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Okta (OKTA) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research

Okta, Inc. OKTA is set to report first-quarter fiscal 2021 results on May 28.

For the quarter, Okta anticipates non-GAAP net loss in the range of 23-24 cents per share.  The Zacks Consensus Estimate for loss has remained steady at 18 cents per share over the past 30 days.

Okta expects revenues in the range of $171 million to $173 million, up 37% to 38% year over year. The consensus mark for revenues is pegged at $172.1 million, indicating an increase of 37.4% 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 positive surprise being 45.3%.

Let’s see how things have shaped up for the upcoming announcement.

Higher Investments in Identity Platform to Dent Profits

First-quarter fiscal 2021 earnings are expected to have been weighed down by higher research and development expenses. Notably, non-GAAP research and development expenses surged 44.4% year over year to $43.3 million in fourth-quarter fiscal 2020 due to significant investments in Okta identity platform and integration network.

Nevertheless, product innovations, continued adoption and higher use of identity solutions are expected to have driven Okta’s top line.

Okta, Inc. Price and EPS Surprise

Okta, Inc. Price and EPS Surprise

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

Additionally, Okta’s revenues are expected to have benefited from higher adoption of the company’s Identity solutions.

Autodesk ADSK selected Okta’s Identity Cloud to centralize identity and access management for its customers in the to-be-reported quarter.

Meanwhile, Zurich North America, one of the largest providers of insurance solutions and services, implemented the Okta Identity Cloud to securely manage and streamline access to critical technology for its global workforce and customer base in the to-be-reported quarter.

Moreover, major updates and additions made to Okta Partner Connect program are expected to have attracted new and expanded customer engagements in the to-be-reported quarter.

Notably, the company added 550 new customers in the last reported quarter, taking the total count to 7950, an increase of 30% year over year including new or expanded customer engagements.

Key Developments in Q1

During the quarter, the company introduced foundational, service-oriented technologies – Okta Platform Services at the heart of the Okta Identity Cloud. Okta Platform Services enable Okta to meet unlimited workforce and customer identity use cases that customers and partners can access through APIs, integrations and other products.

Additionally, Okta announced new strategic partnerships with leading endpoint protection and management providers VMware VMW Carbon Black, CrowdStrike, and Tanium providing a broad set of device risk signals to the Okta Identity Cloud, enabling enterprises to combine endpoint risk detection with user identity to deliver unparalleled access security.

Moreover, Oracle (ORCL) validated integration of Okta Access Gateway with Oracle’s ORCL Oracle E-Business Suite 12.2 during the to-be-reported quarter. Notably, this Zacks Rank #2 (Buy) company is a Gold level member of Oracle PartnerNetwork (OPN). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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