Financial Data and Key Metrics Changes - The company reported solid Q2 results with total revenue growth of 10% to 11% for FY '26, an increase from previous guidance of 9% to 10% [18] - Non-GAAP operating margin is expected to be between 25% to 26% for FY '26, up from previous estimates [18] - Free cash flow margin is projected to be approximately 28% for FY '26, indicating improved profitability and cash flow [18] Business Line Data and Key Metrics Changes - The public sector business showed strong performance with multiple new business and upsell deals, including significant contracts with the DOD [15][16] - New products from Okta Identity Governance, Okta Privilege Access, and others contributed positively to revenue, highlighting the success of the unified identity platform [5][12] - The company experienced a record pipeline generation, reflecting improved sales productivity from specialized go-to-market teams [13][18] Market Data and Key Metrics Changes - Five of the top ten deals in Q2 were with the US public sector, indicating strong demand in this market [16] - The company noted that the macroeconomic uncertainties previously affecting guidance did not materialize, allowing for a more optimistic outlook [13][18] Company Strategy and Development Direction - The company is focused on building an identity security fabric that secures all identities, including AI agents, emphasizing the importance of independence and neutrality in the identity market [7][11] - The acquisition of Acxiom Security is expected to enhance Okta's Privilege Access capabilities and support the integration of new technologies [6][73] - The company aims to consolidate identity solutions for customers, reducing vendor complexity and operational costs [42][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and execution, noting that the go-to-market realignment is showing positive signals [13][19] - The company is optimistic about the adoption of new products and the rapid pace of innovation, positioning itself to lead the identity industry [19] - Management highlighted the importance of addressing current identity security challenges as organizations increasingly adopt AI technologies [70][71] Other Important Information - The company ended the quarter with approximately $2.9 billion in cash and short-term investments, indicating a strong balance sheet [17] - The upcoming Oktane Conference will showcase innovations and provide insights into the company's future direction [10] Q&A Session Summary Question: What indicators are used for guidance and NRR stabilization? - Management noted that NRR has stabilized and emphasized the importance of sales productivity and pipeline generation as indicators for future guidance [20][24][26] Question: What trends are seen in AI native customer adoption? - Management indicated that AI native customers are growing rapidly and are focused on securing their internal operations, similar to other customer cohorts [32][34] Question: Why is identity critical as an independent platform? - Management explained that identity must be independent to reduce fragmentation and operational complexity, allowing companies to consolidate vendors effectively [42][46] Question: How is the sales force productivity evolving? - Management reported increased productivity from specialized sales teams and noted record pipeline generation, reflecting the success of their go-to-market strategy [56][60] Question: What is the monetization strategy for cross-app access? - Management stated that cross-app access will enhance the value of identity providers and will be monetized through existing products while addressing current identity security challenges [102][104]

Core Insights - Okta (OKTA) shares have declined 27.2% in the past three months, underperforming the Zacks Computer and Technology sector's return of 15.4% and the Zacks Security industry's fall of 8.5% [1][7] - The decline is attributed to slowing federal business, challenging macroeconomic conditions, and stiff competition in the Identity and Access management domain [1][10] Financial Performance - For fiscal 2026, Okta expects revenues between $2.85 billion and $2.86 billion, indicating 9-10% growth from fiscal 2025 [10] - Non-GAAP earnings are projected between $3.23 and $3.28 per share, suggesting 16.7% growth year-over-year [11] - Second-quarter fiscal 2026 revenues are anticipated to be between $710 million and $712 million, reflecting 10% year-over-year growth [12] Market Position - Okta shares are currently trading below the 50-day and 200-day moving averages, indicating a bearish trend [5] - The company's Value Score is D, indicating that Okta shares are overvalued compared to peers like Cisco [9] Product and Innovation - Okta is expanding its AI-driven identity tools and partnerships, which are expected to drive long-term growth [7][13] - The launch of the Cross App Access protocol aims to enhance security for AI agents, reflecting Okta's commitment to protecting customers deploying AI [14] Partnerships and Liquidity - Okta has a rich partner base, including major companies like Amazon Web Services, Microsoft, and Palo Alto Networks, with over 7,000 integrations [16] - The company ended Q1 FY26 with $2.73 billion in cash, indicating strong liquidity, and raised free cash flow margin guidance to roughly 27% [18] Customer Growth - Okta exited Q1 FY26 with approximately 20,000 customers, with a notable increase in customers with over $100,000 in Annual Contract Value [19]

