Okta, Inc. (OKTA): what the price assumes

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/OKTA

Headline

Field	Value
Ticker	OKTA
Company	Okta, Inc.
Current price	$134.96/sh
Composition	United States 80% / International 20%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Must persist for	23.9y
Multiple paid	142x operating income

Solve inputs: computed at a 11.5% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~3.1 years.

Reconcile: at the x-ray's 9.3% required return this reads ~17.6 years; the models below use their own rates.

How unusual the bet is: elevated

Reference	Value
vs own history	-0.86σ
sustained it ~10 years at this level	15%
implied end-window share	1%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	11.73x	4	expensive
Earnings	4.09x	4	expensive
Relative	2.61x	5	expensive
Growth	0.98x	3	justifies

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.

Per-Model Detail (n=16)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$137.66	0.98x	yes	FCF base $1.0B, growth 12% (input: historical growth), terminal g 4.0%, WACC 9.2%, 6yr projection
DCF Exit Multiple	Growth	$155.69	0.87x	yes	Exit EV/EBITDA: 139.1x / 141.1x / 143.1x (bear / base = today's held flat / bull), 6yr
Relative Valuation	Relative	$68.85	1.96x	yes	P/E 53.63x (blended: static sector reference 35x + trailing (TTM) 97x), scenarios: 44.5x / 53.6x / 62.7x (bear / base = reference held flat / bull), EV/EBITDA 55x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$15.03	8.98x	yes	BV/sh $38.82, ROE (TTM) 3.6%, ke 9.3%
Two-Stage Excess Return	Asset	$9.32	14.48x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$123.81	1.09x	yes	Rev $3.0B, growth 12% (input: historical growth; tapered), Terminal P/S: 6.6x / 8.0x / 9.4x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$16.56	8.15x	yes	EPS $1.38, growth 1% (input: historical EPS growth), PEG=97.09 (Overvalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	—	—	no	—
Residual Income	Asset	$7.03	19.20x	yes	BV $38.82 + 5yr PV of (ROE (TTM) 3.6% − Kₑ 9.3%) × BV; BV grows 2.3%/yr
Graham Number	Asset	$34.72	3.89x	yes	√(22.5 × EPS $1.38 × BVPS $38.82) — Graham's conservative floor
EV/EBITDA Relative	Relative	$26.53	5.09x	yes	EBITDA $0.17B × sector EV/EBITDA 25.0x
FCF Yield	Earnings	$58.60	2.30x	yes	FCF $911.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$26.18	5.16x	yes	SBC-adj FCF $0.38B (FCF $0.91B − SBC $0.53B) capitalized at Kₑ
Ben Graham Formula	Earnings	$44.53	3.03x	yes	EPS $1.38 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	$3.55	38.02x	yes	BV $38.82 × (ROIC 0.8% / WACC 9.2%) (excluded from median)
P/Sales Sector	Relative	$134.88	1.00x	yes	Revenue $3.00B × sector P/S 8.0x
PEG Fair Value	Relative	$51.75	2.61x	yes	EPS $1.38 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings Yield	Earnings	$14.92	9.05x	yes	EPS $1.38 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net cash	$2.2b
Net debt / NOPAT (after-tax)	-14.22x (net cash)
Net debt / operating income (pre-tax)	-13.49x (net cash)
Interest coverage	41.5x
Share count CAGR (dilution)	3.3%
Burning cash	no

Bullet Takeaways

At $117.86, only the growth-DCF family of methods reaches the price. The asset, earnings-power and peer-multiple methods all land far below: asset-based values cluster near a tenth of the price, earnings-power roughly a third, peer multiples under half. The price is a bet on durable compounding the static frames cannot see.

The balance sheet is the steadiest part of the story. Okta holds about $2.59 billion in liquid assets against $350 million of gross debt, a net cash position near $2.24 billion, and interest coverage above 40x. Free cash flow now runs a fifth of revenue. Cash burn is not the question here.

The question is duration. To justify today's price the company would need to grow at its ceiling rate for more than twenty years. Subscription revenue grew 11% in the most recent quarter, down from the 30%-plus pace of a few years ago. The price assumes the deceleration stops well short of where the trend points.

Bull Case

Start with what management does with the cash, because it tells you how they read their own business. Okta carries roughly $2.24 billion in net cash and generates free cash flow near a fifth of revenue, yet pays no dividend and runs no large buyback against the float; share count is still drifting up about 3% a year. That combination, hoarding liquidity while the share base grows, reads as a company that still sees its best return inside the business: more sales capacity, more platform, more Auth0. Whether that judgment is right is the whole debate, but it is a reinvestment posture, not a wind-down.

