Okta, Inc. (NASDAQ:OKTA) has outperformed expectations in the second quarter of fiscal 2024, reporting earnings of 31 cents per share. This figure comfortably surpasses the Zacks Consensus Estimate of 21 cents. In comparison, the company had reported a loss of 10 cents per share during the same period in the previous year.
The company’s total revenues have shown a remarkable increase, climbing by 23% year over year to reach $556 million. This achievement not only demonstrates the company’s financial strength but also exceeds the consensus prediction by 4.11%. This upward trend in revenues is primarily attributed to the substantial growth in subscription revenues.
Okta’s customer base has expanded significantly, with a 12% increase in total customer count compared to the previous year. Particularly noteworthy is the growth of customers with an Annual Contract Value (ACV) exceeding $100,000, which has risen by 19% year over year. The company managed to onboard 350 new customers during the reported quarter, out of which 125 were in the high-value $100K-plus ACV category.
Key Highlights from the Quarter
- Workforce Identity ACV increased by 22% and accounted for 61% of the total ACV.
- Customer Identity ACV experienced a robust growth of 29%, representing 39% of the total ACV.
- Subscription revenues, constituting 97.5% of total revenues, surged by 24.6% to reach $542 million.
- Revenues from the United States contributed to 79% of total revenues, with international revenues (21% of total revenues) growing by 18.2% year over year.
- The dollar-based retention rate in the trailing 12 months slightly decreased to 115%, compared to 122% reported in the year-ago quarter.
- Remaining Performance Obligations (RPO) showed an 8% increase year over year, totaling $3.03 billion. Current RPO, expected to be recognized within the next 12 months, reached $1.77 billion, marking an 18% year-over-year increase.
Operational Performance
Non-GAAP gross profit witnessed substantial improvement, soaring by 28% year over year to $444 million. The gross margin also expanded by 310 basis points to 79.9%, showcasing the company’s efficiency in managing costs.
While research and development expenses saw a 10.3% year-over-year increase, reaching $172 million, both sales and marketing expenses and general administrative expenses experienced changes of -1.5% and 17.8% respectively, compared to the previous year.
The company’s overall operating expenses increased by 5.7% year over year to $552 million. Notably, non-GAAP operating income reached $59 million, marking a significant improvement compared to a loss of $15 million in the year-ago quarter.
Financial Outlook
Looking ahead, Okta has projected a positive outlook for the rest of fiscal 2024:
- Q2 fiscal 2024 revenues are estimated to be in the range of $558 million to $560 million, indicating a year-over-year growth of 16%.
- The current RPO is anticipated to be between $1.78 billion and $1.785 billion, reflecting a 13% increase year over year.
- Non-GAAP operating income is expected to range between $53 million and $55 million, with non-GAAP earnings per share predicted to be between 29 and 30 cents.
For the entirety of fiscal 2024, Okta predicts revenues to fall within the range of $2.207 billion to $2.215 billion, representing a 19% year-over-year growth. Non-GAAP operating income is projected to be between $215 million and $220 million, while non-GAAP earnings per share are anticipated to be in the range of $1.17 to $1.20.
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