Executive Summary
Okta reported solid QQ2 2026 results with revenue of $728.0 million and a path toward higher profitability driven by a broadened product portfolio and a more specialized go-to-market (GTM) approach. The quarter highlighted continued demand for a unified identity platform, contributions from new products (Okta Identity Governance, Privilege Access, Device Access, Identity Threat Protection with AI, and fine-grained authorization), and meaningful progress in key growth vectors such as the public sector and AI-enabled offerings. Management signaled confidence in long-term profitability through raised FY2026 guidance and a strong balance sheet, while signaling aggressive investments in AI and a broader identity security fabric.
Strategically, Okta is advancing an independent, cloud-native identity fabric that encompasses human, nonhuman (NHIs), and AI agent identities. The Acxiom Security acquisition (PAM focus) enhances Privileged Access capabilities and deepens the platform’s ability to secure critical infrastructure. Management also underscored the importance of cross-app access as an open standard to securely connect AI agents and other technologies, a framework expected to broaden Okta’s ecosystem and partner engagement. The company’s international expansion remains a priority, with a focus on top 10 countries, while the public sector (including a large DOD deal) continues to be a meaningful growth driver. Overall, the quarter reinforces Okta’s core thesis: identity as the security fabric across all identity use cases, further amplified by AI.
Key Performance Indicators
QoQ: -99.89% | YoY:-99.89%
QoQ: -99.89% | YoY:-99.89%
QoQ: -99.89% | YoY:100.22%
QoQ: -99.89% | YoY:-99.77%
Key Insights
Revenue: $728.0M in QQ2 2026 vs. $646.0M in QQ2 2025, ~+12.7% YoY; QoQ revenue increase from Q1 2026 ($688.0M) to QQ2 2026 ~+5.8%. Gross margin: 76.9% (560.0M gross profit on 728.0M revenue). Operating income: $41.0M; EBIT margin: 5.6%. Net income: $67.0M; Net income margin: 9.2%. EPS (diluted): $0.37; Shares (weighted avg): 180.97M.
Profitability and efficiency: Q2 gross profit rose to $560.0M (GM 76.9%), reflecting favorable margin despite ongoing investments in product development and GTM sp...
Financial Highlights
Revenue: $728.0M in QQ2 2026 vs. $646.0M in QQ2 2025, ~+12.7% YoY; QoQ revenue increase from Q1 2026 ($688.0M) to QQ2 2026 ~+5.8%. Gross margin: 76.9% (560.0M gross profit on 728.0M revenue). Operating income: $41.0M; EBIT margin: 5.6%. Net income: $67.0M; Net income margin: 9.2%. EPS (diluted): $0.37; Shares (weighted avg): 180.97M.
Profitability and efficiency: Q2 gross profit rose to $560.0M (GM 76.9%), reflecting favorable margin despite ongoing investments in product development and GTM specialization. Operating income was $41.0M with an EBIT margin of 5.6%; current quarter net income of $67.0M supports a positive earnings trajectory as scale and mix improve. Cash flow: Operating cash flow was negative at approximately -$240.6M for the quarter, with free cash flow of about -$239.6M, largely reflecting working capital movements and timing of cash receipts/payments. Balance sheet: Total assets ~$9.55B; total liabilities ~$2.80B; total stockholders’ equity ~$6.75B; cash and short-term investments totaled roughly $2.86B, underscoring ample liquidity. Leverage: Total debt ~$0.94B; substantial liquidity provides financial flexibility for strategic investments and potential M&A. Guidance: FY2026 revenue growth guided to 10-11% with non-GAAP Op Margin 25-26% and FCF margin ~28%; Q3 guidance implies 9-10% revenue growth and ~10% RPO growth, non-GAAP Op Margin ~22%, FCF ~21%. Management notes removal of prior macro conservatism as no material macro shifts materialized in Q2.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
728.00K |
-99.89% |
-99.89% |
| Gross Profit |
560.00K |
-99.89% |
-99.89% |
| Operating Income |
41.00K |
100.22% |
-99.89% |
| Net Income |
67.00K |
-99.77% |
-99.89% |
| EPS |
0.38 |
123.53% |
5.56% |
Management Commentary
- Strategy and AI: Todd emphasizes that Okta aims to be the “one-stop shop for identity,” leveraging its independence and breadth to consolidate identity platforms and enable broad use cases, including AI agents. He highlights the vision of an “identity security fabric” across human, NHIs, and AI agents, and the role of cross-app access as a standard for secure agent connectivity. Quote: “Our strategy is to be the one-stop shop for identity. That’s what customers want.” (Todd McKinnon)
- AI and cross-app access: Okta is advancing AI-enabled security through Auth0 for AgenTek AI, token vaulting, and fine-grained authorization, alongside the Cross-App Access standard to securely connect AI agents with other technologies. Quote: “Cross-app access allows for support of AI agents within the identity security fabric and the flexibility to safely connect to other technologies.” (Todd McKinnon)
- GTM specialization and public sector: Brett notes the company’s go-to-market realignment is yielding improved sales productivity and a record pipeline, with public sector renewals and five of the top 10 deals in Q2 with the US federal sector, including a DOD win, underscoring the strength of specialization in driving higher-value deals. He also indicates that OCI bookings accelerated and contributed to pipeline generation across public/private sectors.
- Outlook and conservatism: Management communicated a removal of macro conservatism from guidance, reflecting stronger-than-expected execution and a normalization of macro risk. Quote: “Neither materialized and we’re removing them from our outlook for the remainder of the fiscal year.” (Brett Tighe)
"Our strategy is to be the one-stop shop for identity. That's what customers want."
— Todd McKinnon
"Cross-app access allows for support of AI agents within the identity security fabric and the flexibility to safely connect to other technologies."
— Todd McKinnon
Forward Guidance
- Near-term outlook: Q3 FY2026 revenue growth expected 9-10%, current RPO growth ~10%, non-GAAP operating margin ~22%, and free cash flow margin ~21%. This implies continued discipline on costs while capitalizing on a larger, more productive pipeline.
- Full-year outlook: FY2026 revenue growth raised to 10-11%, non-GAAP operating margin elevated to 25-26%, and free cash flow margin around 28%, signaling a strong balance between growth and profitability.
- Confidence drivers: Strong OCI bookings, a robust public sector pipeline, expanding AI-driven product adoption (Auth0 and AgenTek AI), cross-app access standards, and the Acxiom PAM acquisition collectively support the path to higher ARR and improved cash generation.
- Monitoring factors for investors: Critical to watch will be the continuation of GTM specialization productivity, the pace of AI-native cohort adoption, integration progress of Acxiom PAM, international market expansion effectiveness (top 10 countries), and the trajectory of free cash flow given working capital dynamics. Overall, the guidance assumes a favorable mix of upsell and adoption of new suites, with risk primarily from macro or competitive dynamics.