Insights

Why Ping Identity Stock Skyrocketed Today

What happened

Shares of Ping Identity Holding (NYSE: PING) soared out of the gate on Wednesday, surging as much as 60.2%. As of 10:29 a.m. ET, the stock was still up 59.8%.

The catalyst that sent the cybersecurity and identity solutions specialist higher was news the company is being taken private.

So what

Ping Identity announced that it would be acquired by technology-focused private equity firm Thoma Bravo in an all-cash deal valued at $2.8 billion. Ping Identity shareholders would receive $28.50 per share, a 63% premium compared to the stock’s closing price on Tuesday. 

The deal will require shareholder approval and the blessing of regulators. Once completed, Ping will be a private company and will no longer trade on the New York Stock Exchange.

In a separate press release, Ping announced its second-quarter financial results. Total revenue of $72 million declined 9% year over year, resulting in a loss per share of $0.34. Analysts’ consensus estimates were calling for revenue of $73.2 million and a loss per share of $0.12, so Ping missed on both counts.

Ping Identity also had negative free cash flow of $8.4 million, highlighting the company’s struggles. The financial results weren’t all bad, as annual recurring revenue (ARR) increased 22%. The company’s dollar-based net retention rate was robust, at 114%. Its client base also generated solid growth, as customers with more than $250,000 in ARR grew 19%.  

While investors might have otherwise panned the results, the company’s performance was clearly overshadowed by the deal to take the company private.

Now what

The digital transformation is ongoing and businesses continue to migrate data to the cloud, so identity management solutions have become more important than ever. “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.”

The acquisition has already been unanimously approved by Ping Identity’s board of directors and is expected to close in the fourth quarter. Given the generous buyout premium and barring unforeseen complications, the deal is all but done.

Danny Vena has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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