CrowdStrike vs. Okta: Which Cybersecurity Stock is a Better Buy?
CrowdStrike provides its cybersecurity services mainly through its Falcon platform. CrowdStrike's Falcon platform is renowned for being the industry's first multi-tenant, cloud native, intelligent security solution. The Falcon platform helps in securing workloads across on-premise, cloud-based and virtualized environments running on several endpoints, such as desktops, laptops, servers, virtual machines and IoT devices.CRWD's cloud-based Falcon platform currently provides 29 cloud modules via a SaaS subscription model that is categorised under three categories - Endpoint Security, Security & IT Operations, and Threat Intelligence. The share of subscription-based sales to CrowdStrike's total revenues grew from 72% in fiscal 2017 to 95% in fiscal 2025.However, the company is facing several headwinds related to customers' negative sentiments since the global IT outage incident on July 19, 2024. The company has been implementing the Customer Commitment Package to retain its customers, which includes product additions and discounts, hence compressing its profitability.Regardless of all these measures, the company's upsell into existing customers showed signs of slowdown and the churn rate remained moderate. These factors are likely to weigh on CRWD's profitability in the near term. The Zacks Consensus Estimate for CrowdStrike's fiscal 2026 earnings indicates a year-over-year decline of 10.94%.
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Okta's latest financial results for the first quarter of fiscal 2026 highlight its strengthening position as a leader in identity security. Its broad portfolio, which includes Okta Identity Governance, Privileged Access, Device Access, Identity Security Posture Management, Identity Threat Protection with Okta AI, and Auth for GenAI, continues to drive customer wins and expand its addressable market.It exited the first quarter with roughly 20,000 customers and $4.08 billion in remaining performance obligations, reflecting strong growth prospects for subscription revenues. Customers with more than $100K in Annual Contract Value increased 7% year over year to 4,870.Okta's ability to help organizations secure both human and non-human identities is becoming a key competitive advantage. During its last earnings call, the company noted that the recent boom in AI agents has resulted in a tremendous increase in non-human identities, and its Identity Security Posture Management and Privileged Access solutions have the capabilities to address this problem. Also, Okta's newly introduced suite-based pricing model is likely to encourage customers to consolidate identity solutions with Okta, driving cross-sell opportunities for the company.Okta is also benefiting from a rich partner base that includes the likes of Amazon Web Services, CrowdStrike, Google, LexisNexis Risk Solutions, Microsoft, Netskope, Palo Alto Networks, Plaid, Proofpoint, Salesforce, ServiceNow, VMware, Workday, Yubico and Zscaler. These factors are likely to continue driving growth in OKTA's top and bottom lines. The Zacks Consensus Estimate for Okta's fiscal 2026 revenues and earnings indicates year-over-year growth of 9.44% and 16.73%, respectively.
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Year to date, CrowdStrike shares have appreciated 39.2% and OKTA shares have surged 26.2%.
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OKTA is trading at a forward sales multiple of 5.87X, below the security industry's 14.51X. Whereas, CRWD is trading at a forward sales multiple of 22.93X, indicating its overvaluation at present.
Image Source: Zacks Investment Research
While CrowdStrike is still navigating the headwinds emerging from reputational damage caused by the global IT outage and shrinking profit margin, OKTA's focus on identity solutions, stronger earnings growth potential and low valuations make the stock more attractive for investors seeking growth in the cybersecurity space.
Currently, Okta carries a Zacks Rank #2 (Buy), making the stock a must-pick compared to CrowdStrike, which has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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