Okta's upbeat earnings help offset new details about breach, lifting the stock

By Emily Bary

Okta posted earnings earlier than expected Wednesday, shortly after disclosing new information about a breach of its support system

Shares of Okta Inc. had been falling in Wednesday's premarket trading after the company disclosed new information about a cybersecurity breach, but the shares turned around once the company posted its financial results slightly earlier than expected.

Okta (OKTA) easily topped expectations for its latest quarter, helping to send its stock up about 2% in premarket activity.

The authentication company notched a fiscal third-quarter net loss of $81 million, or 49 cents a share, compared with a loss of $209 million, or $1.32 a share, in the year-earlier period.

On an adjusted basis, Okta recorded earnings per share of 44 cents, while analysts tracked by FactSet had been anticipating 30 cents.

Revenue jumped 21% to $584 million, whereas the FactSet consensus was $561 million.

For the fiscal fourth quarter, Okta anticipates $585 million to $587 million in total revenue, up 15% from a year before. The company is also looking for 50 cents to 51 cents in adjusted EPS. The FactSet consensus was for $580 million and 35 cents, respectively.

The company also offered a preliminary forecast for fiscal 2025, which calls for $2.46 billion to $2.47 billion. Analysts had been modeling $2.55 billion.

"All periods factor in a stable, but still challenging macro environment, as well as the potential impact on our business related to the October 2023 security incident," the company said in a release.

Read: A stranger in your hotel room? Kitty-litter shortages? Online attacks are causing real-world effects.

Okta moved up its earnings report slightly, after previously saying that it would post results after the close of trading Wednesday. Earlier in the day, the authentication company revealed new details about a recently disclosed cybersecurity breach, an update that had been weighing on shares premarket.

The company said in a Wednesday blog post that a threat actor ran and downloaded a report containing the names and email addresses of those using its customer-support system.

"While we do not have direct knowledge or evidence that this information is being actively exploited, there is a possibility that the threat actor may use this information to target Okta customers via phishing or social engineering attacks," David Bradbury, the company's chief security officer, said in the post. "Okta customers sign-in to Okta's customer support system with the same accounts they use in their own Okta org."

Bradbury noted that 94% of Okta customers already require multi-factor authentication at login for administrators, but he recommended that all customers do this "and consider the use of phishing-resistant authenticators to further enhance their security."

Okta disclosed the breach of its support system in late October, helping to fuel a nearly 19% two-day selloff in shares at the time. Back then, analysts worried that the headlines could negatively impact Okta's pipeline.

-Emily Bary

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11-29-23 0736ET

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