Ping Identity Holding Corp.

It features a library of 100-plus out-of-the-box connectors for a whole range of identity, IT, and automation services. In Q4, two global brands purchased our solutions led by orchestration. One of these is among the world's most recognized brands associated with global sporting events the world over. The other proliferates digital organization solutions to hundreds of millions of people in 25 languages around the world. We believe DaVinci will greatly improve our go-to-market velocity while also improving customer experience, streamlining integration, and transforming the way companies and end users experience identity in the years to come. Thank you to all of our customers and partners for another great quarter expanding the boundaries of identity security. A few final thoughts. First, I'm pleased to welcome Shalini Sharma as our new chief legal officer. Shalini has more than 20 years of international corporate legal experience, most recently as general counsel with Vantage Data Centers and before that for many years with Broadridge Financial Solutions. Shalini will also act as secretary to our board of directors. She's an important addition to our leadership team. Second, I'm also pleased to report that late in the year, we received our in-process designation for the Federal Risk and Authorization Management Program, or FEDRAMP, and currently are targeting a mid-year completion of our moderate authorization under the program. We also took our Ping One for Government solution live in late December and are actively working our pipeline of federal contracting opportunities through our resellers and distribution partners. Third, I'm delighted we were recently recognized as a 2022 Best Place to Work in both Denver and Austin, our two largest employment centers, by built-in. Our culture is based on a 10-10 philosophy, where attitude is equally important as performance, and our people exhibited both in 2021. Finally, I know you've heard me talk before about the movie of pink, and I couldn't be more excited about where we are today. we recently passed our 20-year mark as a company. And in the grand arc of our trajectory over the past two decades, I can honestly say I've never been more excited about our future. Raj will provide a bit more detail about the financial path we'll be taking as we move toward our objective over the next three years, en route to reaching ARR growth of 25% to 30% exiting 2024, on our way to our $1 billion ARR North Star. With that, I'll now turn it over to Raj to walk through our results and outlook. Raj? Thanks, Andre. As a reminder, before I get started, I encourage you to follow along with our supplemental presentation, which is being webcast live, as I will refer to a few important slides during my discussion. We once again delivered strong results above our guided ranges for all key metrics. This is the fourth consecutive quarter in which we've driven accelerating ARR growth, which outpaced our initial guidance. Our year-ending ARR of $312.7 million was up 21% year over year. We generated a record $23.1 million in net ARR in the quarter, up 40% compared with the fourth quarter of 2020. We crossed another important milestone in the quarter with SAS ARR now representing more than 25% of total ARR. This highlights our continuing strong SAS growth trends as SAS ARR had just crossed the 15% threshold of total ARR in Q4 of 2020. Fourth quarter revenue grew 19% year-over-year to $75.4 million, of which 93% was subscription-based. Growth was driven by SAS and maintenance and support. We drove $16.9 million of SAS revenue in the quarter, growth of 56% year-over-year, and consistent with Q3. As was the case in Q3, more than half of our new ARR in Q4 was from SAS versus software. For the year, SAS revenue grew 51% versus 2020 to $57.6 million. Maintenance and support revenue grew 25% year-over-year in Q4. Term license revenue was up 10% in the quarter with 26% growth in multi-year term license revenue offset by a reduction in single-year license revenue due to the very strong single-year license performance in Q4 of 2020. This is indicative of the longer average contract durations we've seen throughout 2021. We ended the quarter with 315 customers with at least $250,000 in ARR, up 21% year over year, and in line with our ARR growth. In 2021, we also added 20 customers with more than $1 million in ARR, bringing the total to 71, up 39% year over year. All of these improvements to our large customer penetration rates continue to reflect our ability to more deeply drive value to our existing base of customers. We ended the year with 52% of our customers having adopted at least two ping solutions and 26% with three or more. Our customer base now totals 1,468, up 4% year over year. We added more new logos in Q4 than we have since Q4 of 2019. We now have more than 830 customers using at least one FAS solution, up 20% year-over-year. In addition, we nearly tripled the number of customers leveraging our PingOne Advanced Services in 