Core Viewpoint - Cybersecurity stocks, particularly Palo Alto Networks and Okta, experienced significant declines due to fears that AI competition, specifically from Anthropic's Claude Mythos model, could commoditize their premium-priced products [2][3][6]. Company-Specific Summaries Palo Alto Networks - Palo Alto Networks (PANW) stock fell 6% to $146, adding to a 9% decline over the past week and a 19% drop year-to-date [4][7]. - Despite strong fundamentals, with Q2 FY2026 revenue of $2.594 billion (up 14.9% year-over-year) and non-GAAP EPS of $1.03 beating estimates, investor concerns about AI competition are overshadowing these results [8][9]. - The company is expanding its AI capabilities, launching Prisma AIRS, but investors are questioning whether its strategy can withstand competition from AI-native models [9]. Okta - Okta (OKTA) shares dropped 7% to $73.50, marking a 33% decline over the past year and a 14% drop year-to-date [4][10]. - The company reported Q4 FY2026 revenue of $761 million (up 11.6% year-over-year) and achieved GAAP operating profitability, but growth deceleration has made the stock more sensitive to competitive threats [11][12]. - Okta's guidance for FY2027 revenue of $3.17 billion to $3.19 billion indicates approximately 9% growth, raising concerns among investors about its ability to compete against AI-driven solutions [12]. Sector Overview - The selloff in cybersecurity stocks is not isolated to Palo Alto Networks and Okta; CrowdStrike Holdings also saw a 6% decline due to similar AI competition fears [13]. - The market reaction reflects a sector-wide repricing of competitive risks rather than stock-specific issues, indicating broader concerns about the impact of AI on established cybersecurity platforms [13][14]. - The leak regarding Claude Mythos has not been confirmed, and the actual competitive threat may be less disruptive than the current market reaction suggests [14].

Core Insights - Okta's fourth-quarter fiscal 2026 subscription revenues increased by 11.5% year over year, making up 98.2% of total revenues, driven by an expanding product portfolio [1][9] - New offerings contributed approximately 30% of fiscal fourth-quarter bookings, indicating a rising demand for advanced identity security capabilities [1][9] - The company reported nearly $1.3 billion in total contract value (TCV) and surpassed $3 billion in annual contract value (ACV), reflecting strong demand from large customers [2][9] Product and Market Dynamics - Higher deal values are a key indicator of portfolio strength, with transactions including newer products generating about 40% higher contract value [2] - Okta's expanding partner base has been a significant catalyst, with channel partners involved in 18 of the top 20 deals in the fourth quarter [3] - TCV through AWS grew more than 45% in fiscal 2026 to roughly $750 million, highlighting the effectiveness of Okta's go-to-market strategies [3] Competitive Landscape - Okta faces stiff competition in the security space from companies like SentinelOne and Palo Alto Networks [4] - SentinelOne focuses on endpoint security and threat detection through its AI-driven Singularity Platform, which may pose a challenge to Okta's offerings [5] - Palo Alto Networks is experiencing growth in areas like Zero Trust and SASE, with SASE annual recurring revenues increasing by 40% year over year [6] Financial Performance and Valuation - Okta shares have appreciated by 7.3% in the past month, outperforming the broader Zacks Computer and Technology sector, which declined by 3.5% [7] - The stock is currently considered undervalued, with a Value Score of D, trading at a forward 12-month price/sales ratio of 4.36X, higher than SentinelOne's 3.70X but lower than Palo Alto Networks' 10.13X [11] - The Zacks Consensus Estimate for fiscal 2026 earnings is $3.77 per share, indicating a 7.7% growth from the fiscal 2025 reported figure [16]

Core Insights - Okta (OKTA) is experiencing growth due to an expanding customer base and strong demand for identity solutions, ending fiscal 2026 with over 20,000 customers and a 6% year-over-year increase in clients with more than $100K in Annual Contract Value to 5,100 [1][9] Product Offerings - Okta's portfolio includes innovative products such as Okta Identity Governance, Okta Privileged Access, and AI-driven solutions, which contributed to 30% of the fiscal fourth-quarter bookings, aiding in market share growth [2][9] Security Framework - The company introduced the Blueprint for the Secure Agentic Enterprise, aimed at securing enterprises deploying agentic AI, addressing the fact that 88% of enterprises have faced AI agent security incidents, while only 22% treat agents as identities [4] Competitive Landscape - Okta faces significant competition from companies like SentinelOne and Broadcom, with SentinelOne focusing on endpoint and cloud security, while Broadcom emphasizes AI-powered proactive security solutions [5][6] Stock Performance and Valuation - Okta shares have declined by 9.4% year to date, underperforming the broader Zacks Computer and Technology sector's drop of 6.3% but outperforming the Zacks Security industry's decline of 12.2% [7] - The stock is considered undervalued with a Value Score of D, trading at a forward 12-month price/sales ratio of 4.31X, higher than SentinelOne's 3.92X but lower than Broadcom's 12.31X [11] Earnings Estimates - The Zacks Consensus Estimate for fiscal 2026 earnings is $3.77 per share, reflecting a 3.6% increase over the past 30 days and suggesting a 7.7% growth from fiscal 2025 [16]

