Shares climb as quarterly results beat forecasts
Okta (NASDAQ:OKTA) moved sharply higher in pre-market trading on Friday, gaining more than 7% and building on a 4.7% rise in after-hours dealings after the identity and access management specialist delivered stronger-than-expected fiscal first-quarter 2027 results.
The company reported revenue of $765 million for the quarter ended April 2026, representing year-on-year growth of 11% and exceeding the $752 million consensus estimate highlighted by Raymond James. Adjusted earnings reached $0.91 per share, comfortably ahead of analyst expectations of $0.85.
Subscription business continues to drive growth
Subscription revenue rose 11.4% from a year earlier to $750 million, reflecting continued demand for Okta’s identity security solutions.
Investors also focused on remaining performance obligations, a key indicator of future revenue. Current remaining performance obligations increased 12% year-on-year to $2.50 billion, slightly ahead of Raymond James’ buyside estimate of $2.49 billion.
Total remaining performance obligations climbed 16% to $4.72 billion, while the company’s dollar-based net retention rate improved to 107%, accelerating by 100 basis points from the previous quarter.
Enterprise customer growth remains healthy
Okta continued to expand its presence among larger customers during the quarter.
The company added 80 new customers with annual contract values exceeding $100,000, bringing the total number of large enterprise clients to 5,180, an increase of 6% compared with the same period last year.
According to Raymond James, recently launched products accounted for approximately 25% of first-quarter bookings. Transactions that included at least one newer product generated roughly 40% higher annual contract value than standard deals.
The company also delivered strong cash generation, reporting operating cash flow of $277 million and free cash flow of $271 million.
New product strategy delivers results
Management credited the company’s revised sales strategy and product expansion efforts for the strong performance.
“Last year’s go-to-market specialization is driving tangible results, including continued strength with large enterprises and increased sales productivity,” Chief Financial Officer Brett Tighe said. “The success of our new product portfolio, particularly Okta Identity Governance, validates that Okta’s unified identity platform is resonating with customers.”
AI opportunity continues to expand
During the earnings call, executives highlighted growing customer interest in artificial intelligence-related identity solutions.
Management described the company’s AI pipeline as “bigger than anything we’ve ever seen,” while noting that AI-related offerings are currently at an early stage and were “not materially contributing to the business in Q1.”
The comments reinforced investor optimism about the long-term opportunity for identity management solutions as AI adoption accelerates across enterprises.
Guidance points to continued growth
For the second quarter, Okta forecast revenue between $790 million and $794 million, alongside adjusted earnings of $0.95 to $0.97 per share.
For fiscal 2027 as a whole, management expects revenue of between $3.185 billion and $3.205 billion, representing annual growth of approximately 9% to 10%. Adjusted earnings per share are projected to range from $3.79 to $3.87.
Analysts raise price targets following results
The stronger-than-expected quarter prompted positive reactions from Wall Street analysts.
Raymond James maintained its “outperform” rating and increased its target price to $115 from $85. The brokerage now forecasts fiscal 2027 revenue of approximately $3.195 billion and non-GAAP earnings per share of $3.83.
Morgan Stanley also reiterated its “overweight” rating and lifted its target price to $115 from $101. The bank cited growing traction for newer products and the emerging opportunity in AI agent identity management, valuing the stock at 18 times projected calendar-year 2027 free cash flow.