the gate its identity that we must fortify.

Our job at Ping, along with the broader cyber security ecosystem is to enable a single centralized secure identity control plane wherever user of strongly authenticated and appropriately authorized to access any application of resource irrespective of location.

To deliver on this mission we are focused on 4 key themes.

Number 1 delivering our entire platform in the cloud to help companies secure their hybrid it environments number 2 delivering on the vision of frictionless identity for the customer use case through password list and user experiences.

<unk> III, enabling the easy migration from legacy solutions to the Ping platform and lastly, embracing our partners to help us deliver our solutions at scale.

Out of Denver, we made several important announcements, which highlight our commitment to these themes first we announced that our entire Ping 1 platform can now be administered from our new unified cloud admin portal to solve both workforce and customer use cases.

We introduced <unk> 1 for individuals to directly address the emerging opportunity around privacy, while reducing the burden of regulatory compliance for enterprises. This new solution Leverages. The show card acquisition made last year to allow users to store and share at their discretion their personal information with businesses or.

The other individuals.

Finally, we announced the acquisition of secured touch an Israeli based company focused on reducing fraud and customer interactions.

By leveraging behavioral biometrics artificial intelligence and machine learning secured touch provides identity risk and fraud teams.

Paralleled early visibility into the potential malicious activity happening across digital properties, even prior to a user of creating an account.

We see this as a vital new capability for our customer solution and for achieving our vision of frictionless identity.

As we look to the back half of 2021, we're excited to share the 2 of our products have been approved under the department of Homeland Security's CDM program.

Which was spotlighted in the May 12th executive order on improving the nations cyber security.

Now I'd like to turn our attention to our customers and highlight some of our Q2 customer wins we.

We had a strong quarter in this regard with several significant transactions contributing to our best ever second quarter of <unk>.

Revenue and cash generation.

Notably we saw strong demand for our new Ping, 1 advanced services and the interest is steadily growing as the market begins to appreciate the sophistication of this offering.

In addition to several new notable customers such as the buyer, which I'll cover shortly we're pleased with our deepening relationships with existing customers in Q2, we experienced a 50% plus improvement year over year in the number of customers spending north of $1 million in <unk>.

We also surpassed 2 other key milestones with more than half of our customers now leveraging at least 2 capabilities and 25% leveraging 3 or more.

But nothing accentuates the significance of relevance of paying for the future of security than the recent expansion by Boeing in the quarter.

The aerospace manufacturing giant was looking to modernize its identity and access management system move to the cloud and adopt the zero Trust security posture centered on strong identity controls.

<unk> turned to Ping to help with the strategic initiatives and to grow our 15 year partnership by signing a multiyear contract for Ping 1 advanced services to secure all beta E b to B and B to C interactions.

Another significant transaction in the quarter was avaya.

In a very competitive win Avaya became a new ping customer in June signing up for a broad suite of <unk> workforce and external capabilities to replace unsupported legacy and homegrown identity solutions.

With nearly $3 billion in annual revenue of Io employees people from around the world as a global leader in solutions to enhance and simplify communications and collaborations.

The company serves customers worldwide across banking insurance and health care industries among others.

Many of these customers have strict security compliance and scalability requirements. The Ping is able to match of.

<unk> will leverage our full array of Ping 1 solutions in a combination of software and cloud deployments.

Including our Penguin advanced services.

These solutions create a single platform to enable management of use cases, and standardized architectures to help create consistent user experiences.

Internationally, we expanded our relationship with Banco of Tau based in some Paulo, Brazil, Banco Hotel unit Banco is the largest financial institution in Latin America, serving 55 million customers globally.

They signed the new multiyear contract for the customer use case deployed in AWS.

Ping will enable Banco of Tau to meet their Brazilian open banking requirements as we scale to create better customer experiences and replace the combination of open source and homegrown solutions.

This was a great example of leveraging our channel partner net B R, which has been selling into of Tau for 2 decades as a trusted advisor.

We also grew our relationship with Delta Airlines in the quarter, signing a multiyear contract that included a renewal of the workforce solution and a significant expansion into the customer use case.

Delta's growth into the customer use case is a common theme in our business as we gained the trust of our customers, we often see them expand from 1 use case to the other.

In addition to the quarterly sales. We also had some notable go live events in the quarter.

