Summary
Okta reported total revenue of $646 million for FY2025 Q2, up 16.2% from the prior-year quarter. GAAP gross profit was $491 million, up 20.6%, and gross margin reached 76.0%, up 2.8 percentage points. The GAAP operating loss was $19 million, up 88.3% from the prior-year quarter as the loss narrowed. Operating margin improved to negative 2.9%, up 26.2 percentage points. Net income was $29 million, swinging to a profit from the prior-year quarter, and diluted earnings per share was $0.15, up from a loss per share in the prior-year quarter. The press release calls this record profitability and the company's first quarter of GAAP profitability. The gross margin improvement was primarily driven by improved spend efficiency and lower relative cost of subscription revenue, according to the MD&A. Operating expenses declined in research and development, sales and marketing, and general and administrative, mostly because of lower stock-based compensation and headcount. The company reported no restructuring and other charges in the quarter, compared with lease impairment charges in the prior-year period.
Cash generation was strong. Operating cash flow was $86 million, up 62.3%, and capital expenditures were $5 million, up 150.0%. Free cash flow, a non-GAAP measure, was $78 million, with a free cash flow margin of 12%. Non-GAAP operating income was $148 million, or 23% of revenue, and non-GAAP net income was $131 million. Non-GAAP diluted earnings per share was $0.72. Current deferred revenue was $1.394 billion, up 13.8%, while RPO was $3.505 billion, up 15.8%. cRPO, the portion expected to be recognized over the next 12 months, was $1.995 billion, up 13% from the prior-year quarter.
Okta had 19,300 customers as of July 31, 2024, up from 18,400 a year earlier. Customers with annual contract value above $100,000 totaled 4,620, up from 4,205 a year earlier. The dollar-based net retention rate was 110% for the trailing 12 months ended July 31, 2024, down from 115% a year earlier. The company said the decline mainly reflected the macroeconomic environment, with overall ACV from existing customers increasing at a slower rate. Management also pointed to longer sales cycles, which could delay deal closings and create near-term headwinds for cash flow, RPO and billings growth. Okta had over 7,000 integrations with cloud, mobile, web and IT infrastructure vendors as of July 31, 2024.
For the third quarter of fiscal 2025, Okta guided to revenue growth of 11% year-over-year and current RPO growth of 9% year-over-year. The company also guided to a non-GAAP operating margin of 18%, non-GAAP diluted net income per share of $0.57 to $0.58, and a non-GAAP free cash flow margin of approximately 20% for that quarter. For full fiscal 2025, Okta guided to revenue growth of 13% year-over-year, a non-GAAP operating margin of 21%, non-GAAP diluted net income per share of $2.58 to $2.63, and a non-GAAP free cash flow margin of approximately 23%. The outlook factors in a challenging macro environment and incorporates some conservatism related to the October 2023 security incident.
The company continues to face several risks. The October 2023 security incident harmed reputation and customer relations, and management expects it to adversely affect future financial performance. Macroeconomic uncertainty, rising interest rates, inflation and banking sector uncertainty could also weigh on results. Okta noted that customer growth has slowed in recent periods and could decelerate further. It also carries a full valuation allowance on U.S. deferred tax assets as of July 31, 2024. The 2025 Notes come due on September 1, 2025 and will be classified as current in the third quarter of fiscal 2025. The company also noted that it may not achieve expected synergies from recent acquisitions, and it may not be able to pay off its convertible senior notes when due.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $646.0M | $617.0M | +4.7% | $556.0M | +16.2% |
| Gross profit | $491.0M | $469.0M | +4.7% | $407.0M | +20.6% |
| Gross margin | 76.0% | 76.0% | ±0.0 pp | 73.2% | +2.8 pp |
| Research & development | $164.0M | $163.0M | +0.6% | $172.0M | -4.7% |
| Sales & marketing | $238.0M | $236.0M | +0.8% | $261.0M | -8.8% |
| General & administrative | $108.0M | $117.0M | -7.7% | $119.0M | -9.2% |
| Total operating expenses | $510.0M | $516.0M | -1.2% | $569.0M | -10.4% |
| Operating income (loss) | -$19.0M | -$47.0M | +59.6% | -$162.0M | +88.3% |
| Operating margin | -2.9% | -7.6% | +4.7 pp | -29.1% | +26.2 pp |
| Net income (loss) | $29.0M | -$40.0M | +172.5% | -$111.0M | +126.1% |
| Net margin | 4.5% | -6.5% | +11.0 pp | -20.0% | +24.5 pp |
| Diluted EPS | $0.15 | -$0.24 | +$0.39 | -$0.68 | +$0.83 |
| Customers | 19,300 | 19,100 | +1.0% | 18,400 | +4.9% |
| Net retention rate | 110.0% | 111.0% | -1.0 pp | 115.0% | -5.0 pp |
Risks
Okta has experienced cybersecurity incidents, including the January 2022 third-party service provider compromise and the October 2023 threat actor access to a third-party customer support system where information was stolen. The filing says future incidents may include disabling access to service and could create liabilities, harm reputation and adversely affect financial results.
