OKTA · Forward model · Bull case
The Bull case, 20 quarters out
Each segment is projected from its own operating driver, rolled up into consolidated cash flow, and discounted back to a fair value per share. The assumptions below are editable — change them and every number on this page moves with them.
Reported lines only. Okta operates as ONE reportable segment and disaggregates revenue into exactly two lines in its statements of operations - Subscription and Professional services and other - and this model carries exactly those two. All fourteen historical quarters, 2023 Q2 through 2026 Q3, are disclosed figures read from the 8-K Exhibit 99.1 of each quarter; nothing is apportioned and nothing is estimated. Every quarter's two lines sum to reported total revenue exactly, $793m + $12m = $805m at the basis quarter. There is no Workforce-versus-Customer-Identity split and no quarterly geographic split to be had; either would be manufactured. QUARTER LABELS ARE FISCAL. The r40 label is the calendar quarter each fiscal period ENDS in, so '2026 Q3' here is the three months ended 31 July 2026, Okta's fiscal 2027 second quarter. Seasonality index 0 is therefore the quarter ending 31 JANUARY, not January-March. FREE CASH FLOW IS NOT OKTA'S FREE CASH FLOW. The engine computes it as EBITDA less capex less tax. Okta's reported figure is operating cash flow less property, equipment and capitalised software, so it also includes interest income - about $19m in the basis quarter - and the working-capital inflow from deferred revenue and deferred commissions. The $2,299m generating that interest is added back separately as net cash, so counting it inside free cash flow as well would double-count it. The model's first projected year runs a 25.9% free-cash-flow margin against Okta's guided 28-29% for fiscal 2027 and a 31.3% trailing-twelve-month reported margin, and the model's Rule of 40 therefore runs below the site's own R40 card for the same quarter. Okta's reported free cash flow is also heavily seasonal on collections, 12% to 42% of revenue across the stored quarters, while the engine produces a smooth margin: compare annual totals, never one projected quarter. Margins are on Okta's NON-GAAP basis - 84.0% subscription and -50.0% services gross margin in the basis quarter - while data/companies/okta/series.json stores the GAAP figure, about two points lower. Corporate overhead is zero because the vertical margins are already struck at a consolidated level; adding an overhead line would double-count operating expense. Tax is a constant 15%, between the disclosed 7.7% effective rate under a full US valuation allowance and the 21% non-GAAP planning rate management adopted on 1 February 2026; fair value moves about 1.2% per point. Shares are 178,808,000 GAAP diluted, matching the filed statements and data/companies/okta/profile.json; management's own guidance assumes the 184,448,000 non-GAAP count, which would lower fair value by about 3.2%. The $555m remaining on the $1bn buyback pushes the other way and is NOT modelled - a buyback is a financing use of cash, not an operating outlay, and charging it as capex would understate free cash flow. There is no capital programme: Okta has no fab, plant or joint venture, and the $13m of half-year capital spending is already inside the vertical capex intensities. The reference price is the $172.91 close of 27 August 2026, the session after the print, not the $134.42 that profile.json still carries. No consensus figure is used anywhere: the available feed mixes three different EPS bases for the same quarter, so every beat quoted here is measured against Okta's own prior guidance instead.
Backlog is a leading indicator and it turned. cRPO grew 14% to $2.585bn and RPO 17% to $4.858bn, both faster than the 10.6% of recognised revenue; dollar-based net retention improved year over year for the first time in the disclosed series; and every guided line was beaten, free cash flow by 42% - $227m against $155-165m. A 0.35-point-a-quarter tilt, 1.5 points of margin and an 8.0x exit - still below the 8.88x the shares carry now - give fair value $168.43, 2.6% below the close, on terminal revenue of $4,691m growing 7.6%. Even buying the turn in full, this case does not clear the price without also holding today's multiple for five years.