We expanded our footprint with Wells Fargo of Fortune 50 financial services company with nearly 2 trillion dollars in assets. The serves 1 in 3 of American households.

As Fargo has leverage Ping identity for the 70 million plus customers since 2012 and decided early this year to extend the relationship with Ping for their workforce in a migration from a competing SaaS vendor.

The expanded solution will now serve all of their 266000 employees for authentication and single sign on.

The standardization on <unk> platform has allowed them to consolidate multiple vendors simplify their architecture and reduce costs in a single solution that leverages Ping cloud your way advantages.

Also in the second quarter, we brought sharp healthcare live on their expanded ping offerings to launch of World class digital and unified customer experience.

While placing a heavy focus on customer privacy and compliance with the cares Act.

Sharp is a not for profit regional healthcare group.

Located in San Diego with 2600, physicians and 18000 employees in.

In May we added Ping directory and Ping authorized to their suite to help sharp better manage data sharing requirements.

For example, when capturing patient consent to release any data to third parties.

We're proud to work alongside proof I D. Our north American partner of the year to assist sharp in their implementation.

In all of these deployments, we continue to lean into our growing network of partners. Both in presale sale implementation and ongoing maintenance of our solutions.

To support these partner efforts, we've created a sales certification program and we far exceeded our first half goals for the number of partner certified under the new program.

In closing I'd like to thank the Ping team and congratulate them on winning best identity management solution in the 2021 SC Awards.

I'd like to also officially welcome Jason Wolf as our new Chief revenue Officer, Jason has experienced working on 5 different continents. It is a highly accomplished sales leader with a long track record of success at SAP.

Finally, I am pleased to announce we plan to hold our upcoming Investor day in Q4 on December 1 we will provide more.

More details on format and logistics as the date draws closer.

And with that I'll now turn the call over to Raj to walk through the Q2 results in more detail and update our outlook for Q3 and the full year Raj.

Thanks, Andre we had an impressive second quarter of accelerating growth and delivered above our guided ranges for all key metrics. We ended Q2 with <unk> of.

Of $279.6 million.

Up 19% year over year.

Q2, net IRR of $13.4 million was up 153% compared with the $5.3 million of net <unk> added in Q2 of 2020.

This quarters results included <unk> <unk> of $1.5 million from secured touch which contributed approximately 50 basis points of growth.

This quarter's performance reflected a return to the type of results, we were seeing pre COVID-19 with run rate growth aided by a few large deals we were expecting a couple of the larger deals that closed very late in the quarter to close in the second half of the year, which further contributed to the Q2 growth rate.

Additionally, the SaaS IRR surpassed the 20% threshold in the quarter as we experienced increased adoption of our SaaS solutions.

Yeah.

Second quarter total revenue grew by 34% to $78.9 million of which 93% with subscription based growth was driven by solid performance across the board of SaaS revenue grew 51% in the quarter to $13.4 million.

<unk> from increase the adoption of our Ping 1 cloud platform.

SaaS revenue has grown nicely over the past 6 quarters with the CAGR of 44% and we expect growth between 40% and 45% to continue in future periods.

We previously coupled SaaS revenue with subscription maintenance and support in our financial statements, which collectively increased 34% in the quarter.

Even that SaaS revenue is an increasingly meaningful contributor to total revenue we have broken it out separately from maintenance and support and we will continue to provide both as standalone metrics going forward you can find these metrics in the footnotes to our 10-Q and our supplemental presentation.

Additionally, subscription term based revenue grew 35% in Q2, with particularly strong growth in the multiyear term category driven by larger deals and lengthening average contract durations.

Given the impact of deploying the Mexican contract duration have on GAAP revenue. We continue to believe that <unk> is the key growth metric of the subscription business.

As was the case last quarter, our AR once again outpaced the trailing 12 month revenue.

The difference between those metrics of converged somewhat throughout 2021 and should continue to converge over time. This reflects the ongoing SaaS transformation, we have been calling out for several quarters.

Our Q2 dollar based net retention rate was up to 111% calculated on a trailing 12 month basis, and again tracking consistently with accelerating our growth.

We ended the quarter with 279 customers with more than $250000 in IRR of 15% year over year.

Unless otherwise stated for the remainder of the P&L I will refer to non-GAAP metrics you can find the reconciliation of non-GAAP to GAAP numbers in the accompanying press release.

Gross profit margin for the second quarter was 81% and comparatively our GAAP subscription gross margin was 86%.

