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Okta surpasses Q4 earnings estimates, Vroom posts mixed earnings

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Yahoo Finance's Myles Udland, Julie Hyman and Brian Sozzi break down Okta, Kroger and Vroom's latest financial results.

Video Transcript

MYLES UDLAND: All right, welcome back to "Yahoo Finance Live" on this Thursday morning. Futures pointing to kind of a muted open here. But we've seen a couple eventful sessions so far this week.

Earnings continue to trickle in, however. And let's talk about a couple of stocks that are on the move this morning. Let's start with Okta, the company that many of our viewers may know as the service that requires an extremely long and detailed password to be changed every three months to sign into all of your corporate backend stuff.

As you see here, the company beat on the top and the bottom line during its earnings yesterday. We're going to talk to Okta CEO Todd McKinnon on the program tomorrow morning.

Now, Okta's really been a part of the at-home trade. They're helping to basically create a secure backend while you are at your home and not on your company's network. So they've been a big part of that.

Also, they were caught up in, really, the hot SaaS trade that we saw back in 2019. But the company out yesterday, making a big acquisition, Brian Sozzi-- $6.5 billion in stock. The acquisition-- they're buying Auth0. The acquisition is-- you know, uses Okta shares, I should say, at $276 per share.

In the premarket this morning, Okta shares are down around $218. So nice use of the stock as currency there. But a pretty steep sell-off after this quarter. Guidance-- slightly light. Big acquisition. What do you see here, Sozz?

BRIAN SOZZI: Yeah, our sister publication, TechCrunch, had a nice dive into this acquisition. I know Julie has done some work on it, too. But just looking at the numbers here, and I think the sell-off is very simple to understand.

Their revenue growth outlook for this year-- about 29 and 1/2%. You look at some of the buy-side expectations that I saw coming into this, they were looking for about 32% to 33%. Maybe also some disappointment with the bottom line outlook, as well.

But again, this is another company that has, in many respects, become an essential player in your tech stack, Myles, as we all move to the cloud and we have to securely log in. But again, you know, Julie, the acquisition by Okta, this was something, considering where the company they are buying was valued, what, just a couple months ago?

JULIE HYMAN: Yes, exactly. And I think that helps explain the decline, too, is that they're really paying up for this company. You mentioned they're buying this company, Myles, for $6 and 1/2 billion. The last private raise for Auth0, or Autho-- however you say this thing-- $1.92 billion. That was in July.

So you're talking about, in an eight-month period of time, the valuation going from just under $2 billion to Okta paying $6 and 1/2 billion. So you know, that sort of explains what's going on here. My tip on the Okta passwords-- titles. Movies, books-- titles as your password. I always struggle with what to come up with for those things.

MYLES UDLAND: I have come up with a tip as well, which usually works. But I will not share it because--

JULIE HYMAN: Mm.

MYLES UDLAND: --you can figure it out if you know a couple things about me. All right, let's stay on earnings here. Let's move to another hot pandemic play. That's Vroom, Sozzi. This stock also under pressure this morning. What's the story here?

BRIAN SOZZI: Yeah, I have a story looking at this now on the Yahoo Finance homepage, appropriately titled, "Why Vroom stock is getting run over." And it absolutely is. Shares are down almost 20% here in the premarket.

Sales in the quarter, up 14% year over year. That looked OK. But the thing is here, I think the market is focusing on the fourth quarter loss-- pretty massive and was also worse, $0.05 worse, than street expectations.

First quarter sales below estimates. First quarter estimates for earnings, big loss-- $0.61 to $0.68 estimates. By Vroom, the consensus was at about $0.37 loss. So really not a good earnings day for Vroom.

And it boils down to them just ordering too much inventory. And now they're going to have to start selling that inventory at depressed prices. They started in the fourth quarter. That will continue in the first quarter. And I think that's why you're seeing estimates come down across the board and the stock really getting destroyed here.

MYLES UDLAND: An eventful year for the auto space. And we talked earlier about pull forwards of expectations and changes in consumer habits. I think several years of change happening there. We'll see how that keeps up. I'm, myself, physically going to a dealer this weekend. We'll see how that plays out.

All right, let's talk quickly about the grocery space. Julia, a stock that amazingly hasn't done really anything over the last year-- Kroger up a little bit this morning premarket after its latest results. What are we seeing there?

JULIE HYMAN: I mean, the last year has made the grocery business broadly more interesting because it's obviously one of the few businesses that remained consistently open. And a lot of grocery store chains saw an increase.

Kroger, though-- one of the more staid chains, though, within the grocery business. I think we can say sort of the mass-market retailers like Target and Walmart have probably picked up more share. That said, though, Kroger did see an increase of 118% in its digital sales. So it definitely has transitioned in that direction.

Fourth quarter results coming in a little bit better than estimated. Earnings per share in particular, adjusted earnings per share, coming in well above estimates-- $0.81 versus the $0.69 estimate.

And same-store sales, they're excluding fuel up 10.6% in the latest quarter. The forecast is quite interesting to me because there the company is forecasting adjusted earnings per share of $2.75 to $2.95, which is above what analysts had been predicting.

However, same-store sales excluding fuel predicted to fall 3% to 5%, again because, while many of the big tech companies, we're talking about them lapping-- that maybe last year was a strong year, this year not going to be as strong-- that's happening with some of these grocery stores, I guess, too. Or at least in the case of Kroger, they would have had a stronger year last year than many other companies.

And so this year in comparison, perhaps not going to be as strong for a company like this. But we'll see. That's the forecast. We'll see how it actually plays out.

BRIAN SOZZI: What I'm really interested in here, Julie, is, what type of car does Myles roll up to in Kroger?

JULIE HYMAN: Right?

BRIAN SOZZI: Myles, is it a G-Wagen? Is it a G-Wagen?

MYLES UDLAND: So when the lottery was a billion dollars, I did pick out a G-Wagen. But I did not win the lottery for a billion dollars. And so, as a result, I will not be driving a G-Wagen, unfortunately. I mean, those are $200,000, which I could not believe that there is a car that I have actually seen on the road that's $200,000. So not for me. Not for me, folks.