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Okta earnings: Shares soar after revenue guidance revised upward

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Yahoo Finance Live anchors discuss first-quarter earnings for Okta Inc.

Video Transcript

BRIAN SOZZI: Pre-market, stock is making a big move up about 14%, was up about 16% after the company reported earnings. And this is another I would say case where investors got very bearish into the report of a company that is not making money that operates in a highly valued software space but they did check a couple of boxes here.

First and foremost, subscription revenue up 66% year over year, accelerated two point sequentially. That is good and I like the earnings call. I liked co-founder Todd McKinnon talking about how they are going to manage the business much more, I would say prudently. So hitting a lot of buzzwords now that they are focused on free cash flow, focus on margins. If you are a software player and you are hitting those notes in this worry and market environment, I think that's a good thing.

BRAD SMITH: Yeah, you want to hear about the large customers. That's exactly what they call out in their earnings report as well, saying that they delivered solid first quarter results. They highlighted strength in new customer additions, dollar based net retention rate and then the success that they're having with large customers as they're really trying to just continue that journey to the cloud for so many. And that looks different across different business profiles and the type of data that you're dealing with as well.

We've seen a swift migration, or at least an accelerated migration, to the cloud and prompted by the number of different applications that businesses have to run to either make sure that they're tracking or necessarily engaging with the digital body language of their individual customers or just managing their own data all in.

And so with that, I think Okta continues to be a beneficiary of the market opportunity, and they're still citing strong market opportunity for themselves right now.

BRIAN SOZZI: Yeah, also didn't hear anything this conference call it suggests that. There is a recession looming, a slowdown in demand. Definitely not the same vibe as we heard from Microsoft yesterday and their guide down. But again, here's another software stock that has been hit hard that has come out here reported over 50% revenue growth.

ServiceNow, a couple of weeks ago, strong quarter, snowflake. That stock got slammed a couple of weeks ago on its earnings. But still, the revenue growth is strong. And I know these stocks tend to get valued on their sequential growth but still, the top line looks strong for these companies. And I'm not surprised the entire software space caught a strong bid yesterday afternoon. It's unclear if that will continue but still, a pretty good quarter from Okta.