Okta (OKTA -1.79%) delivered another strong quarterly report on Wednesday, trouncing estimates on both sides of the income statement. 

The second-quarter report shows the identity-as-a-service provider continuing to deliver brisk growth as it's asserted itself as the leading provider of cloud identity software. Okta gives businesses tools that allow their employees and customers to seamlessly and securely log on across multiple portals and stay connected.

Revenue in the quarter rose 43% to $451.8 million, easily beating the analyst consensus of $430.6 million. On the bottom line, adjusted loss per share came in at $0.10, compared to a per-share loss of $0.11 in the quarter a year ago and the loss of $0.30 per share expected by analysts.

Despite the wide beats on the top and bottom lines, the cloud stock was down nearly 30% Thursday morning. Okta acknowledged a variety of challenges with the integration of Auth0, the customer identity software company it acquired early in 2021.

The growth target in question

Okta said it experienced greater-than-expected attrition from the Auth0 sales force as well as some confusion in the field. In an interview with the Motley Fool, Okta COO Frederic Kerrest said that some Auth0 reps were used to working for smaller companies and may have felt more comfortable in that kind of environment. He also said Okta had added new reps to replace the ones that had left, but they're still ramping up. The company has made adjustments to its go-to-market approach as well, making it easier for its sales force and its customer base to understand which product -- Okta or Auth0 -- is right for them. 

Additionally, management said macroeconomic headwinds are starting to have an impact as it's seeing lengthening sales cycles, a sign that customers were becoming more cautious.

All this seems to be taking a toll on the company’s long-term outlook. Last May, shortly after its acquisition of Auth0, Okta gave financial targets for fiscal 2026, which ends in January 2026. It set a goal of $4 billion in revenue with a 20% free cash flow margin. On the earnings call Wednesday, CFO Brett Tighe said the company is reevaluating the fiscal 2026 targets due to the headwinds related to the Auth0 integration, a reduction in its hiring plans as the company focuses on profitability and an uncertain macroeconomic environment.  

Asked about the fiscal 2026 target on the call, CEO Todd McKinnon stressed the importance of having a successful customer identity cloud in order to reach the $4 billion revenue goal, and said that given the challenges the company was facing in customer identity, which is Auth0's focus, it was prudent to reevaluate the target.

The company plans to give a complete update on the long-term guidance on the next earnings call, though based on the remarks above, it seems more likely than not that the company will step back from the $4 billion revenue target, potentially delaying it by a year. Historically, management has been conservative with its short-term guidance, so it would make sense for it to do the same with long-term guidance.

Should investors be worried?

While backing away from guidance is never a good sign, panicking about the announcement seems premature. Okta just delivered a rock-solid quarter, complete with 43% revenue growth, and it expects to expand its free cash flow margin in the second half of the year. 

The company also launched its identity governance platform in the quarter, helping to unlock a $15 billion addressable market, on top of the $65 billion addressable market the company currently serves in workforce and customer identity.

At Thursday morning's prices, it seems like any fears of slower long-term growth are already priced in. Okta is down nearly 80% from its peak a year ago, and it trades at a price-to-sales ratio just over 6 based on revenue of $1.6 billion over the past 12 months. That's the cheapest the stock has ever been, according to that metric.

Investors should stay tuned for the long-term guidance update in the third quarter, but at this point it looks like management is just being cautious with those comments. There's no reason to be alarmed.