The pandemic has heightened the need for Okta’s software.
Tiffany Hagler-Geard/BloombergOkta shares are trading lower in late trading Wednesday, after the identity-management software company announced better-than-expected results for its fiscal first quarter ended April 30—but also announced mixed full-year guidance and disclosed the surprise resignation of Chief Financial Officer Mike Kourey.
For the quarter, Okta (ticker: OKTA) posted revenue of $251 million, up 37% from a year earlier, and ahead of its guidance range of $237 million to $239 million. On a non-GAAP basis, the company lost $15 million, or 10 cents a share, beating the guidance range of a loss between 20 and 21 cents a share. On a GAAP basis, the company lost $109 million, or 83 cents a share. Remaining performance obligations, a measure of future growth, were $1.89 billion, up 52%, while billings were $364 million, up 74%. Free cash flow was $53 million, up 21%.
The company revised its guidance for both the July quarter and the January 2022 fiscal year to reflect the completion of its $6.5 billion acquisition of Auth0, an identity software provider. For the quarter, Okta now sees revenue of $295 million to $297 million, well ahead of the Street consensus at $258 million. But the company is forecasting a non-GAAP loss for the quarter of 35 to 36 cents a share, while the old consensus called for a loss of 11 cents.
For the full year, Okta now sees revenue of $1.215 billion to $1.225 billion, up 45% to 47% and ahead of its previous forecast of $1.08 billion to $1.09 billion. The company’s revised forecast calls for a non-GAAP loss of $1.13 to $1.16 a share, compared with a previous forecast loss of 44 to 49 cents a share.
Okta also said that Kourey will step down as CFO effective June 1. He will remain with the company in an interim capacity to ensure a smooth transition, it said. Okta named Brett Tighe, now treasurer and senior vice president of finance, as interim CFO. The company will launch a search for a permanent successor.
Okta stock was down 2.7%, at $239.82, in late trading.
CEO Todd McKinnon said in an interview with Barron’s that it was “another strong quarter for Okta,” with record operating and free cash flow. McKinnon said the company is seeing particularly strong demand from enterprise customers—he says the number of customers generating $100,000 a year or more in revenue has topped 2,000, up 125 in the quarter.
McKinnon noted that with the closure of the Auth0 acquisition on May 3, the deal will be fully reflected in fiscal-second-quarter results. He said the revised guidance for the quarter and the year reflects both Auth0’s status as a growth business—it’s further away from reaching profitability than the rest of Okta—as well as some purchase accounting accruals that will impact both the revenue and expense lines in the company’s results.
As for the CFO change, McKinnon said he and Kourey “mutually decided it wasn’t a fit.” A former Okta board member who had been chairman of the audit committee, Kourey was named to the spot in December after the retirement of the previous CFO, Bill Losch. Okta also said that former Oracle CFO Jeff Epstein, now with Bessemer Venture Partners, is joining the board and will be audit chair.
Asked about the tone of business, McKinnon said that “the business environment is starting to normalize” and that the pandemic has heightened the need for Okta’s software. He says the company is benefiting from both the expanded reliance on remote work and growing concerns about cybersecurity. Says McKinon: “We should have a really strong next few quarters.”
Write to Eric J. Savitz at eric.savitz@barrons.com
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Okta Results Top Guidance, but Stock Slips on CFO Exit and Revised Outlook - Barron's
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