Okay OKTA shares have gained 8.9% in a month, outperforming the broader Zacks Computer & Technology sector’s return of 3.5% and the Zacks Internet Software and Services sector’s gain of 6.3%.
The strength of OKTA’s portfolio is notable, with strong demand for new products such as Okta identity management and Okta privileged access amid a challenging macroeconomic environment. A growing customer base, driven by strong adoption of the Identity Threat Protection solution, is a key catalyst for growth-oriented investors.
Okta ended the third quarter of fiscal 2025 with 19,450 customers and $2.062 billion in current remaining performance obligations, reflecting strong future growth prospects for subscription revenue. The number of customers with more than $100,000 in annual contract value (ACV) increased 8% year over year to 4,705.
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OKTA’s innovative portfolio is expected to help customers win and drive revenue growth. The Okta AI, a suite of AI-powered capabilities embedded in both Workforce Identity Cloud and Customer Identity Cloud, enables organizations to leverage AI to build better experiences and protect against cyber attacks.
OKTA’s revenues are expected to experience a CAGR of 26% between fiscal year 2022 and fiscal year 2025.
In September, Okta expanded the capabilities of Auth0 and the Okta Customer Identity Cloud to provide developers with greater scalability, security and customization.
Okta has expanded the capabilities of its Auth0 Free Plan to include 25,000 monthly active users (MAUs), as well as a passwordless feature, unlimited social and Okta connections, and custom domain support. Paid subscriptions now include enterprise-grade identity security with multi-factor authentication, support for System for Cross-domain Identity Management, improved log retention, and more.
Okta’s strong portfolio is helping the company gain market share in cybersecurity Microsoft MSFT, International business machines IBM and CyberArk CYBR.
Gartner ranked Okta higher than Microsoft and CyberArk in all use cases on the Gartner Critical Capabilities for Access Management. Gartner also ranked OKTA highest in its Magic Quadrant for Ability to Execute for the third year in a row.
The plethora of security breaches worldwide has indicated the growing importance of cybersecurity service providers like OKTA.
IDC expects the global security market to experience double-digit growth over the next five years, reaching $200 billion in revenue by 2028. Identity and Access Management (IAM), in which Okta specializes, is expected to be one of the fastest growing businesses. segments, with a CAGR expected in the teens or higher between 2024 and 2028.
IAM’s growth prospects are robust due to the growing need to provide secure remote access and increased protection around the ongoing digital transformation of businesses. These factors bode well for Okta’s long-term prospects.
In October, the company announced new Workforce Identity Cloud capabilities that address issues related to unmanaged SaaS service accounts, governance risks and identity authentication.
The Secure SaaS Service Accounts feature within Okta Privileged Access is a set of future capabilities to protect non-federated SaaS accounts with storage, login rotation, incremental MFA before secret disclosure, and audit trail.
Governance Analyzer helps managers and approvers by providing the insights they need, including usage data and past governance decisions, to make informed authorization decisions quickly and with confidence.
For the fourth quarter of fiscal 2025, Okta expects revenue between $667 million and $669 million, indicating 10-11% year-over-year growth.
OKTA expects fourth-quarter 2025 non-GAAP earnings between 73 and 74 cents per share.
For fiscal year 2025, Okta expects revenue in the range of $2.595 billion to $2.597 billion (up from previous expectations of $2.555 billion to $2.565 billion), indicating 15% growth over fiscal year 2024.
OKTA expects fiscal 2025 non-GAAP earnings between $2.75 per share and $2.76 per share (up from previous guidance of $2.58-$2.63 per share).
Free cash flow margin is now expected to be around 25% for fiscal year 2025.
For the yet-to-be-reported fourth quarter of fiscal 2025, the Zacks Consensus Estimate for Okta’s earnings rose 9% over the past 30 days to 73 cents per share. The profit figure indicates a growth of 15.87% year-on-year.
Okta’s revenues surpassed the Zacks Consensus Estimate in all four trailing quarters, with an average surprise of 19.87%.
Okta, Inc. price consensus chart | Okta, Inc. Quote
Find the latest EPS estimates and surprises on the Zacks Earnings Calendar.
The consensus figure for revenue is set at $668.8 million, indicating a growth of 10.55% over the figure reported in the previous year’s quarter.
For fiscal 2025, the Zacks Consensus Estimate for Okta’s earnings has risen 5.7% over the past 30 days to $2.76 per share. The profit figure indicates a growth of 72.5% compared to the figure reported in the 2024 financial year.
The consensus figure for revenue is set at $2.60 billion, indicating a growth of 14.75% over the figure reported in fiscal 2024.
Okta stock is trading at a premium, as evidenced by its Value Score of F.
In terms of forward-twelve-month price-to-sales (P/S), OKTA trades at 5.17x, a premium compared to the Zacks Internet Software Services industry’s 2.82x.
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Okta is an attractive choice in the short term, given its strong growth prospects and large addressable market, which justifies a premium valuation.
Okta currently has a Zacks Rank #2 (Buy) and a Growth Score of A, a favorable combination that offers strong investment opportunities, according to the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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