2021. More than 80% of new customers in 2021 purchased at least one FAS solution. Our Q4 dollar-based net retention rate was 112%, calculated on a trailing 12-month basis. Note that this was a sequential improvement compared with Q3, even though both figures rounded to 112%. Unless otherwise stated, for the remainder of the P&L I will refer to non-GAAP metrics. You can find a reconciliation of non-GAAP to GAAP numbers in the accompanying press release. Gross profit margin for the fourth quarter was 76%, compared with 80% in Q4 2020, and driven primarily by our high growth SAS, and compared with our GAAP subscription gross margin of 82%. Total non-GAAP operating expenses in the fourth quarter were $62.7 million. We ended the year with more than $220 million in cash, improving our liquidity and adding flexibility by successfully refinancing our debt. We executed a $300 million seven-year term loan fee and a new $150 million five-year revolver in late November. This improves our optionality to drive growth to both internal investment and M&A. Full year operating cash flow was $41.7 million of 86% year over year. This resulted in unlevered free cash flow of $21 million for the year, nearly $10 million better than our expectation as Q4 cash collections were extremely strong. Even with our continued investments to drive innovation and growth, we remain in a strong cash position as we enter the first quarter of 2022. Now turning to guidance. As Andre mentioned in his comments, we are excited about the growth re-acceleration we achieved in 2021, which gives us increased confidence going forward. We expect annual recurring revenue of $320 million to $324 million in the first quarter, growth of 21% at the midpoint versus Q1 of 2021. We also expect ARR of $378 million to $385 million for the full year, growth of 22% year-over-year at the midpoint, and above the preliminary 20%-plus rate we provided at Investor Day. As was the case when we entered 2021, we expect GAAP-reported revenue growth to be lower than ARR growth due cheaply to accelerating fast market adoption and growth. The faster adoption and growth in SAS is reflective of increasing investment in our SAS solutions. We have also been investing in maintenance and support of our software. As such, we expect that we will now begin recognizing an increasing percentage of revenue, ratably, over the life of a contract versus upfront. You'll see that change reflected going forward in our disaggregated revenue footnote, which you can also find in the appendix of our supplemental earnings presentation. We expect this will shift our reported revenue percentages between term licenses, SAS, and maintenance and support, or M&S, for 2022 and beyond. In 2021, term license revenue made up just over 60% of our subscription revenue, with SAS just over 20% and maintenance and support just under 20%. In 2022, we expect a shift in this composition, with term license revenue declining as a percentage of total subscription revenue and both SAS and M&S increasing as a percentage of revenue. The overall result of this is our full-year revenue expectation of $330 million to $340 million, year-over-year growth of 12% at the midpoint. We expect Q1 revenue in the range of $78 million to $82 million, growth of 16% at the midpoint versus Q1 2021. As the impact of this revenue shift becomes more apparent in Q2, our preliminary Q2 revenue estimate is $70 million to $75 million. Recall that Q2 of 2021 was exceptionally strong, especially within our multi-year term license category. Over time, we expect the difference between our trailing 12-month revenue and ARR will shrink with growth rates roughly converging. As we've said for several quarters, these revenue fluctuations support our ongoing belief that annual recurring revenue, or ARR, is the best metric for measuring pain's growth trajectory. With a maturing cloud platform, growth in our customer use case, and strong SaaS performance, we plan to further invest in our go-to-market and continue our SaaS investments within a growing demand environment. As a result, we expect our unlevered free cash flow to be approximately breakeven for the year, with first quarter unlevered free cash flow of between negative $5 million and breakeven. Our cash flow outlook for 2022 is predicated on several factors. First, we have strong overperformance for Q4 and 2021, driven primarily by collections, which shifted roughly $10 million forward into 2021. This also affects our Q1 view. Second, we are seeing strong signals that our cloud maturity, bolstered by our recent acquisitions, is improving our competitiveness and want to leverage these improvements with very targeted impact-based spending. Similar to our multi-year revenue trajectory, we expect to invest more earlier in this multi-year period with free cash flow yields improving over time. In closing, we feel great about our 2021 performance and our expectation for acceleration of ARR growth in 2022. With that, I'll turn it over to the operator for your questions.

