Have you ever watched a stock you really like report great numbers, only to see the price barely budge after hours? That was me yesterday, staring at my screen as Okta dropped its third-quarter results. On paper, everything looked fantastic – another beat, stronger guidance, subscription growth picking up steam. Yet the initial reaction was… a yawn. Sometimes the market just needs a minute to catch up, right?
I’ve followed the identity and access management space for years, and honestly, Okta keeps surprising me with how quietly consistent it has become. The headline numbers tell only part of the story, so let’s dig in properly.
Another Clean Beat – And This One Actually Felt Big
When a company beats Wall Street estimates for what feels like the tenth quarter in a row, it’s easy to become numb to the news. But this time something felt different. Okta didn’t just edge past consensus – it cleared the bar with room to spare.
Revenue clocked in at $742 million against expectations of around $730 million. That might look like a modest $12 million beat, but in a macro environment where many software firms are still scraping to hit lowered bars, every million counts. More importantly, the top line grew almost 12% year-over-year – a re-acceleration from recent quarters.
On the bottom line, adjusted earnings per share came in at 82 cents, easily topping the 76 cents analysts were modeling. Perhaps the most eye-catching figure: net income nearly tripled from $16 million a year ago to $43 million this time around. That’s the kind of profitability improvement investors dream about.
Subscription Revenue – The Engine That Keeps Humming
Let’s be real: in SaaS, subscription revenue is the metric that matters most. Okta delivered $724 million here, ahead of the $715 million estimate and up 11% year-over-year. That’s the second consecutive quarter of accelerating subscription growth – a trend worth circling in red.
Why does this feel significant? Because for a long stretch, many of us worried that budget scrutiny and elongated sales cycles would cap growth in the low teens forever. Seeing the subscription line move back toward the mid-teens range tells me enterprise confidence in identity projects is genuinely returning.
“Customers are no longer just evaluating identity – they’re expanding deployments and consolidating vendors around modern platforms.”
– Okta management commentary (paraphrased)
The Guidance That Actually Moved the Needle
If you’ve been around earnings seasons long enough, you know the beat-and-raise routine. Most companies play it safe. Okta did the opposite.
For Q4, management guided revenue to $748–750 million (above the $738 million consensus) and lifted EPS expectations to 84–85 cents. That’s not a massive raise, but in the current climate it’s bold – especially when many peers are still guiding conservatively.
- Q4 revenue midpoint implies roughly 13% year-over-year growth
- Operating margin guidance also ticked higher
- Full-year profitability outlook improved again
In my experience, when a management team starts guiding aggressively after years of caution, it usually means they can actually see the bookings momentum in the pipeline.
RPO Growth: The Number Few People Talk About (But Should)
Remaining performance obligations – essentially the subscription backlog – jumped 17% year-over-year to $4.29 billion. That crushed the $4.17 billion estimate floating around the Street.
Think of RPO as future revenue already in the bag. A 17% increase signals that new deals and expansions are outpacing what the company is recognizing today. For a business that lives and dies by multi-year contracts, this is pure rocket fuel.
I still remember when Okta’s RPO growth dipped into single digits during the 2023 slowdown. Watching it climb back toward the high teens feels like the final piece of the puzzle clicking into place.
Why the Stock Yawned (At First)
Okta shares were down slightly in the immediate after-hours reaction, which puzzled a lot of people. My take? Expectations had simply run ahead of reality.
Coming into the print, the stock had already enjoyed a decent run on hopes of a cybersecurity rebound. Some investors were priced for perfection. When the company delivered “only” a solid beat instead of a blowout, the reflexive reaction was to take a little profit.
But here’s the thing – great companies rarely gap up 15% on every good quarter. They compound quietly. Okta is up only about 4% year-to-date while broader cybersecurity names have run hot and cold. That strikes me as an opportunity more than a warning.
The Bigger Picture in Cybersecurity
2025 has been a banner year for the sector so far. We’ve seen massive M&A, a wave of successful IPOs, and improving demand trends across the board. Identity sits right at the center of it all.
Every major breach you read about ultimately traces back to compromised credentials or poor access controls. As organizations move deeper into zero-trust architectures, the need for modern identity platforms becomes non-negotiable.
Okta isn’t the flashy AI security play that grabs headlines, but in many ways it’s the plumbing that everything else depends on. And plumbing companies with recurring revenue and widening margins can be absolute gold mines over time.
What I’m Watching Next
- Can subscription growth push into the mid-teens sustainably?
- Will large enterprise deal momentum continue into 2026?
- How aggressively will management expand margins from here?
- Any signs of consolidation in the identity space?
The answers to those questions will determine whether Okta remains a steady compounder or accelerates into something bigger. Either outcome looks attractive from today’s valuation.
At the end of the day, this was another quarter that showed Okta doing exactly what great software companies do: executing cleanly, taking share, and getting more profitable. The fact that the stock didn’t rocket higher immediately just means the market hasn’t fully priced in the durability of this story yet.
Sometimes the best investments are the ones that make you wait a little. Okta might just be setting up for that kind of move.
