Okta, Inc. (OKTA) - Q1 2026 (Ended April 30, 2025) Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended April 30, 2025 (Fiscal Q1 2026). Okta, Inc. operates as a single reportable segment, providing cloud-based identity and access management solutions through its Okta and Auth0 platforms. The company employs a SaaS business model, generating approximately 98% of its revenue from multi-year subscriptions.
Key Financial Metrics
| Metric | Q1 2026 (Apr 30, 2025) | Q1 2025 (Apr 30, 2024) |
|---|---|---|
| Total Revenue | $688 million | $617 million |
| Net Income (Loss) | $62 million | ($40 million) |
| Diluted EPS | $0.35 | ($0.24) |
| Gross Margin | 77% | 76% |
| Operating Income | $39 million | ($47 million) |
| Operating Cash Flow | $241 million | $219 million |
| Cash & Investments | $2,725 million | $2,523 million (est.) |
| Convertible Debt (Current) | $509 million | $509 million |
Material Changes vs. Prior Period
- Profitability Turnaround: The company reported a net income of $62 million, a significant improvement from a net loss of $40 million in the prior year. Operating income turned positive at $39 million compared to a loss of $47 million.
- Revenue Growth: Total revenue increased 12% year-over-year, driven primarily by a 12% increase in subscription revenue ($673 million vs. $603 million).
- Expense Efficiency: Total operating expenses decreased by 4% to $494 million. Research and Development (R&D) expenses dropped 6% due to reduced stock-based compensation, and General and Administrative (G&A) expenses fell 11% due to lower stock-based compensation and the absence of a $7 million legal settlement charge incurred in the prior year.
- Stock-Based Compensation: Total stock-based compensation expense decreased to $128 million from $151 million in the prior year.
Guidance, Outlook, and Risks
- Outlook: Management expects sales and marketing expenses to remain the largest operating expense category but anticipates this as a percentage of revenue will decrease as total revenue grows. The company intends to settle the principal amount of its 2025 Convertible Senior Notes (maturing September 1, 2025) in cash.
- Key Business Metrics:
- Dollar-Based Net Retention Rate: 106% (down from 111% in the prior year), attributed to a slower rate of ACV growth from existing customers due to the macroeconomic environment.
- Remaining Performance Obligations (RPO): Total RPO is $4,084 million, with $2,227 million (55%) expected to be recognized in the next 12 months.
- Customer Count: Customers with ACV >$100,000 increased to 4,870 (up 7% from 4,550).
- Risks and Contingencies:
- Debt Maturity: $510 million in 2025 Convertible Senior Notes are classified as current liabilities due to maturity in September 2025.
- Legal Proceedings: A securities class action lawsuit regarding cybersecurity controls was settled for $60 million (covered by insurance and retention). Derivative lawsuits are in the process of finalizing a non-monetary settlement.
- Cybersecurity: The company notes that past incidents have harmed reputation and financial results, and future incidents remain a material risk.
- Macroeconomic Conditions: Rising interest rates, inflation, and geopolitical events continue to create uncertainty, potentially lengthening sales cycles and impacting customer spending.
Investor Verification Checklist
- Verify the company's ability to refinance or repay the $510 million 2025 Convertible Senior Notes maturing in September 2025 using current cash reserves of $2.7 billion.
- Monitor the trend of the Dollar-Based Net Retention Rate (106%) to ensure it stabilizes or improves despite macroeconomic headwinds.
- Review the status of the derivative litigation settlements to confirm no additional unexpected liabilities arise beyond the agreed non-monetary terms.
- Assess the impact of the 180-employee restructuring plan approved in the prior fiscal year on future operational efficiency and morale.
- Track the conversion of Class B common stock to Class A, noting the dual-class voting structure where directors and officers hold 33.3% of voting power.