Too Aggressive S&M Spending At Okta Could Turn Investors To Ping Identity
Summary
After the recent security breach at Okta made headlines, its smaller competitor, Ping Identity awoke the interest of the investment community.
With its recently perfected full-stack SaaS solution Ping has become a viable alternative to Okta in many segments of the identity and access management market.
Both companies have strong growth prospects accompanied by a very conservative valuation, which makes their shares an excellent medium/long-term investment at current levels.
Looking solely at current growth forecasts and valuations, shares of Okta seem to be a better investment decision. However, for those investors who are concerned about large losses and a possibly too aggressive sales focus at Okta, Ping Identity could be the better choice.
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Investment Thesis
As the security breach at Okta (NASDAQ:OKTA) enjoyed great publicity in the past month a small competitor of the company emerged on the map of investors and analysts. Ping Identity (NYSE:PING) has come a long way from pioneering identity and access management (IAM) in the early 2000’s to build out it’s SaaS solution for the cloud, which now directly competes with Okta’s services. After some analysts were of the opinion that Okta’s negative publicity could benefit Ping, I was curious how the two companies compare to each other.
The product offering of the two companies experienced increasing convergence in recent years, especially after Ping made all its services available as SaaS. According to independent third parties both companies offer high quality services being in the TOP 3 in the IAM space besides the solution of Microsoft. The IAM market itself is expected to grow dynamically in the upcoming years, which leaves both companies ample room to grow.
Looking at fundamental trends we see accelerating revenue growth on both sides for several quarters, with Okta growing significantly faster. However, this comes at the cost of rapidly growing losses and an excessive sales focus that could hurt customer satisfaction in my opinion. This could make Ping an attractive alternative for those investors, who are looking for more stability from an operations perspective. However, due to its shifting business model resulting from an increased SaaS focus, fundamentals of Ping are surrounded by higher than usual unpredictability on the short run.
Looking at current valuations I think shares of both companies provide a compelling entry opportunity, with the valuation of Okta being somewhat more attractive considering current growth prospects.
Ping Identity: The Pioneer Of IAM
Ping and Okta have started from very different roots many years ago, but for today they became head-to-head competitors in the rapidly growing IAM space.
Denver based Ping was the pioneer of IAM. The company was founded in 2002 by Andre Durant, who still serves as company CEO and is passionate about IAM. Originally the focus of the company was to help large enterprises in creating a single-sign-on (SSO) for their employees, that can be used for all the applications available within the organization. This IAM solution was later extended to customers as well, enabling companies to securely manage and capture customer identity data. Ping started with zero competition, which partly explains the fact that currently they serve more than half of Fortune 100 companies, including the 5 largest global aerospace companies or 13 of the 15 largest U.S. banks.
Ping has a reputation for solving the complex IAM needs of large enterprises, who are now moving step by step to the cloud. Although the company consciously focuses on the global top 3-5000 companies, their recent improvements on the SaaS front and the introduction of their no-code identity orchestration service could open the way towards smaller companies as well.
Question | What does ping mean?
Before the arrival of cloud-native, SaaS competitors Ping was in a comfortable situation characterized by a moderately competitive environment. Perhaps this was the reason that they didn’t adapt to the introduction of cloud services quickly enough and have been outpaced by cloud-native vendors like Okta (founded in 2009) and Auth0 (founded in 2013). Ping managed in recent years to build up its own cloud-based SaaS offering, which experienced accelerating growth in recent quarters accounting now for more than 25% of total annual recurring revenue (ARR). Coupled with their recently introduced no-code version of IAM, they will be able to provide a viable alternative to Okta’s services in my opinion. (Dear Reader, if you are a professional in the IAM space with experience in using both the solutions of Okta and Ping, I would be glad if you’d leave a comment regarding your experiences.)
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Source: https://seekingalpha.com/article/4505664-too-aggressive-s-and-m-spending-at-okta-could-turn-investors-to-ping-identity
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