Okta Reports Strong Q4 2025 Earnings with Record Profitability

Okta's recent earnings call showcased a strong Q4, highlighting record profitability and a significant growth trajectory. Investors should take note of its increasing revenue and profitability margins as key indicators for future stock performance.

Date: 04-03-2025

AI Rating: 8

Financial Highlights

Okta has reported strong financial results for Q4 FY '25, characterized by significant revenue growth and record profitability. The company's revenues stem from its workforce and customer identity products, both of which are seeing increasing demand.

Revenue Growth

Okta achieved approximately $1 billion in bookings for the first time during Q4. This performance translates into a 25% increase in remaining performance obligations (RPO), which crossed the $4 billion mark, indicating strong future revenue visibility.

Free Cash Flow (FCF)

The company reported a 6-point increase in free cash flow margin for FY '25, achieving approximately 25%. This growth is a positive sign for investors, reflecting better cash generation capabilities.

Profit Margins

Notably, Okta saw a 9-point increase in operating margin, which aligns with its focus on driving efficiencies in its operations. The reported non-GAAP operating margin for FY '25 is estimated at 25%, which underscores the company's operational strength.

Future Outlook

Guidance for Q1 of FY '26 anticipates a total revenue growth of 10%, further evidencing Okta’s robust financial health. The guidance reflects an optimistic outlook based in part on the recent growth in both customer and workforce identity products. Additionally, the significant rise in customer base with increased Annual Contract Value (ACV) showcases a shift towards higher revenue potential.

Additionally, Okta continues to enhance its product offerings, particularly with its identity solutions which have seen strong traction, promising increased future revenue streams. The focus on further specialization in marketing and sales roles is expected to enhance revenue further.

Stocks: OKTA