We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Okta's Subscription Revenues Accelerate: Which Factors Are Driving it?
Read MoreHide Full Article
Key Takeaways
OKTA's subscription revenues rose 12% Y/Y to $673M, now making up 98% of the total Q1 revenues.
New modules like Identity Governance and Privileged Access drove 15% of new bookings in the quarter.
Customers with above $1M in ACV grew 20% Y/Y, aided by a reorganized, segment-focused sales team.
Okta’s (OKTA - Free Report) 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 - Free Report) 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 - Free Report) 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: Bigstock
Okta's Subscription Revenues Accelerate: Which Factors Are Driving it?
Key Takeaways
Okta’s (OKTA - Free Report) 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 - Free Report) 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 - Free Report) 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.