Okta, a leading cloud-based access management platform, has recently announced an upward revision of its revenue forecast, following the release of stronger-than-expected fiscal fourth-quarter results. The company now anticipates fiscal year 2026 revenue to fall within the range of $2.85 billion to $2.86 billion, marking a notable annual growth rate of 9% to 10%.
This announcement reflects Okta's commitment to a strategic approach in achieving growth, as highlighted by Chief Financial Officer Brett Tighe during their third-quarter earnings call in December, where earlier estimates ranged from $2.77 billion to $2.78 billion, which equated to a 7% year-over-year increase.
The consensus among analysts on FactSet estimates a revenue target of $2.83 billion for the fiscal year. During a recent conference call, Tighe emphasized the prudence in their forward guidance, noting the importance of their go-to-market specialization strategies aimed at reigniting growth while maintaining spending efficiencies and optimizing cash flow. The anticipated adjusted earnings per share (EPS) are set between $3.15 and $3.20 for the ongoing fiscal year, with market expectations at approximately $3.11.
A significant rise was observed in fiscal 2025, as adjusted EPS surged to $2.81, a substantial increase from $1.60 in the previous fiscal year. Following this promising forecast, Okta's stock surged 16% during premarket trading. In a move demonstrating its commitment to financial discipline, Okta disclosed last month that it would lay off 180 employees, amounting to approximately 3% of its total workforce.
Tighe elaborated that these layoffs are part of a broader effort to streamline the company’s cost structure, reallocating resources and investment to critical growth areas. For the fourth quarter ending January 31, Okta reported an adjusted EPS of $0.78, an increase from $0.63 a year prior, exceeding the average analyst estimate of $0.74.
Revenue posted a robust growth of 13% year-over-year, reaching $682 million, which was higher than the expected $668.9 million from the market. Subscription revenue showed a remarkable upward trend, climbing to $670 million from $591 million in the same quarter the previous year. Significantly, Okta reported a 25% increase in remaining performance obligations (RPO), which rose to $4.22 billion, a growth attributed to an uptick in the weighted average term length for fourth-quarter deals that saw a multi-year high, as mentioned by Tighe during his analysis call.
Notably, the company crossed a significant milestone by achieving over $1 billion in total contract value bookings for the first time in this quarter. Current RPO has also seen an increase of 15%, now totaling $2.25 billion. For the upcoming three-month period, Okta projects an adjusted EPS between $0.76 and $0.77, with revenues expected to range from $678 million to $680 million.
The market has established a current forecast of a non-GAAP EPS of $0.75, along with anticipated sales of $676.9 million. Additionally, the company expects a cash impact of around $11 million due to the recent layoffs during the ongoing quarter, as acknowledged by Tighe..