Okta reported better-than-expected financial results for its fiscal fourth quarter ended January. The identity management software company also gave forecasts for the April quarter and fiscal 2025 that beat Wall Street estimates.
Okta has taken several steps to recover from a major security breach in 2023. The company said late last year that it had discovered that a “threat actor” had downloaded a report containing the names and email addresses of all users of Okta's customer support system in a security breach in October. The breach affected most of the company's customers, with the exception of certain federal and Department of Defense systems.
Okta has made progress in responding to the breach with a plan that includes new security measures and a number of management changes. And the company's financial results suggest the problem is unlikely to have a lasting impact.
For the January quarter, Okta reported revenue of $605 million, up 19% year-over-year, beating the company's forecast range of $585 million to $587 million and the Wall Street consensus of $587 million tracked by FactSet U.S. dollar.
Adjusted net income was 63 cents per share in the quarter, above the company's forecast range of 50 to 51 cents per share and the Street consensus of 51 cents. At quarter end, remaining performance obligations were $3.385 billion, an increase of 13%.
CEO Todd McKinnon said in an interview with Barron's that the company isn't seeing the kind of “spending fatigue” that security software company Palo Alto Networks described in its earnings release last week.
He says small and medium-sized customers are no longer investing as much as they were a few years ago, but adds that demand from larger customers is robust, pointing out, for example, that one of the largest U.S. telecommunications companies has a 25 -year-old facility replaced -old identity management system with Okta's platform. Okta saw a 30% increase in transactions valued at $1 million or more this quarter, he says.
As for the fallout from the breach, McKinnon said that “it probably had some impact,” if only in the “tremendous amount of time” he and other executives spent talking to customers about the issue. But he adds, “When I look at the success rates, graduation rates, projections and growth, everything is good.”
For the April quarter, Okta expects revenue between $603 million and $605 million, up 16 percent to 17 percent, with adjusted earnings of 54 cents to 55 cents per share. That's above the Wall Street consensus of $584 million in revenue and profit of 41 cents per share.
For the 2025 fiscal year ending in January, the company now expects revenue between $2.495 billion and $2.505 billion, up 10% to 11% and above the previous guidance range of $2.46 billion to $2.47 billion.
Okta expects full-year non-GAAP earnings of $2.24 to $2.29 per share, above the Wall Street consensus of $1.96 per share. The company expects full-year non-GAAP free cash flow margin to be approximately 21%, above a previous forecast of 19%. “We have a big year ahead of us,” McKinnon added. “We are confident in our leadership.”
Okta also announced several management changes. Eric Kelleher, who was previously chief customer officer, will become president of customer experience and communications. Ed Daly, who was senior vice president of customer success and renewal sales, will become chief customer officer. Christine Halvorsen, a 20-year FBI employee who most recently worked at consulting firm Protiviti, has been named chief technology officer for the public sector.
Okta shares are down about 4% so far this year.