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Okta (NASDAQ: OKTA) is a cybersecurity platform that helps companies verify the identity of employees, contractors, and customers. Cybersecurity has been a hot-button issue in tech over the past decade, and Okta is approaching the problem from a new angle, solving it for a rapidly growing customer base.
The company's stock price has been on a tear since it went public in 2017. Okta debuted at $17 per share in its IPO, and just two years later, the stock trades at a price exceeding $130 -- that's more than seven times the IPO price!
Will the stock's momentum continue? Signs point to yes.
The identity cloud
Most cybersecurity companies focus on creating a firewall between a network and the outside world. However, in a cloud computing world in which people are on the go and use multiple devices and connections to access a network, firewalls have become increasingly difficult to administer.
Okta has taken a different approach, which it refers to as identity management. In Okta's security paradigm, identity is the key to trusting users. According to the company, 81% of cybersecurity breaches can be traced back to stolen or weak user credentials.
The company's identity management product works by enabling people to securely access a network via a multifactor verification and sign-in process. This sign-in method can effectively stop most unauthorized log-in attempts. Once logged in through Okta's verification gateway, a user can access the applications and resources they have been granted access to. This includes network folders, cloud-based applications, communications tools, and more.
Okta refers to its flagship platform for identity management as the "identity cloud" because it enables users to log in from anywhere using any device to seamlessly and securely access the resources they need. The company's largest source of revenue today is enabling an organization's employees and contractors to securely access company resources, but Okta has also enabled businesses to use the identity cloud to verify customers.
The solution to significantly reduce incidents of cybersecurity breaches through better identity verification is both simple and powerful. Okta's platform provides an effective solution that has the promise to save organizations a lot of money in fraud prevention. Based on the company's reported growth figures, customers appear to see the value in Okta's solutions.
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Executing on growth
Like with many other recent initial public offerings, Okta's investors are primarily betting on sales growth. The company has laid out a growth strategy that involves signing up new customers, expanding relationships with existing customers, and growing internationally. So far, the growth strategy appears to be working.