Additional Okta Security Incident Details Indicate Poor Communication but Limited Impact

Following up on our March 22 initial reaction to narrow-moat Okta's security incident, we still do not see this as a death knell. We believe the company can weather the near-term turbulence caused by customers concerned about its reaction (or lack of action) to the incident that occurred in January. We are maintaining our $280 fair value estimate and believe the shares are vastly undervalued for long-term investors. Our long-term thesis--that Okta has a sizable growth opportunity alongside substantial margin and free cash flow expansion as the leading identity and access management platform--is intact. Identity has become the first line of defense and a key productivity enabler, and we think Okta remains an essential piece of operations and security for customers.