Despite our strong 51% year over year of growth in SaaS revenue, our subscription gross margins were consistent with Q2 of 2020.

Total operating expenses in the second quarter were $51.2 million.

We delivered another strong quarter of Unlevered free cash flow with $15 million in the quarter compared with $4.7 million in.

In Q2 of 2020.

Operating cash flow was also strong at $19.9 million in the quarter. We outperformed on these metrics on the quarters. The result of higher IRR growth than expected as well as timing of cash collections, which we expect will have the reverse the fact on our Q3 unlevered free cash flow.

We remain in the strong cash position at the end of the quarter with $104 million of cash on hand. This was driven by drawing $80 million on our revolver $40 million of which was used in acquiring secured touch in the quarter and the remainder of which we anticipate using for general working capital purposes.

This puts us in a strong net cash position as we enter the second half of the year.

Before I turn to guidance I'd like to provide an overview of stock comp impacts this quarter, which were more pronounced due to performance based awards that vest when best of realizes a 1 point for $9.1 billion return of its investment in Ping.

In Q2. These awards became probable of vesting, which resulted in $9.4 million of incremental stock based compensation expense recognized in the quarter, an additional $6.3 million of stock based compensation expense related to these awards will be recognized over the remainder of 2012.

The 1.

As the result of these awards, we continue to anticipate our 2021 annual stock comp will represent between 18 and 20% of <unk> versus.

Versus about 8% normalized.

Moving now to guidance for the third quarter, we project <unk> of $286 million to 288 million.

The growth of 18% at the midpoint compared with Q3 of 2020.

We expect Q3 revenue growth of 13% at the midpoint of $65 million to $70 million, a slightly wider range than in prior quarters, given the quarterly variability in this metric we expect unlevered free cash flow of negative 16 to negative $13 million in Q3 related to the timing of collections in Q2.

We are raising our full year 2021 estimate to between $304 million and $306 million.

Up 18% at the midpoint compared with full year of 2020.

We now project annual revenue of 278 to 285 million growth of 16% at the midpoint.

We continue.

You'd expect Unlevered free cash flow for the year of 11% to $15 million of 48% at the midpoint relative to our 2020 performance note that this includes the impact of the secured touch acquisition.

In closing, we feel encouraged about our first half performance. The overall market seems to reflect the return to normal and drives our optimism about the second half of this year and beyond with that I'll turn it over to the operator for your questions.

At this time I would like to remind everyone in order to ask your questions. You May Press Star then the number 1 on your telephone keypad again that star 1 on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.

Your first question comes from the line of Matt Hedberg from RBC. Your line is open.

Alright, Thanks, guys. Thanks for taking my questions Congrats on a really strong quarter.

You know I guess Andre I guess.

That is the backdrop obviously.

It feels to me like the demand environment is certainly improving.

Some of these deals renewed a bit early I wonder if you could spend a little bit more time on just some of these post COVID-19 trends are you starting to see some of these customers that may be stalled or delayed purchases to come back with a bit more urgency.

Now just trying to get a better sense just of kind of what's driving some of these strong results.

Yeah, Matt we absolutely are seeing that.

So Q2 is seasonally.

Strong for us.

But we did experience a better than expected close rate.

As we reported earlier large deals are back.

Some of those deals were expected to close in H 2 they ended up closing here in Q2.

The pipeline does reflect that health and is tracking to plan.

And we're also seeing strong interest in pings cloud offering which has been maturing quickly throughout this year.

Combination of all of those and what we'll call the external macro environments, where.

I think a number of companies now have had an opportunity to assess their security posture in this.

Growing environment of cyber threats, there seems to be almost universal recognition that identity is the future of security and as a result. Many of these companies are are now beginning to fund.

At a larger scale and with more urgency their identity projects.

That's great and I guess, maybe dovetailing on that on the.

On the call you noted Boeing and Delta with some expansion. It seems like both are using the workforce of the customer side.

Can you kind of I think historically, you've said of a 25 per cent of your customers use ping for both workforce and the <unk>.

Customer side, where do you see that going over time, and how do you think you could be even more successful.

Promoting some cross sell of those 2 products.

Well central to our theme and consistent with our history of 1 platform for all identity types. The.

The company has had a long history of serving both use cases.

Historically, our E R R.

<unk> was roughly split equally between the workforce from the customer use case.

