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OKTA
Earnings call · Jul 2026 (Q2 FY27)

Okta Q2 FY27 earnings call OKTA

Aug 26, 2026 Source

Executive summary

Okta Q2 FY27 — Strong Core Performance and Early AI Agent Momentum

Okta delivered a strong Q2 FY27, marked by accelerating current RPO growth and record non-Q4 bookings, fueled by robust performance in its core workforce and customer identity platforms and significant contributions from new products. The company is making early but promising strides in AI security with generally available products and strategic partnerships, though AI-specific revenue remains nascent. Okta continues to balance disciplined capital allocation with investments in product innovation and go-to-market strategies.

Highlights

5

  • Q2 bookings were a record for any non-Q4 quarter, driven by strong pipeline conversion and deal expansions.

  • Customers with over $1 million in ACV grew over 20%, now exceeding 600 accounts.

  • New products contributed approximately 30% of bookings, with an average ACV uplift of 40% when included in a deal.

  • Annual contract value growth accelerated for both workforce identity and customer identity platforms.

  • Ended Q2 with approximately $2.3 billion in cash, cash equivalents, and short-term investments, and repurchased $125 million in shares.

Concerns

2

  • A strategic shift in professional services is expected to impact FY27 total revenue growth by approximately 1 point.

  • FY27 free cash flow margin guidance includes about a 1 point impact related to lower interest income due to the stock repurchase program and convertible notes settlement.

Guidance & targets

CategoryTargetConfidence
Q3 FY27 Total revenue growth
10%
high materiality
High
Q3 FY27 Current RPO growth
11% to 12%
high materiality
High
Q3 FY27 Non-GAAP operating margin
24% to 25%
medium materiality
High
Q3 FY27 Free cash flow margin
21% to 23%
medium materiality
High
Full Year FY27 Total revenue growth
10% to 11%
high materiality
High
Full Year FY27 Non-GAAP operating margin
26%
medium materiality
High
Full Year FY27 Free cash flow margin
28% to 29%
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Workforce Identity
Experienced accelerated annual contract value growth, contributing to broad-based strength.
Annual contract value growth: accelerated
—accelerated——
Customer Identity
Experienced accelerated annual contract value growth, contributing to broad-based strength.
Annual contract value growth: accelerated
—accelerated——
New Products
Significant contributor to Q2 bookings, with Okta Identity Governance being the leading product. These products drive substantial ACV uplift.
Bookings: approximately 30% of total Q2 bookingsACV uplift (when included in a deal): about 40%
————

OKTA operating KPIs by quarter

OKTA operating KPIs stated on its earnings calls, by fiscal quarter
KPI Apr 2026 Q1 FY27This call Jul 2026 Q2 FY27Change vs prior quarter
Customers
20K+ Over the past 17 years, we've built the most modern and comprehensive identity platform, which is now the identity system of record trusted by more than 20,000 customers. Source transcript
20K+ Our distribution advantage comes from the reach and trust we built as the identity system of record for more than 20,000 customers. Source transcript
—

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Current RPO 11% to 12% growth Q2 FY27

200 bps acceleration

Guidance for Q3 FY27. Experienced 200 basis points of acceleration in Q2.

Bookings Record non-Q4 bookings Q2 FY27

Q2 was a record bookings quarter for Okta outside of Q4, driven by strong pipeline conversion and deal expansions.

Product announcements

ProductTypeDetails
Agent Gatewaylaunch
Okta for AI agents corelaunch
Enterprise Managed Authmilestone
Agent SSOupdate

Deals & partnerships

Premiso Cloud-native identity security platform that detects and mitigates threats across human, nonhuman and agentic identities in multi-cloud environments.

Acquisition of Premiso, a cloud-native identity security platform. It offers 400 native risk detections, compared to Okta's 90, enhancing advanced identity threat protection.

Anthropic Named Okta the first IDA provider supporting enterprise managed off for MCP connectors.

Anthropic's Cloud is supporting Cross App Access, with Okta being the first identity provider to support this protocol, enabling Enterprise Managed Auth.

AWS, Cisco, OpenAI, Data Rx, Snowflake Expanded work with these industry leaders, alongside more than 25 new cross-app access integrations.

Expanded partnerships to provide broader support for AI agent connectivity and governance across various enterprise applications and resources.

Risks & headwinds

Impact of professional services shift FY27

Approximately 1 point impact on FY27 total revenue growth.

Mitigation:Strategic decision to shift more professional services business to GSI partners, expected to lead to greater long-term benefits and fuel top line growth by deepening partner relationships and increasing business with large enterprises.

