Okta Inc Stock (OKTA): Should I Buy It Now?

By Amit Chowdhry ● June 1, 2020
  • Should you buy Okta Inc (NASDAQ: OKTA) now? Here is some information to help you decide.

I have been getting many notifications about the stock price of Okta Inc (NASDAQ: OKTA) surging lately so it only made sense to do a deep dive of the identity management platform’s financials. Okta — which is known for offering single sign-on/multi factor authentication, API access management, and user management products — recently reported positive metrics for the quarter where people across the world were following shelter-in-place orders.

For the fiscal first quarter ended April 30, revenue increased 46% year-over-year. And the company’s subscription revenue also surged 48% year-over-year.

The total revenue for the quarter was $182.9 million. The actual revenue was well ahead of the company’s guidance of $171 million to $173 million.

And Okta’s non-GAAP adjusted net loss had was reduced from $21.4 million in the year-ago period to $8.1 million for the first quarter of fiscal 2021.

Okta also maintained its full-year outlook for fiscal 2021 revenue to grow 31% to 33% year-over-year. And the fiscal second-quarter revenue is expected to rise by 32% to 33%.

Another interesting metric from the company’s earnings report was the Remaining Performance Obligations (RPO) — which is the company’s backlog. That figure increased 57% to $1.24 billion. And the current RPO (bookings for next year) increased 49% to $619.1 million.

Plus free cash flow more than doubled year-over-year from $13.2 million to $29.8 million.

Okta Inc Stock Performance – (NASDAQ: MELI) as of 06/01/2020 afternoon

5 day: Up 14.06% 

1 month: Up 35.35%

3 month: Up 59.91%

6 month: Up 57.79%

1 year: Up about 81%

2 year: Up about 257%

Since 4/2017: Up 771%

Should You Buy Okta Inc (NASDAQ: OKTA) Now?

Based on the reports I have been reading, 65% of analysts are saying buy, 30% of analysts are saying hold, and 4% are saying sell. In another report, I am seeing that 1 analyst is saying strong buy, 1 is saying buy, 10 are neutral, 2 say sell, and 1 says strong sell.

Case From The Bulls

The bulls are saying that Okta’s novel cloud-based approach for identity access management is expected to attract new customers as margin expansion will come from prolific revenue growth. And as Okta moves upstream, it will be able to land higher-value deals with larger customers. Plus there are plenty of cross-selling and up-selling opportunities existing between Okta’s workforce identity and customer identity products.

Case From The Bears

The bears are saying that margin expansion could see a bottleneck if Okta needs to spend more on sales and marketing for educating consumers on what makes them different from their rivals. And the bears also said that larger firms may start offering comparable products or aggressive pricing incentives. Plus enterprises may be reluctant to change their identity access strategy with a vendor that has a younger track record.

Disclosure: I own a small number of Okta Inc (NASDAQ: OKTA) shares. I wrote this article myself and I do not have any business relationship with any company whose stock I write about. I am not a financial advisor and all articles are my opinion. You should do your own due diligence and consider talking to a financial professional before investing.