Okta continued its growth spurt in the first quarter -- but the rest of the year will likely look a bit different for Okta and the broader universe of cloud services companies.
Shares of Okta (OKTA) - Get Report, which sells a variety of cloud services aimed at workforce and customer authentication, were up 5% on Friday $192.35 after the company topped top and bottom line forecasts for its first fiscal quarter. It also reaffirmed its revenue outlook, forecasting between $185 million and $187 million for the current quarter, which kicked off May 1.
Okta CEO Todd McKinnon told TheStreet that "the puts and takes canceled each other out" last quarter, with customers in heavily impacted industries pushing off contracts as others moved up deals as part of a shift to remote work. Okta's sales grew 46% last quarter to $182.9 million, and it narrowed losses to 7 cents per share on a non-GAAP basis.
Looking ahead, Okta is taking a cautious approach both to its forecasting and its own pace of investments. For the full fiscal year, it's guiding for between $770 million and $780 million in revenue.
"We are being conservative in our forecast on what the macro conditions will be, our assumptions about what the economy is going to do -- we’re still growing and investing, but the reality is there’s uncertainty," McKinnon said.
As seen in the past quarter, the shift to remote work brought a period of high growth to a slew of cloud services, from productivity software to videoconferencing apps like Zoom (ZM) - Get Report. Adapting rapidly to doing business online, and sorting out how to connect employees reliably and securely, companies snapped up cloud services at a pace that might have otherwise taken years.
Now we're entering a different phase, McKinnon said.
"I think you'll see projects for companies to connect with their customers digitally," he said. "Physical stores aren't going to cut it --you have to get online. So how are [companies] going to add that to their bag of tactics? You're going to see those projects built out."
Okta observed some of those trends in its first quarter results, with much more sales activity in its workforce-oriented services than on the customer identity side, McKinnon said.
As more businesses open up -- even in a reduced capacity --the trends are likely to shift in the current quarter and beyond.
"Our [sales] pipeline and marketing is off the charts... as the quarters unfold, how does that translate into results? That’s where we're taking a measured approach in trying to predict that," he added. "Its hard to know how the limitations on companies making decisions will play out, so we'll have to wait and see."
Okta shares are up 62% year to date.