OKTA Rides on Strong Subscription Revenue Growth: More Upside Ahead?

Okta OKTA is benefiting from strong subscription revenue growth, which has become the key growth driver of the company’s financial performance. For the first quarter of fiscal 2027, revenues increased 11% year over year to $765 million. The uptick can be attributed to steady subscription momentum, as subscription revenues increased 11% year over year to $750 million and continued to account for the vast majority of the top line. This growth is largely attributed to the durability of Okta’s core business, with both the Okta and Auth0 platforms contributing to steady momentum across a diverse and expanding customer base. In the first quarter of fiscal 2027, Okta reported more than 20,000 total customers and 5,180 customers now spending more than $100,000 annually.The company’s expanding product lineup plays an important role in driving growth. Newer offerings accounted for nearly 25% of first-quarter bookings, reflecting rising customer interest in solutions beyond basic identity management. Identity Governance remained the strongest-performing new product, while Privileged Access delivered encouraging results. Customers are increasingly turning to Okta for a broader set of identity and security needs.A key driver behind Okta’s subscription growth is its ability to land and expand within large enterprises. Large enterprises now represent 85% of Okta’s annual contract value, up from 80%, reflecting the company’s successful focus on high-value clients. The number of customers with annual contract values exceeding $100,000 grew 6% year over year, highlighting Okta’s success in upselling and cross-selling its broadening portfolio of identity products. Okta remains confident about its prospects. The company expects revenues to grow 9-10% in fiscal 2027, supported by continued adoption of newer products, expanding enterprise relationships and stronger partner contributions. In addition, management highlighted significant interest in its AI-related offerings, which could create another avenue for long-term subscription revenue growth.OKTA Faces Tough Competition in the Security SpaceIn the security domain, Okta is facing stiff competition from the likes of SentinelOne S and Palo Alto Networks PANW.While OKTA offers cloud-based identity solutions, SentinelOne focuses on endpoint security, cloud security and threat detection, through its Singularity Platform, which leverages a unified security data lake and Purple AI, its Generative AI engine. Singularity, a complete AI-native platform, benefits from SentinelOne’s AI and automation-driven approach.Palo Alto Networks’ broad cybersecurity platform and platformization strategy continue to drive growth across its business. The company remains the fastest-growing provider in the SASE market. SASE ARR reaching $1.6 billion in the third fiscal quarter of 2026, up 40% year over year, fueled by strong customer demand for unified security across hybrid workforces and AI applications. The company is also benefiting from increasing adoption of AI security, network security and platform-based solutions as enterprises expand AI deployments and seek consolidated cybersecurity architectures.OKTA’s Share Price Performance, Valuation & EstimatesOkta shares have appreciated 35.6% in the year-to-date period, outperforming the broader Zacks Computer and Technology sector's 16.5% gain but underperforming the Zacks Security industry’s 41.9% growth.                                            OKTA Stock’s Price PerformanceImage Source: Zacks Investment ResearchThe Okta stock is currently undervalued, as suggested by a Value Score of D. In terms of forward 12-month Price/Sales, Okta is trading at a ratio of 6.11X, slightly lower than the broader Zacks Computer and Technology sector’s 6.54X.                                                              OKTA ValuationImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $3.83 per share, up 2.4% over the past 30 days, suggesting 1.1% growth from the fiscal 2026 reported figure.                                          Okta, Inc. Price and Consensus Okta, Inc. price-consensus-chart | Okta, Inc. QuoteOkta currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.   Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks