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

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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.

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

Okta, Inc. Price, Consensus and EPS Surprise
Okta, Inc. Price, Consensus and EPS Surprise

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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