Okta Eyes 15% Revenue CAGR by FY26: What's the Upside Potential?

Core Insights - Okta (OKTA) aims for a 15% compound annual growth rate (CAGR) in revenues, projecting growth from $1.86 billion in fiscal 2023 to approximately $2.85-2.86 billion by fiscal 2026, despite cautious near-term guidance of 9-10% year-over-year growth [1][9] Financial Performance - For the first quarter of fiscal 2026, Okta reported an 11.5% revenue increase to $688 million, with remaining performance obligations (RPO) rising 21% year-over-year, indicating a solid pipeline of future business [2][9] - The Zacks Consensus Estimate for second-quarter fiscal 2026 earnings is set at 84 cents per share, reflecting a 16.67% year-over-year growth, while the fiscal 2026 earnings estimate is pegged at $3.28 per share, suggesting a 16.73% growth over fiscal 2025 [13][14] Strategic Initiatives - Okta's expanding identity platform, including high-growth offerings like Identity Governance, Privileged Access, and Device Access, is enhancing its security services and relevance in enterprise IT [3][9] - The company has separated its sales teams for Workforce Identity and Customer Identity (Auth0) to sharpen focus and improve sales execution [3] Market Position and Competition - Okta is gaining traction among large enterprises through strategic partnerships, such as with AWS, with the number of customers generating over $1 million in annual contract value (ACV) growing 20% year-over-year [4][9] - However, Okta faces stiff competition from Microsoft, which has integrated its IAM platform Entra ID across its services, supporting over 900 million monthly active users [5] - CyberArk Software also presents a challenge with its advanced identity security platform and strong profitability, bolstered by strategic acquisitions [6] Valuation Metrics - Okta currently trades at a premium with a forward Price/Cash Flow ratio of 23.11, higher than the broader Zacks Computer and Technology sector's 20.02X, and has a Value Score of D [10]