Okta Rides on Strong Subscription Revenue Growth: More Upside Ahead?

Okta’s OKTA fourth-quarter fiscal 2026 subscription revenues increased 11.5% year over year and accounted for 98.2% of total revenues. The company is benefiting from an expanding portfolio. New offerings, including Okta Identity Governance, Okta Privileged Access, Okta Device Access, Identity Security Posture Management, Identity Threat Protection with Okta AI, Fine-Grained Authorization, Auth0 for AI Agents and Okta for AI Agents, have been gaining strong traction. These new products contributed roughly 30% of fiscal fourth-quarter bookings, highlighting rising demand for advanced identity security capabilities.

A key indicator of portfolio strength is higher deal value. Transactions that include these newer products generate approximately 40% higher contract value, reflecting increased cross-selling and platform adoption. This trend suggests that customers are increasingly adopting Okta as a comprehensive identity platform rather than a point solution. Okta reported nearly $1.3 billion in total contract value (TCV) in the fiscal fourth quarter and surpassed $3 billion in annual contract value (ACV), underscoring strong demand from large customers. These enterprises typically deploy multiple products under multi-year agreements, improving subscription revenue visibility and supporting long-term growth stability.

OKTA’s expanding partner base has been a key catalyst. In the fourth quarter of fiscal 2026, Channel partners were engaged in 18 of the top 20 deals. TCV through AWS grew more than 45% in fiscal 2026 to roughly $750 million. Expanding channel partners, along with Okta’s investments in developing go-to-market teams and product innovation, remain key catalysts. The company expects revenues to grow at 9% in fiscal 2027, reflecting its decision to shift more professional services business to partners. OKTA’s investments are expected to drive subscription revenues in fiscal 2027.

OKTA Faces Tough Competition in the Security Space

In the security domain, Okta is facing stiff competition from the likes of 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, which leverages a unified security data lake and Purple AI, its Generative AI (GenAI) engine. Singularity, a complete AI-native platform, benefits from SentinelOne’s AI and automation-driven approach.

Palo Alto Networks’ wide range of innovative products, strong customer base and growing opportunities in areas like Zero Trust, Secure Access Service Edge (“SASE”) and private 5G security continue to support its long-term growth potential. In the second quarter of fiscal 2026, SASE was Palo Alto Networks’ fastest-growing segment, with SASE annual recurring revenues increasing 40% year over year.

OKTA’s Share Price Performance, Valuation & Estimates

Okta shares have appreciated 7.3% in the past month, outperforming the broader Zacks Computer and Technology sector, which declined 3.5%, and the Zacks Security industry’s 0.1% growth.

OKTA Stock’s Price Performance

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The Okta stock is currently undervalued, as suggested by a Value Score of D. In terms of forward 12-month price/sales, Okta shares were trading at 4.36X higher than SentinelOne’s 3.70X but lower than Palo Alto Networks’ 10.13X.

OKTA vs. SentinelOne Valuation

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OKTA vs. PANW Valuation

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $3.77 per share, up 2.4% over the past 30 days, suggesting 7.7% growth from the fiscal 2025 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.

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

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