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The cloud-based business solutions provider turned in another round of stellar quarterly results.
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Coming into Okta's (OKTA +0.00%) third-quarter earnings report, investors may have been nervous. Shares of the cloud-based digital-access specialist had gotten swept up in the market sell-off in recent weeks, pushing Okta stock down after its post-earnings pop in September.
However, the latest quarterly report, released Wednesday afternoon, assuaged some concerns, as the cloud company's strong momentum continued from the second quarter and the company racked up another round of impressive growth.
| Metric | Q3 2019 | Q3 2018 | Year-Over-Year Change |
|---|---|---|---|
| Revenue | $105.6 million | $66.9 million | 57.8% |
| Net income from continuing operations | ($29.5 million) | ($33 million) | N/A |
| Adjusted earnings per share | ($0.04) | ($0.19) | N/A |
Data source: Okta third-quarter report.
Okta once again blew past its own guidance, with strong growth in customer numbers. Revenue growth of 58% was much better than the company's forecast of 43%-45%, and its $0.04-per-share adjusted loss easily beat its guidance for a loss of $0.11 to $0.12. Okta also delivered its first free-cash-flow-positive quarter, with FCF of $1.4 million.
Other highlights from the quarter:
Okta was pleased with the results in the quarter, in particular the strong growth in larger accounts.
CEO Todd McKinnon had this to say in the company's press release:
We had a record third quarter ... Our continued strength is a testament to the growing pervasiveness of identity, and we believe we are well positioned to further benefit from these tailwinds as organizations continue their move to the cloud, while digitally transforming and securing their businesses.
COO Frederic Kerrest touted the new partnership with Albertsons, saying it shows the potential of the company's customer identity products, and projected a long growth runway.
Okta raised its guidance once again for the full year. The company sees revenue of $391 million to $392 million, a 52%-53% increase, up from a previous forecast of $372 million to $375 million, or 45%-46% growth. On the bottom line, the company forecasts an adjusted per-share loss of $0.36 to $0.37, an improvement over the previous estimate of $0.46 to $0.48. For the current quarter, management expects revenue of $107 million to $108 million, or 39%-40% growth. On the bottom line, it expects a loss of $0.08 to $0.09 a share.
The cloud-based security specialist also issued preliminary guidance for 2020, calling for $510 million to $520 million in revenue, or 30%-33% growth. Though that represents a significant slowdown from the current year's pace, Okta expects growth to stabilize at that rate. It said at its investor day conference in October that it's targeting at least 30% revenue growth over each of the next five years.
With strong tailwinds from cloud adoption and its leading position as an independent and neutral identity platform, the company continues to bring in new customers and rapidly grow the business.