Shares of Okta (OKTA) surged in after-hours trading after the identity management company reported earnings for its third quarter of Fiscal Year 2025. Earnings per share came in at $0.67, which beat analysts’ consensus estimate of $0.59 per share. Sales increased by 13.9% year-over-year, with revenue hitting $665 million. This beat analysts’ expectations of $649.74 million.
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CEO Todd McKinnon attributed the company’s growth to strategic investments in its partner ecosystem, as well as its public sector vertical and large enterprise customers, all of which significantly contributed to revenue. In addition, it appears that Okta’s focus on innovation and identity security continues to resonate with customers across various sectors. Indeed, McKinnon noted that businesses are increasingly turning to Okta to modernize their identity infrastructure.
Interestingly, investors could have anticipated the solid year-over-year growth by simply looking at Okta’s website traffic. As the image below shows, the number of visitors rose significantly during the most recent quarter. In fact, total estimated visits jumped 13.7% when compared to the same quarter of last year.
2025 Outlook
Looking forward, management has provided the following guidance for 2025:
- Q4 revenue between $667 million and $669 million versus estimates of $650.7 million
- Q4 adjusted earnings per share of $0.73 to $0.74 compared to expectations of $0.67
- FY25 revenue between $2.595 billion and $2.597 billion versus estimates of $2.56 billion
- FY25 adjusted earnings per share of $2.75 to $2.76 compared to expectations of $2.61
As you can see, guidance was better than expected, which definitely contributed to the stock’s after-hours move.
Is OKTA Stock a Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on OKTA stock based on seven Buys, 14 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 12% rally in its share price over the past year, the average OKTA price target of $89.65 per share implies 10% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