Latest: $1.21B (2031Q3E)
| Period | Value |
|---|---|
| 2023Q2 | $518M |
| 2023Q3 | $556M |
| 2023Q4 | $584M |
| 2024Q1 | $605M |
| 2024Q2 | $617M |
| 2024Q3 | $646M |
| 2024Q4 | $665M |
| 2025Q1 | $682M |
| 2025Q2 | $688M |
| 2025Q3 | $728M |
| 2025Q4 | $742M |
| 2026Q1 | $761M |
| 2026Q2 | $765M |
| 2026Q3 | $805M |
| 2026Q4E | $823M |
| 2027Q1E | $844M |
| 2027Q2E | $847M |
| 2027Q3E | $885M |
| 2027Q4E | $903M |
| 2028Q1E | $923M |
| 2028Q2E | $925M |
| 2028Q3E | $965M |
| 2028Q4E | $983M |
| 2029Q1E | $1.00B |
| 2029Q2E | $1.00B |
| 2029Q3E | $1.05B |
| 2029Q4E | $1.06B |
| 2030Q1E | $1.08B |
| 2030Q2E | $1.08B |
| 2030Q3E | $1.13B |
| 2030Q4E | $1.15B |
| 2031Q1E | $1.17B |
| 2031Q2E | $1.17B |
| 2031Q3E | $1.21B |
What drives each segment
Subscription
Subscribers × ARPU98.5% of revenue and effectively all of the value. Multi-year contracts recognised ratably, so the quarter's revenue is the run-off of a backlog that is itself disclosed ($2.585bn of cRPO) rather than the result of a sale. The two halves Okta publishes multiply out to the growth rate exactly: 5,255/4,945 = +6.27% on the large-customer count and 150,904/143,782 = +4.95% on subscription revenue per large customer, and 1.0627 x 1.0495 = 1.1153, which is 793/711 to four decimal places.
Latest: $1.21B (2031Q3E)
| Period | Value |
|---|---|
| 2023Q2 | $503M |
| 2023Q3 | $542M |
| 2023Q4 | $569M |
| 2024Q1 | $591M |
| 2024Q2 | $603M |
| 2024Q3 | $632M |
| 2024Q4 | $651M |
| 2025Q1 | $670M |
| 2025Q2 | $673M |
| 2025Q3 | $711M |
| 2025Q4 | $724M |
| 2026Q1 | $747M |
| 2026Q2 | $750M |
| 2026Q3 | $793M |
| 2026Q4E | $812M |
| 2027Q1E | $833M |
| 2027Q2E | $837M |
| 2027Q3E | $876M |
| 2027Q4E | $894M |
| 2028Q1E | $915M |
| 2028Q2E | $917M |
| 2028Q3E | $957M |
| 2028Q4E | $975M |
| 2029Q1E | $996M |
| 2029Q2E | $997M |
| 2029Q3E | $1.04B |
| 2029Q4E | $1.06B |
| 2030Q1E | $1.08B |
| 2030Q2E | $1.08B |
| 2030Q3E | $1.12B |
| 2030Q4E | $1.14B |
| 2031Q1E | $1.16B |
| 2031Q2E | $1.16B |
| 2031Q3E | $1.21B |
Assumptions & reasoning
- The driver's three traces need reading with care. 'Subscribers' is the disclosed count of customers with annual contract value above $100,000 - 5,255 at 31 July 2026 - not Okta's total customer count, which the fiscal 2026 10-K gives only as a floor of 'more than 20,000'. 'ARPU' is therefore the WHOLE subscription line divided by that cohort, so it absorbs the revenue of the sub-$100k long tail as well. The identity is exact and nothing is invented, but the number is a blended revenue-per-large-customer figure, not a price.
- The long tail is deliberately NOT split out. Okta discloses the large-customer count and total subscription revenue and nothing that connects them, so apportioning revenue between the cohort and the tail would manufacture a sub-line the company does not report. Non-subscriber revenue is set to zero and the disclosed count carries the entire line.
