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Okta Stock Falls. Forecast Losses Exceeded Expectations.

Okta shares fell in late trading Wednesday after the identity management software business posted better-than-expected results for its latest quarter, but provided guidance that suggests aggressive investment in the business will spur greater-than-expected near-term losses at the bottom line.

For the fiscal fourth quarter ended Jan. 31, Okta (ticker: OKTA ) posted revenue of $383 million, up 63% from a year earlier, well ahead of both the company’s guidance range of $358 million to $360 million and consensus at $359 million. On an adjusted basis, the company had a loss in the quarter of $29 million, or 18 cents a share, which was narrower than both Okta’s forecast of a loss of 24 to 25 cents a share and consensus that called for a loss of 24 cents.

Remaining performance obligations were $2.69 billion, up 50%, while billings were $603 million, up 91%. Free cash flow was $5 million, down from $32 million a year ago.

In late trading, Okta shares were down 6% to $172.

CEO Todd McKinnon said in an interview that the company had a great quarter, with “super strong growth,” driven in particular by the company’s customer identity management business. Okta’s historical strength has been in employee identity software, and the additional focus on customer identity is a newer area for the company. 

He also notes that the company is investing for growth, and you can see it in the company’s guidance for the April quarter and the January 2023 fiscal year. “We’ve made a decision to grow, grow, grow,” he says, with a particular focus on increased spending on sales and marketing.

For the April quarter, the company sees revenue of $388 million to $390 million, with a non-GAAP loss of 34 to 35 cents a share. The previous consensus had been for $375 million and a loss of 20 cents a share. For the January 2023 fiscal year, the company projects revenue of $1.78 billion to $1.79 billion and a non-GAAP loss of $1.24 to $1.27 a share. Consensus had called for $1.75 billion and a loss of 49 cents a share.

Write to Eric J. Savitz at
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