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OKTA's Strong Backlog and AI Opportunity Drive Growth: What's Ahead?
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Key Takeaways
Okta grew RPO 16% to $4.72B and increased revenues 11% to $765M in fiscal Q1.
OKTA sees strong AI identity demand as enterprises seek governance and security for AI agents.
Okta is driving cross-sell opportunities as AI customers adopt broader identity and access products.
OKTA (OKTA - Free Report) reported a strong first-quarter fiscal 2027 performance, with its growth story increasingly anchored in two key drivers: a strengthening backlog and an expanding artificial intelligence (AI) identity opportunity. Together, these factors are shaping both near-term visibility and long-term growth expectations.
A key highlight from the first quarter of fiscal 2027 was robust backlog expansion. Remaining Performance Obligations (“RPO”) rose 16% year over year to $4.72 billion, while current RPO (cRPO), reflecting revenues expected over the next 12 months, increased 12%. This growth signals strong enterprise demand and provides high visibility into future subscription revenues. Combined with 11% year-over-year revenue growth to $765 million and subscription revenues of $750 million, up 11% year over year, the backlog trend reinforces the durability of Okta’s core identity business.
AI is emerging as a transformational growth lever. Management emphasized that AI agents are rapidly becoming a new category of enterprise identity, requiring governance, authentication and lifecycle control. Okta’s “AI for agents” and Auth0 AI solutions are positioned to secure this emerging layer by treating AI agents as first-class identities. Although still in the early stages of monetization, AI-related pipeline activity is described as the strongest ever for a new product cycle, indicating significant future upside.
AI is also acting as a catalyst for Okta’s broader platform. Customers adopting AI governance solutions are increasingly expanding into identity governance, privileged access and workforce identity products, creating meaningful cross-sell opportunities. This platform pull-through is strengthening Okta’s role as a unified identity control layer across enterprises.
The outlook for Okta is supported by growing AI adoption, broader enterprise use and the steady conversion of backlog into revenues. AI is still at an early stage, but demand is rising, deal sizes are increasing and customer interest is growing. Okta is expected to see stronger subscription growth and benefit from a new wave of AI-driven identity security, which may expand its long-term market opportunity. For the second quarter of fiscal 2027, the company expects revenues between $790 million and $794 million, suggesting year-over-year growth of 9%, and current RPO in the range of $2.505 billion to $2.515 billion, representing year-over-year growth 11%.
Okta Faces Rising Pressure in IAM Space
Okta is facing significant competition from Microsoft (MSFT - Free Report) and SailPoint (SAIL - Free Report) in the identity and access management (IAM) domain.
Microsoft continues to strengthen its enterprise identity and governance capabilities through Agent 365, a control plane that extends existing governance, identity, security and management frameworks to AI agents. The company disclosed that thousands of organizations are already managing millions of agents through Agent 365. As enterprises increasingly deploy AI agents across workflows, Microsoft expects demand for identity, governance and security tools to grow significantly. Combined with its broader AI, cloud and productivity ecosystem, this positions Microsoft to play a central role in securing and managing the emerging agentic computing environment.
Okta faces increasing competitive pressure in the Identity and Access Management (“IAM”) market from SailPoint’s expanding identity security platform. During its fourth quarter of fiscal 2026, SailPoint highlighted its leadership in adaptive identity security, supported by more than $1.1 billion in ARR and 38% SaaS ARR growth. The company believes the rise of AI agents and non-human identities is creating a major market expansion opportunity that traditional identity solutions may struggle to address. SailPoint’s AI Security, Machine Identity Security and Data Access Security offerings are gaining traction, with more than 500 innovation-related deals closed. Its deep governance capabilities, extensive entitlement-level integrations and growing focus on real-time identity intelligence position SailPoint as a strong challenger in the evolving IAM landscape.
OKTA’s Price Performance, Valuation & Estimates
Shares of Okta have appreciated 35.2% year to date compared with the Zacks Security industry’s return of 39.7%.
OKTA's YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation perspective, Okta, trading at a forward Price/Cash Flow ratio of 22.57, is slightly higher than the broader Zacks Computer and Technology sector’s 22.22X. 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 2027 earnings is pegged at 96 cents per share, up 1 cent over the past 30 days, indicating 5.49% year-over-year growth.
The consensus mark for fiscal 2027 earnings is pegged at $3.83 per share, up 4 cents over the past 30 days. The earnings figure suggests 9.43% growth over the figure reported in fiscal 2026.
