‘We raised the guidance but we actually think the macro condition could get worse,’ CEO tells MarketWatch in interview
Okta Inc. shares plunged in the extended session Wednesday after the identity-management software company raised expectations for the months ahead even while its chief executive warned macroeconomic conditions could worsen.
In an interview with MarketWatch ahead of the company’s conference call, Okta Chief Executive Todd McKinnon, a company co-founder, said that even while increasing his annual forecast, he sees a tougher business environment ahead.
“We raised the guidance but we actually think the macro condition could get worse, so we’re being pretty conservative with our guidance,” McKinnon told MarketWatch.
Shares dove more than 16% in after-hours, following a 0.9% gain to close the regular session at $90.90.
For the second quarter, Okta executives forecast adjusted earnings of 21 cents to 22 cents a share on revenue of $533 million to $535 million, while the Street expected 16 cents a share on revenue of $528.4 million, according to FactSet. Okta also hiked its outlook for the year, forecasting adjusted earnings of 88 cents to 93 cents a share on revenue of $2.18 billion to $2.19 billion, up from a previous forecast of 74 cents to 79 cents a share on revenue of $2.16 billion to $2.17 billion.
McKinnon listed concerns about interest rates, inflation and business spending being scrutinized more so than fallout from the failure of Silicon Valley Bank. Many young software companies that relied upon upsells and cross-sells faced a tougher time closing deals after the failure of many startups’ favorite bank.
Okta reported a first-quarter loss of $119 million, or 74 cents a share, compared with a loss of $243 million, or $1.56 a share, in the year-earlier period. After adjusting for stock-based compensation expenses and other items, the company reported earnings of 22 cents a share, versus a loss of 27 cents a share a year before. Revenue rose to $518 million from $414.9 million in the year-ago quarter.
Analysts had forecast adjusted earnings of 12 cents a share on revenue of $511 million. That was based on the company’s forecast of 11 cents or 12 cents a share on revenue of $509 million to $511 million.
Okta shares have gained 33% year to date as of Wednesday’s close, compared with a 9% rise by the S&P 500 index, and a 24% gain for the tech-heavy Nasdaq Composite Index.
