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Okta share price declined 10% after this news

Okta Inc. (OKTA) share price declined 10.4% in Thursday’s pre-market trading session after the company announced its fourth-quarter results ending on January 31, 2021. The results beat the expectation but failed to impress the investors.

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Q4 Financial highlights

The company reported $0.06 per share earnings for the fourth quarter. The Okta revenue for the reported quarter was $234.7 million which exceeded the estimates of $221.9 million. The company’s subscription revenue grew 42% year-over-year to $225.4 million.

Despite the better results than the estimates, the company was unbale to impress investors. For 1Q the company is expecting a loss in the range of $0.20-$0.21 per share, which is more than the analysts’ estimates. The company also predicting a loss of $0.44-$0.49 per share versus analysts’ expectations for earnings of $0.01 per share. Hence the share price plunged on Wednesday. The company provide a revenue estimate in the range of $237-$239 million for 1Q. For 2022, the company anticipates revenues of between $1.08 and $1.09 billion.

Recent developments:

OKTA recently also announced the purchasing of its rival company peer Auth0 for $6.5 billion. The company wants to solidify its position in the growing market for digital authentication security services.Auth0 raised $120 million in a round that was led by Salesforce Ventures and valued the Seattle-area company at $1.92 billion. The stock deal will be completed in the second quarter of 2021 ending July 31. The company is expecting that this deal will enhance the company’s vision of enabling everyone to safely use any technology.  The analyst from Oppenheimer, Ittai Kidron expecting a price target of $295. Okta has a Moderate Buy consensus rating based on 4 Buys and 6 Holds. The average analyst price target of $289.89 implies over 20% upside from current levels.

Okta said that the Auth0 will operate as an independent business unit within Okta and both companies’ products will be supported and developed going forward. Okta is an identity management firm and its main product Identity Cloud was used almost 16 billion times to access an app or website between March and July. The usage has tripled during the pandemic period.

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