Executive Summary

Q1 FY26 delivered solid top-line and record profitability: revenue $688M (+12% y/y) and non-GAAP EPS $0.86; both were above Street consensus, with revenue ~$7.9M and EPS ~$0.09 ahead of expectations. Bold beat: revenue $688M vs $680.1M consensus; non-GAAP EPS $0.86 vs $0.77 consensus . Values retrieved from S&P Global.
Operating cash flow $241M (35% margin) and free cash flow $238M (35% margin), underscoring robust cash generation .
Management maintained a prudent posture in guidance to reflect go-to-market specialization and macro uncertainty. FY26 outlook raised vs preliminary from Q4: revenue growth now 9–10% and non-GAAP operating margin 25% (from ~7% growth and ≥22% margin) — a clear raise .
Watch-points: cRPO guidance for Q2 (c.$2.200–$2.205B) implies a second sequential decline, with CFO emphasizing seasonality/coverage ratio mechanics rather than bookings weakness; macro caution factored into guidance despite no observed deterioration in Q1 activity .

What Went Well and What Went Wrong

What Went Well

Record GAAP and non-GAAP operating profitability; non-GAAP operating margin 27% vs 22% y/y, driven by disciplined spend and scale leverage .
Strong cash generation: operating cash flow $241M (35% margin) and free cash flow $238M (35% margin), matching y/y FCF margin despite higher scale .
Product innovation and adoption: governance (OIG), Privileged Access, Device Access, Identity Security Posture Management, and Identity Threat Protection with Okta AI contributed; CEO: “world’s biggest organizations continue to turn to Okta… across AI use cases” . Management quote: “suite-based pricing… good, better, best… made good progress in Q1” .

What Went Wrong

cRPO guidance indicates sequential decline again in Q2, atypical historically; CFO explained seasonality/coverage ratio modeling as the driver rather than demand softness .
Ongoing NRR pressures tied to seat/MAU headwinds and older customer cohorts; management expects NRR to “travel in this range… plus or minus a little bit” and acknowledged potential macro sensitivity .
Macro prudence layered into guidance despite solid Q1 linearity; tone has turned more cautious based on customer conversations even though numbers remained consistent early in Q2 .

Financial Results

Core financials: current vs prior quarter vs prior year and vs estimates

Metric	Q1 2025 (Prior Year)	Q4 2025 (Prior Qtr)	Q1 2026 (Current)	Consensus (Q1 2026)	Surprise
Revenue ($M)	$617	$682*	$688	$680.1	+$7.9
GAAP Diluted EPS ($)	($0.24)	$0.13*	$0.35	—	—
Non-GAAP Diluted EPS ($)	$0.65	N/A	$0.86	$0.77	+$0.09
GAAP Operating Margin (%)	(8)%	2.8%*	6%	—	—
Non-GAAP Operating Margin (%)	22%	N/A	27%	—	—
Gross Margin (%)	76%	76.8%*	77%	—	—
Operating Cash Flow ($M)	$219	$286*	$241	—	—

Values marked with * retrieved from S&P Global.

Segment revenue breakdown

Segment	Q1 2025 ($M)	Q1 2026 ($M)
Subscription	$603	$673
Professional services and other	$14	$15
Total Revenue	$617	$688

KPIs and cash metrics

KPI	Q1 2025	Q1 2026
RPO ($B)	—	$4.084
cRPO ($B)	—	$2.227
Operating Cash Flow ($M, % of Rev)	$219 (36%)	$241 (35%)
Free Cash Flow ($M, % of Rev)	$214 (35%)	$238 (35%)
Cash, cash equivalents & ST investments ($B)	—	$2.725

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2026	~$2.77–$2.78B (~7% growth)	$2.850–$2.860B (9–10% growth)	Raised
Non-GAAP Operating Margin	FY 2026	≥22%	25%	Raised
Free Cash Flow Margin	FY 2026	≥24%	~27%	Raised
Non-GAAP Diluted EPS	FY 2026	—	$3.23–$3.28 (assumes ~186M dil. shares, 26% tax)	Initiated
Revenue	Q2 2026	—	$710–$712M (~10% y/y)	Initiated
cRPO	Q2 2026	—	$2.200–$2.205B (10–11% y/y)	Initiated
Non-GAAP Operating Margin	Q2 2026	—	26%	Initiated
Non-GAAP Diluted EPS	Q2 2026	—	$0.83–$0.84 (assumes ~186M dil. shares, 26% tax)	Initiated
Free Cash Flow Margin	Q2 2026	—	~19%	Initiated

