Business Overview
Okta, Inc. (OKTA) has established itself as the leading independent identity partner, providing cloud-based solutions that enable organizations to securely connect the right people to the right technologies and services at the right time. With a focus on innovation, strategic partnerships, and go-to-market execution, Okta has positioned itself for sustained growth in the rapidly evolving identity security market.
Okta was founded in 2009 and incorporated in 2010 as Saasure Inc. before reincorporating as Okta, Inc. in Delaware. The company started as a cloud-based identity management platform, providing secure access and authentication services for both employees and customers. In its early years, Okta faced challenges common to many SaaS startups, including building brand awareness, expanding its product suite, and scaling its sales and marketing efforts.
The company's core platforms, the Okta Platform and the Auth0 Platform, allow customers to manage and secure user identities across a wide range of cloud, mobile, web, and on-premises applications. In 2021, Okta made a major move with the acquisition of Auth0, a leading identity platform for developers. This expanded Okta's capabilities and reach, allowing it to better serve both workforce and customer identity use cases. The integration of the two platforms presented challenges as Okta worked to unify its go-to-market approach and product roadmap.
Okta's solutions are used by over 19,650 customers across nearly every industry, ranging from large enterprises to small and medium-sized businesses, universities, non-profits, and government agencies. The company has weathered cybersecurity incidents in the past, which impacted its reputation and financial results, but it remains focused on strengthening its security posture and product capabilities.
Okta's business model is subscription-based, with the company generating revenue primarily through the sale of multi-year subscriptions to its cloud-based offerings. The company's focus on retaining existing customers and expanding the value provided to them over time has resulted in a strong track record of growth and profitability. As of the latest fiscal year, Okta reported annual revenue of $2.61 billion, representing a 15% year-over-year increase, and achieved profitability with net income of $28 million.
Product Segments
Okta operates in two main product segments: the Okta Platform and the Auth0 Platform.
The Okta Platform simplifies how an organization's employees, contractors, and partners connect to its applications and data from any device, while increasing efficiency and security. It serves as the central system for an organization's connectivity, access, authentication, and identity lifecycle management needs. Key products within the Okta Platform include Access Management, Adaptive Multi-Factor Authentication, API Access Management, Access Gateway, Universal Directory, Lifecycle Management, Workflows, Identity Governance, and Privileged Access Management. In fiscal 2025, the Okta Platform generated approximately 98% of Okta's total revenue and served over 19,650 customers.
The Auth0 Platform enables companies, nonprofits, and governmental agencies to transform their own customers' or citizens' experiences by empowering development teams to rapidly and securely build customer- and citizen-facing cloud, mobile, or web applications. Key products within the Auth0 Platform include Universal Login, Attack Protection, Adaptive MFA, Passwordless, Machine to Machine, Private Cloud, Organizations, Actions and Extensibility, Enterprise Connections, and Fine Grained Authorization. In fiscal 2025, the Auth0 Platform generated the remaining 2% of Okta's total revenue.
Competitive Landscape and Market Opportunity
The identity security market is highly competitive, with Okta facing competition from both cloud-based and on-premises enterprise application software providers, as well as open-source solutions. However, Okta's technological neutrality, platform architecture, and focus on innovation have allowed the company to differentiate itself and maintain a strong market position.
The growing importance of identity as the foundation for modern security, coupled with the accelerating trends of cloud adoption and the proliferation of applications, have created a significant market opportunity for Okta. According to the company, the total addressable market for identity solutions is estimated to be over $80 billion, providing ample room for Okta to continue its growth trajectory.
The cybersecurity market as a whole is poised for significant growth, with a projected CAGR of 12.9% from 2025 to 2030 according to Grand View Research. This growth is driven by escalating cyber threats and the need for advanced security solutions as organizations increasingly adopt cloud, mobile, and remote work technologies.
Financial Performance and Guidance
Okta's financial performance has been strong, with the company reporting consistent revenue growth and improving profitability. In the fiscal year ended January 31, 2025, Okta's revenue grew 15% year-over-year to $2.61 billion, while the company achieved net income of $28 million, a significant improvement from the prior year's net loss of $355 million. The company also reported operating cash flow of $750 million and free cash flow of $730 million for the year.
