Cloud Stocks: Okta Benefiting From App Diversity

According to a recent Fortune Business Insights report, the global identity and access management (IAM) market is estimated to grow from $9.5 million in 2018 to $24.8 billion by the year 2026. Recently, Okta (Nasdaq: OKTA) announced its fourth quarter performance that surpassed market expectations.

Okta’s Financials

Revenues for the fourth quarter grew 45% over the year to $167.3 million, ahead of the market’s forecast of $155.9 million. Net loss was $50.5 million compared with a loss of $30.8 million a year ago. Adjusted loss of $0.01 per share was also better than the Street’s estimated loss of $0.05 per share. Billings grew 42% over the year to $225 million.

By segment, subscription services revenues increased 46% over the year to $158.5 million. Professional services and the others segment revenues grew from $7 million a year ago to $8.8 million.

Among key metrics, Remaining Performance Obligations (RPO) grew 66% over the year to $1.21 billion. Dollar-based net retention also improved to 119% compared with 117% a quarter ago. Okta has been focused on attracting enterprise customers. During the last quarter, it added 550 new customers of which more than 140 were enterprise customers spending more than $100,000 on its platform.

Okta ended the year with revenues growing 47% over the year to $586.1 million and net loss of $208.9 million. On an adjusted basis, net loss was $36.7 million compared with a net loss of $34.1 million reported a year ago.

For the first quarter, Okta forecast revenues of $171-$173 million with a net loss of $0.24-$0.23 per share. It expects to end 2020 with $770-$780 million in revenues and non-GAAP net loss per share of $0.42-$0.37. The market was looking for revenues of $167.49 million for the quarter with a loss of $0.13 per share and revenues of $755.7 million for the year with a net loss of $0.29 per share.

Okta’s Growth Opportunity

According to its management, 73% of its customers are looking to expand their business with Okta this year and 0% are looking to reduce. Customer confidence has fueled Okta’s product development. Last quarter, it released DynamicScale, a leading customer identity solution that supports over 500,000 authentications per minute. The high capacity customer identity offering enables organizations to support the highly-trafficked apps and traffic bursts such as those experienced during a new product release, a viral marketing campaign, or a major shopping weekend.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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