Key Takeaways Okta shares fell 27.2% in three months, underperforming the sector and industry peers.OKTA projects FY26 revenues of $2.85B to $2.86B and EPS of $3.23 to $3.28, up 16.7% year over year.Okta expands AI-driven identity tools and partnerships while ending Q1 FY26 with $2.73B in cash.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%. The plunge in Okta’s shares c ...

Core Insights - CyberArk's subscription revenues rebounded significantly in Q2 2025, reaching $264 million, which is a 66% year-over-year increase [1][10] - The annual recurring revenues (ARR) from subscriptions hit $1.08 billion, marking a 61% increase year-over-year [3][10] - CyberArk's subscription revenues constituted 80% of total revenues in Q2 2025 [3] Subscription Growth Drivers - The growth is attributed to customers transitioning from perpetual maintenance contracts to subscription models [2] - Larger deal sizes and improved customer lifetime value from platform upsells are contributing factors [2] - A significant number of customers are adopting multiple solutions simultaneously, enhancing subscription annual contract value (ACV) [2] Product Enhancements and Acquisitions - Recent product launches, such as Secure AI Agent, and acquisitions like Venafi and Zilla Security are expected to further boost subscription revenue growth [4] - The strong business model has led to Palo Alto Networks planning to acquire CyberArk for approximately $25 billion at a premium [4][10] Competitive Landscape - Competitors like Okta and CrowdStrike are also experiencing growth in subscription revenues [5] - Okta's subscription revenues rose 11.6% year-over-year to $673 million, accounting for 97.8% of total revenues [6] - CrowdStrike's subscription revenues increased by 21% to $1.05 billion, driven by demand for its identity security platform [7] Financial Performance and Valuation - CyberArk's shares have increased by 26.9% year-to-date, outperforming the Zacks Security industry's growth of 7.6% [8] - The forward price-to-sales ratio for CyberArk is 14.14X, higher than the industry average of 11.98X [11] - Earnings estimates for fiscal years 2025 and 2026 imply year-over-year growth of 27% and 25.3%, respectively, with upward revisions in the past 30 days [14]

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]

Core Insights - Okta's subscription business is experiencing significant growth, with subscription revenues increasing by 12% year-over-year to $673 million, accounting for 98% of total revenues in Q1 fiscal 2026 [1][9] - The company has seen a 21% year-over-year rise in remaining performance obligations (RPO), with current RPO (cRPO) up 14%, indicating a strong future revenue pipeline [1] Strategic Developments - Okta has expanded its identity platform with new modules such as Identity Governance, Privileged Access, and Device Access, which contributed to 15% of new bookings in Q1 fiscal 2026 [2][9] - The sales organization has been restructured to focus on distinct customer segments, leading to a 20% year-over-year increase in customers generating over $1 million in annual contract value (ACV) [3][9] Financial Performance - The company reported a 27% non-GAAP operating margin and 35% free cash flow, allowing for continued investment in product development and market initiatives [4] - The Zacks Consensus Estimate for Q2 fiscal 2026 earnings is set at 84 cents per share, reflecting a 16.67% year-over-year growth [11] Market Position - Okta's shares have appreciated by 16.2% year-to-date, slightly trailing the Zacks Security industry's return of 17% [7] - The company currently trades at a forward Price/Cash Flow ratio of 21.56, which is marginally higher than the broader Zacks Computer and Technology sector's 21.5X [10]

Core Insights - Okta's Remaining Performance Obligations (RPO) surged to $4.084 billion in Q1 FY2026, a 21% year-over-year increase, with current RPO at $2.23 billion, reflecting strong revenue visibility for the next 12 months [1][8] - The company is experiencing robust demand for its identity security solutions, particularly in areas like Identity Governance and Privileged Access, as enterprises prioritize secure access [2][8] - For Q2 FY2026, Okta projects current RPO growth of 10% to 11%, indicating resilient demand despite macroeconomic challenges [3][8] Competitive Landscape - Okta faces significant competition from CyberArk and Microsoft in the identity and access management sector [4] - CyberArk is enhancing its offerings in Privileged Access Management and expanding into automated Identity Governance through its acquisition of Zilla Security [5] - Microsoft's Entra ID presents a formidable challenge with its comprehensive Identity and Access Management solutions [6] Financial Performance - Okta's stock has appreciated 27.7% year-to-date, outperforming the Zacks Security industry's return of 19.9% [7] - The Zacks Consensus Estimate for Okta's FY2026 revenues is $2.86 billion, reflecting a 9.44% year-over-year growth, with earnings estimated at $3.28 per share, indicating a 16.73% growth from FY2025 [10] - Okta currently trades at a forward Price/Cash Flow ratio of 23.83, higher than the broader Zacks Computer & Technology sector's 20.4X, with a Value Score of D [9]

