Cybersecurity and identity management company Okta (NASDAQ:OKTA) smashed analysts’ third-quarter expectations, reflecting strong execution amid macro uncertainties. The company issued a robust outlook for the fourth quarter and raised its full-year guidance. Okta stock jumped over 15% in Wednesday’s extended trading session.
Okta’s Q3 FY23 (ended October 31, 2022) revenue grew 37% to $481 million, reflecting solid demand for the company’s cloud-based identity security products. It delivered break-even earnings compared to a net loss per share of $0.07 in the prior-year quarter. Analysts expected revenue of $465.4 million and an adjusted loss per share of $0.24. Lower-than-anticipated operating expenses helped in improving the bottom line.
Okta Issues Impressive Guidance
Management expects the macro environment to worsen before it gets better. Given this scenario, the company is improving its profitability by cutting down on hiring, rationalizing its facilities footprint, and exercising cost discipline. Additionally, the company stated that sales attrition, a major concern earlier this year, has significantly improved compared to the second quarter.
Okta expects Fiscal Q4 revenue of $488 million to $490 million, reflecting year-over-year growth of 27% to 28%. It projects adjusted EPS in the range of $0.09 to $0.10. Analysts anticipated an adjusted loss of 0.12 per share on revenue of $488.3 million.
The company raised its full-year revenue forecast to the range of $1.836 billion to $1.838 billion, up from the prior outlook of $1.812 billion to $1.820 billion. It expects a loss per share of $0.26 to $0.27, compared to the prior guidance of a loss per share of $0.70 to $0.73.
Is Okta a Good Stock to Buy?
Wall Street is cautiously optimistic about Okta stock, with a Moderate Buy consensus rating based on 13 Buys, 10 Holds, and one Sell. The average Okta stock price target of $72.09 implies 35.2% upside potential. Shares have plunged 76.1% year-to-date.