Spotlight on Identity and Governance Tools

JAN22 Data Subsector Review

Erik Bradley | ETR Research 

| February 11, 2022

With the pandemic-driven work from home shift, Identity Access, Privileged Account, and Governance Management functionality was thrust into a prominent role for information security strategies. Now, with a broad cultural shift pushing hybrid work as a permanent fixture of the labor force for companies across all industries, it seems this subsector will retain its prominence for the foreseeable future. With earnings season well underway, CyberArk already reporting, and three more market players still left to print, it's time for us to review the recent data for this key subsector of information security.

CyberArk: Kicking off the earnings season for this group, CyberArk released strong numbers that beat expectations earlier this week. The vendor reported F4Q (Dec) revenue of $151.3M (+4.7% y/y vs +14.1% last q) vs cons $144.7M, guided F1Q (Mar) revenue to $125M-$133M ($129M at midpoint, or +14.4% y/y) vs cons $128.6M, and guided FY22 (Dec 22’) revenue to $582M-$598M ($590M at midpoint, or +17.3% y/y/) vs cons $563.5M). As of press time, the stock reaction was equally positive, with shares rising 17% this week alone, netting a 9x fwd sales valuation.

In the most recent JAN22 data set, CyberArk maintained one of the strongest Net Scores (i.e., spending velocity) within the Information Security sector as spending intentions showed considerable y/y gains and survey Pervasion resting at all-time highs within our work. Ultimately, the ETR Research team maintained a Positive rating on the data, stating, "CyberArk is seeing one of the biggest improvements in Net Score across the entire Information Security sector vs. last year, especially among Global 2000 organizations. This, coupled with Pervasion reaching new all-time highs, keep us Positive heading into 2022." See the full report HERE. 

Okta: Next up is the undisputed leader of this sub-sector, the SSO and MFA kingpin known as Okta. Okta was always well-positioned in ETR's surveys, but when a high-growth emerging player started to make waves in the vendor's marketplace, the company quickly acquired Auth0 and turned a potential competitor into a tremendous asset. Now, as a combined company, the data set is reaching premier levels. Based on the most recent data, ETR wrote, "Auth0 maintains the strongest Net Score, Adoption Rate, and year-over-year citation growth within the Information Security sector, while Okta’s spending intent continues to improve among Fortune 500 organizations and the company sees further gains in Pervasion among key verticals; we remain Positive."

The company is slated to report earnings on March 2nd, with shares trading well off all-time highs in the $290s back in February of 2021. While we await the results, commentary from our IT Decision Maker community continues to be overwhelmingly positive, with the lead quote above depicting the general end-user consensus that the ETR Insights team has captured. Lastly, ETR's proprietary regression forecasts continue to project higher-than-consensus growth for the current and out-quarter. See the full report, including revenue forecast details HERE. 

SailPoint: After two consecutive survey periods yielding Positive data outlooks, SailPoint's most recent data set captured a sharp drop in spending intentions, resulting in a move down to Neutral for the vendor. In the most recent vendor report, the ETR research team wrote, "Even amidst strong Pervasion growth and relative outperformance to the broader Information Security space, the y/y weakness in Net Score across most customer subsamples ultimately leaves SailPoint’s dataset less exciting than those of Okta or CyberArk, prompting a Neutral outlook."

Trading at a significant discount to Okta's 17x sales and a more modest markdown to CyberArk's 9x valuation, the company is currently trading at roughly 7.5x forward sales and is expected to report earnings on Feb 28. Meanwhile, ETR's regression-based revenue forecasts predict that reported revenue has a 60%-80% chance to beat consensus by 2% or more for this quarter, but a higher than 80% chance to miss consensus in the out quarter. Check out all the details HERE. 

Ping Identity: Rounding out our roster is Ping Identity, which currently carries a sub-$2 billion market cap with a 5x forward sales valuation. While no one takes joy in reporting bad news, ETR's JAN22 data for this vendor was too troubling to ignore, leaving the ETR research team to write, "Overall, Ping’s dataset has deteriorated materially vs. last year. Comparing the data to peers in the Identity space (who continue to see tailwinds from COVID-19 accelerating the transition to remote work) makes trends for Ping Identity appear even worse. As such, we are moving to a Negative outlook on the vendor's data set heading into 2022." Shares of PING are now trading back at its 2019 IPO levels, with earnings scheduled for February 24th. While you wait, check out the vendor's full report HERE.  

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