Okta OKTA shares have appreciated 15.3% year to date (YTD), outperforming the broader Zacks Computer and Technology sector’s decline of 0.4% and the Zacks Security industry’s appreciation of 10.2%.

OKTA’s portfolio strength is noteworthy, with strong demand for new products like Okta Identity Governance and Okta Privileged Access amid a challenging macroeconomic environment. An expanding clientele, driven by the strong adoption of its Identity Threat Protection solution, is a key catalyst for growth-oriented investors.

Okta Beats Sector, Industry YTD

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OKTA’s innovative portfolio is expected to help win clients, driving top-line growth. It exited third-quarter fiscal 2025 with 19,450 customers and $2.062 billion in current remaining performance obligations, reflecting strong growth prospects for subscription revenues. Customers with more than $100 thousand in Annual Contract Value increased 8% year over year to 4,705. 

Okta AI — a suite of AI-powered capabilities embedded across both Workforce Identity Cloud and Customer Identity Cloud — empowers organizations to harness AI to build better experiences and protect against cyberattacks.

OKTA has increased the capability of its Auth0 Free Plan to include 25,000 monthly active users, as well as a passwordless feature, unlimited social and Okta connections, and custom domain support. Paid plans now include enterprise-grade identity security with multi-factor authentication, support for System for Cross-domain Identity Management, enhanced log retention and more.

Okta’s strong portfolio is helping it win market share in the cybersecurity domain against Microsoft MSFT, International Business Machines IBM and CyberArk CYBR.

Gartner has placed OKTA higher than Microsoft and CyberArk in all use cases on the Gartner Critical Capabilities for Access Management. Gartner also ranked Okta highest on its Magic Quadrant for Ability to Execute for the third straight year.

OKTA Benefits From Strong Demand for Identity Solutions

The plethora of security breaches worldwide has signified the growing importance of cybersecurity service providers like Okta. 

IDC expects the global security market to witness double-digit growth over the next five years, with revenues hitting $200 billion in 2028. Identity and Access Management (“IAM”), which Okta specializes in offering, is expected to be one of the fastest-growing segments, with a CAGR expected in the teens or higher between 2024 and 2028.

IAM’s growth prospect is robust due to the growing need to offer secured remote access and heightened protection around enterprises’ ongoing digital transformation. These factors bode well for Okta’s long-term prospects. 

OKTA is benefiting from strong demand for Okta Identity Governance, which represents roughly one-third of the contract value when sold in a workforce deal. New solutions like Okta Privileged Access, Device Access, Fine Grain Authorization, Identity Threat Protection and Identity Security Posture Management are gaining traction. Roughly 15% of third-quarter fiscal 2025 bookings were from new products.

Okta’s Q4 & FY25 View Strong

For fourth-quarter fiscal 2025, Okta expects revenues between $667 million and $669 million, indicating 10-11% year-over-year growth. It anticipates non-GAAP earnings between 73 cents and 74 cents per share.

For fiscal 2025, OKTA expects revenues between $2.595 billion and $2.597 billion (up from the previously mentioned $2.555-$2.565 billion), indicating 15% growth from that reported in fiscal 2024. 

Okta expects fiscal 2025 non-GAAP earnings between $2.75 and $2.76 per share (up from the previously stated $2.58-$2.63 per share). 

The free cash flow margin is expected to be 25% for fiscal 2025.

OKTA’s Earnings Estimate Revision Shows Upward Trend

For fiscal 2025, the Zacks Consensus Estimate for Okta’s earnings has increased by a penny to $2.77 per share over the past 60 days. The earnings figure suggests 73.13% growth over the figure reported in fiscal 2024.

The consensus mark for revenues is pegged at $2.60 billion, indicating 14.75% growth over the figure reported in fiscal 2024.

For fourth-quarter fiscal 2025, the Zacks Consensus Estimate for OKTA’s earnings has been unchanged at 73 cents per share over the past 30 days. The earnings figure suggests 15.87% year-over-year growth.

The consensus mark for revenues is pegged at $668.8 million, indicating 10.55% growth over the figure reported in the year-ago quarter.

Okta’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 19.87%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Here is Why Okta Stock is Buy

Okta is an attractive bet in the near term, given its strong growth prospect and large addressable market, which justify a premium valuation, as suggested by the Value Score of F. 

The stock is currently trading above the 50-day and 200-day moving averages, indicating a bullish trend.

OKTA Stock Trades Above 50-Day & 200-Day SMAs

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Okta currently flaunts a Zacks Rank #1 (Strong Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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