Okta Posts Smaller-than-Expected Q1 Loss; Shares Drop After-Hours

Okta (OKTA) reported a lower-than-expected loss in the fiscal first quarter (ended April 30), driven by a 37% year-over-year rise in revenues. However, shares of the independent identity provider declined 2.8% in Wednesday’s extended trading session on investors’ disappointment about the wider-than-expected loss forecast for the July quarter.

Okta reported a Q1 adjusted loss of $0.10 per share, compared to the loss of $0.06 per share reported in the same quarter last year. Analysts had expected the company to report a loss of $0.20 per share. Revenue of $251 million came in ahead of the Street’s estimates of $238.3 million.

Subscription revenues surged 38% year-over-year in the quarter, while calculated billings came in at $364 million, up 74%. (See Okta stock analysis on TipRanks)

Okta CEO Todd McKinnon said, “Organizations around the world are turning to Okta to improve the digital customer experience and to improve how their employees safely connect to their applications from anywhere. With the closing of the Auth0 acquisition earlier this month, we are further enhancing Okta’s market-leading identity platform, enabling us to provide even more choice and unprecedented innovation to customers and developers. Together, we’ll capture more of the massive $80 billion identity market opportunity even faster.”

For Fiscal Year 2022, the company projects adjusted loss per share to be in the range of $1.16 to $1.13, versus analysts’ expectations of $0.44 loss per share. Revenue is expected to land between $1.215 billion and $1.225 billion, versus the consensus estimate of $1.09 billion.

For fiscal Q2, revenue is expected to be in the range of $295 million to $297 million, versus the consensus estimate of $258 million. Adjusted loss per share is forecast to be in the range of $0.36 to $0.35, versus the loss of $0.11 per share estimated by analysts.

On May 24, Stifel Nicolaus analyst Adam Borg initiated coverage of the stock with a Hold rating and a price target of $260 (5.5% upside potential).

Borg believes that Okta is well-positioned to help firms to modernize their identity security posture but cites “growing competition and a premium valuation” as reasons for the neutral stance.

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 10 Buys versus 5 Holds. The average analyst price target of $277.57 implies 12.6% upside potential to current levels. Shares have increased 37.4% over the past year.

TipRanks data shows that financial blogger opinions are 88% Bullish on OKTA, compared to a sector average of 69%.

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