A Fast-Growing Software Company Keeping Us Safe Online

Hacking is the world's fastest-growing criminal enterprise.

Damages from "cybercrime" are expected to hit $6 trillion per year by 2021.

In the U.S., there were more than 1,200 major data breaches last year... and more than 400 million records were exposed. This includes name and password combinations, credit card data, and even Social Security numbers.

When this happens to you... it's a nightmare. But it doesn't just happen to individuals. There's a laundry list of high-profile institutions that have also been affected...

The U.S. Securities and Exchange Commission.

The Trump organization.

The CIA.

The National Security Administration.

And as more of our information is stored online and in the "cloud," data security is as important as ever.

Right now, there's almost nothing you can do to prevent getting hacked.

It could happen because you have a weak password...

... or because your password was stolen by an invisible "keystroke logger" hidden on your computer...

... or because you used a poorly secured public Wi-Fi network...

... or simply because you used an ATM or gas station card reader and had your card "skimmed" by a tiny device.

Luckily, today's company has built a reputation for keeping digital identities safe.

Okta (Nasdaq: OKTA) is the leading independent provider of identity and access management ("IAM") services. Its technology helps businesses connect securely with their partners, suppliers, and customers.

For most of us, the concept of identification is different in the online digital world than it is in the physical one.

In the physical world, we have universally accepted forms of identity, such as a passport or driver's license. These IDs give us access to countless unrelated products and services such as airline flights, bank loans, and alcoholic beverages.

But online is a different story.

See, for most of the digital world, we lack a universal ID. Every time we sign up for a website or mobile app, we create a unique digital identity.

Since every website has its own login requirements, this quickly gets out of hand.

How many of us keep written logs of all our account passwords, rely on the same combination of words over and over, and/or let our computers remember all of our passwords?

All of these tricks to managing our digital identities undermine the security these credentials are intended to protect.

Okta cuts down the headaches.

The company has pioneered IAM in the cloud because its software architecture was born in the cloud. The "Okta Identity Cloud" enables customers to securely connect people to technology anywhere, at any time, and from any device.

Every day, more than 5 million people use Okta's platform to access the applications they need to do their most important work.

Okta now has a leading market position in IAM.

To reach this point, Okta spent years partnering and integrating with hundreds of software providers and technology consulting firms (including most of the biggest names, like Oracle, Google, SAP, and Accenture).

Now, more than 6,000 of the most-used software applications are part of the Okta Integration Network. That means Okta's customers get one-click access to their accounts on any of these services.

Having such a wide reach helps Okta continue to grow...

It benefits from a true "network effect." The business gets better as it gets bigger.

You see, the more software applications that use Okta's platform to manage user identity, the more attractive Okta is for customers. And the more customers that use Okta, the more software applications will join Okta's platform. And so on.

Just look at Okta's retention rates...

Like many software providers, Okta sells most of its offerings on a subscription basis. (Okta is a software-as-a-service company, commonly referred to as "SaaS.") Successful SaaS companies retain 80% or more of their customers on a yearly basis.

What's more, these companies retain a higher percentage of customer revenues than other types of businesses, since returning customers frequently upgrade to a pricier service the following year. As such, successful SaaS companies generally retain 90% of the previous year's revenues from existing customers alone.

Okta blows this rate out of the water.

It retains about 120% of those customers' revenues. That means its sales would grow 20% even if it didn't bring on a single new customer.

This dynamic, combined with one- to three-year contracts, means that Okta is in the unusual position at the beginning of the year of already being certain that revenues will grow from the previous year.

Okta's customers stay for a long time. And they buy more of its broadening suite of offerings year after year. The company also has had no trouble bringing on new clients, either.

And Okta's business has attractive economics:

Its main software has extremely high profit margins, particularly as it gains customers. Okta has a "build it once, sell it many times" business model. This means its core software is infinitely scalable.

Okta already has a gross margin north of 70%, and this can increase even more over time.

Okta's business is impressive, and shareholders have been rewarded. The stock is up more than 500% since its initial public offering ("IPO") in 2017. And the stock hit an all-time high earlier this summer.

Identity management is becoming a cornerstone in cloud security. And Okta is a company that ensures digital identities around the world remain secure.

Sometimes investing is simple.