And if you go back 3 or 4 years ago, while we've been successful serving both use cases there was.

Not nearly the level of cross pollination of teams as we are seeing now so I, probably talked with a dozen large customers of weak.

And there is an undeniable growing trend of what I'll call the the roll up of responsibility.

For the identity team now inside of the security team and.

And for the combination of those 2 to be talking about the investments and partnerships that theyre, making.

Between the workforce and the customer use case so.

That number is up from prior years.

Do believe that that number will improve let's say of that number the 25% of customers that use us for both use cases in all of the conversations I'm, having there is a trend where companies are looking to get better leverage out of their technology partner.

The technology choices and the underlying in force infrastructure and platforms that they're using.

So we very consciously do.

Do market to both use cases, we are leaning in to the customer use case fairly aggressively that is beginning to pay off we do see faster for our growth.

The market is greenfield, but growing faster and we think ultimately will be larger.

That's super helpful. Thanks Andre.

Your next question comes from the line of Brian Essex from Goldman Sachs. Your line is open.

Hi, good afternoon, and thank you for taking the question and congratulations on a fantastic set of results.

I was maybe and I apologize if I missed this I was jumping between a few calls but can you dig into the multiyear term based licenses and the the growth there was that primarily.

Multi year that renewed for 1 year that was going back to multi year, maybe a little bit more color behind that and some of the dynamics. There. So we can better understand the potential volatility of stickiness behind the types of contracts under that number.

Sure Brian. Thank you so the revenue was a.

It was obviously very strong in the quarter cross across the board growth really.

Leading to the 34% revenue growth the term based license revenues.

We're the.

The multiyear impact was it was definitely significant both on new and.

Renewals. So we did see durations come back on both of which was encouraging but to 1 quarter doesn't make a trend so.

As we saw last year right. So so yeah, we did have a couple of larger deals debt.

That drove both the renewals and the.

The multiyear renewals and multiyear new IRR to the end up in revenue in the quarter, but.

Other than that it was it was fairly run rate.

Got it that's helpful and maybe just a follow up on the SaaS side of the house.

You've reached I think feature parity in for Q last year.

Any insight around what youre seeing in the pipeline or a little more detail around the velocity in the pipeline in terms of is this now making it through your kind of 6 to 9 months sales cycles, and how we see the pipeline building or maybe just a little bit of help in terms of now that you've hit that parity point.

How is the traction progressing in your pipeline and then through into revenue.

Well, it's certainly improving on the cloud side of that would suggest that the demand has always been there. The question is whether or not we had.

The product to meet that demand. So 2 things have really improved with respect to our cloud posture..1 is as you mentioned.

We achieved.

Feature parity in Q4 of last year and it takes a little while for new capabilities of that magnitude to be fully understood.

Both by the market as well as our own teams.

But we are seeing growing interest and demand.

In the in that solution as a migration path for existing customers who.

Who are utilizing a lot of those advanced features the.

The other kind of notable piece on the on the on the cloud is that the.

The Ping 1 platform itself, which has been of long lived investment for us.

I also believe has reached a certain level of maturity.

And the size and sophistication of some of the prospects in the pipeline now is representative of the maturation of that platform I think are going to be solid proof points going forward. So all.

All of that is the thing I think the market demand has been there and I think our competitive posture in the maturity of our platform is now beginning to meet it.

1 other thing I would just add to that Brian as you know, we did breakout SaaS revenue growth, our SaaS revenue and our disaggregated footnote for the first time and.

So.

It has been making its way through the pipe we have been seeing.

Stronger closer rates closing rates as of.

As Andre mentioned.

But that 51% year over year of SaaS growth rate in revenue and the SaaS crossing over 20% of total <unk> in the quarter. That's just indicative of the fact that.

We.

That it's already making its way through the system and we expect that SaaS revenue growth to in the near term to to.

To be sustainable above 40%.

All right very helpful. Thanks.

Your next question comes from the line of Mike Nichols from Needham <unk> Company. Your line is open.

Hey team. Thanks, Thanks for all of the disclosures today, specifically around that that says contribution. That's very helpful. Wanted to ask you if I'm looking specifically to Q could.

Can you help me better understand.

What was the contribution from large deals in <unk>.

I guess you guys had originally anticipated the close in the back half of the year.

It's not completely clear cut Mike, but I would say probably half of point to a point of of our <unk> growth.

