What happened
Shares of Okta (OKTA 7.13%), the identity-for-the-cloud specialist, were moving higher today after the company posted strong results in its second-quarter earnings report.
As of 10:52 a.m. ET, the stock was up 12.6%.
NASDAQ: OKTA
Key Data Points
So what
In a challenging environment for software stocks, Okta posted impressive results as management said the macro environment was stabilizing.
Revenue at the company, which helps businesses allow employees and customers to seamlessly and securely log in to the apps they need, rose 23% to $556 million, beating expectations of $534.5 million.
Okta continued to deliver strong growth in customers, up 12% to 18,400, and customers with over $100,000 and $1 million in annual contract value (ACV) were its best-performing categories, showing solid demand from large companies.
Current remaining performance obligations (cRPO), a backlog indicator, were up 18% to $1.77 billion, and RPO was up 8% as customers are requesting shorter contract lengths, in part a reflection of the cautious macro environment.
On the bottom line, the company's focus on profitability continued to yield results with adjusted earnings per share improving from $0.10 in the quarter a year ago to $0.31, topping estimates at $0.22. Free cash flow improved from a loss of $24 million in the quarter a year ago to a $49 million profit.
CEO Todd McKinnon said, "Our focus on execution and efficiency has delivered solid top-line results with significant improvements to operating profit and cash flow year-over-year."
Now what
Okta raised its guidance for the full year calling for $2.21 billion to $2.22 billion, or 19% growth, and it sees adjusted earnings per share (EPS) of $1.17 to $1.20, up from a previous range of $0.88 to $0.93, a sign its cost control efforts are paying off as the company has held sales and marketing spending flat.
For the third quarter, it called for revenue of $558 million to $560 million, or 16% growth, and adjusted EPS of $0.29 to $0.30.
With the macro environment stabilizing and profitability continuing to ramp up, it's not a surprise to see the stock popping today.
Okta has an $80 billion addressable market in front of it and it's expected to fully release its privileged access management (PAM) product later this year. Considering that, Okta shares look poised to continue climbing.