As a reminder, to ask a question, you will need to press the 1 on your telephone. And to withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. For our first question, we have Matt Hanson. Hedberg from RBC Capital Market. What alliance have you been?

Hi, this is Anishtha from Matt Hedberg. Thanks for taking my question and congratulations on the strong quarter and a really impressive ride. I had a question on the guidance. Could you talk more about the assumptions which give you the confidence in your ability to accelerate growth to 22% this year? And then as a follow-up, how should we think about the go-to-market investments in 2022 to potentially drive faster growth in 2023 and beyond? Thank you.

Sure. Hey, this is Raj. I'll take that. So in terms of our guidance, our philosophy is to guide to numbers where we have a high degree of confidence, and we do have a consistent track record of meeting or beating that guidance. So that is first and foremost what gives us confidence. Secondly, we have a backdrop with improving demand and spending environment. We sort of called that out over the last few quarters. We continue to see that. And, you know, the biggest thing is that we're focused on driving our strategic initiatives that Andre laid out in his prepared remarks around our focus on cloud, on the customer use case and the channel. And those three Cs are really important. They've been really important to our historical growth, and we continue to see great signs in terms of our future growth as well. And I believe the second one was around the go-to-market investments. Can you just repeat that question for me, please?

Yeah. Just how we should think about the go-to-market investments in 2022 to potentially drive faster growth in 2023 and beyond.

Sure. Okay. Yeah, I'll go ahead and take that. Well, so built upon both the performance that we've seen in our cloud offering and the maturing platform, the numbers that we've seen on the channel, the strength that we had in the pipeline generation in 2021, We are now investing in our go-to-market, both sales and marketing, capacity and pipeline generation to take advantage of that opportunity. And I'm going to suggest that this is the first time in some years where we are now taking that position based upon the confidence and the numbers and results we're seeing in our cloud platform.

Got it. Thank you. For our next question, we have Andrew Nowinski from Wells Fargo. Andrew, your line is open. Andrew Nowinski Wonderful.

Thank you. And perhaps a nice close to 2021. I want to start with a question on maybe your large deal activity. I know you had 71 customers that spent over $1 million. I think you had 20 in 2021 as well. But I'm wondering if you had any particularly abnormally large deals in Q4. And what might be driving sort of that, you know, uptick in large customers?

I'll take that. This is Andre speaking. We had a number of nice-sized deals in 2004 that is historically consistent with what we've seen in prior years. End-of-year budget flushing, people getting their act together throughout the year and wanting to start off the year on a series of new digital transformation projects. A number of those projects have been accelerated, as you've heard, around zero trust. And then on the customer side, a growing awareness that customer experience is foundational for digital transformation. So all of that has historically been consistent. There was no one deal, say, that skewed the numbers in any one direction. It was a healthy mix of customers consistent with the themes of cloud migration, cloud transformation, the acceleration in the customer use case, And a few of those large deals were sourced directly from the channel. That is relatively new, shall I say, to have sizable material Q4 deals sourced by the channel.

That's great to hear. I know you have a focus on growing that channel contribution, so it's great to see some large ones coming through there. i have a follow-up question as it relates to maybe competition you know certainly octa has made a large acquisition in the customer identity space and your investors seem to be concerned with maybe microsoft pushing more into the identity security space so i'm wondering if it certainly doesn't seem to be having any impact on your results you're growing subscription extremely high so i'm wondering um if you could just comment on maybe what's changed in the competitive landscape if anything

