Here is the breakdown of another high flying technology name. Check out the breakdown on $OKTA, otherwise known as Okta.
Current Price: $246.85
52/Wk High: $287.35
52/Wk Low: $88.66
Market Cap: $32.0 Billion
Read below for the breakdown!
Okta ($OKTA ) is a major software and IT services provider in which offers a platform and services for companies in order to secure and manage connection authentication into commonly used applications and software.
Due to COVID-19 Okta stock has been on fire, in fact, in the past year Okta stock has run 108% and continues to move higher. Given the massive rally, many are wondering if Okta is a buy, and for good reason.
Taking a look at the most recent quarter, Okta beat expectations with an EPS of $0.04, much better than the expected EPS consensus estimate of $-0.01. On a year over year basis, that is a 157.14% improvement.
Not only that but Okta reported revenues of $217.4 million, representing a 42% year over year increase. Subscription revenues also continued to improve, increasing by 43% year over year to $206.7 million.
As for remaining performance obligations, RPO totaled $1.58 billion, representing an increase of 53% year over year. Total calculated billings increased by 44% year over year as well, hitting $252.4 billion.
Furthermore, Okta reported a non-GAAP operating income of $5.5 million for Q3 2021, much better than the same time 2020 operating loss of $8.1 million. It is also important to note that the Q3 operating income totaled 2.5% of revenues.
Okta management also reported a GAAP net loss of $72.8 million for Q3 2021, slightly worse than the Q3 2020 level of $63.5 million.
Finally, net cash provided by operations totaled $43.4 million, representing roughly 20% of revenues, much better than the Q3 2020 level of $10.6 million and 7% of total revenues.
Shifting into guidance Okta management has large expectations for Q4 of 2021. Okta expects revenues to land within a range of $221 million to $222 million in Q4, representing a 32% to 33% gain.
Management also expects a Q4 non-GAAP operating loss of $2.0 million to $1.0 million as well as a non-GAAP net loss per share of $0.02 to $0.01.
Looking onto the end of FY 2021, management expects revenues to total $822 million to $823 million, representing growth of 40% on the year. Okta also predicts that FY 2021 non-GAAP operating losses will total $2.3 million to $1.3 million.
Management was upbeat about the quarter and future.
“Our strong third quarter results reflect Okta's leading position in identity and access management and our continued ability to execute and drive industry-leading performance,” CEO Todd McKinnon said.
Taking a look at the balance sheet the numbers are solid.
Total Debt: $1.745 Billion
Total Liabilities: $2.490 Billion
Total Assets: $3.170 Billion
Cash & Short Term Inv: $2.495 Billion
While the numbers have been quite good overall, Okta is quite expensive on a valuation basis.
Price to Sales: 42.86x
Price to Book: 48.38x
As for management performance, leadership could be more effective.
Return on Equity: -44.67%
Return on Assets: -9.56%
Return on Invested Capital: -12.08%
Given the numbers, the analysts are bullish with a mean price target of $268.38/share, representing a 9.14% upside.
It is also important to note that the high price target is $313.00/share, representing a 27.28% upside, while the low price target is $250.00/share, representing a 1.66% gain.
The big money is also quite involved with 81.66% of Okta being owned by institutions. Top holders include Morgan Stanley Investment Management, The Vanguard Group, and BlackRock Institutional Trust.
On a technical basis, Okta could be flashing opportunity. According to the six-month charts the MACD recently crossed to the downside with significant momentum within a range of 8.80 down to 5.77.
The six-month charts are also indicating an RSI of 45.22 and CCI of -70.59, both of which are on the low end.
In short, Okta is a major player in the world’s shift from paper to digital and I believe demand for services like Oktas will continue to grow in the years to come. Therefore, Okta is a solid long term pick within the software and IT services space.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.