Adobe - Adobe's AI-first annual recurring revenue (ARR) tripled year-on-year in Q4 2025, with management anticipating it to become the next $1 billion business [2][3] - The company is focusing on integrating its products with leading AI platforms like Anthropic, Google, and OpenAI, and collaborating with global system integrators to drive technological transformation [3][5] - AI usage at Adobe is rapidly increasing, with record generative credit consumption and strong enterprise adoption of content automation solutions [6][11] - Adobe's AI-powered applications for business professionals and consumers saw significant growth, with AI Assistant monthly active users (MAU) doubling year-on-year and Express MAU tripling, now used by 99% of U.S. Fortune 500 companies [7][8] - The Firefly ecosystem, which includes Firefly Enterprise, saw ending ARR exceed $250 million in Q4 2025, with a 75% sequential growth in subscription and credit pack ARR [10][12] - Adobe's Experience Platform (AEP) subscription revenue grew 30% year-on-year, with significant traffic increases to retail sites driven by large language models (LLMs) during the 2025 holiday season [13][14] Okta - Okta's management believes the market for securing AI agents is still in its early stages, with 91% of organizations using AI but only 10% having a governance strategy [17][18] - The company is positioning itself to secure AI agents, treating them as a new identity type, and has launched Okta for AI Agents to manage the lifecycle of these agents [19][21] - Okta's management sees the proliferation of AI agents as a potential massive expansion of its total addressable market (TAM), estimating it could grow from $20 billion to $80 billion [27] - The company is working with standards bodies to build solutions for securing AI agents, emphasizing the need for a solid identity infrastructure [28] - Okta's new products, including Auth0 for AI Agents, are still in early stages but are expected to contribute significantly to future growth [22][23] Sea Ltd - Sea's credit business grew in 2025 due to AI-driven improvements in risk underwriting capabilities, utilizing transformer-based AI models for better performance [30] - The company has invested heavily in AI for its Shopee business, focusing on ROI for each AI initiative, including multi-modal search and AI tools for sellers [31][32][33] Tencent - Tencent is leveraging AI to enhance game content development, user engagement, and marketing efficiency, with a 22% revenue growth in 2025, outperforming the global games industry [34][41] - The company is using generative AI to improve ad conversions and user experiences in its marketing services, contributing to a 19% revenue growth in this segment [42] - AI is also being integrated into Tencent's enterprise software products, providing features like AI agents for meeting summaries and customer service history [45]

Core Insights - Okta has demonstrated strong performance in fiscal Q4 2026, driven by large enterprise engagement and contributions from newer products, including AI-focused offerings [2][3][4] New Products and Market Positioning - Okta Identity Governance (OIG) has gained over 2,000 customers in just over three years, representing significant progress [1][6] - Newer products accounted for approximately 30% of Q4 bookings, with an average contract uplift of around 40% when included in deals [1][6] - The introduction of AI-focused products, such as Auth0 for AI Agents and Okta for AI Agents, is seen as a major security catalyst, with early traction noted in the pipeline [5][7] Financial Performance - Okta reported nearly $1.3 billion in total contract value for Q4 and over $3 billion in annual contract value, with partner involvement in 18 of the top 20 deals [4][10][11] - The company ended Q4 with over $2.5 billion in cash and announced a $1 billion share repurchase program [4][13] Strategic Initiatives - Management is shifting more professional services work to partners, particularly global systems integrators, to enhance relationships and support large enterprises in AI adoption [12] - The company aims to establish itself as a standard for securing agentic AI and to grow faster with large customers [16] Fiscal 2027 Guidance - For fiscal 2027, Okta has guided for a total revenue growth of 9%, with a current RPO growth of 10% and a non-GAAP operating margin of 23% to 24% [14][15]

