Okta 2026 Q1 Earnings Beats Expectations with Net Income Surging 255%

Okta reported its fiscal 2026 Q1 earnings on May 28th, 2025. Okta surpassed analysts' expectations, reporting revenue of $688 million, beating the anticipated $680.1 million. Adjusted earnings per share also exceeded expectations, coming in at $0.86 compared to the forecasted $0.77. The company's guidance for the next quarter remains cautious, aligning with analyst expectations, forecasting revenue between $710 million and $712 million. Despite a conservative outlook, Okta's continued focus on innovation and identity security positions it well for future growth.

Revenue
Okta's total revenue increased by 11.5% to $688 million in 2026 Q1, from $617 million in the previous year. Subscription revenue was a significant contributor, reaching $673 million, while professional services and other segments added $15 million. This growth reflects Okta's expanding market presence and customer engagement.

Earnings/Net Income
Okta returned to profitability with an EPS of $0.36 in 2026 Q1, reversing from a loss of $0.24 per share in 2025 Q1, marking a 250.0% positive change. Net income for the quarter reached a record high of $62 million, representing a 255.0% positive swing from the net loss of $-40 million in 2025 Q1. The EPS reflects a strong performance, indicating a positive outlook for the company.

Price Action
The stock price of Okta dropped 3.60% during the latest trading day, plummeted 16.18% during the most recent full trading week, and edged up 1.78% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing Okta shares following a revenue miss and maintaining the position for 30 days has historically resulted in poor performance. The backtest revealed a significant loss of -45.33%, coupled with an excess return of -131.42% and a Sharpe ratio of -0.20, indicating elevated risk and negative returns. The maximum drawdown of -84.23% underscores the strategy's high risk, making it a losing approach. This analysis highlights the volatile nature of Okta's stock post-earnings and suggests caution for investors considering this strategy.

CEO Commentary
Todd McKinnon, CEO & Co-Founder, expressed satisfaction with Okta's performance, noting a solid start to fiscal 2026 driven by large customer engagement, new product contributions, and record profitability. He highlighted innovations like Okta Identity Governance and Identity Security Posture Management as enhancing customer value and integration into IT infrastructures. McKinnon emphasized the importance of identity security amidst evolving cyber threats and conveyed optimism about future opportunities as customers consolidate identity systems.

Guidance
For Q2 FY '26, Okta expects total revenue growth of 10%, with current RPO growth anticipated at 10% to 11%. The non-GAAP operating margin is projected to be 26%, while the free cash flow margin is approximately 19%. For the full year FY '26, the company guides total revenue growth of 9% to 10%, a non-GAAP operating margin of 25%, and a free cash flow margin around 27%.

Additional News
In recent developments, Okta has expanded its Secure Identity Integrations, adding prebuilt connections for Google Workspace, Microsoft 365, and Salesforce. This expansion goes beyond basic single sign-on and multifactor authentication, offering entitlements management, universal logout, and automated workflows. Additionally, Okta introduced new capabilities under its platform and Auth0 brand, including Identity Security Posture Management and Okta Privileged Access. These enhancements aim to secure nonhuman identities and provide granular controls for AI agents and service accounts. The introduction of Auth for GenAI in developer preview further strengthens Okta's position in securing generative AI applications.