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OKTA Beats Q2 Earnings Estimates: Guidance Raise to Lift Shares?
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Okta (OKTA - Free Report) reported second-quarter fiscal 2025 earnings of 72 cents per share, beating the Zacks Consensus Estimate by 18.03%. The company posted earnings of 31 cents per share in the year-ago quarter.
Total revenues increased 16% year over year to $646 million and surpassed the consensus mark by 2.18%. The year-over-year upside can be attributed to higher subscription revenues.
OKTA raised its top-line guidance for the fiscal 2025 based on its strong second-quarter performance and operational efficiencies.
The company’s shares have inched up 0.1% year to date compared with the Zacks Computer & Technology sector’s growth of 21.6% over the same time frame. However, we expect that strong second-quarter results and raised guidance will help the stock recover in the near term.
Subscription revenues (97.8% of total revenues) rose 16.6% year over year to $632 million.
Professional services and other revenues (2.2% of total revenues) were unchanged year over year at $14 million.
Location-wise, revenues from the United States contributed 78.8% to total revenues in the fiscal second quarter. The figure increased 15.95% year over year to $509 million.
International revenues contributed 21.2% to total revenues. The figure increased 17.09% year over year to $137 million.
Okta’s total customer count was 19,300, up 5% year over year. Customers with more than $100K in Annual Contract Value (ACV) increased 10% year over year to 4,620.
The dollar-based retention rate in the trailing 12 months was 110%, down from 115% reported in the year-ago quarter.
Remaining Performance Obligations (RPO) totaled $3.505 billion, up 16% year over year. The current RPO, expected to be recognized over the next 12 months, was $2 billion, up 13% year over year.
In the second quarter, Okta launched various new products such as Identity Threat Protection with Okta AI, Identity Security Posture Management and Highly Regulated Identity. This bolstered the company’s market position and addressed critical security needs.
It also saw rapid uptake of its new products, such as Okta Identity Governance, which attracted more than 1,000 customers in less than two years.
Okta’s Operating Details
Non-GAAP gross profit improved 18.9% year over year to $528 million. Gross margin expanded 190 basis points on a year-over-year basis to 81.7%.
Research and development expenses increased 10.2% year over year to $108 million. Moreover, general and administrative expenses increased 4.1% year over year to $76 million.
Sales and marketing expenses declined 8.4% year over year to $196 million.
Total operating expenses dropped 1.3% year over year to $380 million.
Non-GAAP operating income was $148 million compared with $59 million in the year-ago quarter.
Okta’s Balance Sheet
Okta had $2.35 billion in cash, cash equivalents and short-term investments as of Jul 31. 2024, compared with $2.31 billion as of Apr 30, 2024.
Net cash provided by operations was $86 million in the reported quarter, while free cash flow was $78 million.
Okta Raises Fiscal 2025 Guidance
For third-quarter fiscal 2025, Okta expects revenues in the range of $648-$650 million, indicating year-over-year growth to be 11%.
Current RPO is expected to be between $1.985 billion and $1.990 billion, suggesting year-over-year growth of 9%.
Non-GAAP operating income is expected in the range of $118-$120 million. Operating margin is expected to be 18%.
Non-GAAP earnings are anticipated to be 57-58 cents per share.
Non-GAAP free cash flow margin is expected to be approximately 20%.
For the fiscal 2025, revenues are expected to be $2.55-2.56 billion, indicating year-over-year growth of 13%.
Non-GAAP operating income is expected in the range of $535-$545 million. Operating margin is expected to be 21%.
Non-GAAP earnings are anticipated to be between $2.58 and $2.63 per share.
Non-GAAP free cash flow margin is expected to be approximately 23%.
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OKTA Beats Q2 Earnings Estimates: Guidance Raise to Lift Shares?
Okta (OKTA - Free Report) reported second-quarter fiscal 2025 earnings of 72 cents per share, beating the Zacks Consensus Estimate by 18.03%. The company posted earnings of 31 cents per share in the year-ago quarter.
Total revenues increased 16% year over year to $646 million and surpassed the consensus mark by 2.18%. The year-over-year upside can be attributed to higher subscription revenues.
