Expectations were high going into Okta's (OKTA +3.43%) fiscal 2020 fourth-quarter financial report. The stock had gained more than 68% over the past year on the strength of the company's impressive growth. In Q3, Okta reported revenue that grew 45% year over year, easily surpassing its guidance of about 36%. With that type of outperformance as a backdrop, investors were hoping for more of the same, and the company delivered.
The digital-identity and access-management specialist generated stronger growth on both the top and bottom lines than many expected. Investors celebrated the results, driving the shares up more than 6% in after-hours trading. Here are five highlights:
Inside Okta headquarters. Image source: Okta.
1. Revenue continued its vigorous growth
Okta reported revenue of $167.3 million, up 45% year over year, crushing both its own forecast and analysts' consensus estimates, which both topped out near $156 million. What's even more impressive is that it came on top of 56% growth in Q4 2019.
The better-than-expected gains were driven by subscription revenue that grew even faster, at 46%, to $158.5 million. Professional services revenue (which tends to be lumpy and more difficult to predict) also contributed, increasing 26% over the prior-year quarter.
2. Backlog grew
The company's backlog, also known as its remaining performance obligation (RPO) -- which consists of subscription revenue that is under contract but has not yet been recognized -- also grew at an impressive rate, 66% year over year to $1.21 billion. The current RPO, the portion of subscription revenue that will be realized over the coming 12 months, jumped to $592.3 million, a 54% increase over the prior-year quarter.
Calculated billings, a sales growth metric that also factors in changes in deferred revenue, grew to $225 million, an increase of 42% year over year.
3. Losses weren't as bad as predicted
The strength of the top line also helped boost its bottom-line results. As Okta continued to focus on market share growth in lieu of current profits, the company still lost money, but those losses were not as bad as anticipated.
Okta reported an adjusted net loss per share of $0.01, much improved from the $0.04 it lost in the prior-year quarter. It was also better than analysts' consensus estimates for a loss per share of $0.05.
4. Customer growth expanded
In the fourth quarter, Okta added 550 new customers, bringing its total customer count to 7,950, an increase of 30% year over year. Providing even greater visibility into the company's continuing long-term growth prospects is the increase in enterprise-level clients: It added 142 customers with contract values in excess of $100,000, bringing the total to 1,467, up 41% year over year, and accelerating from 40% gains sequentially. These larger contracts are helping to supercharge revenue growth.
Okta customers continue to expand their spending once they come on board. The company's dollar-based retention rate, which measures the amount spent by its existing client base, was 119% last quarter, also accelerating from 117% in Q3 -- continuing its unbroken streak of exceeding 117% in each quarter since its IPO.
Image source: Getty Images.
5. A robust revenue outlook for the coming year
For the upcoming fiscal 2021 first quarter, Okta management is guiding for revenue in a range of $171 million to $173 million, representing year-over-year growth between 37% and 38%. This forecast was noticeably higher than analysts' expectations for $166.37 million. Okta is also guiding for an adjusted loss per share in a range of $0.23 to $0.24, worse than the loss per share of $0.14 predicted by analysts.
The full-year fiscal 2021 forecast was equally robust, guiding for revenue of $770 million to $780 million, which would represent growth of 32% at the midpoint. Analysts' consensus estimates for the year were calling for revenue of $756.28 million, or growth of just 29%, so the software-as-a-service company's strong guidance likely contributed to Wall Street's giddy reception.
Okta delivered on all the metrics that matter, continuing to boost its long-term prospects, and shareholders celebrated the news.
