By Emily Bary
Unlike Salesforce and ServiceNow, Okta beats with its outlook, and its CEO says that forecast is still 'prudent.' Okta's stock rises after hours.
Not all software companies are giving upbeat guidance these days, but Okta Inc. just impressed with its view of what's to come.
The company, which helps ensure people can access workplace applications with the proper permissions, forecast $2.85 billion to $2.86 billion in revenue for the new fiscal year, above the FactSet consensus, which was for $2.79 billion. Okta (OKTA) also models $678 million to $680 million in fiscal first-quarter revenue, whereas analysts were projecting $670 million.
In part, "it's a result of the very strong results in Q4 because a lot of the bookings in Q4 turn into revenue next year," Chief Executive Todd McKinnon told MarketWatch. But he also said he thinks the guidance is "prudent," as it's still early in the fiscal year. "We think it's very achievable."
Okta shares were up more than 15% in the extended session Monday. Some of its larger peers, including Salesforce Inc. (CRM) and ServiceNow Inc. (NOW), failed to impress with their own forecasts earlier this earnings season.
McKinnon deemed Okta's latest quarter a "blowout" period in which the company saw new products click with customers. Okta also gained further traction with larger businesses.
The company traditionally has served medium-sized businesses as well as some larger companies. "Now it's really starting to be resonant with the largest enterprises, so that million-dollar-plus cohort of customers is growing in a quite healthy way," McKinnon said.
In the latest quarter, Okta turned in $682 million in revenue, up 13% from a year before. Analysts had been looking for $669 million in revenue.
McKinnon said Okta stands to benefit as artificial-intelligence adoption grows. Not only is the company driving AI efficiencies in its own business, but it sees room to capitalize as other software companies build AI "agents" that can perform functions alongside human workers.
"Just like a person logging into multiple applications as an employee, the agent has to be secured the same way," McKinnon said. "All of the things the agent does to have to have the right permissions and the right security."
See more: 7 software stocks that could benefit as AI gets cheaper to run
-Emily Bary
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