Okta Delivers Strong Q4 Earnings Beat, Raises Full-Year Guidance

Okta (NASDAQ: OKTA) reported fourth-quarter earnings that exceeded Wall Street expectations, driving a sharp post-earnings rally in its stock price. The identity and access management company posted adjusted earnings per share (EPS) of 0.78, surpassing the consensus estimate of 0.74. Revenue for the quarter came in at 682 million dollars, up 13 percent year-over-year and ahead of analyst expectations of 669 million dollars.

Okta delivered strong key performance indicators in the quarter. Subscription revenue reached 670 million dollars, up 13 percent year-over-year, beating estimates of 656.2 million dollars. Professional services and other revenue came in at 12 million dollars, down 14 percent year-over-year and slightly below expectations of 13.9 million dollars. Adjusted gross margin held steady at 82 percent, slightly above the 81.4 percent estimate. Research and development expenses were 157 million dollars, a modest 0.6 percent year-over-year increase, coming in below the projected 163 million dollars. Free cash flow totaled 284 million dollars, a substantial 71 percent increase compared to last year. Current remaining performance obligations, known as CRPO, grew 15 percent to 2.248 billion dollars, topping estimates of 2.138 billion dollars.

Okta continues to position itself as a key player in the evolving cybersecurity landscape, with a strong emphasis on integrating artificial intelligence capabilities into its offerings. Chief executive officer Todd McKinnon noted that AI is playing an increasingly crucial role in identity security, enabling more advanced threat detection and user authentication processes.

McKinnon stated that AI-driven identity protection will be a long-term growth driver for Okta. The company recently launched its Secure Identity Assessment, a professional service designed to help organizations reduce identity risk by leveraging AI-driven insights. Additionally, its Privileged Access Management solution continues to gain traction, reinforcing its role in securing high-level administrative access within enterprises.

Okta's upbeat guidance for fiscal 2026 provided further momentum for the stock. The company projected first-quarter revenue between 678 million and 680 million dollars, comfortably above the 670.81 million dollar consensus estimate. First-quarter adjusted EPS is expected to range between 0.76 and 0.77, well ahead of the 0.70 expected by analysts. For the full year, Okta forecasts revenue between 2.85 billion and 2.86 billion dollars, topping expectations of 2.8 billion dollars. Full-year adjusted EPS is expected between 3.15 and 3.20, significantly exceeding the 2.94 consensus estimate.

This marks an increase from Okta’s preliminary fiscal 2026 guidance issued in December, underscoring management’s growing confidence in the company’s growth trajectory.

Following the earnings release, Okta shares surged over 15 percent in after-hours trading, bringing the stock above the 100 dollar level. Prior to the report, shares had already gained 14 percent year-to-date, reflecting improving sentiment around the company’s ability to execute in a challenging macroeconomic environment.

Technical analysts note that Okta’s stock has broken through key resistance levels, suggesting further upside potential if buying momentum continues. However, some analysts caution that after such a strong post-earnings move, profit-taking could create near-term volatility.

The earnings beat and robust guidance prompted a wave of bullish reactions from analysts. RBC Capital’s Matthew Hedberg stated that Okta delivered a strong quarter and outperformed expectations on all metrics, with CRPO accelerating nicely and fiscal 2026 guidance being raised. Jefferies highlighted Okta’s emerging marketplace initiatives as a significant long-term growth driver that Wall Street has yet to fully price in. Evercore ISI remained more measured, noting that while the numbers were strong, macroeconomic uncertainties, including interest rates and trade policies, could still present challenges in 2026.

Okta’s fourth-quarter results showcased strong execution, with revenue and EPS both exceeding expectations, robust CRPO growth, and an encouraging outlook for fiscal 2026. The company’s focus on AI-driven security solutions positions it well for long-term growth, while its improving profitability and cash flow trends provide a solid financial foundation.

With the stock rallying post-earnings, investors will now look to see if Okta can sustain its momentum and execute on its AI and security initiatives to drive further upside in the quarters ahead.