01—Abstract
Summary
Summary of the 10-Q filed May 29, 2026. Cited figures are marked; the original filing is the authoritative source.
Okta, Inc. reported total revenue of $765 milliona for the three months ended April 30, 2026, up from $688 million in the prior-year period, with subscription revenue at $750 million (98% of total revenue).
Gross profit was $595 millionb versus $533 million, and operating income was $56 million compared with $39 million. Net income rose to $74 million, or $0.42 per diluted share, from $62 million, or $0.35 per diluted share, in the prior-year quarter. Income tax provision was only $4 million on pretax income of $78 million, an effective tax rate of 4.6%, reflecting a full valuation allowance on U.S. deferred tax assets and the favorable impact of the One Big Beautiful Bill Act.
The filing states the company may release a significant portion of that valuation allowance in the foreseeable future, though timing and amount remain uncertain. Key business metrics improved: customers with annual contract value above $100,000c rose to 5,180 from 4,870, dollar-based net retention rate was 107% versus 106%, and remaining performance obligations reached $4,719 million versus $4,084 million a year earlier. Cash, cash equivalents and short-term investments totaled $2,589 million at April 30, 2026.
Operating cash flow was $277 milliond, compared with $241 million, while financing outflows of $293 million included $248 million of higher common stock repurchases. The company repurchased 3,026,820 Class A shares for $241 million under its $1 billion Share Repurchase Program, leaving $680 million available. The company's 2026 convertible senior notes, with $350 million principal outstanding, mature June 15, 2026 and are classified as current liabilities.
Management stated it has elected to settle the principal in cash and expects lower interest income in fiscal 2027 as cash is deployed for repurchases and note settlement. Total deferred revenue was $1,752 million, and the filing reports no material legal matters as of April 30, 2026.
02—Key points
Key Highlights
- Total revenue of $765 million, up 11% from $688 million; subscription revenue was 98% of total revenue.
- Operating income of $56 million versus $39 million; gross margin of 78% versus 77%.
- Net income of $74 million, or $0.42 per diluted share, compared with $62 million, or $0.35 per diluted share.
- Effective tax rate of 4.6%, with a full U.S. valuation allowance that management says may be released in the foreseeable future.
- Dollar-based net retention rate of 107% and 5,180 customers with ACV above $100,000, up from 4,870.
- Remaining performance obligations of $4,719 million, with $2,499 million expected to be recognized over the next 12 months.
- Repurchased 3,026,820 shares for $241 million; $680 million remains under the $1 billion program. Cash and short-term investments total $2,589 million, and $350 million of 2026 Notes mature June 15, 2026.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2027, Okta kept $0.10.
- Revenue$765.0M100.0%
- Cost of revenue−$170.0M22.2%
- Gross profit$595.0M77.8%
- Operating costs−$539.0M70.5%
- Operating income$56.0M7.3%
- Interest, other & tax$18.0M2.4%
- Net income$74.0M9.7%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2027filed May 29, 2026Financial Statements
Q1 FY2027 against Q1 FY2026
| Line item | Q1 FY2027Q1 FY2026 | Change |
|---|---|---|
| Revenue | $765.00M$688.00M | +11.2% |
| Cost of Revenue | $170.00M$155.00M | +9.7% |
| Gross Profit | $595.00M$533.00M | +11.6% |
| R&D Expenses | $163.00M$154.00M | +5.8% |
| Operating Expenses | $539.00M$494.00M | +9.1% |
| Operating Income | $56.00M$39.00M | +43.6% |
| Net Income | $74.00M$62.00M | +19.4% |
| EPS (Basic) | $0.42$0.36 | +16.7% |
| EPS (Diluted) | $0.42$0.35 | +20.0% |
| Shares Outstanding (Basic) | 176.13M174.17M | +1.1% |
| Shares Outstanding (Diluted) | 177.70M181.75M | −2.2% |
05—Questions
Frequently Asked Questions
How did Okta's profitability change in the first quarter of fiscal 2027?
Operating income rose to $56 million from $39 million, and net income increased to $74 million from $62 million. Diluted earnings per share were $0.42 compared with $0.35. Operating expenses grew to $539 million from $494 million, led by higher sales and marketing and research and development costs.
Why was the income tax provision so low this quarter?
The provision was $4 million on pretax income of $78 million, a 4.6% effective rate. The filing attributes this mainly to a full valuation allowance on U.S. deferred tax assets, the favorable tax impact of the One Big Beautiful Bill Act, and the tax effect of foreign operations. Management notes it may release a significant portion of the valuation allowance in the future, which would reduce income tax expense in the period recorded.
How is Okta returning capital to shareholders and handling its convertible debt?
Okta repurchased 3,026,820 Class A shares for $241 million during the quarter under a $1 billion program authorized in January 2026, leaving $680 million available. The 2026 Notes, with $350 million principal, mature June 15, 2026, and management has elected to settle the principal in cash. Management expects interest income to decline in fiscal 2027 as cash is used for repurchases and note settlement.
What do the customer and retention metrics show?
Customers with ACV above $100,000 increased to 5,180 from 4,870, and dollar-based net retention rose to 107% from 106%. Remaining performance obligations grew to $4,719 million from $4,084 million, and current RPO increased to $2,499 million from $2,227 million.
What are the main cost pressures mentioned in the filing?
Cost of subscription revenue rose by $14 million, driven by an $8 million increase in hosting fees and $3 million in labor costs. Sales and marketing expense increased $41 million, mainly from $30 million in higher labor costs. Professional services gross margin fell to (33)% from (27)% due to higher labor costs, and management expects professional services revenue to decline as work shifts to partners.
06—Continue