Cloud Stocks: Okta Reiterates Outlook

Corporate identity management software company Okta (Nasdaq: OKTA) reported a strong first quarter recently that beat estimates. Like several cloud stocks, Okta’s stock has also benefited from the work-from-home transition following the COVID-19 pandemic outbreak.

Okta’s Financials

Revenues for the first quarter grew 46% to $182.9 million, ahead of the market’s forecast of $171.4 million. GAAP net loss was $57.7 million compared with a loss of $52 million a year ago. Adjusted loss narrowed to $0.07 per share from $0.19 a year ago and was also better than the Street’s estimated loss of $0.07 per share. Billings grew 42% to $209.5 million. Cash, cash equivalents, and short-term investments were $1.45 billion at April 30, 2020.

By segment, subscription services revenues increased 48% to $173.8 million. Professional services and the others segment revenues grew 12% to $9.1 million.

Among key metrics, Remaining Performance Obligations (RPO) grew 57% to $1.24 billion. Dollar-based net retention also improved to 121% compared with 119% a quarter ago. During the quarter, it added 113 large enterprise customers with ACV over $100,000 taking the total count to 1,600. Over 50% of the additions were from new customers like Parsons Corporation. A much smaller portion of Okta’s overall business is generated from SMBs. As a result, the slowdown in this sector has less impact.

Based on its performance, Okta reiterated its revenue outlook for the year. It expects to end fiscal 2021 with $770-$780 million in revenues at a growth rate of 31%-33% and non-GAAP net loss per share of $0.23-$0.18. For the second quarter, Okta forecast revenues of $185-$187 million or a growth rate of 32%-33% with a net loss of $0.02-$0.01 per share in line with analyst estimates.

Okta’s Acquisitions, New Offerings, and Partnerships

In March, Okta announced its plans to acquire Seattle-based workflow automation startup Azuqua for $52.5 million. Founded in 2013, Azuqua has raised $16 million. Its customers include Airbnb, McDonald’s, VMware, and HubSpot. San Francisco-based Okta plans to move the Azuqua team to its Bellevue office and increase its presence in the Northwest.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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