Okta’s OKTA subscription business is booming, driven by strong customer demand and continued product innovation. In the first quarter of fiscal 2026, subscription revenues grew 12% year over year to $673 million, representing 98% of the company’s total revenues. Backing this growth is a 21% year-over-year increase in remaining performance obligations (RPO), with current RPO (cRPO) up 14%, highlighting a solid pipeline of future subscription revenues already under contract.
Several strategic moves are fueling this momentum. Okta has expanded its identity platform with high-impact modules such as Identity Governance, Privileged Access and Device Access, broadening its relevance in zero-trust security environments. These new offerings accounted for 15% of new bookings in first-quarter fiscal 2026.
Meanwhile, Okta’s sales organization has been restructured to better serve distinct customer segments, with separate teams focused on Workforce Identity and Customer Identity (Auth0). This targeted approach is translating into results, as the number of customers generating over $1 million in annual contract value (ACV) climbed 20% year over year.
Okta’s strong financial performance, with a 27% non-GAAP operating margin and 35% free cash flow, enables continued investment in product development and market entry initiatives. This positions its subscription business as a catalyst for sustainable growth.
Okta Faces Rising Pressure in Security Race
Microsoft MSFT continues to dominate enterprise IT with Entra ID’s deep integration into Azure and Microsoft 365, offering seamless identity and access management. Microsoft’s expanding data and AI portfolio, including PostgreSQL, Microsoft Fabric and Azure, fuels strong cloud adoption. With breakthroughs like its Majorana quantum chip, Microsoft is advancing future tech while sustaining robust growth, making it a cornerstone of scalable, secure, and innovative enterprise infrastructure.
CrowdStrike CRWD is strengthening its cybersecurity edge with AI-driven innovations and product expansion. Its Falcon platform now boasts 29 modules, including the new Falcon Data Protection tool, enhancing data loss prevention and compliance. These upgrades, alongside rising demand for threat protection, position CrowdStrike as a leader in identity security. CrowdStrike’s sustained innovation and platform growth continue to attract customers seeking robust, all-in-one cybersecurity solutions.
OKTA’s Price Performance, Valuation & Estimates
Shares of Okta have appreciated 16.2% year to date compared with the Zacks Security industry’s return of 17%.
OKTA’s YTD Price Return Performance
Image Source: Zacks Investment Research
Okta currently trades at a premium with a forward Price/Cash Flow ratio of 21.56, slightly higher than the broader Zacks Computer and Technology sector’s 21.5X. OKTA has a Value Score of D.
OKTA Forward 12-Month Price/CF Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for OKTA’s second-quarter fiscal 2026 earnings is pegged at 84 cents per share, up by 5 cents over the past 60 days, indicating 16.67% year-over-year growth.
The consensus mark for fiscal 2026 earnings is pegged at $3.28 per share, which increased 2.8% over the past 60 days. The earnings figure suggests 16.73% growth over the figure reported in fiscal 2025.
Image Source: Zacks Investment Research
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).