By Michael Dabaie
Okta Inc. shares rose 11% to $220.36 Thursday afternoon after third-quarter results and guidance beat analyst views.
The identity provider after the bell Wednesday reported third-quarter revenue was 61% higher at $351 million, exceeding the FactSet consensus for $327.2 million. Adjusted loss per share was 7 cents, narrower than the FactSet consensus for a loss of 24 cents.
Okta's guided for fourth-quarter revenue of $358 million to $360 million, representing 53% growth and coming in above the FactSet $355.2 million consensus. Forecast for fourth-quarter adjusted loss per share was 25 cents to 24 cents, while the FactSet consensus had been for a loss of 28 cents.
The financial outlook for the fourth quarter and full year fiscal 2022 includes the expected contribution from the acquisition of Auth0, which was completed in May.
For the full year fiscal 2022, the company said it now expects revenue of $1.275 billion to $1.277 billion, up from previous outlook of $1.243 billion to $1.25 billion, and adjusted loss per share of 53 cents to 52 cents, narrower than previous guidance of 77 cents to 74 cents. The company guided for adjusted operating loss of $85 million to $84 million, narrower than its previous outlook for $119 million to $114 million.
Interim Chief Financial Officer Brett Tighe said during the company's conference call that Okta currently estimates fiscal 2023 total revenue to be in the range of $1.745 billion to $1.755 billion, representing growth of 37%.
J.P. Morgan noted organic improvement in results, but prudence in the outlook.
"Standalone Okta grew slightly faster than last quarter and that should come as a relief to investors concerned about an organic slowdown, but the guide for 4Q22 and FY23 implies a noticeable slowdown organically. We chalk this up to the guidance approach management has used since the IPO," J.P. Morgan analysts said.
"Revenue guidance for the fourth quarter implies roughly 53% growth; assuming around $50M of contribution from Auth0 leads us to organic growth of 32%, a sharp slowdown from the 40% growth this quarter. Furthermore, the company issued preliminary guidance for FY23 of 37%, which is below our previous estimate of 49% growth that assumed continued strong performance from Auth0 as well as the standalone Okta business. We view these updates as prudence rather than any meaningful operational changes," J.P. Morgan said.
Stifel said Okta delivered a solid third-quarter print, "with all key metrics above guidance and/or Stifel/street estimates given underlying strength across core Okta and Auth0 segments, supported by the ongoing favorable cybersecurity spending environment, strong execution, and early momentum with Okta/Auth0 cross-sells."
Raymond James said it maintained its Strong Buy after results that featured upside to growth and profitability metrics, and forward guidance that ticks its own and Wall Street models higher.
Write to Michael Dabaie at michael.dabaie@wsj.com
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