That's a good question. I'll start with Microsoft. And so Microsoft is obviously a very important part of the security and identity ecosystem. They do have particular strength in the workforce use case and with enterprises that are neither hybrid nor necessarily strategically pursuing a multi-cloud strategy. We do partner with Microsoft on several fronts. We're very focused on helping our large enterprises succeed with Microsoft, just not exclusively Microsoft. So where Microsoft has strength is where a good enough solution for companies that have taken a Microsoft-centric approach to their entire cloud strategy, Microsoft has particular strength. And Ping is strengthening as a go-to for large enterprises with either a hybrid or multi-cloud mandate. and i've given hundreds of vision sessions over the course of the last nine months and i am now regularly hearing that built upon resiliency companies are viewing a multi-cloud strategy as extremely um strategic that that is that that is an incoming trend that i'm hearing regularly with respect to auth zero um we do see the a future shift and where value is both perceived and realized you know if you go back five ten years i would say the cloud first mandate realized a pretty significant uptick in efficiency off zero focused on the developers who were looking to embed identity in their applications and do so through apis we believe that the future value capture is not going to be cloud first or developer first. We see that shifting to experience first. So we do focus on a different segment of the market with respect to Auth0. The large enterprises with centralized board level mandates to essentially clean up and consolidate siloed identity systems across business units to create a better user experience. Those tend to be top-down-led initiatives, not bottom-up-led initiatives. It's not meant to say that developers aren't extremely important in the decision-making process, but the needs of the large enterprises to consolidate identity plays directly into our wheelhouse.

That makes sense. Keep up the good work, guys. Thank you.

For our next question, we have Mike Seacoast from Needham & Company. Mike, your line is open.

Hey, guys. Thanks for taking the questions here. For Raj, I know that we spoke to the growth in SAS that you guys are seeing in some of the commentary on SAS versus term licenses. Can you help us think about what the headwind to revenue is in calendar 22 as a result of this shifting um i guess revenue mix that we're talking to and then part two of that question would be the gross margin pressures that you guys are seeing as sad scales um should we expect further degradation from current levels or is this a good place to be when we're thinking about calendar 22.

Sure, Mike. So in terms of the headwind, we're not really quantifying that because I think it's a little difficult to tell in terms of what the mix would be, what the deployment would be on those, what the durations would be. There's just so much that goes into it. But certainly there is a revenue impact, right, to your point, around that. The fact that SAS is accelerating and posting up 50-plus percent growth quarter over quarter, you do tend to have that sort of impact. And we also – our software stack is mostly complete, and we're investing more in the new feature functionality on the SAS side of the house and more on the maintenance and support on the – on the software side. So we do expect an impact that's baked into our projections and our guidance, but we're super excited about the fact that this will lead to more readability and more predictability over the longer term. And then in terms of your question on gross margin degradation, when you're growing fast at the rate that we are, we're certainly building out our infrastructure and our capabilities ahead of the curve. So we would expect a little bit of compression on gross margin as we continue to build that out. And we think that that's really important to do. because we want to accommodate that fast growth without a hitch. But over time, we do expect that to kind of normalize what we're looking at in terms of current levels. One thing I'd just point to is we put up those growth wave charts in the earnings presentations. I think that's really important to understand the true movie of what's going on here at Ping. in terms of some of the revenue impacts this year and next, and then, you know, the eventual convergence we expect. That's a really important graphic.

Great. That makes a lot of sense. And then real quick for Andre, I know that you had called out, I think it was 55% of your AR today is coming from the customer use case. Just to help us maybe on a relative basis, that 55% of total AR today is How does that compare to where we were a year ago or a quarter ago, just so we have something to compare it to? Because I know that has been obviously a key focus of yours.

well we've been fairly balanced since the beginning of pink so there's always been a small percentage of our use case focus on the partner situation so you know this is this is pulling from memory so don't hold me to this exact number but i think for a number of years we were like 45 percent workforce 45 percent customer and you know eight to ten percent partner I think the message and story is that we believe the market opportunity for customer is ultimately both larger. We believe and we are experiencing that it is faster growing. We also appreciate that the investments that we've made in the platform and the acquisitions that we've made differentiate us in the customer use case. We think that that market long term doesn't have, say, an incumbent like Microsoft with a particular strength for workforce built around their Azure Office 365. anchor tenants in large enterprises. So the customer use case is really largely up for grabs. So all that is to say that our investments there, the market opportunity, all the external analysis we've seen, all the internal metrics that we're experiencing speak to this market as very, very exciting with being very well positioned. Thank you again, James. I'll see the floor.

For our next question, we have Brian Essex from Goldman Sachs. Brian, your line's open.

Great. Thank you. Thank you for taking the question and nice set of results.

