Okta vs. Zscaler: The Better Cybersecurity Investment

Okta and Zscaler are both leading pure-play cybersecurity companies, but their recent financial stories are diverging. Okta reported a 12% year-over-year revenue increase for its 2026 fiscal year, turning a net operating loss into a gain and generating nearly $3 billion in subscription revenue. However, its guidance for the coming year points to a slowdown, with revenue growth expected to decelerate to 9% and remaining performance obligations (RPO) growth slowing to 10%.

In contrast, Zscaler's latest quarterly results show more robust momentum. The company reported revenue of $815.8 million, a 26% year-over-year increase, with annual recurring revenue growing 25% to $3.3 billion. Zscaler also revised its full-year 2026 guidance upward, now expecting 24% revenue growth.

The stock performance of both companies reflects these underlying trends. Okta's stock has fallen 30% over the past 12 months, while Zscaler's is down over 20%. This has led to a debate about which stock presents the better opportunity for investors.

A key differentiator is their relationship with artificial intelligence (AI). Okta is reportedly facing headwinds as AI poses a potential threat to its business model. Zscaler, however, is actively collaborating with AI, focusing on developing AI-driven security products to enhance its platform.

For investors, the core question is which company can sustain growth and navigate industry shifts, particularly the rise of AI. Okta's decelerating growth rate is a significant red flag in the high-growth software sector, suggesting potential market saturation or competitive pressures. While its lower stock price may indicate an undervalued opportunity, the slowing fundamentals could limit its upside.

Zscaler's consistent high growth, upwardly revised guidance, and achievement of the 'Rule of 40' metric (where growth rate plus profit margin exceeds 40%) signal a healthy and efficiently scaling SaaS business. This financial discipline combined with rapid expansion is a powerful combination for long-term value creation.

The contrasting approaches to AI are critical. In cybersecurity, being a disruptor is better than being disrupted. Zscaler's strategy to leverage AI as a tool positions it as an innovator, potentially opening new revenue streams. Okta's perceived vulnerability to AI disruption adds a layer of risk to its future.