Company Performance - CyberArk Software (CYBR) shares have increased by 27.2% year-to-date, significantly outperforming the Zacks Security industry's growth of 7.2% [1][7] - In Q2 2025, CyberArk's subscription revenues reached $264 million, marking a year-over-year growth of 66% [4] Growth Drivers - CyberArk's identity security offerings have surpassed 10,000 active users globally, with a compound annual growth rate (CAGR) of 44% projected from 2020 to 2024 [4] - The company anticipates a total addressable market of $80 billion, indicating substantial growth potential [4] - CyberArk has implemented AI solutions, including CyberArk Secure AI Agents Solution and CORA AI, enhancing its identity security platform [5] - Strategic partnerships with major tech companies like Microsoft, Amazon Web Services, and Google Cloud have bolstered CyberArk's market position [9][10] Acquisitions and Market Position - CyberArk has expanded its capabilities through acquisitions, including Zilla Security and Venafi, which have improved its expertise in identity governance and machine identity [6] - The identity security and access management market is expected to grow at a CAGR of 8.4% from 2024 to 2029, positioning CyberArk favorably [6] - CyberArk serves over 5,400 global businesses, including more than 50% of the Fortune 500 and 35% of the Global 2000 companies [9] Financial Outlook - The Zacks Consensus Estimate for CyberArk's 2025 earnings is $3.86, reflecting a year-over-year increase of 27.4% [6][8] - CyberArk trades at a forward price-to-sales ratio of 14.14X, which is above the industry average of 11.95X [14] Competitive Landscape - The identity security market is competitive, with players like CrowdStrike, Okta, and Cisco also integrating AI into their offerings [12][13] - CyberArk has invested significantly in enhancing its sales and marketing capabilities to maintain its competitive edge [13]

Core Insights - Okta shares closed at $95.63, approximately 25% below the 52-week high of $127.57, with a year-to-date appreciation of 21.3%, outperforming the Zacks Computer and Technology sector and the Zacks Security industry [1][9] - The company has a strong liquidity position with $2.73 billion in cash and investments, and a free cash flow margin guidance raised to roughly 27% for fiscal 2026 [7][9] - Okta's innovative product portfolio and extensive partner base are driving customer growth and revenue, with over 20,000 customers and a significant increase in high-value contracts [15][16] Performance Comparison - Okta has outperformed peers such as CyberArk, Cisco, and Microsoft year to date, with respective share price appreciations of 12.9%, 15.9%, and 20% [2] - In terms of valuation, Okta is trading at a forward Price/Cash Flow of 22.51X, which is higher than the broader sector's 22.03X but lower than CyberArk's 73.58X and Microsoft’s 28.88X [8][10] Product and Market Position - The company is benefiting from strong demand for its new products, including Identity Governance and AI-powered capabilities, which enhance security and user experience [3][9] - Okta's new protocol, Cross App Access, aims to secure AI agents and improve security compliance, reflecting the company's commitment to protecting customers deploying AI [14] Financial Guidance - For fiscal 2026, Okta expects revenues between $2.85 billion and $2.86 billion, indicating a growth of 9-10% from fiscal 2025, with non-GAAP earnings guidance raised to $3.23-$3.28 per share [17][18] - The second-quarter fiscal 2026 revenue guidance is between $710 million and $712 million, suggesting a 10% year-over-year growth [19][20] Conclusion - Despite facing macroeconomic challenges and a competitive landscape, Okta's innovative portfolio and expanding customer base position it favorably for growth, supported by a Zacks Rank 2 (Buy) and a Growth Score of A [21]