I was wondering if maybe we could just touch on, you know, how to think about the balance of growth and profitability as you kind of transition into, like, next year and as we kind of, you know, fine-tune our models for the next several years. Maybe not just maybe not a multi-year guidance framework, but, you know, maybe a rule of thumb in terms of how you're thinking about throttling investment and growth of the business relative to what you may let trickle down to the bottom line just to kind of get that kind of ballpark in the right direction.

Yeah, sure, Brian. Great question. This is Raj. I'll take that. So let's just rewind to 2021 for a minute, right? We drove 21% growth, you know, significantly higher than what we had expected when we provided guidance a year ago. And and did that while generating record operating cash flow for the year. So we're confident that we can drive growth and profitability. That's been our mantra here for a long time. We're at a point in time where we feel like it's time to press into the investment. And as you've seen with us, we're very responsible and take that very seriously. And we're going to invest for high-impact return. Everything we do is on an ROI basis. And if I can just refer you back to our earnings presentation and the growth wave that we have on there, we also have a wave chart for the Unlevered Free Cash Flow line where you see us pressing into growth. On the sales and marketing side, we'll continue to press into the R&D side of things and continue to innovate. and really sort of prepare ourselves for that ARR growth acceleration. So in the near term, we will press into it. And then as that curve shows, and that's for illustrative purposes only, but, you know, we expect to have more operating leverage in the model next year on our eventual, you know, target of around 10% to 15%, which is what we laid out in our investor day for 2024.

Got it. That's super helpful. And maybe to follow up, I think we've had this question come up before in previous quarters, but we'd love to know what your visibility is in the install base with regard to maybe potential term-based customers and those you may migrate on to SaaS and what the outlook looks like for conversion there.

I'll take that. So you obviously see us highlighting an increasingly strong and cloud SaaS performance here at Ping. And I'll reiterate, north of 25% of our ARR is coming from SaaS. It's growing at north of 50%. Second quarter booking, this was our second quarter where our SaaS bookings outpaced software. North of 55% of our customers are taking on at least one SaaS solution. And we've seen a tremendous uplift and uptake of our advanced services. We do see an opportunity to grow the company and the ARR, both with new customers and migrating existing customers. And we actually had a very, very healthy balance of both. In terms of new logos, Q4 new logos was the strongest it's been since Q4 of 2019. SAS played a significant role in that. And for the customers that are migrating, existing customers, say, to advanced services or a combination of advanced services and Ping One, we are seeing an uplift as they make significant commitments to the journey to cloud with Ping. And once they make that leap, they start looking at our entire portfolio, of which 100% of our offerings are now offered as SaaS. And what is the impact in that case of, you know, up? maybe acv or what they're taking on up front is there a lift there or is it more kind of over a break-even period over a couple of years yeah um so brian i can give you a little bit of an anecdotal um uh you know some some something more anecdotal here because uh it's really difficult to do a like-for-like comparison because the the nature of the deals they just get much bigger And so what we are seeing is almost a doubling of the ARR if you go from software to Ping One Advanced Services. Now, the reason why I kind of caveat that a little bit is because You know, there's puts and takes when a customer makes that migration, and there's more products and solutions that are in the bundle. So, you know, to the best of our ability, what we're seeing is that, you know, we're approaching 2X on a like-for-like basis.

All right, that's helpful, Kalar. Thank you very much.

For our next question, we have Brian Coley from Stevens. Brian, your line's open.

Hey, thanks for taking my question, and congrats on a great quarter. I wanted to ask about just the pace of new logo ads. You know, with the SaaS platform continuing to mature, you know, and the channel expanding, and channel partners playing a bigger role, should we expect the pace of new logo wins to accelerate in 2022? And then also, you know, should we expect the mix of new ARR coming from new customers to increase this year as well?

