Okta Inc. continues to reap the benefits of the shift to remote work and accelerated adoption of cloud computing with fiscal third-quarter results that soundly beat analyst estimates.

Revenue rose 42% from a year ago, to $217.4 million, well ahead of the $203 million the company had forecast last quarter and the $202.7 million analysts expected. Subscription revenue, which comprises 95% of total sales,  jumped 43%, to $206.7 million.

Operating income of $5.5 million reversed a loss of $8.1 million in the previous quarter. Earnings per share of four cents climbed from a net loss of three cents in the previous quarter and beat analyst consensus estimates of a loss of two cents.

Remaining performance obligations, which is the aggregate of deferred revenue and backlog, rose 53% from the previous quarter, to $1.58 billion, indicating considerable pent-up demand. Contracted subscription revenue, the amount expected to be recognized over the next 12 months, jumped 46% from the last quarter, to $753.2 million.

To round out the virtuous cycle, Okta raised expectations for the fourth quarter, saying it expects a loss of between 1 and 2 cents per share on revenue of $221 million to $222 million. That was ahead of analysts’ forecast of a loss of 2 cents a share and $216.2 million in sales.

For the full year, the company said it now expects total revenue of between $822 million to $823 million, compared with its own high-end estimate of $760 million from a year ago. And it expects to cross the $1 billion threshold in fiscal 2022, said Chief Financial Officer Bill Losch, who is retiring early next year.

“We’re in the enviable position of being in a market that is coming toward us,” said Chief Executive Todd MacKinnon.

Investors liked the story. They sent Okta shares up more than 8% in initial after-hours trading.

Cloud tailwind

Okta was one of the early beneficiaries of a large-scale shift by big enterprises to the cloud that began with the onset of the COVID-19 pandemic in March. Now it’s benefiting from the residual effects as organizations make their cloud migrations more strategically.

“These trends will last a long time,” Frederic Kerrest (pictured), Okta’s co-founder and chief operating officer, said in an interview with SiliconANGLE. “In Q1 and Q2 people had to get remote work up and running very quickly. I now think executives are saying this is a technology leapfrog and a time to move their businesses forward.”

The company is not only onboarding new customers at a frantic rate — its customer count grew from 7,400 a year ago to 9,400 today — but mining more from the from its base. Kerrest said the top 25 contracts in this quarter were all over $1 million and six were over $5 million.

The company now has 1,780 customers who pay more than $100,000 a year. Kerrest pointed to growth in the dollar-based net retention rate, a measure of increased spending by existing customers, to 123% in this quarter from 121% the previous quarter. “It shows customers are confident with the solutions they’re buying,” he said.

“Customers are buying more advanced versions of the products with features like predictive analytics, security technology and advanced [multifactor authentication],” he said. “There’s a lot of new innovation and customers are buying it.”

Kerrest said the company is in no hurry to move into adjacent markets. “Customer identity management is a $25 billion market, and secure workforce identity is a $30 billion market,” he said. “All the on-prem infrastructure is going to go away and we’re going to make sure we get as much as we can of that market. We aren’t even at $1 billion yet.” He noted that international revenue, which grew 51% in the quarter, comprises just 16% of total sales.

Photo: Okta/Facebook