For the most recent quarter ended January 31, 2025, Okta reported revenue of $682 million and net income of $23 million. The company's remaining performance obligations (RPO), a key metric that reflects future contracted revenue, grew 25% year-over-year to $4.21 billion as of the end of the latest fiscal year. This growth in RPO, coupled with Okta's strong customer retention and expansion rates, underscores the company's ability to generate sustainable and predictable revenue streams.
Okta's dollar-based net retention rate stood at 107% as of January 31, 2025, indicating strong customer loyalty and upsell opportunities. The company generated 21% of its revenue outside the United States in fiscal 2025, highlighting its global reach and potential for international expansion.
Looking ahead, Okta has provided guidance for the upcoming fiscal year 2026, forecasting total revenue growth of 9-10% and a non-GAAP operating margin of 25%. For the first quarter of fiscal 2026, the company expects revenue growth of 10%, current RPO growth of 12%, a non-GAAP operating margin of 25%, and a free cash flow margin of approximately 25%. The company's focus on continued product innovation, go-to-market execution, and strategic partnerships is expected to drive this growth and profitability.
Okta has consistently achieved the "rule of forty" (sum of revenue growth rate and free cash flow margin) every year since going public in 2017, demonstrating its ability to balance growth and profitability effectively.
Liquidity
Okta maintains a strong liquidity position, which provides the company with financial flexibility to invest in growth initiatives and weather potential economic uncertainties. As of January 31, 2025, the company reported $2.52 billion in cash, cash equivalents, and short-term investments. Okta's debt-to-equity ratio stood at 0.14, indicating a conservative capital structure. The company's current ratio and quick ratio were both 1.35, reflecting its ability to meet short-term obligations.
This robust liquidity position, combined with Okta's positive cash flow from operations, enables the company to fund its ongoing operations, pursue strategic acquisitions, and invest in research and development to maintain its competitive edge in the identity security market.
Risks and Challenges
While Okta has demonstrated impressive growth and a strong market position, the company faces several risks and challenges that investors should consider:
1. Intense competition: Okta competes with larger, well-established companies, as well as emerging startups, in the identity security market. Maintaining its competitive edge will require ongoing investment in product development and go-to-market strategies.
2. Macroeconomic conditions: Adverse economic conditions, such as inflation, rising interest rates, and geopolitical tensions, could impact Okta's customers' willingness to invest in identity solutions, potentially slowing the company's growth.
3. Cybersecurity threats: As a provider of identity and security solutions, Okta is a prime target for cyber threats. Any successful attacks or data breaches could harm the company's reputation and erode customer trust.
4. Integration and acquisition challenges: Okta has made strategic acquisitions, such as Auth0, to expand its capabilities. Effectively integrating these acquisitions and realizing the expected synergies will be crucial for the company's continued success.
5. Past incidents and legal challenges: In January 2022, Okta experienced a cybersecurity incident involving one of its third-party service providers, which harmed the company's reputation and customer relations, and adversely impacted its financial results. Additionally, in May 2022, a shareholder filed a securities class action lawsuit against Okta alleging false or misleading statements regarding the company's cybersecurity controls and the integration of its Auth0 acquisition. This lawsuit was later settled in May 2024 for $60 million.
6. Executive departures: Okta has faced some executive departures, including the retirement of Eugenio Pace, the co-founder of Auth0, in March 2025. Maintaining leadership stability and continuity will be important for the company's ongoing success.
Conclusion
Okta, Inc. has established itself as a leading provider of identity security solutions, capitalizing on the growing importance of identity management in the era of cloud computing and digital transformation. The company's strong financial performance, innovative product offerings, and strategic partnerships position it well for continued growth and market leadership. While Okta faces competitive and macroeconomic challenges, the company's focus on innovation, customer success, and disciplined execution have enabled it to navigate these obstacles and deliver value to its shareholders.
Okta's commitment to transforming itself into one of the most secure companies in the world and its efforts to reignite growth through strategic initiatives around its partner ecosystem, product innovation, and go-to-market specialization demonstrate its adaptability and forward-thinking approach. As the cybersecurity market continues to expand, Okta is well-positioned to capitalize on the growing demand for advanced identity and access management solutions across both workforce and customer identity segments.