We just expected.

To kind of fallen into Q3 of our Q4, it's more of a testament of just part of the demand environment coming back as Ondrej alluded to earlier.

And also just the importance of identity projects right. It's just these things these projects and Ping solutions are mission critical and and it was customers really driving the timeline here.

Okay.

That will make sense, we totally view identity is 1 of the cornerstones of the securities and I guess, just the just 1 other follow up if I could but could you help me better understand I know you guys had 2 products specifically the word.

True for the department of Homeland Security of J P L and the odd.

Obviously, the cyber of executive order just curious what are you guys seeing on the federal from and.

I'm also trying to wrap my head, but any color you could provide what is federal historically been as the contribution to revenues for you guys.

Are you seeing increased urgency on their side as well given the the increased threat environment.

Some of these executive orders thank you.

Federal has been historically opera opportunistic for paying that said, we do have <unk>.

Several pretty significant federal customers.

The beginning part of this year, we made a concerted effort to invest in federal federal on 2 fronts..1 is we now have.

The fully functional federal team in place.

The second major effort in addition to that.

Moving on the approved product list for the Homeland Security's CDM program is that we do expect fed ramp certification by the end of 2021 to support our efforts in federal so.

Historically federal has not been of focus we've been opportunistic there we do of several significant customers. This.

This year, we're investing in it we expect that to yield results next year.

Thank you very much guys.

Your next question comes from the line of Patrick Colville.

From DB your line is open.

Hey, Thank you so much for taking my question and congrats on them.

And the turnaround versus last year.

These.

These large deals.

As always impressive to close deals like that.

How would you feel about the second half of the year guidance suggest slightly slower growth in the second half of the year in <unk> than we saw this quarter.

Like conservatism or is that because of things outside deals this quarter and then the benefit from secured touch.

Yeah.

Yeah, Patrick I'll take that this is raj.

Our overall.

Our philosophy on guidance has always been to the guide to what we see in front of us and.

That's what's baked into our guidance now right and we have seen this improving environment with some.

With some pent up demand returning but I still think it's too early to the call normal just given what's happening what the what the delta variant and such but.

But we are confident we're confident in where our solutions are in the market the adoption rate the customer environment.

It's just.

We're looking at the pipeline, we're looking top down and bottoms up.

And that's where.

I think the return to.

In my prepared remarks, when I talk about we saw a behavioral change too.

The pre COVID-19 buying behavior, right, where we had a lot of run rate deals, but also supplemented by a.

A couple of large deals each quarter, we did see that again in Q2 now could that be of trend potentially yes, and we also do have.

Some nice momentum and upside drivers.

Debt that.

That could play out but for right now we're guiding to what we see in front of us.

That's helpful.

I mean.

These are the calendar 'twenty some of the commentaries rounds.

Smaller deal sizes.

Less urgency in closing deals being phased in.

Those kind of 3 things now behind us so the deal.

The sizes typically larger kind of back to normal is there more urgency around deals.

The deal is getting close quicker.

Yes.

Of the headwinds we saw in calendar 'twenty.

Now in the Bray of Humira, and what kind of back to.

For the Ping we know.

Pre COVID-19.

Yes.

It certainly feels that way, but as Raj said.

1 quarter is not yet of trends.

But.

The large deals are back there is a sense of urgency for these projects I think possibly built upon the fact that they've had several months now to late plan for identity for Zero Trust for password list, we are kind of living in a new world and there is recognition that identity is central to the security of the SNP distributed environment.

Certainly the sniff work from home environment.

So it does feel like there is a return.

A return of confidence.

And an urgency to these projects that feel similar to what we had experienced prior to COVID-19.

Okay. Thank you so much.

Okay.

Your next question comes from the line of Adam Borg from Stifel. Your line is open.

Hey, guys. Thanks, so much for taking the question.

We just provided it again, a lack of my Mike. Thanks for the additional disclosures on SaaS and it was nice to hear that gross margin really didn't have an impact but as we look forward in the go from 20%, obviously something north of that in coming quarters, how should we think about the potential gross margin impact.

The gross par as that becomes a larger part of the mix.

Yes sure Adam This is Raj here so.

Pickle wet SaaS business.

There is a there is infrastructure of those people in their sport.

That you need to put in place.

In our case prior to a critical mass of SaaS revenue right and and we are growing into that nicely, but but certainly we think debt in the future there will be at least over the next several quarters there will be.

