Okta (OKTA) reported a fiscal Q1 beat overnight, but shares still slumped following the results because the cloud-based software provider's conservative full-year topline guidance, reflecting macroeconomic uncertainty, disappointed investors.

The company, which helps clients manage user authentication and access to applications and websites, reported fiscal Q1 non-GAAP net income late Tuesday of $0.86 per diluted share, up from $0.65 a year earlier. Analysts polled by FactSet expected $0.77.

Revenue for the quarter ended April 30 was $688 million, up from $617 million a year earlier. Analysts expected $680.3 million.

Truist Securities said in a late Tuesday review of the company's results that the public sector drove two of the top three and four of the top 10 deals in the quarter, including a Federal Reserve deal for workforce. Looking ahead, management anticipates near-term uncertainty for Fed renewals in Q2 and Q3, but is confident in the long-term opportunity, analysts, including Miller Jump, said in the note.

For fiscal Q2, the company expects non-GAAP EPS of $0.83 to $0.84 on revenue of $710 million to $712 million. Analysts are looking for $0.79 and $708.8 million, respectively. For fiscal 2026, the company raised its EPS guidance to $3.23 to $3.28 from the previous range of $3.15 to $3.20. However, revenue projection for the fiscal year remained at $2.85 billion to $2.86 billion. Analysts surveyed by FactSet expect EPS of $3.2 from revenue of $2.86 billion.

The company reiterated topline FY26 guidance to factor in "additional conservatism for macro uncertainty," Jump said in the Truist note. Investors were likely "disappointed with the guide," resulting in shares trading down after-hours.

While management acknowledged that they did not see a macroeconomic impact on their business in fiscal Q1, they pointed out that customer sentiment has become more negative, according to the research note. "As a result, they are incorporating incremental conservatism related to macro uncertainty, on top of the haircut related to the ongoing [go-to-market] realignment."

Shares of Okta slumped almost 13% in premarket activity on Wednesday.