Okta Posts Strong Q2 Upside, But Some Analysts Cut Forecasts: 'Not Firing On All Cylinders'

Core Viewpoint - Okta Inc's shares fell by 16.51% despite reporting strong second-quarter results, highlighting a disconnect between financial performance and market reaction [1][13]. Financial Performance - Okta reported revenues of $646 million and earnings of 72 cents per share, surpassing consensus estimates of $632.7 million and 61 cents per share [2]. - The company's subscription revenue growth slowed to 17% year-on-year, down from 20% in the previous quarter [2]. Guidance and Projections - Current remaining performance obligation (cRPO) guidance for the fiscal third quarter is $1.99 billion, indicating 9% year-on-year growth, which is below the consensus of 10% and a deceleration from 13% in the second quarter [3][6]. - Analysts noted that the forward guidance is disappointing, suggesting a slowdown in growth [6][10]. Customer Dynamics - The net revenue retention (NRR) declined by 1 percentage point in the fiscal second quarter, with management indicating potential further pressure in the latter half of the year due to companies adjusting software spending [7]. - Okta added only 200 net new customers in the quarter, indicating softness in new customer acquisitions [9][10]. Analyst Insights - Analysts expressed mixed views on Okta's performance, with some highlighting solid execution and a strong pipeline, while others pointed out the deceleration in cRPO growth and challenges in new customer growth [4][8][10]. - There is optimism regarding enterprise deals and larger contract sizes, but concerns remain about seat growth and upselling in the SMB space [5][10].