Shares of the cybersecurity stock fell as it called for slowing growth ahead.
Shares of Okta (OKTA -17.64%), the cloud-based identity software company, were taking a dive after the company reported third-quarter numbers that beat headline estimates, but its guidance missed the mark in some key metrics.
As a result, the stock was down 16.1% as of 11:32 a.m. ET on the news.
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Okta is still stuck in second gear
Okta’s revenue growth was solid, but investors seem to be hoping that the company can accelerate growth back toward the 40% mark where it was growing for most of the pandemic.
Revenue in the quarter rose 16% to $646 million, which was ahead of estimates at $632.9 million. Current remaining performance obligations (cRPO), a reflection of its backlog over the next year, increased 13% to $2 billion.
On the bottom line, adjusted operating income jumped from $59 million to $148 million, and the company reported its first quarter of generally accepted accounting principles (GAAP) net income at $29 million. On an adjusted basis, earnings jumped from $56 million to $131 million, or $0.72, which beat the consensus at $0.61.
CEO Todd McKinnon said, “We’re delivering all of this product innovation while achieving record profitability and maintaining strong cash flow.”
Growth is expected to slow
Okta forecast just 11% revenue growth to a range of $648 million to $650 million in the third quarter, which was still better than the consensus at $639.1 million, and it sees cRPO slowing to between $1.985 billion and $1.99 billion, which is actually a sequential decline from the second quarter.
On the bottom line, it called for adjusted earnings per share (EPS) of $0.57 to $0.58, again a sequential decline but better than the consensus at $0.55.
Okta did raise its full-year adjusted EPS guidance to $2.58-$2.63 from $2.35-$2.40, which was ahead of the consensus at $2.42.
The company has historically given conservative guidance so investors should take those forecasts with a grain of salt. Given that, the sell-off looks like it could be a buying opportunity, especially with Okta now trading at a forward P/E of about 31 based on adjusted earnings.
