Okta puts out a report called Business at Work, that anonymizes their integration network usage and allows them to highlight what SaaS providers are taking off. I find it a super helpful presentation to watch for what companies are gaining traction. It comes out every year, and last one came out in January. See my report here: https://boards.fool.com/okta-business-work-2020-i-love-this-...Top winners for 2019 were:Snowflake (still waiting for it to IPO)OpsGenie (TEAM)Splunk (SPLK)... and down in 10th place, Zoom (ZM) ... who had now been in their top 10 fastest growers list for 4 years in a row. Well, Okta has clearly been getting introspective during this pandemic (see my recent Oktane20 reports), and decided to release a mid-year special edition since EVERYTHING HAS CHANGED.Okta Business at Work (at Home) 2020https://www.okta.com/businesses-at-work/2020/work-from-home/...They measured one month of growth of SaaS providers - March 2020. Zoom is number 1. An astounding 110% gain in unique users in March 2020. Meaning that on Mar 31, they had 110% more unique users that 30 days period than were in during the prior 30 day period.Imagine the scale and infrastructure needed for that number of users at the end of February... then double it over the next 30 days. Then imagine what April and May brought -- and all the months beyond that. Go back at that last 2019 yearly report in Jan, and see Zoom did 76% YoY growth in unique users for 10th place. They grew more in the month of March then they did in all of 2019. WebEx makes a respectable showing here in 7th place. But it pales in comparison to the new leader in video conferencing, with TRIPLE their growth (110% to 37%).Other takeaways: - Palo Alto and Cisco have had huge growth at #2 and #3 in the list. No doubt due to the suddenly scattered workforce whose traffic needed securing. Zscaler is a distant 15th place (with a still respective 14% growth in unique users in a month). This tells me Zscaler isn't able to stave off the big players, so they've been able to catch up. This pandemic is clearly a good thing for Zscaler and it's good it showed up here, but competitors are gaining more users by magnitudes. This reduces the luster on Zscaler, IMHO. It's had a serious gain from its lows, and I'm not exactly sure why.- Surprising lack of the top 2 in annual report, Snowflake and OpsGenie (TEAM); both had a huge 2019s but aren't showing up at all here. These popular data warehouse and incident mgmt tool might be wavering a bit in this environment due to reduced business spend.- DocuSign, Slack and Smartsheet all show up, in a show that they are clearly benefiting from this environment, and usage is exploding - gaining potentially a year's worth of customer growth in a month. - Further down the report is the section "Security: now more than ever". Attackers are proliferating in this confusing environment between pandemic and work-from-home. Security is an utmost concern for EVERY enterprise right now. (Of course, we already knew this would be the case -- if you've been paying attention since my Flavors of Security series last fall.) So don't fear for our cybersecurity-focused companies, as THEY ARE MORE INDESPENSIBLE THAN EVER. Crowdstrike, Okta, Cloudflare, and Zscaler (even though I was just harping on them) will continue to execute quite well in this environment.- They report a 667% increase in phishing attacks in March over Feb. Cybersecurity EDUCATION is also really important. Proofpoint is doing quite well, but especially their employee training division. First line of defense is making your employees aware of the dangers, and how to increase awareness enough to learn to identify attacks.- A GREAT trend for Okta is shown on the "Perecentage Change in Unique Users Authenticating with Each Factor" closing chart. Okta Verify, their MFA service, is on F-I-R-E, growing 80% in a month while other MFA factors grew less than half that. Okta's customers and users are clearly preferring Okta's inline solution over the other forms. The sticky company is growing even more sticky. Epilog:For those wondering, I don't think CRWD is a company that would ever show up on this report. It's is Endpoint protection, which is an agent installed on devices & systems. It isn't going to have huge numbers from Okta as its SaaS service is only logged into by cybersecurity staff & managers - not those with the devices.Same as for Datadog - only IT and developers are logging into that system. It isn't ever going to show up this report compared to platforms with millions of users like Zoom or Slack.-mujilong OKTA
Thanks mujiOne thought about ZS is that perhaps it's too early to be able to really tell the impact.ZS is a top down, C suite sales process, and it might take a little longer to show the impact as the full ramifications of WFH and future organisational plans are really hitting home. I don't know enough about PANW or CSCO products to compare, but they might already have a footprint in the organisations and are ramping up usage, while ZS represents a new approach...?It's not a "turn it on" easy onboard SAAS product like ZM TEAM or DOCUJust an idea.
