Shares in Okta Inc. plunged more than 12% in late trading today despite the identity and access management company reporting earnings and revenue beats in its fiscal 2026 first quarter, after Chief Executive Todd McKinnon warned of macroeconomic challenges and softening demand from customers.

For the quarter that ended on April 30, Okta reported adjusted earnings per share of 86 cents, up from 65 cents per share in the same quarter of the previous fiscal year, on revenue of $688 million, up 12% year-over-year. Both figures were ahead of the 77 cents per share and revenue of $680.3 million expected by analysts.

Subscription revenue in the quarter came in at $673 million, up 12% year-over-year and as of the end of the quarter, Okta at $4.08 billion in remaining performance obligations, up 21% year-over-year. The company has approximately 20,000 customers, with 4,870 spending $100,000 or more, the latter figure up slightly from 4,800 at the end of January.

Adjusted operating income in the quarter was $184 million, while free cash flow came in at $238 million, up from $214 million in the same quarter of the previous fiscal year.

Business highlights in the quarter included the general availability of Okta’s Workforce Identity Suites in February. The suites are designed to help organizations improve their identity security maturity and consolidate Okta’s core products into streamlined packages to simplify identity tool selection and deployment.

Okta also expanded its Secure Identity Integrations, adding prebuilt connections for Google Workspace, Microsoft 365 and Salesforce Inc. The integrations extend beyond basic single sign-on and multifactor authentication with entitlements management, universal logout and automated workflows.

In April, Okta introduced new capabilities under its platform and Auth0 brand, including Identity Security Posture Management and Okta Privileged Access. ISPM helps organizations discover and secure nonhuman identities like artificial intelligence agents and service accounts, while Privileged Access provides granular controls and monitoring for these accounts.

Additionally, Okta rolled out Auth for GenAI in developer preview, a suite designed to secure generative AI applications. The offering includes built-in authentication, fine-grained authorization, secure application programming interface access and asynchronous workflows for human-in-the-loop approvals.

“Okta had a solid start to FY26 highlighted by record operating profit and another quarter of robust free cash flow,” McKinnon said in the company’s earnings release. Though McKinnon was reserved in the earnings release, it was in an interview where he was less reserved in talking about potential issues going forward, telling CNBC that “when we look forward for our outlook, we’re putting a little bit of conservatism for potentially some macro uncertainty going forward” and that “big picture, we’re in a good position in our market” for identity security.

McKinnon also added that discussions with customers have turned “more cautious.” It was enough to spook investors, given there is nothing in the company’s outlook that should raise concern, other than it not being raised.

For its fiscal second quarter, Okta expects adjusted earnings per share of 83 to 84 cents on revenue of $710 million to $712 million. For the full year, the company expects adjusted earnings of $3.23 to $3.28 per share on revenue of $2.85 billion to $2.86 billion.

Photo: Okta