$Okta Inc.(OKTA)$ is scheduled to report its financial results for the second quarter of fiscal year 2026 after the U.S. market closes on Tuesday, August 26, 2025. This report is highly anticipated by investors, especially given the stock's recent volatility and the broader economic climate.
Non-GAAP Earnings Per Share (EPS): The consensus estimate for Q2 FY2026 non-GAAP EPS is $0.33, with a range of $0.30 to $0.35. This represents a significant year-over-year increase from the $0.21 reported in the same quarter last year.
Tipranks is expecting the consensus EPS forecast to come in at $0.84 per share.
Revenue: Analysts are forecasting revenue to be in the range of $710 million to $712 million, which would indicate a year-over-year growth of about 10%.
Summary of Okta's (OKTA) Fiscal Q1 2026 Earnings
Okta reported its financial results for the first quarter of fiscal year 2026 on May 27, 2025. The company delivered a "beat and raise" on its headline numbers, with strong performance driven by its large enterprise customers and new product adoption. However, despite the positive financial report, the stock experienced a significant decline in aftermarket trading.
Key Financial Highlights:
Revenue: Okta's total revenue for Q1 FY2026 was $688 million, a 12% year-over-year increase and an over-performance against the consensus estimate of approximately $680 million.
Non-GAAP Earnings Per Share (EPS): The company posted a non-GAAP EPS of $0.86, a substantial beat compared to the analyst consensus of $0.77.
Profitability: Okta continued its trend of improving profitability, reporting record GAAP and non-GAAP operating profitability and a quarter of strong free cash flow. This demonstrated the company's operational leverage and efficiency gains.
Key Metrics:
Current Remaining Performance Obligations (cRPO): This metric, a key indicator of near-term revenue, grew by 14% year-over-year, indicating a healthy, though somewhat decelerating, backlog of subscription contracts.
Customer Growth: The company exited the quarter with approximately 20,000 customers, with a notable increase in large customers (those with an Annual Contract Value (ACV) over $100,000) and customers with an ACV over $1 million.
The Lesson from the Guidance Given
The negative stock reaction despite the solid Q1 results was a classic example of "guidance matters more than the past." The lesson learned from Okta's Q1 FY2026 guidance is a critical one for investors in the current market environment: Prudent and cautious forward guidance, even when accompanied by a strong performance, can spook a market that is highly sensitive to growth expectations.
Here Is a breakdown of the key takeaways from the guidance:
Pessimism on Revenue Growth: While Okta raised its full-year EPS outlook, it maintained a conservative and somewhat cautious tone regarding its revenue growth projections. Management cited "uncertain economic environment" and "potential risks" for the remainder of the fiscal year. This commentary, suggesting a headwind to revenue retention and a potential slowdown in customer spending, overshadowed the positive Q1 numbers.
Focus on Profitability vs. Growth: The guidance reinforced Okta's strategic shift from a "growth at all costs" model to one focused on "profitable growth." While this is a positive long-term development for the company's financial health, it signaled to some investors that the top-line growth rate would continue to decelerate. For high-growth technology stocks, the market often prioritizes revenue acceleration over near-term profitability.
Impact of Go-to-Market Realignment: Management acknowledged that it was still early to fully assess the success of the go-to-market team specialization into Okta and Auth0 sellers. The cautious outlook was, in part, a reflection of the company's prudent approach to factoring in this organizational change, which could create some short-term uncertainty.
Federal Business Headwinds: The earnings call commentary specifically mentioned near-term uncertainty in the U.S. federal vertical, which has historically been a strong area for the company. This highlighted a potential headwind that could affect future contract signings and revenue.
In essence, the market reacted to the narrative of the guidance, not just the numbers. The narrative was one of a company bracing for a potentially more challenging macroeconomic climate, which triggered a sell-off. The lesson for investors is that in a valuation-sensitive market, even a strong performance may not be enough to satisfy expectations if the forward-looking commentary suggests a deceleration in key growth metrics. The focus shifts from what the company has done to what it is going to do, and any sign of caution can be punished severely.
Okta (OKTA) is set to report its fiscal Q2 2026 earnings on August 26, 2025. Analysts anticipate non-GAAP EPS of $0.84 on revenue of roughly $711 million, reflecting a slowdown to around 10% year-over-year growth.
Key metrics for investors to watch include:
Remaining Performance Obligations (RPO) and Current RPO (cRPO): These metrics, particularly cRPO, signal future revenue growth.
Profitability and Margins: Investors will be keen to see if Okta can maintain its strong operating margins and continue its path toward profitability.
Management Commentary: The market will closely scrutinize management's outlook on the second half of fiscal year 2026, especially regarding macroeconomic conditions and federal business.
Short-term trading opportunities are highly volatile. A "beat and raise" report could lead to a strong rally, while cautious guidance—similar to the Q1 report—could trigger a sell-off. The stock has a history of significant post-earnings price swings, making it a high-risk/high-reward trading event.
Analyst Expectations
Guidance: Investors will be particularly focused on the company's outlook for the third quarter and the full fiscal year 2026. Management's commentary on the demand environment and their confidence in the second half of the year will be critical. The current full-year revenue forecast is for a 9-10% growth rate.
Key Metrics to Watch
While top-line numbers like revenue and EPS are important, a deeper dive into the company's operational metrics can provide a more complete picture of its health and growth trajectory.
Remaining Performance Obligations (RPO) and Current RPO (cRPO): These metrics are a strong indicator of future revenue. RPO represents the total value of all signed contracts that have not yet been recognized as revenue. cRPO specifically includes the portion of RPO that is expected to be recognized as revenue within the next 12 months. Investors will be looking for continued growth in these numbers as a sign of sustained customer demand. A slowdown in cRPO growth has been a concern in the past, so a strong number here would be a positive signal.
