Identity management software maker Okta (OKTA) reported Q4 CY2024 results topping the market’s revenue expectations, with sales up 12.7% year on year to $682 million. Guidance for next quarter’s revenue was better than expected at $679 million at the midpoint, 1.3% above analysts’ estimates. Its non-GAAP profit of $0.78 per share was 6% above analysts’ consensus estimates.
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Okta (OKTA) Q4 CY2024 Highlights:
- Revenue: $682 million vs analyst estimates of $668 million (12.7% year-on-year growth, 2.1% beat)
- Adjusted EPS: $0.78 vs analyst estimates of $0.74 (6% beat)
- Management’s revenue guidance for the upcoming financial year 2026 is $2.86 billion at the midpoint, beating analyst estimates by 2% and implying 9.4% growth (vs 15.5% in FY2025)
- Management’s operating profit (non-GAAP) guidance for the upcoming financial year 2026 is $710 million at the midpoint, well above analyst estimates of $626 million
- Operating Margin: 1.2%, up from -13.7% in the same quarter last year
- Free Cash Flow Margin: 41.6%, up from 23.2% in the previous quarter
- Market Capitalization: $15.51 billion
Company Overview
Founded during the aftermath of the financial crisis in 2009, Okta (NASDAQ:OKTA) is a cloud-based software-as-a-service platform that helps companies manage identity for their employees and customers.
Identity Management
As software penetrates corporate life, employees are using more apps every day, on more devices, in more locations. This drives the need for identity and access management software that help companies efficiently manage who has access to what, and ensure that access privileges are secure from cyber criminals.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Okta’s 26.1% annualized revenue growth over the last three years was solid. Its growth beat the average software company and shows its offerings resonate with customers.
This quarter, Okta reported year-on-year revenue growth of 12.7%, and its $682 million of revenue exceeded Wall Street’s estimates by 2.1%. Company management is currently guiding for a 10% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 6.8% over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and implies its products and services will see some demand headwinds.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
It’s relatively expensive for Okta to acquire new customers as its CAC payback period checked in at 55.5 months this quarter. The company’s slow recovery of its sales and marketing expenses indicates it operates in a highly competitive market and must invest to stand out, even if the return on that investment is low. 
Key Takeaways from Okta’s Q4 Results
Revenue and operating profit beat in the quarter. It was encouraging to see Okta’s full-year revenue guidance beat analysts’ expectations. Furthermore, full-year operating profit guidance beat by an impressive amount. Overall, this quarter was quite strong, with very few blemishes. The stock traded up 11.8% to $97.50 immediately following the results.
So do we think Okta is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