Excellent write-up muji!Thanks for sharing that report.In my previous write-ups, there's perhaps a sense of enthusiasm when it comes to OKTA ( being my largest investment since 2017). The reason is that they are in a way a bellwether depicting the growth of the cloud computing space."- Surprising lack of the top 2 in annual report, Snowflake and OpsGenie (TEAM); both had a huge 2019s but aren't showing up at all here. These popular data warehouse and incident mgmt tool might be wavering a bit in this environment due to reduced business spend."This may be due to the rule that's being applied to measure the growth of the apps, which is "unique users logins per day". As OKTA mentions that the two areas ( collaboration tools and network security) showed tremendous growth; it's very probable that the apps in those categories pushed Snowflake and OpsGenie way down the list.And yes, I totally agree with you about why CRWD and DDOG don't show up. The numbers are based off unique user logins and not agents running on machines/endpoints.Another point to note is that this report is created from Okta's customers data. So the numbers you see here are a subset of the total growth numbers these companies are actually seeing...which could be really huge!Cheers!ron
- DocuSign, Slack and Smartsheet all show up, in a show that they are clearly benefiting from this environment, and usage is exploding - gaining potentially a year's worth of customer growth in a month.mujiDoes it seem reasonable to you to draw inferences regarding upcoming quarterly results for any of these three?There is a lot of info in the report and many companies are mentioned but not all will show earnings strength based on this usage data. In fact I see few if any clues in the report.
Muji, another great write-up. Thanks."Security: Now more than Ever."Let's take the Education vertical for example: I wonder if the IT decision makers (not in tech companies) turn on Zoom based on demand from their stakeholders. It is easy and fast and cheap to implement, all the stakeholders know about it because of the constant reminders in social media and in the public at large, and the demand is urgent. Then there is a phase of catching up--making the distance solution(WFH, Study From Home, consult a lawyer/nurse/doctor/accountant/financial advisor ... from home) more robust, adding better security for example. Or adding bandwith (TWLO, VZ ...).And they'll be a second wave, that follows the ZOOM wave, of growth in OKTA, ZS, CRWD etc.And this pattern would repeat through each vertical.regards,Bill
Great find and commentary, muji.They measured one month of growth of SaaS providers - March 2020. Zoom is number 1.I think it's important to point out that this is "Percentage Growth" of Unique Users, not Total Unique Users. Growth is good and important and all, but without knowing the base from which the user counts are growing, it's hard to compare them directly on some metrics.But, such absolute comparisons are available on their previous report, from Oct 2019: https://www.okta.com/businesses-at-work/2020/ By "Monthly Active Unique Users" (is this different or the same as the current report?) the Oct 2019 list is:1) MS Office 365then a HUGE gap2) Workdaythen a gap3) ServiceNow4) G Suite5) Salesforcethen a gap6) Box7) SAP Concur8) SAP SuccessFactors9) Zscaler10) Cornerstone OnDemand11) Slack12) Atlassian Product Suite13) Cisco WebEx14) ZoomSo if we factor in Zoom's recent 110% growth in MAUs and WebEx's recent 37% growth, it's for sure that Zoom has eclipsed WebEx in MAUs. The question remains, however, what that translates to if one is counting only PAYING MAUs. All of WebEx's are paying - what percentage of Zoom's, especially today, are? I wouldn't be surprised if WebEx still has more paying MAUs, but the question is whether Zoom's growth overall will translate into eventual paying MAUs as well. That is, after all, the investment thesis for Zoom, right?Muji points out that Zscaler grew much less (14%) than PA Networks GlobalProtect (94%) (a Firewall) and Cisco AnyConnect (86%) (a VPN). I think that's mostly a reflection of existing customers using the product more and not indicative of new adoptions, which would take longer the time period so far.It might be worth pointing out that this is traffic using OKTA's identity/access management. It is possible (I don't know how likely) that companies using other tools (Auth0, Microsoft, Duo Security, etc.) may be leaning towards different applications and thus the results are skewed. I know of nothing to indicate this is happening, but it would be interesting to know of particular company tie-ins that might skew these