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Today, two megatrends that shape the entire IT landscape are at the heart of digital transformation: cybersecurity and digital identity management. Companies around the world are increasingly moving their processes to the cloud. Employees access sensitive data from different locations and devices. At the same time, the threat of cyberattacks is constantly growing.
In this environment, managing digital identities is becoming a key strategic task, as security is increasingly no longer starting at the network, but rather with the question of who has access to which systems. Okta (ISIN: US6792951054) has established itself in recent years as a leading provider of identity and access management solutions and is considered a key partner for companies that want to make their digital infrastructure secure and efficient. Okta offers companies of all sizes a platform that enables single sign-on, multi-factor authentication, and comprehensive identity management.
After initial IPO euphoria and a tenfold increase in the stock price, the big crash began in 2021. From its all-time high, the stock lost over 80 percent at its peak.
Source: Okta stock price
Okta continued to grow operationally, improving its profitability and key operating metrics. Today, Okta is a profitable and debt-free company with high free cash flows. Growth potential also remains intact. The valuation, on the other hand, is extremely attractive. However, the market is increasingly considered saturated, and Microsoft, one of Okta's biggest competitors, is seen as a serious threat.
Can Okta manage the balancing act between growth-oriented expansion, increased profitability, and market positioning? The following Okta stock analysis reveals more about the current business development, the latest quarterly figures, the outlook, the market position, analyst expectations, and, of course, the valuation of the stock.
Okta is a US company specializing in identity and access management (IAM). Put simply, Okta ensures that the right people have access to the right applications and data within a company – securely and conveniently.
Source: StocksGuide AI generated Insights
Okta operates a software-as-a-service model for this purpose, or more precisely, an identity-as-a-service model. The Okta Cloud is particularly well suited for large companies, with which multi-year subscription contracts are usually concluded. The big advantage of the Okta Cloud is that you can log in from anywhere on any device. This applies to internal employees as well as potential partners, customers, or suppliers.
The Okta Identity Cloud is compatible with almost all public clouds and private clouds. It functions like an additional protective shell around the actual cloud: for example, employees authenticate themselves via the Okta Identity Cloud and, once this has been successfully completed, have access to all information stored in various clouds for which they have access authorization. All of this takes place within the protected and secure Okta Cloud.
Once you have been identified by the secure Okta Cloud, you can access the content in the individual clouds within it. This is why the Okta Identity Cloud can be used as a central system across the entire company, ensuring connectivity, authentication, and access to all relevant data on almost all connected devices.
The Okta Identity Cloud also offers advantages for developers: they can use this cloud to develop online services and content for PCs and mobile devices. They can also select access rights based on location, identity, time, device, and other characteristics.
Finally, Okta also offers “platform services” designed to enable developers in particular to further develop their applications and create new uses. In addition, Okta acquired Auth0 in 2021. While Okta builds its cloud for a specific type of developer, the combination with Auth0 enables developers to be more innovative and reduce complexity in authentication. Five further acquisitions have followed since then. According to Tracxn, a total of nine companies have been purchased, with a focus on cybersecurity.
But how does Okta ensure security for individual users? This is mainly done with the “Universal Directory” product. Access rights administrators can use the cloud to control which identities are allowed access to which services. User profiles are then stored and managed in the cloud. Using lifecycle management, administrators can also determine how long certain identities have access and automatically delete them as soon as the permissions are no longer required.
Identification, in turn, is performed either via single sign-on or multi-factor authentication. This works by providing links that allow users to be identified beyond doubt.
In addition, Okta has numerous applications for linking its clouds to desktop or offline applications, or for connecting its clouds to those of partners, even if the two companies do not use a shared cloud.
Source: StocksGuide AI generated Insights
One of Okta's biggest competitors is Microsoft with its product “Entra ID,” formerly known as “Azure Active Directory.” This solution is deeply embedded in the Microsoft world and offers particularly easy integration for companies that already use Office 365, Teams, or Windows. Many companies therefore opt for Entra ID because they are already heavily dependent on Microsoft. Entra ID offers reliable security and good management options, but is less flexible if a company uses many applications outside the Microsoft ecosystem.
Another important provider is Ping Identity. The company was acquired by investor Thoma Bravo in 2022 and primarily targets large organizations that use both traditional IT systems in their own data centers and modern cloud services. Ping Identity is considered to be very mature and customizable from a technical standpoint, which is particularly advantageous for complex environments with many different requirements. However, setup and administration can be somewhat more complex and expensive than with simpler cloud services such as Okta.
CyberArk differs slightly from Okta in its focus. While Okta covers general access for employees and customers, CyberArk specializes in so-called “privileged accounts,” i.e., particularly sensitive user accounts such as administrators or system services that have extensive rights. CyberArk offers a very high level of protection and control for this, but is less geared toward everyday access for normal users.
