Okta, Inc. (OKTA Quick QuoteOKTA - Free Report) reported second-quarter fiscal 2022 adjusted loss of 11 cents per share, narrower than the Zacks Consensus Estimate of a loss of 35 cents. The company had reported earnings of 7 cents per share in the year-ago quarter.

Total revenues surged 57.4% year over year to $315.5 million and surpassed the consensus mark by 6.5%. The upside can be attributed to higher subscription revenues.

Subscription revenues (96.1% of total revenues) surged 59% year over year to $303.1 million. Moreover, professional services and other revenues (3.9% of total revenues) increased 26.9% year over year to $12.4 million.

Quarter Details

Location-wise, revenues from the United States (79.3% of total revenues) in the fiscal second quarter were $250.1 million, up 48.7% year over year. International revenues (20.7% of total revenues) soared 103% year over year to $65.4 million.

Total calculated billings were $362.4 million, up 82.9% year over year. The uptick was driven by new and existing commercial as well as enterprise customers, and increased bookings.

The dollar-based retention rate in the trailing 12 months was 124%.

Remaining Performance Obligations (“RPO”) totaled $2.24 billion, up 57% year over year. Current RPO, expected to be recognized over the next 12 months, was $1.1 billion, up 60% year over year.

User Details

Okta added 2,400 new customers in the reported quarter, taking the total customer count to 13,050, up 46% year over year.

Okta Identity Cloud’s capability to consolidate and easily integrate existing applications without compromising security or stability is attracting customers. Okta products’ ability to automate the process, secure data, and reduce costs is also a positive.

Operating Details

Non-GAAP total gross profit surged 52.8% year over year to $241.5 million. Gross margin contracted 230 basis points (bps) to 76.5%.

Non-GAAP research and development expenses increased 76.6% year over year to $68.7 million. Additionally, non-GAAP sales and marketing, and general and administrative expenses increased 71.9% and 85.2% year over year to $146.4 million and $50.9 million, respectively.

Non-GAAP total operating expenses increased 75.5% year over year to $266 million.

Non-GAAP operating loss was $24.5 million against operating income of $6.5 million in the year-ago quarter.

Balance Sheet and Cash Flow

Okta had $2.47 billion in cash, cash equivalents, and short-term investments, as of Jul 31, 2021, compared with $2.69 billion as of Apr 30, 2021.

Cash used in operations was $3 million in the reported quarter compared with $56.1 million cash provided in operations in the previous quarter.

Okta recorded free cash outflow of $4 million in the reported quarter compared with $52.8 million free cash flow reported in the previous quarter.

Guidance

For third-quarter fiscal 2022, Okta expects revenues in the range of $325-$327 million, which indicates year-over-year growth of 50%.

Non-GAAP operating loss is expected in the range of $34-$35 million while non-GAAP net loss is anticipated in the band of 24-25 cents per share.

For fiscal 2022, revenues are expected in the range of $1.243-$1.250 billion, indicating year-over-year growth between 49% and 50%.

Non-GAAP operating loss is expected in the range of $114-$119 million and non-GAAP net loss is anticipated between 74 and 75 cents per share.

Zacks Rank & Stocks to Consider

Currently, Okta carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader technology sector include Microsoft (MSFT Quick QuoteMSFT - Free Report) , Cadence Design Systems (CDNS Quick QuoteCDNS - Free Report) , and Texas Instruments (TXN Quick QuoteTXN - Free Report) , all carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Microsoft, Cadence Design, and Texas Instruments is currently pegged at 11.09%, 11.68%, and 9.33%, respectively.