Hot off the press this am:https://www.fool.com/investing/2018/03/10/looking-for-the-ne...What is Okta?Okta (pronounced Ahk-ta), defines itself as the leading independent provider of identity security for enterprise. In plain English, the company makes products that enable users to securely connect to the platforms, websites, and devices they need to conduct their business. With its central product, the Okta Identity Cloud, the company handles things like password protection and connectivity so executives, employees, and customers can stay seamlessly connected and integrated, saving organizations time and money.Okta pioneered identity in the cloud, and was named a leader by both Gartner and Forrester Research for Access Management and IDaaS (Identity as a Service). Among its customers are JetBlue, 20th Century Fox, and Linkedin. Since its IPO last April, the stock has gained 81%, with revenue jumping 62% last year as the company recruited new customers and expanded it relationship with existing ones.That word "security" leaves a recent bad taste in many investors mouths with many disappointing returns from the likes of Fireye, etc.What should we know about Okta.....its TAM, its competitors, etc.?Already a $4 Billion market cap with P/S of around 16 and TTM revenue of around $260 million.Here are the recent earnings slides:https://seekingalpha.com/article/4154327-okta-inc-2018-q4-re...It has really run hard since that breakout at $31:http://www.stockta.com/cgi-bin/analysis.pl?symb=OKTA&cob...If it retraced, that would be the better entry IMO.Any initial thoughts?For example, why are they are guiding 2019 for only 34% growth vs this years 62%.....why the deceleration?
My primary concern with OKTA and with Altyrex is that their products are relatively inexpensive. Altyrex does have an average “land” of $100k. OKTA gets between $1 and $4 per month, per user, depending on the package chosen for each user.Okta stock will go down when Amazon or Microsoft makes some announcement that they may better compete. But then it will recover.Past experience has shown me, and past experience is not always applicable to the future, that high growth stocks like this, that have small revenues, and each customers provides relatively small revenues, tend to get up to a high valuation and then stays in stasis for quite a long while as the market thought ahead, but the smaller revenues per customer tends to make it difficult to move the needle much thereafter.IF there is a $28 billion TAM for Altyrex, and Altyrex, as an example, wants us to know that they may be, becoming the standard, kind of difficult to to that when their revenues are 1/20*.10 ofthe total market! Who else is out there filling these needs. I would rather know the SAM.Okta is much more clear cut. Any employee who has access to data at their work. This is most everyone, possibly excluding janitors and drivers and the like. There is also the possibility of Okta moving into eCommerce to help create the goal that SHOP says they want, of frictionaless, one click or no click shopping across the web. That would be a huge opportunity.So good to dig through all of this and get to the gist. Obviously I view these companies, not so much to take a “position” but to be a major shareholder in the business (no, not in the context of Okta, but in the context of my holdings). Thus I both get excited, entrepreneurally, and then more picky.In this context, Okta is much lower risk. They have more than 2x the revenues of Altyrex, much more definable market and history and we know its competitors. It will probably merge with SailPoint I think, and perhaps in the not so distant future. Okta is the clear leader in the space. A space that is not the most difficult nut in software to crack, but one that is a terrible nuisance and that can be catastrophic, as we saw at Equifax, so that any business of any scale needs a service such as Okta provides. And there is no other vendor who provides all that Okta provides; particularly now with its partnership with SailPoint. As to valuation...have not looked that close yet. I do not know why they are guiding down to 35%. Seems they all are guiding downward to 30-35%. Just ask PSTG. ANET did even worse. 25-30%.I really think they do not have visibility that far out and are mostly taking good guesses on the conservative side.As for ANET. Only expected news, as ANET does not make much, is litigation news with Cisco. Trial scheduled in August on Arista’s lawsuit against Cisco on antitrust I believe. Judge in patent case wants an update on when or when not he can move the case forward and to do so needs to know which patents are still relevant for the suit going forward as the patent office nullified a patent. There you go, all the news fit to type while sitting on top of the friendly family commode.Good day.Tinker
There you go, all the news fit to type while sitting on top of the friendly family commode.Exactly where guys do their best thinking....LOL.
Tinker:I am not so sure OKTA is a great investment at this time.Looking at various articles, I see that “identity and access management” is expected to grow 13% CAGR to $15 Billion in 2021.....that part looks OK but:Just seems odd to me that they would be reporting a rather marked deceleration in revenue at this early time.On top of that, the stock has run up dramatically with a very high P/S in the face of that revenue deceleration......not a good combination IMO. P/S of 16 in the face of decelerating revenue growth......ugh.There is also some serious competition in CA, ORCL, MSFT and IBM but I get that these don’t really offer a cloud solution. But there is much more concern recently about AWS and its SSO product.....this being the largest cloud provider by far (47% market share) and offered for free to AWS customers.I thought this article and the accompanying blog post on SSO was particularly concerning for OKTA:https://seekingalpha.com/article/4131403-okta-competition-aw...SSO is free and it has very similar functionality. Furthermore and importantly, this article states that switching away from OKTA is not that challenging or disruptive to a business......there isn’t the same stickiness that certainly one would have when we talk about databases.So in my initial cursory review, I think the bear case wins at this time including the following elements:1) The stock is very richly valued at a time when it is guiding a major deceleration in revenue growth2) AWS SSO product is free and this is the largest cloud provider by a VERY wide margin.....convenience has to be a factor as well.3) Switching costs and disruptions to a business are minimal4) The TA doesn’t apppear favorable in the near termFor me, not something I would invest in especially with so many, much more optimistic opportunities.
