Summary
Okta started fiscal 2026 with GAAP revenue of $688 million, up 11.5% from the prior-year quarter. Gross profit rose to $533 million, up 13.6%, and gross margin reached 77.5%, up 1.5 percentage points. The company swung to a GAAP operating profit of $39 million, up 183% and a sharp reversal from the prior-year loss. Operating margin was 5.7%, up 13.3 percentage points. GAAP net income was $62 million, up 255% and also swung to a profit. Diluted earnings per share were $0.35, up 245.8% and swung to a profit. On a non-GAAP basis, Okta reported operating income of $184 million, or 27% of revenue, non-GAAP net income of $158 million, and non-GAAP diluted earnings per share of $0.86. The profit improvement is the main story of the quarter, with both GAAP and non-GAAP profitability at record levels.
Cash generation remained strong. Operating cash flow was $241 million, up 10% from the prior-year quarter. Capital expenditures were $1 million, flat. Free cash flow, a non-GAAP measure, was $238 million, or 35% of revenue. Backlog indicators also expanded. Remaining performance obligations were $4.08 billion, up 21.4%. Current remaining performance obligations, the portion expected to be recognized over the next 12 months, were $2.227 billion, up 14%. Deferred revenue was $1.56 billion, up 12.3%. Customer metrics showed progress and some pressure. Okta had 4,870 customers with annual contract value above $100,000, a 7% increase from the prior-year quarter. The dollar-based net retention rate was 106%, down from 111% a year earlier. The company also reported over 7,000 integrations with cloud, mobile, web, and IT infrastructure vendors.
Management issued guidance for the second quarter of fiscal 2026 and for the full fiscal year. For the second quarter, Okta expects current RPO of $2.200 billion to $2.205 billion, representing growth of 10% to 11% year over year. The company guided non-GAAP operating income to $183 million to $185 million, which implies a non-GAAP operating margin of 26%. Non-GAAP diluted net income per share is expected at $0.83 to $0.84. Non-GAAP free cash flow margin is expected at approximately 19%. For the full fiscal year 2026, management guided non-GAAP operating income of $710 million to $720 million, a non-GAAP operating margin of 25%, non-GAAP diluted net income per share of $3.23 to $3.28, and a non-GAAP free cash flow margin of approximately 27%. The outlook assumes a non-GAAP tax rate of 26% and diluted weighted-average shares outstanding of about 186 million. Okta noted it is taking a prudent approach to forward guidance, factoring in its go-to-market specialization rolled out in the first quarter of fiscal 2026 and potential risks from the uncertain economic environment for the remainder of the year.
Risks remain material. The company cited worldwide economic and political uncertainties, including tariffs, increasing trade protectionism, changes in government spending levels, uncertainty in the banking sector, rising interest rates, and inflation. Okta warned that longer sales cycles could create near-term headwinds for cash flow, RPO, and billings growth, and could affect revenue growth and other key metrics on a trailing basis. Cybersecurity incidents in the past, including the January 2022 incident involving a third-party service provider and the October 2023 incident involving a third-party customer support system, have harmed reputation and customer relations, and the company cannot predict the extent of future impact. Customer growth has slowed in recent periods and could continue to decelerate. The dollar-based net retention rate decline was attributed primarily to the macroeconomic environment, with overall ACV from existing customers increasing at a slower rate. Okta continues to maintain a full valuation allowance on its U.S. deferred tax assets, and a release of that allowance remains uncertain. The 2025 Notes are classified as current liabilities due to their maturity on September 1, 2025.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2026 | Q4 FY2025 | QoQ | Q1 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $688.0M | $682.0M | +0.9% | $617.0M | +11.5% |
| Gross profit | $533.0M | $524.0M | +1.7% | $469.0M | +13.6% |
| Gross margin | 77.5% | 76.8% | +0.6 pp | 76.0% | +1.5 pp |
| Research & development | $154.0M | $157.0M | -1.9% | $163.0M | -5.5% |
| Sales & marketing | $237.0M | $235.0M | +0.9% | $236.0M | +0.4% |
| General & administrative | $103.0M | $113.0M | -8.8% | $117.0M | -12.0% |
| Total operating expenses | $494.0M | $516.0M | -4.3% | $516.0M | -4.3% |
| Operating income (loss) | $39.0M | $8.0M | +387.5% | -$47.0M | +183.0% |
| Operating margin | 5.7% | 1.2% | +4.5 pp | -7.6% | +13.3 pp |
| Net income (loss) | $62.0M | $23.0M | +169.6% | -$40.0M | +255.0% |
| Net margin | 9.0% | 3.4% | +5.6 pp | -6.5% | +15.5 pp |
| Diluted EPS | $0.35 | $0.13 | +$0.22 | -$0.24 | +$0.59 |
| Net retention rate | 106.0% | 107.0% | -1.0 pp | 111.0% | -5.0 pp |
Risks
Okta has experienced cybersecurity incidents, including the January 2022 third-party service provider compromise and the October 2023 customer support system breach, and MD&A states these harmed reputation and customer relations and adversely impacted financial results. Future incidents could create additional liabilities and may include disabling access to service.