- The net-adds input is GROSSED UP because the engine damps adds by the headroom left against TAM. At 5,255 of a 20,000 base that headroom is 73.8%, so the slider carries 106.8 and the published trace prints 75 net adds in the first projected quarter, which is what Okta reported for the quarter ended 31 July 2026. The 41.0 ceiling is the same gross-up of a 30-a-quarter printed floor. The trace fades from 75 to 38 by 2031 Q3 and the base rises from 5,255 to 6,294.
- The decomposition earns its place because the two halves behave differently. The count is the smoothest series Okta publishes - net adds of 85, 70, 80 and 75 over the last four quarters, flat in level for two years - so on a base rising toward 6,294 it is a mechanically decaying growth contribution. Revenue per customer carries all of the volatility and all of the seasonality: it drifts from $50,416 a month in the first projected quarter to $59,212 in the last.
- Seasonality is encoded here and the cause is the CALENDAR, not bookings. Ratio-to-centred-four-quarter-moving-average over the fourteen disclosed quarters gives factors of 1.0045 / 0.9851 / 1.0062 / 1.0041 on the spec's own Q1-Q4 labelling, where Q1 is the quarter ending 31 January and Q3 the quarter ending 31 July. Okta's February-to-April quarter is 89 or 90 days against 92 for each of the other three, and ratable recognition is proportional to elapsed days: pure day-count factors normalise to 1.0082 / 0.9753 / 1.0082 / 1.0082, the same sign and shape at about 60% of the magnitude. Only the Q2 trough is robust. The Q4 factor has a window-to-window spread of 0.84 points against a signal of 0.51, so it carries no information and is left effectively at 1.0; do not read a Q1 or Q4 peak into these numbers.
- The ARPU input is DESEASONALISED on purpose. The engine deseasonalises only a vertical's base value, which the subscription curve never reads, so the input is (793m / 1.0062) / 5,255 / 3 = $49,991 a month rather than the raw $50,301. Feeding the raw figure would apply the July factor twice.
- cRPO is the better mechanism and the engine cannot carry it, so it is used as a cross-check instead. Quarterly subscription revenue has been 29.7% to 31.7% of end-of-quarter cRPO for eleven straight quarters, but cRPO's own path is a staircase - January-quarter increments of +122, +186 and +185 against April-quarter increments of -3, -21 and -14 - and no constant capacity add can express that. Applying the disclosed +14.1% cRPO growth to $3,014m of trailing subscription revenue implies about $3,439m over the next twelve months; this model projects $3,330m of subscription revenue across the same four quarters, 3.2% below. That gap is deliberate: management guided cRPO growth back to 11-12% in the very release that printed 14%.
Professional services and other
Growth path1.5% of revenue, negative gross margin, and being deliberately wound down. Okta told the market in both the May and the August releases that it is accelerating the shift of this business to partners and that the shift costs about one percentage point of total revenue growth in fiscal 2027. On a non-GAAP basis the line lost $6m of gross profit on $12m of revenue in the basis quarter, so shrinking it raises consolidated margin. It is carried as its own vertical because it is disclosed separately and because folding it into subscription would hide a line that is falling while the other rises.
Latest: $6M (2031Q3E)
| Period | Value |
|---|---|
| 2023Q2 | $15M |
| 2023Q3 | $14M |
| 2023Q4 | $15M |
| 2024Q1 | $14M |
| 2024Q2 | $14M |
| 2024Q3 | $14M |
| 2024Q4 | $14M |
| 2025Q1 | $12M |
| 2025Q2 | $15M |
| 2025Q3 | $17M |
| 2025Q4 | $18M |
| 2026Q1 | $14M |
| 2026Q2 | $15M |
| 2026Q3 | $12M |
| 2026Q4E | $11M |
| 2027Q1E | $10M |
| 2027Q2E | $10M |
| 2027Q3E | $9M |
| 2027Q4E | $9M |
| 2028Q1E | $8M |
| 2028Q2E | $8M |
| 2028Q3E | $8M |
| 2028Q4E | $7M |
| 2029Q1E | $7M |
| 2029Q2E | $7M |
| 2029Q3E | $7M |
| 2029Q4E | $6M |
| 2030Q1E | $6M |
| 2030Q2E | $6M |
| 2030Q3E | $6M |
| 2030Q4E | $6M |
| 2031Q1E | $6M |
| 2031Q2E | $6M |
| 2031Q3E | $6M |
Assumptions & reasoning
- The line is 1.5% of revenue at the basis quarter and 0.5% of terminal revenue in this model - $21.5m across the terminal four quarters against $4,397m of total revenue. Every input here is immaterial to fair value; it is carried because Okta discloses it separately and because folding a falling line into a rising one would hide both.
