Identity and access management company Okta (OKTA) delivered strong second-quarter Fiscal 2025 results, with earnings and revenue exceeding forecasts. However, the company’s shares tumbled 9.5% in the after-hours trading session due to weaker-than-expected earnings guidance.
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It is worth highlighting that Okta’s Q2 performance was driven by rising demand for secure digital access in the cloud-centric business environment. Furthermore, the company’s focus on expanding its product offerings aided Q2 results.
Okta Outshines Q2 Estimates
Okta’s total revenue jumped 16% year-over-year to $646 million in Q2, surpassing the consensus estimate of $632.6 million. This growth was driven by a 17% increase in subscription revenue. The company’s remaining performance obligation (RPO) also rose by 16% to $3.505 billion, indicating a healthy pipeline of future revenues.
Importantly, Okta’s customer base continued to expand, adding 70 new customers with annual contract values exceeding $100,000. This brings the total number of such customers to 4,620.
Furthermore, adjusted earnings per share for Q2 came in at $0.72, reflecting a significant 132.3% increase compared to the prior year. This easily beat the Street’s estimate of $0.61.
Q3 and Fiscal 2025 Outlook
Okta’s guidance for Q3 was mixed. The company expects revenue to be between $648 million and $650 million, exceeding the consensus estimate of $639 million. However, its EPS projection of $0.57 to $0.58, remained below the market’s expectation of $0.59.
Interestingly, the company raised its full Fiscal 2025 guidance, reflecting continued strong growth and profitability. Okta now expects revenue to be between $2.555 billion and $2.565 billion, up from its previous forecast of $2.53 billion to $2.54 billion. Additionally, the company forecasts full-year EPS in the range of $2.58 to $2.63, up from the previous estimate of $2.35 to $2.40.
It should be noted that the company’s FY25 revenue outlook exceeded Wall Street’s estimates of $2.542 billion but fell short of earnings estimates of $2.41.
Is Okta a Good Stock to Buy Now?
Okta stock is up over 34% in one year. Further, it sports a Moderate Buy consensus rating based on 11 Buy and 16 Hold recommendations. The analysts’ average price target on OKTA stock of $114.18 implies an 18.27% upside potential from current levels.
Interestingly, investors considering OKTA stock could follow Robert W. Baird analyst Shrenik Kothari. He is the best analyst covering the stock (in a one-year timeframe). The Top-rated analyst boasts an average return of 22.79% per rating and an 85% success rate. Click on the image below to learn more.
