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Okta reported earnings that beat Wall Street's expectations on Thursday and its CEO thinks the identity management company has just scratched the surface of how far it can go.

"I think we're very early in the potential market penetration for what we do...people were spending billions and billions of dollars on identity management and the problems are getting worse every day," Okta CEO Todd McKinnon told Business Insider. "We have a lot of markets to capture and we're working hard to make sure that we continue to grow and build new products and offerings to capture that market."

Okta reported revenue of $153 million, a 45 percent increase from a year prior, and a loss per share of $0.07 for the quarter. Its results showed a wider loss than a year prior, but ultimately beat analyst expectations for the quarter.

Two important metrics for growth showed strong results for the quarter as well. Subscription revenue rose 48% to $144.5 million, beating estimates of $135.3 million and billings grew 42% to $175.6 million, beating estimates of $165.8 million.

Despite the beats, the growth was not as rapid as quarters past and the stock fell over 3 percent in after market trading on Thursday before rebounding to make up some of the lost ground.

McKinnon acknowledged that growing a company at such a rapid pace is more challenging than most realize.

"Just growing at the level of we're growing is a lot of work. You gotta think ahead to what you're going to look like 18 months when you're twice the size," McKinnon said. "People underestimate how much work that is sometimes. So we're focusing a lot on that."

But that growth is attainable, he said, and current industry trends are in Okta's favor. One of the things that will help, is Okta's strength in its enterprise business. Okta now has 1,325 customers who pay over $100,000 annually for its product, which is 41 percent more than it had last year.

Analysts at William Blair think Okta has been able to get these new large customers by making its products very flexible and easily applicable to many scenarios, which these companies may have been searching for. This includes making the products easy to customize and continue to do more functions.

"We believe Okta has driven the increase by improving products and also expanding the number of use-cases they can address. The average top-25 deal this quarter compared with last year grew nearly 50% in contract size, suggesting the company is seeing much larger opportunities than in the past," writes Jonathan Ho, an analyst at William Blair.

McKinnon said that part of Okta's strategy is to make sure that as cloud becomes more widely used in enterprise, Okta can take over the identity management for those large companies.

That trend of cloud adoption also feeds into Okta's future prospects, he said. He thinks companies are increasingly abandoning the model of using one large technology vendor to serve all their IT needs, and are now looking for the best vendor for each service.

It's a trend seen in cloud based startups like Slack and Zoom which compete with large tech companies like Microsoft, Google and others who provide bundles of applications that do communication, productivity, etc.

McKinnon said this trend is just starting to materialize. "I think that best of breed is here to stay and there's going to be even variety and more choice," he said.

This helps Okta because it actually creates a bigger need for identity management. There's so many different applications a company's employees can use that having a single sign on experience that's verified easily makes the IT more secure.

"Okta is benefiting from the rise of SaaS usage which is likely still in the early innings. As organizations continue to decentralize their compute needs, Okta's ability to securely create connections between users and applications becomes more applicable," writes Jonathan B. Reykjav, an analyst at Baird Equity Research in a note published Friday.

McKinnon said many small and medium size companies don't have an identity manager right now and have never needed it.

"So they don't really have to manage things like you do when you really have a globally distributed heterogeneous technology environment like every company's moving to. So I think that the big thing for us is that that is driving expanding the market for identity management," McKinnon said.

The key is, once that market is expanded, Okta has to provide a better option than the identity management options offered by large technology vendors like Microsoft, Salesforce, Google, and Amazon, he said.

Still, McKinnon reiterates that this means there's a huge market opportunity ahead for Okta. "Just the fact that this industry dynamic is making a much bigger market for identity management is powerful," he said.

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Okta's CEO says it is poised to keep growing as identity management market expands - Business Insider