Okta’s profit push is paying off as earnings send the stock soaring

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Okta Inc. issued an upbeat outlook Wednesday afternoon while saying that its emphasis on profitability is paying off. Its stock was rose more than 23% in the extended session.

The identity-management company expects $603 million to $605 million in fiscal first-quarter revenue, along with 54 cents to 55 cents in adjusted earnings per share. Both figures topped the FactSet consensus, which called for $584 million and 41 cents, respectively.

Okta
OKTA,
+0.45%
also boosted its full-year forecast and is now looking for $2.495 billion to $2.505 billion in revenue as well as $2.24 to $2.29 in adjusted EPS. The company’s prior outlook was for $2.46 billion to $2.47 billion, and while Okta didn’t previously have an adjusted EPS forecast, analysts were modeling $1.96.

The company is coming off of a recent security breach of its own, which some on Wall Street worried would dent customer interest in its products. Chief Executive Todd McKinnon told MarketWatch the impact of that was difficult to quantify but “likely minimal.”

“If you look at win rates” and that the company topped its guidance for the most recent quarter, ”the numbers look good,” he said, even though some existing customers and prospects have expressed concern.

Management’s confidence in its outlook comes as Okta is seeing strong momentum from larger customers as well as stability among smaller ones.

“Big companies have some of the most complexity about who can access what systems,” McKinnon said. “We’re really optimistic about that.”

Meanwhile, the “continued macro stability” is sitting well with smaller customers, he said. Overall, Okta is “still factoring in some prudence and conservatism” into its forecasts.

For the fiscal fourth quarter, Okta recorded revenue of $605 million, up from $510 million a year before, while analysts were modeling $587 million.

Okta posted adjusted EPS of 63 cents, while the FactSet consensus was for 51 cents.

The company has been making more of a push for profits recently, and McKinnon said the company “did a really good job executing” there. Okta has “reprioritized things and pulled forward a bunch of work we were going to do in the future” that actually got accomplished in the fourth quarter.

Though Wall Street has been a bit cautious on the cybersecurity sector in light of a disappointing outlook last week from Palo Alto Networks Inc.
PANW,
+0.44%,
McKinnon said investors shouldn’t necessarily think of Okta as a pure cybersecurity company — because customers don’t.

“Customers invest in identity for a number of reasons,” he said. Those include to guard against breaches, but customers also are looking to make their employees more productive and help them find the tools they need.

Some investors might urge Okta to position itself as a cyber investment, he said, and while that might mean more spending when cyber budgets are flush, “maybe we’ll be more durable” in periods of spending fatigue by taking the current approach.



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Alexandra Williams
Alexandra Williams
Alexandra Williams is a writer and editor. Angeles. She writes about politics, art, and culture for LinkDaddy News.

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