OKTA Shares Jump on Solid Q1 Earnings Beat, Revenues Increase Y/Y

Okta OKTA posted first-quarter fiscal 2027 earnings of 91 cents per share, up 5.8% year over year, and surpassed the Zacks Consensus Estimate by 6.75%. Revenues rose 11.2% from the year-ago quarter to $765 million, beating the Zacks Consensus Estimate by 1.82%. The uptick can be attributed to steady subscription momentum, which increased 11% year over year to $750 million, continuing to account for the vast majority of the top line. Professional services and other revenues were $15 million, unchanged from the year-ago quarter, underscoring how product-led growth is driving the quarter’s revenue cadence. Location-wise, revenues from the United States contributed 83% to total revenues in the fiscal first quarter. The figure increased 11.15% year over year to $608 million. International revenues contributed 21.6% to total revenues. The figure increased 11.35% year over year to $157 million.Okta stock gained 8.19% in the pre-market trading.Okta, Inc. Price, Consensus and EPS Surprise Okta, Inc. price-consensus-eps-surprise-chart | Okta, Inc. QuoteOkta’s Q1 Top-Line DetailsOkta ended the quarter with remaining performance obligations (RPO) of $4.719 billion, up 16% year over year, highlighting continued strength in contracted subscription backlog. Current RPO, which captures the portion expected to be recognized over the next 12 months, rose 12% year over year to $2.499 billion. Customers with more than $100K in Annual Contract Value increased 6% year over year to 5,180. The dollar-based retention rate for the trailing 12 months was 107%, down 1% year over year.Okta’s Q1 Operating DetailsFirst-quarter fiscal 2026 non-GAAP gross margin decreased 30 basis points (bps) on a year-over-year basis to 82%.As a percentage of revenues, research and development expenses increased 40 bps year over year to 15.9%. General and administrative expenses decreased 170 bps year over year to 9%. Sales and marketing expenses increased 290 bps year over year to 31.6%.Non-GAAP operating margin contracted 180 bps year over year to 25% in the reported quarter.Okta’s Balance SheetOkta had $2.589 billion in cash, cash equivalents and short-term investments as of April 30, 2026.Net cash provided by operating activities was $277 million, or 36% of revenue, while free cash flow was $271 million, or 35% of revenue.In the first quarter of fiscal 2027, the company also returned capital to shareholders during the quarter, including $248 million of common stock repurchases.OKTA’s Outlook Calls for Steady Expansion in Fiscal 2027For the second quarter of fiscal 2027, Okta expects revenues in the range of $790-$794 million, implying 9% year-over-year growth. The company expects non-GAAP diluted net income per share between 95 cents and 97 cents, free cash flow of $155-$165 million and a free cash flow margin of 20%-21%. For the full year, management raised the framework around steady top-line expansion, guiding revenues in the range of $3.185-$3.205 billion, or 9%-10% growth year over year. Okta also expects non-GAAP diluted net income per share of $3.79-$3.87 and free cash flow of $855-$885 million, while noting an approximately one-percentage-point headwind to total revenue growth tied to accelerating the shift of professional services work to partners.OKTA’s Zacks Rank & Stocks to ConsiderOkta currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the broader Zacks Computer and Technology sector are Applied Materials AMAT, Celestica CLS and Amphenol APH. Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Shares of Applied Materials have surged 75% year to date. The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 earnings is pegged at $12.02 per share, up 9 cents over the past seven days. This indicates a 27.6% year-over-year surge.Shares of Celestica have gained 19.7% year to date. The Zacks Consensus Estimate for Celestica’s 2026 earnings is pegged at $10.16 per share, up 13.6% over the past 30 days. This indicates a year-over-year jump of 67.93%.Amphenol shares have risen 9.6% year to date. The Zacks Consensus Estimate for APH’s 2026 earnings is pegged at $4.76 per share, up 10.9% over the past 30 days. This indicates a year-over-year increase of 42.51%.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. 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