Okta (OKTA, Financial) slides about 10% premarket as management's cautious fiscal-2026 outlook clashes with elevated investor expectations.
Despite a beat across all first-quarter metrics—14% year-over-year cRPO growth, profitability upside and a 1-point raise to ~27% free-cash-flow guidance—Okta projected second-quarter cRPO growth of just 10%–11% (implying a 1% sequential decline at midpoint) versus Street consensus of 12%.
Fiscal-2026 revenue is still guided at 9%–10% growth, but analysts say the “tone feels like it has changed” as management weaves macro prudence into future forecasts. Morgan Stanley kept its Overweight rating and $123 target, noting fresh channel checks show pipeline strengthening in March–April, while Wells Fargo and Jefferies hold Equal Weight/Hold ratings with $110 and $130 targets, respectively.
Investors should care because Okta's identity-security opportunity remains attractive, but the stock's recent 33% rally has priced in near-perfect execution—leaving little room for guidance missteps amid uncertain economic conditions.
With full-year guidance intact but near-term growth tempered, markets will watch Okta's next quarterly update for signs of whether this more conservative framework is warranted or merely a defensive posture.
