Okta and CrowdStrike shares plunge on broader macroeconomic concerns
Shares in both Okta Inc. and CrowdStrike Holdings Inc. plunged in late trading today despite both companies beating expectations in their quarterly earnings, revenue and outlook, as investors have become skittish amid broader macroeconomic concerns.
For its fiscal first quarter ended April 30, Okta reported earnings before costs such as stock compensation of $38 million, or 22 cents per share, up from an adjusted loss of $42 million, or 27 cents per share, in the same quarter of last year. Revenue rose 25%, to $518 million. Analysts had expected adjusted earnings per share of 12 cents on revenue of $511.02 million.
Okta’s remaining performance obligations as of the end of the quarter rose 9% year-over-year, to $2.94 billion, with its cRPO — its subscription backlog — expected to be recognized over the next 12 months rising 20%, to $1.7 billion. Net cash flow in the quarter came in at $129 million, up from $19 million in the same quarter of last year. It had $2.37 billion in cash, cash equivalents and short-term investments as of April 30.
Okta said it expects adjusted earnings of 21 to 22 cents a share in its fiscal second quarter on revenue of $533 million to $535 million. Both were beats, as analysts had expected adjusted earnings of 17 cents a share on revenue of $527.87 million. It was the same with the fiscal year outlook: Okta expects adjusted earnings of 88 to 93 cents on revenue of $2.18 billion to $2.19 billion, whereas analysts expected 78 cents and $2.17 billion.
Despite the solid figures — there was not one miss among them — Okta shares plummeted 16% in late trading. One possible reason is that Chief Executive Todd McKinnon warned of worsening macroeconomic conditions in the company’s earnings report.
It was a similar story with CrowdStrike: beats all around, but its share price fell nearly 12% after-hours.
For its fiscal first quarter, CrowdStrike reported adjusted earnings of $136.4 million, or 57 cents per share, up from $74.8 million, or 31 cents per share, in the same quarter last year. Revenue jumped 42%, to $692.6 million. Analysts were expecting 51 cents and $677.39 million.
CrowdStrike’s annual recurring revenue also rose 42% year-over-year, to $2.73 billion, a figure that included $174.2 million in new net ARR in the quarter. The company had $2.93 billion in cash, cash equivalents and short terms investments at hand as of the end of April.
Highlights in the quarter include the announcement of a visibility and threat detection solution for ChromeOS devices that does not require a mobile device management solution. Falcon Insight XDR for ChromeOS delivers endpoint detection and response and extended detection and response capabilities designed to stop adversaries. CrowdStrike also announced a new managed extended detection and response service on April 19 that unifies human expertise with AI-powered automation and threat intelligence.
The company expects adjusted earnings of 54 to 57 cents a share in its fiscal second quarter of 2024 on revenue of $717.2 million to $727.4 million. For its full year, the company expects adjusted earnings of $2.32 to $2.43 on revenue of $3 billion to $3.036 billion.
CrowdStrike’s outlook was ahead of analyst expectations at the midpoint. Analysts had expected adjusted earnings of 54 cents per share on revenue of $718.9 million and, for the full year, $2.32 and $2.96 billion.
There was no warning from CrowdStrike about broader macroeconomic issues, but it would appear that despite the beats all around, just as with Okta investors were skittish and the better-than-expected figures were perhaps not as high as they could have been to address broader investor concerns with the global economy.
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