Okta-Buy OKTA Stock Before Q4 Earnings? Here's What You Should Know

Company Overview - Okta is set to release its fourth-quarter fiscal 2025 results on March 3, with anticipated non-GAAP earnings in the range of 73-74 cents per share and revenues expected between $667-$ 669 million, indicating a growth of 10-11% year-over-year [1] - The Zacks Consensus Estimate for earnings has remained steady at 73 cents per share, reflecting a year-over-year growth of 15.87%, while the revenue consensus is pegged at $668.8 million, indicating an increase of 10.6% from the previous year [2] Customer Growth and Product Adoption - Okta exited the third-quarter fiscal 2025 with 19,450 customers and$ 2.062 billion in current remaining performance obligations, showcasing strong growth prospects for subscription revenues [3] - The number of customers with more than $100 thousand in Annual Contract Value increased by 8% year-over-year to 4,705, indicating robust demand for Okta's solutions [3] - The adoption of Okta's Workforce and Customer Identity solutions is expected to have continued momentum, driven by the integration of AI capabilities across its platforms [4] Product Innovations and Market Demand - Okta is benefiting from strong demand for its Identity Governance solutions, which represent about one-third of contract value in workforce deals, with new products gaining traction [5] - The enhancements to the Auth0 Free Plan, including increased monthly active users and new security features, are expected to help expand Okta's clientele [6] Stock Performance and Valuation - Okta shares have declined by 16.8% over the past 12 months, underperforming the Zacks Computer & Technology sector and the Zacks Security industry [7] - The stock is currently trading at a forward Price/Cash Flow ratio of 23.86X, which is higher than the broader sector's 21.72X, indicating a stretched valuation [10] Industry Trends and Growth Prospects - The global security market is expected to witness double-digit growth over the next five years, with revenues projected to reach$ 200 billion by 2028, and Identity and Access Management (IAM) is anticipated to be one of the fastest-growing segments [17] - The growing need for secured remote access and enhanced protection during digital transformation is expected to drive demand for IAM solutions, benefiting Okta's long-term prospects [18] Conclusion - Okta's strong portfolio and positive industry trends justify its premium valuation, with a Zacks Rank of 1 (Strong Buy) and a Growth Score of A, indicating a strong investment opportunity [19]