OKTA Shares Jump on Solid Q3 Earnings Beat, Revenues Increase Y/Y

Core Insights - Okta's shares rose 5.46% to close at $86.34 following strong Q3 fiscal 2025 results, with earnings of $0.82 per share beating estimates by 9.33% and increasing 22.4% year over year [1][9] Financial Performance - Total revenues increased 11.6% year over year to $742 million, surpassing consensus estimates by 1.64%, driven by subscription revenues which rose 11.2% to $724 million, accounting for 97.6% of total revenues [2][9] - Professional services and other revenues increased 28.6% year over year to $18 million, representing 2.4% of total revenues [2] Revenue Breakdown - U.S. revenues contributed 81% of total revenues, increasing 12.17% year over year to $590 million, while international revenues accounted for 20.9% and grew 9.35% to $152 million [3] Customer Metrics - Customers with over $100K in Annual Contract Value (ACV) rose 7% year over year to 5,030, with a dollar-based retention rate of 106%, down 2% year over year [4] - Remaining Performance Obligations (RPO) totaled $4.292 billion, up 17% year over year, with current RPO expected to be recognized over the next 12 months at $2.328 billion, up 13% year over year [4] Operating Efficiency - Non-GAAP gross margin remained stable at 81.4%, while research and development expenses decreased to 15% of revenues, general and administrative expenses to 11.2%, and sales and marketing expenses to 31.3% [5] - Non-GAAP operating margin expanded 320 basis points year over year to 24% [5][9] Balance Sheet Strength - As of October 31, 2025, Okta had $2.46 billion in cash, cash equivalents, and short-term investments, with net cash provided by operations at $218 million and free cash flow at $211 million [6] Future Guidance - For Q4 fiscal 2026, Okta expects revenues in the range of $748-$750 million, indicating 10% year-over-year growth, with current RPO projected between $2.445 billion and $2.450 billion, suggesting 9% growth [7] - Non-GAAP operating income is anticipated to be between $189-$191 million, with an expected operating margin of 25% and non-GAAP earnings of 84-85 cents per share [8][10]