Why Okta (OKTA) Shares Are Sliding Today
What Happened: Shares of identity management software maker Okta (OKTA) fell 14% in the after-market session after the company reported first quarter results that exceeded analysts' revenue, subscription revenue, adjusted operating profit, free cash flow, and earnings per share (EPS) expectations. Margin improved significantly. Additionally revenue guidance for the next quarter and full year also came in ahead of Consensus. Operating income guidance for the next quarter and full year were roughly inline. The key negative was that cRPO (current remaining performance obligations) guidance for the next quarter was below, and since since this a leading indicator of revenue, it seemed to drive the narrative and stock action. Additionally, management acknowledged the existence of macro challenges, particularly in new business acquisition across both small and medium-sized businesses (SMB) and enterprise segments. The company reported a shift in customer preferences, with requests for shorter contract terms and a greater emphasis on upsells rather than new business, resulting in smaller average deal sizes. Following the results, J.P. Morgan analysts downgraded the stock's rating from Overweight (Buy) to Neutral (Hold) and lowered the price target from $95 to $85. The analysts attributed the downgrade to macroeconomic pressures impacting the company's growth prospects. Similarly, BMO Capital analysts downgraded the stock's rating from Outperform (Buy) to Market Perform (Hold) and lowered the price target from $94 to $85. ... Continue Reading
Petr Huřťák 2023/06/01 2:02pm
What Happened: Shares of identity management software maker Okta (OKTA) fell 14% in the after-market session after the company reported first quarter results that exceeded analysts' revenue, subscription revenue, adjusted operating profit, free cash flow, and earnings per share (EPS) expectations. Margin improved significantly. Additionally revenue guidance for the next quarter and full year also came in ahead of Consensus. Operating income guidance for the next quarter and full year were roughly inline. The key negative was that cRPO (current remaining performance obligations) guidance for the next quarter was below, and since since this a leading indicator of revenue, it seemed to drive the narrative and stock action. Additionally, management acknowledged the existence of macro challenges, particularly in new business acquisition across both small and medium-sized businesses (SMB) and enterprise segments. The company reported a shift in customer preferences, with requests for shorter contract terms and a greater emphasis on upsells rather than new business, resulting in smaller average deal sizes. Following the results, J.P. Morgan analysts downgraded the stock's rating from Overweight (Buy) to Neutral (Hold) and lowered the price target from $95 to $85. The analysts attributed the downgrade to macroeconomic pressures impacting the company's growth prospects. Similarly, BMO Capital analysts downgraded the stock's rating from Outperform (Buy) to Market Perform (Hold) and lowered the price target from $94 to $85. ... Continue Reading