What happened
Okta (OKTA -0.65%) stock gained 73.6% in the first half of 2020, according to data from S&P Global Market Intelligence. The S&P 500 returned negative 3.1% over this period.
This month, shares of the cloud-based identity-management specialist have jumped nearly 10% through July 8, while the broader market has returned just over 2%. In 2020, shares of Okta, which held its initial public offering (IPO) in April 2017, are up 91%. That makes the stock one of the year's top-performing large-cap tech stocks.
Image source: Getty Images.
So what
We can attribute the stock's powerful performance this year to the company continuing its streak of posting strong financial results. It breezed by the Wall Street consensus earnings estimate in both the fourth quarter of fiscal 2020 and the first quarter of fiscal 2021.
On May 28, Okta released its fiscal Q1 results for the period ended April 30. Results got a boost from the COVID-19 pandemic, which drove a massive increase in the number of people working from home. Here's part of what CEO Todd McKinnon had to say on this topic in the earnings release:
Okta is at the forefront of helping organizations adapt to the current environment where secure remote access has become a top priority across industries. Our strong first quarter performance reflects our market leadership and ability to effectively and quickly shift to a fully remote workforce. This shift is enabled through our core technology, which allows secure access to any technology from anywhere. When this crisis is over, we don't expect organizations to revert to their prior ways of working.
In fiscal Q1, Okta's revenue surged 46% year over year to $182.9 million. Growth was driven by a 48% increase in subscription revenue, which came in at $173.8 million.
Reported net loss was $57.7 million, or $0.47 per share, slightly wider than the year-ago quarter's net loss of $52 million, or $0.46 per share. Adjusted for one-time items, net loss narrowed considerably to $8.1 million, or $0.07 per share, from $21.4 million, or $0.19 per share, in the year-ago quarter. That result crushed the adjusted loss per share of $0.17 that analysts had been expecting.
While Okta is reporting bottom-line losses, investors should know that it generates positive cash flows. In Q1, it generated $38.7 million in cash from operations, up 82% year over year. And it produced free cash flow of $29.8 million, up a whopping 126% from the year-ago period.
Now what
While Okta hasn't yet announced a date for the release of fiscal second-quarter results, investors can probably expect it to be late August.
For fiscal 2021, the company reiterated its previously issued revenue guidance and considerably raised its earnings outlook. It now expects:
- Revenue of $770 million to $780 million, representing growth of 31% to 33% year over year.
- Adjusted net loss per share of $0.23 to $0.18, representing a narrowing of 26% to 42% from fiscal 2020. Previous guidance was for an adjusted loss per share of $0.42 to $0.37.
