OKTA Rides on New Solutions: Is the Growth Rate Sustainable?

Okta OKTA is riding on strong demand for its new solutions, including Okta Identity Governance (OIG), Okta Privileged Access (OPA), Okta Device Access, Identity Security Posture Management (ISPM), Identity Threat Protection (ITP) with Okta AI and Fine-Grained Authorization. These new solutions are helping OKTA gain market share and drive top-line growth. 

In the second quarter of 2025, total revenues increased 12.7% year over year to $728 million and surpassed the consensus mark by 2.37%. 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. 

Okta is providing an end-to-end secure identity fabric for securing non-human identities (NHIs). OKTA offers the same level of visibility, access control, governance and remediation as human identities to NHIs. Okta offers the ability to detect and discover NHIs, provision and register them properly, authorize and protect them with appropriate policies, and govern and monitor their behavior continuously.

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 faces stiff competition from 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 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.

Palo Alto Networks is benefiting from strong growth in its Next-Generation Security (NGS) business. The company’s NGS annual recurring revenue (ARR) grew 32% year over year to $5.58 billion. Palo Alto Networks added about $490 million in new NGS ARR during the quarter. In the fourth quarter, AI-related ARR climbed to $545 million, more than 2.5 times higher than a year ago. This was helped by the launch of new products, such as Prisma AIRS and the acquisition of Protect AI, both aimed at securing AI apps, models, and data.

OKTA’s Share Price Performance, Valuation & Estimates

Okta shares have appreciated 17.7% year to date, outperforming the broader Zacks Computer and Technology sector’s return of 12.9% and the Zacks Security industry’s appreciation of 10.2%.

OKTA Stock’s Performance

Image Source: Zacks Investment Research

The Okta stock is overvalued as suggested by a Value Score of D.

The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $3.36 per share, up by 2.1% over the past 30 days, suggesting 19.6% growth from fiscal 2024’s reported figure.
 

Okta currently carries a Zacks Rank #4 (Sell). 

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

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