Okta shares surge as fiscal Q3 results top expectations, forecast higher as well

The security vendor said it is benefitting from companies speeding up their use of cloud-computing-based software applications.
Written by Tiernan Ray, Senior Contributing Writer

Okta, the eleven-year-old, San Francisco-based maker of software to secure enterprise identities and authorize computer usage, this afternoon reported fiscal third-quarter revenue and profit that both topped expectations, and offered a forecast for revenue that beat expectations as well.

Okta said its chief financial officer, Bill Losch, will retire next year. 

CEO Todd McKinnon called the results "strong," and added that the company is "seeing the importance of a modern identity platform like the Okta Identity Cloud grow as businesses around the world accelerate their adoption of cloud-based applications and re-imagine their digital customer experiences," 

For the three months ended in October, Okta reported revenue of $217 million and 4 cents per share in net profit.

That compares to the average Street estimate for $202.8 million in revenue a net loss of one penny per share. 

Okta said its remaining performance obligation, or RPO, a standard Wall Street measure for cloud companies' future revenue potential, rose by 53% in the quarter to reach $1.58 billion.  

Free cash flow in the quarter quadrupled, year over year, to $41.6 million, equating to just over 19% of revenue, the company said.   

For the current quarter, the company sees revenue of $221 million to $222 million, above the average Wall Street estimate for $216 million.  

CFO Losch, who has been with the company since 2013, will retire in March, Okta said, and will stay on through the first quarter of fiscal 2022 as an advisor to the company. 

Taking over for Losch will be Mike Kourey, the CFO of cloud company Vlocity Inc., and a current board member for Okta who serves on the board's audit committee. 

CEO McKinnon thanked Losch "for his invaluable contribution to Okta from our early years to helping set the course to achieve over $1 billion in revenue next year." McKinnon called Losch "a fantastic leader, partner, and friend," adding "we are all going to sincerely miss him."

McKinnon noted that Kourey "brings decades of experience in scaling companies, which will be key as we position Okta to become the next iconic technology company."

Okta shares are up about 7% in late trading.

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