Okta is aiming to grow, grow, grow -- and sees a long runway ahead to do just that.
The cloud software firm posted better-than-expected revenue for the fourth quarter, at $167.3 million, and a non-GAAP net loss of $0.01 that was narrower than estimates. Okta (OKTA) - Get Report shares were down 2.4% on Friday amid a broader stock market tumble tied to fears of economic damage from the coronavirus.
“We’re very proud of our financial results, but we’re just getting started,” Okta’s CEO Todd McKinnon told TheStreet.
Okta, which sells identity and access management software, aims to keep growing revenue by at least 30% into fiscal 2024. The company has not set a specific deadline for turning a profit, but McKinnon pointed to the positive free cash flow for Okta’s full fiscal year -- which came in at $36.3 million or 6.2% of total revenue, compared to negative $6.8 million, or 1.7% of total revenue for the prior year -- as evidence that it’s on the right track.
The company is capitalizing on the explosion in the total number of applications that organization use. McKinnon noted that one of Okta’s customers uses tens of thousands of apps across its organization. Okta’s products are designed to make it easier for a company’s employees, customers or partners to access the apps they need to use more securely.
McKinnon also believes that a growing trend of “app diversity” -- in which companies use dozens of apps to get work done -- helps Okta to both grow quickly and insulate it from competitors such as Microsoft (MSFT) - Get Report.
“Microsoft is probably our most important partner -- and they’re a competitor for sure, but they’re also an important partner,” said McKinnon. Microsoft’s Office 365 is the most-used app by far among Okta customers, according to the company’s internal data.
Within Okta’s customer base, the average number of apps used reached 88: that’s a 6% increase from 83 apps a year ago, and a 21% increase from 72 apps three years ago.
“In general, my observation is that investors underestimate the complexity of customers’ environments by quite a lot,” McKinnon added. “If you look at our data, 77% of our customers who use Office 365 also use Slack, Zoom or another best-in-breed app. [Microsoft does] have a competing product, but we’ve found that it seems to be pretty oriented on Microsoft technologies. That’s basically why we’re able to compete effectively with them.”
The company sees a long runway ahead for growth ahead as businesses continue to onboard new apps and products, and believes that demand for Okta's products will remain high for years to come.
“We want to connect everything, and it’s very different from Microsoft, which is thinking about getting customers from Windows 10 to Office 365 to Azure,” McKinnon said.
The Okta CEO said that he had not seen any impact to Okta’s financial results or outlook from the ongoing coronavirus outbreak.
However, the company did take Oktane, its annual customer conference, online this year. Several other tech firms, including Facebook (FB) - Get Report, Google (GOOGL) - Get Report and Nvidia (NVDA) - Get Report, also nixed the in-person portions of upcoming conferences in the Bay Area, where several coronavirus cases have been reported.