Okta Closes Out Fiscal 2023 With a Renewed Emphasis on Profitability; Raising FVE to $76

We are raising our fair value estimate for no-moat Okta to $76 from $71 after the firm reported strong results to close out fiscal 2023 with a better-than-expected profitability outlook for fiscal 2024. The firm expects a sharp slowdown in sales for the upcoming year (fiscal 2024), a forecast underpinned by a weak macro outlook and as the firm works to resolve Auth0-related sales challenges. However, we’re not deterred by this rebuilding year for Okta as the firm recalibrates its execution strategy while emphasizing profitability in a turbulent macro environment. With shares up more than 10% after hours, we view Okta’s shares as fairly valued.