Okta delivered solid Q3 FY2025 results driven by large-ACV customer wins, an expanding product portfolio, and strong cash generation. Revenue came in at $665 million, up approximately 13.9% year over year, with a gross margin of about 76.4% and negative GAAP operating income of $16 million for the quarter. Management emphasized efficiency gains and continued spend discipline, noting that a meaningful portion of Q3 bookings (about 15%) came from newer products, underscoring the growing contribution of governance, privileged access, and identity protection within the portfolio. The quarter highlighted a robust partner ecosystem, with all top 10 deals involving partners and roughly $20 million in ACV from these large engagements, including significant federal and public-sector activity.
Management provided a constructive near-term outlook, guiding Q4 revenue growth of 10-11% and FY25 revenue growth of 15%, along with a non-GAAP operating margin of 23% for Q4 and a FY25 free cash flow margin of ~32%. For FY26, Okta signaled a conservative but achievable pathway: revenue of roughly $2.77–$2.78 billion (≈+7% YoY), non-GAAP operating margin of at least 22%, and free cash flow margin of at least 24%. The company also flagged ongoing gross retention strength, some MAU/seat headwinds, and a continued shift toward multi-product attach as a lever for retention and expansion. The results and guidance reinforce Okta’s strategic focus on growth through product diversification ( governance, privileged access, identity threat protection, fine-grained authorization) and on strengthening its neutral, platform-based identity moat in a shifting security landscape.
Overall, the balance sheet remains solid with strong operating cash flow, sizable cash and short-term investments, and a growing portfolio of recurring-revenue contracts. Valuation remains stretched on traditional earnings metrics, but the company’s growth trajectory, profitability improvement momentum, and expanding addressable market for secure identity provide a plausible longer-term upside for patient investors.