Core Insights - Okta, a leading cybersecurity firm specializing in identity and access management, has seen a stock decrease of approximately 10% over the last month despite reporting strong first-quarter earnings that exceeded analyst expectations [2][3] - The company's stock has increased nearly 30% year-to-date, presenting an attractive opportunity for investors [2] Financial Performance - In Q1, Okta's revenue grew 12% year-over-year to $688 million, surpassing the forecast of $678 million to $680 million [3] - Subscription revenue also rose 12% to $673 million, while adjusted EPS increased 24% year-over-year to $0.86 [3] - The company reported positive free cash flow of $238 million for the quarter, marking an 11% year-over-year growth [3] - The net dollar retention rate was 106%, down from 111% a year prior [3] Growth Forecast - Okta has maintained its fiscal 2026 revenue forecast of $2.85 billion to $2.86 billion, indicating a growth of 9-10% [4] - For Q2, the company projects revenue growth of 10% to $710-$712 million, with adjusted EPS of $0.83-$0.84 [4] Market Outlook - The overall cybersecurity market is expected to grow significantly, with investments projected to exceed $298 billion annually by 2028 [5] - Okta's identity management platform is crucial for securing access across various applications, especially as companies adopt cloud-based solutions [5] - Management has noted strong demand for new offerings, such as Identity Governance and Privileged Access [5] Valuation Analysis - Okta has a market capitalization of $17 billion and a price-to-sales (P/S) ratio of approximately 6x based on fiscal 2026 revenue estimates, which is reasonable compared to other cybersecurity stocks [6] - However, trading at 25 times its trailing free cash flow, Okta stock appears somewhat expensive given its low-teens revenue and free cash flow growth [6]

Core Viewpoint - Okta's stock experienced a decline following cautious guidance despite a solid fiscal Q1 performance, reflecting broader economic uncertainties and a conservative outlook from management [2][3]. Financial Performance - For fiscal Q1, Okta reported a revenue increase of 12% year over year to $688 million, surpassing the previous forecast of $678 million to $680 million [6]. - Subscription revenue also rose by 12% to $673 million, while adjusted EPS increased by 24% year over year to $0.86, exceeding the outlook of $0.76 to $0.77 [6]. - The company maintained its full-year revenue forecast for fiscal 2026 at $2.85 billion to $2.86 billion, indicating a growth of 9% to 10% [3]. Customer Metrics - Okta's net dollar retention rate was 106%, indicating growth, although it has decreased from 111% a year ago [7]. - The number of customers with annual contract values (ACVs) above $100,000 increased by 7% to 4,870, and those with ACVs over $1 million rose by 20% year over year [7]. Backlog and Future Guidance - The remaining performance obligation (RPO) backlog grew by 21% to $4.08 billion, while the current RPO backlog increased by 14% to nearly $2.23 billion, indicating future revenue potential [8]. - For fiscal Q2, management guided for approximately 10% revenue growth, projecting revenue between $710 million and $712 million, with adjusted EPS expected to be between $0.83 and $0.84 [8]. Strategic Initiatives - Okta highlighted strong demand for newer products such as Identity Governance and Privileged Access, and is addressing rising security risks associated with AI [4]. - The company is implementing a specialized sales strategy, which has shown early positive results in its U.S. small and mid-sized business team [5]. Market Position - Despite a cautious approach to guidance, Okta is positioned to capitalize on growing market opportunities in the evolving cybersecurity landscape, particularly with the integration of AI [10]. - With a price-to-sales (P/S) ratio of approximately 6.4 based on fiscal 2026 revenue estimates, Okta remains reasonably valued compared to other leading cybersecurity stocks, presenting a potential buying opportunity [11].

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].