View the Zacks #1 Rank List
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OKTA's Strong Backlog and AI Opportunity Drive Growth: What's Ahead?
Key Takeaways
OKTA (OKTA - Free Report) reported a strong first-quarter fiscal 2027 performance, with its growth story increasingly anchored in two key drivers: a strengthening backlog and an expanding artificial intelligence (AI) identity opportunity. Together, these factors are shaping both near-term visibility and long-term growth expectations.
A key highlight from the first quarter of fiscal 2027 was robust backlog expansion. Remaining Performance Obligations (“RPO”) rose 16% year over year to $4.72 billion, while current RPO (cRPO), reflecting revenues expected over the next 12 months, increased 12%. This growth signals strong enterprise demand and provides high visibility into future subscription revenues. Combined with 11% year-over-year revenue growth to $765 million and subscription revenues of $750 million, up 11% year over year, the backlog trend reinforces the durability of Okta’s core identity business.
AI is emerging as a transformational growth lever. Management emphasized that AI agents are rapidly becoming a new category of enterprise identity, requiring governance, authentication and lifecycle control. Okta’s “AI for agents” and Auth0 AI solutions are positioned to secure this emerging layer by treating AI agents as first-class identities. Although still in the early stages of monetization, AI-related pipeline activity is described as the strongest ever for a new product cycle, indicating significant future upside.
AI is also acting as a catalyst for Okta’s broader platform. Customers adopting AI governance solutions are increasingly expanding into identity governance, privileged access and workforce identity products, creating meaningful cross-sell opportunities. This platform pull-through is strengthening Okta’s role as a unified identity control layer across enterprises.
The outlook for Okta is supported by growing AI adoption, broader enterprise use and the steady conversion of backlog into revenues. AI is still at an early stage, but demand is rising, deal sizes are increasing and customer interest is growing. Okta is expected to see stronger subscription growth and benefit from a new wave of AI-driven identity security, which may expand its long-term market opportunity. For the second quarter of fiscal 2027, the company expects revenues between $790 million and $794 million, suggesting year-over-year growth of 9%, and current RPO in the range of $2.505 billion to $2.515 billion, representing year-over-year growth 11%.
Okta Faces Rising Pressure in IAM Space
Okta is facing significant competition from Microsoft (MSFT - Free Report) and SailPoint (SAIL - Free Report) in the identity and access management (IAM) domain.
Microsoft continues to strengthen its enterprise identity and governance capabilities through Agent 365, a control plane that extends existing governance, identity, security and management frameworks to AI agents. The company disclosed that thousands of organizations are already managing millions of agents through Agent 365. As enterprises increasingly deploy AI agents across workflows, Microsoft expects demand for identity, governance and security tools to grow significantly. Combined with its broader AI, cloud and productivity ecosystem, this positions Microsoft to play a central role in securing and managing the emerging agentic computing environment.
Okta faces increasing competitive pressure in the Identity and Access Management (“IAM”) market from SailPoint’s expanding identity security platform. During its fourth quarter of fiscal 2026, SailPoint highlighted its leadership in adaptive identity security, supported by more than $1.1 billion in ARR and 38% SaaS ARR growth. The company believes the rise of AI agents and non-human identities is creating a major market expansion opportunity that traditional identity solutions may struggle to address. SailPoint’s AI Security, Machine Identity Security and Data Access Security offerings are gaining traction, with more than 500 innovation-related deals closed. Its deep governance capabilities, extensive entitlement-level integrations and growing focus on real-time identity intelligence position SailPoint as a strong challenger in the evolving IAM landscape.
OKTA’s Price Performance, Valuation & Estimates
Shares of Okta have appreciated 35.2% year to date compared with the Zacks Security industry’s return of 39.7%.
OKTA's YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation perspective, Okta, trading at a forward Price/Cash Flow ratio of 22.57, is slightly higher than the broader Zacks Computer and Technology sector’s 22.22X. 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 2027 earnings is pegged at 96 cents per share, up 1 cent over the past 30 days, indicating 5.49% year-over-year growth.
The consensus mark for fiscal 2027 earnings is pegged at $3.83 per share, up 4 cents over the past 30 days. The earnings figure suggests 9.43% growth over the figure reported in fiscal 2026.
Okta, Inc. Price and Consensus
Okta, Inc. price-consensus-chart | Okta, Inc. Quote
OKTA stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.