Okta Earnings Lift Outlook on AI Demand

Okta, Inc. (Nasdaq: OKTA) reported second-quarter fiscal 2027 results on Aug. 26, 2026, showing double-digit revenue growth that helped the company raise its full-year revenue outlook. Management cited agentic AI and record bookings as key demand drivers.

Quarterly Results and Profitability

Okta reported total revenue of $805 million for the quarter ended July 31, 2026, up 11% year over year. Subscription revenue rose 12% to $793 million. Remaining performance obligations (RPO), a measure of future subscription backlog, reached $4.858 billion, up 17%, while current RPO expected within 12 months grew 14% to $2.585 billion.

Profitability improved significantly. GAAP operating income rose to $107 million, or 13% of revenue, from $41 million and a 6% margin a year earlier. GAAP net income was $116 million, with diluted earnings per share (EPS) of $0.65. On a non-GAAP basis, operating income increased to $226 million, a 28% margin, and diluted EPS rose to $1.05 from $0.91. Gross profit was $641 million, with a margin near 80%.

Cash flow strengthened as well. Operating cash flow was $234 million, or 29% of revenue, compared with $167 million (23%) in the prior-year quarter. Free cash flow reached $227 million, or 28% of revenue, up from $162 million (22%).

Guidance and Demand Drivers

Okta raised its full-year fiscal 2027 revenue guidance to about $3.216–$3.226 billion and reaffirmed a non-GAAP operating income outlook of $830–$840 million, implying a 26% operating margin. The company projects free cash flow margins of 28–29% and non-GAAP EPS of $3.90–$3.94 for the year.

For the third quarter ending Oct. 31, 2026, guidance includes revenue of $813–$817 million, current RPO near $2.590–$2.600 billion, a non-GAAP operating margin of 24–25%, free cash flow margin of 21–23%, and non-GAAP EPS around $0.92–$0.94.

Management described the full-year outlook as robust, highlighting record bookings for a non-Q4 quarter and broad strength across workforce and customer identity, large enterprises, the public sector, and channel partners. Newer products contributed additional momentum. CEO Todd McKinnon said, “As AI agents transform every layer of technology, every agent needs a trusted identity and clear controls over what it can access and do.” Okta positioned its identity platform as essential for managing agentic AI, autonomous software components that perform tasks. The company also said its recent acquisition of Permiso Security would have no material impact on guidance.

Balance Sheet and Capital

At quarter end, Okta held $2.299 billion in cash, cash equivalents, and short-term investments. The company settled the remaining $350 million principal of its 2026 convertible notes in cash during the quarter and reported no convertible debt outstanding. Okta repurchased and retired about 1.5 million shares for approximately $125 million. Stockholders’ equity stood at $6.973 billion.