Company Overview - Okta is a $16 billion company focused on identity security, providing solutions for both human and non-human identity verifications, including secure processes for agentic AI [2] - The company has developed Okta AI, which integrates into its workforce and customer identity clouds, enhancing security and productivity while improving user experience [6] Financial Performance - Okta's fiscal 2Q26 report showed a revenue of $728 million, exceeding estimates by $16 million and growing 13% from fiscal 2Q25 [7] - The company predicts revenue for fiscal 3Q26 to be between $728 million and $730 million, above the Wall Street expectation of $723.1 million [7] Market Potential - The cybersecurity market is valued at approximately $270 billion and is expected to grow at a 12% CAGR from 2025 to 2028, with cybersecurity spending projected to grow 50% faster than overall software spending [4] - Okta's expansion into Identity Governance (OIG) and Privileged Access Management (PAM) presents significant upsell opportunities, with OIG already being a >$100 million ACV business [8] Analyst Insights - Morgan Stanley analyst Keith Weiss rates Okta shares as Overweight (Buy) with a price target of $123, indicating a 34% upside potential over the next 12 months [9] - The consensus rating for Okta shares is a Moderate Buy, with 19 Buy, 11 Hold, and 2 Sell recommendations [9] Competitive Landscape - Zscaler, another key player in cybersecurity, has grown into a ~$44 billion company, handling over 500 billion daily transactions and preventing over 9 billion daily incidents [12] - Zscaler's recent acquisition of Red Canary enhances its capabilities in exposure management and agentic AI threat management [13] Zscaler Financials - Zscaler's fiscal 4Q25 revenue reached $719.2 million, growing 21% year-over-year and exceeding forecasts by over $12 million [14] - The company's annual recurring revenue (ARR) increased by 22% year-over-year to $3.02 billion [14] Analyst Ratings for Zscaler - Weiss rates Zscaler as Overweight (Buy) with a price target of $320, suggesting a 12% upside potential [15] - The consensus rating for Zscaler is Strong Buy, with 30 Buy and 5 Hold recommendations [16]

Core Insights - Broadcom (AVGO) and Okta (OKTA) are significant players in the enterprise security software market, with Broadcom offering a wide range of security solutions and Okta focusing on cloud-based identity solutions [1][2] Industry Overview - Gartner projects enterprise spending on cybersecurity software and network security to grow by 14% in 2025, reaching $118.5 billion, driven by demand for Generative AI and cloud adoption [2] - IDC anticipates global cybersecurity spending to increase by 12.2% year over year in 2025, with security software spending expected to grow by 14.4% year over year [2] Company Performance - Broadcom's infrastructure software revenues rose by 25% year over year to $6.6 billion in Q2 of fiscal 2025, accounting for 44% of total revenues [7] - Okta's stock has appreciated 21.1% year to date, benefiting from strong demand for its innovative security products [3][11] Product Innovations - Broadcom has introduced several AI-powered security features, including updates to VMware vDefend and Incident Prediction, aimed at enhancing threat prevention and operational efficiency [9][10] - Okta's new protocol, Cross App Access, enhances security for AI agents and improves user experience by streamlining authorization processes [12][13] Earnings Estimates - The Zacks Consensus Estimate for Broadcom's fiscal 2025 earnings is $6.64 per share, indicating a 36.34% increase over fiscal 2024 [14] - Okta's fiscal 2026 earnings estimate remains steady at $3.28 per share, suggesting a 16.73% growth over fiscal 2025 [15] Valuation Metrics - Broadcom's shares are trading at a forward Price/Sales ratio of 18.55X, significantly higher than Okta's 5.6X, indicating that Okta is currently undervalued [17] - Both companies are considered overvalued based on their Value Scores, with Broadcom rated D and Okta rated F [18] Investment Outlook - Broadcom expects its AI revenues to increase by 60% year over year to $5.1 billion in Q3 of fiscal 2025, although it anticipates sluggishness in other business segments [22] - Okta's strong growth prospects are highlighted by its 20,000 customers and $4.084 billion in remaining performance obligations as of Q1 fiscal 2026 [23] - Okta is rated as a better buy compared to Broadcom, with a Zacks Rank of 2 (Buy) versus Broadcom's 3 (Hold) [24]

