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Reviewing some of the financials of this new IPO
Okta (OKTA) is one of the poster children in the high growth/high valuation space. These days, identity management is considered to be a necessity and not an option. Okta has grown revenues at rates of more than 50% since it has been public. The results last quarter were far above prior guidance in terms of both revenues and operating margins. Last quarter, the company achieved a 1300 basis point improvement in non-GAAP operating margins. Free cash flow was marginally negative, but RPO (remaining performance obligation) grew by 68% year on year. Needless to say, the upshot of such fantastic performance has been a fantastic valuation which has made it difficult for me to recommend the shares. I find it more or less impossible to recommend the shares at an EV/S of more than 24X - and that is where they now sell. But optimism and hope spring eternal as the saying goes.
But this is not an article about how good Okta is or about how overvalued it might be, but about an alternative investment to Okta that has a strong offering in the identity management space called Ping (PING). Before I go any further - buying PING shares is not a strategy of finding an equivalent to OKTA for less. I will discuss the differences between the two companies and they are significant. And regardless of anything else - I have no expectation that Ping will overhaul Okta in the near future. It did report 45% revenue growth in its first quarter as a public company, although its ARR growth was around 23% - but I would suggest that forecasting a longer-term revenue growth rate
