EPS of $0.13 increased by 148.2% from previous year
Gross margin of 76.8%
Net income of 23.00M
"“Okta Identity Governance has been a huge success. What we hear repeatedly from customers is the amazing time to value with OIG. Customers are getting up and running just a few short months after signing. Since launching OIG just two years ago, we now have over 1,300 customers contributing over $100 million in annual contract value.”" - Todd McKinnon
Okta Inc (OKTA) Q4 FY2025 Results Analysis: Record Bookings and Governance-Driven Growth Expand the Identity Platform; Strong Free Cash Flow Amid Margin Expansion
Executive Summary
Okta reported a strong Q4 FY2025, posting revenue of $682 million and expanding profitability with a GAAP net income of $23 million and a non-GAAP operating margin guidance of 25% for FY2026. The quarter featured robust demand for both workforce and customer identity products, with more than 20% of Q4 bookings coming from new products such as Okta Identity Governance (OIG), privilege access, device access, and identity threat protection. RPO surged 25% to exceed $4 billion, and quarterly bookings crossed $1 billion for the first time, underscoring the market's appetite for a unified identity platform. Management highlighted continued momentum from governance offerings (OIG, Lifecycle Management, Workflows) totaling around $400 million in governance-related revenue, and AWS Marketplace contributions rose more than 80% in FY2025, validating a strong partner-led growth model.
The company reiterated FY2026 guidance: Q1 revenue growth of ~10%, non-GAAP operating margin ~25%, and free cash flow margin ~25% (including roughly $11 million related to a headcount reduction). For the full year FY2026, Okta guides 9-10% revenue growth, ~25% non-GAAP operating margin, and ~26% free cash flow margin. These targets imply accelerating efficiency gains and continued investment in security, go-to-market specialization, and product innovation, while delivering durable cash flow and a higher-quality revenue mix driven by governance, PAM, and developer-centric ARR via Auth0.
From a financial health perspective, the balance sheet remains robust with $2.523 billion in cash and short-term investments, $952 million total debt, and a solid liquidity profile (current ratio ~1.30). The company’s 76.8% gross margin and ~3.4% net income margin in Q4 reflect a high-margin software model supported by scale, partner channels, and claimed operating leverage as RPO and large deals drive revenue visibility. The strategic emphasis on specialization (Okta sellers vs. Auth0 sellers) and governance-centric products positions Okta to capture a sizable portion of the enterprise IAM opportunity, including federal and public sector adoption, while continuing to monetize Gen AI capabilities via Auth0. Investors should monitor execution against the FY2026 plan, pipeline health (notably in international markets and OIG uptake), and potential macro-driven headwinds in enterprise IT spend.
Key Performance Indicators
Revenue
682.00M
QoQ: 2.56% | YoY:12.73%
Gross Profit
524.00M
76.83% margin
QoQ: 3.15% | YoY:13.91%
Operating Income
8.00M
QoQ: 150.00% | YoY:109.64%
Net Income
23.00M
QoQ: 43.75% | YoY:152.27%
EPS
0.13
QoQ: 129 900.00% | YoY:148.15%
Revenue Trend
Margin Analysis
Key Insights
Q4 2025 Revenue: $682.0M, up 12.7% YoY and 2.6% QoQ. Gross profit: $524.0M, margin 76.8% (YoY +13.9%; QoQ +3.2%).
Net income: $23.0M in Q4, margin ~3.37% (YoY +152.3%; QoQ +43.8%).
EPS: $0.13 (basic/diluted) for Q4; YoY growth ~148.1% (QoQ data inconsistencies in provided table; implied flat-to-slightly up QoQ historically).
RPO (remaining performance obligations): >$4.0B, up 25% YoY.
Financial Highlights
Revenue and profitability indicators:
- Q4 2025 Revenue: $682.0M, up 12.7% YoY and 2.6% QoQ. Gross profit: $524.0M, margin 76.8% (YoY +13.9%; QoQ +3.2%).
- Operating income: $8.0M in Q4, margin ~1.17% (YoY growth 109.6%; QoQ 150.0%).
- Net income: $23.0M in Q4, margin ~3.37% (YoY +152.3%; QoQ +43.8%).
