Okta Prepares for Fourth Quarter Earnings Release with Promising Outlook
Okta (OKTA) is scheduled to announce its fourth-quarter fiscal 2025 results on March 3.
For this quarter, Okta expects non-GAAP earnings to be between 73 and 74 cents per share. Projected revenues are anticipated to fall between $667 million and $669 million, showing a growth of 10-11% compared to the same period last year.
The Zacks Consensus Estimate for earnings has remained stable at 73 cents per share over the past month, indicating a year-over-year growth of 15.87%. The estimate for revenues stands at $668.8 million, reflecting a 10.6% increase compared to last year’s figures.
Okta’s earnings have exceeded the Zacks Consensus Estimate in each of the past four quarters, with an average surprise of 19.87%.
Okta, Inc. Price and EPS Surprise
Okta, Inc. price-eps-surprise | Okta, Inc. Quote
Find the latest EPS estimates and surprises on Zacks earnings Calendar.
Let’s see what to expect from Okta leading up to this announcement:
Key Factors Influencing Okta
As of the third quarter of fiscal 2025, OKTA’s innovative product range has been instrumental in acquiring new clients, boosting revenue growth prospects for the current quarter. The company reported having 19,450 customers and $2.062 billion in current remaining performance obligations, indicating robust expectations for subscription revenues. Notably, clients with over $100,000 in Annual Contract Value rose by 8% year over year, totaling 4,705.
Okta’s Workforce and Customer Identity solutions are seeing increasing market adoption, a trend likely to continue this quarter. The introduction of Okta AI—integrating AI capabilities across both Workforce Identity Cloud and Customer Identity Cloud—helps organizations utilize AI for enhanced experiences and greater cybersecurity. This capability is expected to drive further adoption.
Demand for Okta Identity Governance is strong, contributing roughly one-third of the contract value in workforce agreements. New offerings, such as Okta Privileged Access, Device Access, Fine Grain Authorization, Identity Threat Protection, and Identity Security Posture Management, are gaining traction. Approximately 15% of the bookings in the third quarter were attributed to these new solutions, a trend that is likely to persist.
Increased capabilities for the Auth0 Free Plan—including 25,000 monthly active users and a passwordless feature, among others—coupled with enhancements to paid plans will likely attract more clients and broaden Okta’s market presence.
OKTA Stock Performance Compared to Sector
In the past year, Okta shares have decreased by 16.8%, lagging behind the broader Zacks Computer & Technology sector, which has returned 14.7%, and the Zacks Security industry, which has appreciated by 17.1%.
Okta Stock Performance Overview
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OKTA is currently viewed as expensive, with a Value Score of F signaling a high valuation at present. The 12-month forward Price/Cash Flow ratio stands at 23.86X, compared to 21.72X for the overall sector.
P/CF Ratio (F12M)
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At present, the stock is trading above both the 50-day and 200-day moving averages, indicating a bullish trend.
OKTA Stock Above Key Moving Averages
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Prospects Bolstered by Robust Product Suite
OKTA’s product strength shines through amid a challenging economic landscape, with notable demand for newer offerings like Okta Identity Governance and Okta Privileged Access. The strong uptake of its Identity Threat Protection solution underscores its potential for growth-driven investors.
Okta is capturing market share within the cybersecurity sector, competing effectively against Microsoft (MSFT), International Business Machines (IBM), and CyberArk (CYBR). Notably, Gartner has ranked OKTA higher than both Microsoft and CyberArk across all use cases in its Critical Capabilities for Access Management report.
As global security breaches become more frequent, Okta stands to benefit. Analysts from IDC predict that the global security market will experience double-digit growth over the next five years, with revenues projected to reach $200 billion by 2028. The Identity and Access Management (IAM) field, where Okta excels, is anticipated to be among the fastest-growing sectors, with a compound annual growth rate (CAGR) in the teens or higher from 2024 to 2028.
The demand for IAM growth is driven by the increasing need for secure remote access and enhanced protection for enterprises involved in digital transformation. This strong outlook serves well for Okta’s long-term potential.
Conclusion
Okta’s strong portfolio bolsters its market expansion efforts. Benefiting from industry trends and rising demand for identity solutions, the company’s premium valuation appears justified.
Currently, OKTA holds a Zacks Rank #1 (Strong Buy) and a Growth Score of A—a combination that suggests it could be a strong investment opportunity according to Zacks’ proprietary methodology. You can see the full list of today’s Zacks #1 Rank stocks here.
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This article originally appeared on Zacks Investment Research (zacks.com).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
