Okta Inc (NASDAQ:OKTA) shares were on the backfoot, down 2.9% to $68.70 in premarket, as the fallout of a cyber breach overshadowed what Wall Street analysts described as “better-than-feared” quarterly earnings.
The cloud data firm revealed that hackers had stolen stole information on all users of its customer support system in a network breach two months ago.
In terms of financials, Okta reported a 21% improvement in third-quarter revenue to $584 million, with subscription revenue up 22% to $569 million.
“Our Q3 performance was highlighted by solid top-line growth,” chief executive Todd McKinnon said in a statement.
Okta’s net loss was reported at $111 million, narrowed from $207 million in the same period last year.
Operating cash flow amounted to $156 million, with free cash flow marked at $150 million. The firm ended the quarter with $2.13 billion of cash and cash equivalents.
Guidance for full-year revenue is now pitched in a range of $2.243 billion to $2.245 billion, with operating income expected at $283 million to $285 million whilst net income per share is expected between $1.47 and $1.48.
Taz Koujalgi, analyst at stockbroker Wedbush, commented in a note: “Results and guide were better than feared with revenues beating Street expectations while billings and cRPO came in below expectations.
Reacting to the cyber breach, first reported in October, the Wedbush analysts reckoned Okta may take a hit of up to 15% based on the slowdown in bookings and billings.
“OKTA articulated that Security is a top priority for OKTA, and it is focused on becoming one of the most secure companies in the world. It announced that a 90-day program called 'Project Bedrock' is being implemented to focus on security efforts,” Koujalgi said.
“Given the risk from the security incident, a key question investors would want to answer is how much was the impact from the security incident in FQ3’24, and how conservative is the FQ4’24E and FY25E guide.”
The analyst added: “In terms of FQ4’24E, our analysis assuming a similar shortfall of 15% indicates that both revenue and cRPO guide appear safe, but the beats could be a lot smaller.”
Koujalgi, meanwhile, said Okta’s guidance for 10% revenue growth for the 2025 financial year “would not appear extremely conservative”.
Wedbush has an ‘outperform’ rating with a $90.00 price target, suggesting around 31% upside to the current price.
In New York, Okta was down 2.84%, changing hands at $68.76.