Okta projected third-quarter revenue above market estimates on Wednesday, a sign that demand for its identity authentication services remains resolute from businesses looking to tighten security in the face of rising cyber attacks.
Okta's shares rose 10% after the bell, after the company also raised its annual revenue and adjusted earnings forecast.
The San Francisco-based company provides identity services, such as single sign-on and multi-factor authentication that are used for logging in to online applications and websites, to a roster of customers, including Microsoft-backed OpenAI.
Okta also recently expanded into the Indian market, and even set up its first innovation center in the Asia-Pacific there as it attempts to capitalize on the growing demand in the region.
The company now forecasts annual adjusted earnings between $1.17 to $1.20 per share, from $0.88 to $0.93 per share expected earlier. It also raised its revenue expectations for fiscal year 2024 to $2.21 billion to $2.21 billion from $2.18 billion to $2.19 billion earlier.
Okta is banking on resilient demand for its security identification products on rising security threats in the information technology sector. It projected third-quarter adjusted earnings of 29 to 30 cents per share, compared with estimates of 20 cents.
The company expects revenue in the current quarter to be between $558 million and $560 million, above analysts' average estimate of $552.4 million, according to Refinitiv data.
Subscription backlog, a measure of future revenue, rose 8% to $3.03 billion.
The identification software provider's revenue rose 23% in the second quarter from a year earlier to $556 million, beating expectations of $534.5 million. Its peer Cyberark Software also topped quarterly revenue expectations in June, in a positive sign for the sector.
Okta, which laid off 5% of its workforce in February in an bid to lower its cost bill and improve margins, posted earnings of 31 cents, excluding items, compared to estimates of 22 cents.
(Reporting by Arsheeya Bajwa and Akshita Toshniwal in Bengaluru; Editing by Krishna Chandra Eluri)