So, here's the thing about earnings season: sometimes a company can deliver a perfectly good quarter and still leave investors feeling a bit... meh. That seems to be the story for Okta Inc. (OKTA) after it reported its fiscal fourth-quarter results on Wednesday.
The cybersecurity and identity management specialist posted revenue of $761 million, which was better than the $748.79 million analysts were expecting. Adjusted earnings came in at 90 cents per share, also topping the consensus estimate of 85 cents. On the surface, that's a beat. Revenue grew 11% from the same quarter last year, and subscription revenue—the core of the business—also grew 11% to $747 million.
But the market often cares more about what's next than what just happened. And for the current quarter, Okta's outlook is a bit softer than hoped. The company expects first-quarter revenue between $749 million and $753 million. The midpoint of that range is just below the analyst estimate of $754.69 million. For earnings, it's guiding for 84 to 86 cents per share on an adjusted basis, while the Street was looking for 87 cents.
It's not a massive miss, but it's enough to take some of the shine off the Q4 beat. It's the classic "good quarter, cautious guide" playbook.
Looking further ahead, the full-year forecast for fiscal 2027 is more encouraging. Okta sees revenue of $3.17 billion to $3.19 billion, which brackets the consensus estimate of about $3.17 billion. For earnings, the company expects $3.74 to $3.82 per share, which is actually above the $3.68 per share analysts had penciled in. So, the near-term caution doesn't seem to reflect a longer-term problem with the story.
Digging into the details, a key metric for software companies is remaining performance obligations (RPO), which is essentially contracted revenue that hasn't been recognized yet. Okta's RPO stood at $4.83 billion at the end of the quarter, up 15% year-over-year. That's a healthy sign for future revenue visibility.
On the cash flow side, things were a bit lighter. Net cash from operations was $258 million, down from $286 million a year ago. Free cash flow followed a similar trend, coming in at $252 million compared to $284 million in the prior year's quarter. The company ended the period with a strong balance sheet, holding about $2.55 billion in cash, cash equivalents, and short-term investments.
In the earnings release, CEO Todd McKinnon tied the company's mission to the current tech zeitgeist: artificial intelligence. "AI is redefining the future of software and creating a critical need to secure AI agents, a challenge Okta was built to solve," McKinnon said. He positioned Okta as "the only independent and neutral identity platform" that can secure "every identity — from humans to AI agents." It's a forward-looking pitch, suggesting the company's technology will be just as relevant for managing machine identities as human ones in the coming AI era.
As for the stock, it showed a muted reaction. Shares were down about 1% in after-hours trading, hovering around $71.74. That's not a dramatic move, which fits with a report that had both positive and cautious elements. The market seems to be digesting it rather than making a snap judgment.
Okta's management team was scheduled to discuss the results in more detail on an earnings call starting at 5 p.m. ET. Investors were likely listening for more color on the Q1 guidance, the AI strategy, and whether the softer near-term outlook is a temporary blip or a sign of something more.
