OKTA shares plummet despite positive Q2 results

Identity and access management company Okta (OKTA) delivered strong results in the second quarter of fiscal 2025, with earnings and revenue beating forecasts. However, the company’s shares fell 9.5% in after-hours trading as its earnings guidance came in weaker than expected.

It is important to note that Okta’s performance in the second quarter was driven by the increasing demand for secure digital access in the cloud-centric business environment. In addition, the company’s focus on expanding its product offerings positively impacted the second quarter results.

Okta beats Q2 estimates

Okta’s total revenue increased 16% year over year to $646 million in the second quarter, beating the consensus estimate of $632.6 million. This growth was driven by a 17% increase in subscription revenue. The company’s remaining performance obligation (RPO) also increased 16% to $3.505 billion, indicating a healthy pipeline of future revenue.

Importantly, Okta’s customer base continued to grow, adding 70 new customers with annual contract values ​​of over $100,000, bringing the total number of such customers to 4,620.

In addition, adjusted earnings per share for the second quarter came in at $0.72, a significant increase of 132.3% year over year, comfortably beating Wall Street’s estimate of $0.61.

Outlook for the third quarter and the 2025 financial year

Okta’s third-quarter guidance was mixed. The company expects revenue between $648 million and $650 million, beating the consensus estimate of $639 million. However, EPS guidance of $0.57 to $0.58 fell short of the market expectation of $0.59.

Interestingly, the company has raised its full-year 2025 guidance, citing continued strong growth and profitability. Okta now expects revenue to be in the range of $2.555 billion to $2.565 billion, up from the previous guidance of $2.53 billion to $2.54 billion. In addition, the company forecasts full-year earnings per share to be in the range of $2.58 to $2.63, up from the previous estimate of $2.35 to $2.40.

It is worth noting that the company’s fiscal year 2025 revenue forecast beat Wall Street estimates of $2.542 billion but fell short of earnings estimates of $2.41.

Is Okta a good stock to buy now?

Okta stock has risen over 34% in a year. In addition, it has a Moderate Buy consensus rating based on 11 Buy and 16 Hold recommendations. The average analyst price target for OKTA stock of $114.18 implies an upside potential of 18.27% from current levels.

Interestingly, investors considering OKTA stock might want to follow analyst Shrenik Kothari of Robert W. Baird. He is the best analyst covering the stock (in a one-year period). The top-rated analyst can boast an average return of 22.79% per review and a success rate of 85%. Click on the image below to learn more.

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