Okta,
the identity-management software company, reported better-than-expected financial results and said it saw signs of stabilization in spending on information technology.
In late trading Wednesday, Okta shares were 10% higher at $81.
CEO Todd McKinnon said in an interview that Okta (ticker: OKTA) saw much better than expected free cash flow in the quarter, along with top-line growth that was above both management’s forecasts and Wall Street estimates. But he also noted that Okta is “maintaining a cautious near-term outlook,” with growth driven more by existing business than new customers.
For the fiscal second quarter ended July 31, Okta posted revenue of $556 million, up 23% from a year ago, well above both the Street consensus of $535 million and the company’s guidance range of $533 million to $535 million.
Non-GAAP profits were 31 cents a share, topping the range of 21 to 22 cents management had forecast and the Street consensus forecast of 22 cents. Under generally accepted accounting principles, Okta lost $111 million, or 68 cents a share.
Current remaining performance obligations were $1.77 billion, up 18% and ahead of the company’s target range of $1.71 billion to $1.72 billion. Free cash flow was $49 million, compared with a loss of $24 million a year earlier.
Guidance was impressive. For the October quarter, Okta sees revenue of $558 million to $560 million, up 16%, with non-GAAP profits of 29 to 30 cents a share. Street consensus estimates had called for $553 million of revenue and earnings of 20 cents a share.
For the January 2024 fiscal year, Okta now sees revenue ranging from $2.207 billion to $2.215 billion, with non-GAAP profits of $1.17 to $1.20 a share. Its previous guidance had called for revenue of $2.175 billion to $2.185 billion, with adjusted profits of 88 to 93 cents. The Street consensus for the year has been for $2.19 billion in revenue and adjusted profits of 91 cents a share.
Okta also disclosed that co-founder Frederic Kerrest, who stepped down as chief operating officer to take a sabbatical in November, won’t return to an operational role at the company, but will remain a board member. McKinnon said that Kerrest will focus on early-stage investing and philanthropy, while spending more time with his family.
Okta repurchased $142 million of convertible notes due 2025 in the quarter, along with $242 million of notes due in 2026, resulting in a gain of $42 million on early extinguishment of debt.
Okta also said it continues to win identity-management business from artificial- intelligence software companies, including OpenAI, Recurrency.ai,
C3.ai
(AI), Scale AI, Relational AI, and People.ai.
Write to Eric J. Savitz at [email protected]
Read the full article here
