Okta, a leader in identity authentication services, has projected third-quarter revenue that surpasses market estimates, underscoring the steadfast demand for its security offerings as businesses strive to fortify their defenses against escalating cyber threats.
Following this promising outlook, Okta’s shares surged by 10% after the closing bell. The company also revised its annual revenue and adjusted earnings forecast, further fueling investor confidence.
Headquartered in San Francisco, Okta specializes in identity services such as single sign-on and multi-factor authentication, vital components for accessing online applications and websites. Notably, its clientele encompasses significant players, including Microsoft-backed OpenAI.
Expanding its footprint, Okta has recently ventured into the Indian market and inaugurated its inaugural innovation center in the Asia-Pacific region, a strategic move to tap into the burgeoning demand in that locale.
The revised projections for fiscal year 2024 now indicate annual adjusted earnings ranging from $1.17 to $1.20 per share, a substantial uplift from the previously expected $0.88 to $0.93 per share. Similarly, the revenue outlook for the fiscal year has been elevated to $2.21 billion to $2.21 billion, from the earlier range of $2.18 billion to $2.19 billion.
Riding on the surge in security concerns within the information technology landscape, Okta foresees resilient demand for its security identification products. For the third quarter, it anticipates adjusted earnings of 29 to 30 cents per share, outshining market estimates of 20 cents.
In terms of revenue, Okta expects the current quarter to yield between $558 million and $560 million, comfortably surpassing analysts’ average projection of $552.4 million according to Refinitiv data.
Furthermore, Okta reports a notable uptick in its subscription backlog, which serves as a gauge for future revenue. This figure has surged by 8% to reach $3.03 billion.
In the second quarter, Okta demonstrated a remarkable revenue growth of 23% compared to the same period the prior year, totaling $556 million and outperforming predictions of $534.5 million. This success echoes a broader trend within the sector, as peer company Cyberark Software also surpassed quarterly revenue expectations earlier in June.
Notably, Okta previously undertook a workforce reduction of 5% in February, aimed at streamlining its cost structure and enhancing margins. The company’s Q2 earnings per share, excluding exceptional items, landed at 31 cents, a favorable result compared to market estimates of 22 cents.
