Okta's Cross App Access Expands Security Portfolio: Buy the Stock?

Core Insights - Okta (OKTA) is enhancing its security offerings with the introduction of Cross App Access, aimed at securing AI agents and improving integration for enterprise customers [1][9] - The company is focusing on protecting non-human identities (NHIs) and providing tools for developers to create secure AI applications [2][3] Product and Service Expansion - The new Cross App Access protocol allows better connectivity between AI tools and other applications, streamlining authorization processes for enhanced security and compliance [1] - Okta's product suite includes Okta AI, which integrates AI capabilities across various products to improve user experience and defend against cyber threats [4] Financial Performance - As of the end of Q1 fiscal 2026, Okta has approximately 20,000 customers and $4.084 billion in remaining performance obligations (RPOs), indicating strong growth potential in subscription revenues [5][9] - The number of customers with over $100,000 in Annual Contract Value increased by 70 sequentially to 4,870, showcasing robust demand for Okta's services [5] Market Position and Partnerships - Okta has established a strong partner ecosystem, including major companies like Amazon Web Services, Microsoft, and Salesforce, with over 7,000 integrations across various platforms [6] - The innovative portfolio and extensive partnerships have contributed to a 25.2% increase in Okta's stock price year-to-date, outperforming the broader technology sector [7] Guidance and Earnings Outlook - For fiscal 2026, Okta anticipates revenues between $2.85 billion and $2.86 billion, reflecting a growth rate of 9-10% compared to fiscal 2025 [14] - The company expects non-GAAP earnings per share to be between $3.23 and $3.28, indicating a 16.73% increase from the previous fiscal year [15] Valuation and Investment Potential - Okta shares are currently trading at a premium, with a forward Price/Cash Flow ratio of 23.23X, compared to the sector average of 20.13X [18] - Despite macroeconomic challenges, Okta's innovative offerings and growing customer base present a strong investment opportunity, supported by a Zacks Rank 2 (Buy) and a Growth Score of A [21]