Okta is the IBD Stock Of The Day as the cybersecurity firm trades tightly after surging on its second-quarter earnings report. Okta stock has jumped over 31% in 2023.
On the stock market today, Okta stock rose 3.1% to close at 90.08.
Meanwhile, Okta stock has formed a long, cup base with a buy point of 91.50, according to IBD MarketSmith charts.
Last year, Okta stock dived nearly 70% amid sales challenges and a nettlesome acquisition.
Okta Stock: Q2 Results Beat
San Francisco-based Okta specializes in identity verification. Its software monitors and manages privileged accounts. Hackers often target employees or management with administrative access to company computer systems.
On Aug. 30, Okta reported better-than-expected fiscal second-quarter results.
Okta reported an adjusted profit of 31 cents a share, vs. a 10-cent loss in the year earlier period. Using GAAP accounting, its net loss was $111 million, compared with a net loss of $210 million a year ago.
Revenue rose 23% year over year to $556 million in the quarter ended July 31. Analysts who follow Okta stock had predicted an adjusted profit of 22 cents a share on revenue of $535 million.
Okta's fiscal 2024 sales guidance moved higher to $2.21 billion (19% growth) at the midpoint vs. prior guidance of $2.18 billion.
"Okta delivered a strong set of results, beating expectations on all metrics and highlighted by strong execution," William Blair analyst Jonathan Ho said in a report. "Cost controls that led to operating margin and free cash flow outperformance. While there are always risks associated with sales realignment and go-to-market efforts, we believe Okta is now benefiting from the changes put into place in prior periods."
Okta Stock: Microsoft A Threat
Okta has been a share gainer in the identity security market. But it faces intensified competition from Microsoft. Meanwhile, Microsoft sells multiple cybersecurity products to companies in discounted deals.
In March 2021, Okta made a big acquisition. It agreed to buy Auth0 in a $6.5 billion all-stock deal for the Bellevue, Wash.-based company. Auth0 sells tools that help software developers build identity authentication capabilities into applications.
But integrating Auth0's business into Okta proved challenging, analysts say. At the same time, Okta faced hurdles in the enterprise market selling to large companies.
Restructuring Cuts Costs
In early 2023, Okta announced a restructuring plan to reduce operating expenses. It laid off 300 employees, or about 5% of its workforce.
Meanwhile, Okta stock has an IBD Relative Strength Rating of 92 out of a best-possible 99, according to IBD Stock Checkup. Its Composite Rating is 95 out of 99.
In addition, Okta stock has an Accumulation/Distribution Rating of A-, which indicates institutional buying of shares.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
