ForgeRock Stock Forecast & Analysis

Written by Sean GraytokUpdated: 7th May 2022
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ForgeRock will be the latest cybersecurity to go public in 2021 — will it skyrocket like its peers?

Let’s find out in the ForgeRock (FORG) Stock Forecast and Analysis.

ForgeRock Stock Forecast: Background 

ForgeRock is a cybersecurity company that specializes in identity and access management (IAM) for enterprises.

The company “helps make the digital economy possible” by supporting billions of identities across the connected world.

The company was founded in 2010 in Norway but has since shifted its headquarters to San Francisco.

ForgeRock Stock Forecast: Investment Potential

Demand for cybersecurity stocks is rising to facilitate the digital transformation and other technological trends.

Statista projects the global cybersecurity market size to reach $345.4 billion by 2026, representing a 7.72% CAGR from here.

And while the information security sub-segment (where ForgeRock operates) represents a small portion of this market, it is still growing significantly. It grew over 12.4% in the last year alone.

The companies that are fueling and benefiting from this growth are cashing in — there’s been a wave of cybersecurity IPOs in the past few years.

  • 2017: Okta (OKTA), increased 38% on IPO day, up +1000% all-time
  • 2018: Zscaler (ZS), increased 106% on IPO day, up 758% all-time
  • 2019: CrowdStrike (CRWD), increased 71% in IPO, up 327% all-time
  • 2021: Knowbe4 (KNBE), increased 51% in IPO, up 9% all-time
  • 2021: SentinelOne (S), increased 21% in IPO, up 50% all-time

Will we see a similar performance from ForgeRock?

#2. ForgeRock’s Strong Financials

ForgeRock revealed some strong financials in its S-1 filing with the SEC.

ForgeRock reported $115 million in annual recurring revenue (ARR), representing a 30% year-over-year increase.

Wall Street loves ARR because it means the company has predictable streams of revenue. This also allows the company to strategically plan for the future and execute growth initiatives with less risk.

In addition to ARR, a key metric for SaaS companies is the dollar-based net retention rate. This number indicates a company’s ability to retain existing customers based on their spending.

ForgeRock reported a 113% dollar-based-net retention rate in 2021, meaning that not only are customers coming back each year, but they’re spending more when they do.

Quantifying customer satisfaction reduces the hoopla of misleading marketing and other compensatory shenanigans. It really puts your money where your mouth is.

ForgeRock has a small customer base, but the ones they do have to spend money. Over 350 customers spend more than $100k annually.

This base has contributed to ForgeRock’s hockey-stick growth YTD.

In the first six months of 2021, revenueincreased 53.2% year-over-year to $84 million. Revenue growth over the same period in 2020 was 22%.

Over the same six-month period, ForgeRock shrunk losses from $35 million in 2020 to $20 million in 2021.

ForgeRock’s financials are … rock solid.

#3. Online Identities

We believe that online identities are going to be a major part of cybersecurity’s growth in the coming decade.

As people spend an increasingly large percentage of their days online, we expect governments and corporations to become even more interested in the real-life identities of web users.

Domestic and foreign adversaries’ rise of dis- and mis-information campaigns will be seen less as ‘trolling’ and more as ‘cyberterrorism.’

Just like you need a driver’s license to drive, you might one day need a digital ID to use certain parts of the web or access services provided by the state or a given corporation.

An extreme version of this is China’s social credit system, which was implemented in 2019 to monitor and encourage certain behaviors of its citizens.

Australia is pursuing similar measures to combat internal dissent. Its federal government plans to “de-anonymize the internet” to introduce a social credit system to combat “online abuse.” Australian police will have access to individuals’ social media accounts, which will be linked to people’s passports.

We expect the U.S. to adopt a less intrusive version of these initiatives.

It will probably start with corporations like Facebook (FB) and Twitter (TWTR) removing anonymous accounts and requiring ID verifications to use their platforms.

Eventually, similar practices will trickle into other parts of society.

ForgeRock specializes in the technology that powers these services.

#4. ForgeRock’s Partnerships

ForgeRock has formed strategic partnerships with some of the best companies in the world: Google (GOOG), Amazon (AMZN), and Microsoft (MSFT).

The Google Cloud and AWS partnerships allow customers to easily add ForgeRock’s identity capabilities to their cloud environments.

Leveraging the reach of the largest cloud providers makes ForgeRock the industry’s only full-suite identity platform offered as a service.

Frictionless deployment is crucial for the company to grow its user base.

Additionally, ForgeRock joined the Microsoft Intelligent Security Association (MISA) to strengthen the security posture of users and devices in Microsoft environments.

As you can see, the FAAMG stocks are giving their stamp of approval on ForgeRock’s platform.

ForgeRock Stock Moat

ForgeRock is exceptional at something that is not easy to do — a technical moat is a good start for differentiation.