- EPS: $0.13 (basic/diluted) for Q4; YoY growth ~148.1% (QoQ data inconsistencies in provided table; implied flat-to-slightly up QoQ historically).
- RPO (remaining performance obligations): >$4.0B, up 25% YoY.
- Bookings: Q4 bookings surpassed $1.0B for the first time; top 25 deals totaled over $320M in TCV.
- ACV and customer concentration: 470 customers with $1M+ ACV, +22% YoY; total $1B+ in annualized ACV for the $1M+ cohort.
- Governance momentum: OIG now trusted by >1,300 customers contributing >$100M in annual contract value; governance-related business (>OCG/Lifecycle/Workflows) ~>$400M in bookings.
- AWS Marketplace: FY2025 revenue grew >80% and represents >70% of total deals that are partner-influenced (AWS partnership highlighted as Partner of the Year).
- Cash flow and liquidity: Net cash provided by operating activities $286.0M; free cash flow $284.0M; cash at end of period $415.0M. Cash & short-term investments total $2.523B; net debt $543.0M; current ratio 1.30; cash ratio 0.16.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
682.00M
12.73%
2.56%
Gross Profit
524.00M
13.91%
3.15%
Operating Income
8.00M
109.64%
150.00%
Net Income
23.00M
152.27%
43.75%
EPS
0.13
148.15%
129 900.00%
Key Financial Ratios
currentRatio
1.3
grossProfitMargin
76.8%
operatingProfitMargin
1.17%
netProfitMargin
3.37%
returnOnAssets
0.24%
returnOnEquity
0.36%
debtEquityRatio
0.15
operatingCashFlowPerShare
$1.66
freeCashFlowPerShare
$1.65
priceToBookRatio
2.53
priceEarningsRatio
176.09
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key insights from management call, grouped by themes:
- Strategy and portfolio: Todd McKinnon emphasized the Okta Secure Identity Commitment and ongoing product innovation; 20%+ of Q4 bookings were from new products (OIG, privilege access, device access, fine-grained authorization, identity security posture management, and identity threat protection with Okta.ai). He cited OIG as a major growth driver with over 1,300 customers contributing over $100M in annual contract value and governance-related business surpassing $400M in total value.
- Growth engines and GTM: Brett Tighe highlighted a multi-year drive to improve operating margins (≈9 percentage point margin expansion and ≈6 point FCF margin expansion in FY2025) and the impact of sales specialization (Okta sellers vs. Auth0 sellers) to target IT/security buyers and developers respectively. He noted that >70% of Q4 deals were partner-influenced, including AWS Marketplace becoming a material channel with >$1B in aggregate TCV since launch.
- Q4 results and Q1/FY2026 guidance: The team attributed Q4 strength to high-talent execution across products and partnerships; RPO grew 25% to >$4B; Q1 FY2026 guidance calls for ~10% revenue growth with 25% non-GAAP operating margin and 25% FCF margin; full-year FY2026 guidance increased revenue growth to 9-10% and FCF margin to ~26%.
- AI and agent-centric identity: Todd discussed agentic AI and the notion of machine identities with two orders of magnitude more identites (agents and APIs). He highlighted Auth for Gen AI and the need for fine-grained authorization to secure agent-driven workflows, suggesting a long runway for governance, PAM, and identity fabric expansion beyond human users alone.
- Customer momentum and governance: The Q4 emphasis on governance and platform consolidation (OIG, PAM, posture management) was framed as a strategic shift toward a single identity platform replacing multiple point solutions; the team cited large, multi-product expansions with top-tier customers and a growing installed base ecosystem.
“Okta Identity Governance has been a huge success. What we hear repeatedly from customers is the amazing time to value with OIG. Customers are getting up and running just a few short months after signing. Since launching OIG just two years ago, we now have over 1,300 customers contributing over $100 million in annual contract value.”
— Todd McKinnon
“RPO increased 25% and crossed the $4 billion mark. Driving acceleration in RPO growth was the increase in weighted average term length for Q4 deals, which reached a multiyear high. We achieved record bookings in Q4, which crossed $1 billion in total contract value for the first time.”
— Brett Tighe
Forward Guidance
Management Outlook and Assessment:
- Q1 FY2026 guidance: total revenue growth ~10%; current RPO growth ~12%; non-GAAP operating margin ~25%; free cash flow margin ~25% (inclusive of approximately $11M cash impact from headcount reductions in Q1).
