Okta shares down 12% despite a strong Q2 and raised guidance

on Aug 31, 2022
Updated: Jun 21, 2024
  • Okta had a strong Q2 and it raised guidance for the future.
  • Okta shares still slipped 12% in after-hours for two reasons.
  • The stock is now down over 60% versus the start of the year.

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Okta Inc (NASDAQ: OKTA) reported market-beating results for its fiscal second quarter and raised future guidance on Wednesday. The stock is still down 12% after the bell.

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Why are Okta shares down in after-hours?

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Okta shares are down in extended trading for two reasons. First – it forecasts up to $1.55 billion of remaining performance obligations at the end of its current quarter that translates to a massive 25% sequential decline.

Secondly, the Nasdaq-listed firm said it was struggling with integrating Auth0; a Washington-based identity software company it bought last year for $6.50 billion.

Okta Q2 earnings snapshot

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  • Lost $210.5 million versus the year-ago $276.7 million
  • Per-share loss of $1.34 was narrower than $1.83 last year
  • On an adjusted basis, quarterly loss was 10 cents a share
  • Revenue jumped 43% year-over-year to $451.8 million
  • Consensus was 31 cents loss on $430.7 million in revenue
  • Subscription revenue climbed a better than expected 44%

The California-based company ended the quarter with $2.79 billion of remaining performance obligations – up 25%. Okta shares are now down more than 60% YTD, in consortium with the tech stocks at large that continue to tumble in the rising rate environment this year.

Future guidance and CEO’s remarks

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For the full financial year, Okta now forecasts up to 73 cents of adjusted per-share loss on $1.812 billion to $1.820 billion in revenue.

It expects revenue to fall between $463 million and $465 million this quarter on up to 25 cents of adjusted per-share loss. In comparison, analysts had called for $464 million and 28 cents a share, respectively. In the earnings press release, CEO Todd McKinnon said:

Identity has become a critical component of every organisation’s strategy around zero trust security, digital transformation, and cloud adoption. For H2, we’re focused on refining the go-to market strategy for the combined Auth0 and Okta sales organisation, strengthening our teams, and making strategic reductions to our spend to improve profitability.

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