Okta 2026 Q3 Earnings Record $43M Net Income Marks 168.8% Growth

Okta (OKTA) reported Q3 2026 earnings that exceeded expectations, with revenue rising 11.6% to $742 million and net income surging 168.8% to $43 million. The company raised full-year guidance for non-GAAP operating margin to 26% and maintained a cautious but optimistic outlook for 2027.

Revenue

Okta’s total revenue in Q3 2026 grew 11.6% year-over-year to $742 million, driven by robust performance in its core subscription business. Subscription revenue, which accounts for 97.6% of total revenue, reached $724 million, reflecting strong demand for its identity management solutions. Professional services and other revenue contributed $18 million, marking a modest but consistent contribution to overall growth.

Earnings/Net Income

Earnings per share (EPS) soared 166.7% to $0.24 in Q3 2026, up from $0.09 in the prior year. Net income hit a record $43 million, a 168.8% increase, signaling significant profitability improvement. The company’s ability to scale margins while expanding its customer base underscores its operational efficiency.

Post-Earnings Price Action Review

The strategy of buying OKTA when it beats revenue and holding for 30 days resulted in a -60.13% return, significantly underperforming the benchmark return of 84.40%. The strategy’s Sharpe ratio of -0.30, combined with a volatility of 55.54%, highlights its high-risk, low-reward profile. Maximum drawdowns and erratic performance suggest market skepticism about post-earnings momentum despite strong financial results.

CEO Commentary

CEO Todd McKinnon emphasized Q3’s momentum, driven by large customer expansions and upsells in Okta Workforce solutions. He highlighted the strategic potential of Okta Secures AI, a platform for managing AI agent security, and cited a $200M+ ARR deal in the financial sector as a validation of the company’s vision. McKinnon expressed confidence in executing the AI strategy while maintaining disciplined investment in go-to-market capabilities.

Guidance

Okta guided for Q4 FY26 revenue growth of 10%, with non-GAAP operating margin targeting 25% and free cash flow margin near 31%. Full-year FY26 guidance includes 11% revenue growth and 26% non-GAAP operating margin. The company plans to scale sales capacity and prioritize AI security innovation, while maintaining cost discipline to sustain profitability.

Additional News

Recent developments include insider selling activity, with executives offloading ~65,000 shares totaling $6 million in the past quarter. Analyst sentiment remains mixed, with a “Hold” consensus but divergent price targets ranging from $85 to $142. Additionally, Okta’s strategic focus on AI identity security has attracted attention, with early customer traction in securing AI agents. Institutional investors have increased holdings, and the company’s 10-Q filing underscores its financial resilience despite market volatility.

Key Financial Highlights

• Revenue: $742 million (+11.6% YoY)

• Net Income: $43 million (+168.8% YoY)

• EPS: $0.24 (+166.7% YoY)

• Guidance: 11% FY26 revenue growth, 26% non-GAAP margin

Analyst Reactions

• Needham: Reaffirmed “Buy” with a $110 price target, citing AI-driven growth potential.

• BTIG: Reduced price target to $116 but maintained “Buy,” noting strong cRPO growth.

• Scotiabank: Cut price target to $85, highlighting slower Q4 guidance as a concern.

Market Position

Okta’s 80% subscription gross margin and $2.33 billion current RPO demonstrate its scalability and customer retention strength. However, competition in the identity management space and macroeconomic uncertainties remain risks. The company’s focus on AI security positions it to capitalize on emerging demand in enterprise cybersecurity.