According to a Markets and Markets report, the identity and access management market is expected to grow at a CAGR of 12.9% from $8.09 Billion in 2016 to $14.82 Billion by 2021, driven by the demand for mobility and security solutions. The SME segment is estimated to be the fastest growing segment due to industrial growth in the Asia-Pacific, and the Middle East and Africa regions. Identity and access Management services provider Okta (Nasdaq: OKTA ) listed successfully last year and continues to do well.
Okta’s Financials
Okta’s identity management solution gets rid of duplicative credentials and disparate authentication policies to help organizations simplify and scale their IT infrastructures more efficiently. Its Identity Cloud offering allows customers to securely connect people to technology, anywhere, anytime and from any device. Okta Identity Cloud is integrated with over 5,000 apps, that enables simple and secure access from any device. Its customer list includes names like Experian, 20th Century Fox, LinkedIn, Flex, News Corp, Dish Networks, and Adobe.
Its third-quarter revenue grew 61% y-o-y to $68.2 million. Subscription revenue was $62.7 million, an increase of 64% y-o-y.
GAAP net loss was $33.8 million, compared to $21.9 million a year ago. Non-GAAP net loss was $18.6 million, compared to $17 million a year ago. Non-GAAP net loss per share was $0.19, compared to $0.89 a year ago. Analysts expected loss of $0.24 on revenue of $62.8 million
Cash, cash equivalents, and short-term investments were $223.6 million as of October 31, 2017.
During the quarter, Okta grew its paying customer base to over 3,950 organizations, including Caesars Entertainment, CBRE, City of Las Vegas, Eventbrite, Flight Centre, Groupon, Nordstrom, Restoration Hardware, and State of Arizona. Earlier this year, some customers including Benefit Cosmetics, Rent-A-Center, Rodan + Fields, Saks Fifth Avenue, and Wyndham Worldwide extended their investments in Okta.
For the fourth quarter of fiscal 2018, the company expects total revenue of $70 to $71 million, non-GAAP operating loss of $18 to $17 million, and non-GAAP net loss per share of $0.18 to $0.17. Analysts forecast fourth-quarter revenue at $67.9 million.
For the full fiscal 2018, the company forecast total revenue of $252 to $253 million, non-GAAP operating loss of $73 to $72 million, and non-GAAP net loss per share of $0.87 to $0.86.
Okta’s Startup Focus
Okta recently announced the launch of Okta for Startups. It offers the Okta Identity Cloud to entrepreneurs and small businesses for free for one year. They can use its employee- and customer-facing identity tools for up to 25 employees, contractors, and partners. They can also use Okta’s APIs as the identity and authentication layer of their customer apps for up to 25,000 monthly active users.
When I met with Okta’s co-founder Todd McKinnon in 2013, I was impressed by the way Okta was built by being in touch with its customers’ needs. Even then, Okta was never worried about bigger competitors like Computer Associates, IBM, and Oracle. It believes that while all of these players have identity management suites, their identity solutions have been assembled through several acquisitions. The big players never had a proprietary identity management system that was built for the Cloud. Okta, on the other hand, has been built for the cloud and mobile devices and acts as an “Active Directory of computing“.
It had raised $228 million from investors including Altimeter Capital, Janus Capital Group, Khosla Ventures, Greylock Partners, Andreessen Horowitz, Sequoia Capital, FLOODGATE, SV Angel, Maynard Webb, Dharmesh Shah, Stephen Marcus, Avid Larizadeh, Ed Roberts, Tom Berson, and Jacques & Sandra Kerrest. Its last round of funding was held in September 2015, when it raised $75 million at a valuation of $1.2 billion. In April last year, the company went public after offering its shares at $17 apiece, pegging its valuation at $1.54 billion.
Since then, its stock has shot up by about 70%. Its stock is currently trading at $26.35 with a market cap of about $2.69 billion. Great going so far!
Unlike some other Unicorns that have come into the public market and collapsed, Okta seems like a robust company with a solid value proposition. It is much more likely to sustain its valuation than many other recently public Unicorns.
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