The asset Okta is reinvesting behind is identity as connective tissue. The company describes the Auth0 platform as the way customers "securely and efficiently embed identity into the software they build, allowing them to innovate and focus on their core mission," and frames identity as becoming the central control point as cloud adoption, app sprawl and hybrid work expand (FY2025 10-K, accession 0001660134-25-000049). More than 19,650 customers across "nearly every industry," from the largest enterprises down to small businesses, universities and government agencies, ran on Okta as of the filing (same 10-K). Identity is a switching-cost business: once an organization wires its workforce and its customer logins through one provider, ripping it out is a project nobody volunteers for.

The recent quarter shows the model still works at scale. Q1 FY2027 revenue reached $765 million, up 11% year over year and about $13 million ahead of consensus, with remaining performance obligations up 16% and free cash flow of $271 million, a 35% margin for the quarter (Q1 FY2027 release, May 28 2026). Management guided full-year revenue to roughly $3.19 to $3.21 billion and a non-GAAP operating margin near 26%. The bull case does not need reacceleration. It needs the current double-digit growth, expanding margins and heavy cash conversion to persist long enough for profitability to catch up to the platform's reach.

Bear Case

The bear case starts with an advantage that is being chipped at from above. Okta's own filing names the threat plainly: competition comes "especially from larger, well-established companies, and we may lack sufficient financial or other resources to maintain or improve our competitive position" (FY2025 10-K, accession 0001660134-25-000049). The largest of those companies bundles identity into a productivity suite enterprises already pay for. When identity ships as a checkbox inside a larger contract, a standalone identity vendor has to keep proving it is worth a separate line item. The 10-K also concedes competitors vary widely "in the breadth and scope of the products and services offered" and that some let customers "build their own identity solutions," pressure from both ends of the market.

The numbers show where that pressure lands. Subscription growth has fallen from the 30%-plus range a few years ago to 11% in the latest quarter, and the FY2027 full-year guide of 9% to 10% implies the deceleration continues, with management flagging a roughly one-point headwind from shifting professional services to partners. Decelerating growth is not fatal on its own. It becomes the problem when the price still assumes the high-growth era never ended.

That is the core mispricing. To reach today's price the model has to extend growth at the ceiling rate for more than twenty years, and only the growth-DCF method clears the bar. Every static frame, asset value, earnings power, peer multiples, sits far below: the price is roughly ten times the asset-based estimate, three times earnings-power, and more than double a peer-multiple read. Trailing operating margin is about 5.5%, and even on management's non-GAAP framing the GAAP profit base is thin relative to the multiple. If growth settles into the high single digits the market will eventually price the company off its earnings, not its story, and the static frames are where that price lives.

Valuation

The valuation pattern is unusually one-sided. Across the model families, only the growth-DCF methods land at or above the price: DCF perpetual growth near $138 and DCF exit multiple near $140 sit just above $117.86 (June 27, 2026), while the discounted future market cap method lands near $108. Every other family is far below. The asset-based methods, simple and two-stage excess return, residual income and ROIC-justified book, cluster in single digits to the low teens. Earnings-power methods, earnings yield, SBC-adjusted FCF yield and Ben Graham, run from roughly $15 to $45. Peer multiples are mixed but mostly modest, with EV/EBITDA relative near $27 and relative valuation near $66, though a price-to-sales read reaches the high $130s on Okta's elevated revenue multiple.

Read as an X-ray, the price sits about ten times the asset-family central estimate, roughly three and a half times the earnings-power estimate, and a bit more than double the peer-multiple estimate. The growth family is the only one that reaches it. That is the signature of a name priced on duration rather than current economics: inverting the price implies more than twenty years of compounding at the ceiling growth rate before the cash flows justify the multiple.

The balance sheet underwrites the bet without resolving it. Net cash near $2.24 billion, interest coverage above 40x and free cash flow around a fifth of revenue mean Okta has time and optionality; there is no solvency pressure forcing a re-rate. What the cash does not do is shorten the duration the price requires. The reliability flag on the implied range is low precisely because the answer depends so heavily on how long double-digit growth holds, a variable the static methods cannot price and the growth method can only assume.

Catalysts

Okta reported Q1 FY2027 on May 28, 2026: revenue of $765 million, up 11% year over year and about $13 million ahead of consensus, with current RPO up 12%, total RPO up 16%, and free cash flow of $271 million (Q1 FY2027 release). The next print, Q2 FY2027, is the near-term catalyst: management guided to $790 to $794 million of revenue, about 9% growth, non-GAAP operating margin near 26% and non-GAAP EPS of $0.95 to $0.97 (8-K, FY2026).