Financial Data and Key Metrics Changes - The company achieved a record total contract value of nearly $1.3 billion in Q4, surpassing a major milestone of $3 billion in annual contract value [15][16] - The company closed out FY 26 achieving the Rule of 40, indicating a balance of growth and profitability [15] - Cash flow remained strong, ending the quarter with over $2.5 billion in cash equivalents and short-term investments [16] Business Line Data and Key Metrics Changes - New products represented approximately 30% of Q4 bookings, with an average contract uplift of about 40% when included in deals [6][15] - Okta Identity Governance (OIG) now has over 2,000 customers, highlighting significant market demand for modern governance solutions [6] Market Data and Key Metrics Changes - The company noted that 91% of surveyed organizations are using AI agents, but only 10% have a governance strategy in place, indicating a significant market opportunity [7] - The total contract value generated through strategic go-to-market channels, including AWS Marketplace, grew over 45% in FY26 to approximately $750 million [16] Company Strategy and Development Direction - The company aims to secure AI as a top priority, focusing on becoming the standard for securing agentic AI [12][14] - Plans include increasing focus on larger customers and becoming the default identity security solution for the U.S. federal vertical and highly regulated industries [13] - The company is committed to leveraging partnerships with Global System Integrators to enhance customer engagement and transition to agentic systems [35][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand environment and the effectiveness of their go-to-market strategy, which has led to improved sales productivity [15][18] - The guidance for Q1 FY27 includes total revenue growth of 9%, with a non-GAAP operating margin of 23%-24% [19][20] - Management acknowledged the impact of shifting professional services to partners, which is expected to enhance long-term growth [20] Other Important Information - The company announced a $1 billion share repurchase program, repurchasing over 875,000 shares for a total cost of $79 million [17] - The company is focused on maintaining a healthy balance sheet while investing in growth acceleration across all business areas [17] Q&A Session Summary Question: Can you talk more about pricing for AI agent products? - Management indicated that the agentic products are crucial and noted that 30% of new bookings were from new products, with significant potential for growth in the future [24][25] Question: What are the go-to-market changes and international growth opportunities? - Management confirmed that the go-to-market structure is stable, with increased productivity and low attrition, and emphasized the importance of partnerships with Global System Integrators [32][35] Question: How does the company view competition in the identity market? - Management acknowledged confusion in the market regarding identity infrastructure versus identity security, emphasizing their unique position in offering both [45][46] Question: Can you clarify the revenue guidance and subscription growth? - Management explained that subscription revenue is growing faster than total revenue, with a focus on maintaining clarity around revenue mechanics [51][52] Question: How are customers evaluating alternatives for AI agent solutions? - Management noted that early adopters are considering various options but are drawn to Okta's compelling vision and established reputation in the market [90][91]

Financial Data and Key Metrics Changes - The company achieved a record total contract value of nearly $1.3 billion in Q4, surpassing a major milestone of $3 billion in annual contract value [15][16] - The company closed out FY 2026 achieving the Rule of 40, indicating a balance of growth and profitability [15] - The balance sheet remains strong with over $2.5 billion in cash equivalents and short-term investments [16] Business Line Data and Key Metrics Changes - New products represented approximately 30% of Q4 bookings, with an average contract uplift of about 40% when included in deals [6][15] - Okta Identity Governance (OIG) now has over 2,000 customers, highlighting significant market demand for modern governance solutions [6] Market Data and Key Metrics Changes - The total contract value generated through strategic go-to-market channels, such as AWS Marketplace, grew over 45% in FY26 to approximately $750 million [16] - The company expects total revenue growth of 9% for Q1 FY 2027 and for the full year FY 2027, with a non-GAAP operating margin of 25%-26% [19][20] Company Strategy and Development Direction - The company aims to secure its position as the standard for securing agentic AI, focusing on large customers and the U.S. federal vertical [12][13] - The strategy includes leveraging partnerships with Global System Integrators to enhance customer relationships and drive growth [35][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for identity solutions, particularly in the context of AI and agentic systems [5][7] - The company is optimistic about the potential of new products, particularly in the AI market, and believes that identity security is foundational for future software development [9][14] Other Important Information - A $1 billion share repurchase program was announced to take advantage of perceived undervaluation [17] - The company is transitioning more of its professional services business to partners, which is expected to enhance long-term growth despite a short-term revenue impact [20] Q&A Session Summary Question: Can you talk more about pricing for AI agent products? - Management noted that AI agent products are crucial and had a strong quarter, with significant potential for future growth, although they are still relatively small compared to overall revenue [24][25] Question: What are the go-to-market changes and international growth opportunities? - Management confirmed that the go-to-market structure is stable, with increased productivity and low attrition, and emphasized the importance of partnerships with Global System Integrators [32][34] Question: How does the company view competition in the identity market? - Management acknowledged confusion in the market regarding identity infrastructure versus identity security, emphasizing their unique position in offering both [45][46] Question: Can you provide insights on the pricing model for agentic products? - Management explained that pricing is still being refined, with a focus on capturing value based on the number of connections agents make [62][63] Question: How does the company view the growth profile of Auth0? - Management expressed optimism about Auth0's potential, noting that the CIAM market is evolving and that Auth0 for AI Agents is positioned to deliver significant value [76][79]

