Okta shares up sharply on earnings beat, as it benefits from ‘tech leapfrog moment’


Okta Inc. shares rose sharply in the extended session Wednesday after the provider of enterprise identity-management systems reported revenue and adjusted earnings that handily beat analysts’ estimates.

Shares of Okta
OKTA,
-2.86%

climbed more than 5% in after-hours trading after closing the regular session at $230.21, down 2.9%.

The company, a provider of software that lets employees log into their company networks, reported a third-quarter loss of $72.8 million, or 56 cents a share, compared with a loss of $63.5 million, or 53 cents a share, in the year-ago period. Adjusted earnings were $5.7 million, or 4 cents a share, adjusted for stock-based compensation, debt-related costs and more. Revenue rose to $217.4 million from $153 million in the year-ago quarter. Analysts surveyed by FactSet had forecast a loss of 1 cent a share on revenue of $202.8 million.

“If you take a step back and think of the business we’re in, we’re helping companies with their digital transformations,” said Chief Operating Officer Frederic Kerrest in an interview. “These mega trends have been around for the past five years… and have been accelerated by COVID, no doubt.”

He added that some of the company’s customers, such as large enterprises, realize it’s a perfect time to “really move forward with cloud technologies.” Kerrest said many companies are taking advantage of a “tech leapfrog moment” to roll out new offerings and modernize their infrastructures, which helps businesses like Okta’s.

In the fourth quarter, Okta expects a loss of 2 cents a share to 1 cent a share on revenue of $221 million to $222 million, while analysts had forecast a loss of 2 cents a share on revenue of $216.2 million.

Shares of the San Francisco-based company have doubled so far this year, compared with the S&P 500 Index
SPX,
+0.17%
,
which is up about 13%.

The company also announced that retiring Chief Financial Officer Bill Losch, who has served in that role since 2013, will be replaced by board member Mike Kourey in March.



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