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.