Intrinsic Value Okta, Inc. (0KB7.L)

• Previous Close: £85.51
• Intrinsic Value: £70.95
• Upside potential: -17%

Stock Valuation Context

Business Model And Market Position

Okta, Inc. operates in the identity and access management (IAM) sector, providing cloud-based solutions that enable secure and seamless user authentication across enterprises, SMBs, and government agencies. Its flagship Okta Identity Cloud platform includes critical functionalities like Single Sign-On, Adaptive Multi-Factor Authentication, and Lifecycle Management, which streamline access while enhancing security. The company also integrates Auth0’s developer-centric authentication tools, broadening its appeal to technical users. Okta’s direct and channel-driven sales model ensures scalability across diverse industries, reinforcing its leadership in a competitive IAM market dominated by legacy players and emerging innovators. The company’s focus on hybrid and multi-cloud environments positions it well amid increasing enterprise digital transformation. With a strong emphasis on API security and passwordless authentication, Okta addresses evolving cybersecurity threats, differentiating itself through innovation and integration flexibility. Its acquisition of Auth0 further solidifies its foothold in developer communities, creating cross-selling opportunities and expanding its total addressable market.

Revenue Profitability And Efficiency

Okta reported revenue of $2.61 billion for FY 2025, reflecting robust demand for its identity solutions. Net income stood at $28 million, with diluted EPS of $0.06, indicating modest profitability amid continued reinvestment. Operating cash flow of $750 million underscores strong cash generation, while minimal capital expenditures ($8 million) highlight capital efficiency in its asset-light model.

Earnings Power And Capital Efficiency

The company’s operating cash flow margin of approximately 29% demonstrates healthy earnings conversion, supported by high-margin subscription revenue. Okta’s capital efficiency is evident in its low capex intensity, allowing reinvestment in R&D and sales expansion without significant balance sheet strain.

Balance Sheet And Financial Health

Okta maintains a solid liquidity position with $409 million in cash and equivalents, though total debt of $952 million warrants monitoring. Its market capitalization of $21.77 billion suggests investor confidence in its growth trajectory, while a beta of 0.959 indicates moderate volatility relative to the broader market.

Growth Trends And Dividend Policy

Revenue growth is driven by enterprise adoption of cloud identity solutions and cross-selling synergies with Auth0. Okta does not pay dividends, prioritizing reinvestment in product development and market expansion to sustain its competitive edge.

Valuation And Market Expectations

The market values Okta at a premium, reflecting expectations for sustained growth in the IAM sector. Its valuation multiples align with high-growth SaaS peers, balancing near-term profitability constraints with long-term scalability potential.

Strategic Advantages And Outlook

Okta’s dual-platform strategy (Okta Identity Cloud and Auth0) provides a defensible moat in IAM, catering to both IT and developer audiences. The company is well-positioned to benefit from increasing cybersecurity spend and hybrid work trends, though execution risks around integration and competition persist.

Sources

Company filings, market data