Okta, Inc. 10-Q Summary: Fiscal Q1 2027
Business Context and Reporting Period
This report covers the quarterly period ended April 30, 2026 (Fiscal Q1 2027). Okta, Inc. operates as a leading independent identity provider, offering the Okta Platform and Auth0 Platform to secure access for human users and non-human identities (including AI agents). The company operates as a single reportable segment utilizing a Software-as-a-Service (SaaS) model.
Key Financial Metrics
| Metric | Q1 2027 (Apr 30, 2026) | Q1 2026 (Apr 30, 2025) |
|---|---|---|
| Total Revenue | $765 million | $688 million |
| Net Income | $74 million | $62 million |
| Diluted EPS | $0.42 | $0.35 |
| Gross Margin | 78% | 77% |
| Operating Income | $56 million | $39 million |
| Operating Cash Flow | $277 million | $241 million |
| Cash & Investments | $2,589 million | $2,110 million (implied) |
| Debt (Convertible Notes) | $350 million (Current) | $350 million |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 11% year-over-year, driven by an 11% increase in subscription revenue ($750M vs. $673M). Growth was attributed to increased users, sales of additional solutions to existing customers, and new customer acquisition.
- Profitability: Net income rose 19% to $74 million. Operating income increased 44% to $56 million, supported by improved spend efficiency in General and Administrative (G&A) expenses.
- Expense Trends: Sales and Marketing expenses increased 18% ($278M) due to higher labor and marketing costs. Research and Development expenses rose 6% ($163M). G&A expenses decreased 5% ($98M).
- Capital Allocation: The company initiated a $1 billion share repurchase program in January 2026. During Q1 2027, it repurchased 3.03 million shares for $241 million. $680 million remains available under the program.
- Acquisition: Okta acquired Axiom Security Ltd. in September 2025 for $54 million to enhance privileged access management capabilities.
Guidance, Outlook, and Risks
- Outlook: Management expects interest income to decrease in fiscal 2027 as cash is deployed for share repurchases and to settle the 2026 Convertible Senior Notes maturing on June 15, 2026. Professional services revenue is expected to decline as engagements shift to the partner ecosystem.
- Key Metrics: Dollar-Based Net Retention Rate improved to 107% (trailing 12 months). Customers with Annual Contract Value (ACV) above $100,000 increased to 5,180. Remaining Performance Obligations (RPO) totaled $4,719 million, with $2,499 million expected to be recognized in the next 12 months.
- Risks:
- Cybersecurity: Past incidents have harmed reputation and financial results; future incidents could have material adverse effects.
- Economic Conditions: Macroeconomic uncertainties, inflation, and interest rate fluctuations may impact customer spending and sales cycles.
- Tax: The company maintains a full valuation allowance on U.S. deferred tax assets. Future release of this allowance depends on generating sufficient taxable income.
Investor Verification Checklist
- Verify the settlement plan for the $350 million Convertible Senior Notes maturing June 15, 2026.
- Monitor the impact of the $1 billion share repurchase program on future liquidity and cash flow.
- Assess the sustainability of the 107% Dollar-Based Net Retention Rate in the context of potential economic headwinds.
- Review the timeline for potential release of the valuation allowance on deferred tax assets as profitability continues.
- Track the integration progress and revenue contribution from the Axiom Security acquisition.