Lower interest income FY27

Approximately 1 point impact on FY27 free cash flow margin.

Mitigation:Due to the stock repurchase program and cash settlement of the remainder of the 2026 convertible notes. This is a consequence of capital allocation decisions.

Confusion in AI security market Ongoing

The biggest competitor is confusion.

Mitigation:Okta's solution is clarity, focusing on building products that deliver value, emphasizing 'no-regrets investments,' and leveraging its GA product, comprehensive vision, and rapid iteration to cut through hype.

Immaturity of AI agent products from smaller vendors Ongoing

Many smaller AI companies are immature or narrowly focused, forcing customers to buy multiple solutions.

Mitigation:Okta offers a comprehensive, generally available product and a trusted platform, which resonates with CISOs and CIOs who are wary of fragmented or unproven solutions.

What to watch in Q3 FY27

AI agent deal conversion

Next quarter and beyond
Current Dozens of deals, several million-dollar-plus deals in Q2; still very early, too small to show up in numbers.
Target Increased materiality in overall revenue/bookings, faster conversion of record pipeline.

Why it matters

AI agent security is a key growth driver, and its conversion into material revenue will validate Okta's strategic focus and product leadership in this emerging market.

Okta AI agents inside of that bucket, there were dozens of deals in the quarter, including several million-dollar-plus deals, which is super exciting. But the reality is it's still very early. We do thousands of transactions every quarter. And as exciting as that is, Okta AI agents, it's still -- it's too small to show up in the numbers right now. But going forward, especially over the next couple of years, we're super optimistic.

Q&A highlights

How significant is the Anthropic partnership for AI agents, and what is the uplift and agent-to-human ratio in these deals?

Todd emphasizes Okta's strategic ecosystem position and the importance of open standards like Cross App Access, supported by Anthropic. New products (including AI agents) were 30% of bookings, with dozens of AI deals, some multi-million dollar. AI agents are still early and too small to materially impact overall numbers but show promise. Brett adds that AI deals have a bigger average deal size.

“Okta free agents inside of that bucket, there were dozens of deals in the quarter, including several million-dollar-plus deals, which is super exciting. But the reality is it's still very early.”

asked by Eric Heath · answered by Todd McKinnon

2 min read 6 chapters

Detailed narrative

AI Security & Product Innovation

Okta is actively positioning itself as a leader in AI security, particularly for AI agents. The company launched Agent Gateway and made Okta for AI agents core generally available, supporting highly regulated environments like FedRAMP and HIPAA. Okta emphasizes its unique role as a neutral identity platform to secure the AI era, having closed dozens of AI deals in Q2, including multi-million dollar contracts, and achieved Impact Level 5 (IL-5) authorization for the U.S. Department of Defense.

Strength in Core Business & Large Enterprises

The core workforce identity and customer identity platforms demonstrated broad-based strength, with accelerated annual contract value growth. Large enterprise customers were a significant highlight, showing over 20% growth in customers with over $1 million in ACV, now exceeding 600 accounts. This robust performance is attributed to strong execution and improved sales productivity, indicating healthy underlying demand.

New Product Momentum

Okta's portfolio of new products, with Okta Identity Governance as a leading contributor, represented approximately 30% of Q2 bookings. These new offerings typically lead to a substantial average ACV uplift of about 40% when integrated into a deal, showcasing strong cross-sell and upsell capabilities. The company continues to prioritize investment in product innovation to drive top-line growth and expand its solution set.

Ecosystem Partnerships & Neutrality

Okta highlights its strategic importance within the broader ecosystem, collaborating with industry leaders such as Anthropic, AWS, Cisco, OpenAI, Data Rx, and Snowflake. The company's neutral platform and support for open standards like Cross App Access are crucial for customers navigating heterogeneous AI environments and seeking to avoid vendor lock-in. This approach is a key differentiator in securing AI agents across diverse models and clouds.

Capital Allocation & Financial Discipline

Okta maintains a healthy financial position, ending the quarter with approximately $2.3 billion in cash and short-term investments. The company successfully settled $350 million in convertible notes and executed $125 million in share repurchases during Q2, with $555 million remaining under its $1 billion repurchase program. This demonstrates a commitment to operational efficiencies and shareholder returns while strategically investing in future growth.

Public Sector Growth

The public sector continues to be a strong vertical for Okta, showing significant momentum. The company's achievement of Impact Level 5 (IL-5) authorization for the U.S. Department of Defense is expected to unlock further federal opportunities, aligning with the DoD's 2027 Zero Trust mandate. This strategic advancement positions Okta to expand its presence in highly regulated government environments.

AI-generated summary of the company's earnings call. Not investment advice.