- Shrinking this line is margin-ACCRETIVE, not a pure headwind. On Okta's own non-GAAP basis the services line lost $6m of gross profit on $12m of revenue in the basis quarter, a -50% margin, so moving the work to partners costs about a point of consolidated revenue growth and adds to consolidated margin at the same time. That is exactly why management is doing it.
- The -8% opening rate is a level check, not a trend fit. It reproduces the disclosed fall - $17m in the July 2025 quarter, then $18m, $14m, $15m and $12m now - and lands fiscal 2027 near $48m against $64m in fiscal 2026. Management's disclosed 'approximately one percentage point' of revenue-growth headwind is measured against a counterfactual in which the line kept growing, so a steeper start would be needed to reach the full point; this path sits just inside it.
- No seasonality is encoded and that is a finding, not a gap. The same ratio-to-centred-moving-average method gives 0.9088 / 0.9897 / 1.0426 / 1.0590, but the window-to-window spread meets or exceeds the signal in all four quarters. On a $12-18m line that Okta rounds to whole millions, one million dollars is 6-8% of the value, so the apparent shape is rounding.
Where each case comes from
Bear case — primary sources
The primary sources this case is built from — filings, calls and posts. Where they are claims by an interested party rather than disclosures, every number in the Bear column is what happens if they are taken at face value.
Management guides its own leading indicator back down
- Aug 26, 2026 Current RPO of $2.590 billion to $2.600 billion , representing a growth rate of 11% to 12% year-over-year
- Aug 26, 2026 Total revenue of $813 million to $817 million, representing a growth rate of 10% year-over-year
- Aug 27, 2026 Dollar-based net retention rate for the trailing 12 months ended 107 % 106 %
Bull case — primary sources
The primary sources this case is built from — filings, calls and posts. Where they are claims by an interested party rather than disclosures, every number in the Bull column is what happens if they are taken at face value.
The backlog turned before the revenue line did
- Aug 26, 2026 cRPO, which represents subscription backlog expected to be recognized over the next 12 months, was $2.585 billion, up 14% compared to the second quarter of fiscal 2026.
- Aug 26, 2026 RPO, or subscription backlog, was $4.858 billion, an increase of 17% year-over-year.
- Aug 26, 2026 Free cash flow was $227 million, or 28% of total revenue, compared to $162 million, or 22% of total revenue
McKinnon case — primary sources
The primary sources this case is built from — filings, calls and posts. Where they are claims by an interested party rather than disclosures, every number in the McKinnon column is what happens if they are taken at face value.
The CEO's agent-identity case, in the filed release
From cash flow to fair value
| Present value of free cash flow, 20 quarters | $4.52B |
| Terminal-year revenue | $4.69B |
| Terminal-year EBITDA | $1.72B |
| Exit multiple, on revenue | 8.0x |
| Terminal value | $37.53B |
| Discounted at 10.0% a year, terminal value becomes | $23.30B |
| Enterprise value | $27.82B |
| Net cash | $2.30B |
| Equity value | $30.12B |
| Shares | 0.18B |
| Fair value per share | $168.43 |
| Against the current price of $172.91 | -3% |
Terminal value is 79.7% of enterprise value in the base case, so the exit multiple is the single largest input in this model and any statement about Okta being cheap or expensive is a statement about that multiple. The base takes 6.0x terminal revenue: the terminal year grows 6.1% at a 29.1% free-cash-flow margin, which is about 20.7x terminal cash flow. Okta itself trades at 8.88x guided fiscal 2027 revenue - $30,916m of equity at $172.91 on 178.8m diluted shares, less $2,299m of net cash, over the $3,221m guidance midpoint. Repo peers at the same exit line: Salesforce 4.5x on roughly 10% growth, ServiceNow 7.5x, Datadog 8.0x, Palo Alto 9.0x, CrowdStrike 12.0x at a 35% free-cash-flow margin. A 6% grower does not belong at the top of that range. The discount rate is 10%, peer-consistent for a profitable software business with $2.3bn of net cash and no financing need.
