Okta soared 10% after blockbuster earnings, and a Wall Street analyst says the $7 billion company is becoming a real competitor to Microsoft

OktaOkta cofounders Todd McKinnon, CEO, and Frederic Kerrest, COOOkta's stock closed a little over 10% on Thursday, the first full day of trading after it reported quarterly earnings and beat Wall Street's expectations.Okta reported a 58% revenue growth, and Alex Henderson, senior analyst at Needham & Company, says these spectacular results show that Okta is becoming a real competitor to Microsoft. Okta COO Frederic Kerrest tells us that the company's great strength is that it's neutral: It works with services from all vendors, not just Microsoft. On Wednesday, identity management software company Okta reported earnings, blowing away Wall Street expectations. The next day saw Okta's stock spike as high as 14% in intraday trading, bringing its market cap up to just shy of $7 billion.By the end of the day, the stock closed at $66.95, up over 10% from the opening bell, and more than twice what Okta was trading at this time last year. It's perhaps no surprise, as Okta reported a strong quarter with a 58% year-over-year revenue growth and 55% growth in customers. Okta generated revenue of $105.6 million, handily beating Wall Steet expectations of $96.8 million. Okta also reported an adjust loss of 4 cents per share, much narrower than analyst expectations of a loss of 11 cents per share. For a software as a service company, these results are spectacular, says Alex Henderson, senior analyst at Needham & Company, because a lot of time and effort goes into selling subscriptions to new customers. To grow a SaaS model at a 58 percent clip - it's extremely difficult to do that, Henderson told Business Insider. Going forward, analysts believe Okta has the potential to compete with Microsoft's identity management business. Like Microsoft, Okta makes selling to large customers the cornerstone of its business. However, Okta sees its advantage as the fact that it works equally well with cloud services from all vendors, not just Microsoft's. We're independent and neutral, Frederic Kerrest, COO and co-founder of Okta, told Business Insider on Thursday. We're the only ones driving that message in the market. They want the flexibility to use [Amazon Web Services] and [Microsoft Azure] and [Google Cloud Platform]. They want to be using all sorts of different market technologies.Some also believe that Okta has an advantage from the fact that Microsoft has a spotty reputation in terms of cybersecurity, thanks largely to a long history of bugs and vulnerabilities in the Windows operating system and other products. Today, under CEO Satya Nadella, Microsoft has invested heavily in turning things around, but the perception still lingers. Microsoft is somewhat tainted from the security industry's environment, Henderson said. I know [Microsoft CEO Satya] Nadella wants to fix that but I don't see him getting there anytime soon.Henderson suggests that Okta can use this dynamic to its advantage, and be perceived as a more trusted security company.Read more: I followed the CEO of $6 billion Okta around and learned the secrets of a tech conference that landed President Obama as a speakerOkta's strong earnings and stock growth is a also sign that security is moving to protect users in the cloud, rather than the traditional model of locking servers down from otuside attack. In fact, a security business focused on defending a data center from attacks is becoming a bankrupt concept, Henderson says.The center of gravity in security is moving, Henderson said. It used to be the center of gravity of security is inside the data center. It's increasingly moving out to the cloud.Okta also just announced that it added Albertsons, one of America's largest grocery retailers, under its belt as a customer. Kerrest believes that the potential market for Okta is big, and there's a lot of upside still to be found.It's the early days of the company, Kerrest said. We're very excited. We're growing very fast. We feel that by far the best times are ahead.Get the latest Microsoft stock price here. NOW WATCH: Craig Jackson of Barrett-Jackson Auction Company has one of the world's most expensive private garages - take a look inside function receiveMessage(event){ console.log(event.data.fullscreen); Android.fullscreen(event.data.fullscreen); }window.addEventListener(message, receiveMessage, false);

Okta soared 10% after blockbuster earnings, and a Wall Street analyst says the $7 billion company is becoming a real competitor to Microsoft

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Okta soared 10% after blockbuster earnings, and a Wall Street analyst says the $7 billion company is becoming a real competitor to Microsoft

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