Some pressure on gross margin as we continue to invest in the areas to make us and our customers really successful in their deployment.

And then over time, we would expect to see.

US grow into that so so I think your instinct is right.

But we didn't see it in Q2, but there is potential for for some slight movement downward there before we before we come back up.

And we will.

We will continue to collect the data points here and provide a better outlook in.

In our Investor day.

Oh, that's great. That's really helpful and maybe just a quick follow up in more of a housekeeping item just on the secure touch acquisition any commentary on the expected contribution.

Inorganically.

For that for the full year.

Yeah. The there won't be much this year, we're really focused on making sure. We're we're getting them integrated and getting the team ramped and getting the team integrated end to Ping, an and really building the pipeline amongst our base customers. That's that's probably the the first order of business at least this quarter there may be.

Some slight contribution in Q4, but nothing meaningful I think you'll you'll really start to see the impact of secured touch in.

2022.

A critical technology and just so top of mind in the customer use case.

We just feel like.

This really gives us.

A much stronger and deeper and wider moat around that customer use case, where we're where we've been historically very strong.

Excellent Raj thanks, so much.

Sure.

Next question comes from the line of Brian Colley from Stephens. Your line is open.

Hey, guys. Thanks for taking my question.

So I'm wondering when you look at the 51% growth in SaaS and kind of how that breaks down between your existing customers just shifting over.

From your core software to SaaS versus growth from new customers.

We have the.

Our SaaS platform is of great land.

Great land solution for us and.

We're seeing that increase the adoption both from our base customers as well as new.

I'd say for our Penguin Advanced services, we did see a tick up in in new logos.

From the introduction of that.

Of that platform and.

But now we're seeing in the pipeline that there is there is a lot of based customers that are looking at migration. So so I think going forward youre going to see more.

More migrations onto that platform.

There is.

No.

At the beginning we've seen more from new customers there.

Got it Thats helpful.

Curious if you could just provide an update on the competitive environment and whether you have.

<unk> seen it.

Improved win rates as a result of some of these enhancements you've made to the SaaS platform.

Particularly with customers.

In the global 3000, you moved.

Expanded debt target market from global 1000, the global 3000, I'm curious if you are seeing.

Higher win rates and kind of of the lower bound of that that market.

We are absolutely increasingly competitive for the customers who have a cloud first posture. So I would step back and just say the intent the identity market, obviously is a competitive market, but it's an extremely large and growing market as well and within that.

Global 3000, where we focus.

We've we've built a platform now thats pretty competitively differentiated trusted by north of 60 of the Fortune 100, and you can see some of those expansions are pretty significant by longtime customers who in some cases.

As in the case of Wells Fargo.

We replaced of SaaS competitor with our offering.

So I think what you should expect is increased competitiveness and increased win rates and in some cases.

Suggest deals that were unwinnable by Ping as little of 6 months ago or I believe Ping has.

A distinct advantage.

And some of the capabilities that we can provide so that has been an investment of long lived theme and investment for ourselves that will continue into the future of it I would expect that our win rates.

Have improved and will continue to improve there.

Great I'll leave it at that thanks for the time guys.

Thanks, Brian.

Your next question comes from the line of Gray Powell from BP <unk>. Your line is open.

Great. Thanks.

So maybe wanted to follow up on that 1 can you just kind of help us think how much of the success.

Debt that you saw in Q2, how much of that was ping specific versus macro like specifically like.

The improved win rates and the bake offs that youre, saying was that a bigger part of the performance or would you say it was just more related to just a barrel better better overall market conditions.

I think the macro trend is that we have an improving set of market conditions, but I.

I do want to give credit to it improving competitive.

Posture, the Ping has with our solution set so the.

The Boeing deal in particular was a cloud transformation deal.

Based upon our Ping 1 advanced services that I said was introduced last late part of last year, and that's a pretty significant milestone win.

The company of the size and scale.

And security posture of Boeing selects.

<unk> as a strategic partner for their future identity and cyber security initiatives.

So I can't say that the macro environment, we would not be giving ourselves for credit.

So how we serve Boeing and we've been of great partner and to the evolution of our cloud platform day billable service that deal. So I think both have played an impact.

In the improved performance in Q2.

Yes, I would say, both probably played an equal impact.