Adverse general economic conditions and reductions in workforce identity and customer identity spending have reduced and may continue to reduce demand. MD&A highlights tariffs, trade protectionism, rising interest rates, inflation, and banking sector uncertainty as ongoing pressures.
Okta plans expenses on assumptions about sales cycle length, and it is increasingly focused on larger organizations with lengthy and less predictable purchasing processes. MD&A states longer sales cycles could delay deal closings and create near-term headwinds for cash flow, RPO and billings growth.
Dollar-based net retention rate for the trailing 12 months ended April 30, 2025 decreased to 106% from 111% a year earlier, primarily due to the macroeconomic environment and slower ACV growth from existing customers. If customers do not renew or expand, revenue growth could be harmed.
Okta faces intense competition, especially from larger, well-established companies, and names Microsoft as its principal competitor. Larger competitors can bundle products, sell at zero or negative margins, or maintain closed platforms, which may pressure pricing, gross margins and market share.
Okta uses internally developed and third-party AI and is expanding generative AI features, facing rapid evolution, significant competition, and an uncertain regulatory landscape such as the EU AI Act. AI-related IP, confidentiality, accuracy and ethical concerns could lead to reputational harm, liability or additional costs.
Okta is subject to evolving global privacy and data protection laws, including GDPR, a growing U.S. state patchwork, and data localization requirements. Noncompliance could trigger significant fines, enforcement actions, private litigation and increased compliance costs.
A portion of revenue comes from public sector entities through partners, subject to budget cycles, FedRAMP and other authorizations, audits and contract termination rights. Changes in government spending or compliance failures could reduce sales or increase costs.
The 2025 Notes are classified as current liabilities due to their September 1, 2025 maturity, and Okta intends to settle principal in cash. If holders require repurchase or conversion settlement, Okta may lack sufficient cash or face dilution and liquidity pressure.
Okta depends on executive officers and key employees and faces intense competition for software and sales talent in the San Francisco Bay Area and other locations. In fiscal 2026 it began further specializing its sales force, increasing the need to hire, develop and retain personnel.
Okta has announced restructuring plans involving workforce reductions and may face execution challenges such as employee morale and attrition beyond intended reductions. These could impair business initiatives and make restructuring less effective than anticipated.
Prior revenue growth rates of 43%, 22% and 15% in fiscal 2023, 2024 and 2025 may not be indicative of future growth, and operating expenses are expected to increase. If revenue growth does not offset expense increases, profitability may be harmed.
SaaS KPIs
All quarters →Remaining Performance Obligations (RPO)
Current Remaining Performance Obligations (cRPO)
Free Cash Flow Margin
Free Cash Flow
Non-GAAP Operating Margin
Customers with Annual Contract Value Above $100,000
Summary, forecast, risks and KPIs are extracted from Okta, Inc.'s SEC filings for Q1 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.