The full-year FY2027 guide of $3.185 to $3.205 billion, 9% to 10% growth, carries an explicit roughly one-point headwind from shifting professional services to global systems integrator partners, so the optical growth rate understates underlying subscription momentum slightly (TIKR analysis). Watch three things into the next two quarters: whether cRPO growth holds in the low double digits, whether non-GAAP operating margin keeps expanding toward and past 26%, and whether net retention stabilizes. Any of those reaccelerating would support the duration the price assumes; continued deceleration toward high single digits would pull the market's attention toward the static valuation frames that all sit well below the current price.

Peer Cohorts (Per Segment, With Filing Citations)

Okta (consolidated) (reported)

• TENB (TENABLE HOLDINGS, INC.)
• FY2025 10-K: …0001660280 2025 FY FALSE P1Y P3Y P2Y P3Y iso4217:USD xbrli:shares iso4217:USD xbrli:shares tenb:reporting_unit tenb:segment xbrli:pure tenb:renewal_option iso4217:EUR 0001660280 2025-01-01 2025-12-31 0001660280 2025-06-30 0001660280 2026-02-20 0001660280 2025-12-31 0001660280 2024-12-31 0001660280 2024-01-01…
• FY2025 10-K: …One Exposure Management platform. We acquired 100 % of Vulcan's equity through a share purchase agreement for total cash consideration of $ 148.5 million, net of $ 2.3 million cash acquired. In June 2024, we acquired Eureka Security, Inc. ("Eureka"), a provider of data security posture management ("DSPM") for cloud…
• QLYS (QUALYS, INC.)
• FY2025 10-K: …scanner appliances and other computer equipment are included in cost of revenues. Sales taxes and other taxes collected from customers to be remitted to government authorities are excluded from revenues. 64 Table of Contents Incremental direct costs of obtaining a contract, which consist of sales commissions…
• FY2025 10-K: …in making strategic decisions on organizational resource allocation, as well as to benchmark segment performance against industry competitors. The CODM manages the business using consolidated expense information. The following table sets forth the Company's reported segment revenue, segment profit or loss, and…
• DT (Dynatrace, Inc.)
• FY2025 10-K: …would not have had a material impact on our consolidated financial statements. As of March 31, 2025, we also had the Credit Facility- in place, with availability of $399.2 million. The Credit Facility bears interest based on (i) the Term Secured Overnight Financing Rate plus 0.10%, (ii) the Adjusted Euro Interbank…
• FY2025 10-K: …generally accepted in the United States of America ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding financial reporting. All intercompany balances and transactions have been eliminated in the accompanying consolidated financial statements. Foreign currency…
• ESTC (Elastic N.V.)
• FY2025 10-K: …intangible assets and property and equipment, whether an arrangement is or contains a lease, discount rate used for operating leases, and valuation allowance for deferred income taxes. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that it believes are…
• FY2025 10-K: …a retrospective basis. The Company's adoption of this ASU did not have a material impact on its consolidated financial statements. New Accounting Pronouncements Not Yet Adopted Income Taxes: In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, requiring…
• NTNX (NUTANIX, INC.)
• FY2025 10-K: …were $179.8 million, of which $41.3 million is short-term. Non-cancelable operating leases include leases that have been executed, but not yet commenced. We lease offices, research and development facilities, and data centers under operating leases expiring through October 2030 and lease certain data center equipment…
• FY2025 10-K: …information required by this item is incorporated herein by reference to our 2025 Proxy Statement. Item 13. Certain Relationships and Related Transactions and Director Independence The information required by this item is incorporated herein by reference to our 2025 Proxy Statement. Item 14. Principal Accountant Fees…
• PCOR (Procore Technologies, Inc.)
• FY2025 10-K: …our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls related to the revenue recognition process, including controls over the revenue recognized. These procedures also included, among others (i) evaluating the revenue recognized on a test basis…
• FY2025 10-K: . Notes to Consolidated Financial Statements Subscription fees are generally due and payable upon receipt of invoice by the Company's customers or within 30 days of the stated billing date. The Company does not provide the customer with the right to take possession of its software products at any time. The Company…
• FRSH (Freshworks Inc.)
• FY2025 10-K: …net income (loss). Significant segment expenses reviewed by our CODM for our single operating segment comprise of stock-based compensation, amortization of acquired intangible assets, and other segment expenses. Other segment expenses utilize operating expenses recognized as research and development, selling and…
• FY2025 10-K: …and judgments that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue, costs and expenses and related disclosures during the applicable periods. We base our estimates, assumptions, and…
• DOCU (DOCUSIGN, INC.)
• FY2025 10-K: …income (loss), of stockholders' equity and of cash flows for each of the three years in the period ended January 31, 2025, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of January 31,…
• FY2025 10-K: TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 . Summary of Significant Accounting Policies Organization and Description of Business Docusign, Inc. ("we," "our" or "us") was incorporated in the State of Washington in April 2003. We merged with and into Docusign, Inc., a Delaware corporation, in March 2015. Docusign…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.