Okta (NASDAQ:OKTA) shares surged more than 11% in pre-open Thursday trade following the company's reported Q2 results.
EPS of $0.31 came in better than the consensus estimate of $0.22. Revenue grew 23% year-over-year to $556 million, beating the consensus estimate of $534.67M.
Subscription revenue was $542M, representing an increase of 24% year-over-year. RPO, or subscription backlog, grew 8% year-over-year to $3.03 billion. cRPO, which is subscription backlog expected to be recognized over the next 12 months, increased 18% year-over-year to $1.77B.
“Our focus on execution and efficiency has delivered solid top-line results with significant improvements to operating profit and cash flow year-over-year,” said CEO Todd McKinnon.
For Q3/24, the company expects revenue in the range of $558M-$560M, representing a growth rate of 16% year-over-year. EPS is seen at $0.29-$0.30. Analysts were looking for EPS of $0.22 on revenue of $552.4M.
For the full year, the company expects EPS of $1.17-$1.20, compared to the consensus of $0.91, and revenue of $2.21B-$2.22B, compared to the consensus of $2.18B.
Evercore ISI analysts raised the rating on OKTA stock to In Line with a price target lifted by $10 to $75 per share.
"We are a lot more optimistic that most of the concerns that were underlying our underperform thesis on OKTA have either played out or are actively being addressed to where we are now seeing signs of improvement. We believe the risk/reward is more balanced at these levels given the business seems to be stabilizing," they wrote.
BofA analysts are more cautious and remain Underperform-rated as "growth challenges may not be over."
"While guidance may seem conservative, saturation among the existing customer base in addition to one-off tailwinds that occurred in 2Q could put additional pressure on growth. We raise our estimates to account for 2Q outperformance yet reiterate our Underperform as we believe the company faces both cyclical and internal headwinds."
(Additional reporting by Senad Karaahmetovic)