OKTA

Okta's multi-year pivot from cash-burning growth to durable profitability is now complete. FY2026 revenue grew 11.8% to $2.92B with a 77.4% gross margin, and the company swung decisively into the black: net income of $235M (up 739%) and operating income of $149M (up 301%), versus losses of $848M and $815M as recently as FY2022-23. Cash generation is the standout — $884M of operating cash flow against just $9M of capex makes this a genuine free-cash-flow machine. The balance sheet is fortress-like: $7.00B equity, only $2.71B liabilities (0.39x), and cash that more than doubled to $858M. The subscription model (98% of revenue, invoiced annually in advance) makes revenue highly predictable.

The issue is the price and the decelerating growth. At $117.81 the stock trades at 89.9x trailing EPS, a multiple that implies durable high-teens growth, yet revenue growth has cooled to 11.8% from 41% (FY2023) and management explicitly flags 'longer sales cycles' creating near-term headwinds for RPO, billings and cash flow. ROE is just 3.4% and retained earnings remain deeply negative at -$2.57B, reflecting the accumulated history of losses. R&D was flat year-over-year at $639M, suggesting growth is being bought with discipline rather than aggressive reinvestment.