I am not real concerned with the competition. SSO is a commodity. Might as well do it for free on Amazon.the value add is everything else. Such as, what happens when an employee who use to have access to 10 applications, changes positions, and now has only needs 2 applications (and perhaps 2 different ones. What happens when you fire an employee, or use temp or contract help. you need ot account for this.What happens if an employee who use to use an app a few times a week, or only a short period of time each day suddenly starts using the application for many hours a day, every day.What happens to employees working in Ukraine, Moscow, Shanghai, Cuba, wherever security is a big issue (lets ignore a certain former presidential candidates atrocious examples). There are also regulations that need to be met in some very large industries such as the medical industry with HIPAA and other regulated industries.There are a bunch of details like this and more that Amazon does not and will not cover. Microsoft largely secures its own apps. And that does give them an in, but if you want the above and more, in the cloud, you pay the premium to go with Okta.All this said, I have not decided to go with either of the two SaaS companies at this time. More excited with MongoDB.But lots of work to do, wine to drink tonight.Tinker
Hey Tinker!I tried to recommend above post but fat finger hit Report. I don't see a way to unreport it.So sorry!!!Natasha
Hey Tinker!I tried to recommend above post but fat finger hit Report. I don't see a way to unreport it.So sorry!!!Natasha---Hey Natasha,I thought I would send you this email aka Secret Electronic Communique (SEC)cause I thought your post was funny, and to let you know not to sweat it, cause I report almost all of Tinker's posts. Not really out of malice, just to get him wound up. He takes it out on tamhas, so it's all good.Don't share this with him though, ok? It will be our little secret.-Dreamer
Tinker,I'm curious why you like Mongo better than Okta ?Okta to me seems to fill a real need with a TAM of pretty much every company who needs to manage employee access to many different cloud-related applications. Sure, MS can use their AD-based SSO, and AWS can (claim to) integrate your on-prem AD with their SSO for AWS. But that still leaves all the other things employees need access to that aren't covered by those two solutions. And there are lots and lots and lots of them. Not to mention that it's apparently trivial to integrate home grown apps into Okta using their API.But I get the impression that Mongo is limited to those doing big data analysis. While still a big market, not everyone is doing that. And there's less stickiness to Mongo's solution from what I can tell than there is with AYX. Anyone could come along with a new version of hadoop, or, come out with whatever the next hadoop is, and where will Mongo be at that point? I suppose AYX theoretically faces a similar problem. Or ANET. But AYX and ANET seem like they have stickier products than Mongo does. Whereas Okta solves a huge pain for pretty much any company using the internet and I don't see anyone else challenging them in that area.Just my $.02. I really want to like Mongo, I just don't see the growth trajectory yet. Maybe that's me.--Paul
Grrr, wish there was edit.The above was meant to be addressed to Duma not Tinker.--Paul - who should just quit for today.
Rather ironic thread title today......for some of us, I would say.
One of my employers uses Okta. Basically we use it as a central place to log in for multiple different apps (email, compliance videos, etc).Honestly, it's not awesome. I don't see what separates them from anyone else, and it's just another login with a capital letter and least 3 special characters/numbers that I need to change every 3 months that I forget and have to reset.I'm sure I'm missing something, and yes they do make it slightly easier, but not so much so that I would recommend my company paying for their service to make things easier for their users.
What the Fool indicates is that it is a land and grab. They open with the easy stuff and then upset to the more complicated stuff, as explained in a previous post of mine that may have been linked to on this thread.Honestly, I'd rather own Shopify because it is too early to say the "next" Shopify, as Shopify is just in the 3rd inning, if that, as they are newly started internationally, in B2B, and Shopify Plus is a new emphasis.Okta does handle complicated things when you get into their higher end stuff, and they will probably merge with a current partner (name I currently forget) and become THE player in the field. so worth watching.It is the consumer end that is the unknown quantity that causes the next Shopify. I am not at all clear if Okta really has much of a consumer facing presence yet - although they made an acquisition a year or so ago to enable them to provide access services in eCommerce to consumers (the sort of thing Shopify is already doing - without them). But perhaps they have something in the app store for Shop or Demandware or Magento.Tinker
How is Okta better than a vpn with two step verification? With two step verification they send you a code and you put your code in front of the second code and log in. It's very easy and very secure because the log in code is always changing. I really do not understand what is the big deal with Okta? Andy
Andy you will need to read my more complete post on the thread linked to in this thread I believe. What you are referring to is a commodity bare basic security protocol.Tinker
Fuma, I think your post echos my concern ... there are an awful lot of firms doing various parts of the security issue and it is hard to see that any of them really stand out ... they may be fashionable for a while and grow dramatically from a small base, but whether that growth will continue seems questionable.
Your right Tinker, Okta is much more comprehensive. Thanks.Andy
Tinker:I stand by my posts in the earlier part of this thread. The stock is up around 10% since I started this thread and I must admit this chart looks really good:http://www.stockta.com/cgi-bin/analysis.pl?symb=OKTA&cob...But how do you justify a P/S of 17 yet with their decelerating revenue guidance for 2019?Something doesn’t add up and the switching costs are apparently not that drastic. Lofty stocks can stay up for some time obviously but this seems are higher risk investment at this level.....though technicals look fine.
“There you go, all the news fit to type while sitting on top of the friendly family commode.“Another clue that padded, heated toilet seats that spray wash you are going to be big big big. I lived in Río de Janeiro Brazil for 5 years as a kid and every bathroom had a bidé. I always thought it was for washing your feet. . .
Still TBD on Okta. But it does have some CAP. Tinker
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |