Okta delivers strong performance with record profitability and cash flow

Overview

Okta delivered a strong fiscal year 2025 performance, driven by continued growth in identity security solutions and improving operational efficiencies. The company reported $2.61bn in total revenue, reflecting a 15% year-over-year increase, and achieved record operating profitability and free cash flow. Accelerating remaining performance obligations (RPO) growth and strategic advancements in AI-powered identity solutions further strengthened Okta’s position as a leader in identity security.

CEO Todd McKinnon emphasized Okta’s momentum: “In a rapidly evolving IT and security landscape, organizations are turning to Okta as their identity partner for our ability to deliver the broadest array of modern identity security with the flexibility to meet their demands. We’re entering the new fiscal year laser focused on serving our customers with even more innovation on the Okta and Auth0 platforms while further elevating the industry with the Okta Secure Identity Commitment.”

Q4 FY2025 vs. Q4 FY2024:

Revenue increased to $682m (+13% YoY), mainly supported by strong demand for subscription services.
- Subscription revenue rose to $670m (+13% YoY), accounting for 98% of total revenue.
Remaining Performance Obligations (RPO) recorded a value of $4.215bn (+25% YoY), driven by long-term customer contracts.
Current RPO (cRPO) was $2.248bn (+15% YoY), reflecting strong near-term revenue visibility.
GAAP operating income reached to $8m, compared to a $83m loss in Q4 FY2024, achieving profitability for the first time.
Non-GAAP operating income surged to $168m (+30% YoY), with a margin of 25%.
GAAP net income was $23m, compared to a $44m net loss in Q4 FY2024.
Non-GAAP net income increased to $141m (+25% YoY), with Non-GAAP diluted EPS of $0.78 (compared to $0.63 in Q4 FY2024).
Free cash flow were on a strong upward trend, registering a value of $284m (+71% YoY), representing 42% of total revenue.
Cash and investments recorded a value of $2.52bn as of January 31, 2025, reinforcing financial flexibility.

FY2025 highlights:

Total revenue rose to $2.61bn (+15% YoY), reflecting growing demand for identity security solutions.
- Subscription revenue increased to $2.56bn (+16% YoY), underscoring the strength of Okta’s recurring revenue model.
GAAP operating loss was $74m, but this was a significant improvement from the $516m loss in FY2024.
Non-GAAP operating income increased very rapidly to a value of $587m (+89% YoY), with an operating margin of 22%.
GAAP net income recorded a value of $28m, compared to a $355m loss in FY2024.
Non-GAAP net income surged to $510m (+78% YoY), with Non-GAAP diluted EPS of $2.81 (compared to $1.60 in FY2024).
Net cash provided by operations was $750m (+46% YoY), or 29% of total revenue, while free cash flow was $730m (+49% YoY), representing 28% of total revenue.

For Q1 2026, Okta anticipates revenue between $678m and $680m, reflecting 10% year-over-year growth, with current RPO expected to reach $2.185bn to $2.190bn, an increase of 12% YoY. The company forecasts Non-GAAP operating income between $168m and $170m, maintaining a 25% operating margin, while Non-GAAP diluted EPS is projected at $0.76 to $0.77, based on 184m shares outstanding. Despite $11m in restructuring costs, Okta expects to sustain a 25% free cash flow margin. For fiscal year 2026, the company targets total revenue between $2.85bn and $2.86bn, representing 9% to 10% YoY growth, alongside Non-GAAP operating income between $705m and $715m, keeping a 25% margin. Non-GAAP diluted EPS is projected at $3.15 to $3.20, with 186m shares outstanding, while a 26% free cash flow margin is expected to support continued investment and shareholder value creation.

After the report was published, OKTA shares experienced a significant increase in their stock price, rising by approximately +15% in after-hours trading and even exceeding the $100 threshold, after the main results managed to significantly exceed the estimates of Wall Street analysts. However, despite this increase, looking at the level of the last year, OKTA shares are still trading at a lower price than the same period of the previous year, by approximately -7.7%.