Yahoo Finance OKTA Identity Solutions Gains Users: Should You Buy the Stock?
Okta OKTA is benefiting from an expanding clientele driven by the strong adoption of its Identity Threat Protection solution. It exited the first quarter of fiscal 2025 with the total customer count increasing 6% year over year to 19,100.
Customers with more than $100K in Annual Contract Value (ACV) increased 12% year over year to 4,550. OKTA added 400 new customers in the reported quarter, out of which 160 customers were in the $100K-plus ACV category.
Okta’s expanding user base has been a key catalyst. It is protecting customers by blocking more than 2 billion security attacks a month, and expects these numbers to grow.
OKTA’s revenues are expected to witness a CAGR of 25% between fiscal 2022 and fiscal 2025. In fiscal 2023, the customer base increased 17.3% from fiscal 2022, while in fiscal 2024, clientele jumped 7.7% over fiscal 2023.
However, the current level at which Okta shares are trading doesn’t reflect these positive factors in our view. Shares have declined 1.5% year to date, underperforming the broader Zacks Computer & Technology sector’s return of 6.7% and the Zacks Internet Software and Services’ growth of 1.2%.
Okta, Inc. Stock Price and Consensus
Okta, Inc. price-consensus-chart | Okta, Inc. Quote
OKTA’s closing price of $89.14 on Jun 11 is closer to the mid-point of the 52-week range of $65.04-$114.5, reflecting ample room for upside.
This Zacks Rank #2 (Buy) stock has a Growth Style Score of A and Momentum Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Product Capabilities Helping Okta Stock Win Market Share
Okta’s strong portfolio is helping it win market share in the cybersecurity domain against the likes of Microsoft MSFT, International Business Machines IBM and CyberArk CYBR.
Per Gartner’s Magic Quadrant for Access Management 2023, Okta was recognized as a Leader in the Magic Quadrant for Access Management, putting it above Microsoft and IBM. Gartner recognized CyberArk as a challenger in its Magic Quadrant.
Okta’s expanding portfolio has been a key catalyst. Its Okta AI, a suite of AI-powered capabilities embedded across both Workforce Identity Cloud and Customer Identity Cloud, empowers organizations to harness the power of AI to build better experiences and protect against cyberattacks.
It also announced support for passkeys in early access as a password-less authentication method for Okta Customer Identity Cloud, powered by Auth0.
Early this year, it launched the Okta Secure Identity Commitment, its long-term plan to lead the industry in the fight against identity attacks.
In March, Okta announced the general availability of Fine-Grained Authorization (FGA) to address authorization complexities for developers. FGA allows developers to design authorization models in a way that's centralized, flexible, scalable, and easy to use.
Okta has also demonstrated Identity Security Posture Management powered by its recent acquisition of Spera. The solution proactively identifies vulnerabilities and security gaps before they can be exploited. It works for both Okta and other identity providers like AWS and Azure AD.
OKTA’s Fiscal 2025 View Strong
Okta’s innovative portfolio bodes well for its prospects.
For fiscal 2025, Okta expects revenues between $2.53 billion and $2.54 billion, indicating year-over-year growth of 12%. The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $2.53 billion, indicating year-over-year growth of 11.91%.
OKTA expects the subscription gross margin to remain in the 83% range but reduce slightly for the rest of the fiscal year as it invests in the business across key areas, including security, public sector and customer support.
Non-GAAP operating income is expected in the range of $490-$500 million. Operating margin is expected between 19% and 20%.
OKTA expects fiscal 2025 non-GAAP earnings between $2.35 and $2.40 per share. The consensus mark for earnings is pegged at $2.41 per share, up 5.7% over the past 30 days.
OKTA’s balance sheet also remains strong, with a net cash position of roughly $1.2 billion. Free cash flow margin is now expected to be 22% for fiscal 2025.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
International Business Machines Corporation (IBM) : Free Stock Analysis Report
CyberArk Software Ltd. (CYBR) : Free Stock Analysis Report
Okta, Inc. (OKTA) : Free Stock Analysis Report
