Okta (OKTA) Stock Surges 15% on Strong Earnings, Upbeat Guidance

Okta Inc (OKTA), a leading independent identity partner, saw its stock price surge by 15.1% to $100.28 at the time of publication on Tuesday, March 5, 2025, following the company's strong fourth-quarter fiscal 2025 results and optimistic guidance for the first quarter and full year 2026. Okta's shares experienced a substantial pre-market increase of 15.25% to $100.45, driven by the company's robust financial performance and positive outlook.

Okta reported adjusted earnings per share (EPS) of $0.78, surpassing the consensus estimate of $0.74, and revenue of $682 million, beating the $669.46 million estimate. The company's total revenue and subscription revenue grew 13% year-over-year, while net cash provided by operations and free cash flow increased by 42% and 42%, respectively. Okta's customer metrics also improved, with total customers of 19,650, up 4% year-over-year, and high-value customers (spending $100,000 annually) increasing to 4,800, up 7%. The company's trailing-12-month dollar-based net retention rate clocked in at 107%, indicating that existing Okta customers are expanding their relationships with the company.

Okta's remaining performance obligation (RPO) also climbed, with current RPO of $2.25 billion increasing 15% year-over-year and total RPO of $4.2 billion increasing 25%. This acceleration in RPO suggests that Okta's sales have begun to reaccelerate, providing insight into future results.

For the first quarter of fiscal 2026, Okta expects adjusted EPS of $0.76 to $0.77 and revenue of $678 million to $680 million, both of which exceed analyst estimates. The company also provided strong guidance for the full year 2026, with revenue expected to grow by 10% year-over-year to $2.85 billion to $2.86 billion and adjusted EPS expected to be $3.15 to $3.20 per share. Okta's optimistic outlook reflects the company's confidence in its ability to maintain its growth trajectory.

Multiple analysts upgraded Okta's stock following the earnings report, contributing to the company's stock price surge. DA Davidson analyst Rudy Kessinger upgraded Okta from Neutral to Buy and raised the price target from $90 to $125. Mizuho analyst Gregg Moskowitz also upgraded Okta from Neutral to Outperform and raised the price target from $110 to $127. These upgrades and price target increases reflect the positive sentiment surrounding Okta's recent earnings report and guidance.

Okta's strong financial results, positive guidance, and analyst upgrades contributed to the company's stock price surge. The company's ability to execute, grow its customer base, and maintain a strong financial outlook, combined with the positive market sentiment, drove Okta's stock price higher. Okta's shares are currently trading at a valuation of approximately 30 times next year's expected earnings, which is beginning to look interesting to investors.