OKTA Incurs Loss in Q3, Subscription Revenues Increase Y/Y

Okta, Inc. OKTA reported third-quarter fiscal 2022 adjusted loss of 7 cents per share that beat the Zacks Consensus Estimate by 69.6%. The company had reported earnings of 4 cents per share in the year-ago quarter.

Total revenues surged 61.3% year over year to $350.7 million and surpassed the consensus mark by 7.1%. The upside can be attributed to higher subscription revenues.

Subscription revenues (96% of total revenues) surged 62.9% year over year to $336.7 million. Professional services and other revenues (4%of total revenues) increased 31.4% year over year to $14 million.

Okta, Inc. price-consensus-eps-surprise-chart, Okta, Inc. Quote, Internet-Software and Services, Computer & Technology, Internet Software, Click to get this free report, Zacks Investment Research

– Zacks

Quarter Details

Location wise, revenues from the United States (78.7% of total revenues) in fiscal third quarter were $276.1million, up 51.3% year over year. International revenues (21.3% of total revenues) soared 114.1% year over year to $74.5 million.

Total calculated billings were $389 million, up 54.4% year over year. The uptick was driven by new and existing commercial as well as enterprise customers, and increased bookings.


 

Okta, Inc. Price, Consensus and EPS Surprise

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

Dollar-based retention rate in the trailing 12 months was 122%.

Remaining Performance Obligations (“RPO”) totaled $2.35 billion, up 49% year over year. Current RPO, expected to be recognized over the next 12 months, was $1.18 billion, up 57% year over year.

Okta’s total customer count was14,000, up 49% year over year.

Operating Details

Non-GAAP total gross profit surged 58.5% year over year to $269.8 million. Gross margin contracted 140 basis points (bps) to 76.9%.

Non-GAAP research and development expenses increased 81.2% year over year to $73.6 million. Non-GAAP sales and marketing, and general and administrative expenses, increased 61.1% and 81.1% year over year to $153.8 million and $52 million, respectively.

Non-GAAP total operating expenses increased 69.6% year over year to $279.4 million.

Non-GAAP operating loss was $9.5 million against operating income of $5.5 million in the year-ago quarter.

Balance Sheet

Okta had $2.48 billion in cash, cash equivalents, and short-term investments, as of Oct 31, 2021, compared with $2.47 billion as of Jul 31, 2021.

Guidance

For fourth-quarter fiscal 2022, Okta expects revenues in the range of $358-$360 million, which indicates year-over-year growth of 53%.

Non-GAAP operating loss is expected in the range of $34-$35 million while non-GAAP net loss is anticipated in the band of 24-25 cents per share.

For fiscal 2022, revenues are expected in the range of $1.275-$1.277 billion, indicating year-over-year growth 53%.

Non-GAAP operating loss is expected in the range of $84-$85 million and non-GAAP net loss is anticipated between 52 cents and 53 cents per share.

Zacks Rank & Stocks to Consider

Currently, Okta carries a Zacks Rank #4 (Sell).

Okta shares are down 22.1%, underperforming the Zacks Internet-Software and Services industry’s decline of 6.3% and Computer & Technology sector’s return of 23.6% year to date. Long term earnings growth rate stands at 25%.

Some of the better-ranked stocks in the Computer & Technology sector are Nova Measuring Instruments NVMI, Advanced Micro Devices AMD and Pinterest PINS.

Currently, Nova Measuring sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Long term earnings growth rate stands at 32.2%.

Nova Measuring shares have returned 83% year to date compared with the Zacks Electronics-Semiconductors industry’s growth of 36.7% and the Computer & Technology sector’s return of 22.7%.

Long term earnings growth rate for AMD, a Zacks Rank #2 (Buy) stock, is currently pegged at 46.2%.

AMD shares have returned 62.6% year to date, outperforming the Electronics-Semiconductors industry’s growth of 36.7% and the Computer & Technology sector’s return of 22.7%.

Pinterest, currently carrying a Zacks Rank #2 (Buy) has a long-term earnings growth rate of 52.7%.

    

PINS shares are down 43.4%, underperforming the Zacks Internet Software industry’s decline of 17.8% and Computer & Technology sector’s return of 22.7% year to date.


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