$1.70
$22.60
bear $1.70
base $11.30
bull $22.60
margin of safety $6.00
market price* $187.26
Okta sells subscriptions to identity software, which lets employees, customers and developers sign in securely to applications. It has two platforms, the Okta Platform and the Auth0 Platform. Subscriptions were about 98% of fiscal 2026 revenue (year ended January 31, 2026), which was $2,919 million, up from $2,610 million the year before. How we measure earnings. We start with cash from operations, then remove swings in working capital (customer receivables, prepaid items, payables, accrued costs, lease timing and the growth in subscription fees billed in advance) and subtract stock-based compensation as a real cost, because it pays employees with shares that dilute owners. We also subtract the routine part of capital spending, which is tiny at Okta ($21 million in fiscal 2026). We keep sales commissions in the cost base: Okta paid $245 million of commissions in fiscal 2026 and expensed $161 million, and we treat that net cash outlay as a normal cost of winning subscriptions rather than as working capital. On this basis, owner earnings per diluted share were about $1.42 in fiscal 2026 ($254 million across 179.3 million shares) and about $0.23 in fiscal 2025 ($40 million across 175.1 million shares). Before that they were negative every year we measured (fiscal 2018 through fiscal 2024), mostly because stock-based compensation was very large, reaching $684 million in fiscal 2024. Level we used. Stock-based compensation has since fallen from $684 million (fiscal 2024) to $565 million (fiscal 2025) and $544 million (fiscal 2026), and in the first six months of fiscal 2027 it was $231 million against $272 million a year earlier, while operating cash flow rose to $511 million from $408 million. We treat fiscal 2025 and fiscal 2026 as the business as it now exists and use their midpoint, about $0.82 per share, as the starting level. Fiscal 2024 and earlier are excluded because they describe a company paying far more in stock. We did not use the higher fiscal 2026 figure alone, since two years of improvement is a short record. Growth check: owner earnings per share rose about 520% in fiscal 2026, but from a very small base, so it is not a usable guide; the first year of our base case grows the starting level by 6%, well below that. What is credited as growth. Okta reports that customers who spend more than $100,000 a year rose to 5,100 from 4,800 and 4,485 in the two prior years, and that existing customers spent 106% of what they spent a year earlier (107% a year earlier and 111% the year before). Contracted future revenue that has not yet been recognized was $4,827 million, up from $4,215 million, of which $2,513 million is due within 12 months. We credit only a growth rate at or below that 106% existing-customer expansion, tapering it, and we assume no margin gains, no new products and no share gains, because those have not yet happened. Management notes longer sales cycles, and the declining retention trend (111% to 106%) is the reason the credited growth tapers rather than holds. Base case: $11.3 per share. Owner earnings start at about $0.82, grow 6%, 5%, 4%, 3%, 2% and 1% over the first six years, then stay flat through year ten. We then credit ten further years at that flat level, on the strength of subscription contracts that renew and the retention record above, and nothing after that. Discounted at 6%, this gives about $11.3. Bear case: $1.7 per share. Owner earnings fall back to the fiscal 2025 level of about $0.23 and stay there for ten years with no growth, and nothing is credited afterward. The named risks are slowing expansion of existing customers (retention already down from 111% to 106%), longer sales cycles that management discloses, and the possibility that stock compensation, which fell in fiscal 2025 and 2026, rises again. Okta has also faced securities litigation; a securities class action settlement of $60 million received final court approval on November 19, 2024, which is modest next to Okta's annual owner earnings. Bull case: $22.6 per share. Owner earnings stay at the fiscal 2026 level of about $1.42, grow 6% a year for five years and 3% for the next five, then hold flat for ten more years. This is what happens if existing customers keep expanding at roughly today's pace and stock compensation stays near fiscal 2026 levels, which is the direction the first half of fiscal 2027 points. Margin-of-safety price: $6.00 per share. That is about 47% below our base value, a wide margin because the earnings record on our basis is only two years positive, the retention trend is softening, and the downside case is worth only $1.7. Okta is repurchasing shares (a $1 billion program announced in January 2026 with $921 million still available at January 31, 2026) and plans to settle its 2026 convertible notes; we do not deduct debt separately because owner earnings are already after interest. What could make this wrong. The value is highly sensitive to stock compensation. If it fell to a much lower share of revenue, the shares are worth more than we show; if retention dropped below 100%, less. We found no unexplained gaps in the filings; our owner earnings tie exactly to net income plus non-cash items, less the net commission outlay and routine capital spending.