Got it that makes a lot of sense and then just my other question and I think everyone understands how identity is becoming a more important part of the security stack, but I'd be curious how much or how often is the purchase decision being driven by something like of marketing department of Ed or digital experience or or something that.

<unk> influences your customers' revenue.

Versus just the security Department.

For the customer use case, that's more of the norm the.

The exception so.

Yes, the the line of business, the Chief Digital officer someone responsible for user experience of consolidated user experience from a fragmented user experience.

It is more common the not debt debt that the buying title is different than the security or identity leads what we have seen however is that there is a growing influence.

By the identity teams and certainly by the security group as a whole.

As things like identity fraud, and the customer consumer use case required that the company have additional skill sets to combat that with all of their digital properties.

As I reported before.

Maybe an extreme case of this is that I was talking to 1 of our champions at a large top 5 bank.

And he was describing how he was originally responsible for operations for the workforce identity security use case, then responsible for engineering.

And in the last 4 months, they've consolidated consolidated well over 1000 people.

Between the workforce and the customer use case for all of cyber fraud and identity now Thats, an extreme scenario, where the company has reorganized themselves to gain better leverage and understanding of their identity security posture across both use cases.

But I do believe that that is a sign of what's to come.

I do not see an environment where.

Identity sitting underneath the customer use case and and the first line of defense against fraud, and the foundation of.

Exceptional customer experiences does not benefit the companies don't look to have some sort of leverage between the 2 groups.

Understood that's really helpful. Thanks, and congratulations on the great numbers.

Yeah.

Your next question comes from the line of Ben Smith from Piper Sandler Your line is open.

Hi, guys Ben Schmidt on for Rob Owens, Thanks for taking my question.

Andre you talked a bit about how take.

It takes time to educate both the market and your sales force on the.

SaaS offering and I'm wondering if you can talk a little bit about the progress with the GSI is on that front and just how those partnerships are playing out with the SaaS product.

Most of our connection in the channel with our SaaS product and our products in general.

We have a very strong set of partners, who exclusively focus on identity and our very deep in many cases exclusively focus on ping.

Maybe 1 step up from those are kind of the national.

National integrators of where we're not quite to the GSI scale and there we have a growing set of partnerships as well, while we have many customers who have worked with GSI is and we've worked with all of the GSI is in obviously in the Fortune 100, GSI is our present in all of those accounts and see Ping I would say.

That <unk>.

Most of the interaction historically has been with our software on the <unk>.

We're very focused on developing strong partnerships with the global Gsi's. We are building upon successful deployments. There is good recognition of the importance of ping to the growing cyber practice, the CSI do see us in many of their strategic accounts and they are looking for stronger relationships with ping, but I would imagine.

That it will take some additional time for them to become familiar with our growing cloud and SaaS offering.

Got it thanks, that's all from me guys.

Okay.

Your next question comes from the line of Gregg Moskowitz from Mizuho. Your line is open.

Okay. Thank you and congrats on a very good quarter and I apologize. If my questions have been asked just had multiple calls today.

Hey, I know, it's still early days, but is there anything new or different that Jason is putting in place from a go to market perspective.

Yes.

That's a good question the.

There is a there are several focuses that we had as a company prior to.

Jason the arrival of course, we were looking for strength in some of those skill sets.

Global 3000 solution selling is very important and as our portfolio has grown we're kind of moving beyond individual products into use cases and into the solutions and adjacent of very strong background, there as well as channel international and federal all kind of growth investment areas for us.

We have not made any major changes or he is not instigated any major changes to the organization.

I will say I am impressed with.

What I'll call.

The mindset, the Jason brings with him he's.

He's he has just got a great outlook on embracing.

The embracing the new in.

In looking at the portfolio of capabilities and appreciating all of the ways in which we can land in the new customer or expanding on the customer.

And so it's always good to get kind of a new perspective I'm sure. He has built.

The success in his career on that mindset and I do see maybe some of the early things is bringing that mindset to ping, but no major changes to the design of our go to market.

Okay. That's very helpful. Andre and then Raj I realize you don't disclose your customer count until the end of the year, but since we're at the halfway Mark are you able to say Directionally. How this has been tracking vis vis what you guys saw in 2019 and 2020.

Cash Greg will provide some more detail on that in.

In December when we talk but.

But just directionally, we're continuing to attract new logos, especially with our SaaS.

That form the creates.

A nice land for us and of course, that's offset by.