Industry Overview - Cybersecurity has evolved into a major business priority due to the increasing frequency and sophistication of cyberattacks, which can result in significant financial losses and brand damage [1][2] - The global cybersecurity market is projected to grow from $193.73 billion in 2024 to $562.72 billion by 2032, reflecting a compound annual growth rate (CAGR) of 14.3% [2] Technological Advancements - Traditional security tools are becoming inadequate against modern threats, leading to a shift towards artificial intelligence (AI) for proactive threat detection and response [3] - AI technologies are being integrated into cybersecurity solutions to automate detection processes and enhance threat intelligence capabilities [10] Key Companies CyberArk - CyberArk focuses on identity security solutions and is leveraging AI to enhance its offerings, particularly with its Secure AI Agent solution [6][8] - The company’s unified platform provides critical capabilities for managing AI-driven identities, which positions it well in the identity security market [7] Fortinet - Fortinet is recognized as a leader in network security, offering a range of solutions including next-generation firewalls and AI-driven threat intelligence [9] - The FortiAI platform utilizes deep learning to automate threat detection, contributing to the company's strong financial performance and market share growth [10][11] Okta - Okta specializes in identity and access management, significantly enhancing its AI capabilities to address the complexities of digital identities [13] - The company’s Identity Threat Protection solution employs machine learning to monitor and mitigate identity risks in real time, focusing on non-human identities [14][15] - Okta has a growing customer base, with a notable increase in high-value contracts, indicating strong market traction [16]

Group 1: Company Strategy and Developments - Okta is enhancing its identity protection efforts by integrating artificial intelligence (AI) into its security strategy, enabling real-time detection and response to identity-based threats [1] - The company's AI approach supports a growing portfolio that includes Identity Governance, Privileged Access, Fine-Grained Authorization, Device Access, and Identity Security Posture Management, while also expanding tools to protect non-human identities like service accounts and bots [2] - A significant boost to Okta's AI-driven vision comes from a new partnership with Palo Alto Networks, creating a unified security architecture for automated threat detection and response [3][4] Group 2: Competitive Landscape - Okta faces increasing competition in the identity and access management (IAM) space from CyberArk Software and Microsoft [5] - CyberArk has shown strong growth with a 43% revenue increase in Q1 2025, bolstered by acquisitions and a robust position in identity security [6] - Microsoft's Entra ID presents a significant challenge with over 900 million monthly active users and advanced IAM tools, reinforcing its dominance in secure identity solutions [7] Group 3: Financial Performance and Valuation - Okta's shares have appreciated 18.8% year to date, outperforming the Zacks Security industry's return of 15.6% [8] - The company is trading at a forward Price/Cash Flow ratio of 21.44, slightly below the broader Zacks Computer and Technology sector's 21.7X, with a Value Score of D [11] - The Zacks Consensus Estimate for Okta's Q2 fiscal 2026 earnings is 84 cents per share, indicating a 16.67% year-over-year growth, while the fiscal 2026 earnings estimate is $3.28 per share, suggesting a 16.73% growth over fiscal 2025 [13][15]

