Okta Stock Sinks 15% on Soft Q2 Outlook and Cautious FY25, Despite Strong Q1

Quick overview

After a robust recovery from late 2024 lows, Okta’s stock experienced a steep decline after its Q1 results report as investor euphoria gave way to skepticism regarding the company’s outlook.

A Swift Reversal After a Bullish Run

Okta Inc. (NASDAQ: OKTA) had been on an impressive bullish trajectory since Q4 2024, when its stock found support slightly above $70. Over the following months, the share price surged by nearly 80%, reaching a peak of $127.70, where it met stiff resistance. However, this rally has now come to an abrupt halt.

The release of Okta’s Q1 financial results sparked a sharp reversal. Shares opened Wednesday’s U.S. trading session with a steep bearish gap, starting the day at $109.05—down significantly from Tuesday’s close of $125.50.

Okta Stock Chart Weekly – Falling Below the 200 SMA Again

The selling pressure quickly intensified, pushing the stock further down to around $107.60, marking a single-day decline of nearly 14% or a loss of $18 per share.

Earnings Beat, But Guidance Casts a Shadow

Although Okta exceeded expectations for Q1 revenue and earnings, the market’s reaction focused instead on its cautious guidance for the remainder of FY2025. The company chose not to raise its full-year forecast, citing persistent economic uncertainty. CFO Brett Tighe elaborated during the post-earnings conference call, noting that Okta’s net revenue retention is experiencing mild headwinds—a trend the company expects will continue through the first half of the fiscal year.

The decision to hold guidance steady and flag macroeconomic risks reflects a more measured tone from Okta’s leadership, who appear focused on managing investor expectations amid a volatile environment.

Okta Q1 Performance and Outlook – Summary

• Q1 Revenue
• Reported revenue was $688 million, a 12% year-over-year increase and ahead of the $680.3 million consensus.
• Subscription Revenue
  Rose 12% to $673 million, driving the bulk of total revenue.
• Earnings
  Adjusted EPS reached $0.86, beating estimates of $0.77 and growing 32% from the previous year.
• Current RPO (cRPO)
  Hit $2.23 billion, indicating a solid pipeline for future revenue.
• Q2 cRPO Guidance
  Projected between $2.2 billion and $2.205 billion. While this is still up 10.4% year-over-year, it’s down sequentially—marking the first such drop in Okta’s public history, per Jefferies.
• Bookings Outlook
  Guidance implies a 1% year-over-year decline in Q2 bookings, compared to 9% growth in Q1.
• Full-Year Revenue Guidance
  Remains unchanged at $2.85–$2.86 billion, representing 9–10% annual growth.

Conclusion: Okta delivered a strong Q1 with earnings and revenue comfortably beating expectations. However, its outlook revealed a rare dip in sequential cRPO and a potential bookings slowdown. While long-term growth remains intact, the near-term caution could weigh on investor sentiment.

Conclusion: Despite a strong earnings beat, Okta’s lack of upward revision to its full-year guidance and commentary on ongoing economic pressures prompted a swift selloff. The stock’s sharp drop underscores investor sensitivity to forward-looking indicators—even when recent performance remains strong. With net revenue retention under pressure and a cautious Q2 outlook, Okta now faces the challenge of maintaining growth momentum in a more skeptical market.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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