What we've typically considered to be non regrettable churn logos, where we're not a good fit for them and they are not a good fit for us and as we continue to focus in on the global 3000 ideal customer of cohort Youll.

It can continue to see that kind of push and pull but the nice part is that the customers. We are attracting our traditional grew.

Growth accounts.

And great land and expand capability and potential there and youre seeing that in the <unk> growth.

So that's more of the focus for us.

Great. Thank you very much.

Your next question comes from the line of sockets Telia from Barclays. Your line is open.

Okay, Great Hey, guys. Thanks for taking my questions here and similarly, I apologize if any of my questions have been have been asked.

Yes.

Roger maybe you will start to start with you Gregg.

Great to see the the.

The beat on AOR of this quarter.

I believe the outlook for the year is going up just a little bit lesson of the beat so I'm. Just wondering is there anything that we should keep in mind.

Vis vis sort of timing of deals or anything else to just sort of thinking about when you compare sort of the Q2 beat versus kind of what <unk> projected to do for the rest of the year.

The sockets. So as you know we are we always guide to what we see in front of us and we did see.

Strong activity in Q2.

And we're triangulating all data points, so top down bottoms up and as well as the macro we're also keeping a keen eye on the delta variant and making sure that we don't have any kind of dip like we did.

Last year, but that's hard to tell right at this point so.

So.

Part of it is our enthusiasm and excitement about what we're seeing in the market and what we saw certainly in Q2.

But it's a low it too early to call normal and and claim that we are back to pre COVID-19 pattern. If you will of a bunch of run rate deals coupled with some really large deals like we saw in Q2 could that continue to happen share.

But we're not.

We're just not calling that a trend yet.

Got it got it that's helpful. Maybe maybe for my follow up for for you Andre.

Great to see the increasing SaaS mix also really appreciate the increased disclosure there.

I was wondering how you sort of see the SaaS business long term in terms of.

Whether it's mix whether it's.

Yes, I mean, maybe maybe I'll sort of.

Leave it there of kind of a high level can you just talk about what the SaaS business here of Ping looks like long term.

Second as you know 1 of our thesis is that we're not going to live in a singular cloud world or even a singular SaaS world in large enterprise.

Hybrid is here to stay it's certainly hybrid it environments are here to stay.

And now I think everyone realizes that they're going to live in a multi cloud reality as well so.

The combination of them.

The multi generational hybrid it doesn't shift and become singular in any 1 cloud and the reality that theyre going to of assets of multiple clouds.

The whole cloud your way.

Approach that Ping has the ability for us to deploy.

In 1 or more clouds, and I've reported in the past with some of our larger customers are doing is being coupled with now what I've seen in the last 90 days.

<unk>.

The real awareness and focus on I guess, what I'll call resiliency and in particular cloud resiliency.

A number of surveys have come out showing that most companies believe 92% not just believe but are drawing up a multi cloud strategy.

And it's not just resiliency driving that mandate.

We're extremely well positioned on that front.

So I do believe that a lot of new.

Run rate business down market activity is going to optimize on speed of deployment of their identity control plane in that and that speaks to a cloud first requirement.

But serving the global 3000, and regulated industries and with this growing multi cloud awareness in this growing awareness of multi cloud resiliency more specifically wanting to run the identity control plane in 2 or more clouds for resiliency and to combat lock in any vendor.

<unk> locked in or cloud lock in.

I anticipate that.

Debt what today is the software part of our business being deployed in the cloud using our Dev ops program.

As a.

Long lived reality for us and of desired outcome for our large enterprises. So.

Anyway that was a long winded way of saying do expect our SaaS to grow.

And <unk>.

Do expect that the growth rate that we're experiencing in SaaS to continue we are projecting that.

But do not expect debt in the Ping world or in the global 3000 did it becomes all of SaaS certainly not all SaaS overnight, we're going to see a healthy balance over time I do believe SaaS will be the larger part of our <unk>.

If you if you play this out for 5 years, but the other part of our business is going to be very healthy.

That's very helpful. Thanks for fitting me in here guys.

Sure.

There are no more questions at this time presenters. Please continue.

So that concludes today's earnings call. Thank everyone for joining and we look forward to providing updates as the year progresses, including our second half of Investor day scheduled for December 1.

2021, Thank you very much thank you.

This concludes today's conference call. Thank you for your participation you may now disconnect.

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