Shares of Okta (OKTA 18.00%) barreled out of the gate Tuesday, gaining as much as 19.9%. As of 11:54 a.m. ET, the stock was still up 18.4%.
The catalyst that sent the cybersecurity specialist higher was its quarterly earnings results, which provided upbeat news for shareholders.
A swing to profitability
For its fiscal 2025 fourth quarter (ended Jan. 31), Okta generated revenue of $682 million, up 13% year over year, fueled by subscription revenue that grew 13% to $670 million. Cost controls increased its bottom line, as Okta swung from a net loss of $44 million to a profit of $23 million. This resulted in adjusted earnings per share (EPS) of $0.78. Analysts’ consensus estimates were calling for revenue of $668 million and EPS of $0.74, so Okta cleared both hurdles with ease.
Okta’s robust cash generation continued, with record operating cash flow of $286 million and free cash flow of $284 million, up 64% and 71%, respectively.
The company’s customer metrics also improved, with total customers of 19,650, up 4% year over year, though Okta’s most lucrative customers — those spending $100,000 annually — climbed 7% to 4,800. At the same time, the company’s trailing-12-month dollar-based net retention rate clocked in at 107%, illustrating that existing Okta customers are expanding their relationships with the company.
Okta’s remaining performance obligation (RPO) — or contractually obligated sales not yet recognized as revenue — is also climbing. Current RPO of $2.25 billion increased 15% year over year, while its total RPO of $4.2 billion increased 25% — accelerating from 19% growth sequentially. Since RPO provides insight into future results, it shows that Okta’s sales have begun to reaccelerate.
The future looks bright
For the first quarter, the company is forecasting revenue of about $679 million, up roughly 10% at the midpoint of its guidance, while guiding for full-year revenue of $2.85 billion, also an increase of about 10% and well ahead of expectations of $2.79 billion. Management has a history of issuing conservative guidance, so the results could actually be better.
After hitting a rough patch, Okta appears to have stabilized its growth, giving shareholders a boost of confidence in the process. The stock is currently selling for roughly 30 times next year’s expected earnings, a valuation that is beginning to look interesting.