Financial Data and Key Metrics Changes - The company achieved a record total contract value of nearly $1.3 billion in Q4, surpassing a major milestone of $3 billion in annual contract value [13][14] - The company maintained the Rule of 40, achieving a balance between growth and profitability [12] - The cash flow in Q4 was strong, ending the quarter with over $2.5 billion in cash equivalents and short-term investments [14][15] Business Line Data and Key Metrics Changes - New products represented approximately 30% of Q4 bookings, with an average contract uplift of about 40% when included in deals [4][21] - Okta Identity Governance (OIG) now has over 2,000 customers, indicating strong market demand for modern governance solutions [4][5] Market Data and Key Metrics Changes - The total contract value generated through the strategic go-to-market channel, AWS Marketplace, grew over 45% in FY26 to approximately $750 million [14] - The company is seeing strong performance from large enterprises and partner engagement, which are critical for future growth [11][12] Company Strategy and Development Direction - The company aims to secure AI as a top priority, focusing on becoming the standard for securing agentic AI [9][10] - There is a strategic shift to deepen relationships with Global System Integrators to enhance growth and customer engagement [32][34] - The company is committed to driving growth through product innovation, go-to-market specialization, and leveraging channel partners [15][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about surpassing $3 billion in revenue on the way to $5 billion and then $10 billion, emphasizing the importance of identity in security [11][19] - The guidance for Q1 FY27 includes total revenue growth of 9% and a non-GAAP operating margin of 23%-24% [17][18] - Management acknowledged the impact of shifting more professional services to partners, which may lower professional services revenue but is expected to fuel long-term growth [18] Other Important Information - The company announced a $1 billion share repurchase program, repurchasing over 875,000 shares for a total cost of $79 million [15] - The company is focused on capturing the growing opportunity in the AI market, with AI agents expected to become a significant part of enterprise software [7][11] Q&A Session Summary Question: Can you talk more about pricing for AI agent products? - Management highlighted that AI agent products are crucial and had a strong quarter, with significant potential for future growth [21][22] Question: What are the go-to-market changes and international growth opportunities? - Management noted that the go-to-market structure is stable, with increased productivity and low attrition, and emphasized the importance of partnerships with Global System Integrators [28][32] Question: How does the company view competition in the identity market? - Management acknowledged confusion in the market regarding identity infrastructure versus identity security, emphasizing the company's unique position in both areas [39][42] Question: Can you clarify the subscription revenue guidance? - Management explained that the subscription revenue is growing faster than total revenue, with a focus on long-term growth despite a conservative guidance approach [46][47]

Q4 FY26 Investor Presentation March 4, 2026 © Okta and/or its affiliates. All rights reserved. © Okta and/or its affiliates. All rights reserved. Confidential Information of Okta – For Recipient's Internal Use Only. Safe Harbor This presentation contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook, business strategy and plans, market trends and ...

Core Viewpoint - The recent launch of Anthropic's Claude Code Security, an AI tool for scanning code vulnerabilities, triggered a significant sell-off in cybersecurity stocks, including Okta, despite the company's ongoing financial progress and transformation into a profitable enterprise software provider [1][2]. Company Overview - Okta, based in San Francisco, specializes in cloud-based identity and access management solutions, boasting a market capitalization of $13.3 billion. The company provides secure user authentication, single sign-on, multi-factor verification, API security, device access, and identity governance [4]. Financial Performance - Okta's stock has faced challenges, with a nearly 18.7% decline over the past 52 weeks, worsening to a 22.06% drop over the last six months, and a 10% decrease in the last three months [5]. - The stock is currently trading at 21.87 times forward adjusted earnings, which is below both the industry average and the company's own five-year historical average. This valuation may present a potential entry point for long-term investors who believe in Okta's ability to sustain double-digit growth while expanding margins [6]. Market Context - The broader narrative involves the rise of agentic AI, with enterprises eager to deploy autonomous software agents that require an identity layer. Okta has proactively positioned itself in this space, as evidenced by its Q3 fiscal 2026 performance and the launch of Auth0 for AI Agents [3].