It's Thursday, May 27th. Welcome to Marketfoolery. I'm Chris Hill with me today. Maria Gallagher. Good to see you.

Nice to see you too. We've got more specialty retail to talk about. We've got more earnings. But let's start with a reminder that next Monday is Memorial Day.

And that means the stock market is closed here in the United States for the holiday. And that means we're off until Tuesday.

So plan accordingly people. Let's start with Octa because shares of Octa are falling 10% this morning.

This is the ID management software business. They said their loss for the current quarter is going to be bigger than they originally thought. And also the CFO, Michael Corey is leaving.

And unless I'm misreading this, this is a sudden departure because they have named an interim CFO while they look for a permanent successor.

Yeah, so the quarter was pretty good. Their revenue grew 37% to 251 million. Their subscription revenue grew 38%. Their remaining performance obligations were up 52%. They added 650 new customers. Their enterprise customers surpassed 2000. They closed on an acquisition.

So on a financial metric basis, it was a solid quarter. But I think the stepping down of the CFO after about a year isn't the best the best idea. People are not happy about it.

Yeah, I've said before, if the CEO leaves suddenly, that's one of those where there's smoke, there's probably fire situations. And right after that in terms, if I'm rank ordering right after the CFO, it's the CFO.

If the CFO leaves suddenly, it immediately invites the question, what's going on? So hopefully nothing really is going on in terms of the business. Maybe it's a clash of personalities, something like that.

But the guidance plus the CFO is suddenly walking out the door. I get why the stock is down.

Yeah, I'm not surprised. I think whenever you see that it's sudden and you see they're pointing someone into them. I think that always raises a lot of red flags for people, yellow flags at a minimum. I would actually flip your order. I get more nervous when a CFO leaves someone as CEO leaves because a lot of times, I think of a CFO leaves.

They're the one who is like deep dive looking at those finances. I get more nervous when they when they depart sometimes CEOs leave for various reasons. So yeah, I understand why the stocks down. I'm not surprised by it.

And so hopefully they can find someone good. And I'm actually more nervous about this acquisition because it was a really big acquisition. It was probably at $6.5 billion a stock transaction.

And a lot of times with acquisitions, when I look at them, I want to see that they're kind of growing that total addressable market. And so from what I can tell, Auth0 does a lot of the same things as Octa. It has a different go to market strategy. So it's kind of attacking the same problem at a different angle, which is useful.

But I just think a lot of times with acquisitions, I like to see them growing that total addressable market and going into new spaces. And that's not really what I saw with this quite large acquisition. So for me, that is something that kind of raised more like yellow flags than anything else in the past couple months with Octa.

Yeah, and it is one of those things where look, you and others have said time and time again that, you know, when it comes to Wall Street analysts, look, they're going to do their job. But in terms of expectations, a company's expectations, the ones that they set, those are more important.

And we as investors should hold businesses to the company's expectations, not necessarily that of Wall Street analysts.

That said, you just touched on something that I think is important and shouldn't be overlooked, which is that you need to explain things like this.

Like it is the responsibility of any company management team that is making any acquisition to lay out for shareholders and the analyst community. This is why we made this.

And to your point, like Octa, they haven't done a great job of that. They just, they haven't fully explained why this is money well spent.

Yeah, and especially when you see a big acquisition like that, a one that I have still a good amount of questions about. And then within a month, the CFO who approved this acquisition leaving, that's not the best, the best vision from a company.

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