Only a handful of companies deploy cloud-based Zero Trust identity solutions, and ForgeRock is one of them.

Combine high barriers to entry in an unsaturated industry with an estimated $71 billion TAM?

Sounds like ForgeRock is well-positioned.

ForgeRock Stock Analysis

Unfortunately, the only version of ForgeRock’s stock that we can analyze is private. However, the company filed its S-1 on August 24th and plans to list on the NYSE in Q3.

The IPO is being led by J.P. Morgan Chase with a $4 billion valuation, a significant increase from its post-money raise just last year that valued the company at $730 million.

ForgeRock’s latest round was a $93.5 million Series E led by Riverwood Capital and Accenture Ventures.

Since its founding, the company has raised a total of $233.7 million across five rounds of funding.

ForgeRock Stock Top Competitors

Let’s meet ForgeRock’s top competitors in the IDaaS arena:

  • Okta (OKTA)
  • Ping Identity (PING)
  • SailPoint (SAIL)
  • CrowdStrike (CRWD)
  • Zscaler (ZS)
  • Microsoft (MSFT)
  • IBM (IBM)
  • Oracle (ORCL)
  • Salesforce (CRM)
  • Darktrace (OTCMKTS: DRKTF)
  • Cisco Systems (CSCO)

Okta (OKTA) has a commanding presence in the IDaaS market and is ForgeRock’s top competitor.

The larger cybersecurity companies, like Zscaler (ZS) and CrowdStrike (CRWD), currently partner with IAM vendors like Okta and Ping Identity, but the future of these relationships are unclear.

As they continue to expand, they might attempt to vertically integrate more of their own platforms.

Relationships in the cybersecurity industry are complex, much like the semiconductor and fintech spaces.

Many of these companies are frenemies.

Forecasting The Risks

#1. Revenue is Highly Concentrated

Revenue concentration is one risk to consider when investing in FORG stock. The company has just 1,300 customers.

This makes ForgeRock more vulnerable to churn, or the rate at which customers stop doing business with a company.

Granted, ForgeRock is still a small corporation — we expect it to organically add customers as it matures and establish an antifragile user base.

But it will nonetheless have to answer the ‘PalantirQuestion:’ can its products and services scale or is it a low-margin consultancy?

#2. Okta

ForgeRock will face fierce competition from Okta, the market’s distinct leader in identity solutions.

Okta is approximately 10x the size of ForgeRock, and the company is not messing around — Okta recently acquired one of its top competitors, Auth0, in a $6.5 billion all-stock deal.

However, Okta was facing similar questions just four years ago.

It was going public at a $1.5 billion valuation with mounting losses and buyout rumors ahead of its public debut.

FORG Stock Allocation in Your Portfolio

Here’s a mix of secular and competitor-based questions to help you decide on your ForgeRock allocation:

  • Is the growth in cybersecurity stocks sustainable in the long term?
  • Which level of focus attracts you to ForgeRock? More cybersecurity exposure or its position amongst other IAM stocks like Okta or Ping?
  • Are identity access management companies safe from Big Tech?
  • Does online surveillance from institutions and governments increase or decrease over the next decade, and what role will ForgeRock play in that, if any?
  • Can ForgeRock sustain its high dollar-based retention rate? Does it have to increase?
  • Is a cybersecurity ETF a better investment?
  • ForgeRock made a significant revenue jump from 2020 to 2021. Can it do the same into 2022?
  • Can ForgeRock reduce the current friction of onboarding new customers?
  • Will ForgeRock expand its marketing and sales department to acquire new customers?

We believe there is plenty of room for healthy competition in the growing markets of IAM and cybersecurity.

ForgeRock Stock Forecast: FAQs

Is ForgeRock going public?

ForgeRock is going public sometime in Q3 2021 and plans to list under the ticker symbol “FORG” on the New York Stock Exchange. It will be the latest in a string of cybersecurity IPOs in 2021.

Who are ForgeRock’s competitors?

ForgeRock’s competitors include Okta (OKTA), Ping Identity (PING), IBM (IBM), Microsoft (MSFT), Cisco Systems (CSCO) via Duo, and SailPoint (SAIL).

Is ForgeRock a good company?

ForgeRock is a good company to consider for those seeking exposure to growing cybersecurity stocks. It is an industry leader in identity and access management (IAM) solutions, among other identity-related services.

Bottom Line: ForgeRock Stock Forecast

The secular tailwinds in cybersecurity are kicking into gear, and we don’t expect them to slow down any time soon.

Buying ForgeRock stock in 2021 is a chance to get in on the ground floor of an increasingly essential technology.

This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we researched ForgeRock stock. 

Sean Graytok
Sean Graytok

Sean Graytok is our Co-Founder and leading expert in investing and financial management. His work has been cited in leading industry publications, such as InvestorPlace and Business Insider. Sean is interested in the people and technologies that are improving the world.