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OKTA Rides on Strong Subscription Revenue Growth: More Upside Ahead?
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Key Takeaways
OKTA subscription revenues rise 11% to $750M as total revenues grows 11% to $765M with 20K customers.
Large enterprises drive OKTA growth as 85% of ACV, up from 80%, with 100K ACV customers up 6% YoY.
New OKTA products drive ~25% of bookings, led by Identity Governance and Privileged Access strength.
Okta (OKTA - Free Report) 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 Space
In the security domain, Okta is facing stiff competition from the likes of SentinelOne (S - Free Report) and Palo Alto Networks (PANW - Free Report) .
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 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 Performance
Image Source: Zacks Investment Research
The 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 Valuation
Image Source: Zacks Investment Research
The 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.
View the Zacks #1 Rank List
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OKTA Rides on Strong Subscription Revenue Growth: More Upside Ahead?
Key Takeaways
Okta (OKTA - Free Report) 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 Space
In the security domain, Okta is facing stiff competition from the likes of SentinelOne (S - Free Report) and Palo Alto Networks (PANW - Free Report) .
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 & Estimates
Okta 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 Performance
Image Source: Zacks Investment Research
The 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 Valuation
Image Source: Zacks Investment Research
The 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. Quote
Okta currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.