Okta Tops Revenue Forecasts, Posts Smaller-Than-Expected Loss

Okta CEO Todd McKinnon told TheStreet that the firm's continued high growth and ability to generate cash bode well for investors.
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Shares of Okta (OKTA) - Get Report fell in after-hours trading Thursday after the cloud firm posted strong revenue growth and a smaller-than-expected net loss, but

Okta’s stock fluctuated, but was down 2.5% overall in extended trading after it beat expectations on top and bottom lines, but grew its net loss on a year-over-year basis. For the third quarter, Okta reported 45% growth in revenue to $153 million and billings growth of 42% to $175.6 million. Its net loss of 7 cents per share beat analysts’ forecasts of 12 cents per share, but was higher than its loss of 4 cents per share for the same period last year.

Okta also disclosed that it had $1.03 billion in contracts under management last quarter -- cited as remaining performance obligations (RPO) -- and that it added more than 100 large enterprise customers with annual contacts worth $100,000 or more to a total of 1,325. It also reported free cash flow of $9.2 million, or 6% of total revenue, compared to $1.4 million in the third quarter of last year.

“We’re demonstrating that we can generate cash, and a combination of high growth and moving towards profitability,” Todd McKinnon, Okta’s CEO, told TheStreet.

Okta counts the healthcare IT firm Athenahealth among its enterprise customers, and the companies said on Thursday that Athenahealth had implemented Okta’s Identity Cloud offering, which facilitates a secure point of access for an organization’s customers and employees, into its patient portal.

Earlier this fall, Okta rolled out a slate of new security and access management offerings with large organizations in mind. McKinnon said that there’s a clear demand for products that simplify those two functions, and that early reception has been strong.

Although Okta is not yet profitable, McKinnon added that the company’s investors understand the path the company is on -- and that its record of consistently communicating its plans have built a foundation of trust in Okta’s long-term prospects.

Okta has not set a deadline for profitability, but has laid out a target of growing revenue by at least 30% for the remainder of this year, and keeping up that level of growth as a baseline into fiscal 2024.

“Building that communication and trust and has really benefited us,” McKinnon said.

Shares of Okta are up 88% so far this year to $119.16.