Identity management software company Okta (OKTA) reported Q4 FY2025 results that exceeded expectations in both revenue and earnings. Revenue went up by 12.7% to $682 million, surpassing market projections, and the non-GAAP profit of $0.78 per share was 6% higher than analysts’ consensus estimates. The company’s guidance for next quarter’s revenue is also promising, estimated at $679 million, a 1.3% rise above analysts’ estimates. In a recent development, Okta surpassed the milestone of $1 billion in aggregate sales over the past four years through AWS Marketplace, with plans for expanded collaboration in the pipeline.
Partnership with AWS
Okta, Inc. offers tools to manage and secure identities. Its products include Single Sign-On for application access, Adaptive Multi-Factor Authentication for added security, and API Access Management for organizational APIs. Okta sells products through its sales force and partners.
One of the primary distribution partners, AWS Marketplace, is a digital catalog facilitating easy discovery, testing, and deployment of software that runs on Amazon (AMZN) Web Services. AWS has recognized Okta as the 2024 Global Marketplace Partner of the Year and Global Non-Profit Organization Technology Partner of the Year. Due to their successful collaboration, Okta and AWS have worked together on over 25 product integrations to enhance secure identity and authentication. Okta reported an aggregate total contract value of $1 billion via AWS in January 2025.
In addition to this, Okta and AWS are expanding their collaboration with a new Strategic Collaboration Agreement. This partnership aims to accelerate the adoption of secure identity solutions worldwide, focusing on initiatives like disaster recovery enhancement, scalability of identity platforms, and additional compliance certifications. Okta’s use of artificial intelligence (AI) is also set to transform how the company detects Identity threats. In particular, Okta AI has been integrated into various products to protect against cyberattacks.
Top and Bottom-line Beats
For Q4 FY2025, the company reported revenue of $682 million, marking a 13% year-over-year increase and exceeding analyst expectations by $12.8 million. The company’s RPO or subscription backlog reached $4.215 billion, 25% higher than the previous year. Okta’s GAAP operating income came in at $8 million, a vast improvement compared to the GAAP operating loss of $83 million in the same quarter of the previous year. Non-GAAP operating income was $168 million, a 25% share of total revenue, a step up from the prior year’s $129 million or 21%. Non-GAAP earnings per share (EPS) of $0.78 beat consensus projections by $0.04.
For FY2025, total revenue increased by 15% to $2.610 billion, with subscription revenue growing by 16% to $2.556 billion. The GAAP operating loss was $74 million, compared to $516 million in FY2024. Non-GAAP operating income was $587 million, or 22% of total revenue, a key improvement from the 14% recorded in FY2024. The company’s net cash provided by operations was $750 million, or 29% of total revenue, marking an increase from 23% in FY2024.
The company’s financial outlook for the first quarter of FY2026 includes projected revenue of $678 million to $680 million, a growth rate of 10% year-over-year. It anticipates a non-GAAP operating income of $168 million to $170 million, equating to a non-GAAP operating margin of 25%. For the full year of FY2026, Okta expects total revenue of $2.850 billion to $2.860 billion, a growth rate of 9% to 10% year-over-year, and a non-GAAP operating income of $705 million to $715 million with a non-GAAP operating margin of 25%.
Analysts Respond Positively
Analysts following the company have responded to the recent financial results by raising price target estimates. For example, Jefferies, Wells Fargo, and Canaccord announced upgrades on the shares following promising Q4 results. Jefferies has raised the target from $90 to $110, citing strong Q4 results. Wells Fargo increased its target from $95 to $100, emphasizing strong cRPO growth and above-expected FY26 revenue/margin guidance despite slowing Workforce growth. Lastly, Canaccord increased its target from $94 to $100, highlighting the 25% RPO growth exceeding firm and consensus expectations.
Okta is rated a Moderate Buy overall, based on recent recommendations of 21 analysts. The average price target for OKTA stock is $111.35, which represents an upside potential of 27.75% from current levels.
