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Okta product announcements to add $15B of addressable market: CEO

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Todd McKinnon, Okta CEO, joins Yahoo Finance’s Kristin Myers to discuss Okta’s latest product announcements, business outlook, and Oktane21 annual conference.

Video Transcript

KRISTIN MYERS: Let's talk now about user identification and security. The software at Okta has created some new products, and we're joined now by Okta CEO Todd McKinnon. So Todd, I want to start with these new products that Okta has out-- identity governance, privileged access. How do these products really complement the current suite of products that Okta has? And what will it do for growth for the company going forward?

TODD MCKINNON: Well, first of all, thank you for having me on, Kristin. It's great to be back on the show. Okta is about helping everyone safely use any technology. And we do that with our Identity Cloud products and platform. And they really-- a simple way to think about it is they connect people to the technology they need to be productive, whether that's at work, all your business app, or whether it's our customers using the Identity Cloud to connect their customers to their mobile apps and websites.

So a good example is JetBlue.com. JetBlue.com users log in through Okta to get to that website. And these product announcements this week are a very important rounding out of this platform approach. There's two product announcements. And together, these product announcements add $15 billion of addressable market for Okta. The two products are privileged access management. This is about the very sensitive privileged accounts, server administrators, database administrators. These are the things, if the hackers get in, this is where they go. They go to download the information. They go to steal it. And privileged access allows the Identity Cloud to really lock down all those privileged accounts a company has.

Identity governance is all about visibility and giving our customers complete 360 degree view of all of their identity access capabilities and present it to their auditors and their executives in a simple-to-view report with workflows making sure it's all tied down and locked up and gives them that complete confidence that their identity posture is what it should be.

KRISTIN MYERS: All right, you're not alone in this space. And we have seen some of the growth numbers slow just a little bit for Okta. I mean, how critical was it for the future of your company, for the success, and for some of those revenue numbers, for you to add on some of these products and to push into this space even more?

TODD MCKINNON: Our growth is very strong. Last year, the fiscal year, we just finished back in January. We reported 43% growth for subscription revenue. And this is-- our company is coming up on a billion dollar revenue run rate. So the growth is very, very strong. When I look at these products and why we're excited about them, it's really about customers. Our customers need these products to round out their identity portfolio and their environments. And they want them from us.

They want them in a modern cloud first way, software for privileged access and identity governance that's not built with on-premise systems. And customers don't have to install it or manage it. They can just use it from the cloud, and it's pre-integrated with our network of over 7,000 integrations to connect to everything our customers have and solve these problems in a simple way that keeps them secure and keeps them compliant in their environments.

KRISTIN MYERS: I want to go back to you were mentioning that addressable market. I believe you said $15 billion for these two products. It seems as if especially with everything going virtual, everyone being-- thinking that cybersecurity is so paramount, it seems as if this addressable market just continues to grow and grow and grow every single year. I mean, how much do you see that market growing just over the next 5 to 10 years, especially as this emphasis moves on to that cybersecurity going forward?

TODD MCKINNON: Well, the market's massive, and it is growing. So the total addressable market for Okta is $80 billion. As I mentioned, $15 billion of that is for privileged access and for governance. But $65 billion of that is for workforce identity and access management, the core bread and butter that we've kind of grown up with. And then, from customer identity and access management, which is helping our customers connect to their customers.

So if you put these all together, what, really, you're seeing is that identity is critical. Identity is a primary cloud. Every organization has to have a good handle on all the identities, how they log into-- how the people log into different systems, how those systems get personalized, easy to use experiences, and how it's all done secure. Because every business is trying to get better technology to their employees, whether it's remote work, whether it's hybrid work back in the office now, or whether it's connecting more closely to their customers. And they do that through identity, and they do that with our suite of products. That's why the future is so bright and our growth rates are so strong.

KRISTIN MYERS: All right, now I want to talk about your annual conference, Oktane-- I absolutely love the name. Octane '21, of course, for this year. Obviously, things were done virtually. And I think I know I'm tired of doing things, everything through the computer. I know I'm not alone. How did you make it so that this conference wasn't boring, that people weren't just muting their computers, walking away? How did you make it so that people could stay engaged with you guys?

TODD MCKINNON: It's a challenge we're all facing. Everyone has computer fatigue. And in terms of customer events, they have virtual event fatigue. This is our ninth Oktane. And but it's our second one doing it virtually. We-- Oktane '20 last year was right after the pandemic started rolling through the world. And we reacted in a few weeks and pivoted to being a full online event, which is pretty challenging to do in three weeks.

And this week, we had an entire year to prepare. And we did something pretty unique. Instead of having another virtual keynote, where we were flipping through slides or just talking about the products for the year, we actually made and produced a documentary film. And your viewers can watch it on our website. If you go to oktane.com, you can see the making of Okta, the documentary film. And it's basically telling the story of this past year, the story of our company, the story of our customers. We have great customers that were interviewed for the documentary.

And then the story of us developing these products in a year that was-- you know, had a lot of challenges for people. But most importantly, it had a lot of people overcoming those challenges. And I think it was a good way to get our story out there in a format that was different and unique and took the viewer and the attendees through this narrative that ended up at the end, which is a company that was releasing these products and really had customers back and is a team that's galvanized around, really, the future coming out of this pandemic and coming out of this transition and moving toward the future.

KRISTIN MYERS: Absolutely, and I'm sure a nice change of pace for everyone as well that is tired of just seeing speech after speech after speech in front of their computer. Todd McKinnon, Okta CEO, thanks so much for joining us today.