Okta (OKTA +19%) has reached nine-month highs after an impressive Q4 report, surpassing earnings and sales expectations. The cybersecurity company, specializing in identity and access management, continues its recovery from a Q2 sell-off, with positive forward guidance for FY26.

• Okta exceeded its Q4 forecasts, achieving adjusted EPS of $0.78, above the predicted range of $0.76-0.77. The non-GAAP operating margin improved to 28%, a 6-point increase from FY24. Revenue grew by 12.7% year-over-year to $682 million, surpassing the $667-669 million forecast.
• The company's success is attributed to high sales productivity, with Auth0 achieving its best bookings quarter. Okta also saw strong cross-selling to existing SIEM customers.
• RPO increased by 25%, surpassing $4.0 billion, driven by longer deal terms. Q4 bookings reached a record high, exceeding $1.0 billion in TCV for the first time.
• Large deals are a key driver, with Okta's top 25 Q4 deals totaling over $320 million in TCV. The company added 25 customers with $1.0 million or more in ACV, now representing over $1.0 billion in total ACV. Okta's partnership with Amazon (AMZN, Financial) AWS exceeded $1.0 billion in aggregate TCV within four years, with AWS revenues up by over 80% for the year.

Okta projects FY26 adjusted EPS of $3.15-3.20, up from $2.81 in FY25, and revenues of $2.85-2.86 billion, a 9% year-over-year increase at the midpoint. This slight deceleration reflects the current economic climate, as IT departments scrutinize budgets to curb unnecessary spending.

Despite potential breaches, cybersecurity remains essential. Okta's 2023 customer support system breach highlights the risks, but the absence of cybersecurity can be far more damaging. Peers like Palo Alto Networks (PANW, Financial) and IBM (IBM, Financial) emphasize the strong momentum in the cybersecurity sector, providing a favorable outlook for Okta.