To The Moon

$Okta Inc.(OKTA)$ After announcing its fiscal 2025 Q3 results on Tuesday, the company moved up 15.5% after hours in a shakeout that also one-upped the Q2 selloff as the company beat Q3 estimates and raised its full-year outlook. The performance is just like $Snowflake(SNOW)$ days ago.

Financial data and market expectations

In the Q3 fiscal quarter ended October 31, the company's revenue reached $649.6 million, an increase of approximately 11.24% year-over-year, beating market expectations of $646.0 million.This included $651 million in subscription revenue and $14 million in professional services and other revenue.

Current residual fulfillment value is $2.130 billion to $2.135 billion, up 9% year-over-year;

Non-GAAP EPS of $0.73-$0.74, significantly ahead of market expectations of $0.68.

Okta's business is organized into two main segments: Workforce Identity and Customer Identity. during the quarter, Workforce Identity saw significant revenue growth, primarily due to increased demand for identity management solutions in the enterprise.Meanwhile, Customer Identity also performed well, attracting more customers for authentication and managed services.

Guidance.

Looking ahead to Q4, the company expects revenue to be in the range of $667 million to $669 million, ahead of market expectations of $651 million, and adjusted EPS to be in the range of $0.73 to $0.74, compared to market expectations of $0.67

For the full year of fiscal 2025, the company expects revenue to be between $2.595 billion and $2.597 billion, higher than the market's estimate of $2.56 billion, an increase of 15% year-over-year; non-GAAP operating profit to be between $573 million and $575 million, with an operating margin of 22% also higher than expected.

Investment highlights

Okta's quarterly results exceeded expectations for the following reasons:

1. Strong market demand: Enterprise demand for secure identity management solutions continues to rise as digital transformation accelerates.

2. Product Enhancements: Okta announced a number of new product enhancements at its user conference that, while not considered revolutionary, still strengthened its product portfolio

3. Expanding customer base: The company has been successful in attracting new customers and existing customers have increased their investment in Okta's services.

   

4. AI adoption boost: there is already a downward shift of favor from hardware companies to B2B software companies.

   

Of course, investors should continue to focus on the following focal points:

• Future growth potential: primarily Okta's market response to new product launches, and in particular whether the attractiveness of its Identity Governance and Privileged Access Management (PAM) products will live up to market expectations.

• Customer satisfaction and retention: analyze how the company is responding to competition and its ability to innovate its products.Find out how satisfied existing customers are with Okta's services and whether they will continue to expand their commitment.In addition, keep an eye on the company's RPO as well as its retention rate. the growth rate of RPO in Q3 was 9%, slightly lower than the revenue growth rate of 11%.

• Financial health: continued focus on the company's cash flow and profitability to assess its long-term growth potential.

Overall, while Okta had a good third quarter, the market remains concerned about its ability to sustain growth in the future and respond effectively to the challenges posed by competition.Investors need to keep a close eye on upcoming product launches and market developments to make more informed investment decisions.