Okta, a leading identity-management software company, recently announced impressive financial performance and expressed optimism regarding the stability of IT spending. CEO Todd McKinnon highlighted the company’s better-than-expected free cash flow and robust top-line growth, surpassing both management’s expectations and Wall Street estimates. However, McKinnon emphasized that Okta remains cautiously optimistic in the short term, with growth primarily driven by existing customers rather than new acquisitions.
During the fiscal second quarter, which ended on July 31, Okta achieved a revenue of $556 million, reflecting a 23% increase compared to the previous year. This figure exceeded both the Street consensus of $535 million and the company’s projected range of $533 million to $535 million.
Additionally, non-GAAP profits reached 31 cents per share, exceeding the forecasted range of 21 to 22 cents and the consensus forecast of 22 cents. Under generally accepted accounting principles, Okta recorded a loss of $111 million, equivalent to 68 cents per share.
The current remaining performance obligations stood at $1.77 billion, indicating an 18% increase and outpacing the company’s target range of $1.71 billion to $1.72 billion. Notably, Okta’s free cash flow for the quarter was $49 million, a significant improvement compared to the $24 million loss reported in the same period last year.
Okta Exceeds Expectations with Impressive Q4 Guidance
Revenue and Profits Soar
Okta, the leading provider of identity-management solutions, has reported impressive guidance for the fourth quarter of the fiscal year. The company expects revenue to reach $558 million to $560 million, representing a considerable 16% increase. Non-GAAP profits are projected to be between 29 and 30 cents per share.
These figures exceed street consensus estimates, which had predicted $553 million in revenue and earnings of 20 cents per share. Okta’s continued growth is a testament to its strong position in the market and commitment to delivering exceptional results.
Optimistic Outlook for the Future
Looking ahead to January 2024, Okta has raised its revenue expectations. The company now anticipates revenue ranging from $2.207 billion to $2.215 billion for the fiscal year, accompanied by non-GAAP profits of $1.17 to $1.20 per share. This revised guidance surpasses the previous forecast of $2.175 billion to $2.185 billion in revenue and adjusted profits of 88 to 93 cents.
The street consensus had projected revenue of $2.19 billion and adjusted profits of 91 cents per share for the year. Okta’s higher estimates demonstrate its confidence in ongoing growth and commitment to delivering value to its shareholders.
In other news, Okta has announced a management transition. Co-founder Frederic Kerrest, who previously served as chief operating officer, will not return to an operational role at the company. Instead, Kerrest will continue to contribute as a board member, focusing his efforts on early-stage investing and philanthropy while enjoying more time with his family.
Successful Debt Repurchases
During the quarter, Okta made significant progress in reducing its debt load. The company repurchased $142 million of convertible notes due in 2025 and $242 million of notes due in 2026. These actions resulted in a gain of $42 million on early extinguishment of debt. Okta’s commitment to improving its financial position further strengthens its ability to drive future growth and innovation.
Dominating the Identity-Management Market
Okta’s success extends beyond financial achievements. The company continues to secure significant contracts in the identity-management space. Notably, Okta has emerged as the preferred choice for artificial intelligence software companies, including OpenAI, Recurrency.ai, C3.ai (AI), Scale AI, Relational AI, and People.ai. This strong customer base speaks to Okta’s reputation for providing reliable and cutting-edge solutions.
In summary, Okta’s impressive guidance for the fourth quarter and optimistic outlook for the fiscal year underscore the company’s commitment to growth and value creation. With a skilled management team, successful debt reduction, and a dominant presence in the identity-management market, Okta remains one of the industry’s leading players.