Okta’s Strong Q2 Results: What to Expect Moving Forward

2 min read | September 04, 2024 12:43 PM PDT | By Team Kalkine Media

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Solid Q2 Performance: Okta reported impressive second-quarter results with a 16% revenue increase and a substantial rise in adjusted EPS.
Future Outlook: The company's revenue and EPS forecasts for the upcoming quarters show steady growth, with a slight dip in the short-term subscription backlog growth.
Strategic Developments: Okta remains optimistic about future growth, bolstered by its expanding customer base and upcoming product launches.

Okta (NASDAQ:OKTA) shares experienced a decline despite the company posting strong results for the second quarter. The latest financials revealed a 16% increase in revenue, reaching $646 million, and a 17% rise in subscription revenue, which hit $632 million. Adjusted earnings per share (EPS) rose notably from $0.31 to $0.72. The company’s revenue and EPS guidance for the quarter was set at 13% to 14% growth and between $0.60 and $0.61 per share, respectively.

The company's remaining performance obligation (RPO) backlog grew 16% to $3.51 billion, while the current RPO (cRPO) backlog, representing expected subscription revenue for the next 12 months, increased 13% to nearly $2 billion. These figures indicate future revenue prospects based on existing contracts. Additionally, Okta’s net dollar retention rate stood at 110%, consistent with the previous quarter, and its customer base grew to 19,300, up from 19,100 at the end of the previous quarter.

Looking ahead, Okta projects third-quarter revenue to range between $648 million and $650 million, reflecting an approximate 11% year-over-year increase, with adjusted EPS anticipated between $0.57 and $0.58. The company expects the current subscription backlog to expand by 9%, reaching between $1.985 billion and $1.99 billion. Although concerns arose over the forecasted growth rate of the cRPO backlog, Okta is confident in its ability to secure new deals and capitalize on upsell opportunities.

For the full fiscal year, Okta anticipates revenue between $2.555 billion and $2.565 billion, marking a 13% growth at the midpoint, with adjusted EPS expected between $2.58 and $2.63. This upward revision in guidance for the second consecutive quarter reflects a cautious approach influenced by macroeconomic conditions and the impact of a previous security incident in 2023.

Despite these challenges, Okta remains positive about its growth prospects. The company is set to unveil several new products at its upcoming Oktane conference in October and continues to see robust performance with large enterprises.

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