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2 Key Quotes From Okta's Third-Quarter Earnings Call


Okta (NASDAQ: OKTA) recently reported some impressive results for its third quarter of fiscal 2019. Revenue surged 58% year over year -- a slight acceleration from Okta's revenue growth in Q2. This was driven by a 42% year-over-year increase in customers, including 100 new customers with an annual contract value of $100,000 or more. More importantly, the enterprise identity-management company reported positive free cash flow for the first time.

But there's still more from the quarter to dissect. During the company's earnings call following its earnings release, management discussed a range of notable topics. Two key ideas from the call worth reviewing are Okta's big market opportunity and its early progress with ThreatInsight.

Okta's Single Sign-On product

Image source: Okta.

The trifecta of Okta's opportunity

Okta management frequently references the growing imperative for identity solutions as organizations move their businesses to the cloud. But what does this mean, exactly? Okta CFO Bill Losch said this growing market for Okta's solutions ultimately boils down to three transitions many businesses are going through:

  1. A journey to cloud-based data and applications.
  2. Improved customer engagement through technology and mobile apps.
  3. Greater prioritization of digital security.

Together, these transitions create a significant and growing market for Okta.

Losch explained:

As these transitions unfold, organizations are recognizing the critical role that identity must play in their environments. And while cloud, digital transformation, and security are top priorities, most organizations are still relatively early in their journeys to realize their full potential. We believe Okta's opportunity will grow alongside all three of these transitions as they continue to mature over time.

ThreatInsight: A promising product

Okta improved its overall value proposition to clients earlier this year with the release of Okta ThreatInsight. The product taps into insights from thousands of customers and partners and then provides those insights to customers so they can make informed decisions to improve security.

Okta CEO Todd McKinnon summed up the product in the company's third-quarter earnings call.

Because we see so many customers and so many logins, we can detect threats across the entire ecosystem and then we can expose that threat intelligence back to individual customers and let them configure policies in Okta that would make certain decisions based on those threats that are relevant to an individual customer.

Fortunately, the product is doing "very well," McKinnon said. "We are continuing to roll it out, and uptake has been very positive... [I]t's a very powerful capability that's being well-received by the customer base."

There were plenty of insights in the call , of course, but these were some of the most interesting takeaways.

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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Okta. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




This article appears in: Personal Finance , Stocks
Referenced Symbols: OKTA



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