Okta Inc Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Okta Inc's Q3 2026 earnings call highlighted solid financial results, driven by strength in large customer deals and workforce upsells, especially with new products like Okta Identity Governance. Okta is focusing on securing AI as a significant growth opportunity, leveraging its unified identity platform. The company is specializing its go-to-market teams and expanding sales capacity to capture growing demand.
Key Financial Results
Q3 2026 was a solid quarter of results.
Experienced strength with large customers and Okta workforce upsells.
Total revenue growth is expected to be 10% for Q4 FY 2026.
Total revenue growth for the full year FY 2026 is now expected to be 11%.
Non-GAAP operating margin is expected to be 25% for Q4 FY 2026.
Non-GAAP operating margin for the full year FY 2026 is now expected to be 26%.
Free cash flow margin is expected to be approximately 31% for Q4 FY 2026.
Free cash flow margin for the full year FY 2026 is expected to be approximately 29%.
Current RPO growth is expected to be 9% for Q4 FY 2026.
Ended the quarter with nearly $2.5 billion in cash, cash equivalents, and short-term investments.
Business Segment Results
Strength in Okta workforce upsells, particularly with new products like Okta Identity Governance.
New products include Okta Identity Governance, Okta Privileged Access, Identity Security Posture Management, Identity Threat Protection with Okta AI, Okta Device Access, and Fine Grained Authorization.
Auth0 for AI Agents allows customers to build secure agents, APIs, and users more effortlessly across their B2B, B2C, and internal app ecosystem.
Capital Allocation
In September, the 2025 convertible notes reached maturity, and the remaining principal amount of $510 million was settled in cash.
Regularly evaluate capital structure and capital allocation priorities, including investing in the business, M&A, and opportunistic repurchasing of the 2026 notes, of which $350 million remains outstanding.
Industry Trends and Dynamics
The emergence of agentic technology is redefining the identity security landscape.
AI security is identity security.
Organizations of all sizes are looking to Okta to deliver modern and scalable identity security solutions that can seamlessly integrate across their networks.
Competitive Landscape
Okta's neutral and unified platform, coupled with its installed base of over 20,000 customers, positions it best to become the identity layer for AI agents.
Okta is the only company that is able to secure AI with a modern and neutral platform, allowing it to deliver even greater value to its customers.
Macroeconomic Environment
The government shutdown didn't meaningfully change the outcome of Q3 results.
Continue to take a prudent approach to forward guidance that factors in current market conditions.
Growth Opportunities and Strategies
Okta secures AI, which represents a significant new opportunity and a catalyst for growth.
Focus on helping customers solve the business imperative of securing AI and capture what is believed will be the next catalyst for growth and meaningful market within the identity security space.
Expanded investment areas to drive future growth by increasing the number of quota-carrying sales reps.
Continue to see improvement in sales productivity, partially driving this is our average AE tenure, which has remained strong on the back of healthy attrition levels.
Continue making critical investments to accelerate top-line growth.
Specializing in the buyer persona was important, but also that our pace of product innovation on both the Okta platform and Auth0 platform had accelerated to the point where it was just really hard for one seller to keep pace with all the capabilities coming out in the platform.
Financial Guidance and Outlook
For the fourth quarter of FY 2026, expect total revenue growth of 10%, current RPO growth of 9%, non-GAAP operating margin of 25%, and free cash flow margin of approximately 31%.
For the full year of FY 2026, raising the outlook and now expect total revenue growth of 11%, non-GAAP operating margin of 26%, and a free cash flow margin of approximately 29%.
FY 2027 guidance will be issued on the Q4 earnings call, which will provide a more informed view of FY 2027, especially as we exit this quarter, which is seasonally the biggest quarter of the year.
