Okta Stock Price Surges After Strong Earnings — Should You Buy in 2025?

Okta (NASDAQ: OKTA) shocked Wall Street after Tuesday’s closing bell: the identity-management specialist beat earnings expectations yet its share price sank more than 10% in after-hours trading. The sell-off followed management’s decision to stick with a conservative full-year outlook despite a robust first-quarter beat—fueling fears that macroeconomic headwinds could slow growth. Stronger quarter, softer tone For the fiscal first quarter ended April 30, revenue rose 12% year over year to $688 million, topping consensus estimates of about $680 million. Adjusted earnings landed at $0.86 per share versus forecasts near $0.77. Subscription sales—roughly 98% of revenue—also advanced 12%, underscoring the stickiness of Okta’s cloud-based identity platform. Operating cash flow hit $241 million, delivering a healthy 35% margin. Why the stock plunged CEO Todd McKinnon said the company is “taking a prudent approach” amid “more cautious” customer conversations. Okta reiterated its full-year fiscal 2026 sales target of $2.85 billion–$2.86 billion (about 9%–10% growth) and guided second-quarter revenue to $710 million–$712 million, roughly 10% growth—slower than the mid-teens pace investors had hoped for. That tempered forecast offset the headline beat and triggered the share-price slide. Key metrics investors are watching • Current remaining performance obligations (cRPO) climbed 14% to $2.23 billion, signaling decent near-term demand. • Free cash flow margin stayed rock-solid at 35%, giving Okta flexibility for buybacks or acquisitions. • Non-GAAP operating margin improved to 27% from 22% a year ago, reflecting cost discipline even as the company invests in AI-driven security features. Competitive and macro backdrop Okta remains the largest independent identity-security vendor, but faces intensifying competition from Microsoft Entra, CrowdStrike Falcon Identity, and Ping Identity. At the same time, enterprises are scrutinizing software budgets amid higher interest rates and trade-policy uncertainty. Any slowdown in new seat additions or upsells could pressure Okta’s top-line trajectory. Analyst sentiment and price targets Ahead of the report, several brokerages carried 12-month price targets between $120 and $150. Those targets may reset lower if revenue growth decelerates to single digits, but bulls argue Okta’s improving profitability and $2.7 billion cash pile limit downside risk. What’s next for OKTA stock Investors will listen closely to Okta’s Q2 call for early signals on: • Uptake of its unified Workforce + Customer Identity Cloud bundles. • Progress integrating AI-powered threat-detection features announced earlier this year. • Any shifts in large-deal pipeline conversion rates. Bottom line Okta just posted record profit and cash flow, yet its guarded guidance reminded the market that even best-in-class cybersecurity names are not immune to economic turbulence. Whether Tuesday’s double-digit drop proves a buying opportunity or a warning shot will hinge on management’s ability to reaccelerate growth without sacrificing its newly minted margins.