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OKTA Gears Up to Report Q1 Earnings: What's in the Cards?

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Okta, Inc. (OKTA - Free Report) is set to report first-quarter fiscal 2022 results on May 26.

For the fiscal first quarter, Okta anticipates non-GAAP net loss in the range of 20-21 cents per share.  The Zacks Consensus Estimate for loss per share has remained steady at 20 cents over the past 30 days.

Okta expects revenues in the range of $237-$239 million, indicating growth rate of 30-31% from the year-ago period reported figure. The Zacks Consensus Estimate for revenues is pegged at $238.6 million, indicating an increase of 30.4% from the year-ago quarter reported figure.

Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, with the average earnings surprise being 427.7%.

Okta, Inc. Price and EPS Surprise

Okta, Inc. Price and EPS Surprise

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

Continued Investments to Dent Profits

Okta’s first-quarter fiscal 2022 results are expected to reflect new product additions, continued adoption and increased use cases of identity solutions.

During the fiscal first quarter, Okta introduced new areas, namely, privileged access management and identity governance and administration (IGA), which are expected to have expanded the size of Okta’s potential markets to about $80 billion. The market is currently dominated by CyberArk Software (CYBR - Free Report) and SailPoint Technologies (SAIL - Free Report) .

Okta’s new Identity Governance delivers self-service identity governance and administration for all users within the extended enterprise through a single control plane to meet compliance requirements without sacrificing speed in hybrid and multi-cloud environments.

Meanwhile, privileged access management seeks to protect data from being hacked within an organization while governing who can view and change an organization’s critical systems.

The company aims to create an extensive cloud infrastructure to provide top independent software clouds needed by business applications with identity and access remaining the company’s core specialty.

In the to-be-reported quarter, Okta announced expanded deployments with Crate and Barrel, a leading lifestyle brand offering contemporary furniture, housewares and decor and NTT DATA, a top 10 global IT services provider.

In the fourth quarter of fiscal 2021, Okta added 600 new customers, taking the total customer count to 10,000, up 26% year over year. Moreover, partnerships with the likes of salesforce.com (CRM - Free Report) , OFX and Renault among others, is helping the company to win customers.

However, continued investments in research & development toward its solutions are expected to have kept this Zacks Rank #4 (Sell) company’s first-quarter fiscal 2022 margins under pressure.

Notably, non-GAAP research and development expenses increased 35.9% year over year to $43.5 million in fourth-quarter fiscal 2021 due to significant investments on Okta identity platform and integration network.

Additionally, sales and marketing expense is anticipated to have been higher owing to the company’s increased international presence and expenses from on-boarding additional customers.

Key Q1 Developments

During the to-be-reported quarter, Okta announced a definitive agreement to acquire Auth0, a leading identity platform for application teams, in a stock transaction valued at nearly $6.5 billion. The proposed transaction is expected to close during Okta’s second quarter of fiscal year 2022, ending Jul 31, 2021.

The transaction is expected to accelerate Okta’s growth in the $55 billion identity market. Auth0 will operate as an independent business unit inside of Okta, and both platforms will be supported, invested in, and integrated over time.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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