Okta, Inc. ((OKTA)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Okta, Inc. Reports Strong Quarter with Promising Growth Opportunities
The recent earnings call of Okta, Inc. reflected a strong quarter with significant contributions from new products and a positive financial outlook. The company is focusing on AI security, which presents a promising growth opportunity. However, there is some uncertainty due to limited guidance for FY ’27 and potential risks associated with AI agent security. Overall, the sentiment is positive with optimism for future growth.
Strong Financial Performance
Okta reported another solid quarter, showcasing improvements in sales productivity and positive trends in key performance indicators. The company maintains a strong balance sheet with nearly $2.5 billion in cash, cash equivalents, and short-term investments, underscoring its financial robustness.
Growth in New Products
Okta’s new products, including Okta Identity Governance and Okta for AI agents, have significantly contributed to the company’s results. A record number of customers are engaging with these solutions, highlighting the successful integration and market acceptance of these offerings.
AI Security as a Growth Catalyst
Focusing on securing AI agents, Okta sees this as a significant new opportunity and a catalyst for growth. The company has already engaged with over 100 customers, representing over $200 million in existing annual recurring revenue (ARR), indicating strong interest and potential in this area.
Positive Outlook for Revenue Growth
For FY ’26, Okta expects total revenue growth of 11%, a non-GAAP operating margin of 26%, and a free cash flow margin of approximately 29%. This positive outlook reflects the company’s confidence in its strategic initiatives and market positioning.
Sales Specialization Strategy Success
The specialization strategy in sales is yielding positive results for Okta, with improvements in account executive productivity, tenure, and low attrition rates. This strategy is proving effective in enhancing sales efficiency and effectiveness.
Limited Guidance for FY ’27
Due to the importance of Q4, Okta did not provide guidance for FY ’27, creating some uncertainty regarding future financial performance. Investors and analysts will be keenly awaiting the next quarterly earnings call for further insights.
Potential Risks with AI Agent Security
While there is a surge in interest for AI agent security, it is still early days. The market is dynamic, and there is a risk of being locked into a single platform, which could pose challenges as the landscape evolves.
Forward-Looking Guidance
In the third quarter of fiscal 2026 earnings webcast, Okta provided detailed guidance about its financial outlook and market positioning. The company anticipates a total revenue growth of 10% for Q4 and FY 2026, with current RPO growth projected at 9%. Okta expects a non-GAAP operating margin of 25% for Q4 and a free cash flow margin of approximately 31%. For the full year FY 2026, Okta has raised its outlook, now predicting an 11% total revenue growth, a 26% non-GAAP operating margin, and approximately 29% free cash flow margin. The company plans to issue FY 2027 guidance in the next quarterly earnings call.
In conclusion, Okta, Inc.’s earnings call highlighted a strong quarter with positive sentiment and optimism for future growth. The company’s focus on AI security and new product growth are promising, though some uncertainty remains due to limited future guidance and potential risks in AI agent security. Investors should watch for further updates in the next earnings call.