Here's our initial take on Okta's (NASDAQ: OKTA) financial report.
Key Metrics
| Metric | Q4 2024 | Q4 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $605 million | $682 million | 13% | Beat |
| Earnings per share | $0.63 | $0.78 | 24% | Beat |
| Net retention rate | 111% | 107% | -400 bp | n/a |
| Free cash flow | $166 million | $284 million | 71% | n/a |
Okta's Focus on Large Customers Pays Off
Identity verification software vendor Okta reported solid numbers in the fourth quarter of its 2025 fiscal year, beating Wall Street top- and bottom-line estimates and delivering 24% year-over-year earnings growth.
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The company added 200 new customers in the quarter, which represents a 4% year-over-year gain. Increasingly, that's coming from large enterprise customers. Okta added 95 customers in the quarter with $100,000 or more in annual contract value. Those customers now represent about one-quarter of Okta's 19,650 total customers and account for more than 80% of the company's total annual contract value.
At quarter's end, 470 customers were doing at least $1 million in business with Okta annually, up 22% year over year.
One not-so-rosy figure was the net retention rate, which fell to 107% from 111% a year ago. That implies that while customers are still increasing the amount they spend with Okta, the rate of the increase is falling. The company said that recent pressure on retention rate "primarily reflects macro-related pressures." Okta said it expects the rate to fluctuate from quarter to quarter as the mix of new business, renewals, and upsells changes.
Immediate Market Reaction
Investors cheered the results. Shares of Okta were up about 15% in after-market trading immediately following the release but ahead of the company's quarterly call.
What to Watch
Okta provided upbeat guidance for the year to come, forecasting total fiscal 2026 revenue of between $2.85 billion and $2.86 billion and non-GAAP earnings per share of $3.15 to $3.20. Both ranges are well above the $2.94 per share in earnings on $2.8 billion in revenue consensus estimate. At the midpoint, that revenue figure represents 12% year-over-year growth.
Okta shares have been in a holding pattern for most of the last two years, weighed down by a high-profile security incident, some disappointing quarters, and concerns about the broader macro environment. These results and the company's optimistic guidance about what is to come provide a welcome change to what has been a quarter full of cautious outlooks among corporate tech vendors.
The macro environment remains a concern, but Okta appears well on its way to proving out the thesis that corporate customers will keep spending on cybersecurity even when times are uncertain.
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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Okta. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
