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

Okta, Inc. OKTA reported earnings of 22 cents per share in first-quarter fiscal 2024, comfortably beating the Zacks Consensus Estimate of 12 cents. The company reported a loss of 27 cents per share in the year-ago quarter.

Total revenues increased 24.8% year over year to $518 million and surpassed the consensus mark by 1.45%. The upside can be attributed to higher subscription revenues.

Okta’s total customer count was 18,050, up 14% year over year. Customers with more than $100K in Annual Contract Value (ACV) increased 23% year over year.

It added 450 new customers in the reported quarter, out of which, 150 customers were in the $100K-plus ACV category.

Okta, Inc. Price, Consensus and EPS Surprise

 

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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However, Okta’s shares were down almost 18.38% in pre-market trading following the results.

Quarter Details

Subscription revenues (97.1% of total revenues) rose 26.4% year over year to $503 million. Professional services and other revenues (2.9% of total revenues) declined 11.8% year over year to $15 million.

Location-wise, revenues from the United States contributed 79% to total revenues in the fiscal first quarter. International revenues (21% of total revenues) increased 23% year over year.

The dollar-based retention rate in the trailing 12 months was 117%. The downtick was driven by a decline in the upsell rate with enterprise and SMB customers.

Remaining Performance Obligations (“RPO”) totaled $2.94 billion, up 9% year over year. Current RPO, expected to be recognized over the next 12 months, was $1.7 billion, up 20% year over year.

Operating Details

Non-GAAP gross profit improved 29.1% year over year to $408 million. Gross margin expanded 260 basis points on a year-over-year basis to 78.8%.

Non-GAAP subscription gross margin increased by 2.2% on a year-over-year basis.

Research and development expenses increased 0.6% year over year to $163 million. Sales and marketing increased 1.6% year over year to $256 million.

General and administrative expenses remained flat year over year to $110 million.

Total operating expenses increased 2.3% year over year to $536 million.

Non-GAAP operating income was $37 million against a loss of $41 million in the year-ago quarter.

Balance Sheet

Okta had $2.37 billion in cash, cash equivalents and short-term investments as of Apr 30, 2023 compared with $2.58 billion as of Jan 31, 2023.

Guidance

For second-quarter fiscal 2024, Okta expects revenues in the range of $533-$535 million, which indicates a year-over-year growth of 18%.

Current RPO is expected between $1.71 billion and $1.72 billion, indicating a year-over-year growth of 14-15%.

Non-GAAP operating income is expected in the range of $36-$38 million, while non-GAAP earnings are anticipated to be 21-22 cents per share.

For fiscal 2024, revenues are expected to be $2.175-$2.185 billion, indicating a year-over-year growth between 17% and 18%.

Non-GAAP operating income is expected in the range of $161-$170 million and non-GAAP earnings are anticipated between 88 and 93 cents per share.

Zacks Rank & Other Stocks to Consider

Currently, Okta carries a Zacks Rank #2 (Buy).

Okta’s shares have increased 33% year to date, outperforming the Zacks Computer & Technology sector’s rise of 31.6% over the same time frame.

Ciena CIEN, Momo MOMO and Soitec SLOIF are some other top-ranked stocks that investors can consider in the broader sector. Momo sports a Zacks Rank #1 (Strong Buy) whereas Ciena and Soitec carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ciena shares have declined 8.4% year to date. CIEN is set to report its second-quarter fiscal 2023 results on Jun 6.

Momo shares have declined 10.2% year to date. MOMO is set to report its first-quarter 2023 results on Jun 6.

Soitec shares have declined 15.1% year to date. SLOIF is set to report its first-quarter fiscal 2024 results on Jun 14.

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