With Secular Tailwinds Behind Its Back, We View Okta as a Leader in the Identity Security Space

We believe Okta is poised for long-term financial success as a leader in the identity and access management, or IAM, space. Okta’s Identity Cloud, which weaves together the firm’s workforce and customer offerings, stands to grow in importance to its clients as zero-trust security infrastructures, digital transformations, and cloud migrations increase the company’s value proposition. However, we assign Okta with a no-moat rating as we don’t foresee excess returns on capital in the next few years. Yet, we believe Okta has a positive moat trend as the firm’s platform, impressive number of integration, and a broad range of SKUs have allowed the business to be on the cusp of generating high customer switching costs and a network effect.