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OKTA is benefiting from an expanding clientele driven by the strong adoption of its Identity Threat Protection solution. It exited the first quarter of fiscal 2025 with the total customer count increasing 6% year over year to 19,100.
Customers with more than $100K in Annual Contract Value (ACV) increased 12% year over year to 4,550. OKTA added 400 new customers in the reported quarter, out of which 160 customers were in the $100K-plus ACV category.
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. Per IDC’s latest data, worldwide revenues for security products totaled $106.8 billion in 2023, up 15.6% over 2022. Microsoft (MSFT - Free Report) was the largest vendor with an 11.6% market share, followed by Palo Alto Networks (PANW - Free Report) at 5%.
Cloud Native Application Protection Platforms, provided by the likes of CrowdStrike (CRWD - Free Report) and Palo Alto Networks, witnessed the greatest year-over-year growth of 31.5%, followed by Identity and Access Management (IAM) at 21.4%.
IDC expects the global security market to witness double-digit growth over the next five years, with revenues hitting $200 billion in 2028. IAM is expected to be one of the fastest-growing segments, with CAGR expected in the teens or higher between 2024 and 2028 timeframe.
IAM’s growth prospect is robust, due to the growing need to offer secured remote access and heightened protection needed around ongoing digital transformation by enterprises. These factors bode well for Okta’s long-term prospects. It is protecting customers by blocking more than 2 billion security attacks a month, and expects these numbers to grow.
OKTA’s revenues are expected to witness a CAGR of 25% between fiscal 2022 and fiscal 2025. In fiscal 2023, the customer base increased 17.3% from fiscal 2022, while in fiscal 2024, clientele jumped 7.7% over fiscal 2023.
Okta’s strong portfolio is helping it win market share in the cybersecurity domain against the likes of Microsoft, IBM and CyberArk.
Gartner, in its Magic Quadrant for Access Management 2023, recognized Okta as a Leader, putting it above Microsoft and IBM. Gartner recognized CyberArk as a challenger in its Magic Quadrant.
Okta’s expanding portfolio has been a key catalyst. Its Okta AI, a suite of AI-powered capabilities embedded across both Workforce Identity Cloud and Customer Identity Cloud, empowers organizations to harness the power of AI to build better experiences and protect against cyberattacks.
It also announced support for passkeys in early access as a password-less authentication method for Okta Customer Identity Cloud, powered by Auth0.
OKTA’s Fiscal 2025 View Strong
Okta’s innovative portfolio bodes well for its prospects.
For fiscal 2025, Okta expects revenues between $2.53 billion and $2.54 billion, indicating year-over-year growth of 12%. The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $2.53 billion, indicating year-over-year growth of 11.91%.
OKTA expects fiscal 2025 non-GAAP earnings between $2.35 and $2.40 per share. The consensus mark for earnings is pegged at $2.41 per share, up 5.3% over the past 30 days.
OKTA’s balance sheet remains strong, with a net cash position of roughly $1.2 billion. The free cash flow margin is now expected to be 22% for fiscal 2025.
OKTA Stock Not so Cheap
However, Okta stock is not so cheap, as the Value Style Score of F suggests a stretched valuation at this moment.
In terms of the forward 12-month Price/Sales ratio, OKTA is trading at 5.93X, higher than its median of 5.75X and the Zacks Internet Software-Services industry’s 2.97X.
Price/Sales Ratio (F12M)
Image Source: Zacks Investment Research
Conclusion
Okta’s robust portfolio is helping it to expand its clientele. It benefits from positive industry trends, including growing demand for identity solutions. The company currently has a Growth Style Score of A, which is hard to ignore for growth-oriented investors despite its stretched valuation.
OKTA currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. However, investors who already own the stock may expect the company's growth prospects to be rewarding over the long term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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OKTA Stock Rises 14% in 6 Months: What's Next for Investors?
Okta (OKTA - Free Report) shares have gained 14% in the past six months, underperforming the broader Zacks Computer & Technology sector’s return of 15.4% but outperforming the Zacks Internet Software and Services industry’s decline of 1.6%.