I'll take at least the first part of that. So we are beginning to focus now on our new logo and customer ads now that our SaaS platform is approaching a level of maturity. So unquestionably, we do believe that new customers beginning their journey are often starting in the cloud. And so having 100% of our capabilities in the cloud makes us increasingly competitive to be in every deal. In prior years, we would get eliminated if we didn't have all of our capabilities offered at SaaS. So the answer is absolutely, we are A, focused on it, and B, expect to see improvement on new customer acquisition as a result of SaaS. The second part of that was channel. We've been very strong with the systems integrators, helping customers both succeed and deploy, and facilitating during the sales cycle, but not necessarily introducing us into the sales cycle. So as our channel program has matured, so too has our metrics. We don't KPI now or look at influence, channel influence. Now we look at channel source as our sole metric. And there are two areas or two types of channel partners that we are very optimistic about. The first one is the GSIs, and we have a growing set of relationships with the large global systems integrators. And the second are the are essentially the VARs. And we have a growing number of relationships on that side of the equation as well. They're kind of both ends of the typical deployment integrators we had, both upstream, the large advisors, and then I'll say kind of downstream focus on moving product in the VARs. So we are making investments on the channel from both of those directions. That combined with our SaaS maturity leads us to want to look at the growth and invest in the growth, which you're seeing us doing at the beginning part of this year.

Got it. That's helpful. Thank you. And then just as a follow-up, I was wondering if you could provide an update on how your efforts are going to expand more down market with the Global 3000? I mean, are you seeing improving success there? And are there any penetration stats you could share on what that penetration looks like today versus, say, a year ago?

We're not sharing the penetration stats, but as we've reported before, we do have a growth team focused on the cohort of customers below the 3,000. So when we say G5,000, this is roughly companies of $500 million in revenue or greater. And that team that we've had now for over two years, had an exceptional year last year. As a matter of fact, a lot of our new logos came from that team last year. Again, as our cloud product has matured, it's made us increasingly both optimistic and wanting to invest in our ability to go downmarket. Now, when I say downmarket, don't think SMB. These are all solidly enterprises, to be clear. They're just enterprises below the G3000.

Right. That makes sense. Well, I appreciate the time. Thanks for taking my question.

Thank you, Brian.

For the next question, we have John Weidenmaier from William Blair and Company. John, your line is open.

Hi. Yeah, this is John Weidenmaier for Jonathan Hough. Thanks for taking our question. Very strong quarter. A lot of my questions have been answered. A lot of our questions have been answered. But sales cycles, can you talk about the sales cycle recently, the last quarter or two, how it's compared historically, and the extent to which you might see that change if you're investing in going through the channel more, et cetera, over the next two to four quarters?

Sales cycles have been improving throughout 2021. Again, partially as a result of a maturing channel organization that has been essentially trained both in how to sell our solutions as well as how to deploy our solutions. as well as the SaaS sales cycle and the digital land is just a different motion than we've traditionally experienced. We've also invested pretty heavily in sales enablement that has improved the tooling, the demos, and the POCs. that has also materially improved the sales cycle. The last piece to this is that DaVinci is a game changer for us in terms of how we POC and demo our technology. We can now do in hours what used to take legitimately weeks, if not a month or more, in terms of delivering a very targeted, very personalized, demonstration of all of our technology orchestrated, you know, into the same environment look and feel of what the customer is looking to actually accomplish. And we can do that with drag-and-drop ease. We've never been able to do that before. I believe that's going to have a material impact on sales cycles and win rates.

Excellent. Thank you for the elaboration. And it sounds like, well, certainly it sounds like my last question is on investments in sales and marketing. So clearly you're going to be investing in channel and change your comp structure. I'm curious, it sounds like you've done a lot of investing in process and such. Do you anticipate more investment this year in obviously continued process, but more process or more people or more channel? Can you just elaborate a little bit on that?

We've made a lot of investments in infrastructure and process to date. I think you're going to see a heavier investment on quota-carrying capacity and investments in the channel, and especially around channel marketing programs.

Thank you very much.

For our next question, we have Patrick Colville from DB. Patrick, your line is open.

Thank you so much for the question, and Congrats on a very impressive end to the fiscal year. Can I just ask about this channel? I mean, throughout the call, for me, there's a message that's coming out pretty loud and clear. It's, you know, channel, channel, channel. What has changed that, you know, now channel is so important and has been such a great vector for you guys that, you know, like if we had this conversation two years ago, you know, there's been this kind of slight pivot. You know, why is that? Is that customer buying behaviors change? Is that because the channel has kind of really leant into identity management just to help us, you know, understand why does this, you know, this real emphasis on channel now?

