01—Abstract
Summary
Summary of the 10-Q filed December 3, 2025. Cited figures are marked; the original filing is the authoritative source.
Okta, Inc. reported third-quarter fiscal 2026 results for the three and nine months ended October 31, 2025.
Total revenue was $742 milliona for the quarter, up from $665 million, and $2,158 million for the nine months, up from $1,928 million. Subscription revenue made up approximately 98% of total revenue. Operating income was $23 million for the quarter, compared with an operating loss of $16 million a year earlier, and net income was $43 million, or $0.24 per diluted share.
For the nine months, net income was $172 millionb, compared with $5 million in the prior-year period. Gross margin was 77% for both the quarter and the nine months, and subscription gross margin improved to 80% from 78%. The balance sheet and cash flow profile remained strong.
As of October 31, 2025, cash, cash equivalents and short-term investments totaled $2,463 millionc. Net cash provided by operating activities was $626 million for the nine months, up $162 million from the prior year. The company settled the remaining $510 million principal of its 2025 convertible senior notes in cash at their September 1, 2025 maturity.
The $350 milliond of 2026 Notes, due June 15, 2026, are now classified as current liabilities. Deferred revenue was $1,586 million, and remaining performance obligations were $4,292 million, of which approximately $2,328 million (54%) is expected to be recognized over the next 12 months. Investors should note that the dollar-based net retention rate declined to 106% from 108% a year earlier, which the company attributed primarily to the macroeconomic environment.
Customers with annual contract value above $100,000 rose to 5,030 from 4,705. The company also completed the acquisition of Axiom Security Ltd for $54 million in cash in September 2025. The filing discloses that a full valuation allowance remains on U.S. deferred tax assets, and that the company may release a significant portion of it in the future, which would reduce income tax expense.
02—Key points
Key Highlights
- Total revenue rose to $742 million for the quarter (from $665 million) and $2,158 million for the nine months (from $1,928 million); subscription revenue was about 98% of the total.
- Operating income of $23 million for the quarter, compared with an operating loss of $16 million a year earlier; net income was $43 million, or $0.24 per diluted share.
- Subscription gross margin improved to 80% from 78%, and total gross margin was 77% versus 76%.
- Cash, cash equivalents and short-term investments totaled $2,463 million; operating cash flow for the nine months was $626 million.
- The $510 million 2025 convertible notes were settled in cash at maturity; $350 million of 2026 Notes due June 15, 2026 are now current liabilities.
- Dollar-based net retention rate declined to 106% from 108%, which the company attributed mainly to the macroeconomic environment.
- Remaining performance obligations reached $4,292 million, with approximately $2,328 million (54%) expected to be recognized over the next 12 months.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2026, Okta kept $0.06.
- Revenue$742.0M100.0%
- Cost of revenue−$170.0M22.9%
- Gross profit$572.0M77.1%
- Operating costs−$549.0M74.0%
- Operating income$23.0M3.1%
- Interest, other & tax$20.0M2.7%
- Net income$43.0M5.8%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed December 3, 2025Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $742.00M$665.00M | +11.6% |
| Cost of Revenue | $170.00M$157.00M | +8.3% |
| Gross Profit | $572.00M$508.00M | +12.6% |
| R&D Expenses | $160.00M$158.00M | +1.3% |
| Operating Expenses | $549.00M$524.00M | +4.8% |
| Operating Income | $23.00M-$16.00M | +243.8% |
| Net Income | $43.00M$16.00M | +168.8% |
| EPS (Basic) | $0.24$0.09 | +166.7% |
| EPS (Diluted) | $0.24— | — |
| Shares Outstanding (Basic) | 176.52M170.22M | +3.7% |
| Shares Outstanding (Diluted) | 178.40M170.67M | +4.5% |
05—Questions
Frequently Asked Questions
How did Okta's profitability change compared with a year earlier?
Operating income was $23 million for the three months ended October 31, 2025, compared with an operating loss of $16 million in the prior-year quarter. Net income was $43 million versus $16 million. For the nine months, net income was $172 million versus $5 million. The company attributed improved results to spend efficiency, with research and development and sales and marketing expenses falling as a percentage of revenue.
Is Okta able to repay its convertible notes?
The company settled the full $510 million principal of its 2025 Notes in cash at their September 1, 2025 maturity. As of October 31, 2025, $350 million of 2026 Notes remain outstanding and mature June 15, 2026. The company's cash, cash equivalents and short-term investments totaled $2,463 million as of October 31, 2025, and the company stated it believes these resources, together with cash from operations, will be sufficient for its projected needs.
What is the trend in customer retention and expansion?
The dollar-based net retention rate was 106% as of October 31, 2025, down from 108% a year earlier. The company said the decrease was primarily a result of the macroeconomic environment, with ACV from existing customers growing at a slower rate. Customers with annual contract value above $100,000 increased to 5,030 from 4,705.
Are there any significant legal matters disclosed?
The securities class action (In re Okta, Inc. Securities Litigation) was finally approved and dismissed in November 2024. The related derivative actions reached final approval of a settlement in October 2025 for the California federal actions, and the Delaware federal actions were dismissed with prejudice on November 24, 2025. The Delaware Chancery actions were subject to a notice of voluntary dismissal filed on November 24, 2025.
What could affect Okta's future tax expense?
The company recorded a provision for income taxes of $13 million for the nine months ended October 31, 2025, and maintains a full valuation allowance on its U.S. deferred tax assets. The filing states that the company may release a significant portion of this valuation allowance in the foreseeable future if positive evidence outweighs negative evidence, which would result in a corresponding decrease to income tax expense for the period of release. The One Big Beautiful Bill Act, enacted July 4, 2025, is also expected to reduce cash tax payments through immediate expensing of domestic R&D costs.
06—Continue