OKTA's Subscription Revenue Growth Picks Up: A Sign of More Upside?

Okta’s OKTA subscription revenues accounted for 97.7% of second-quarter fiscal 2025 revenues and increased 12.5% year over year to $711 million. The growth rate picked up from 11.6% growth reported in the first quarter of fiscal 2026. 

Subscription revenues benefited from the company’s go-to-market initiative that is driving improved sales productivity and record pipeline generation. Okta is benefiting from its strong position in the U.S. small and medium business market and public sector. The company saw a strong rate of renewals in the federal space, as five of the top 10 deals in the second quarter were with the U.S. public sector. Okta is seeing strong demand for the Customer Identity solution across the public and private sectors.

New solutions, including Identity Governance, Privileged Access, Device Access, Identity Security Posture Management, Identity Threat Protection with Okta AI and Fine Grained Authorization contributed strongly to the top-line growth of 12.7% with revenues hitting $728 million in the second quarter of 2026. Customers with more than $100K in Annual Contract Value (ACV) increased more than 7% year over year to 4,945. 

Strong demand for Okta’s solutions, further supported by Cross App Access, a new open standard, is expected to boost subscription revenues in the long haul. For fiscal 2026, Okta expects revenues to grow between 10% and 11% over fiscal 2025’s reported figure. 

The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $2.87 billion, indicating 10.1% growth from the figure reported in fiscal 2025.

OKTA Faces Tough Competition

In the security domain, Okta is facing stiff competition from the likes of SentinelOne S and Broadcom AVGO. 

While OKTA offers cloud-based identity solutions, SentinelOne focuses on endpoint security, cloud security and threat detection through its Singularity Platform that leverages a unified security data lake and Purple AI, its Generative AI (GenAI) engine. Singularity, which is a complete AI-native platform, is benefiting from SentinelOne’s AI and automation-driven approach.

Broadcom offers Endpoint Security (Symantec and Carbon Black), Network Security, Information Security, Application Security (Carbon Black) and Identity Security solutions. Broadcom’s focus on delivering AI-powered, proactive security to stay ahead of evolving cyber threats has been noteworthy.

OKTA’s Share Price Performance, Valuation & Estimates

Okta shares have appreciated 18.1% year to date, outperforming the broader Zacks Computer and Technology sector’s return of 13.4% and the Zacks Security industry’s appreciation of 8.9%.

OKTA Stock’s Performance

The Okta stock is overvalued, with a forward 12-month price/cash flow of 21.9X compared with the broader sector’s 21.84X. OKTA has a Value Score of F.

OKTA Valuation

The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $3.29 per share, up by a penny over the past 30 days, suggesting 17.1% growth from fiscal 2024’s reported figure.
 

Okta, Inc. Price and Consensus

Okta, Inc. price-consensus-chart | Okta, Inc. Quote

Okta currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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