Summary
Okta's fiscal 2026 third quarter revenue rose 12% year over year to $742 million. RPO, the company's subscription backlog, grew 17% to $4.292 billion, while current RPO reached $2.328 billion, up 13%. Current deferred revenue was $1.557 billion, up 10%. The customer mix continued to move upmarket: customers with annual contract value above $100,000 totaled 5,030, compared with 4,705 a year earlier, and the company cited a 7% increase in that group. Dollar-based net retention was 106%, down from 108%, which management tied to the macroeconomic environment and slower expansion in ACV from existing customers. On a GAAP basis, Okta produced operating income of $23 million, a swing from an operating loss of $16 million in the prior-year quarter. Net income was $43 million, up from $16 million, and diluted EPS was $0.24, up from $0.00.
Profitability improved. Gross profit rose 12.6% to $572 million, and gross margin was 77.1%, up 0.7 percentage points from 76.4%. Operating margin was 3.1%, up from -2.4%. The company also leaned on non-GAAP measures: non-GAAP operating income was $178 million, or 24% of revenue, versus $138 million and 21% a year earlier. Non-GAAP net income was $152 million, compared with $121 million, and non-GAAP diluted EPS was $0.82, compared with $0.67. Cash generation remained a bright spot. Operating cash flow was $218 million, up 37.1% from $159 million, and free cash flow was $211 million, compared with $154 million. Capital expenditures were $4 million, up from $1 million. For the first nine months of fiscal 2026, revenue was $2.158 billion, up 11.9%; operating income was $103 million, a swing from an operating loss of $82 million; net income was $172 million, up from $5 million; and diluted EPS was $0.96, up from -$0.08. Year-to-date operating cash flow was $626 million, up 34.9%, and capital expenditures were $7 million, flat.
Guidance points to slower growth at the top line. For the fourth quarter of fiscal 2026, Okta expects total revenue growth of 10% year over year and current RPO of $2.445 billion to $2.450 billion, up 9%. Non-GAAP operating income is guided to $189 million to $191 million, which yields a non-GAAP operating margin of 25%. Non-GAAP diluted net income per share is guided to $0.84 to $0.85, assuming diluted weighted-average shares outstanding of approximately 185 million and a non-GAAP tax rate of 26%. Non-GAAP free cash flow margin is expected at approximately 31%. For the full fiscal year 2026, the company now expects total revenue growth of 11% year over year, non-GAAP operating income of $753 million to $755 million, which yields a non-GAAP operating margin of 26%, non-GAAP diluted net income per share of $3.43 to $3.44, and a non-GAAP free cash flow margin of approximately 29%. The company describes its forward guidance as prudent and tied to current market conditions. These are forward-looking statements and actual results may differ materially.
Risks remain. Okta's MD&A repeats that past cybersecurity incidents, including the January 2022 incident involving a third-party service provider and the October 2023 incident involving a threat actor in a customer support system, harmed reputation and customer relations and adversely affected financial results. Future impact is hard to predict. The company also flags macroeconomic and political uncertainty, tariffs, trade protectionism, changes in government spending, banking sector uncertainty, changing interest rates, and inflation. Longer sales cycles could create near-term headwinds for cash flow, RPO and billings growth, and they could pressure future revenue growth. Customer growth has slowed and could decelerate further. During the quarter, Okta settled the remaining principal amount of the 2025 Notes in cash. The 2026 Notes are classified as current liabilities due June 15, 2026. The company also maintains a full valuation allowance on its U.S. deferred tax assets and says a release would depend on sufficient positive evidence, so the timing and amount remain uncertain.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2026 | Q2 FY2026 | QoQ | Q3 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $742.0M | $728.0M | +1.9% | $665.0M | +11.6% |
| Gross profit | $572.0M | $560.0M | +2.1% | $508.0M | +12.6% |
| Gross margin | 77.1% | 76.9% | +0.2 pp | 76.4% | +0.7 pp |
| Research & development | $160.0M | $160.0M | ±0.0% | $158.0M | +1.3% |
| Sales & marketing | $271.0M | $246.0M | +10.2% | $256.0M | +5.9% |
| General & administrative | $118.0M | $113.0M | +4.4% | $110.0M | +7.3% |
| Total operating expenses | $549.0M | $519.0M | +5.8% | $524.0M | +4.8% |
| Operating income (loss) | $23.0M | $41.0M | -43.9% | -$16.0M | +243.8% |
| Operating margin | 3.1% | 5.6% | -2.5 pp | -2.4% | +5.5 pp |
| Net income (loss) | $43.0M | $67.0M | -35.8% | $16.0M | +168.8% |
| Net margin | 5.8% | 9.2% | -3.4 pp | 2.4% | +3.4 pp |
| Diluted EPS | $0.24 | $0.37 | -$0.13 | $0.00 | +$0.24 |
| Net retention rate | 106.0% | 106.0% | ±0.0 pp | 108.0% | -2.0 pp |
Risks
Adverse general economic, market and industry conditions and reductions in workforce identity and customer identity spending have in the past and may in the future reduce demand. MD&A attributes the decrease in dollar-based net retention rate for the trailing 12 months ended October 31, 2025 to 106% from 108% as of October 31, 2024 primarily to the macroeconomic environment, with ACV from existing customers increasing at a slower rate.
MD&A states future growth may be impacted by longer sales cycles, which the company has experienced, creating delays in deals closing and near-term headwinds for cash flow, RPO and billings growth. Risk factors also note increasing variability in sales cycles, especially for larger organizations with lengthy purchasing approval processes.
Okta has experienced cybersecurity incidents, including the January 2022 third-party service provider compromise and the October 2023 customer support system breach. MD&A states these incidents harmed reputation and customer relations and adversely impacted financial results, and risk factors warn future incidents could trigger liability, remediation costs and customer loss.
Risk factors state Okta faces intense competition especially from larger, well-established companies, with Microsoft named as principal competitor. Competitors may have greater resources and can sell at zero or negative margins, bundle products or maintain closed technology platforms, which could pressure pricing, gross margins and market share.
Revenue growth depends on retaining existing customers and expanding their subscriptions. The dollar-based net retention rate was 106% for the trailing 12 months ended October 31, 2025, compared with 108% as of October 31, 2024, a decrease that MD&A attributes primarily to the macroeconomic environment.
The company uses internally developed and third-party machine learning and AI technologies in offerings and is expanding AI capabilities, while the risk factors cite an uncertain regulatory environment and potential reputational harm, liability or other adverse consequences from AI development and use.
The risk factors describe a rapidly expanding global data protection and privacy regime, including GDPR, U.S. state laws and data localization requirements, with noncompliance potentially triggering fines, orders to change data processing and private litigation. Okta also notes compliance costs and potential inability to offer services in some markets.
As of October 31, 2025, the 2026 Notes are classified as current liabilities due to their June 15, 2026 maturity. Risk factors state holders may convert if conditional features are triggered, requiring cash settlement or share delivery that could adversely affect liquidity and dilute existing stockholders.
Risk factors state Okta depends on executive officers and key employees and faces intense competition for software engineers and experienced sales professionals. MD&A and risk factors note fiscal 2026 sales force specialization requires significant resources and failure to hire, develop or retain sales personnel could impede anticipated revenue growth.
SaaS KPIs
All quarters →Remaining Performance Obligations (RPO)
Current Remaining Performance Obligations (cRPO)
Free Cash Flow Margin
Free Cash Flow
Non-GAAP Gross Margin
Non-GAAP Operating Margin
Customers with annual contract value (ACV) above $100,000
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from Okta, Inc.'s SEC filings for Q3 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.