Okta Inc (NASDAQ:OKTA) delivered first quarter financial results that beat Wall Street expectations, but shares traded more than 13% lower on Wednesday morning as it issued conservative guidance, citing macro uncertainty.
For the first quarter, the identity and access management firm reported revenue of $688 million, up 12% year-over-year and above consensus estimates of $680.3 million. Subscription revenue increased 12% to $673 million.
Adjusted earnings per share came in at $0.86, significantly above the $0.77 estimate and representing a 32% increase from the year-ago quarter.
Current Remaining Performance Obligations (cRPO), a key metric for future revenue, climbed to $2.23 billion.
Analysts at Jefferies noted Okta’s quarterly performance as “good, short of great expectations,” highlighting its 14% year-over-year cRPO growth, which outpaced company guidance by 2%. However, they wrote that this still fell short of “elevated” investor expectations of around 15%.
The analysts welcomed several other positives during Q1, including momentum in Auth0 with Okta’s largest deal of the quarter driven by that platform, reinforcing the effectiveness of its specialization-based go-to-market strategy. Public sector traction also improved, with two of the top three deals originating from government customers.
‘Prudent’ guidance
Q2 cRPO guide implies the first sequential decline in cRPO in the company's public history, Jefferies noted. The company guided Q2 cRPO in the range of $2.2 billion to $2.205 billion, at the midpoint of $2.203 billion up 10.4% year-over-year but down quarter-over-quarter by $25 million.
It implies a 1% year-over-year decline in bookings compared to 9% growth in Q1. “While customer pipeline strengthened in March/April, the tone of conversations and sales refinement changes led to incremental prudence,” the analysts wrote.
For the full year, Okta maintained its full-year revenue guidance of $2.85 to $2.86 billion, representing growth of 9% to 10% growth.
Okta is “baking in additional prudence for macro uncertainty going forward,” Jefferies wrote, adding that upside could be driven by an expanding product portfolio.
The analysts repeated their ‘Hold’ rating on Okta and lowered their price target to $130 from $135, stating they would continue to monitor potential acceleration or further deceleration in future quarters, especially in cRPO trends.
Shares of Okta traded down 13.2% at $109 late morning on Wednesday.