The news
SaaS valuations are rewarding a different story than they did in the growth era, and Okta (OKTA) is the clearest example. According to SaaStr founder Jason Lemkin, Okta's stock roughly tripled in five months, from a low of $62.66 on April 10 to a high of $212.50 on September 24, while revenue grew about 11%.
Okta's own numbers show why the market moved. In results released on August 26 for the quarter ended July 31, 2026, the identity security company reported revenue of $805 million, up 11% year over year, and subscription revenue of $793 million, up 12%. Current remaining performance obligations, or cRPO, the subscription backlog Okta expects to recognize over the next 12 months, rose 14% to $2.585 billion.
Lemkin pointed to cRPO accelerating from 12% in the prior quarter to 14%, and to new products, led by Okta Identity Governance, making up 30% of bookings. He also cited a forward earnings multiple of about 50 times, up from roughly 18 times. Okta reported free cash flow of $227 million, a 28% margin, and GAAP operating income of $107 million, up 161%.
Okta's guidance is more measured. For the third quarter it forecast revenue of $813 million to $817 million, growth of 10%, and full-year fiscal 2027 revenue of $3.216 billion to $3.226 billion.
The wider market is far less generous. In a separate September 30 analysis of a16z Growth's September 2026 State of Markets deck, Lemkin reported that horizontal B2B software traded at 2.7 times trailing revenue in the first half of 2026. Cloud, data and AI infrastructure traded at 9.1 times, security and identity at 6.8 times and vertical software at 4.6 times.
The numbers
- Okta share price, April 10 low to September 24 high (SaaStr)
- $62.66 to $212.50
- Okta Q2 revenue growth
- 11% ($805M)
- Okta cRPO growth
- 14% ($2.585B)
- New products' share of Okta Q2 bookings (SaaStr)
- 30%
- Horizontal B2B software, EV/trailing revenue (a16z)
- 2.7x
- U.S. unicorns with under 2 years of runway (a16z)
- 55%
Why CEOs should care
For SaaS CEOs, the lesson from Okta is that investors are paying for evidence of a second act. A product that reaches 30% of bookings, as Okta's newer products did according to SaaStr, tells the market that the company can sell more to customers it already has. Leaders should ask how much of next year's R&D budget funds products that can show up in bookings within four quarters.
CFOs should think about which metrics they lead with. Okta's rally tracked forward-looking backlog (cRPO) and cash flow more than revenue growth, which its own guidance shows slowing to 10%. Reporting new-product bookings, backlog acceleration and free cash flow margin clearly can matter as much as the top-line figure.
Boards and investors should weigh the category gap in the a16z data. A horizontal B2B tool at 2.7 times revenue is valued at less than a third of infrastructure at 9.1 times. For companies stuck in the lower band, moving into security, data or infrastructure workloads, or proving profitability, may do more for valuation than spending to grow faster.
The bigger picture
The a16z deck, as summarized by SaaStr, also shows the pressure on private companies. It found that 55% of U.S. venture-backed unicorns have under two years of runway, 57% grow at 20% or below, and about a quarter are profitable. Brand-new B2B companies under a year old are growing 500% to 600%, which shows how unevenly growth is spread.
Okta chief executive Todd McKinnon tied the company's pitch to AI agents, saying in the earnings release that every agent needs a trusted identity. That framing puts Okta in the security and identity category, which a16z data shows trading well above horizontal software.
What’s next
Okta's next test is its third-quarter report, where its guidance calls for cRPO growth of 11% to 12%, below the 14% it just posted. A slowdown there would test whether the higher multiple holds. For other SaaS companies, the upcoming earnings season will show whether investors keep rewarding new-product traction over raw growth.
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