Cloud identity management company Okta Inc. beat earnings expectations in its second-quarter financial results today, but the strong performance wasn’t enough to prevent its stock falling more than 4% in after-hours trading.
The company reported a profit before certain costs such as stock compensation of 7 cents per share on revenue of $200.4 million, up 43% from a year ago. Wall Street was expecting a loss of 2 cents per share on revenue of $186.29 million.
Okta Chief Executive Todd McKinnon (pictured) said the company’s successful quarter was driven by a trio of “megatrends” that have boosted its fortunes for several years already, including the adoption of cloud and hybrid IT, digital transformation, and the rise of zero-trust security practices. He said all three of those trends are being accelerated by COVID-19 and the resulting move to working from home.
“These trends are reflected in our strong second-quarter results and reflect the work that Okta is doing to help organizations around the world accelerate their adoption and deployment of cloud applications, and remote access, and re-imagine their digital customer experiences,” McKinnon said. “We believe that the world will not return to the pre-COVID work environment and Okta is committed to helping our customers on their journeys.”
Okta said subscription revenue for the quarter rose 44% from a year ago, to $190.7 million. It also reported remaining performance obligations of $1.43 billion, up 56%. Meanwhile, current RPO came to $684.5 million, up 48%.
RPO is an important accounting metric that provides investors with more visibility into recurring subscription business. Current RPO refers to contracts due in the next 12 months, while total RPO provides insight into the company’s overall contract business, including multiyear deals.
Okta cited a number of customer wins during the quarter, saying that Equifax Inc., LVMH Group and the
State of Illinois had all adopted the Okta Identity Cloud to secure their critical applications. Those additions helped Okta’s total number of customers grow to 8,950 at the end of the quarter.
“We’re continuing to focus on successful customer deployments,” in particular the public sector, Okta co-founder and Chief Operating Officer Frederic Kerrest told SiliconANGLE in an interview.
Kerrest added that he wasn’t too concerned that Okta’s stock had fallen after-hours. “The public markets always want more, but I feel like we’re doing all the right things,” he said.
Okta also delivered strong guidance for the next quarter. It said it expects third-quarter revenue of $202 million to $203 million, well ahead of Wall Street’s forecast of $195.68 million in revenue.
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