8-K: Okta Q3 FY26 Results: Revenue Up 12%, Strong Cash Flow

Okta announced solid third quarter fiscal year 2026 financial results, with revenue growing 12% year-over-year and strong cash flow generation.

Summary

• Total revenue for Q3 FY26 was $742 million, an increase of 12% year-over-year.
• Subscription revenue for Q3 FY26 was $724 million, an increase of 11% year-over-year.
• Remaining performance obligations (RPO) reached $4.292 billion, growing 17% year-over-year.
• Current remaining performance obligations (cRPO) were $2.328 billion, up 13% compared to Q3 FY25.
• GAAP operating income was $23 million (3% of total revenue), a significant improvement from a GAAP operating loss of $16 million (-2%) in Q3 FY25.
• Non-GAAP operating income was $178 million (24% of total revenue), up from $138 million (21%) in Q3 FY25.
• GAAP net income was $43 million, compared to $16 million in Q3 FY25.
• Non-GAAP net income was $152 million, compared to $121 million in Q3 FY25.
• GAAP diluted net income per share was $0.24, compared to $0.00 in Q3 FY25.
• Non-GAAP diluted net income per share was $0.82, compared to $0.67 in Q3 FY25.
• Net cash provided by operations was $218 million (29% of total revenue), up from $159 million (24%) in Q3 FY25.
• Free cash flow was $211 million (28% of total revenue), up from $154 million (23%) in Q3 FY25.
• Cash, cash equivalents, and short-term investments totaled $2.463 billion at October 31, 2025.
• The company settled the remaining principal amount of the 2025 Notes for $510 million in cash during the quarter.

Sentiment

Score: 8

Explanation: The filing indicates strong financial performance with significant improvements in profitability and cash flow, coupled with strategic positioning in the AI security market. While future growth rates show a slight moderation, the overall trajectory is positive and the company is executing well on its strategy.

Positives

• Strong revenue growth with total revenue up 12% and subscription revenue up 11% year-over-year.
• Significant improvement in GAAP operating income, moving from a loss of $16 million in Q3 FY25 to a profit of $23 million in Q3 FY26.
• Non-GAAP operating income margin expanded to 24% from 21% in the prior year.
• Substantial increase in GAAP net income to $43 million from $16 million year-over-year.
• Robust free cash flow generation of $211 million, with free cash flow margin improving to 28% from 23%.
• Continued strength with large customers and successful adoption of new products like Okta Identity Governance.
• Strategic positioning in the AI security market with the recent launch of Auth0 for AI Agents.
• Growth in RPO (17% YoY) and cRPO (13% YoY) indicates future revenue visibility.

Negatives

• The guidance for Q4 FY26 and full year FY26 indicates a slight deceleration in revenue growth rates compared to Q3 FY26 actuals (e.g., Q4 revenue growth expected at 10% vs. Q3 actual of 12%).
• Current RPO growth guidance for Q4 FY26 is 9% year-over-year, which is lower than the 13% year-over-year growth achieved in Q3 FY26.

Risks

• Macroeconomic conditions could reduce demand for solutions.
• The company and its third-party service providers could experience cybersecurity incidents.
• Inability to manage or sustain revenue growth and profitability.
• Financial resources may be insufficient to effectively compete in the market.
• Inability to attract new customers, or retain or sell additional solutions to existing customers.
• Failure to maintain strategic partnerships to promote or enhance solutions.
• Challenges in successfully expanding existing marketing and sales capabilities, including further specializing the go-to-market organization.
• Customer growth has slowed in recent periods and could continue to decelerate in the future.
• Potential for interruptions or performance problems associated with technology, including service outages.
• Failure or perceived failure to fully comply with various privacy and security provisions.

Future Outlook

For the fourth quarter of fiscal 2026, Okta expects total revenue of $748 million to $750 million (10% YoY growth), current RPO of $2.445 billion to $2.450 billion (9% YoY growth), non-GAAP operating income of $189 million to $191 million (25% margin), and non-GAAP diluted net income per share of $0.84 to $0.85. For the full fiscal year 2026, the company now expects total revenue of $2.906 billion to $2.908 billion (11% YoY growth), non-GAAP operating income of $753 million to $755 million (26% margin), and non-GAAP diluted net income per share of $3.43 to $3.44. Non-GAAP free cash flow margin is projected at approximately 31% for Q4 FY26 and 29% for full year FY26.

Management Comments

• "We delivered another quarter of solid results highlighted by continued strength with large customers, adoption of new products like Okta Identity Governance, and strong cash flow." Todd McKinnon, Chief Executive Officer and co-founder of Okta.
• "Our modern, neutral identity platform enables companies to safely build, manage, and govern every identity, including agents." Todd McKinnon, Chief Executive Officer and co-founder of Okta.
• "Okta secures AI and we are excited about the recent launch of Auth0 for AI Agents. AI agents are redefining how organizations work, and Okta is key to securing this technology transformation." Todd McKinnon, Chief Executive Officer and co-founder of Okta.
• "We are confident in our strategy and excited to carry this momentum into the fourth quarter and beyond." Todd McKinnon, Chief Executive Officer and co-founder of Okta.

Industry Context

Okta is actively positioning itself within the evolving cybersecurity landscape by securing AI technologies, as evidenced by the launch of Auth0 for AI Agents. This move aligns with broader industry trends emphasizing the critical need for robust identity management and security solutions as AI adoption expands and redefines organizational workflows.

Comparison to Industry Standards

• NA

Stakeholder Impact

• Shareholders are likely to benefit from improved profitability, strong cash flow generation, and a positive outlook, which could lead to increased share value.
• Customers will benefit from continued product innovation, including new offerings like Okta Identity Governance and Auth0 for AI Agents, enhancing their security and identity management capabilities.
• Employees may experience stability and potential growth opportunities due to the company's strong financial performance and strategic expansion into new technology areas like AI security.

Next Steps

• Okta will host a live video webcast on December 2, 2025, at 2:00 p.m. Pacific Time to discuss the results and outlook.
• The company will continue to use its investor.okta.com and okta.com/blog websites as a means of disclosing material non-public information, announcing upcoming investor conferences, and complying with Regulation FD obligations.

Key Dates

Recommendation

Okta demonstrated strong Q3 FY26 financial performance with significant year-over-year improvements in revenue, profitability (GAAP and non-GAAP), and cash flow. The company is strategically positioned in the growing identity and AI security markets, as evidenced by the launch of Auth0 for AI Agents. While the forward guidance indicates a slight moderation in growth rates, the overall outlook remains positive with healthy margins and continued cash generation. The company's ability to turn GAAP operating loss into a profit and increase free cash flow makes it an attractive investment for long-term growth in the cybersecurity sector.

Keywords

Okta, OKTA, financial results, Q3 FY26, identity management, cybersecurity, cloud security, Auth0, AI agents, software, SaaS, enterprise software, revenue, earnings, cash flow, RPO, cRPO