At around the same time that the earnings press release hit the wire, we posted supplemental commentary to the 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 measures versus their closest GAAP equivalents are available in our earnings release. In today's meeting, we will quote a number of numeric or growth changes as we discuss our financial performance, and unless otherwise noted, each such reference represents a year-over-year comparison.

In aggregate, these new products represented approximately 30% of Q4 bookings, which is a meaningful increase from prior quarters. That's remarkable progress in just over three years, and it underscores the market demand for a modern governance solution. We believe that in a few years, agents and agentic systems won't be the exception to how enterprise software is built and operated. We believe that AI agents represent nothing less than the future of software.

The customer picked Auth0 for AI Agents as it met their stringent requirements for a secure, extensible platform to build and deploy agentic systems. Building and protecting AI agents is inherent to Okta's position as the world's system of record for identity management. It shouldn't be surprising that all of these priorities are focused on driving growth. We're excited about the momentum we've built for the year ahead as we look to surpass $3 billion in revenue on our way to $5 billion and then $10 billion.

What went well
  • Okta delivered a strong finish to FY2026, with continued strength in large enterprises, partner engagement, and contribution from newer products.
  • New products (OIG, OPA, ISPM, ITP, Device Access, Fine Grained Authorization, and the new Auth0 and Okta for AI Agents) represented approximately 30% of Q4 bookings, a meaningful increase from prior quarters, and when included in a deal added roughly 40% average contract uplift.
  • Okta Identity Governance surpassed 2,000 customers in just over three years, reflecting strong demand for its cloud-native IGA solution built into the unified platform.
  • Okta closed a record total contract value of nearly $1.3 billion in Q4 and surpassed $3 billion in annual contract value.
  • Channel partners were engaged in 18 of the top 20 deals in Q4, and total contract value through AWS Marketplace grew over 45% in FY26 to approximately $750 million.
  • The company achieved Rule of 40 again, as it has every year since going public, and ended Q4 with over $2.5 billion in cash, equivalents, and short-term investments.
What went wrong
  • Auth0 growth decelerated from the level last disclosed in Q2, which management attributed to a tough year-over-year compare against a record Auth0 Q4 last year and some cost of change from the go-to-market mix shift.
  • The FY2027 revenue guidance of 9% was below where some analysts expected the company to start.
  • Dollar-based net retention rate has been flat all year, as the upsell rate has not been strong enough to lift it despite healthy gross retention.
  • The FY2027 revenue guide reflects about a one-point negative impact from shifting more professional services business to Global System Integrators, lowering professional services revenue.
  • FY2027 free cash flow margin guidance reflects about a one-point headwind tied to lower interest income from the share repurchase, intent to settle remaining 2026 notes in cash, and the interest rate environment.

Guidance Changes

MetricPeriodCurrent guidance
Total revenue growthQ1 FY20279%
Current RPO growthQ1 FY202710%
Non-GAAP operating marginQ1 FY202723%-24%
Free cash flow marginQ1 FY202733%-35%
Total revenue growthFY20279%
Subscription revenue growthFY202710%
Non-GAAP operating marginFY202725%-26%
Free cash flow marginFY202727%-28%
Non-GAAP tax rateQ1 and FY202721% (Lowered based on recent federal tax law changes)

Performance Breakdown

MetricYoYNote
Total contract value (Q4) Record nearly $1.3 billion Driven by focus on large customers and large deals.
AWS Marketplace TCV +45% in FY26 to approximately $750 million Growth through the strategic go-to-market channel as channel partner engagement increased.
New products share of bookings Approximately 30% of Q4 bookings, a meaningful increase from prior quarters Resonance of the unified identity platform with a single control plane, including newly available AI agent products.
Auth0 growth Decelerated from Q2 level Tough compare against a record Auth0 Q4 a year ago plus some cost of change from the go-to-market mix shift.
Dollar-based net retention Flat across the year Healthy gross retention offset by an upsell rate that has not been strong enough to move the metric higher.

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Securing AI and agentic identity (Auth0 for AI Agents, Okta for AI Agents)Discussed at Oktane with high interest but no bookingsTranslated into real bookings in Q4; named the top FY2027 priorityRising
Landing bigger and faster with large customers—Cited as the primary driver of consistent results and a top FY2027 priorityRising
Channel partners and Global System Integrators—GSIs attended sales kickoff for the first time; deliberate shift of professional services to GSIs to fuel subscription growthRising
Go-to-market specialization and added sales capacityImplemented at the start of FY2026 with assumed cost of changeProductivity ramping, attrition low, capacity being added with no cost-of-change assumption in the FY2027 planSteady
U.S. federal and highly regulated industries—Public sector one of the fastest-growing verticals; named a top FY2027 priorityRising
Capital allocation and share repurchase—$1 billion repurchase program announced in January; over 875,000 shares repurchased for $79 millionRising

Q&A Summary

On AI agent pricing and when agentic will become meaningful to growth and guidance (Joe Gallo, Jefferies).
Management said the 30% of Q4 bookings from new products is strategic, with the agentic products off to a strong start despite Okta for AI Agents not yet being generally available; the absolute number is still small against the $3 billion run rate, so little is baked into guidance, and it is viewed as a potential source of upside and accretive to growth in FY2028-FY2029, showing up in current RPO before revenue.
On go-to-market changes this year and the international growth opportunity (Adam Borg, Stifel).
Management said go-to-market changes are very limited, the structure is in place, productivity is ramping and attrition is low with no cost-of-change assumption this year; the one notable change is deliberately leaning into Global System Integrators, who customers increasingly need for the transition to agentic and who see Okta as the neutral, independent identity leader.
On competitive encroachment from names like CrowdStrike, Rubrik, 1Password and Ping, and why the guide started below expectations (John DiFucci, Guggenheim).
Management said identity is more central than ever in the agentic world and the main confusion is between identity infrastructure and identity security, where Okta is the only company doing both; they see no material change in competitive behavior, citing 20,000+ customers, 7,000+ integrations, 45 billion authentications and 8 billion threats blocked monthly; Brett clarified the guide is a 10-point subscription and 9-point total revenue guide, with professional services falling from about 2% to about 1% of revenue.
On agentic pricing model and how per-agent pricing is resonating (Roger Boyd, UBS).
Management said there are two charging approaches: a multiplier on a human when agents augment a person's work, and pricing based on the number of connections when an agent is not tied to a person, since securing fine-grained access is where the value lies; pricing is still early and the 40% uplift figure referenced a specific new-products deal, not agents specifically, with more detail to come in future quarters.
On whether AI agent customers are evaluating alternatives and clarification of the 40% uplift versus prior 33%/50% figures (Eric Heath, KeyBanc).
Management said these early adopters evaluate everything but choose Okta for its compelling vision, reluctance to trust startups likely to be acquired, and desire to avoid lock-in to a single stack; Brett clarified the prior 50% figure was uplift on a workforce contract alone, while the 40% is uplift across the entire contract, and deal sizes have been good, tilted toward larger companies.
On why dollar-based net retention has stayed flat and when it might improve (Rob Owens, Piper Sandler).
Management said gross retention has been a consistent pillar of strength for several years and the flatness is driven by a lower upsell rate; they expect NRR to travel in roughly this range for FY2027, with added sales capacity and rep productivity gains aimed at accelerating top-line and current RPO growth rather than NRR, noting RPO is growing faster than CRPO as term lengths lengthen.

More on Okta, Inc.

Reported 2026-03-04 · figures from the Okta, Inc. Q4 2026 earnings call.

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