It’s definitely not a good time to be a software company, even if you answer to the name Okta (OKTA). As the “Sasscopalypse” unfolds and continues to hit software stocks, the cloud-native identity security company is set to report its results for Q4 2025 on Wednesday, after the market closes.
Founded in 2009 by two former Salesforce ( CRM ) employees, Okta’s core business is identity and access management (IAM) software delivered through the cloud. The company’s platform includes single sign-on (SSO), multi-factor authentication (MFA), API access management, universal directory, lifecycle management, identity governance, privileged access management, and other security tools that help organizations authenticate and secure human and non-human identities in hybrid IT environments.
With a market value of $12.8 billion, OKTA is down 18.6% in 2026 and 19.3% over the past year.
However, a closer look at the company will reveal that such a long decline is definitely not warranted.
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Okta’s results for Q3 2026 were stellar, with both revenue and earnings estimates and key operating metrics seeing significant growth over the prior year.
Total revenues increased 11.6% year-over-year to $742 million, with core subscriptions growing 11.2% year-over-year (YoY) to $724 million. Earnings rose an even 22.4% to $0.82 per share over the same period, beating the consensus estimate of $0.76. Impressively, this was not only the ninth consecutive quarter of beating estimates but also the company’s annual revenue growth.
Outstanding performance obligations, a key indicator of demand, rose 17% year-over-year to $4.3 billion, while cRPO, which is the amount of orders that must be fulfilled within 12 months, rose 13% year-over-year to $2.3 billion. Thus, there are broader concerns about the software stock, but demand for Okta’s products and services remains strong.
In terms of cash flows, net cash flow from operating activities increased 35% to $626 million for the nine months ended October 31, 2025 compared to last year. Overall, the company closed the quarter with a cash balance of $645 million, with no short-term debt on its books.
For Q4, Okta expects revenue to be between $748 and $750 million, which would indicate a midpoint increase of 9.8% year over year. Meanwhile, earnings are expected to be in the range of $0.84 to $0.85 per share. At the midpoint, it will show a growth of 34.2%, which is higher than Q3 2025. Finally, the expectation for CRPO is between $2.445 billion and $2.450 billion, with the midpoint showing growth on an annualized basis of 8.9%.
However, unlike others in its industry, Okta is trading at a reasonable level when compared to its peers. While the forward P/E and P/CF of 21.07 and 15.39 are below the sector medians of 22.01 and 16.99, respectively, the forward P/S of 4.42 is just above the sector median of 3.12.
Okta is looking to be a force in the world of AI agents, and its strategic vision for growth is written into it.
Okta used its recent “Octane” conference to present an overview of what it calls “Agent Identity Security.” The company argues that AI agents and non-human identity (NHI) are quickly becoming the next big frontier in identity and access management. Essentially, every AI application, autonomous agent, or automated workflow that touches a company’s systems needs its own identity, authentication, and tightly controlled permissions, just like a human employee or contractor. As organizations develop AI assistants, bots and background processes, managing these non-human actors becomes an urgent priority. Okta sees this as a natural extension of its identity security business.
To address this trend, Okta has introduced two new offerings. While Auth0 for AI Agents is aimed at developers embedding AI into customer-facing applications, Okta for AI Agents targets IT and security teams responsible for internal AI tools and workflows. Both build directly on the company’s existing platform, allowing organizations to register, verify and manage machine identities with the same rigor that applies to human users. The move positions Okta to capture demand as AI adoption accelerates and companies look for sustainable, scalable ways to control non-human access without building new silos.
Notably, Okta’s competitive edge is built on its ability to seamlessly integrate into thousands of disparate applications and multi-cloud environments, unlike hyperscalers like Microsoft ( MSFT ) . This platform-agnostic approach is increasingly valuable as enterprises move away from vendor lock-in. Additionally, the company has successfully moved into the developer space through its Auth0 acquisition, creating a higher barrier to entry by not only securing the workforce but also securing the client-facing applications themselves. By offering a unified identity cloud, Okta reduces the complexity of managing fragmented digital identities, which typically results in better customer retention and higher lifetime value than more specialized or rigid competitors.
However, the company faces a complex set of headwinds that keep investors cautious. The most immediate challenge is the persistent threat landscape; Recent reports of sophisticated “vishing” (voice phishing) campaigns targeting SSO providers remind the market that identity platforms are the ultimate prize for hackers. While Okta’s core infrastructure remains resilient, any perceived breach could lead to reputational crashes and long sales cycles. Additionally, competitive pressure from Microsoft Intra ID remains intense, especially among cost-conscious enterprises that have already invested heavily in the Microsoft 365 ecosystem.
Overall, analysts remain cautiously optimistic about OKTA stock, giving it a consensus rating of “moderate buy.” The average target price of $107.94 indicates a potential upside of about 51% from current levels. Of the 41 analysts covering the stock, 26 have a “Strong Buy” rating, two have a “Strong Buy” rating, 11 have a “Hold” rating, one has a “Moderate Sell” rating, and one has a “Strong Sell” rating.
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As of the date of publication, Pathikrit Bose did not have any positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