results.Muji also noted: Surprising lack of the top 2 in annual report, Snowflake and OpsGenie (TEAM); both had a huge 2019s but aren't showing up at all here I think Okta sums this actually not surprising behavior up in its Oct 2019 report:This year’s fastest growing apps show us that apps tend to grow in category waves. A few years ago the #1 fastest growing apps — Slack and Zoom — focused on collaboration. Winners from the past two years were security-focused Jamf Pro and KnowBe4.One thing that I wonder about is how OKTA separated AWS, GCP, and Azure from the applications that run on them. For instance, we know Zoom runs mostly on AWS (with a new deal with Oracle that hasn't taken over, at least yet, see https://www.businessinsider.com/aws-andy-jassy-zoom-mostly-r... ), so how does Okta decide which Apps to count as Apps and which to count as AWS? Is it they count anything in-house developed as AWS and anything commercial as that commercial App, or something else?One final note: I've been tracking Snowflake for a while now. I know Frank Slootman (the CEO) from his days at Data Domain (eventually bought by EMC) and ServiceNow (in which I'm a happy investor), and so with him involved in Snowflake I gotta believe that company is going to do very well and hope it goes public relatively soon so I can grab a piece.
- Further down the report is the section "Security: now more than ever". Attackers are proliferating in this confusing environment between pandemic and work-from-home. Security is an utmost concern for EVERY enterprise right now. (Of course, we already knew this would be the case -- if you've been paying attention since my Flavors of Security series last fall.) So don't fear for our cybersecurity-focused companies, as THEY ARE MORE INDESPENSIBLE THAN EVER. Crowdstrike, Okta, Cloudflare, and Zscaler (even though I was just harping on them) will continue to execute quite well in this environment.- They report a 667% increase in phishing attacks in March over Feb. Cybersecurity EDUCATION is also really important. Proofpoint is doing quite well, but especially their employee training division. First line of defense is making your employees aware of the dangers, and how to increase awareness enough to learn to identify attacks.Thanks muji! You posted a real gem there! Yes, security is indespensible but all companies in the world are on notice that having the ability to instantly revert to WFH even after the lockdowns end is of upmost importance. For this reason, the security companies and other companies that make it possible to have a seamless transition from the office environment to WFH is a MUST. Therefore, the coronavirus tailwinds for companies that enable remote working are not fleeting; the tailwinds will stay with us even after the virus is gone.Chris
App FOMO: the need for best-of-breedWhile companies’ finance teams might be tempted to go all in on software suites, the reality is that their stakeholders aren’t willing to sacrifice the functionality provided by the top-ranked apps. We see customers increasingly “double dip” by purchasing best-of-breed apps in addition to bundles.Popular office suite bundles generally include tools for personal productivity, communication, collaboration, and content management. We looked at whether companies that invest in the Office 365 suite — the most popular app in our network — find it meets all their needs. We looked at whether deploying Office 365 means they commit to an exclusively Microsoft environment. The answer is increasingly “no”: the overlap of companies that deploy Office 365 and also invest in best-of-breed apps continues to grow.This best of breed trend is really important to factor in. Choosing the wrong tech component creates a ton of tech debt in organizations.I think this is why you Zoom and Slack doing well with Office 365 customers, because it's well known that Teams is not a best of breed product. Recently, I have seen this where a competing product to Tableau (formerly DATA acquired by Salesforce), was chosen. This competing product did not work as well, and it was a 6-month project to replace it with Tableau. Also, seen where there was a competition to chose between Auth0 and Okta. Auth0 was chosen, and I believe it was a mistake in retrospect. There's also the advantage that workers in the enterprise want to use best of breed. So it looks much better on a resume, to say that you worked with Tableau and Okta as opposed to SAAS products which are lesser known.The growth in OpsGenie is an encouraging sign for PagerDuty I believe. PD is best of breed for it's category.
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |