Okta Delays New Products, Projects 90 Days to Boost Security

Okta has paused product development and internal projects for 90 days to beef up its security architecture and operations for applications, hardware and third-party vendors.

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The San Francisco-based identity behemoth took steps in recent weeks to strengthen its cyber posture, including initiating a security action plan and engaging with third-party cyber firms. Okta’s move comes after it disclosed that the attacker behind its September data breach had stolen details for all users of its primary customer support system, including a list of customer support system usernames and contact details (see: Okta Says Hacker Stole Every Customer Support User’s Details).

“Bolstering our security environment is, by far, the highest priority for Okta,” CEO Todd McKinnon told investors Wednesday. “During this hyper-focused phase, no other project or even product development area is more important. In fact, the launch dates for the new products and features that we highlighted at Oktane last month will be pushed out approximately 90 days.”

Okta’s security efforts to date have primarily gone into product or infrastructure protection and have been balanced with other corporate priorities such as growth and new product development, McKinnon said. But recent events have made it clear that’s not good enough and that more is needed – specifically around safeguarding Okta’s architecture and operations, according to McKinnon.

“Okta is one of the most targeted companies in the world because of the leadership position we have in this important market of identity access management,” McKinnon said. “We have to raise our game to be able to defend ourselves and our customers … For the end of this year and going into next, the number one priority is securing Okta and securing our customers. And everything else is prioritized after that.”

The company will take an “all hands on deck” approach to bolstering its security over the next 90 days, incorporating both a bottom-up approach from rank-and-file staff as well as a top-down approach from outside industry experts helping the company’s internal staff. McKinnon said Okta has done this to various degrees over the years and wants to ensure it’s getting the best minds and best input possible (see: Okta Breach Tied to Worker’s Personal Google Account).

“When Okta started, our focus was enabling technology and making it easy to adopt the cloud. It wasn’t necessarily started 15 years ago as a cyber company,” McKinnon said. “It’s very clear to us now – and has been for the last few years – that the bar is the most secure company in the world, full stop. That’s the number one priority, and that’s what we’re focused on.”

Okta will also focus on ensuring the actual security use cases for the company’s products are prioritized incredibly highly, which McKinnon said includes managing access to privileged resources and ensuring the technology works great with the company’s own administration console. Okta’s new privileged access product that came out this week will help organizations protect their most valuable targets, he said.

“We will stop at nothing to make sure we become one of the most secure companies in the world,” McKinnon said. “It’s clear to everyone that we’re short of where we need to be now, and we will fix that.”

Better Security From Top to Bottom

From a bottom-up standpoint, McKinnon said, Okta will get all the team’s ideas on the table around what would make Okta the most secure company in the world. For instance, he said, Okta will shift from recommending multifactor authentication for all administrator accounts to requiring it – with no opt-out provided.

“Over the years, we – in some cases – made the choice for convenience or speed of implementation or frictionless adoption instead of security,” McKinnon said. “But as we march toward being one of the most secure companies in the world, that’s going to change.”

This will require Okta to work through why some customers don’t have multifactor authentication configured today, which McKinnon said could be tied to a specific workflow or service account. From there, he said, Okta will tap some of the world’s most prominent security experts to strengthen its internal security architecture to safeguard both business operations as well as IT operations (see: 1Password Finds ‘Suspicious Activity’ Tied to Okta Breach).

“There are people that do this for the most secure companies in the world, and we want to take those experts and combine them with our experts internally to make sure we have the best security blueprint from an architectural perspective,” McKinnon said.

From a cultural standpoint, he said, Okta’s leadership must prioritize and set the expectation of becoming one of the most secure companies in the world and must allocate sufficient resources to that end. And finally, McKinnon said, Okta’s products must be built in a way that goes beyond delivering power and performance and actually ensures the security of customers.

“We’re short of where we need to be now.”


– Todd McKinnon, CEO, Okta

For instance, Okta last month implemented a feature that cryptographically binds an administrative console session to a specific network, which McKinnon said is very valuable for customers and helps keep them secure. As Okta goes through its entire product architecture, he said, there are many more features that could be implemented to protect customers during product use or deployment.

“The 90-day focus gives everyone space and clarity to have no confusion about this being the priority,” McKinnon said. “There are enough things that will decrease the risk at a significant level that we think it’s worth a sprint here.”

Okta’s approach to security has been very mature in the areas of product and infrastructure but less comprehensive when it comes to overall IT and company operations. McKinnon said Okta will report product security gains in the same manner that it does product releases or new features, meaning items such as mandatory MFA and network binding for session tokens will appear on the firm’s public road map (see: Okta Support Unit Breached Via Credential Stolen by Hackers).

McKinnon said the company will need to think about how it broadly communicates with customers about internal improvements to its operational security. Customers want to learn from Okta’s journey to become one of the most secure companies in the world, and McKinnon said detailed communication will help not only from a trust perspective but also in providing the end-user community with education.

“Not only does it just give customers more confidence in how seriously and how aggressively we’re taking this, but it can also help them learn,” McKinnon said.

Okta Reaches Non-GAAP Profitability

Okta’s revenue of $584 million in the quarter ended Oct. 31 crushed Seeking Alpha’s sales estimate of $560.4 million. And the company’s non-GAAP earnings of $0.44 per share demolished Seeking Alpha’s estimate of $0.29 per share.

The company’s stock is down $5.77 – 7.9% – to $67.05 per share since disclosing earnings and the security incident update. That’s the lowest Okta’s stock has traded since Nov. 9.

For the quarter ending Jan. 31, Okta expects non-GAAP net income of $0.50 to $0.51 per share on revenue of between $585 million and $587 million, representing a year-over-year growth rate of 15%. Analysts had been expecting a non-GAAP net income of $0.35 per share on sales of $580.3 million, according to Seeking Alpha.