Industry Overview - The digital economy has elevated cybersecurity from a background IT concern to a top priority for businesses, as they face increasing cyber threats such as ransomware, data breaches, and phishing attacks [1] - The global cybersecurity market is projected to grow from $193.73 billion in 2024 to $562.72 billion by 2032, reflecting a strong CAGR of 14.3%, driven by the complexity of IT systems, tighter regulations, and the need to protect sensitive data [2] Technological Advancements - Traditional security tools are becoming inadequate against smarter and faster cyberattacks, leading to a shift towards artificial intelligence (AI) for proactive threat detection and response [3] - AI is being integrated into cybersecurity solutions to analyze large volumes of data, enabling companies to automate detection and response processes [3] Company Highlights - **CyberArk Software (CYBR)**: Focuses on identity security solutions, leveraging AI to enhance its leadership in the identity security space with innovations like the Secure AI Agent solution [6][8] - **Qualys (QLYS)**: Specializes in vulnerability management and cloud security, enhancing its AI capabilities to improve threat detection and remediation [9][10] - **Okta (OKTA)**: Concentrates on identity and access management, ramping up AI capabilities to address the complexities of digital identities, with innovations like Identity Threat Protection with Okta AI [12][13] - **A10 Networks (ATEN)**: Advances its AI-driven cybersecurity strategy through acquisitions and scalable solutions, positioning itself for growth in AI data center deployments [15][16][17] Market Positioning - CyberArk's unified platform offers critical capabilities for identity security, enhancing its market relevance and customer value proposition [7][8] - Qualys' AI-powered platform is expected to drive customer adoption and long-term revenue growth [11] - Okta's growing customer base, particularly among Fortune 500 clients, positions it as a compelling long-term investment [14] - A10 Networks is well-placed to benefit from the intersection of AI and cybersecurity, supported by strong margins and disciplined capital allocation [17]

Financial Data and Key Metrics Changes - The company reported solid Q1 results with exceptional cash flow and record operating profitability and profit margin [16] - For Q2 FY '26, total revenue growth is expected to be 10%, with current RPO growth of 10% to 11%, and a non-GAAP operating margin of 26% [20] - For the full year FY '26, total revenue growth is projected at 9% to 10%, with a non-GAAP operating margin of 25% and a free cash flow margin of approximately 27% [20] Business Line Data and Key Metrics Changes - The governance portfolio, including Okta Identity Governance, lifecycle management, and workflows, has seen substantial growth, with workflow executions increasing nearly 400% over the past three years [8] - The Auth0 platform performed well, contributing positively to the overall results, particularly following a record Q4 [16][17] Market Data and Key Metrics Changes - The US public sector vertical has shown strength, with significant deals contributing to Q1 results, including federal contracts [18] - International markets experienced a deceleration compared to the US, but specific details on the impact were not disclosed [34] Company Strategy and Development Direction - The company is focused on product innovation, with new offerings such as Okta Identity Governance and Auth for GenAI, aimed at addressing evolving cyber threats and enhancing security [7][12] - Okta is positioning itself as a leader in identity security, emphasizing the importance of consolidating disparate identity systems for customers [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong customer conversations and the importance of identity solutions in the context of AI projects [26][30] - There is a cautious approach to guidance due to potential macroeconomic uncertainties, although no immediate impacts were observed in Q1 [28][30] Other Important Information - The company is committed to maintaining its investment levels despite a cautious macro outlook, indicating confidence in long-term growth opportunities [110] - The introduction of suite-based pricing for the Okta platform has shown positive results, with customers interested in purchasing multiple products [62] Q&A Session Summary Question: What factors influenced the additional conservatism in guidance? - Management noted that while Q1 results were strong, there is a cautious tone in the environment, prompting a conservative approach in guidance [28][30] Question: Was there any softness in April? - Management confirmed that there was no softness in April, and performance remained solid throughout the quarter [35] Question: How is the go-to-market specialization progressing? - Management reported a solid start to the specialization process, with strong performance in the Auth0 side and pipeline building [41][42] Question: What is the outlook for new logo pipeline in the workforce business? - Management expressed optimism about the new logo pipeline, highlighting the potential of new products to attract new customers [91][92] Question: How should investors interpret the guidance for CRPO? - Management explained that the guidance reflects a cautious approach due to macroeconomic factors, but emphasized that the underlying business remains strong [55][107]

