Okta Inc. (OKTA)

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Okta (OKTA) surges 15% after beat-and-raise quarter, analysts upgrade as 'stability is restored'
By: Investing.com | March 2, 2023

Shares of Okta (NASDAQ:OKTA) are trading about 15% higher in pre-market after the cybersecurity company gave a robust full-year forecast.

Okta reported adjusted Q4 EPS of $0.30 on revenue of $510 million, beating the consensus for earnings of $0.21 on revenue of $489.8M. Revenue soared 33%, driven by the 34% surge in subscription revenue to $495M. Okta also reported calculated billings of $710M, beating the consensus of $661.3M.

“We’re pleased with our fourth quarter financial performance and the continued improvement of our go-to-market execution,” said Todd McKinnon, Chief Executive Officer and co-founder of Okta.

“Identity remains a top priority for organizations around the world and Okta is the only independent and neutral platform that brings market leading solutions for both workforce and customer identity at scale. Despite an evolving macroeconomic environment, we’re more excited than ever to advance our leadership position in a massive market as Okta delivers on non-GAAP profitable growth.”

For this quarter, Okta sees EPS between $0.11 and $0.12 on revenue of $510M (up or down $1M), ahead of the consensus for flat EPS on revenue of $497.9M. For FY24, Okta projects EPS in the range of $0.74-0.79 on revenue of $2.16-2.17B, which compares to the market estimate for FY earnings of $0.32 per share on sales of $2.16B.

In the aftermath of the earnings report, TD Cowen analysts upgraded Okta shares to Outperform from Market Perform with a price target of $100 per share (the prior $70).

“Our upgrade is based on: 1) Strong FQ4 results and improved FY24 guidance; 2) Focus shifting to profitable growth as FY24 operating & FCF margin should dramatically expand on the heels of prior & expected disciplined cost mgmt; 3) Ongoing healthy trends realized across the Identity arena given its mission criticality,” the analysts said in a note.

On the other hand, BofA analysts reiterated an Underperform rating on Okta shares as challenges to growth are still there.

“In our view, the quarter’s positives only mask the negative underlying growth trends… Our thesis is unchanged and we view the stock jump as an overreaction. We remain concerned about new business growth, saturation across the existing customer base, and the infancy of the Customer Identity market,” they wrote in a client note.

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