The Okta stock price rose in extended hours after the cybersecurity company published strong results and upgraded its outlook, noting that the macro conditions were better than expected. It jumped to a high of $95, paring back some of the recent losses. 

Okta earnings download

Okta is a top company offering a cloud-based access management (AIM) platform that enables firms to manage user authentication and authorization. Its tools enable single sign-on, multi-factor authentication, and user life management lifecycle. 

Okta has also launched solutions to take advantage  of the ongoing artificial intelligence hype. Its AI solutions help to secure the identity of AI agents. Some of its top clients include companies such as FedEx, Peloton, Takeda, and Hewlett Packard Enterprise. 

Okta stock price rose after the company published stronger-than-expected financial results. Its revenue rose by 13% to $728 million, with the subscription segment bringing in $711 million. 

The report also showed that its subscription backlog jumped by 18% to over $4.15 billion.

Okta’s profitability continued growing in the second quarter, with the net income soaring to $67 million, a big increase from the $28 million it made in the same period last year. 

The non-GAAP net income jumped to $169 million, translating to a per-share increase of 91 cents. 

Most importantly, Okta upgraded its outlook, noting that the economic headwinds it predicted in the first quarter were not as pronounced as expected. 

Consequently, the management boosted the third and full-year revenue and profitability. It expects its third-quarter revenue to be between $728 million and $730 million, and its full-year figure to be between $2.87 billion and $2.88 billion. In a statement, the CEO said:

“Our solid Q2 results are highlighted by continued strength in new product adoption, the public sector, Auth0, and cash flow. In the age of AI, Okta’s independence and neutrality will continue to give organizations the freedom to innovate securely and on their own terms.”

A key concern among investors is that Okta seems to be overvalued based on price-to-earnings and the rule-of-40 multiples. Its forward GAAP P/E ratio of 105 is much higher than most companies. The GAAP multiple tends to be better than the non-GaaP figures. 

The rule-of-40 valuation metric adds a company’s margins and revenue growth. In its case, the expected revenue growth for the year is 11%, while its non-GAAP operating and free cash flow margins are 26% and 28%. Adding these margins and its estimated revenue growth shows that it is a bit overvalued. 

Okta stock price analysis

Okta stock chart | Source: TradingView

The daily timeframe chart shows that the Okta share price formed a double-bottom pattern at $90 and a neckline at $104. A double-bottom is one of the most common bullish reversal signs in technical analysis. 

The stock also formed a descending channel, and is attempting to move above it after earnings. Therefore, the most likely scenario is where it jumps to $104, the neckline of the double-bottom pattern. 

The next key catalyst for the Okta stock will be NVIDIA earnings and the Oktane event that brings together its community, including its senior management. 

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