Read the other way round: at $172.91 the market is paying 8.3x terminal-year revenue, holding every other assumption on this page fixed. That is the number to argue about.
The projected path
| Quarter | Subscription | Professional services and other | Revenue | YoY | EBITDA | Capex | FCF | R40 | PV of FCF |
|---|---|---|---|---|---|---|---|---|---|
| 2026 Q4E | $812M | $11M | $823M | +11% | $266M | $7M | $219M | +38 | $214M |
| 2027 Q1E | $833M | $10M | $844M | +11% | $276M | $8M | $228M | +38 | $217M |
| 2027 Q2E | $837M | $10M | $847M | +11% | $280M | $8M | $231M | +38 | $215M |
| 2027 Q3E | $876M | $9M | $885M | +10% | $296M | $8M | $244M | +38 | $222M |
| 2027 Q4E | $894M | $9M | $903M | +10% | $305M | $8M | $252M | +38 | $224M |
| 2028 Q1E | $915M | $8M | $923M | +9% | $315M | $9M | $260M | +38 | $225M |
| 2028 Q2E | $917M | $8M | $925M | +9% | $318M | $9M | $263M | +38 | $222M |
| 2028 Q3E | $957M | $8M | $965M | +9% | $334M | $9M | $276M | +38 | $228M |
| 2028 Q4E | $975M | $7M | $983M | +9% | $343M | $9M | $283M | +38 | $229M |
| 2029 Q1E | $996M | $7M | $1.00B | +9% | $352M | $10M | $291M | +38 | $229M |
| 2029 Q2E | $997M | $7M | $1.00B | +8% | $355M | $10M | $293M | +38 | $226M |
| 2029 Q3E | $1.04B | $7M | $1.05B | +8% | $372M | $10M | $307M | +38 | $231M |
| 2029 Q4E | $1.06B | $6M | $1.06B | +8% | $380M | $10M | $314M | +38 | $231M |
| 2030 Q1E | $1.08B | $6M | $1.08B | +8% | $390M | $11M | $322M | +38 | $231M |
| 2030 Q2E | $1.08B | $6M | $1.08B | +8% | $391M | $11M | $324M | +38 | $226M |
| 2030 Q3E | $1.12B | $6M | $1.13B | +8% | $409M | $11M | $338M | +38 | $231M |
| 2030 Q4E | $1.14B | $6M | $1.15B | +8% | $418M | $11M | $345M | +38 | $230M |
| 2031 Q1E | $1.16B | $6M | $1.17B | +8% | $427M | $11M | $353M | +38 | $230M |
| 2031 Q2E | $1.16B | $6M | $1.17B | +8% | $428M | $11M | $354M | +38 | $225M |
| 2031 Q3E | $1.21B | $6M | $1.21B | +8% | $447M | $12M | $370M | +38 | $230M |
Every row is projected. A year-over-year change is shown only where the quarter it compares against exists — an em dash means there is no comparable quarter, not a flat year.
Model revisions
Assumptions are marked to reality as each quarter prints. Every change is appended here, with the fair value the model produced at the time, so the model's own history stays visible.
| Date | Changed | Fair value then | Note |
|---|---|---|---|
| 2026-08-29 | all | $127.74 | First published model, built on the 2026 Q3 (fiscal 2027 second quarter) 8-K Exhibit 99.1 and the matching 10-Q: fourteen disclosed quarters of the subscription and professional-services split, the disclosed $100k+ ACV customer count as the subscription driver, and day-count seasonality on the subscription line only. |