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Okta Inc A OKTA

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Morningstar’s Analysis

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Incredible Demand for Okta’s Identity Security Solutions Drives Q1 Results; Raising FVE to $170

Mark Cash Equity Analyst

Analyst Note

| Mark Cash |

Narrow-moat Okta posted resounding 46% year-over-year revenue growth, beating CapIQ consensus estimates, as customers accelerate the demand for cloud-based identity and access management cybersecurity solutions in a distributed networking world. We believe that that shelter-in-home scenarios have forced entities to update their remote security solutions, with an emphasis on updating identity and access protection to be cloud-delivered. In our view, the acceleration of demand for Okta's products is not a transitory tailwind due to remote access requirements, but rather, Okta's solutions will be embedded within customers' networks for the long haul. While management expects the next couple of quarters to challenge its breakneck growth rate, we believe Okta's solutions are becoming more widely accepted by new customers and the company can proliferate additional products once landing a client. In turn, we increased our top-line growth rate beyond fiscal 2021, and we are raising our fair value estimate to $170 from $150. We view shares as fairly valued and recommend investors look for a pullback.

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Company Profile

Business Description

Okta, Inc. addresses two primary security concerns via its workforce identity and customer identity solutions. The pureplay cybersecurity firm sells products to protect employees, contractors, and partners as well as its customers' end users. Okta's software solutions are cloud-delivered, and its integration network gives customers security protection across a wide variety of applications that are critical to business and government needs. The California-based company went public in 2017 and had over 2,100 employees at the end of the third quarter of fiscal 2020.

100 First Street, Suite 600
San Francisco, CA, 94105
T +1 888 722-7871
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Apr 30, 2020
Fiscal Year End Jan 31, 2021
Stock Type Speculative Growth
Employees 2,379