OKTA Gears Up to Report Q4 Earnings: What's in the Cards?

Okta, Inc. OKTA is set to report its fourth-quarter fiscal 2024 results on Feb 28.

For the fiscal fourth quarter, the company anticipates non-GAAP earnings in the range of 50-51 cents per share.

The Zacks Consensus Estimate for earnings has remained steady at 51 cents per share over the past 30 days.

Revenues are expected in the range of $585-$587 million, indicating growth of 15% from the year-ago period’s reported figure.

Okta, Inc. Price and EPS Surprise

Okta, Inc. Price and EPS Surprise

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

The Zacks Consensus Estimate for revenues is pegged at $586.25 million, indicating an increase of 14.95% from the year-ago quarter’s reported figure.

Okta’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average earnings surprise being 94.41%.

Let’s see how things have shaped up for Okta prior to this announcement:

Factors to Consider

The company’s fourth-quarter fiscal 2024 results are expected to reflect the benefits of increased use cases of identity solutions.

Okta Identity Cloud’s capability to consolidate and easily integrate existing applications without compromising security or stability is attracting customers. Okta products’ ability to automate processes, secure data and reduce costs has been a positive.

Expanding clientele has been a key catalyst. The company ended the fiscal third quarter with 18,800 customers, adding 400 customers throughout the previous quarter despite the challenging macroeconomic environment. Customers with more than $100K in Annual Contract Value increased 3.8% year over year.

Okta’s Workforce and Customer Identity solutions have been gaining adoption and the momentum is expected to have continued in the to-be-reported quarter.

The launch of Okta AI during the to-be-reported quarter is expected to have further aided in customer adoption. Okta AI is a suite of AI-powered capabilities that are embedded across both Workforce Identity Cloud and Customer Identity Cloud. Okta AI powers real-time identity actions using the latest AI models and Okta’s crowdsourced threat intelligence and identity data.

Moreover, an expanding partner base that includes Google and Zoom is expected to have driven top-line growth in the fiscal fourth quarter.

However, Okta’s results are expected to have suffered from macroeconomic challenges that have been affecting contract term lengths and deal sizes across small and medium-sized businesses and enterprises. This is also expected to have hurt the net retention rate on a sequential basis.

What Our Model Indicates

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Okta has an Earnings ESP of 0.00% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Semrush SEMR has an Earnings ESP of +23.08% and currently has a Zacks Rank #2. You can find the complete list of today’s Zacks #1 Rank stocks here.

Semrush is set to announce fourth-quarter 2023 results on Mar 4. SEMR shares have declined 7.6% year to date.

Guidewire GWRE has an Earnings ESP of +4.76% and a Zacks Rank #3 at present.

Guidewire is set to announce second-quarter fiscal 2024 results on Mar 7. GWRE’s shares have gained 10.3% year to date.

Pure Storage PSTG currently has an Earnings ESP of +2.68% and a Zacks Rank #3.

Pure Storage is set to announce fourth-quarter fiscal 2024 results on Feb 28. PSTG shares have returned 9.3% year to date.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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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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