OKTA is benefiting from an expanding clientele driven by the strong adoption of its Identity Threat Protection solution. It exited the first quarter of fiscal 2025 with the total customer count increasing 6% year over year to 19,100.
Customers with more than $100K in Annual Contract Value (ACV) increased 12% year over year to 4,550. OKTA added 400 new customers in the reported quarter, out of which 160 customers were in the $100K-plus ACV category.
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. Per IDC’s latest data, worldwide revenues for security products totaled $106.8 billion in 2023, up 15.6% over 2022. Microsoft (MSFT - Free Report) was the largest vendor with an 11.6% market share, followed by Palo Alto Networks (PANW - Free Report) at 5%.
Cloud Native Application Protection Platforms, provided by the likes of CrowdStrike (CRWD - Free Report) and Palo Alto Networks, witnessed the greatest year-over-year growth of 31.5%, followed by Identity and Access Management (IAM) at 21.4%.
IDC expects the global security market to witness double-digit growth over the next five years, with revenues hitting $200 billion in 2028. IAM is expected to be one of the fastest-growing segments, with CAGR expected in the teens or higher between 2024 and 2028 timeframe.
IAM’s growth prospect is robust, due to the growing need to offer secured remote access and heightened protection needed around ongoing digital transformation by enterprises. These factors bode well for Okta’s long-term prospects. It is protecting customers by blocking more than 2 billion security attacks a month, and expects these numbers to grow.
OKTA’s revenues are expected to witness a CAGR of 25% between fiscal 2022 and fiscal 2025. In fiscal 2023, the customer base increased 17.3% from fiscal 2022, while in fiscal 2024, clientele jumped 7.7% over fiscal 2023.
YTD Performance
Image Source: Zacks Investment Research
Product Capabilities Helping Okta Stock Win Market Share
Okta’s strong portfolio is helping it win market share in the cybersecurity domain against the likes of Microsoft, IBM and CyberArk.
Gartner, in its Magic Quadrant for Access Management 2023, recognized Okta as a Leader, putting it above Microsoft and IBM. Gartner recognized CyberArk as a challenger in its Magic Quadrant.
Okta’s expanding portfolio has been a key catalyst. Its Okta AI, a suite of AI-powered capabilities embedded across both Workforce Identity Cloud and Customer Identity Cloud, empowers organizations to harness the power of AI to build better experiences and protect against cyberattacks.
It also announced support for passkeys in early access as a password-less authentication method for Okta Customer Identity Cloud, powered by Auth0.
OKTA’s Fiscal 2025 View Strong
Okta’s innovative portfolio bodes well for its prospects.
For fiscal 2025, Okta expects revenues between $2.53 billion and $2.54 billion, indicating year-over-year growth of 12%. The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $2.53 billion, indicating year-over-year growth of 11.91%.
Okta, Inc. Price and Consensus
Okta, Inc. price-consensus-chart | Okta, Inc. Quote
OKTA expects fiscal 2025 non-GAAP earnings between $2.35 and $2.40 per share. The consensus mark for earnings is pegged at $2.41 per share, up 5.3% over the past 30 days.
OKTA’s balance sheet remains strong, with a net cash position of roughly $1.2 billion. The free cash flow margin is now expected to be 22% for fiscal 2025.
OKTA Stock Not so Cheap
However, Okta stock is not so cheap, as the Value Style Score of F suggests a stretched valuation at this moment.
In terms of the forward 12-month Price/Sales ratio, OKTA is trading at 5.93X, higher than its median of 5.75X and the Zacks Internet Software-Services industry’s 2.97X.
Price/Sales Ratio (F12M)
Image Source: Zacks Investment Research
Conclusion
Okta’s robust portfolio is helping it to expand its clientele. It benefits from positive industry trends, including growing demand for identity solutions. The company currently has a Growth Style Score of A, which is hard to ignore for growth-oriented investors despite its stretched valuation.
OKTA currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. However, investors who already own the stock may expect the company's growth prospects to be rewarding over the long term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.