Geoffrey Seiler, The Motley Fool

Sat, May 31, 2025, 3:00 PM5 min read

• Okta turned in solid fiscal Q1 results, but conservative guidance sank the stock.

• The company continues to innovate, while its new go-to-market strategy is showing signs of promise.

• The stock is reasonably valued at current levels.

• 10 stocks we like better than Okta ›

Okta (NASDAQ: OKTA) has been in rally mode for much of this year, but the stock hit a speed bump when it reported its fiscal 2026 first-quarter results. Despite a 15% drop in its share price since May 27, the stock is still up 35% year to date, as of this writing.

Let's take a closer look at the cybersecurity company's most recent results and guidance to see it if can regain its momentum.

In what has been a pretty common theme of late, Okta shares fell after management issued cautious guidance. With continued uncertainty around tariffs and their effect on the economy, many companies have opted to take a conservative view when it comes to their forecasts.

Okta said it saw no effect in Q1 from the macro environment, but it still thought it was prudent to stay conservative. As such, it maintained its full-year revenue forecast, calling for fiscal 2026 revenue of $2.85 billion to $2.86 billion, representing 9% to 10% growth. However, it did increase its adjusted earnings per share (EPS) outlook from a range of $3.15 to $3.20 to a new range of $3.23 to $3.28.

Management called out the strong demand for newer products, like Identity Governance, Privileged Access, and Identity Threat Protection powered by Okta AI. The company is also taking steps to address rising security risks related to AI agents and other non-human identities (NHIs). To do that, it's combining its Identity Security Posture Management tools with Privileged Access to offer a unified platform that can secure both human users and NIHs across an organization.

At the same time, Okta is confident its strategy of making sales teams more specialized will pay off over the long run. That confidence is backed by early results from parts of the business where this approach is already in place. For example, Okta shifted its U.S. small and mid-sized business (SMB) team to a "hunter-farmer" model last year where some reps focus on landing new customers while others focus on growing existing accounts. That team performed well in Q1, showing that this kind of focus can lead to better results over time.

This all led to a solid fiscal Q1, which ended April 30. Okta's revenue increased 12% year over year to $688 million. This easily topped its prior forecast for revenue of $678 million to $680 million. Subscription revenue also increased 12% to $673 million. Adjusted EPS jumped 24% year over year to $0.86, well above the $0.76 to $0.77 outlook.