- Full-year FY2026 guidance: total revenue growth ~9-10%; non-GAAP operating margin ~25%; free cash flow margin ~26%.
- Assessment: The guidance for FY2026 implies continued operating leverage from a higher-quality revenue mix (governance, PAM, Auth0), ongoing efficiency programs, and the expansion of the partner ecosystem (AWS Marketplace). Given Q4 strength and the acceleration in governance-related bookings, the framework appears achievable if pipeline builds as expected and if the specialization strategy drives higher win rates, particularly in large multi-product deals. Potential risks include macro headwinds affecting enterprise IT budgets, longer sales cycles for large platform deals, and integration/execution risks as product portfolio continues to expand.
- Key factors to monitor: trajectory of RPO and CRPO growth into each quarter, mix of new products vs. renewals, pipeline health in international markets and public sector (federal opportunities), expansion of Auth0 in developer-focused channels (Auth0 Gen AI adoption), and the pace of field specialization adoption and associated go-to-market efficiency gains.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
OKTA Focus
76.83%
1.17%
0.36%
176.09%
CRWD
74.10%
-8.06%
-2.81%
-266.29%
NET
76.40%
-7.55%
-1.23%
-720.78%
MDB
72.80%
-3.38%
0.57%
335.18%
PANW
73.80%
10.90%
6.92%
80.32%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Okta’s FY2026 outlook reflects a prudent balance between growth, profitability, and cash generation. The combination of governance-driven revenue (OIG + PAM), broader platform adoption, and a more specialized GTM approach positions Okta to capture a broader share of the enterprise IAM market. The company’s liquidity runway, high gross margins, and stabilized free cash flow trajectory create a favorable environment for continued investments in R&D and go-to-market expansion while delivering accretive returns. Investors should monitor the pace of OIG-driven upsells, the effectiveness of field specialization, the evolution of Auth0’s Gen AI offerings, and macro-driven IT spending trends, especially in international and public sector deals. The key catalyst remains the expansion of the Okta Secure Identity Platform as enterprises consolidate identity tooling and adopt end-to-end identity governance, security posture management, and privileged access across hybrid multi-cloud environments.
Key Investment Factors
Growth Potential
High potential from governance (OIG), PAM, and identity security platform convergence; sizable RPO of over $4B and record Q4 bookings (> $1B) signal strong runway for multi-product upsell and large enterprise deployments. AWS Marketplace momentum and a broadened Auth0 GEN AI initiative provide diversified revenue streams and cross-sell opportunities into both workforce and developer markets. International expansion and public sector adoption (federal/state/local) offer additional growth vectors as Okta continues to mature its identity fabric across buyers (IT/security and developers) with specialized sales teams.
Profitability Risk
Key risks include continued macro headwinds in enterprise IT spending, dependence on large, multi-product deals which can be lumpy, competition from other IAM vendors (e.g., SailPoint/Saviyon and cloud incumbents with identity offerings), and execution risk related to scaling Go-To-Market specialization. Execution risk also ties to integration of governance and PAM offerings with Okta's core platform and ensuring consistent time-to-value for governance customers. Currency and regional mix could influence growth in international markets. Additionally, the seat-based headwinds in earlier cycles may persist if enterprise buying patterns do not normalize as quickly as expected.
Financial Position
Strong liquidity and cash flow profile underpins the investment thesis: cash and short-term investments of $2.523B, net debt ~$543M, current ratio ~1.30, and free cash flow margin guidance of 26% for FY2026. The balance sheet supports continued investment in R&D and GTM specialization while returning substantial cash flow. Profitability is improving with non-GAAP operating margin guided at 25% for FY2026, and gross margin stands at ~76.8% in Q4 2025, reflecting a high-margin SaaS model at scale.
SWOT Analysis
Strengths
Strong Q4 execution with revenue of $682M and gross margin of 76.8%
RPO >$4B and record Q4 bookings (> $1B), signaling durable revenue visibility
Governance suite (OIG, Lifecycle Management, Workflows) generating >$400M in governance-related bookings
Auth0 Gen AI and AI-enabled capabilities expanding the platform’s addressable market