Okta, Inc. OKTA reported first-quarter fiscal 2025 earnings of 65 cents per share, comfortably beating the Zacks Consensus Estimate by 20.37%. It reported earnings of 22 cents per share in the year-ago quarter.
Total revenues increased 19.1% year over year to $617 million and surpassed the consensus mark by 2.1%. The year-over-year upside can be attributed to higher subscription revenues.
Okta shares were up 5.62% in after-hours trading. Shares have gained 6.5% year to date, underperforming the Zacks Computer & Technology sector’s growth of 18.4% over the same time frame.
Quarter Details
Subscription revenues (97.4% of total revenues) rose 22.1% year over year to $569 million. Professional services and other revenues (2.6% of total revenues) were unchanged year over year to $15 million.
Location-wise, revenues from the United States accounted for 78.9% of total revenues in the fiscal first quarter. The figure increased 19.7% year over year to $487 million.
International revenues accounted for 21.1% of total revenues. The figure increased 17.1% year over year to $130 million.
Okta, Inc. Price, Consensus and EPS Surprise
Okta, Inc. price-consensus-eps-surprise-chart | Okta, Inc. Quote
Okta’s total customer count was 19,100, up 6% year over year. Customers with more than $100K in Annual Contract Value (ACV) increased 12% year over year to 4,550.
It added 400 new customers in the reported quarter, out of which 160 customers were in the $100K-plus ACV category.
The dollar-based retention rate in the trailing 12 months was 111%, down from 117% reported in the year-ago quarter.
Remaining Performance Obligations (“RPO”) totaled $3.364 billion, up 14% year over year. The current RPO, expected to be recognized over the next 12 months, was $1.95 billion, up 15% year over year.
Operating Details
Non-GAAP gross profit improved 23.3% year over year to $503 million. Gross margin expanded 280 basis points on a year-over-year basis to 81.5%.
Research and development expenses increased 5.3% year over year to $100 million. Moreover, general and administrative expenses increased 3% year over year to $71 million.
Sales and marketing decreased 3.9% year over year to $199 million.
Total operating expenses decreased 0.3% year over year to $370 million.
Non-GAAP operating income was $133 million compared with $37 million in the year-ago quarter.
Balance Sheet
Okta had $2.31 billion in cash, cash equivalents and short-term investments as of Apr 30, 2024 compared with $2.2 billion as of Jan 31, 2024.
Net cash provided by operations was $219 million in the reported quarter, while free cash flow was $214 million.
Guidance
For second-quarter fiscal 2025, Okta expects revenues in the range of $631-$633 million, indicating year-over-year growth between 13% and 14%.
Current RPO is expected between $1.955 billion and $1.960 billion, suggesting year-over-year growth in the 10-11% range.
Non-GAAP operating income is expected in the range of $123-$125 million. Operating margin is expected between 19% and 20%.
Non-GAAP earnings are anticipated to be 60-61 cents per share.
For fiscal 2025, revenues are expected to be $2.53-2.54 billion, indicating year-over-year growth of 12%.
Non-GAAP operating income is expected in the range of $490-$500 million. Operating margin is expected between 19% and 20%.
Non-GAAP earnings are anticipated between $2.35 and $2.40 per share.
Zacks Rank & Stocks to Consider
Currently, Okta carries a Zacks Rank #3 (Hold).
Alphabet GOOGL, Datadog DDOG, and NVIDIA NVDA are some better-ranked stocks that investors can consider in the broader sector, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Alphabet shares have gained 25.9% year to date. The long-term earnings growth rate is pegged at 17.51%.
Datadog shares have gained 0.3% year to date. The long-term earnings growth rate is pegged at 9.56%.
NVIDIA shares have jumped 131.9% year to date. The long-term earnings growth rate is pegged at 36.69%.
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