Okta Inc (NASDAQ:OKTA)’s latest quarterly results showed solid growth in key metrics, with analysts at Jefferies highlighting that the company appears to be prioritizing accelerating revenue growth even if it comes at the expense of near-term margins.
In a note following the results, Jefferies maintained a ‘Buy’ rating on the identity management company and a $105 price target. Shares traded up almost 11% at $79 on Thursday afternoon.
The firm described the fourth quarter as strong, highlighting that current remaining performance obligations (cRPO) growth of 11.8% year-over-year beat consensus expectations by about three percentage points.
Analysts also said Okta’s fiscal 2027 revenue outlook came in slightly ahead of expectations once the impact of declining professional services revenue is considered.
“While FY27 operating margin guidance was modestly disappointing, it’s evident the No. 1 priority is accelerating growth,” Jefferies wrote, adding that the company’s valuation of roughly three times calendar-year 2027 revenue appears attractive.
Okta reported fourth quarter revenue of $761 million, up 11% year over year, including subscription revenue of $747 million, also up 11%.
GAAP operating income increased to $46 million, or 6% of revenue, compared with $8 million, or 1% of revenue, in the same period a year earlier. GAAP net income rose to $63 million, or $0.35 per diluted share, from $23 million, or $0.13 per share, a year earlier.
On an adjusted basis, the company reported non-GAAP operating income of $202 million, representing 26% of revenue, compared with $168 million, or 25% of revenue, in the prior-year quarter. Non-GAAP net income totaled $167 million, or $0.90 per diluted share, up from $141 million, or $0.78 per share, a year earlier.
Remaining performance obligations totaled $4.83 billion, up 15% year over year, while current RPO, expected to be recognized within 12 months, reached $2.51 billion, up 12%.
Jefferies said the cRPO performance was particularly notable, with the figure beating the midpoint of company guidance by about $66 million. The analysts believe that bookings growth and large deal traction appeared to support management’s outlook, adding that “material upside” to growth could remain possible if current trends continue.
The firm also pointed to Okta’s decision to scale back its focus on professional services revenue and rely more on partners and system integrators. Jefferies described the move as “a smart strategic pivot” that could strengthen relationships with channel partners and support adoption of products such as identity governance and customer identity offerings.
For fiscal 2027, Okta guided for revenue of about $3.18 billion at the midpoint, representing roughly 9% year-over-year growth, slightly ahead of analyst expectations.
However, the company forecast non-GAAP operating margins of about 25.3%, below consensus estimates of around 26.4%, as it plans to increase spending on sales hiring and research and development.
Jefferies believes that the lower margin outlook reflects the company’s focus on growth initiatives. The analysts added that improving go-to-market execution and opportunities related to emerging AI-driven software agents could help drive stronger growth over time.