Okta CEO: ‘Our Neutral Choice Is Going To Win Out’ Vs. Microsoft
The company’s recently launched identity governance offering, meanwhile, has ‘exceeded expectations’ and has ‘all the markings of a hit,’ Okta CEO Todd McKinnon said during the company’s quarterly earnings call.
Okta believes that its approach to offering a “neutral” option in identity — which isn’t sold alongside applications themselves like some of its rivals — will ultimately “win out” versus competitors such as Microsoft, co-founder and CEO Todd McKinnon said Wednesday.
While Okta’s aspiration is undoubtedly to become the “one-stop shop for identity,” McKinnon said, the company stands out from some other vendors in the space that are selling both identity security and the applications that are leveraging authentication.
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There’s significant value for customers in “having an independent, neutral partner there that will give them choice of technology and not lock them in,” McKinnon said during the company’s quarterly call with analysts.
“Our differentiation there against any platform provider — whether it’s Microsoft today or another major platform tomorrow, that wants to be broader in identity — our independent neutral choice is going to win out,” he said.
McKinnon made the comments as Okta reported financial results for its latest quarter that crushed analyst expectations on profitability and released a stronger outlook, leading to Okta’s stock price to jump Wednesday.
Products seeing strong demand during the quarter included Okta’s recently launched identity governance offering, while the company also said its confidence about being able to grow profitably has increased looking ahead.
Since giving its prior revenue guidance three months ago, “our confidence in [our] ability to execute this year has, I would say, increased. So I think we’re turned in the right direction,” McKinnon said.
Revenue for Okta’s fiscal fourth quarter of 2023, ended Jan. 31, reached $510 million, up 33 percent from the same quarter a year earlier. The top-line results beat the $489.36 million that Wall Street analysts had forecast for Okta’s quarter.
On earnings, the company reported non-GAAP net income of 30 cents per diluted share for its fiscal Q4, well above the 9 cents per diluted share that had been expected by analysts.
Okta’s stock price climbed 12 percent in after-hours trading Wednesday, to $80.10 a share.
‘All The Markings Of A Hit’
During the quarterly earnings call, McKinnon pointed to Okta’s recently launched identity governance capabilities as a major bright spot of its fourth quarter. While it’s still early for the Okta Identity Governance offering, which was released in North America in late November 2022, “it’s got all the markings of a hit. It’s exceeded our expectations,” he said.
Major customer wins during Okta’s fiscal Q4 was a deal with ChatGPT maker OpenAI, which turned to Okta “to support authentication for the rapid influx of people interested in using the tool,” McKinnon said.
Meanwhile, the strong quarterly profitability results came on the heels of cost-cutting measures including layoffs that affected 5 percent of Okta’s global workforce, or 300 positions, in early February. The layoffs came after “execution challenges” by Okta in prior quarters, McKinnon had said in an email to staff, as well as the broader economic downturn.
On the call Wednesday, McKinnon said he’s optimistic about Okta’s future now in part from conversations such as one he had recently with the CIO of a large global media company.
“They were telling me that, ‘Identity is one of our top three priorities at our whole company this year,’” McKinnon recalled. “There’s macroeconomic stuff, there’s structural stuff in their industry — but they’re still prioritizing identity. And that’s golden when you’re trying to build a company. If you’re building a company [and] you have that customer success, and that kind of focus, and that kind of mindshare — it can really give you a foundation to work through a lot of what may be short-term issues for long-term success.”