Okta (OKTA) beat first-quarter earnings expectations, raising its adjusted earnings forecast to $2.35-$2.40 per share from $2.24-$2.29. The company's CEO, Todd McKinnon, appears on Market Domination to share insights on Okta's earnings and how the company is staying relevant while maintaining a “cautious” view in a volatile market environment.
“You have to provide something of value, regardless of the overall economy or current technology trends. So now everyone is thinking about what to do with AI. And guess what? Identity management plays a key role in AI. We're OpenAi's ChatGPT login,” McKinnon told Yahoo Finance.
For more expert insights and the latest market trends, click here to watch this entire episode of Market Domination.
This post Nicholas Jacobino
Video Transcript
The company raised its full-year adjusted profit forecast after beating first-quarter expectations.
However, the company says it's taking a cautious approach to its guidance in a challenging macro environment, and here to discuss is co-founder and CEO Todd McKinnon.
Nice to meet you.
Thanks for coming.
Julie, thank you so much for having me on the show.
I'm glad I'm here.
So, Todd, I want to get your thoughts on that temperature check on the macro environment.
You know, we've been talking a lot about sales talent today.
We've been talking about the corporate spending environment.
What's going on in your business?
I think there are certainly headwinds in the macro environment, especially compared to a few years ago when there was a lot of heat in the environment, in spending, in transaction scrutiny.
I think we are starting to see a more cautious approach among businesses, particularly in the small and medium-sized enterprise sector.
On the positive side, we are seeing good momentum in the enterprise sector, with the $1 million+ customer base being the fastest growing customer segment.
And that has been going on for several quarters now.
So I think there's some economic prudence and a cautious spending environment, but overall, we're also seeing strength.
So, Todd, how do you guys react when your macros are a little shaky?
What steps are you taking to overcome it?
Well, there are various tactics and ways of executing, but this is what's being lost.
I believe that the companies that will thrive in this type of environment are those that are good at steady execution.
They are good at communicating with customers.
They have good relationships with their customers.
They sell basic products that work and provide value to their customers.
And so we're taking it back to basics and creating a playbook and trying to do an effective job.
And they must continue to provide something of value, regardless of the broader economy or current technology trends.
So now everyone is thinking about what to do with AI. Think about what role identity management plays in AI. We're Open A is Chat GP T login, and all these new AI services need login and security, and all the new tools that companies bring to their work need good security and login. We're really at that point, the nexus between people and technology, and it's super relevant in any environment.
Todd, you've raised your expectations, but many people are saying you're being conservative.
How seriously should they take the predictions?
Can we potentially see some upside?
Well, I look at it from both perspectives, length.
So in the short term, we are being cautious and our guidance is cautious and rightly so given the macroeconomic uncertainty. But in the long term, we are very bullish.
We think the whole technology market and the whole identity management market is a huge market.
Every business needs identity for their employees and customers and they need to make sure everything is secure, identity is the key to security.
So, long term, we're very optimistic about our total addressable market opportunity and our ability to respond to it over time. Todd, do you see any lingering impacts from the security incident in October? It sounds like what you're saying is that the installed base is unaffected.
But do you think that has presented any challenges in attracting new business?
Yes, we are one of the most attacked companies in the world, and because we play a critical role in the technology ecosystem, we block approximately 2 billion cyber attacks against our company and our customers every month.
Well, we had an issue back in October, but we've been working hard to address our customers' concerns.
And more importantly, we keep moving forward.
We are leading the industry in fighting these types of identity-based attacks.
We call this the Octa Secure Identity Commitment.
And that message really resonates with customers, because not only do they want vendors they can trust, they also want vendors they can learn from.
And as we go through the process of hardening our corporate infrastructure, we are ensuring that our products are secure by default.
Our goal is to be the model that all customers expect from all vendors.
We are off to a good start and are committed to continuing this journey.
But in order to drive that, we need to ensure that we're the safest company in the world, Todd.
I mean, listen, you guys have competition.
You know, it's Microsoft, it's a small vendor.
I just want to know whether you think that the violation gave rivals an opportunity to take advantage.
Well, competitively, I think it's very important to execute well and differentiate yourself from your competitors.
I think there are some advantages for us.
One, some of your competitors that you mentioned have had their own breaches, showing how hard it is to focus on remaining robust and secure when you're a recognized leader in your industry.
We also think about the hardening process that goes through companies like Octave that have been industry leaders for years, the companies that have been tested to demonstrate how robust and secure they are, and ultimately, how well they deliver.
It's very differentiated, especially compared to smaller competitors and start-ups that haven't gone through as much hardening.
And we know that it's resonating with customers.
Most CEOs we speak to say they don't pay much attention to stock prices, which must be a little frustrating.
Yes, that's right.
You know, it must be frustrating to see these numbers coming up.
As you can see, the stock price has fallen. It's down just over 2% so far this year.
So, what would you do in such a situation?
What if they were lying?
Like, tell me what you think about that.
That means thinking about what's going on in the business that's contributed to that long-term journey.
And that long-term path is something I started working on 15 years ago.
There's been a lot of ups and downs, but if you take a step back and think about it, in this last quarter, we signed some very significant seven-figure contracts in the public sector with the Department of Defense.
And I imagined five years ago, 10 years ago, 15 years ago, signing a contract like that and thinking it would give us a solid sense of what's possible in the long term.
When you look at stock prices, you would think it would definitely be better for them to go up than down.
You can take a step back and look at those big milestones.
Todd, we're excited for the next 15 years.
Thank you so much for joining us on the show today.
appreciate.
I'm happy to be here.
thank you.
