Analyst(s): Mitch Ashley
Publication Date: August 28, 2026
Okta closed the first half of fiscal 2027 with broad-based strength across its workforce and customer identity platforms, a record bookings quarter outside the seasonally strongest period, and accelerating annual contract value growth. The company raised its full-year guidance while positioning its newly generally available agentic identity products as the next growth driver, even as that contribution remains immaterial to current revenue.
What Is Covered in This Article:
- Okta’s Q2 FY 2027 financial results
- Core identity strength and new products
- Agentic identity positioning and early wins
- Partner ecosystem and acquisition momentum
- Guidance and Final Thoughts
The News: Okta (NASDAQ: OKTA) reported financial results for the second quarter of its fiscal year 2027 (Q2 FY 2027), which ended July 31, 2026. Total revenue was $805 million, up 11% year over year (YoY) and ahead of the consensus estimate between $790 million and $795 million. Subscription revenue, which represented 99% of the total, grew 12% YoY to $793 million, while professional services and other revenue declined 29% YoY to $12 million as the company shifted more services work to its partners. Non-GAAP operating income was $226 million, up 12% YoY, for a non-GAAP operating margin of 28%, level with the prior-year quarter. Non-GAAP diluted earnings per share (EPS) were $1.05, up from $0.91 a year earlier. Free cash flow was $227 million, a 28% free cash flow margin, and current remaining performance obligations (cRPO) grew 14% YoY to $2.585 billion.
“Our Q2 financial performance was driven by broad-based strength across our core workforce identity and customer identity platforms. Particular areas of strength were once again with large enterprises, partner engagement, and contribution from our newer products,” said Todd McKinnon, Chief Executive Officer, Chairperson of the Board, and Co-Founder of Okta.
Okta Q2 FY 2027 Earnings Beat and Raise on Core Identity Strength
Okta Q2 FY 2027 Earnings Beat and Raise on Core Identity Strength
Analyst Take: Okta’s Q2 FY 2027 earnings show a core identity business that reaccelerated while the company sets up its next growth engine. Revenue of $805 million and a raised full-year outlook came from broad execution rather than any single product, with annual contract value (ACV) growth picking up for both workforce and customer identity. Management framed the quarter as a record for bookings outside the seasonally strongest fourth quarter, helped by a stable sales force and deeper partner involvement. New products contributed about 30% of bookings, and the company said the average deal grows roughly 40% in ACV when one of those products is attached. Okta is converting past investment in platform breadth into measurable demand, even before its agentic identity products register in revenue.
Core Identity and New Products Drove the Beat
The quarter’s strength started with large enterprises, where customers with more than $1 million in ACV grew 22% YoY to 605, and the $100,000-plus cohort reached 5,255. Workforce Identity ACV grew 11% and represented 59% of total ACV, while Customer Identity ACV grew 13% and represented the remaining 41%, a sign that both sides of the portfolio contributed. Okta Identity Governance was again the leading contributor within the new-products group, which management said now spans governance, privileged access, and identity threat protection. Company leadership pointed to a shift in buying behavior, with customers increasingly purchasing these products as a suite rather than as isolated tools. Current RPO growth of 14% marked an acceleration of roughly 200 basis points, and management attributed it to execution rather than to any AI contribution. Large-enterprise demand paired with platform breadth is what turned a solid quarter into a beat across revenue, margin, and cash flow.
Agentic Identity Moves From Positioning to Early Deals
Okta used the quarter to press its claim that identity is the control plane for securing AI, and it backed the message with generally available products rather than roadmap promises. Okta for AI Agents Core reached general availability, which management claimed made Okta the first independent, neutral identity platform to bring AI agent governance to regulated environments such as FedRAMP and HIPAA. The company reported dozens of agentic deals in the quarter, including several worth more than $1 million, with wins that included a Fortune 50 healthcare company, one of the world’s largest asset managers, and a global consulting firm. Management was candid that this revenue is still immaterial for FY 2027 and will remain so this year, while pointing to fiscal 2028 and beyond as the period when it could begin to move the numbers. A recurring theme was that agent counts inside customer environments are climbing quickly, with one prospect moving from 50 detected agents to 1,500 within weeks. The near-term payoff is less about agentic revenue today and more about using AI conversations to pull forward core identity modernization and legacy migrations.
Partnerships and Tuck-In M&A Extend the Platform
Ecosystem work was central to the quarter, and management said Okta is the first identity provider to support Anthropic’s Enterprise-Managed Authorization for Claude and participating Model Context Protocol (MCP) connectors. Okta also signed an expanded multi-year Strategic Collaboration Agreement with AWS and added integrations across Cisco, Google Cloud, OpenAI, Databricks, Snowflake, and NVIDIA, alongside more than 25 new Cross App Access integrations. The company positioned these moves as a standardized way to govern how AI agents connect to enterprise applications, with its Cross App Access protocol as the connective layer. Alongside results, Okta announced it had completed its tuck-in purchase of Permiso, a cloud-native identity security platform that detects threats across human, non-human, and agentic identities. Management said Permiso will fold into a unified security offering with Okta’s existing identity threat protection and posture management tools, extending its detection library well beyond the company’s current native risk checks. These additions reinforce a platform strategy that favors organic development supplemented by targeted acquisitions rather than large, integration-heavy deals.
Guidance and Final Thoughts
Okta raised its full-year outlook and now expects FY 2027 total revenue of $3.216 billion to $3.226 billion, up from a prior range of $3.19 billion to $3.21 billion, for growth of 10% to 11%. The company guided FY 2027 non-GAAP operating income to $830 million to $840 million, a 26% margin, with non-GAAP diluted EPS of $3.90 to $3.94 and free cash flow of $910 million to $930 million. For Q3 FY 2027, management expects revenue of $813 million to $817 million, cRPO growth of 11% to 12%, non-GAAP operating margin of 24% to 25%, and non-GAAP diluted EPS of $0.92 to $0.94. The full-year revenue guidance carries about a one-percentage-point headwind from the decision to move more professional services to global systems integrator (GSI) partners, a trade the company argues will deepen partner relationships and support top-line growth over time. Management characterized its guidance philosophy as unchanged and prudent, declining to assume that the stronger first-half conversion rates continue. For executives weighing identity vendors, the quarter shows a company funding an agentic bet from a core business that is already paying for it, a more durable setup than the reverse.
See the full press release on Okta’s Q2 FY 2027 financial results on the company website.
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Author Information
Mitch Ashley is VP and Practice Lead for the CIO & Technology Buyers and Software Lifecycle Engineering practices at The Futurum Group. A multi-time CIO and CTO with 30+ years leading technical organizations, Mitch built and operated production systems spanning cybersecurity for the U.S. Department of Defense, PKI services for the broadband and 5G industries, SaaS platforms, large-scale telecom and banking systems, and a national broadband network. His work with AI began early, developing expert systems that diagnosed and repaired complex mainframe environments. That operator foundation grounds his analysis in operational consequence, covering the technology buyer's world of software engineering, cybersecurity, DevOps, cloud, and AI.
