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

Okta (OKTA) delivered mixed post-earnings performance, with shares rising 14.21% on the day but dropping 5.67% month-to-date. The company exceeded revenue and EPS estimates, with CFO Brett Tighe guiding to 10% Q4 revenue growth and 26% non-GAAP operating margin for FY26.

Revenue

Okta’s total revenue grew 11.6% year-over-year to $742 million in Q3 2026, driven by robust subscription demand. Subscription revenue reached $724 million, reflecting strong customer retention and upsell success, while professional services and other revenue contributed $18 million. The performance underscores the company’s dominant position in identity management solutions.

Earnings/Net Income

Earnings per share (EPS) surged 166.7% to $0.24, with net income hitting a record $43 million—a 168.8% increase from $16 million in the prior year. This marks Okta’s highest Q3 net income in a decade, demonstrating significant profitability improvements. The EPS growth trajectory remains strong and aligns with long-term margin expansion goals.

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 was -0.30, with a maximum drawdown of 0.00% and a volatility of 55.54%, indicating a high-risk, low-reward approach.

CEO Commentary

CEO Todd McKinnon highlighted momentum in AI security adoption, with over 100 customers engaged in cross-app access solutions. He emphasized Okta’s innovation in identity governance and partnerships to address AI-driven security needs, positioning the company for long-term growth.

Guidance

CFO Brett Tighe outlined Q4 2026 guidance: 10% revenue growth, 9% current RPO growth, and 25% non-GAAP operating margin. For FY26, the company targets 11% revenue growth and 26% non-GAAP operating margin, with disciplined investment in sales and product innovation.

Additional News

Recent non-earnings updates include:

1. SWOT Analysis: Okta’s market leadership and 80% subscription gross margin reinforce its competitive edge, though cybersecurity risks and intense competition remain challenges.

2. Profitability Shift: The company’s transition to sustained profitability, with trailing twelve-month revenue of $2.8 billion and EPS of $1.12, underscores operational efficiency.

3. Analyst Ratings: Post-earnings, ratings were mixed: Needham reiterated a Buy rating with a $110 price target, while Scotiabank reduced its target to $85, citing decelerating cRPO growth.