It’s ok, Todd. You’re only paranoid if you’re wrong.
Okta chairman and CEO Todd McKinnon said he believes it would be difficult for an LLM alone to replicate the quality of SaaS applications his company provides, but that doesn’t stop him from worrying about competition from bots.
“We are paranoid. And we're making sure that we are using all the latest technologies: LLMs, coding tools to make sure we have not only something that's resilient and secure but has the best features and the best capabilities,” he told investors during a fourth quarter earnings call on Wednesday. “And so we're making sure that we build things internally as fast as anyone could build them because we – make no mistakes, the prize here that the whole industry is going after, which is this agentic future where digital labor is part of the TAM is a massive prize.”
McKinnon joins many wary investors who are likewise taking a second look at the soundness of the software market with the broadening use and capabilities of AI coding tools such as Anthropic’s Claude Code. Those fears have given rise to the so-called SaaSpocalypse, which has taken billions in value from technology bellwether stocks with Microsoft, Oracle, SAP, Salesforce and others all down double digit percentages over the last six months.
"I think if you want to build what any SaaS company has done or what Okta has done," he said. "it's years and years of hardening and making sure there's no vulnerabilities and making sure it scales and it's reliable."
The stakes are high for Okta as it sees identity access as key to the general adoption and proliferation of AI agents throughout the technology industry. Okta’s 20,000 customers are using its identity access tools to enable agents to work in sensitive areas of their organizations.
McKinnon said Okta has two billing models for agents, one which charges per number of agents used by an individual human, and another that charges by the number of connections the agent has into systems.
During the call, McKinnon said that demand for its new products Auth0 for AI Agents and Okta for AI Agents is surging, while total sales of its new product lineup Okta Identity Governance, Okta Privileged Access, Identity Security Posture Management, Identity Threat Protection, Okta Device Access, and Fine-Grained Authorization represented approximately 30% of Q4 bookings.
While the total addressable market for identity access today is about $20 billion, he sees that market growing to up to $80 billion as the industry competes for the future of digital labor.
“I mean this could be bigger than – this could be the biggest part of cyber in a few years for sure. And it could be even bigger than that if you really think about the infrastructure that stitches together the entire agentic enterprise and is the plumbing that makes it run,” he told analysts on the call. “So we're investing and we're paranoid and we're working hard to make sure we capture that.”
Late last year, Okta's president of Auth0, Shiv Ramji, told The Register that anxiety in the enterprise over AI agents running amok has thus far halted the wide deployment of these digital workhorses, while Okta’s products were key to mitigating that fear.
"It is security, privacy concerns like, OK are these systems ready? Do we have the right measures and visibility in place," he said. "Which is kind of the insight that led us to really accelerate and build these products and get to market faster, because we realized that our customers need us to help them."
Okta’s total revenue for the fiscal year ended January 31 was $2.9 billion, up 12 percent, with net income of $235 million. The company expects growth of nine percent in the next fiscal year. The company's stock price jumped 11% on Thursday after the earnings report as investors cheered numbers that were better than Wall Street analysts expected. ®