Customer Growth and Customer with $100k+ in Annual Contract Value (ACV): Okta's ability to add new customers and, more importantly, to expand its relationships with larger enterprise clients is a key driver of its long-term growth. The company reported roughly 20,000 customers and a sequential increase in customers with ACV over $100,000 in Q1. Investors will want to see continued momentum in these areas.
Profitability and Margins: While Okta has been focused on growth, its recent shift toward profitability has been a positive sign. Analysts will be scrutinizing gross margins, particularly subscription gross margin, and operating margins. A sustained path toward GAAP profitability would be a major win for the company and its investors. Okta raised its free cash flow margin guidance for the full year in its last report, and a strong free cash flow performance in Q2 would reinforce this positive trend.
Commentary on Macroeconomic and Federal Business: Management's commentary on the current macroeconomic conditions and the health of its federal business will be a critical part of the earnings call. Previously, the company noted some "added levels of uncertainty" and anticipated a sluggish federal business, which has been a headwind. Any change in this sentiment could significantly impact investor confidence.
AI and New Product Adoption: Okta has been investing heavily in its AI-powered security portfolio and expanding into new areas like Identity Governance, Privileged Access, and AI-driven identity solutions. The adoption rates of these newer products will be a key indicator of the company's ability to diversify its revenue streams and maintain a competitive edge against rivals like Microsoft.
Okta (OKTA) Price Target
Based on 40 analysts from Tiger Brokers offering 12 month price targets for Okta in the last 3 months. The average price target is $120.05 with a high forecast of $148.00 and a low forecast of $75.00. The average price target represents a 30.42% change from the last price of $92.05.
Short-Term Trading Opportunities Post-Earnings
Trading around earnings is inherently risky and highly dependent on the outcome of the report. The stock's reaction can be swift and severe, often driven by whether the results and guidance meet, beat, or miss analyst expectations.
Potential Scenarios for Trading:
Positive Surprise (Bullish Scenario): If Okta reports a significant beat on revenue and EPS and, most importantly, provides a confident and optimistic outlook for the second half of the fiscal year, the stock could see a strong positive reaction. A surprise in cRPO growth or a positive update on the federal business would be particularly impactful. This could create an opportunity for short-term long positions.
Negative Surprise (Bearish Scenario): If the company misses on key metrics, or if management's guidance is weaker than anticipated, the stock could face significant selling pressure. Continued deceleration in growth, especially in a competitive market, could lead to a sharp decline. Concerns about a slowdown in the federal business or macroeconomic headwinds could reinforce a negative view. This might present an opportunity for short-term short positions.
"In-Line" Report (Neutral/Volatile Scenario): An "in-line" report, where results are generally as expected but without a significant positive surprise in guidance, could lead to a more muted or even a negative reaction. Given the stock's recent volatility and the high expectations for the tech sector, simply meeting expectations may not be enough to satisfy investors. This could lead to choppy trading.
Historical Volatility:
Historically, Okta's stock has shown a tendency for significant price swings following earnings reports. Over the last five years, one-day post-earnings returns have been evenly split between positive and negative outcomes. The median positive move has been around +12%, while the median negative move has been approximately -9%. This suggests that the stock is highly sensitive to earnings news, and traders often use options to play this volatility.
Important Considerations for Short-Term Trading:
Risk Management: Due to the high volatility, short-term trading around earnings requires a robust risk management strategy. This could include using stop-loss orders or options strategies like straddles or strangles, which are designed to profit from a large move in either direction.
Options Market: The options market provides an "implied volatility" number, which is a key metric for traders. It represents the magnitude of the move the market expects from the stock after earnings. You can use this to gauge the potential risk and reward.
OKTA implied volatility (IV) is 65.8, which is in the 92% percentile rank. This means that 92% of the time the IV was lower in the last year than the current level. The current IV (65.8) is 3.8% above its 20 day moving average (63.4) indicating implied volatility is trending higher.
Beyond the Headlines: For a short-term trade, it's crucial to listen to the earnings call and understand the nuances of the report. The "why" behind the numbers, such as management's commentary on customer behavior or the competitive landscape, can be just as important as the numbers themselves.
Technical Analysis - Exponential Moving Average (EMA)
If we looked at OKTA, which have been on negative momentum due to the recent selloff, and we can see that the share price finally manage to go above the 12-day period, and if OKTA could provide an earnings beat with stronger remaining RPO and current cRPO, we might see a nice reversal to the bullish side for OKTA.
Summary
Okta (OKTA) is set to report its fiscal Q2 2026 earnings on August 26, 2025. Analysts anticipate non-GAAP EPS of $0.84 on revenue of roughly $711 million, reflecting a slowdown to around 10% year-over-year growth.
Key metrics for investors to watch include:
Remaining Performance Obligations (RPO) and Current RPO (cRPO): These metrics, particularly cRPO, signal future revenue growth.
Profitability and Margins: Investors will be keen to see if Okta can maintain its strong operating margins and continue its path toward profitability.
Management Commentary: The market will closely scrutinize management's outlook on the second half of fiscal year 2026, especially regarding macroeconomic conditions and federal business.
Short-term trading opportunities are highly volatile. A "beat and raise" report could lead to a strong rally, while cautious guidance—similar to the Q1 report—could trigger a sell-off. The stock has a history of significant post-earnings price swings, making it a high-risk/high-reward trading event.
Appreciate if you could share your thoughts in the comment section whether you think OKTA could continue to maintain its strong operating margins and gave a much positive path toward profitability.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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