You know, if you go back prior to two years ago, Ping had played half court on the channel, speaking to it but never committing to it for years. And as our platform grew and the sophistication of our solutions grew, and as the size and commitment and duration by large enterprises grew, there was a moment in time to which it became very clear that Ping's ability to penetrate at the time global 3,000, much less global 5,000, that there was no way that we were going to do that alone. not at the size and scale and sophistication of the programs you know the companies were looking to undertake with ping and so really i'm going to point to two years ago we made a decision to not play half court we were going to be completely committed to the channel and as you know that's a that's a couple of year journey at least when you make that decision um we had to build a team And we had to train the channel. So I would say that we have certainly moved towards the channel driven by a commitment to the channel. That's number one. Number two, I would say the channel has come towards us because they also see in the market that the scale of these zero trust, customer experience transformations that these large enterprises are undergoing, that they're significant. And there just aren't providers like paying dedicated to them with proven solutions that they know that they can succeed upon for years to come. So it was our commitment to them starting a couple of years ago. It's the market maturing and then coming to us based upon our platform and the success that we demonstrated with large enterprises that they see in their accounts. So all of that has matriculated to this moment in time to where now we are seeing that we are beginning to see the results of that commitment.

That's truly helpful. And when we talk about the channel, are we talking about global systems integrators or, you know, is – is the kind of VAR channel also important? Just help us understand, like, you know, where is the focus in terms of the channel? And, you know, and if it is, you know, mostly systems integrators, are we talking about, you know, the kind of big four or, yeah, just kind of any color to kind of double-click in that space would be truly interesting.

Historically, we've been in kind of the more regional or national integrators. In the last 12 months, as you would say, the big four, it actually extends beyond the big four, but I like that vernacular. The big four had definitely come to ping and are now making significant investments to train their teams and to train their sales force on our solutions. And at the same time, well, I would say, especially in the last six months or so, a number of very significant bars have come to us and said that they want to represent our products. So to both sides of the national integrator that Ping has traditionally been strong with, those are companies focused on identity and identity integration on both sides, both up to the big four and in the channel. They have come to us. And we are now building and responding with programs that will essentially enable them to sell our solutions. Great. That's very clear. Thank you so much.

For our next question, we have Ben Schmitz from Piper Sandler. Ben, your line's open.

Hey, guys. I'm for Rob Owens. Thanks for taking our questions. First, really strong net new ARR in the quarter with, I guess, more than half of that from SAS. But looking at the quarter-over-quarter increase in SAS revenue, I guess we would have expected to see a bit higher conversion there into revenue. Is that a function of linearity in the quarter, or how should we think about that?

Yeah, keep in mind that, you know, your ARR is going to outpace your revenue, right? That's kind of the core thesis around the ratable model. So the more bookings you have later in the quarter, to your point, around linearity, you know, a lot of that doesn't reveract in the actual quarter. But you do get visibility into that going forward.

Makes sense. Okay. All right. great year over year growth in million dollar customers um wondering if we can add some color to the sas penetration and the cyan penetration into that that cohort of large enterprise customers is that still a big conversion opportunity for sas or do we already see a lot of sas deployments in that group and and cyan as well wondering about upsell capacity there

Well, the larger the deal, the more apt they are to have Ping One advanced services. That's typically emblematic of larger deals. You've also got some element of hybrid deployment, so they may also have software in there. And certainly the customer use case, which has been growing faster for us as we're highly differentiated there, we've been investing there, and customer budgets are also going there. So there's still plenty of room for us to penetrate our customers with additional solutions around that. the cloud and around the customer use case. But certainly, you know, when we think of bigger deals, a lot of them do center around the customer use case and ping on advanced services or SaaS parity solution. Yeah, I would imagine that being – I was just going to say, once you're north of a million, If you were one use case, chances are it was a customer-focusing use case. Keep in mind, 25% of our customers use us for both workforce and customer. So I'm sure a lot of those have now expanded from one use case to both, and they're essentially using the platform as a unified platform for both use cases, which is also kind of a unique differentiator of the way we've designed the platform.

