A Peek Behind Okta’s (OKTA) 4Q Numbers

A forensic accounting review continues to reveal problems

Okta (OKTA) is one of the leading names in the security software industry. It recently posted 4Q results that topped consensus estimates by 12 cps and issued guidance for 1Q 25 that wowed the Street. However, a close examination of the numbers reveals how dependent the company’s earnings and cash flows are on non-GAAP imagination and management estimates. We believe much of the earnings beat is due to unsustainable factors that could disappear in upcoming quarters. Also, comparing guidance going into 4Q versus actual results reveals what looks like unsustainable cost-cutting. Furthermore, 1Q25 guidance seems to indicate that either management expects the cost-cutting to reverse- or it has set itself up with an easy hurdle next quarter.

While we would not bet against security software in the short run given the market’s affinity for all things tech, current and prospective owners should be aware of the mechanics of what is driving OKTA’s recent growth. We have covered other concerns with OKTA in past reports including November’s Convertible Tech Wreck and July’s OKTA- Disproving Shakespeare’s “What’s in Name?” Theory Every Quarter. We recommend new readers review those for more background on the name.

Let’s get Behind the Numbers…

---