OKTA raised its top-line guidance for the fiscal 2025 based on its strong second-quarter performance and operational efficiencies.
The company’s shares have inched up 0.1% year to date compared with the Zacks Computer & Technology sector’s growth of 21.6% over the same time frame. However, we expect that strong second-quarter results and raised guidance will help the stock recover in the near term.
Okta, Inc. Price, Consensus and EPS Surprise
Okta, Inc. price-consensus-eps-surprise-chart | Okta, Inc. Quote
Okta’s Q2 Top Line Details
Subscription revenues (97.8% of total revenues) rose 16.6% year over year to $632 million.
Professional services and other revenues (2.2% of total revenues) were unchanged year over year at $14 million.
Location-wise, revenues from the United States contributed 78.8% to total revenues in the fiscal second quarter. The figure increased 15.95% year over year to $509 million.
International revenues contributed 21.2% to total revenues. The figure increased 17.09% year over year to $137 million.
Okta’s total customer count was 19,300, up 5% year over year. Customers with more than $100K in Annual Contract Value (ACV) increased 10% year over year to 4,620.
The dollar-based retention rate in the trailing 12 months was 110%, down from 115% reported in the year-ago quarter.
Remaining Performance Obligations (RPO) totaled $3.505 billion, up 16% year over year. The current RPO, expected to be recognized over the next 12 months, was $2 billion, up 13% year over year.
In the second quarter, Okta launched various new products such as Identity Threat Protection with Okta AI, Identity Security Posture Management and Highly Regulated Identity. This bolstered the company’s market position and addressed critical security needs.
It also saw rapid uptake of its new products, such as Okta Identity Governance, which attracted more than 1,000 customers in less than two years.
Okta’s Operating Details
Non-GAAP gross profit improved 18.9% year over year to $528 million. Gross margin expanded 190 basis points on a year-over-year basis to 81.7%.
Research and development expenses increased 10.2% year over year to $108 million. Moreover, general and administrative expenses increased 4.1% year over year to $76 million.
Sales and marketing expenses declined 8.4% year over year to $196 million.
Total operating expenses dropped 1.3% year over year to $380 million.
Non-GAAP operating income was $148 million compared with $59 million in the year-ago quarter.
Okta’s Balance Sheet
Okta had $2.35 billion in cash, cash equivalents and short-term investments as of Jul 31. 2024, compared with $2.31 billion as of Apr 30, 2024.
Net cash provided by operations was $86 million in the reported quarter, while free cash flow was $78 million.
Okta Raises Fiscal 2025 Guidance
For third-quarter fiscal 2025, Okta expects revenues in the range of $648-$650 million, indicating year-over-year growth to be 11%.
Current RPO is expected to be between $1.985 billion and $1.990 billion, suggesting year-over-year growth of 9%.
Non-GAAP operating income is expected in the range of $118-$120 million. Operating margin is expected to be 18%.
Non-GAAP earnings are anticipated to be 57-58 cents per share.
Non-GAAP free cash flow margin is expected to be approximately 20%.
For the fiscal 2025, revenues are expected to be $2.55-2.56 billion, indicating year-over-year growth of 13%.
Non-GAAP operating income is expected in the range of $535-$545 million. Operating margin is expected to be 21%.
Non-GAAP earnings are anticipated to be between $2.58 and $2.63 per share.
Non-GAAP free cash flow margin is expected to be approximately 23%.
Zacks Rank & Stocks to Consider
Currently, Okta has a Zacks Rank #3 (Hold).
ADOBE (ADBE - Free Report) , Daktronics (DAKT - Free Report) and Smartsheet (SMAR - Free Report) are some better-ranked stocks that investors can consider in the broader sector.
ADOBE, Daktronics and Smartsheet each carry a Zacks Rank 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Adobe’s shares have declined 5.7% year to date. ADBE is scheduled to release third-quarter fiscal 2024 results on Sep. 12.
Daktronics shares have gained 77.3% year to date. DAKT is set to report its first-quarter fiscal 2025 results on Sep 4.
Smartsheet shares have surged 44.8% year to date. SMAR is scheduled to release second-quarter fiscal 2025 results on Sep 5.