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On Wednesday, Okta, Inc. (NASDAQ:OKTA), currently trading at $125.50 and up an impressive 59% year-to-date, received a reiterated Buy rating and a price target of $137.00 from Goldman Sachs, despite a post-earnings decline. Okta’s first-quarter fiscal year results showed revenue slightly above expectations, with a 1% beat compared to the consensus. According to InvestingPro data, the company maintains strong gross profit margins of 76.3% on revenues of $2.61 billion. The company’s calculated remaining performance obligations (cRPO) also surpassed estimates by 2%, and its EBIT margin exceeded projections by approximately 200 basis points.
The second-quarter revenue guidance provided by Okta aligns with the Street’s expectations, while cRPO guidance is slightly below, by 1%. With a market capitalization of $22 billion, Okta has confirmed that it will maintain its fiscal year 2026 revenue and EBIT margin guidance. InvestingPro analysis shows the company holds more cash than debt on its balance sheet, suggesting strong financial flexibility. The net retention rate (NRR) has slightly decreased from 107% in the fourth quarter of the previous fiscal year to 106%, with expectations to remain within the 106-108% range for the remainder of FY26.
The stock’s after-hours drop is attributed to a combination of factors, including weaker quarter-over-quarter subscription revenue growth, a sequential decline in cRPO, and guidance that implies a further decrease in the second quarter. Additionally, the maintained full-year guidance suggests a modest reduction in second-half numbers and points to an 8% growth rate at year-end. These results come after Okta had previously outperformed the NASDAQ by approximately 10 points following its fourth-quarter results.
Goldman Sachs’ analyst highlighted that the recent trends could be due to Okta’s increasing integration with enterprise sales and renewal cycles, a shift that has been more noticeable over the past two years. Other contributing factors may include the company’s go-to-market realignment in the first quarter and the ongoing normalization headwinds from renewals of the 2021-2022 cohort.
Despite the current challenges, Goldman Sachs has reaffirmed its positive outlook on Okta’s stock. The firm believes that Okta is well-positioned to stabilize its growth by overcoming the COVID normalization headwinds and successfully executing its go-to-market strategy with an enhanced product portfolio. InvestingPro’s comprehensive analysis rates Okta’s overall financial health as "Good," with 11 additional exclusive ProTips available to subscribers through the platform’s detailed research reports.
In other recent news, Okta, Inc. reported its first-quarter financial results for fiscal year 2026, showing a strong performance that exceeded both company guidance and analyst expectations. The company achieved a non-GAAP earnings per share (EPS) of $0.86, surpassing the consensus estimate of $0.77, and reported revenue of $688 million, a 12% increase year-over-year. Despite these positive results, Okta’s forward guidance was conservative, with a projected 10% revenue growth for the second quarter, reflecting caution amid macroeconomic uncertainties. Analysts from BTIG maintained a Buy rating with a $142 price target, noting Okta’s solid operating income and free cash flow. Jefferies, however, adjusted its price target for Okta to $130, maintaining a Hold rating due to the company’s conservative guidance and unexpected forecasted decline in current remaining performance obligations (cRPO) for the second quarter. Stifel analysts raised their price target from $120 to $130, highlighting Okta’s resilient performance and product innovations. Citizens JMP reiterated a Market Perform rating, acknowledging the company’s strong results but maintaining a neutral outlook due to economic challenges. These developments underscore Okta’s strategic focus on balancing growth ambitions with caution in an uncertain market environment.
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