One of the hotter IPOs this year was the April debut of Okta (NASDAQ:OKTA). Cybersecurity and cloud-based environments are major opportunities these days, and Okta's Identity Cloud offering is the leader in identification and authentication for enterprises, especially those that work in the cloud or hybrid environments.
Okta products streamline the identity login function for corporations -- a big deal since so many companies now operate remote offices around the world. And while it faces competition from the likes of Microsoft and IBM, Okta is formidable in cloud security, integrating with over 5,000 corporate applications. Moreover, it works across different cloud vendors, allowing enterprises to avoid "cloud lock-in" -- the challenge of moving from one cloud provider to another.
Recently, the company announced two initiatives that could be essential to its long-term investment story -- here's what's new with the cloud security leader.
Partnership with Palo Alto Networks
On Aug. 30, Okta announced a partnership with Palo Alto Networks (NYSE:PANW), integrating the latter's network security and Minemeld analytics platform with Okta's identity and authentication platform into one seamless product. The integration will simplify the combined offering and allow for the automation of lots of security functions, giving corporate security professionals a better experience and saving them precious time.
This could be a win-win for both companies, as Okta will gain a valuable partner in Palo Alto, which has over 42,500 customers and has been adding new ones at a rapid pace. Meanwhile, Okta only had 3,100 customers as of its April IPO.
In return, Palo Alto will gain an industry-leading authentication offering, which will allow it to offer a wider range of services to its customers. This could help Palo Alto in head-to-head competition with companies such as Cisco, which tends to offer a complete bundle of security services along with its networking and software products.
Pursuit of the consumer
While Okta has already built a successful business connecting employees to corporate applications, the company recently announced its intention to be the secure log-on technology for consumer-facing retail and banking applications, too. Okta believes its technology can help companies provide an easy-to-use, yet secure login system for customers and suppliers. While the corporate sign-on addressable market is measured to be about $5 billion, this new consumer opportunity would be much larger. In its S-1 Registration, Okta stated that the external-facing, consumer market is still developing, but it expects the opportunity to occupy a "meaningful portion" of the combined $120 billion markets for custom application development and cloud software.
Of course, you may be thinking, "I can already sign on to my banking app." That's true, and many corporations have built their own login security systems. However, Okta is betting that companies will find its products more scalable in the cloud versus building their own systems in house. Okta currently charges $2 per user per month for enterprise login capabilities, but since those likely require more functionality than the consumer market -- which is also much larger -- Okta can attack this opportunity with competitive pricing.
With added credibility from the Palo Alto partnership, Okta is looking to establish dominance over legacy enterprise service providers and upstart competitors. Moreover, if it makes inroads with the larger external-facing market, the company can better sustain the impressive 60%-plus growth rate on its top line. If it wasn't already, Okta should be on every growth investor's radar.