What happened
Shares of Okta (OKTA 2.91%) stock, the cloud-based cybersecurity company, crashed today despite beating expectations in its earnings report last night -- down 10% as of 11:20 a.m. ET.
Heading into the fourth quarter of fiscal year 2022, analysts had forecast that Okta would lose $0.24 per share (adjusted) on less than $360 million in sales. As it turned out, Okta lost only $0.18 per share, and scored $383 million in sales -- but investors didn't care.
Image source: Getty Images.
So what
Okta grew its revenue 63% year over year in fiscal Q4 2022, with subscription revenue growth even a bit stronger than that -- 64%. For the year, sales grew 56% to $1.3 billion -- so sales growth actually accelerated in Q4.
Nevertheless, Okta lost money in the quarter -- and the year. Looking past the company-defined "adjusted" number, when calculated according to generally accepted accounting principles (GAAP) Okta's loss for Q4 came to a staggering $1.56 per share -- way worse than the adjusted loss stated above, and triple last year's quarterly loss.
For the full year, Okta's net loss totaled $5.73 per share, nearly triple the $2.09 per share lost in fiscal 2021.
Now what
And the news gets worse. As regards fiscal Q4 2022, at least you can still say the company did better than expected. As investors turn their attention to fiscal 2023, however, it appears Okta will do considerably worse than Wall Street was predicting.
Issuing new guidance for the new year, Okta warned that:
- First-quarter sales will range from $388 million to $390 million, which works out to 55% year over year growth -- a deceleration in sales growth from Q4 2022's impressive run.
- Okta will lose $0.34 or $0.35 per share in the quarter, non-GAAP -- and perhaps even more, GAAP.
- For the full year, the company anticipates sales slowing even further -- up 38% or less to just under $1.8 billion.
- And non-GAAP losses will be at least $1.24 per share -- perhaps as much as $1.27 per share.
As regards analyst expectations, Okta's forecast implies better-than-expected sales growth, but losses much worse than feared. Apparently, it's those losses that are scaring investors today.
