Snapshot
Okta, Inc. reported $742M of revenue in Q3 2026, up 11.6% year over year, with diluted EPS of $0.24 and an operating margin of 3.1%.
- Revenue
- $742M
- YoY growth
- +11.6%
- Diluted EPS
- $0.24
- Operating margin
- 3.1%
What management said
- •At around the same time that the earnings press release hit the wire, we've posted supplemental commentary to our IR website.
- •Today's meeting will include forward-looking statements pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding our financial outlook and market positioning.
- •A reconciliation between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP financial measures versus their closest GAAP equivalents are available in our earnings press release.
- •I'll also share how Okta secures AI, which represents a significant new opportunity and a catalyst for growth.
- •We believe these new products will continue to provide incredible value to our customers and will be a growth driver for many years to come.
- •Earlier in Q3, we had a record number of customers and partners come to Octane in Las Vegas to hear how Okta secures AI.
- •Okta has prioritized our efforts to focus on helping customers solve this business imperative and capture what we believe will be the next catalyst for growth and meaningful market within the identity security space.
- •Okta is helping the customer to safely deploy AI across their business, and the addition of Okta for AI agents represented a significant ACV uplift compared to their prior contract.
- •To wrap things up, we're pleased with another solid quarter of results, and we believe we're best positioned to win the exciting new market segment of securing AI.
- •And now here's Brett to cover the financial commentary and talk about how we're positioned for long-term profitable growth.
- •My commentary will provide insights into our Q3 performance and then move into our outlook for Q4 and FY 2026.
- •The continued positive trends we are seeing across our go-to-market KPIs reinforce our confidence that this specialization strategy is the right path to accelerate long-term growth.
What went well
- •Okta reported another solid quarter, with strength among large customers and workforce upsells, particularly driven by newer products such as Okta Identity Governance.
- •The full-year FY2026 outlook was raised, with total revenue growth now expected at 11%, non-GAAP operating margin of 26%, and free cash flow margin of approximately 29%.
- •Sales productivity improved both quarter-over-quarter and year-over-year as the go-to-market specialization strategy took hold, while AE attrition reached a multi-year low and average AE tenure neared a multi-year high.
- •Okta saw a surge of inbound interest in its new agentic security solutions, engaging over 100 existing customers that together represent more than $200 million in current ARR.
- •The cohort of million-dollar deals grew 17% year-over-year, and the company ended the quarter with nearly $2.5 billion in cash, cash equivalents, and short-term investments.
- •Current RPO outperformed, growing ahead of expectations on strong execution by the sales team.
What went wrong
- •Net retention rate held at about 106%, roughly flat and within the range it has occupied for several quarters rather than recovering.
- •Management chose not to provide an early look at FY2027 guidance this year, breaking from prior practice, because the seasonally large Q4 makes a five-quarter-out forecast unhelpful.
- •The new agentic products are very early, with only a couple of months in market and just a few deals transacted, so management cautioned against drawing patterns yet.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Total revenue growth | Q4 FY2026 | — | 10% | new |
| Current RPO growth | Q4 FY2026 | — | 9% | new |
| Current RPO | Q4 FY2026 | — | $2.45 billion | new |
| Non-GAAP operating margin | Q4 FY2026 | — | 25% | new |
| Free cash flow margin | Q4 FY2026 | — | approximately 31% | new |
| Total revenue growth | Full year FY2026 | — | 11% | raised |
| Non-GAAP operating margin | Full year FY2026 | — | 26% | raised |
| Free cash flow margin | Full year FY2026 | — | approximately 29% | raised |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Million-dollar deals | +17% | Growing focus on larger enterprise and strategic accounts, where most of the company's growth is concentrated. |
| Sales and marketing expense | Up | The company increased quota-carrying sales rep capacity over the past two quarters out of confidence in the demand opportunity. |
| Net retention rate | About 106% | Strong gross retention offset by the mix of new business versus upsells; it tracked within the expected range. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Securing AI agents (Okta for AI Agents / Auth0 for AI Agents) | Discussed Cross-app Access in the prior quarter | Positioned as the company's number-one priority and next major growth catalyst, with over 100 customers engaged and Cross-app Access now recognized as an MCP extension | expanding |
| Go-to-market specialization | Changes implemented in February, described as on track in Q1 and Q2 | Reinforced as working, with rising AE productivity, low attrition, and high tenure giving confidence to add sales capacity | improving |
| New product adoption (Governance, Privileged Access, ISPM, suites) | Described as meaningful contributors in prior quarters | Continuing to drive a healthy share of total bookings as specialized reps sell directly to economic buyers | steady |
| Adding sales capacity | Began adding capacity in Q2 | Added more in Q3, plan to add more in Q4 and into FY2027 in a methodical, metered fashion | increasing |
Q&A summary
What convinces customers to consolidate IAM, governance, PAM, and customer identity onto Okta, and why do you win those deals?
Consolidation is almost always triggered by another technological change, increasingly AI adoption and app modernization; customers find legacy multi-vendor stacks fragile and insecure and consolidate on Okta for a single pane of glass and stronger security posture.
Do customers have to be Okta customers to use the AI capabilities, and how much can AI elevate the total bill?
The agentic products can be sold beyond the existing base; customers are stuck rolling out AI without proper access control, and Okta sees agentic identity as potentially a larger TAM than its $50B workforce and $30B customer identity markets combined, priced per agent at roughly five to ten agents per person.
Why no early look at FY2027, and how should we think about next year given strong bookings?
Because Q4 is the seasonally largest quarter, a five-quarter-out guide would require embedding too much conservatism to be helpful; management pointed analysts to Q4 guided current RPO of $2.45B, divided by an FY2026-like coverage ratio of about 79% plus professional services, as a rough revenue approximation.
What is driving the large increase in sales headcount this quarter?
Improving AE productivity and business momentum gave confidence to add capacity, weighted toward go-to-market roles and additions in lower-cost regions for R&D and G&A, done methodically to preserve high productivity and low attrition.
Are buyers consolidating AI identity governance around a single vendor, and what does a conversion look like?
The agentic and consolidation trends are related; Okta cited a Fortune 50 customer replacing Ping, SailPoint, CyberArk and others to standardize all 5,500 applications on Okta, driven by cost, integration, and enabling governed agent access across the full app estate.
Will seat-count reductions hurt the opportunity to upsell agentic products?
Agentic products are priced per agent versus per user, giving flexibility; management is not seeing a material headwind from seat reductions and is confident customer identity and agentic identity provide net upside rather than just replacing existing business.