Okta Stock Hits 4-Month High After Partnerships Growth Drives Q3 Beat: Retail Confidence Hits Year's Peak
By Stocktwits Inc | First Published Dec 4, 2024, 9:39 PM ISTThe cybersecurity company expects fourth-quarter revenue to fall between $667 million and $669 million.
Okta’s stock surged over 10% at market open on Wednesday before paring back some gains later in the morning after the cybersecurity company reported quarterly results that surpassed estimates and stronger-than-expected guidance.
The company clocked third-quarter earnings of $0.67, surpassing the forecasted $0.58. Its revenue came in at $665, a 14% increase over the prior year, beating Wall Street’s estimate of $649.74.
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Okta’s $1 million-plus annual contract value (ACV) customer base continued to drive growth, with this cohort now accounting for approximately $1 billion in ACV.
CEO Todd McKinnon highlighted the significance of its expanding partner ecosystem, particularly within the public sector.
"We're already seeing strong progress, as all of our top 10 deals in Q3 involved partners, each over $1 million in ACV, collectively totaling about $20 million in ACV," McKinnon said, noting that half of these deals were within the U.S. federal vertical.
"Our relentless focus on innovation has resonated with customers, with around 15% of Q3 bookings coming from new products," Okta CFO Brett Tighe added.
The company, known for its identity and access management solutions, is on track to report an annual profit.
Okta posted net income of $16 million for the quarter, a dramatic turnaround from the $81 million net loss in the same period last year.
The company expects fourth-quarter revenue to fall between $667 million and $669 million.
Retail activity around the stock hit the highest over the past year, with ‘extremely bullish’ (96/100) retail sentiment and ‘extremely high’ chatter.
Ahead of the earnings, in mid-day trading on Tuesday, retail sentiment around Okta had dipped to a year-low in the ‘extremely bearish’ (20/100) zone.
Users on the platform expect Okta’s shares to rise again after profit-taking is done.
The upbeat earnings drew a slew of upgrades from Wall Street with Bernstein being the most bullish, raising its price target to $123 from $116, while maintaining a "Market Perform" rating. The firm cited Okta's revised guidance, which more than doubled the beat.
However, Bernstein also noted that Okta's growth rate is continuing to decelerate.
Piper Sandler has set the lowest price target of $90 raised from $85 with a ‘Neutral’ rating on the shares. The brokerage applauded Okta’s new deals but cautioned that other metrics remain a concern.
The stock was last trading up over 5% at levels last seen in early August.
Despite the strong quarterly performance, Okta’s stock has dipped over 3% year-to-date, underperforming the First Trust NASDAQ Cybersecurity ETF (CIBR), which has gained more than 23% during the same period.
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