Buy the Spike in CrowdStrike or Okta Stock After Posting Record Profitability?

In a week marked by broader market volatility, cybersecurity firms CrowdStrike CRWD and Okta OKTA have emerged as outperformers after exceeding their Q4 expectations.

CrowdStrike and Okta stock have spiked more than 10% since reporting their Q4 results on Tuesday and Wednesday, respectively.   

Both delivered standout Q4 reports, showing record profitability, strong revenue growth, expanding recurring revenue bases, and rising demand for cybersecurity and identity solutions.

CrowdStrike’s AI-Driven Security Demand

CrowdStrike’s strong Q1 results were defined by faster-than-expected growth amid surging demand for its Falcon cybersecurity platform as AI-driven cyberthreats are becoming more sophisticated.

Notably, Falcon is a cloud native cybersecurity solution that provides advanced endpoint detection and response (EDR), managed detection and response (MDR), and next-generation antivirus capabilities to protect organizations from cyber threats.

Falcon’s growth led to CrowdStrike posting Q4 sales of $1.3 billion, up 24% from a year ago and topping estimates of $1.29 billion. It’s noteworthy that CrowdStrike’s net new annual recurring revenue (ARR) grew 47% year over year, reaching a quarterly record of $331 million. More importantly, CrowdStrike saw record profitability since going public in 2019, with Q4 EPS rising 9% to a peak of $1.12 and surpassing expectations of $1.10.

Okta’s Enterprise Adoption & Platform Consolidation

Okta’s standout Q4 report was highlighted by steady subscription growth, expanding enterprise adoption, and strong cash flow, signaling a successful transition for its now unified identity security platform.

The consolidated platform allows customers to integrate with nearly any application, service, or cloud that they choose through a secure, reliable, and scalable security system. Accelerating adoption of Okta's unified identity platform was attributed to trust from large organizations as companies modernize their security architecture.

Seeing solid revenue growth, Okta’s Q4 sales were up 11% to $761 million and topped estimates of $749.1 million. Okta’s remaining performance obligations (RPO) stood out, rising 15% YoY, while current RPO grew 12%, a strong indicator of future revenue. Plus, Okta posted record profitability as well, with Q4 EPS spiking 15% to a peak of $0.90 and beating expectations of $0.85. Other highlights included Q4 free cash flow rising 11% to a record $252 million.

Full-Year Results & Guidance

Capping off a record year, CrowdStrike’s annual sales surged 22% to $4.81 billion, while full-year EPS skyrocketed to $3.73 from $0.49 per share in its fiscal 2026. Seeing massive ARR momentum, CrowdStrike’s annual recurring revenue rose 24% YoY to $5.25 billion.

Further fueling investor sentiment, CrowdStrike expects Q1 sales for its current FY27 to be around $1.36 billion, reflecting 23%-24% growth. CrowdStrike also expects Q1 ARR at $5.5 billion or 24% growth, translating to net new ARR of $249-$251 million.

As for Okta, it also hit record top and bottom line peaks in its FY26, with annual sales increasing 12% to $2.92 billion and full-year EPS surging to $3.50 from $0.40 per share in FY25. Okta did signal more conservative growth for its upcoming Q1 FY27, expecting quarterly sales to increase 9%. Additionally, for Q1, Okta expects a current RPO growth rate of 10%, non-GAAP operating margin of 23%-24%, and free cash flow margin of 33%-35%. 

Okta also provided full-year FY27 guidance, expecting annual sales growth of 9%, non-GAAP operating margin of 25%-26%, and a free cash flow margin of 27%-28%.

Bottom Line

It’s easy to see how investors are mesmerized by CrowdStrike and Okta’s compelling expansion. This is especially the case as both have quieted broader fears that AI could potentially disrupt the need for SaaS (Software as a Service) companies. That said, the smart money may be leaning toward Okta, which trades at a far more reasonable forward P/E valuation of 21X compared to CrowdStrike’s notable premium of 87X.  

For now, Okta stock sports a Zacks Rank #1 (Strong Buy), with CrowdStrike landing a Zacks Rank #3 (Hold).

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

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