Okta stock fell hard Thursday on second-quarter results that, while beating estimates, struggled with integration issues tied to its acquisition of Auth0 in 2021. Okta reported quarterly results late Wednesday.
The cybersecurity software company reported an adjusted loss of 10 cents a share on revenue of $452 million. Analysts, however, expected Okta to report a loss of 31 cents a share on revenue of $430.7 million.
"Regarding the Auth0 integration, Okta saw heightened attrition within the sales organization, as well as some confusion in the field," RBC Capital Markets analyst Matthew Hedberg said in a note to clients. "Management noted they are working to slow attrition, including making changes to their org structure to better align with their strategy as well as improving sales comp structures."
Okta stock plunged 33.7%, closing at 60.60 on the stock market today.
"Okta has already taken a step back and is addressing these challenges," Oppenheimer analyst Ittai Kidron said in a note. "However, we believe it could be a slow path to recovery and targeted Auth0 synergies will likely be lower/take longer to extract,"
Okta Stock: Refining Go-To-Market Strategy
The company expects third-quarter revenue in the range of $463 million to $465 million. The midpoint of $464 million matches analyst estimates. Meanwhile, it expects an adjusted loss in the range of 24 cents to 25 cents. Okta stock analysts expected a loss of 28 cents.
Okta's cybersecurity software monitors and manages privileged accounts. Hackers often target employees or management with administrative access to company computer systems.
"Looking at the second half of the fiscal year, we're focused on refining the go-to-market strategy for the combined Auth0 and Okta sales organization, strengthening our teams, and making strategic reductions to our spend to improve profitability," Okta Chief Executive Todd McKinnon said in written remarks with the earnings release.
Heading into the earnings report, Okta stock owned a weak Relative Strength Rating of 15 out of a possible 99, according to IBD Stock Checkup.
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