Okta Announces First Quarter Fiscal Year 2027 Financial Results

First quarter revenue and subscription revenue increased 11% year-over-year.

Remaining Performance Obligations (RPO) increased 16% year-over-year, and current RPO (cRPO) expected to be recognized over the next 12 months increased 12% year-over-year.

Operating cash flow was $277 million, and free cash flow was $271 million.

Okta, Inc. (Headquarters: San Francisco, USA; hereinafter "Okta"), the leading independent identity provider, today announced its financial results for the first quarter of fiscal year 2027 ended April 30, 2026.

"AI agents are rapidly becoming a new workforce in every organization, creating a wave of identities that must be protected and managed just like human users," said Todd McKinnon, Chief Executive Officer and co-founder of Okta. "We are expanding our opportunity as the world's leading independent and neutral identity provider, helping customers make identity the unified control plane for the secure, agentic enterprise."

"Okta is off to a strong start to the new fiscal year, highlighted by solid cRPO, robust free cash flow, and capital returns to shareholders," said Brett Tighe, Chief Financial Officer of Okta. "Our Go-to-Market (GTM) specialization efforts from last year are delivering tangible results, including continued strength in large enterprises and improved sales productivity. The success of our new product portfolio, particularly Okta Identity Governance, proves that our unified identity platform is highly valued by our customers."

Q1 FY2027 Financial Highlights

Revenue: Total revenue was $765 million, an increase of 11% year-over-year. Subscription revenue was $750 million, an increase of 11% year-over-year.

Remaining Performance Obligations (RPO): RPO, or contract backlog, was $4.719 billion, an increase of 16% year-over-year. cRPO, which is the contract backlog expected to be recognized over the next 12 months, was $2.499 billion, an increase of 12% compared to the same period last year.

GAAP Operating Income: GAAP operating income was $56 million (7% of total revenue), up from $39 million (6% of total revenue) in the same period last year.

Non-GAAP Operating Income: Non-GAAP operating income was $191 million (25% of total revenue), compared to $184 million (27% of total revenue) in the same period last year.

GAAP Net Income: GAAP net income was $74 million, compared to $62 million in the same period last year. GAAP basic and diluted net income per share were both $0.42, compared to $0.36 and $0.35, respectively, in the same period last year.

Non-GAAP Net Income: Non-GAAP net income was $168 million, compared to $158 million in the same period last year. Non-GAAP diluted net income per share was $0.91, compared to $0.86 in the same period last year.

Cash Flow: Net cash provided by operating activities was $277 million (36% of total revenue), compared to $241 million (35%) in the same period last year. Free cash flow was $271 million (35% of total revenue), compared to $238 million (35%) in the same period last year.

Cash, cash equivalents, and short-term investments were $2.589 billion as of April 30, 2026.

Financial Outlook

We continue to take a prudent approach to our forward-looking guidance for the second quarter and full year of fiscal 2027.

For the second quarter of fiscal 2027, we expect:

Total revenue of $790 million to $794 million, representing a growth rate of 9% year-over-year.

cRPO of $2.505 billion to $2.515 billion, representing a growth rate of 11% year-over-year.

Non-GAAP operating income of $204 million to $208 million, and a non-GAAP operating margin of 26%.

Non-GAAP diluted net income per share of $0.95 to $0.97, assuming approximately 184 million diluted weighted-average shares outstanding and a non-GAAP tax rate of 21% (Note 1).

Non-GAAP free cash flow of $155 million to $165 million, and a free cash flow margin of 20% to 21%.

For the full fiscal year 2027, we expect:

Total revenue of $3.185 billion to $3.205 billion, representing a growth rate of 9% to 10% year-over-year.

The revenue outlook includes a negative impact of approximately 1% on the total revenue growth rate due to the decision to accelerate the transition of professional services to partners. This change is expected to be a headwind for professional services revenue.

Non-GAAP operating income of $806 million to $826 million, and a non-GAAP operating margin of 25% to 26%.

Non-GAAP diluted net income per share of $3.79 to $3.87, assuming approximately 184 million diluted weighted-average shares outstanding and a non-GAAP tax rate of 21% (Note 1).

Non-GAAP free cash flow of $855 million to $885 million, and a free cash flow margin of 27% to 28%.

The free cash flow outlook includes a negative impact of approximately 1% related to a decrease in interest income resulting from the combined effects of the share repurchase program and the intention to settle the remaining 2026 convertible notes in cash.

Note 1: Effective February 1, 2026, the first day of the first quarter of fiscal 2027, we reduced our long-term projected non-GAAP tax rate from 26% to 21%. This is primarily due to the enactment of the "One Big Beautiful Bill Act". This revised tax rate will be applied prospectively.

