3 Important Takeaways From Okta's Second-Quarter Earnings Call

Enterprise identity management specialist Okta (NASDAQ: OKTA) reported second-quarter earnings last night, and shares have surged to all-time highs following the blockbuster results. Revenue jumped 57% to $94.6 million, and while the company's net loss widened modestly to $16.4 million, or $0.15 per share, on a non-GAAP basis, it was better than analysts were expecting. Okta boosted its full-year guidance to boot, and now expects total revenue for fiscal 2019 to be $372 million to $375 million, up from its prior forecast issued in June of $353 million to $357 million in sales.

Beyond the headline results, here are three important takeaways from the conference call yesterday.

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Identity is becoming mainstream

CEO Todd McKinnon highlighted one broad tailwind that is helping to drive growth: organizations are becoming increasingly aware of how important identity access and management (IAM) is. As a clear leader in the IAM space, Okta will only benefit as the overall market continues to grow.

Okta's brand is only becoming stronger over time in the minds of many chief information officers and chief information security officers, McKinnon says.

International opportunities abound

Currently, Okta's business remains heavily concentrated in the U.S., with CFO Bill Losch noting:

In dollar terms, that translates into international revenue of just $15.1 million, but IAM is very much a global need. Responding to an analyst question about where Okta is investing for future growth, co-founder and COO Frederic Kerrest later added, "You're going to see us continue to build out that salesforce, in particular, international, which we've touched on briefly."

Okta now has over 5,000 customers

The company surpassed 5,000 customers during the quarter for the first time, and had a total of 5,150 customers at the end of the quarter, up from approximately 4,700 at the end of the first quarter. Okta continues to execute well in upselling customers, with the number of its biggest customers jumping 55%. Here's Losch again:

Regarding upsells and expanding customer relationships, McKinnon added that growing awareness is helping the business. "The build versus buy decision in the marketplace is becoming more well-known to be something you can buy. So, you're seeing more deals start with that and then bigger expansions because of that," McKinnon said. "That's an important dynamic there."

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Evan Niu, CFA owns shares of Okta. The Motley Fool owns shares of and recommends Okta. The Motley Fool has a disclosure policy.