Okta recently released their 10K filing for the 2019 financial year with the Securities and Exchange Commission. The following contains references to that document unless otherwise stated.

Introduction

Okta is a cloud based identity and access management provider, who went public in April 2017. As per the filing, they describe themselves as:

…the leading independent identity management platform for the enterprise. Our vision is to enable any organization to use any technology, and we believe identity is the key to making that happen. The Okta Identity Cloud is our category-defining platform that enables our customers to securely connect the right people to the right technologies at the right time.The Okta Identity Cloud helps organizations effectively harness the power of cloud, mobile and web technologies by securing users and connecting them with the applications they rely on.

SEC 10K Filing, March 2020

Some initial key facts:

  • Okta has 7950 customers, with 1450 having a total contract value of more than $100,000 (as of January 31st 2020)
  • Major technology partners include Amazon Web Services, Atlassian, Cisco, CyberArk, Google Cloud, Microsoft, Proofpoint, SailPoint, ServiceNow, VMware and Workday
  • Okta has over 6500 technology integrations
  • SaaS business model, with multi-years subscriptions (average of 2.6 years in length)
  • Two main focus areas – identity for workforce and identity for consumers
  • Only 16% of total revenue is attributable to countries outside of the United States (International)
  • 16 US issued patents
  • 2248 employees

The Okta’s product set ” …can be used for both customer identity and for workforce identity use cases. Our workforce identity products are consumed through web and mobile interfaces, and provide simple ways for IT organizations to manage identities for their employees, contractors and partners. For customer identity, our APIs are also used by developers to embed Okta identity functionality into their own customer-facing mobile or web applications. We continuously improve the Okta Identity Cloud through the release and development of additional products and features.”

They breakdown their products into the following distinct areas:

  • Universal Directory – centralised, cloud based system of record for people and things
  • SSO – single sign on to on-premise and cloud based applications to improve security and user experience
  • Adaptive MFA – additional security for mobile and web applications, that are either cloud or on-premises, that is driven by an adaptive security framework
  • Lifecycle Management – management of the user’s identity from cradle-to-grave
  • API Access Management – managing the security of API’s via standards based approach
  • Advanced Server Access – cloud infrastructure protection for likes of AWS, Google Cloud Platform and Microsoft Azure, using continuous and contextual controls
  • Access Gateway – cloud extension into the on-premises world to protect API’s and services

Go To Market

Okta leverages a direct and indirect sales model – “we leverage our land-and-expand sales model to generate incremental revenue, often within the term of the initial agreement, through the addition of new users and the sale of additional products.”

A typical 3 tier support model is provided, along with professional services under a “SmartStart” initiative to rapidly on-board new customers.

They list Microsoft as their principal competitor, although acknowledge other providers in the authentication, life cycle management, MFA and Infrastructure as a Service space, as also competing with them.


Revenue

Revenue growth over the last 3 fiscal year ends, has been extremely positive, with year on year growth between the end of fiscal 2018 to 2019 growing at 56%, and between 2019 and 2020 at 47%.

Revenue is only one half of the story it seems, with the declaration that “We have incurred significant net losses in each year since our inception, including net losses of $109.8 million, $125.5 million and $208.9 million in fiscal 20182019 and 2020, respectively.”

Okta sales are done via an annual (typically multi-year) subscription model, with a focus on retention and renewal – “Our dollar-based net retention rate declined from 120% as of January 31, 2019 to 119% as of January 31, 2020”.

Irregardless of revenue and loss ratios, the following stock earnings graphic from the filing, show of significant growth, in comparison to the S&P 500 index.

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