Core Viewpoint - Okta's shares fell 16.16% to $105.22 after reporting strong earnings and revenue growth, primarily due to slowing growth expectations for the upcoming fiscal second quarter and fiscal 2026 [1] Financial Performance - For Q2 fiscal 2026, Okta expects revenues between $710 million and $712 million, reflecting a 10% year-over-year growth, down from 11.5% in Q1 fiscal 2026 [2] - For fiscal 2026, Okta anticipates revenues between $2.85 billion and $2.86 billion, indicating a 9-10% growth from fiscal 2025 [3] - Non-GAAP earnings for fiscal 2026 are projected between $3.23 and $3.28 per share, an increase from previous guidance of $3.15 to $3.20 per share [3] Market Performance - Year-to-date, Okta shares have returned 33.5%, outperforming peers like Microsoft (8.5%), IBM (14.5%), and CyberArk (18.4%) [4] - The Zacks Consensus Estimate for Q2 fiscal 2026 earnings remains steady at 79 cents per share, suggesting a 9.72% year-over-year growth [7] - For fiscal 2026, the Zacks Consensus Estimate for earnings is $3.19 per share, indicating a 13.52% growth over fiscal 2025 [8] Product Demand and Client Growth - Okta is experiencing strong demand for its identity solutions, including Identity Governance and Privileged Access, which are crucial for managing non-human identities [9] - The company exited Q1 fiscal 2026 with approximately 20,000 customers and $4.084 billion in remaining performance obligations (RPOs), indicating robust subscription revenue growth [10] - The number of customers with over $100,000 in Annual Contract Value increased by 70 sequentially to 4,870 [10] Strategic Partnerships and Innovations - Okta's governance portfolio has surged 400% over the past three years, reaching nearly $40 billion, supported by a strong partner ecosystem including AWS, Microsoft, and Salesforce [12] - The company offers AI-powered capabilities through Okta AI, enhancing user experiences and cybersecurity [11] Valuation and Market Sentiment - Okta shares are considered overvalued, with a Price/Cash Flow ratio of 24.59X compared to the sector's 19.8X, indicating a premium valuation [13] - The stock is trading below its 50-day and 200-day moving averages, suggesting a bearish trend [16] - Despite its innovative portfolio, Okta faces challenges from macroeconomic conditions and a stretched valuation, leading to a Zacks Rank 3 (Hold) [19]

Core Viewpoint - Okta's shares have faced an 11% decline in a month due to a challenging macroeconomic environment, but an innovative product portfolio is expected to drive significant growth in 2025 [1] Company Performance - Year-to-date, Okta shares have returned 29.3%, outperforming competitors like Microsoft (MSFT), IBM, and CyberArk, which returned 3.6%, 4.6%, and -8.2% respectively [2] - Okta exited the fourth quarter of fiscal 2025 with 19,650 customers and $4.215 billion in remaining performance obligations, indicating strong growth prospects for subscription revenues [5] - Customers with over $100 thousand in Annual Contract Value increased by 7% year-over-year to 4,800 [5] Product Demand and Innovation - Okta's innovative portfolio, including Okta AI and various identity solutions, is driving strong demand and client acquisition [5][6] - The recent introduction of Auth for GenAI in Developer Preview enhances secure identity integration in GenAI applications [8] Market Position and Recognition - Okta is gaining market share in the cybersecurity domain, outperforming Microsoft, IBM, and CyberArk, and has received accolades from Gartner for its access management capabilities [10][9] - The company has a rich partner base, including AWS, Google, and Salesforce, with over 7,000 integrations as of January 31, 2025 [11] Financial Outlook - For Q1 fiscal 2026, Okta expects revenues between $678 million and $680 million, reflecting a 10% year-over-year growth, with non-GAAP earnings projected between 76 and 77 cents per share [12] - For fiscal 2026, revenues are expected to be between $2.85 billion and $2.86 billion, indicating 9-10% growth from fiscal 2025 [13] - Okta's earnings have consistently beaten Zacks Consensus Estimates, with an average surprise of 15.7% over the trailing four quarters [14] Valuation Metrics - Okta is trading at a forward Price/Sales ratio of 6.05X, compared to the broader sector's 5.56X, indicating a premium valuation [15] - The stock is currently trading above the 200-day moving average, suggesting a bullish trend [19]