Shares of Okta (OKTA +0.54%) surged out of the gate Thursday morning, gaining as much as 28.4%. As of 11:30 a.m. ET, the stock was still up 20.8%.
The catalyst that sent the cybersecurity specialist soaring was its quarterly earnings results, which suggested the company may finally be on the path to recovery.
NASDAQ: OKTA
Key Data Points
Beat and raise
For its fiscal 2024 fourth quarter (ended Jan. 31), Okta generated revenue of $605 million, up 19% year over year, fueled by subscription revenue of $591 million, which grew 20%. The company's focus on costs boosted its bottom line, as adjusted earnings per share (EPS) of $0.68 more than doubled.
To give the results some context, analysts' consensus estimates were calling for revenue of $587 million and EPS of $0.51, so Okta sailed past expectations with plenty of room to spare.
Okta's robust cash generation continued, with operating cash flow of $174 million, up 129% year over year, while free cash flow of $166 million surged 131%.
The company's customer metrics also improved, with total customers of 18,950, up 8% year over year. Okta's most lucrative customers -- those spending $100,000 annually -- grew even faster, climbing 14%. The company's trailing-12-month dollar-based net retention rate clocked in at 11%, which shows existing customers are expanding their relationships.
Okta's remaining performance obligation (RPO) -- or contractually obligated sales not yet booked into revenue -- is on the upswing. Current RPO of $1.95 billion increased 16% year over year, while its total RPO of $3.39 billion increased 13%. This marked an acceleration compared to Q3. Since RPO is a forward-looking indicator, it suggests Okta's sales have begun to reaccelerate.
A stark recovery
For the second quarter, the company is expecting revenue of about $604 million, up roughly 16% at the midpoint of its guidance, while guiding for full-year revenue of $2.5 billion. Both forecasts exceeded Wall Street's expectations of $585 million and $2.48 billion, respectively -- and investors let out a collective sigh of relief.
The economic headwinds and self-inflicted wounds Okta suffered appear to be in the rearview mirror. With the strides the company has made, it might finally be time to buy Okta stock again.
