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Okta (OKTA) to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research

Okta, Inc. OKTA is set to report fourth-quarter fiscal 2020 results on Mar 5.

For the quarter, Okta anticipates non-GAAP net loss in the range of 4-5 cents per share.  The Zacks Consensus Estimate for loss has remained steady at 5 cents per share over the past 30 days.

Okta expects revenues in the range of $155-$156 million, indicating year-over-year growth of 34-35%. The consensus mark for revenues is pegged at $155.7 million, indicating an increase of 34.9% from the year-ago quarter reported figure.

Fourth-quarter revenues are derived mainly from in-quarter bookings which are usually lower than other quarters. Management expects the trend to continue in the to-be reported quarter.

Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, with the average positive surprise being 37.8%.

Okta, Inc. Price and EPS Surprise

Okta, Inc. Price and EPS Surprise

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

Higher Expenses to Dent Profits

Fourth-quarter fiscal 2020 earnings are expected to have been weighed down by higher research and development expenses. Notably, non-GAAP research and development expenses surged 45.2% year over year to $30.9 million in third-quarter fiscal 2020 due to significant investments on Okta identity platform and integration network.

Additionally, sales and marketing expenses are likely to have increased owing to the company’s increased efforts to expand international presence and expenses from on-boarding additional customers.

Nevertheless, product innovations, continued adoption and higher use of identity solutions are expected to have driven Okta’s top line.

Moreover, Okta’s revenues are expected to have benefited from increasing adoption of the company’s Identity solutions.

Notably, the company added 400 new customers in the last reported quarter, taking the total count to 7400 including new or expanded customer engagements with companies such as Berry Global Group, Cardinal Health, Dentsu Group, Knauf Information Services and Tableau.

Additionally, the company added 103 net new customers with more than $100,000 annual recurring revenues.

Key Developments in Q4

During the quarter, a leading provider of network-enabled healthcare IT services, athenahealth implemented the Okta Identity Cloud to provide patients with seamless and secure access to critical medical information, products, and services.

What Our Model Says

According to 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 carries a Zacks Rank #3 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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