Okta (OKTA), a cybersecurity company founded in 2009, provides identity and access management (IAM) solutions. Its platform allows organizations to manage and secure user authentication across multiple applications, devices, and networks.
Okta provides cloud-based solutions that help organizations secure their user authentication processes. Okta has experienced rapid growth in recent years, reflecting the growing demand for cybersecurity solutions. From 2019 to 2024, Okta's revenue increased from $399.2 million to $2.26 billion. Although there were concerns about profitability, the company recently achieved profitability in the fourth quarter of fiscal 2024.
The company also reported a record quarter, with its stock up 13.7% year-to-date, compared to an 11.2% gain for the S&P 500 Index ($SPX). The stock is currently down about 10% from its 52-week high.
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Okta Reports Great Quarter
Okta's cloud-based model is highly scalable and flexible, making it attractive to customers ranging from small businesses to large enterprises.
Analysts and investors were even more impressed with the company's latest quarterly results. His Okta revenue for fiscal year 2024 was reported at $2.26 billion, an increase of 22% from the previous year. This growth is primarily driven by the company's subscription-based revenue model, demonstrating strong retention and expansion of its existing customer base.
Okta has a large cash balance (cash, cash equivalents, and short-term investments) of $2.2 billion. Additionally, the company generated free cash flow (FCF) of $489 million in fiscal year 2024.
Further growth in the future
CEO Todd McKinnon said of 2025: “Organizations continue to turn to Okta to help modernize and simplify their identity infrastructure. As we begin the new fiscal year, we are delivering powerful new features and products that are built on security to help our customers better serve their customers. We're excited to deliver our service and power even more identity use cases.”
Okta is scheduled to announce its first quarter 2025 financial results on May 29, after the market closes. Management expects revenue to increase 16% to 17% year over year to $603 million to $605 million, in line with consensus expectations.
Additionally, cRPO (current remaining performance obligations) could increase by 13% in the first quarter. The company defines cRPO as “the backlog of subscriptions expected to be realized within the next 12 months.” Adjusted net income per share could be $0.54 to $0.55, compared with $0.22 in the year-ago period.
Okta announced a 16% increase in cRPO in the fourth quarter. This is probably why management expects him to have revenue growth of 10% to 11% for the full year 2025. Adjusted net income could range from $2.24 to $2.29. The company expects him to generate his 21% of sales as his FCF in fiscal 2025.
Analysts similarly expect Okta to achieve sustainable profitability in the next two fiscal years, with adjusted earnings of $2.26 per share in fiscal 2025 and a 14.9% increase in earnings per share in fiscal 2026. We expect it to be $2.60.
Furthermore, sales are expected to grow by 10.8% in FY2025 and 13.1% in FY2026. Okta remains an attractive buy at 6x forward sales, compared to peer Palo Alto Networks (PANW), which trades at 12x. sale.
What is Wall Street saying about Okta stock?
Following another strong quarter, Mizuho Securities raised its price target on Okta stock from $105 to $110. In addition, Wedbush analyst Imtiaz Khoujalgi reiterated his buy rating and set a price target of $130.
Overall, Wall Street analysts rate Okta stock a “Moderate Buy.” Of the 37 analysts covering the stock, 13 have recommended a “strong buy,” two have recommended a “moderate buy,” and 22 have recommended a “hold.”
OKTA's analysts have an average price target of $108.15, suggesting upside potential of 5% above current levels. Additionally, the street high of $140 represents an increase of approximately 36% over the next 12 months.
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Important points
Organizations across industries are embracing digital transformation, resulting in an increased use of cloud-based services. As cyber threats become more sophisticated, the need for advanced IAM solutions is likely to increase. Okta's products are well placed to capitalize on this trend. However, fierce competition exists in this field. Investors looking to ride out volatility and focus on long-term growth may find his Okta to be able to add value to their portfolios at this point.
On the date of publication, Sushree Mohanty did not have any positions (directly or indirectly) in any securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
