Okta Inc. (OKTA) delivered exactly what Wall Street likes to see on Tuesday after the close: revenue and earnings that beat expectations. And then, in a move that surprises absolutely no one who's been paying attention to earnings season, investors sold off the stock anyway.
The Numbers: Okta reported third-quarter revenue of $742 million, comfortably ahead of analyst estimates of $730.36 million, according to Benzinga Pro. Adjusted earnings came in at 82 cents per share, beating the 76-cent consensus.
The cybersecurity company's total revenue climbed 12% year-over-year, while subscription revenue grew 11%. Remaining performance obligations—essentially the revenue already contracted but not yet recognized—reached $4.29 billion at quarter's end, up 17% from the prior year.
Cash generation looked solid too. Net cash from operations hit $218 million, up from $159 million in last year's third quarter. Free cash flow jumped to $211 million from $154 million year-over-year. The company finished the quarter sitting on approximately $2.46 billion in cash, cash equivalents and short-term investments.
"We delivered another quarter of solid results highlighted by continued strength with large customers, adoption of new products like Okta Identity Governance, and strong cash flow," said Todd McKinnon, co-founder and CEO of Okta.
McKinnon also touched on the topic du jour: "AI agents are redefining how organizations work, and Okta is key to securing this technology transformation."
Looking Ahead: Okta projected fourth-quarter revenue of $748 million to $750 million, ahead of the $737.92 million consensus. The company expects adjusted earnings of 84 to 85 cents per share versus the 84-cent estimate.
The company also bumped up its full-year guidance. Okta now anticipates full-year revenue of $2.906 billion to $2.908 billion compared to estimates of roughly $2.89 billion. Full-year earnings expectations rose to $3.43 to $3.44 per share versus the $3.37 consensus.
Okta executives were scheduled to discuss the results on an earnings call with investors and analysts at 5 p.m. ET.
Market Reaction: Despite the beat-and-raise quarter, Okta shares fell 4.31% in after-hours trading to $78.34 at publication time, according to Benzinga Pro. Sometimes good news just isn't good enough.
