CrowdStrike vs. Okta: Which Cybersecurity Stock Is the Better Buy After Q2 Earnings?
- CRWD
- OKTA
Cybersecurity stocks surged on Thursday after CrowdStrike CRWD) and Okta OKTA) both topped Q2 expectations yesterday evening and raised their outlooks.
CRWD spiked 20%, while OKTA soared nearly 30%, as investors cheered resilient security spending and the growing need to protect AI workloads and identities.
Both reports strengthened their respective growth stories, but with valuations becoming even more stretched after Thursday’s rallies, investors may want to be selective before chasing either stock.
CrowdStrike’s Q2 Highlights Accelerating Security Demand
CrowdStrike delivered arguably the more impressive growth quarter, with Q2 revenue rising more than 26% year over year to $1.47 billion, topping the Zacks Consensus Estimate of $1.43 billion by 2%. Adjusted earnings increased nearly 35% to $0.31 per share, beating Q2 EPS expectations of $0.29.
More importantly, annual recurring revenue climbed 25% to $5.84 billion, while net new ARR surged 51% to a record $333 million.
Falcon Flex continues to be a major catalyst, with ARR from Flex customers more than doubling to over $2.29 billion. Notably, Falcon Flex is a flexible subscription and licensing model for CrowdStrike’s cybersecurity platform, allowing organizations to deploy only the security modules they need while adapting to evolving threats and operational requirements.
Other highlights included CrowdStrike generating a Q2 record $377 million in free cash flow, reinforcing the scalability of its cloud-based security platform.
Furthermore, management raised its outlook and now expects Q3 revenue of $1.523-$1.529 billion and adjusted EPS of roughly $0.31. Full-year revenue is now projected at $5.99-$6.01 billion, with adjusted EPS of $1.25-$1.26. CrowdStrike also significantly raised its net new ARR growth outlook to roughly 34% at the midpoint.
Okta’s Profitability Makes a Big Leap
Okta’s growth rate isn’t as explosive, but its Q2 report showed an attractive combination of improving demand and expanding profitability. Quarterly revenue increased more than 11% YoY to $805 million and topped Q2 estimates of $792.14 million by over 1%.
More impressively, Q2 adjusted EPS climbed 15% to $1.05 and comfortably exceeded expectations of $0.96 per share by 9%.
Subscription backlog, or remaining performance obligations (RPO), jumped 17% to $4.86 billion, with current RPO increasing 14% to $2.59 billion. Even more encouraging, Okta’s GAAP operating margin expanded to 13% from 6%, while free cash flow reached $227 million, equaling an impressive 28% of revenue.
