- The identity-management company Okta has grown rapidly as more people work from home, and it’s now worth over $28 billion.
- Okta makes cloud software to manage people’s online identities and is best-known for its workplace login tools that manage employees’ access to corporate cloud software.
- However, its service that allows companies to add identity tools to their websites and apps is growing rapidly — 72% last quarter.
- CEO Todd McKinnon says that business is its own $25 billion market and tells Business Insider it has the potential to be even bigger for Okta than its flagship business login software.
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The identity-management company Okta has grown rapidly since the pandemic began, as businesses around the world need secure login systems for their employees who have suddenly shifted to working from home. After exceeding Wall Street expectations in its earnings last week, it’s now worth over $28 billion — and still sees a big opportunity ahead.
Okta makes cloud software to manage people’s online identities and is best-known for what it calls its “workforce-identity” tools. These allow companies to manage many employees’ access to many corporate cloud services. However, Okta has another business it calls “customer identity.” These are tools that allow companies to embed passwords, authentication, and other identity-management services into their apps and websites.
This second business is quickly gaining traction: Customer-identity tools accounted for 24% of Okta’s $200 million in revenue for its second quarter that ended on July 31, which is a 72% increase for that unit from the same quarter a year ago, CEO Todd McKinnon told Business Insider in an interview after reporting earnings. While Okta doesn’t break out these numbers, a little back-of-envelop math puts that unit at about $48 million last quarter.
McKinnon said this unit was nowhere near its peak and could be even bigger than Okta’s flagship software.
“Customer identity, it can be bigger than workforce. It could be more than 50% of our revenue,” he said.
To give that statement some context, Okta is on track to grow revenue by about 37% for its current full year, forecasting between $800 million and $803 million, it said last week.
During the earnings call, the company said it saw the total market for its workplace identity-management software as $30 billion, but it pegged another market for customer-identity software at $25 billion.
McKinnon said he believed his company was in a good position to capture plenty from both of these markets. But the reason he’s so bullish on the customer-identity unit is that he believes most companies are past the work-from-home panic stage caused in the early days of the pandemic, he said.
They’ve figured out how to work remotely and have secure login and identity management, among other remote-working necessities. Now companies are looking to improve the digital experience for their customers, and that starts with making sure their websites, mobile apps, and other customer touch points are secure to access. He sees the customer-identity part of Okta’s business benefiting from that right now, he said.
Long term, he thinks identity management will be one of the major cloud technologies all companies will have to use, he said. He said he believed there would ultimately be five or six cloud types of technologies that CEOs will care about, including collaboration, infrastructure, customer-relationship management, financial planning, and identity.
And identity doesn’t just mean employee passwords. It means securely managing access and control for both employees and customers, putting consumers and companies in control over their data and digital lives.
“For us to reach our potential, every organization in the world, the leaders, the CEOs, and the IT people need to think of identity as one of the primary clouds in their environment,” McKinnon said. “Today, frankly, we’re not there. People don’t think of it like that.”
He said he believed that leaders of any company still using old-school on-premises technology or homegrown systems to manage their employee and customer passwords, as well as access to apps, websites, and IT services, would come to see cloud identity management as a core technology they need. And that’s how Okta will get “gravity” for its customer-identity software to become a must-have technology a company needs to go digital, he said.
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