Okta Inc. reported growing revenue and a smaller loss Wednesday, beating expectations on both counts.
Okta (OKTA - Get Report) , which sells cloud software for identity management, reported $105.6 million in revenue for the quarter, beating its prior guidance of $96 to $97 million. It reported losses of $.04 per share versus the $0.11 expected by analysts polled on FactSet. It further guided for $107 to $108 million in revenue for the fourth quarter.
"We're growing very fast, and that's been the headline about Okta for the seven quarters we've been public," Okta's CEO Todd McKinnon told TheStreet. "We're right in the middle of a few really important trends: Every customer want to figure out how to use the cloud more; they're trying to figure out how to build better websites and mobile apps, which leads back to having a good system for identity in place, and making sure it's easy to use and secure."
Okta sells its products on a recurring subscription basis, and earns the majority of its revenue through subscriptions ($97.7 million of $105.6 million in total revenue for the quarter). In Okta's earnings release, the company highlighted an increase in customers with over $100,000 in annual recurring revenue, which was a record of 100 net new customer additions for the quarter.
"The good thing about our product is that it's very horizontal -- any organization that uses technology or needs technology could use our product," McKinnon added, noting the Okta's success as of late in signing up federal government agencies looking to modernize their systems.
"Another piece of momentum is with the other big companies trying to align with us because we're the leader in identity management," he said, citing the partnerships Okta has fostered with large tech and consulting firms, including VMware (VMW - Get Report) and Deloitte.
McKinnon added that Okta tends to be conservative in its guidance to take into account factors like large enterprise deals that can take longer to close, but pointed out the Okta's improving gross margins and free cash flow. It was free cash flow positive for the first time this quarter, he said.
"Growth is great, but investors don't want a company that's growing but losing [a] bunch of money. We've continued to show steady improvement in our profitability," he said. "We're super bullish on the future -- the strong growth is going to continue, and we are prudent in our guidance given."
Okta shares are up 129% since the beginning of this year.