Got it. Thanks, guys.

Sure, Ben.

For our next question, we have Alexander Frankreich from Raymond James. Alexander, your line is open.

Hi. Thanks for taking my question. I just wanted to double-click on PIN1 DaVinci for a second. I was wondering, you know, kind of how customers are using it, how adoption is moving. I know you said it helps improve concepts, but this is kind of also how it sort of stacks up against Okta workflows.

Yeah, so this was the acquisition of SingularKey, and we did announce two wins in Q4 that we attribute the win essentially to the strength of the DaVinci platform. When we've spoken about DaVinci becoming foundational to our platform, we really mean it. We think that the future will hold every prospect and every future customer that is attempting to integrate identity to create an experience a secure experience for their customers and workforce are going to begin and end by wanting to design essentially a flow, a workflow, if that makes sense. And so one of the things that we really liked about SingularKey, now DaVinci, was their focus on an integration layer that sat above every identity, product, and service. By the way, it even extends beyond that, but I'm just going to focus on the identity in products and services. So they had 100 existing out-of-box connectors to multiple providers of nearly every piece of technology that sits within the identity stack. So it's extremely strong as an integration tool. not just for Ping, but for customers leveraging Ping, trying to integrate other legacy or cloud technologies into an overall experience for their end users. The speed with which you can do that in DaVinci is really pretty unbelievable. I don't think that we've seen, for the sales engineers here at Ping, I don't think I've seen them more excited about any one technology in the history of the company in the last 20 years. and it's because they can go into any complex environment and design a solution with nearly drag and drop ease demonstrate that to the customer you know in a matter of hours it will play a significant role in our go-to-market fantastic um and then just kind of one last thing on um increasing increasing liquidity

Do you have any targets in mind in terms of M&A? Are you looking for more technology or adding to revenue? And then sort of just what type of technology you might be looking at here?

Well, I don't know that we're going to divulge that on our M&A roadmap and strategy, but if you look at the history of purchasing, we definitely haven't acquired any revenue, inorganic revenue per se. We are building a platform. We're not building a collection of companies that serve the identity market. A unified cloud platform that is cohesive in our ability to control identity from login to log off and everything in between We believe that customers will perceive that value when we do the hard work of integrating that technology into a single platform so they don't have to do it. And so we have – I will say this, however. The acquisitions that we've made over the course of the last 18 months have largely realized the vision of an intelligent identity platform that leverages risk and fraud signals to strongly authenticate any user – to appropriately authorize that user into any environment and to have that entire thing orchestrated with no code or low code. So said another way, the acquisitions that we've made largely complete the vision of a real-time identity control plane that can be integrated, you know, with extreme ease relative to the way it's been done with legacy systems.

Fantastic. Thank you.

For our next question, we have Austin Iwoki from CISO. Austin, your line's open.

Hi, thanks. This is Austin Iwoki on for Adam Borg. Maybe just a quick one from me. Maybe for Andre on the international front, where are you seeing the most success internationally, and where do you envision investing the most in calendar 2022?

Well, we have efforts both in EMEA, headquartered out of the UK, and we have efforts in Australia. Both of those markets have performed well for us. We're not done in either one of those markets, so we continue to invest both in EMEA and our Australian efforts. There has been some conversations now kind of in the APAC region. I won't go into details of where we're looking to expand, but let's just say we still have growth opportunity in both of those primary markets. and we'll continue to invest in both of those markets. Great. International revenue right now is 24% of our revenue in Q4. That is up 41% year over year.

Awesome. Thank you very much.

And we don't have any further questions at this time. I'll hand it back to Andre Durant from Closing Remarks.

Yeah, thank you. So that concludes today's earnings call. In summary, 2021 was a really exciting year of growth acceleration for Ping, and especially with regards to maturing SaaS platform, as we spoke about here today. We look forward to continued growth in 2022, and we'll keep you updated on our progress as we move throughout the year. Thank you, everyone, for joining us.

Ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.