KeyBanc On Okta's Q1 Report: 'Wow'

Okta Inc OKTA reported Wednesday its first-quarter results, which if were to be summed up in one word it would be "wow," according to KeyBanc.

The Analyst

KeyBanc Capital Markets' Rob Owens maintains an Overweight rating on Okta with a price target lifted from $57 to $65.

The Thesis

Owens' main takeaways from Okta's "across-the-board" beat include 60 percent billings growth and 60 percent revenue growth, stronger large-deal activity versus the fourth quarter, 740 basis points of operating margin upside and better-than-expected full year guidance.

Digging beyond financial metrics, Okta now services 4,700 customers which is up 40 percent from a year ago. During the quarter, the company landed 350 new logos and gained 56 new customers in the $100,000-plus category -- both of which mark a first-quarter record high. Encouragingly, Okta is also showing success in monetizing its existing user rate as evidenced by the 121 percent dollar-based net retention rate.

Bottom line, Okta's high growth and retention rates, coupled with its strong unit economics, improving sales productivity, increasing customer activity and a broad market penetration contribute to a "favorable outlook," the analyst wrote. As such, the company's status as a "rare asset with a promising trajectory" implies investors are likely to see further upside ahead.

Price Action

Shares of Okta were trading higher by 10 percent at %59.62 Thursday morning.

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