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Last Update: 06-Dec-18 09:13 ET
Okta reports another beat-and-raise; doing a good job at winning larger accounts (OKTA)
Okta (OKTA 63.86, +3.21, +5.29%) is trading higher today despite a weak overall market.
The company reported Q3 (Oct) results last night.
Okta is a provider of identity security for the enterprise. Every day, workers use Okta to securely access a wide range of company assets, including cloud applications, websites, mobile apps and services from a multitude of devices. Each of these users represents a unique user ID that authenticates into Okta's platform. Companies also use the Okta platform to provide their customers with more modern experiences online and via mobile devices.
Identity is quickly becoming the most critical layer of a company's security. As the corporate perimeter has dissolved, identity has become the most reliable way to manage user access, adopt cloud and mobile technologies and protect digital assets. Its approach to identity eliminates duplicative, sprawling credentials and disparate authentication policies, allowing customers to simplify their IT security infrastructures. The Okta Identity Cloud allows their customers to provision their customers, employees, contractors, and partners, enabling any user to connect to any device, cloud or application, all with a simple sign-on.
Turning to the Q3 (Oct) results, Okta reported a non-GAAP loss of $(0.04) per share, which was much better than the $(0.19) loss last year and much better than prior guidance of $(0.12)-(0.11). Revenue rose 57.8% yr/yr to $105.6 mln, which also was well above prior guidance of $96-97 mln. Subscription revenue was $97.7 mln, an increase of 58% yr/yr. Looking ahead, Okta expects a Q4 (Jan) non-GAAP loss of $(0.09)-(0.08) and revenue of $107-108 mln. Both guidance metrics are well ahead of market expectations.
Okta added 450+ new customers in Q3 bringing its total to over 5,600. Growth in customers with over $100,000 annual recurring revenue (ARR) has been accelerating lately and that was the case again this quarter, which saw 55% growth in customers with over $100,000 in ARR, which represents a record 100 net new adds in a quarter.
On the call, Okta said it closed a number of significant deals in the quarter. For example, Hertz chose Okta to securely connect all of its employees to the hundreds of applications they use to run their business. Also, an international financial services company with over 750,000 members was a new customer identity and workforce identity win for Okta in the quarter. A noteworthy upsell in the quarter was the US Dept of State, which had initially purchased Okta for authentication for its more than 100,000 external industry partners, but will now expand to its entire workforce. Partnering with system integrators has been a key way for Okta to grow its business. Deloitte and VMWare are key partners for Okta.
Of note, they are really doing a good job at winning larger accounts, so that's good to see. Okta is really a play on companies moving to the cloud and their need for identity management. Okta sees a lot of room for growth as its market is still in the early stages of development.
In sum, the stock has been hitting choppy waters in the past few months after a nice move higher in 1H18. Okta has now reported upside each of the seven quarters since it became a public company in April 2017. Okta's history has been to beat-and-raise and oftentimes by a sizeable amount as was the case this quarter. Despite the company not yet being profitable, this was another good quarter for Okta and that's reflected in today's move in the stock price.
Okta is a provider of identity security for the enterprise. Every day, workers use Okta to securely access a wide range of company assets, including cloud applications, websites, mobile apps and services from a multitude of devices. Each of these users represents a unique user ID that authenticates into Okta's platform. Companies also use the Okta platform to provide their customers with more modern experiences online and via mobile devices.
Identity is quickly becoming the most critical layer of a company's security. As the corporate perimeter has dissolved, identity has become the most reliable way to manage user access, adopt cloud and mobile technologies and protect digital assets. Its approach to identity eliminates duplicative, sprawling credentials and disparate authentication policies, allowing customers to simplify their IT security infrastructures. The Okta Identity Cloud allows their customers to provision their customers, employees, contractors, and partners, enabling any user to connect to any device, cloud or application, all with a simple sign-on.
Turning to the Q3 (Oct) results, Okta reported a non-GAAP loss of $(0.04) per share, which was much better than the $(0.19) loss last year and much better than prior guidance of $(0.12)-(0.11). Revenue rose 57.8% yr/yr to $105.6 mln, which also was well above prior guidance of $96-97 mln. Subscription revenue was $97.7 mln, an increase of 58% yr/yr. Looking ahead, Okta expects a Q4 (Jan) non-GAAP loss of $(0.09)-(0.08) and revenue of $107-108 mln. Both guidance metrics are well ahead of market expectations.
Okta added 450+ new customers in Q3 bringing its total to over 5,600. Growth in customers with over $100,000 annual recurring revenue (ARR) has been accelerating lately and that was the case again this quarter, which saw 55% growth in customers with over $100,000 in ARR, which represents a record 100 net new adds in a quarter.
On the call, Okta said it closed a number of significant deals in the quarter. For example, Hertz chose Okta to securely connect all of its employees to the hundreds of applications they use to run their business. Also, an international financial services company with over 750,000 members was a new customer identity and workforce identity win for Okta in the quarter. A noteworthy upsell in the quarter was the US Dept of State, which had initially purchased Okta for authentication for its more than 100,000 external industry partners, but will now expand to its entire workforce. Partnering with system integrators has been a key way for Okta to grow its business. Deloitte and VMWare are key partners for Okta.
Of note, they are really doing a good job at winning larger accounts, so that's good to see. Okta is really a play on companies moving to the cloud and their need for identity management. Okta sees a lot of room for growth as its market is still in the early stages of development.
In sum, the stock has been hitting choppy waters in the past few months after a nice move higher in 1H18. Okta has now reported upside each of the seven quarters since it became a public company in April 2017. Okta's history has been to beat-and-raise and oftentimes by a sizeable amount as was the case this quarter. Despite the company not yet being profitable, this was another good quarter for Okta and that's reflected in today's move in the stock price.