These statements are forward-looking and actual results may differ materially. For factors that could cause our actual results to differ materially from these forward-looking statements, please refer to the safe harbor for "Forward-Looking Statements" below.

Okta has not reconciled forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures because certain items are outside of Okta's control or cannot be reasonably predicted. Therefore, reconciliations for forward-looking non-GAAP financial measures are not available without unreasonable effort.

Supplemental Financial and Other Information

Supplemental financial and other information can be accessed through our investor relations website at investor.okta.com.

Non-GAAP Financial Measures

This press release includes the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP net margin, non-GAAP diluted earnings per share, non-GAAP tax rate, free cash flow, and free cash flow margin.

Some of these non-GAAP financial measures exclude stock-based compensation, non-cash charitable contributions, amortization of acquired intangible assets, acquisition and integration-related expenses, restructuring costs related to severance and termination benefits, lease impairments associated with the closure of certain leased facilities, certain unusual legal settlements and related expenses, amortization of debt issuance costs, and gains on early extinguishment of debt. Acquisition and integration-related expenses include transaction costs and other non-recurring expenses incurred up to one year after the completion of a transaction.

Stock-based compensation is a non-cash expense that typically vests upon grant and is amortized over several years. While stock-based compensation is an important aspect of employee and executive compensation, the expense associated with the fair value of stock-based compensation used by the company may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. We believe that excluding stock-based compensation provides meaningful supplemental information regarding the long-term performance of our core business and facilitates comparisons with peer companies.

In addition, non-cash charitable contributions, amortization of acquired intangible assets, acquisition and integration-related expenses, restructuring costs related to severance and termination benefits, lease impairments associated with the closure of certain leased facilities, certain unusual legal settlements and related expenses, amortization of debt issuance costs, and gains on early extinguishment of debt are excluded from the applicable non-GAAP financial measures because management considers them to be outside of our core operating performance.

In addition to these exclusions, we deduct an assumed tax provision to calculate non-GAAP net income. Effective February 1, 2026, the first day of the first quarter of fiscal 2027, we use a fixed long-term projected non-GAAP tax rate of 21% in calculating the non-GAAP provision for income taxes. Prior to fiscal 2026, we used a tax rate of 26%. The non-GAAP tax rate is subject to change for a variety of reasons, including changes in tax laws or regulations, significant changes in our geographic earnings mix, or other changes in our strategy or business operations. We will periodically re-evaluate our long-term projected tax rate as necessary if significant events occur, based on our ongoing analysis of relevant tax law changes, significant changes in our projected geographic earnings mix, and significant acquisitions.

Free cash flow, a non-GAAP financial measure, is defined as net cash provided by operating activities less cash used for purchases of property and equipment, proceeds from sales, and capitalized software, net. Free cash flow margin is calculated by dividing free cash flow by total revenue. We use free cash flow as an indicator of the financial progress of our business, balancing operating performance, cash management, and capital efficiency. We believe that information regarding free cash flow provides investors and others with an important perspective on the cash available to make strategic acquisitions and investments, fund ongoing operations, and fund other capital expenditures. Free cash flow can be volatile and is subject to many factors, including fluctuations in working capital and the timing of capital expenditures. Working capital at any given point in time is subject to many variables, including seasonality, the discretionary timing of expense payments, discounts offered by vendors, vendor payment terms, and fluctuations in foreign exchange rates.

We periodically re-evaluate the components of our non-GAAP adjustments for changes in how we evaluate our performance, changes in how we make financial and operational decisions, and consider the use of these measures by competitors and peers to ensure that our adjustments remain appropriate and meaningful.

Okta believes that non-GAAP financial information, when considered together with GAAP financial measures, is useful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies. Non-GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies.

The principal limitation of these non-GAAP financial measures is that they exclude significant expenses that are required by GAAP to be recorded in our financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by our management about which expenses are excluded or included in determining these non-GAAP financial measures. A reconciliation of each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP is provided below.

Okta encourages investors to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures included in our quarterly earnings press releases, including this press release, and not to rely on any single financial measure to evaluate our business.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook, business strategy and plans, market trends and market size, opportunities and positioning. These forward-looking statements are based on current expectations, estimates, forecasts and projections. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements, although not all forward-looking statements contain these identifying words.

Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. For example, a deterioration in macroeconomic conditions could reduce demand for our solutions; we and our third-party service providers could experience further cybersecurity incidents; we may be unable to manage or sustain our revenue growth and profitability; we may be unable to respond to technological changes; our financial resources may be insufficient to compete effectively in the market; we may be unable to acquire new customers, or retain existing customers or sell additional solutions to them; we may be unable to maintain strategic partnerships to promote or enhance our solutions; we may experience challenges in expanding our existing marketing and sales capabilities, including further specialization of our go-to-market organization; the growth of our customer base may slow further; and disruptions or performance issues could occur with our technology.