OKTA Gears Up to Report Q4 Earnings: What's in the Cards?

Okta, Inc. OKTA is set to report fourth-quarter fiscal 2020 results on Mar 3.

For the fiscal fourth quarter, Okta anticipates non-GAAP net loss in the range of 1-2 cents per share. The Zacks Consensus Estimate for loss per share has remained steady at 1 cent over the past 30 days.

Okta expects revenues in the range of $221-$222 million, indicating growth rate of 32-33% from the year-ago period reported figure. The Zacks Consensus Estimate for revenues is pegged at $221.8 million, indicating an increase of 32.6% from the year-ago quarter reported figure.

Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, with the average earnings surprise being 272.7%.

Okta, Inc. Price and EPS Surprise

Okta, Inc. Price and EPS Surprise

Okta, Inc. price-eps-surprise | Okta, Inc. Quote

Continued Investments to Dent Profits

Okta’s continued investments in its solutions are expected to have pushed up fourth-quarter fiscal 2020 research and development expenses. Notably, non-GAAP research and development expenses increased 31.2% year over year to $40.6 million in third-quarter fiscal 2020 due to significant investments on Okta identity platform and integration network.

Additionally, sales and marketing expense is anticipated to be higher owing to the company’s increased international presence and expenses from on-boarding additional customers.

These are expected to have kept fourth-quarter fiscal 2020 margins under pressure.

However, continued adoption and increasing use cases of identity solutions are expected to aid Okta’s top line in the to-be-reported quarter.

During the fiscal fourth quarter, Okta announced significant momentum in the financial services industry with new and expanded deployments for Canadian Western Bank, First National of Nebraska, and Nota, powered by M&T Bank.

Okta’s fourth-quarter fiscal 2020 revenues are expected to benefit from increasing adoption of the company’s Identity solutions. In the to-be-reported quarter, Okta announced expanded partnerships with Fortune 500 IT services company DXC Technology, Finance of America, OFX, Renault, State of Iowa, Washington State Board of Community and Technical Colleges, and Zoom Video ZM.

Key Q4 Developments

During the to-be-reported quarter, Okta announced the availability of the Okta Identity Cloud and its products in AWS Marketplace. Global Okta prospects are now able to purchase both Customer Identity and Workforce Identity products in AWS Marketplace, while also benefiting from new integrations that take advantage of both Okta and Amazon Web Services (AWS), including AWS Control Tower.

Moreover, the company was recognized by Gartner as a Leader in the Magic Quadrant for Access Management for the fourth consecutive year.

What Our Model Says

According to the Zacks model, a company with a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates.

Okta has a Zacks Rank #3 and an Earnings ESP of +55.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are some more companies, which, per our model, also have the right combination of elements to post an earnings beat in their upcoming release.

Vail Resorts, Inc. MTN has an Earnings ESP of +12.44% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ballard Power Systems, Inc. BLDP has an Earnings ESP of +22.22% and carries a Zacks Rank of 3, currently.

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