Okta beats third-quarter earnings expectations

On Tuesday, Okta reported stronger-than-expected earnings for the third quarter, showcasing a positive trend as more customers embrace its identity management solutions. Despite an initial dip in shares during after-hours trading, the company’s performance stood out against Wall Street estimates. Revenues surged nearly 12%, reaching $665 million compared to the same period last year. Additionally, net income saw a remarkable increase, nearly tripling to $43 million from $16 million a year prior. Subscription revenues also experienced an 11% growth, amounting to $724 million, which exceeded the anticipated $715 million. A significant highlight from the quarter was Okta's introduction of a feature enabling businesses to create AI agents and automate various tasks. CEO Todd McKinnon emphasized in a CNBC interview that the potential benefits from these AI agents have not yet been fully reflected in the company’s results. He expressed optimism that AI could greatly expand Okta's addressable market over the next five years, stating, "It's not in the results yet, but we're investing, and we're capitalizing on the opportunity like it will be a big part of the future." Looking ahead, Okta forecasts revenues between $748 million and $750 million for the current quarter, with adjusted earnings estimated at 84 to 85 cents per share. Analysts had predicted revenues of $738 million and earnings per share of 84 cents for the fourth quarter. Furthermore, the company’s returning performance obligation, which reflects its subscription backlog, grew 17% year-over-year to $4.29 billion, surpassing the $4.17 billion estimate from StreetAccount. This year has been particularly fruitful for cybersecurity firms, highlighted by significant acquisitions and a wave of new public offerings. So far, Okta's shares have seen a rise of approximately 4% in 2023.