Sean D. Emory
Founding Partner & CIO of Avory & Co., Avory Foundational ETF (AVRY)
Okta's backlog reaccelerated, with booked demand now outrunning recognized revenue. RPO rose 17% to $4.86B and current RPO 14% to $2.59B, both above 11% revenue growth. Identity is the lowest-hanging AI value layer: whoever wins at building AI, every agent will need a trusted identity and controls over what it can access, as Okta's founder says. x.com x.comÂ
Okta could become the identity version of CrowdStrike for AI, building a data flywheel around agents and identity governance. Every AI agent creates identity, permission and security risks, and the more enterprises use Okta to secure agents across OpenAI, Anthropic, Salesforce, Microsoft and open-source frameworks, the more signals strengthen governance and detection. Neutrality lets it sit above the ecosystem as the identity layer as AI value flows into software. The position may be too small. x.com x.com x.com x.com x.comÂ
Okta should capture durable value from agentic AI because every agent touching enterprise data needs authentication, authorization and auditability, making identity infrastructure. Okta is the only independent identity platform with real enterprise distribution, a launched non-human identity product, and early signs of contract-value expansion. It trades far below its historical multiple despite 27% FCF margins, priced as if Microsoft consolidates identity, unlikely in multi-cloud firms. x.com … Show more
Okta and SailPoint should benefit as AI agent traffic explodes, because agents generate vast numbers of requests for tiny files, which favors identity security rather than bandwidth plays. At about 8-9x sales they are not superficially cheap, but with change spanning orders of magnitude and business models that scale well, they could trade around 15x today and return about 300% over time. Cloudflare, by comparison, trades near 40x. The long-avoided theme is about to light up. x.comÂ
Okta is unlikely to sustain mid-teens growth, and valued on free cash flow including stock-based compensation it trades above 40x. Workforce identity grew 11%, and although cRPO rose 14%, it is at risk from layoffs, whether AI-driven to free up token budgets or efficiency cuts. Whether margins flatline in the high 20s is still to be seen. x.com x.comÂ
AI is turning security spending from optional to essential, and beats from CrowdStrike and Okta confirm it. CrowdStrike's Q2 revenue rose 26% with record net new ARR of $333M, up 51%, and raised guidance; Okta's RPO reached $4.86B, up 17%, with a second guidance raise this year, after Fortinet also raised. AI agents and coding widen attack surfaces, Morgan Stanley estimates up to $220B of added security demand, and buyers are consolidating onto platforms. x.com x.comÂ
Cloudflare's Q2 beat-and-raise shows growth holding above 35% as it becomes an AI-era platform for networking, security, edge computing and agent infrastructure. Revenue rose 36% to $696M versus $666M expected, current RPO grew 35%, and full-year revenue guidance rose again to $2.86-2.87B. Its CEO says traffic is shifting toward AI-to-AI and agent-to-agent interaction. Non-GAAP gross margin fell 320 bps to 73.1% and layoff charges drove a GAAP loss, but neither affects cash flow or guidance. … Show more
Okta is being run like Cisco, for low growth, profitability and buybacks, rather than as a high-growth tech company trying to win, after three years of layoffs. Its AI thesis is generic and soft, and beyond customer inertia there is no strong answer for why it wins in five years. Its model rests on switching costs, yet net retention keeps declining, and outsourcing implementation to GSIs gives up the proprietary deployment knowledge that could deepen its moat. x.comÂ
Rubrik had another great quarter, with ARR up 33% and full-year guidance raised to 29% ARR growth, which it should beat easily. Much of the upside came from on-prem services; the CEO said sovereign cloud and infrastructure demand is driving some sales back toward non-cloud Rubrik. Its identity segment, which crossed $50M ARR last quarter, seems to be doing well, though no new figure was given. x.comÂ
Palo Alto Networks wants every AI agent's credentials routed through it, and whoever brokers the keys sits inline on every action a CISO wants to control. It is the only firewall vendor that also owns a top privileged-access stack. Last quarter revenue grew 34% at a 70% gross margin, with $4.11 billion of free cash flow and net cash. The price is steep at 81.2x forward earnings and 28.2x sales, leaving no cushion if cloud platforms credential agents natively. x.comÂ
Okta's risk/reward is no longer attractive after doubling in three months, at 10 times FY27 sales and over 50 times earnings. Even if agentic AI products reach half of its 20,000 enterprise customers within two years with a 40% contract-value uplift, implying 13-15% annual sales growth, it is not cheap; a 50-60% uplift and 17-20% growth still isn't. Agentic AI is exponential, so the growth duration may be underestimated, but two-thirds of the position has been sold. x.comÂ
ServiceNow's Q2 2026 results refute the bear case that AI is demo buzz without monetization. AI products crossed $1B in annual contract value, net new AI ACV accelerated over 40% sequentially, and customers running agentic AI in production grew ninefold in nine months, tracking toward a $1.5B full-year target. Revenue rose 24% to $3.99B, adjusted EPS of $0.90 beat $0.86, and cRPO grew 21% to $13.2B. Partnerships with Anthropic, Nvidia and Lenovo extend its role as an enterprise AI control tower. … Show more