Management emphasized prudence tied to go-to-market specialization rollout and macro uncertainty despite solid Q1 performance and pipeline strengthening .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 FY25)	Previous Mentions (Q4 FY25)	Current Period (Q1 FY26)	Trend
AI/Agentic initiatives	Highlighted Oktane innovations; identity as security foundation; early Auth for GenAI plans	Auth for GenAI early access; strong interest; machine identities surge opportunity	Auth for GenAI developer preview; MCP/OAuth integration vision; usage-based pricing; secure agent access emphasis	Up
Go-to-market specialization	Planning further specialization to align IT/security vs developer buyers	Announced split into Okta vs Auth0 sellers; best-ever Auth0 bookings validate approach	Early positive signals; Auth0 strong; pipeline strengthened; suite pricing introduced	Up
Public sector (U.S. federal)	Area of strength; top deals influenced by partners; runway ahead	Multiple top-10 deals; DoD momentum; broad public sector traction	Two of top three and four of top ten deals in public sector; near-term federal uncertainty but long-term confidence	Mixed (strong activity; near-term caution)
cRPO/Seasonality modeling	Back-end loaded year; cRPO growth guidance framed as prudent	Coverage ratio modeling emphasized; longer contract duration accelerating RPO	Q2 cRPO guide down sequentially; CFO explains seasonality and coverage ratio math; not softness	Stable (clarified methodology)
NRR/seat & MAU headwinds	NRR under pressure; gross retention strong; headwinds from cohorts	Expect NRR to tick down near term; headwinds abate by H1 FY26	NRR to travel in range; macro could impact; seat headwinds still a factor	Stable/Cautious
Partner ecosystem & large enterprise focus	All top 10 Q3 deals had partners; $1M+ ACV cohort ~$1B	Record large deals; top 25 deals $320M TCV; GSIs critical; AWS Marketplace success	Large enterprise remains biggest opportunity; $1M+ ARR customers up 20%	Up

Management Commentary

“Okta had a solid start to FY26 highlighted by record operating profit and another quarter of robust free cash flow” — CEO Todd McKinnon .
“We continue to take a prudent approach to forward guidance… factoring in our go-to-market specialization rolled out in Q1 and potential risks related to the uncertain economic environment” — company financial outlook statement .
On product momentum: “New products such as Okta Identity Governance, Okta Privilege Access, Okta Device Access… and Identity Threat Protection with Okta AI had another quarter of strong contribution” .
On bundling/pricing: “We have suite-based pricing for the Okta platform now… good, better, best configurations… made good progress in Q1” .
On macro tone: “We did not see [macro softness] in Q1… numbers stayed consistent… but it warrants being a little prudent here” .

Q&A Highlights

cRPO sequential decline: CFO detailed modeling via coverage ratio (subscription revenue vs cRPO) and seasonality; emphasized lack of April softness and blowout Q4 backdrop .
Macro prudence: Added conservatism to guidance despite no Q1 macro deterioration; tone feels more cautious based on field/customer conversations .
NRR trajectory: Seat/MAU headwinds continue; NRR expected to “travel in this range,” with macro as a potential additional headwind .
Auth0/Developer momentum: Auth0 had a strong Q1 after record Q4; Auth for GenAI in developer preview; usage-based pricing reinforced .
Suite pricing and cross-sell: Suite-based bundles driving multi-product adoption and consolidation narratives; “good progress in Q1” .

Estimates Context

Metric	Period	Consensus	Actual/Guide	Surprise
Revenue ($M)	Q1 2026	680.1	688	+7.9
Primary EPS ($)	Q1 2026	0.7714	0.86	+0.0886
Revenue ($M)	Q2 2026	711.9	Guide: 710–712	In-line
Primary EPS ($)	Q2 2026	0.8460	Guide: 0.83–0.84	Slightly below midpoint

Values retrieved from S&P Global.

Consensus breadth: 41–43 estimates across EPS and revenue for Q1/FY26 indicate robust coverage. Beats on Q1 reflect record operating performance and strong product contribution; estimates may need modest upward revisions on profitability, while top-line revisions are likely limited by management’s macro prudence and cRPO seasonality framing .

Key Takeaways for Investors

Quality beat: Strong Q1 revenue and a definitive EPS beat, backed by record operating profit and 35% FCF margin — positive for sentiment on execution durability .
Guidance raise vs Q4 preliminary: FY26 revenue growth lifted to 9–10% and non-GAAP operating margin to 25%; signals confidence despite macro caution .
cRPO sequential decline is a modeling artifact, not demand weakness, per CFO; use coverage ratio to map cRPO to near-term subscription revenue .
Product suite synergies: Governance, Privileged Access, and Identity Threat Protection with Okta AI plus suite pricing are strengthening multi-product wins and cross-sell, especially in large enterprise .
Public sector momentum continues, but near-term federal uncertainty is baked into prudence; long-term tailwinds supported by certifications and efficiency outcomes .
Trading lens: Near term, catalysts include sustained profitability and suite-driven deals; risks center on conservative cRPO optics and macro tone. Medium term, specialization and AI/agentic identity should drive mix shift to higher-value products and stable cash generation .

Additional References

Press release announcing Q1 FY26 results and detailed reconciliations .
Upcoming investor conferences (post-Q1) to sustain IR engagement .

Okta, Inc. (OKTA)·Q1 2026 Earnings Summary