Okta Inc Up 150% Since March, Outlook Remains Bullish

Okta Inc Up 150% Since March But Outlook Is Even More BullishOkta Stock Soars 90% Year-to-Date

While the coronavirus pandemic has hammered the bottom lines and share prices of many tech companies, it has actually helped propel Okta Inc (NASDAQ:OKTA) considerably higher. The cloud security tech stock has advanced 75% year-over-year, 90% since the start of 2020, and about 150% since the middle of March.

In comparison, the WisdomTree Cloud Computing Fund (NASDAQ:WCLD) has climbed 67% year-to-date and 125% since March. The iShares Expanded Tech-Software Sector ETF (BATS:IGV) is up 28% year-to-date and 57% since the March crash. The S&P 500, meanwhile, is up one percent year-to-date and 44% since March.

The strong gains made by Okta stock are certainly justified, as is the investor optimism. Okta Inc reported strong first-quarter financial results, with strong double-digit revenue growth and a similar increase in its subscription revenue.

And the company expects the good times to continue, even in a post-pandemic world. Looking forward, Okta management said they “don’t expect organizations to revert to their prior ways of working.” (Source: “Okta Announces Strong First Quarter Results,” Okta, Inc, May 28, 2020.)

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This bodes well for the company’s long-term growth.

Okta Stock Overview

Okta’s latest investor presentation says its “Okta Identity Cloud” platform “securely connects the right people to the right technologies at the right time.” (Source: “Investor Presentation Q1 FY21,” Okta Inc, May 28, 2020.)

The general growth of the mobile workforce, along with the identity and access management industry, has been robust. And because of COVID-19, the industry has been on fire.

Okta’s cloud-based technology allows its customers to securely and easily log in to software and apps anywhere, anytime, and from any device. That means businesses that use Okta Identity Cloud do not need to worry about data breaches or security threats.

The San Francisco-based company has over 8,400 customers globally, including JetBlue Airways Corporation (NASDAQ:JBLU), Nordstrom, Inc. (NYSE:JWN), Takeda Pharmaceutical Co Ltd (NYSE:TAK), and T-Mobile US Inc (NASDAQ:TMUS). (Source: “Okta Announces Strong First Quarter Results,” Okta, Inc, May 28, 2020, op. cit.)


Chart courtesy of StockCharts.com

Q1 Revenue Up 46%, Subscription Revenue Up 48%

Okta Inc announced that its total revenue for the first quarter of fiscal 2021 (ended April 30, 2020) increased 46% year-over-year to $182.9 million, while subscription revenue advanced 48% to $173.8 million. (Source: “Okta Announces Strong First Quarter Results,” Okta, Inc, May 28, 2020, op. cit.)

The company reported a first-quarter net loss of $57.7 million, or $0.47 per share, compared to a net loss of $52.0 million, or $0.46 per share, in the same prior-year period.

Adjusted net loss was $8.1 million, or $0.07 per share, versus an adjusted net loss of $21.4 million, or $0.19 per share, in the first quarter of fiscal 2020.

Todd McKinnon, CEO and co-founder of Okta, commented, “Our strong first quarter performance reflects our market leadership and ability to effectively and quickly shift to a fully remote workforce.”

He added, “When this crisis is over, we don’t expect organizations to revert to their prior ways of working. Our commitment to our customers and continued focus on operational agility will help us navigate this environment, lead the new way of work, and seize the opportunity to emerge in an even stronger position.” (Source: Ibid.)

Business Outlook

On the future of Okta Inc, CFO Bill Losch said, “Looking ahead, our strong first quarter revenue performance and highly recurring business model give us confidence in reiterating our fiscal year 2021 revenue outlook. In addition, we are improving our operating loss and loss per share outlook for the fiscal year.” (Source: Ibid.)

For the second quarter of fiscal 2021, Okta expects to report total revenue of $185.0 to $187.0 million, representing year-over-year growth of 32% to 33%. The company also forecasts an adjusted net loss per share of $0.01 to $0.02 in the second quarter.

For fiscal 2021, Okta expects total revenue of $770.0 to $780.0 million, representing growth of 31% to 33%. It also expects an adjusted net loss per share of $0.18 to $0.23.

Add it all up and the future looks bright for Okta stock.

Analyst Take

Okta Inc is an excellent cloud security company that has seen the demand for its technology soar during the coronavirus pandemic.

But the company doesn’t expect the demand to subside in the post-pandemic world. In fact, Okta management remains “highly confident” in its long-term success. That’s good to hear for holders of Okta stock.