OneLogin, on the other hand, is a direct competitor of Okta at a similar level. This platform also offers features such as single sign-on, multi-factor authentication, and centralized user management. OneLogin places great emphasis on ease of use and a clear design. This makes it particularly popular with medium-sized companies looking for a modern but not overly complex solution. Compared to Okta, however, OneLogin offers slightly less specialized features for very large or highly regulated organizations.
Finally, there are providers such as IBM Security, which offer comprehensive security solutions for large enterprises. IBM integrates identity management as part of a broader portfolio that also covers data protection, governance, and threat detection. While these systems are extremely powerful, they are often complex to implement and manage. They are particularly suitable for large corporations or government agencies that must meet the highest security standards.
The market for identity and access management has become increasingly important in recent years. More and more companies are working in the cloud and using mobile devices and networked applications. This creates the challenge of securely controlling access to data and systems. In the past, security was often a question of network boundaries. Anyone who was on the company network was considered trustworthy. Today, these boundaries are blurring and identity is becoming the new basis for security. This development has led to strong growth in the IAM market – and thus also to the importance of providers such as Okta.
The global market for identity and access management is now estimated at more than $20 billion and continues to grow rapidly – at an annual rate of 13% over the next decade, according to Kings Research. The reasons for this are the increasing use of cloud services, stricter data protection laws, remote working, and the growing demand for zero-trust security models. Companies must ensure that every user clearly identifies themselves before accessing data, regardless of where they work from. This is precisely what Okta and its competitors offer specialized solutions for.
Okta has had a significant impact on this market in recent years and is still considered the market leader with an estimated market share of over 40 percent. The company was an early adopter of a fully cloud-based platform that can be easily integrated into other applications. This has made it one of the best-known providers in the field of modern identity management. While traditional security solutions were often limited to internal networks, Okta pursued a new approach: identity as the central key for all applications – in the cloud, on mobile devices, and in the office. According to analysts, the growth story could continue. And the latest figures confirm this.
Okta once again posted solid results in the second quarter of fiscal year 2026. The company is thus demonstrating that it continues to grow at double-digit rates and is becoming more profitable. Specifically, revenue in the second quarter of 2026 rose by 13 percent to $728 million, while net income increased by 131 percent to $67 million. Compared to the previous quarter, this represents a slight increase in momentum.
Source: Financial data
Revenue growth thus remained at a healthy level, driven by continued strong demand for identity and security solutions. Business was particularly strong in the public sector and among large international companies, which are increasingly turning to the independent provider Okta. The integration of the Auth0 platform, acquired in 2021, also continues to contribute significantly to growth. The development of remaining performance obligations (RPOs) – i.e., revenue that has already been contractually committed but not yet realized – shows that Okta has a well-filled order book, with an increase of 18 percent to $4.2 billion. However, momentum slowed slightly here. In the previous quarter, RPOs grew by 21 percent.
On the other hand, a particularly positive sign is that Okta was able to significantly improve its profitability. The company achieved significant profits both at the operating level and in its GAAP results – a clear improvement over the losses of previous years. Operating cash flow and free cash flow also rose significantly, indicating a healthy liquidity position and better cost and expenditure control. Specifically, free cash flow for the quarter amounted to $162 million, which is almost 1.5 times net income.
Source: StocksGuide Charts
Okta has traditionally had strong cash flow that significantly exceeds investments. However, high stock-based compensation regularly weighed on earnings. Since 2024, however, this has been significantly reduced, while the number of outstanding shares has continued to increase. Cash holdings have reached record levels.
Despite a deteriorating economic environment, Okta is cautiously optimistic about the coming quarters. The company continues to take a cautious approach to its forecast, taking into account in particular the ongoing transition of its sales model. This specialization of the sales organization, introduced in the first quarter of the current fiscal year, is expected to lead to better market coverage and more efficient customer acquisition in the long term, but will result in somewhat subdued growth momentum in the short term.
Now to the specific figures: For the full year 2026, Okta expects moderate revenue growth in the low double-digit percentage range (10 to 11 percent). Management expects demand in its core areas – particularly in the cloud and security segment – to remain stable. It will therefore be lower than in previous years. This is due to saturation trends and increased competitive pressure.
The order backlog remains at a high level, which indicates sustained customer demand and recurring revenues. The adjusted free cash flow margin is expected to be 28 percent. This could generate over $800 million in freely available cash. The long-term outlook also remains positive, as the chart below shows.
Source: Sales and Margin forecast
Current analyst estimates show that Okta is likely to continue growing steadily in the coming years and also become significantly more profitable. While revenue growth has been in double digits in recent years, most market observers expect a gradual slowdown in momentum in the future, albeit at a solid level. Revenue is expected to increase from around US$2.6 billion in fiscal year 2025 to around US$5.3 billion by 2033. This corresponds to an average annual growth rate of around 9 percent.
