HomeMarket NewsOKTA's Q1 Earnings Beat Estimates, Revenues Increase Y/Y

OKTA's Q1 Earnings Beat Estimates, Revenues Increase Y/Y

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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.
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Okta, Inc. Price, Consensus and EPS Surprise

Okta, Inc. Price, Consensus and EPS Surprise

Okta, Inc. price-consensus-eps-surprise-chart | Okta, Inc. Quote

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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 (β€œRPO”) 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%. Β 

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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This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

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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.

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