Okta Stock Surges On Strong Earnings, Raised Outlook—Key Price Levels to Watch

Okta (OKTA) shares surged 23% in extended-hours trading on Wednesday evening after the cloud identity software maker topped quarterly estimates and raised its annual sales outlook on growing momentum from enterprise customers.

For the fiscal fourth quarter ended Jan.31, the identity management company posted a 19% jump in revenue from the prior year to $605 million, comfortably ahead of the $587 million figure estimates by analysts. Adjusted earnings came in at 63 cents per share, above the 51 cents-per-share consensus. The company said it acquired 120 customers in the period with at least $100,000 annual contract value, adding that its total base of $100,000 contract-value customers grew 14% to 4,485.

“We’re also pleased with the strong top-line performance, which was driven by strength with large customers. Organizations continue to turn to Okta to help modernize and simplify their identity infrastructure,” the company said in its earnings statement.

Looking ahead, the San Francisco, California-based company said it sees current-quarter revenue ranging between $603 million and $605 million, with the lower end of that band sitting comfortably ahead the $584 million expected by analysts. Okta projects adjusted earnings in the period of 54 cents to 55 cents, whereas Wall Street had forecast 41 cents.

Okta also impressed investors by raising its top-line full-year outlook, now expecting the metric to range between $2.495 billion and $2.505 billion, up from its earlier forecast of $2.46 billion to $2.47 billion. It also issued adjusted earnings guidance of $2.24 to $2.29 per share, handily topping forecasts of $1.96 a share.

The company’s better-than-anticipated results also indicate that a serious security data breach that occurred last year, which compromised the names and addresses of its customer base, has had minimal impact on the software maker’s financial performance.

Taking a look at the weekly chart, the Okta share price has traded within an orderly range since early April last year. Amid an earnings-driven breakout, it’s worth keeping an eye on two key areas on the chart that may provide overhead resistance. Firstly, monitor how price responds to the $108 region, an area where the stock may find selling pressure from a prior countertrend peak. Also watch the $145 level, where the price runs into resistance from the July 2019 swing high and downward sloping 200-week moving average.

Okta shares rose 23.3% to $107.61 in after-hours trading Wednesday.

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As of the date this article was written, the author does not own any of the above securities.