What Happened:
Shares of identity management software maker Okta (OKTA) jumped 5.8% in the morning session after competitor, Zscaler, pre-announced an impressive "beat and raise" quarter. Preliminary third-quarter results exceeded analysts' revenue, and operating income estimates. In addition, management raised full-year guidance for revenue, calculated billings, and operating income. Founder and CEO, Jay Chaudhry, added to the optimism, stating that "the high ROI of adopting the Zscaler Zero Trust Exchange platform continues to resonate with customers and prospects in this challenging macro environment." It's been a mixed start to the earnings season for cybersecurity stocks, with Tenable, Cloudflare, and Check Point Software all reporting disappointing results thus far. However, the company's impressive announcement means that either the subsector may not be as challenged as feared, that there is company-specific outperformance from Zscaler, or some combination of both.
What is the market telling us:
Okta's shares are very volatile and over the last year have had 46 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
Okta is up 12.8% since the beginning of the year, but at $78.44 per share it is still trading 26.8% below its 52-week high of $107.22 from August 2022. Investors who bought $1,000 worth of Okta's shares 5 years ago would now be looking at an investment worth $1,640.
Is now the time to buy Okta? Access our full analysis of the earnings results here, it's free.