Source: Revenue Estimates
The expected jump in profitability is particularly striking. After Okta generated little or no GAAP profits in recent years, analysts expect net profits to rise significantly from 2026 onwards. This is expected to rise from around $28 million in 2025 to more than $600 million in 2026 and to more than quintuple to over $1.5 billion by 2033. This sharp increase reflects the company's increasing operational efficiency and cost discipline, which has already become apparent in recent quarters. However, the sharp decline in share-based compensation is also contributing to this. Furthermore, the net margin, i.e., the percentage of profit relative to revenue, is also expected to improve significantly. While it will still be around one percent in 2025, analysts expect values of 21 to 22 percent by 2030 and, from 2032 onwards, an increase in the margin to almost 28 percent. This could enable Okta to achieve a level of profitability in the long term that is comparable to that of other established software companies.
Source: StocksGuide
The current High-Growth Investing Analysis (HGI) rates Okta as a strong growth company overall. However, recent revenue growth of 12 percent based on the last twelve months shows that it is no longer a classic high-growth investment. Nevertheless, there are several key figures in the analysis that are convincing. The HGI analysis is based on a possible 18 points, of which Okta achieves 13—a solid result that places the company in the category of top scorers.
Source: HGI analysis
A look at the individual key figures shows why Okta is so impressive in this regard: the gross margin is almost 77 percent, which is attributable to the profitable software model and high scalability. The debt ratio is also very low at 0.13. In the last quarter, the balance sheet showed $2.9 billion in cash and short-term investments.
Source: Okta blance sheet
The Rule of 40 score, which combines revenue growth and profitability, is 43 percent. Although there is still room for improvement here, this is a good result. The situation is different when it comes to current revenue growth. It stands at 12.7 percent, down from 15.3 percent in the previous fiscal year 2025 and significantly higher growth rates in previous years. This reflects the transition from a very rapid growth phase to a more stable and profitable business model. However, it also shows that the days of organic growth are over. It should also be noted that growth is now being supported by inorganic factors.
The PEG ratio (price/earnings-to-growth) is also attractive at 0.7, making the stock appear undervalued in relation to growth and expected earnings. The stock also appears inexpensive when measured by revenue, with a multiplier (EV/sales) of 4.6.
As we learned in the previous chapter, Okta is only moderately valued with an EV/sales ratio of 4.6. This also applies in comparison to many other software companies. Looking at the ratio of enterprise value to free cash flow, this is only 15.3.
Source: Key metrics
Looking at the expected double-digit sales growth for the coming year, this could be a bargain valuation. The valuation is also low from a historical perspective.
Source: EV Sales vs. Revenue Growth
But it's not that simple. One key reason for the low valuation is the current market environment for technology and growth stocks. Higher interest rates and an overall uncertain economic situation have led investors to demand higher returns for risk. This is putting pressure on the valuations of even strong software companies, as investors are less willing to pay high multiples for future growth. Another key factor for the lower valuation level, however, is the slowdown in revenue growth. While Okta has achieved annual growth rates of over 20 to 40 percent in the past, growth of only around 10 percent is expected for the coming years. From 2027 onwards, growth could even be in the single digits. Ultimately, this decline is causing many investors to take a more cautious view of the stock. In addition, Okta continues to invest heavily in internationalization, product development, and a specialized sales structure. Investments increase operating costs and have a short-term impact on profitability, even if they could lead to higher margins and stronger cash flow in the long term. Last but not least, macroeconomic uncertainties and the competitive landscape also play a role. At the same time, the market sees Okta competing with large and established providers such as Microsoft, Ping Identity, and IBM. Microsoft in particular has already made many up-and-coming competitors obsolete in the past.
Okta stands at the intersection of two clear megatrends: digitalization and the growing need for cybersecurity and identity management. The company has a strong market position, benefits from growing demand for cloud solutions, and at the same time is recording solid revenue growth, rising profitability, and robust cash flow. Despite these positive fundamentals, the stock is currently trading at a relatively low price. This is mainly due to moderate growth, ongoing investments, and macroeconomic uncertainties. Added to this is the risk that a large tech company could render Okta's products obsolete with its own solution.
Source: Okta target price
The majority of analysts rate Okta positively and issue a clear buy recommendation. Of the 43 assessments analyzed, 67 percent recommend buying the stock, 29 percent recommend holding, and only four percent recommend selling. The average price target is $122.40. Based on the current stock price of $83.94, this corresponds to a price potential of around 46 percent – a very high figure that should be viewed with skepticism. Anyone who finds the stock exciting can set a price alert at a price of $70 to take another look at the stock.
The author and/or persons or companies associated with StocksGuide own or may own shares of Okta. This article represents an expression of opinion and does not constitute investment advice. Please note the legal information.