In a recent announcement, identity-management software company Okta (ticker: OKTA) revealed its better-than-expected financial performance and observed signs of stabilization in information technology spending.
Strong Quarter Performance
During the fiscal second quarter that ended on July 31, Okta reported impressive results. The company’s revenue reached $556 million, marking a 23% increase compared to the previous year. This figure surpassed both the Street consensus of $535 million and Okta’s guidance range of $533 million to $535 million.
Okta’s non-GAAP profits stood at 31 cents per share, surpassing the forecasted range of 21 to 22 cents. The Street consensus expected 22 cents per share. However, under generally accepted accounting principles, Okta reported a loss of $111 million or 68 cents per share.
Positive Cash Flow and Growth Outlook
Okta’s free cash flow in the quarter exceeded expectations, contributing to its strong financial performance. CEO Todd McKinnon emphasized that Okta remains cautiously optimistic about the near-term outlook. The company expects growth to be primarily driven by existing business rather than new customer acquisition.
Additionally, Okta noted an increase in its current remaining performance obligations, which stood at $1.77 billion—an 18% growth compared to the previous year. This value surpassed the company’s target range of $1.71 billion to $1.72 billion.
Market Response
Following the announcement, Okta’s shares experienced a positive response in late trading on Wednesday, with a 10% increase reaching $81.
In summary, Okta’s financial performance exceeded expectations, demonstrating its resilience and stability in the face of economic challenges. The company remains cautiously optimistic and is focused on leveraging existing business for continued growth.
Okta Reports Impressive Guidance for October Quarter
In a recent announcement, Okta revealed its impressive guidance for the October quarter. The company expects revenue to reach $558 million to $560 million, reflecting a 16% increase. Additionally, non-GAAP profits are projected to be between 29 to 30 cents per share. This outlook exceeds the street consensus estimates, which had predicted $553 million in revenue and earnings of 20 cents per share.
Favorable Forecast for the January 2024 Fiscal Year
Okta has also revised its forecast for the January 2024 fiscal year. The company now anticipates revenue in the range of $2.207 billion to $2.215 billion, with non-GAAP profits ranging from $1.17 to $1.20 per share. These projections surpass its previous guidance of $2.175 billion to $2.185 billion in revenue and adjusted profits of 88 to 93 cents per share. The street consensus estimate for the year was set at $2.19 billion in revenue, with adjusted profits of 91 cents per share.
Leadership Transition at Okta
As part of the recent update, Okta disclosed that co-founder Frederic Kerrest will not be returning to an operational role at the company after his sabbatical. However, Kerrest will remain as a valued member of the board. Moving forward, he plans to dedicate his time to early-stage investing and philanthropy, while also prioritizing quality time with his family.
Financial Highlights
During the quarter, Okta took proactive measures to improve its financial position by repurchasing $142 million of convertible notes due in 2025 and $242 million of notes due in 2026. This strategic move resulted in a gain of $42 million on early extinguishment of debt.
Expanding Market Presence
Okta continues to strengthen its market presence in identity management, winning business from renowned artificial intelligence software companies. OpenAI, Recurrency.ai, C3.ai (AI), Scale AI, Relational AI, and People.ai are among the notable organizations that have chosen Okta for their identity management needs.
