Thoma Bravo picks up Ping Identity for $2.8B in an all-cash deal

·4 min read

After a tough few months in the markets for Ping Identity, the enterprise identity management company today announced a big move: private equity firm Thoma Bravo is buying the company and taking it private for $2.8 billion.

The news was announced at the same time that Ping posted its Q2 earnings. The company said it made revenues of $72 million for the quarter, missing analysts' expectations. (It has cancelled its earnings call in light of the acquisition news.)

Ping is traded on the NYSE (it went public pre-pandemic) and Thoma Bravo will be paying $28.50 per share in an all-cash transaction, which is 63% over Ping Identity's closing share price on August 2, 2022, the company said.

"This compelling transaction is a testament to Ping Identity's leading enterprise identity solutions, our talented team, and our outstanding customers and partners," said Andre Durand, Ping Identity's CEO, in a statement. "Identity security and frictionless user experiences have become essential in the digital-first economy and Ping Identity is better positioned than ever to capitalize on the growing demand from modern enterprises for robust security solutions. We are pleased to partner with Thoma Bravo, which has a strong track record of investing in high-growth cloud software security businesses and supporting companies with initiatives to turbocharge innovation and open new markets."

This is actually the second time that Ping has bounced into the hands of a PE firm. Prior to going public, it was majority-owned by Vista Equity. Vista retained a share of the company, currently 9.7% of its outstanding shares.

Thoma Bravo has been one of the group of PE firms that has been aggressively scooping up tech companies in recent months capitalizing on the current climate. Companies that are targets have included those that have been struggling to perform well in the public markets, those finding it a challenge to scale and raise money in later-stage rounds and those that had been planning to go public but have not been able to due to market conditions and the general cool state of the IPO market. Other major enterprise IT deals Thoma Bravo has been involved in have included buying SailPoint for $6.9 billion and Anaplan for $10.7 billion.

Identity management remains a very hot area in the world of enterprise IT, given the increasing number of cyberattacks and breaches that started by hackers maliciously entering networks through credential stuffing and other tactics that leverage weaknesses in log-in procedures.

Ping missed analysts' estimates at a time when a lot of other technology companies are struggling to meet numbers -- a collective sign of a wider downturn in the market and of the pressure it is piling on software companies, with SaaS companies in particular facing volatility.

All the same, Ping is showing some growth. It noted that in the quarter that ended June 30, it had annual recurring revenues of $341 million, up 22% versus the same quarter a year ago, with SaaS ARR at $100 million, which Ping described as 30% of "total ending ARR." Subscriptions make up the majority of Ping's revenues, and in the last quarter they were at $66.3 million, or 92% of all revenue, with SaaS at $22.7 of that (versus $13.4 million a year ago). Another key metric for the company was the number of higher-value users. Ping ended the quarter with 331 enterprise customers "with more than $250,000 in ARR," up 19% over a year ago.

However, the killer for Ping is that even while it's been growing, it has not been fast enough. It was in a tough spiral, and given the state of capital markets today, Ping might have been running out of options for raising funding as an independent company to bolster itself for more growth and profitability. It noted that "unlevered free cash flow" was actually negative $8.4 million for the last six moths ended June 30 (meaning: no cash, and actually debt). A year ago in the same period it was $34.5 million (that's a positive number).

"A tectonic shift is occurring in intelligent identity solutions for the enterprise," said Seth Boro, a managing partner at Thoma Bravo, in a statement. "Ping Identity's unique capabilities and strong position in enterprise identity security make it a great platform to deliver customer outcomes, expand into new use cases and support digital transformations. We are highly impressed with the talented Ping Identity team and look forward to working collaboratively in the years to come."

The board of Ping has unanimously approved the deal, the two firms said. The deal, pending regulatory and other approvals, is expected to close in Q4.

More to come.

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