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OKTA Incurs Loss in Q2, Subscription Revenues Increase Y/Y
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Okta, Inc. (OKTA - Free Report) reported second-quarter fiscal 2023 adjusted loss of 10 cents per share, beating the Zacks Consensus Estimate by 66.67%. The company had reported a loss of 11 cents per share in the year-ago quarter.
Total revenues surged 43.2% year over year to $451.8 million and surpassed the consensus mark by 4.93%. The upside can be attributed to higher subscription revenues.
Subscription revenues (96.4% of total revenues) surged 43.6% year over year to $435.4 million. Professional services and other revenues (3.6% of total revenues) increased 32.7% year over year to $16.4 million.
Okta shares were down 11.93% in after-hours trading following the second-quarter results. Okta shares are down 71.1%, underperforming the Zacks Computer & Technology sector’s decline of 28.2% year to date.
Quarter Details
Location-wise, revenues from the United States (78% of total revenues) in the fiscal second quarter were $352.4 million, up 41.4% year over year. International revenues (22% of total revenues) soared 50% year over year to $99.4 million.
Total calculated billings were $491.3 million, up 35.6% year over year. The uptick was driven by new and existing commercial as well as enterprise customers and increased bookings.
The dollar-based retention rate in the trailing 12 months was 122%, down 200 basis points (bps).
Remaining Performance Obligations (“RPO”) totaled $2.79 billion, up 25% year over year. Current RPO, expected to be recognized over the next 12 months, was $1.49 billion, up 36% year over year.
Okta’s total customer count was 16,400, up 26% year over year. Customers with more than $100K in Annual Contract Value increased 35% year over year.
Operating Details
Non-GAAP total gross profits surged 43.7% year over year to $347.1 million. Gross margin contracted 30 bps to 76.8%.
Non-GAAP subscription gross margin was flat on a year-over-year basis.
Research and development expenses increased 27.3% year over year to $155.8 million. Sales and marketing increased 33.4% year over year to $264.7 million.
However, general and administrative expenses decreased 35.3% year over year to $101.7 million.
Total operating expenses increased 9.3% year over year to $522.2 million.
Non-GAAP operating loss was $15 million compared with a loss of $24.5 million in the year-ago quarter.
Balance Sheet
Okta had $2.49 billion in cash, cash equivalents and short-term investments as of Apr 30, 2022 compared with $2.49 billion as of Apr 30, 2022.
Guidance
For third-quarter fiscal 2022, Okta expects revenues in the range of $463-$465 million, which indicates year-over-year growth between 32% and 33%.
Non-GAAP operating loss is expected in the range of $37-$36 million while non-GAAP net loss is anticipated to be 25-24 cents per share.
For fiscal 2023, revenues are expected to be $1.812-$1.820 billion, indicating year-over-year growth between 39% and 40%.
Non-GAAP operating loss is expected in the range of $110-$105 million and non-GAAP net loss is anticipated between 73 and 70 cents per share.
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OKTA Incurs Loss in Q2, Subscription Revenues Increase Y/Y
Okta, Inc. (OKTA - Free Report) reported second-quarter fiscal 2023 adjusted loss of 10 cents per share, beating the Zacks Consensus Estimate by 66.67%. The company had reported a loss of 11 cents per share in the year-ago quarter.
Total revenues surged 43.2% year over year to $451.8 million and surpassed the consensus mark by 4.93%. The upside can be attributed to higher subscription revenues.
Subscription revenues (96.4% of total revenues) surged 43.6% year over year to $435.4 million. Professional services and other revenues (3.6% of total revenues) increased 32.7% year over year to $16.4 million.
Okta, Inc. Price, Consensus and EPS Surprise
Okta, Inc. price-consensus-eps-surprise-chart | Okta, Inc. Quote
Okta shares were down 11.93% in after-hours trading following the second-quarter results. Okta shares are down 71.1%, underperforming the Zacks Computer & Technology sector’s decline of 28.2% year to date.
Quarter Details
Location-wise, revenues from the United States (78% of total revenues) in the fiscal second quarter were $352.4 million, up 41.4% year over year. International revenues (22% of total revenues) soared 50% year over year to $99.4 million.
Total calculated billings were $491.3 million, up 35.6% year over year. The uptick was driven by new and existing commercial as well as enterprise customers and increased bookings.
The dollar-based retention rate in the trailing 12 months was 122%, down 200 basis points (bps).
Remaining Performance Obligations (“RPO”) totaled $2.79 billion, up 25% year over year. Current RPO, expected to be recognized over the next 12 months, was $1.49 billion, up 36% year over year.
Okta’s total customer count was 16,400, up 26% year over year. Customers with more than $100K in Annual Contract Value increased 35% year over year.
Operating Details
Non-GAAP total gross profits surged 43.7% year over year to $347.1 million. Gross margin contracted 30 bps to 76.8%.
Non-GAAP subscription gross margin was flat on a year-over-year basis.
Research and development expenses increased 27.3% year over year to $155.8 million. Sales and marketing increased 33.4% year over year to $264.7 million.
However, general and administrative expenses decreased 35.3% year over year to $101.7 million.
Total operating expenses increased 9.3% year over year to $522.2 million.
Non-GAAP operating loss was $15 million compared with a loss of $24.5 million in the year-ago quarter.
Balance Sheet
Okta had $2.49 billion in cash, cash equivalents and short-term investments as of Apr 30, 2022 compared with $2.49 billion as of Apr 30, 2022.
Guidance
For third-quarter fiscal 2022, Okta expects revenues in the range of $463-$465 million, which indicates year-over-year growth between 32% and 33%.
Non-GAAP operating loss is expected in the range of $37-$36 million while non-GAAP net loss is anticipated to be 25-24 cents per share.
For fiscal 2023, revenues are expected to be $1.812-$1.820 billion, indicating year-over-year growth between 39% and 40%.
Non-GAAP operating loss is expected in the range of $110-$105 million and non-GAAP net loss is anticipated between 73 and 70 cents per share.
Zacks Rank & Stocks to Consider
Currently, Okta carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Computer & Technology sector are Audioeye (AEYE - Free Report) , Airbnb (ABNB - Free Report) and Amphenol (APH - Free Report) . All three stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Audioeye, Airbnb and Amphenol are down 7.4%, 33.6% and 17%, respectively, on a year-to-date basis.