Why is Okta stock down today?

Actions of Okta (OKTA -16.32%)the cloud-based identity software company was taking a dive after the company reported third-quarter numbers that beat headline estimates, but its guidance missed the mark in some key metrics.

As a result, the stock was down 16.1% at 11:32 a.m. ET on the news.

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Okta is still stuck in second gear

Okta’s revenue growth has been solid, but investors seem hopeful that the company can accelerate growth back toward the 40% mark where it has been growing for most of the pandemic.

Revenue for the quarter rose 16% to $646 million, beating estimates of $632.9 million. Current remaining performance obligations (cRPO), a reflection of backlogs over the next year, rose 13% to $2 billion.

All in all, adjusted operating income rose from $59 million to $148 million, and the company reported first-quarter generally accepted accounting principles (GAAP) net income of $29 million. On an adjusted basis, earnings rose from $56 million to $131 million, or $0.72, which beat the consensus of $0.61.

CEO Todd McKinnon said, “We are delivering all of these product innovations while achieving record profitability and maintaining strong cash flow.”

Growth is expected to slow

Okta estimated revenue growth of just 11% to a range of $648 million to $650 million in the third quarter, which was still better than the consensus of $639.1 million, and sees cRPO slowing to between $1.985 and $1.99 billion, which is actually a sequential. decrease from the second quarter.

Bottom line, it called for adjusted earnings per share (EPS) of $0.57 to $0.58, again down sequentially but better than the $0.55 consensus.

Okta raised its full-year adjusted EPS guidance to $2.58-$2.63 from $2.35-$2.40, which was ahead of the $2.42 consensus.

The company has historically provided conservative guidance, so investors should take these forecasts with a grain of salt. With that in mind, the sale looks like it could be a buying opportunity, especially with Okta now trading at a forward P/E of around 31 on adjusted earnings.