Core Viewpoint - Okta is expected to report strong fiscal first-quarter 2026 results, with anticipated non-GAAP earnings of 76-77 cents per share and revenues between $678-$680 million, reflecting a 10% year-over-year growth [1][2]. Group 1: Earnings and Revenue Expectations - The Zacks Consensus Estimate for earnings has remained steady at 77 cents per share, indicating an 18.46% year-over-year growth [2]. - The consensus for revenues is pegged at $679.73 million, representing a 10.17% increase from the previous year [2]. Group 2: Customer Growth and Product Portfolio - Okta's expanding product portfolio, particularly in security and identity governance, is expected to drive client acquisition and top-line growth, with 19,650 customers and $4.215 billion in remaining performance obligations reported at the end of fiscal Q4 2025 [3]. - The number of customers with over $100 thousand in Annual Contract Value increased by 7% year-over-year to 4,800 [3]. Group 3: New Product Momentum - Continued momentum from new products such as Okta Identity Governance and Privileged Access is expected to contribute positively to the upcoming quarter, with over 20% of fiscal Q4 bookings coming from these offerings [4]. - Okta Identity Governance has rapidly gained traction, with over 1,300 customers contributing more than $100 million in annual contract value within two years of its launch [5]. Group 4: Partner Ecosystem - Okta benefits from a robust partner ecosystem, including major players like Amazon Web Services, Google, and Salesforce, which enhances its security capabilities [6][7]. - More than 70% of deals in fiscal Q4 2025 were influenced by partners, with Okta surpassing $1 billion in total contract value through its partnership with AWS [7]. Group 5: Stock Performance - Okta shares have outperformed the Zacks Computer & Technology sector, surging 54.9% year-to-date, while the sector has declined by 2% [8]. Group 6: Competitive Landscape - Despite strong product momentum, Okta faces stiff competition from CyberArk and Microsoft, both of which are expanding their presence in the identity and access management space [14]. - Microsoft's Entra identity offering serves over 900 million monthly active users, highlighting the competitive pressure in the market [15].

Industry Overview - Cybersecurity has transitioned from a back-office concern to a boardroom priority due to the increasing frequency and sophistication of cyberattacks, with global cybercrime costs projected to rise from $9.22 trillion in 2024 to $15.63 trillion by 2029 [1] - The global cybersecurity market is expected to grow from $193.73 billion in 2024 to $562.72 billion by 2032, reflecting a compound annual growth rate (CAGR) of 14.3% [2] - The growth in the cybersecurity market is driven by increasing enterprise IT complexity, rising regulatory scrutiny, and the need for real-time protection of data, identities, and infrastructure [2] Technological Advancements - Artificial intelligence (AI) is revolutionizing the cybersecurity landscape, enabling more efficient detection, prevention, and response to cyber threats [3] - AI can analyze large volumes of data, detect anomalies, and identify potential breaches in real time, providing a proactive approach to security [3] Company Highlights - Companies like Fortinet, Zscaler, Okta, and Qualys are heavily investing in AI-driven security solutions to enhance their capabilities and position themselves for long-term growth in the expanding cybersecurity market [4] - Okta specializes in identity and access management (IAM) and is ramping up its AI capabilities to address the complexities of digital identities [6] - Qualys focuses on vulnerability management and cloud security, integrating advanced AI models into its platforms for faster detection and remediation of security threats [10][11] - Fortinet offers a comprehensive suite of cybersecurity solutions, differentiating itself with high-performance security at lower costs, and has integrated AI-driven analytics into its services [13][14][15] - Zscaler is a pioneer in zero-trust security, enhancing its platform with AI-powered security analytics to improve threat detection and response [16][17][18] Financial Performance - Okta reported 19,650 customers at the end of fiscal Q4 2025, with a 7% year-over-year increase in customers with over $100,000 in Annual Contract Value (ACV) [8] - Qualys' AI-powered platform is expected to drive customer adoption and revenue growth, positioning it well in the market [12] - Fortinet has consistently delivered profitability and strong free cash flow, reflecting its growing market share and demand for AI-enhanced security solutions [15] - Zscaler has maintained robust financial performance with expanding revenues driven by demand for its AI-enhanced offerings [18]