Okta Inc. (NASDAQ:OKTA) exceeded Wall Street expectations for its second-quarter earnings and revenue on Tuesday, also issuing an optimistic full-year outlook.
Shares of the identity management company jumped over 5% in premarket trading Wednesday. The company reported earnings of $0.91 per share, surpassing analysts’ projections of $0.84.
Revenue climbed to $728 million, above forecasts of $711.2 million. The company’s current remaining performance obligations (cRPO) grew 13.5% year-over-year to $2.265 billion, exceeding the midpoint of guidance by 2.8%. cRPO bookings accelerated to 11% growth from a year earlier, up from 9% in Q1.
For the third quarter, Okta anticipates earnings of $0.74 to $0.75 per share, in line with consensus, with revenue expected between $728 million and $730 million, higher than the $723 million analysts had forecast. Q3 cRPO is projected at $2.263 billion, up 10% year-over-year at the midpoint.
According to Jefferies analysts, this “implies a $2.5M qoq decline vs the $67M” reported in the same quarter last year. They added, “F3Q cRPO guide implies bookings growth was down 1% yoy vs up 11% in F2Q (on a 4 pt tougher comp), seemingly prudent.”
Jefferies also noted, “OKTA remains a low-double-digit grower with improving profitability, which feels fairly priced at 19x EV/’26 FCF until key metrics accelerate.”
Okta said it plans to adopt a less conservative approach to guidance going forward. For the full year, the company expects earnings of $3.33 to $3.38 per share and raised its revenue forecast to $2.88–$2.89 billion, up from the previous $2.85–$2.86 billion, compared with analyst expectations of $2.86 billion.
“Okta’s unified identity platform is winning customers ranging from the world’s largest global organizations to massive government agencies,” said CEO Todd McKinnon. “Our solid Q2 results are highlighted by continued strength in new product adoption, the public sector, Auth0, and cash flow. In the age of AI.”
Guggenheim analysts maintained a Buy rating with a $138 price target, stating their March 2024 thesis is beginning to play out. They described the current valuation as “a very attractive entry point,” noting that the stock trades at 5.4 times enterprise value to next twelve months recurring revenue and 19 times next twelve months free cash flow.
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