Okta OKTA shares have appreciated 19.2% in a month, outperforming the broader Zacks Computer & Technology sector’s return of 0.9% and the Zacks Internet Software and Services industry’s appreciation of 13.6%.
OKTA’s portfolio strength is noteworthy, with strong demand for new products like Okta identity governance and Okta privileged access amid a challenging macroeconomic environment. An expanding clientele, driven by the strong adoption of its Identity Threat Protection solution, is a key catalyst for growth-oriented investors.
The company’s multi-year partnership with the McLaren Formula 1 Team further expands clientele. OKTA will work with McLaren Racing to explore new ways to protect and improve its apps and platforms. Eventually, Okta will support McLaren Racing in further streamlining the team’s digital infrastructure and improving security capabilities so that the team can operate more securely and efficiently.
OKTA Beats Sector, Industry in a Month
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Strong Portfolio to Help Okta Shares Jump in 2025
KTA’s innovative portfolio is expected to help win clients, driving top-line growth. It exited third-quarter fiscal 2025 with 19,450 customers and $2.062 billion in current remaining performance obligations, reflecting strong future growth prospects for subscription revenues. Customers with more than $100K in Annual Contract Value increased 8% year over year to 4,705.
Okta AI, a suite of AI-powered capabilities embedded across both Workforce Identity Cloud and Customer Identity Cloud, empowers organizations to harness AI to build better experiences and protect against cyberattacks.
OKTA’s revenues are expected to witness a CAGR of 26% between fiscal 2022 and fiscal 2025.
Okta has increased the capability of its Auth0 Free Plan to include 25,000 monthly active users, as well as a passwordless feature, unlimited social and Okta connections, and custom domain support. Paid plans now include enterprise-grade identity security with multi-factor authentication, support for System for Cross-domain Identity Management, enhanced log retention, and more.
Okta’s strong portfolio is helping it win market share in the cybersecurity domain against Microsoft MSFT, International Business Machines IBM and CyberArk CYBR.
Gartner has placed Okta higher than Microsoft and CyberArk in all use cases on the Gartner Critical Capabilities for Access Management. Gartner also ranked OKTA highest on its Magic Quadrant for Ability to Execute for the third straight year.
Okta Benefits From Strong Demand for Identity Solutions
The plethora of security breaches worldwide has signified the growing importance of cybersecurity service providers like OKTA.
IDC expects the global security market to witness double-digit growth over the next five years, with revenues hitting $200 billion in 2028. Identity and Access Management (IAM), which Okta specializes in offering, is expected to be one of the fastest-growing segments, with a CAGR expected in the teens or higher between 2024 and 2028.
IAM’s growth prospect is robust due to the growing need to offer secured remote access and heightened protection around enterprises’ ongoing digital transformation. These factors bode well for Okta’s long-term prospects.
In October, the company announced new Workforce Identity Cloud capabilities that solve issues related to unmanaged SaaS service accounts, governance risks and identity verification.
The Secure SaaS Service Accounts feature within Okta Privileged Access is a set of upcoming capabilities to protect non-federated SaaS accounts with vaulting, credential rotation, step-up MFA before secret reveal and audit trail.
Governance Analyzer helps managers and approvers by providing the insights they need, including usage data and previous governance decisions, to make informed authorization decisions quickly and confidently.
OKTA’s Q4 & FY25 View Strong
For fourth-quarter fiscal 2025, Okta expects revenues between $667 million and $669 million, indicating 10-11% year-over-year growth. It expects non-GAAP earnings between 73 cents and 74 cents per share.
For fiscal 2025, Okta expects revenues between $2.595 billion and $2.597 billion (up from previous guidance of $2.555-$2.565 billion), indicating 15% growth over fiscal 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).
The free cash flow margin is now expected to be roughly 25% for fiscal 2025.
For fiscal 2025, the Zacks Consensus Estimate for Okta’s earnings has increased by a penny to $2.77 per share over the past 30 days. The earnings figure suggests 73.13% growth over the figure reported in fiscal 2024.
The consensus mark for revenues is pegged at $2.60 billion, indicating 14.75% growth over the figure reported in fiscal 2024.
For fourth-quarter fiscal 2025, the Zacks Consensus Estimate for Okta’s earnings has been steady at 73 cents per share over the past 30 days. The earnings figure suggests 15.87% growth year over year.
The consensus mark for revenues is pegged at $668.8 million, indicating 10.55% growth over the figure reported in the year-ago quarter.
Okta, Inc. Price and Consensus
Okta, Inc. Price and Consensus
Okta, Inc. price-consensus-chart | Okta, Inc. Quote
Okta’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 19.87%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
OKTA Shares Trade at a Premium
Okta shares are trading at a premium, as suggested by the Value Score of F.
In terms of the forward 12-month Price/Sales (P/S), OKTA is trading at 5.84X, a premium compared with the industry’s 3.87X.
Price/Sales Ratio (F12M)
Zacks Investment Research
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Conclusion
Okta is an attractive bet in the near term, given its strong growth prospect 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 a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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