Adverse general economic conditions and reductions in workforce identity and customer identity spending have in the past and may in the future reduce demand, with risks from inflation, interest rates, banking-sector uncertainty and customer bankruptcies or requests to renegotiate contracts. MD&A says these uncertainties have and could continue to adversely affect operations or financial results.
MD&A states future growth may be impacted by longer sales cycles, which the company has experienced, causing delays in deals closing and near-term headwinds for cash flow, RPO and billings growth plus potential future impacts on revenue growth on a trailing basis. The risk factors also say sales cycles are lengthening and becoming less predictable as Okta focuses on larger organizations.
Customer growth has slowed in recent periods and could fall below expectations. Okta's Dollar-Based Net Retention Rate was 110% as of July 31, 2024, down from 115% as of July 31, 2023, primarily due to the macroeconomic environment and slower ACV growth from existing customers.
Okta faces intense competition from larger, well-established companies, with Microsoft named as principal competitor, and competitors may bundle products, sell at zero or negative margins or develop in-house identity solutions. Competitive pressure could lead to price reductions, fewer orders, reduced revenue and gross margins, and loss of market share.
Okta depends on executive officers and key employees, and the filing notes the former Chief Operating Officer did not return as an employee following his recent sabbatical, though he remains a director and Vice Chairman. Competition for engineers and sales professionals in the San Francisco Bay Area is intense, and failure to attract or retain personnel could harm growth prospects.
Okta announced worldwide restructuring plans in Q1 fiscal 2024 and Q1 fiscal 2025 involving reductions of approximately 300 and 400 full-time employees, respectively. The filing warns of execution challenges such as adverse impacts on employee morale or attrition beyond intended reductions that could hinder business initiatives.
Okta has 2025 Notes due September 1, 2025 and 2026 Notes due June 15, 2026; the 2025 Notes will be classified as current as of the end of Q3 fiscal 2025. The filing says servicing debt may require significant cash, and failure to generate sufficient cash flow could require asset sales, restructuring, or dilutive financing and could result in default.
Okta is subject to evolving privacy and data security laws, including CCPA/CPRA, other state laws, data localization requirements and FedRAMP obligations, which increase compliance costs and may limit demand or operations. The filing says failure or perceived failure to comply could result in enforcement, litigation, fines and customer loss.
Okta sells through partners to government agencies and is subject to budget cycles, FedRAMP authorization, audits and investigations, and contract terms that differ from standard arrangements. Violations could result in penalties, contract termination, refunds, fines or debarment from future government business.
Okta completed the acquisition of Spera on February 1, 2024 for $58 million cash consideration and may pursue further acquisitions. The filing warns acquisitions could divert management attention, disrupt partner and customer relationships, dilute stockholders and lead to unknown liabilities or impairment.
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 (ACV) above $100,000
Non-GAAP Operating Income
Number of Customers
Summary, forecast, risks and KPIs are extracted from Okta, Inc.'s SEC filings for Q2 FY2025 (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.