All AI companies need our cybersecurity services: Okta CEO

Okta (OKTA) beat first quarter earnings estimates and lifted its adjusted earnings forecast from $2.24-$2.29 to $2.35-$2.40 per share. The company’s CEO, Todd McKinnon, joins Market Domination to share insight into Okta’s earnings and how to stay relevant in a choppy market environment while maintaining a “prudent” view.

“You have to be providing something that’s going to be valuable despite what’s going on in the broader economy or what’s going on in the tech trends of the of the moment. So right now we’re everyone’s figuring out what they’re doing with AI. And guess what? Identity management plays a role in AI. We’re the login for OpenAi’s ChatGPT,” McKinnon tells Yahoo Finance.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Nicholas Jacobino

Video Transcript

Lifting its full year adjusted earnings forecast after topping for first quarter estimates.

However, the company says it’s taking quote a prudent approach to guidance and in a challenging macro environment here to discuss is the co founder and Ceo Todd mckinnon, Todd.

It’s great to see you.

Thanks for being here.

Thanks for having me on Julie.

It’s great to be here.

So Todd, I’m really curious to get your uh sort of temperature check on that macro environment.

You know, we have been talking a lot about sales force today.

We’ve been talking about the enterprise spending environment.

What are you seeing in your business?

I think there’s definitely some headwinds in the macro environment, particularly if you compare it to a couple of years ago where the environment and spending and scrutiny of deals and so forth was quite frothy.

I think we’re seeing a more measured approach now, particularly in our business in the small and medium business sector.

Uh On the positive side, though in the large enterprise sector, we’re seeing good momentum, the million dollar plus cohort of customers is our fastest growing segment of customers.

And it’s been that way for a few quarters now.

So I think there’s some economic uh prudence and measured spending environment, but overall, we’re seeing pockets of uh strength as well.

So, so, Todd, if the macros kinda um you know, choppy here, how are you all responding?

What leverage are you pulling to navigate that?

Well, there’s all kinds of tactical and execution of things and it’s the lost on this.

I think the companies that can do well in this kind of environment are the companies that are good at just down and dirty execution.

They’re good at uh communicating with customers.

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They’re, they have good customer relationships.

They’re, they’re selling basic things that work and provide value for customers.

And we’re trying to get that back to basics, playbook and doing an effective job at that.

And then also you have to be providing something that’s gonna be value valuable despite what’s going on in the broader economy or what’s going on in the tech trends of the, of the moment.

So right now we’re, everyone’s figuring out what they’re doing with A I and guess what identity management plays a role in A I, we’re the login for open A is chat GP T and all of these new A I services are gonna need login and they’re gonna need security and all the new uh tools that enterprises deploy to their work are gonna need great security and great log in and we’re gonna be uh right at that, that nexus between people and technology and so we’re very relevant in any environment.

So, Todd, you guys did raise your forecast, but uh a lot on the street are calling it conservative.

How hard and fast, I guess, should they take that forecast?

Can they expect potentially some upside?

Well, we look at it in both terms of length.

So in the short term, we’re being prudent and we think that given some of the macroeconomic choppiness, we’re, you know, our guidance is, is prudent and it’s ju justifiably so, but in the long term, we’re very bullish.

We think that the entire tech market and the entire uh identity management market is a massive market.

Every company needs identity for their employees, for their customers and they need to make sure it’s all secure and more and more identity is the key to security.

And so in the long term, we’re very bullish on our total addressable market opportunity and our ability to address that over time, Todd, I gotta ask you, um if you think there’s been any kind of uh lingering fallout from that October security incident because it sounds like Todd, what you’re saying is, you know, no impact to the installed base.

I’m wondering if you think though there’s been any challenges because of that to acquire new business?

Yeah, we’re, we’re one of the most attacked companies in the world and, and because of the critical role we play in the technology ecosystem and every month we block about 2 billion cyberattacks against us and our customers.

Uh but in October, we did have an issue and we’re working really hard to make sure that we address the concerns customers have.

And more importantly, we go on a go forward basis.

We’re leading the industry in the fight against these kind of identity based attacks.

We call it the Octa secure identity commitment.

And that messaging is really resonating with customers because they want a vendor they can trust, but they also want a vendor they can learn from.

And as we go through the process of hardening our corporate infrastructure, making sure our products are secured by default.

Our goal is to be the model that every customer will expect of all their vendors.

And we’re off to a good start and uh we’re dedicated to con continuing on this trip.

We need to make sure we’re the most secure company in the world just to push on that though, Todd.

You know, I mean, listen, you all have uh competition.

You know, it’s, it’s Microsoft, it’s smaller vendors.

I’m just curious whether you think that that breach gave your rivals your competition an opportunity there to capitalize.

Well, I think competitively uh it’s it is very important that we execute well and that we differentiate from the competition.

I think a couple of things we have going for us there.

One is that some of the competitors you just mentioned who had their own breaches and just demonstrating that uh how difficult it is when you’re a prominent leader in an industry, um how, how much you have to focus on it to stay robust and secure.

And then also just how the hardening process that goes through something like octave being an industry leader for years and years and years, how robust and secure the company that’s been tested, can demonstrate and come out at the end of it.

It’s pretty differentiated, especially from competition that’s smaller or more of an upstart that hasn’t gone through that hardening.

And we’re seeing that resonate with customers as well.

I know most, most CEO S we speak to say, oh, we don’t pay much attention to the stock price, but it must be somewhat frustrating to come.

Yeah, exactly.

It must be frustrating that, you know, come out with these numbers.

You see the stock drop, you guys are down a little more than 2% year to date.

You know, what do you do in a situation like that?

What if they’re lying?

Like, tell us what you’re thinking about it.

I mean, you, you do have to think about what’s going on in the business that’s contributed to that long term journey.

And that long term path I started active 15 years ago.

So there’s been a lot of ups and downs and I, I take a step back and I think about think to myself in this last, in this last quarter we signed a very significant uh deal seven figure deal in the public sector with uh part of the US Department of Defense.

And I think to myself, five years ago, 10 years ago, 15 years ago, you know, imagine signing something like that and it really keeps you grounded in what’s possible over the long term.

And although you do look at the stock price and you, you definitely rather have it go up than go down.

You can take a step back and see big milestones like that.

You get excited for the next 15 years, Todd.

Thank you so much for taking the time to join the show today.

We appreciate it.

Happy to be here.

Thank you.