Okta Rises 15% YTD: Should You Add the Stock in Your Portfolio?

Core Viewpoint - Okta (OKTA) has shown strong performance in the market, with a year-to-date appreciation of 15.3%, outperforming the broader Zacks Computer and Technology sector and the Zacks Security industry [1] Company Performance - Okta's portfolio demonstrates strength, with high demand for products like Okta Identity Governance and Okta Privileged Access, contributing to growth despite a challenging macroeconomic environment [2] - The company exited the third quarter of fiscal 2025 with 19,450 customers and $2.062 billion in current remaining performance obligations, indicating strong growth prospects for subscription revenues [5] - Customers with over$100 thousand in Annual Contract Value increased by 8% year-over-year to 4,705 [5] Product Innovation - Okta AI, a suite of AI-powered capabilities, is integrated into both Workforce Identity Cloud and Customer Identity Cloud, enhancing user experience and cybersecurity [6] - The Auth0 Free Plan has been upgraded to support 25,000 monthly active users, along with new features such as passwordless login and unlimited connections [7] Market Position - Okta is gaining market share in the cybersecurity domain, outperforming competitors like Microsoft, IBM, and CyberArk, as recognized by Gartner's rankings [8] - The global security market is projected to grow significantly, with Identity and Access Management (IAM) expected to be one of the fastest-growing segments [10][11] Financial Outlook - For Q4 fiscal 2025, Okta anticipates revenues between $667 million and$669 million, reflecting a year-over-year growth of 10-11% [13] - The company expects fiscal 2025 revenues between $2.595 billion and$2.597 billion, indicating a 15% growth from fiscal 2024 [13] - Non-GAAP earnings for fiscal 2025 are projected between $2.75 and$2.76 per share, with a free cash flow margin expected to be 25% [14] Earnings Estimates - The Zacks Consensus Estimate for Okta's earnings has increased to $2.77 per share for fiscal 2025, suggesting a 73.13% growth over fiscal 2024 [15] - For Q4 fiscal 2025, the earnings estimate remains at 73 cents per share, indicating a year-over-year growth of 15.87% [16] Investment Appeal - Okta is viewed as an attractive investment opportunity due to its strong growth prospects and large addressable market, supported by a favorable Zacks Rank and Growth Score [18][20]