Identity management company Okta (NASDAQ: OKTA) announced better-than-expected revenue in Q2 CY2026, with sales up 10.6% year on year to $805 million. Guidance for next quarter’s revenue was better than expected at $815 million at the midpoint, 0.9% above analysts’ estimates. Its non-GAAP profit of $1.05 per share was 8.9% above analysts’ consensus estimates.
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Okta (OKTA) Q2 CY2026 Highlights:
- Revenue: $805 million vs analyst estimates of $792.8 million (10.6% year-on-year growth, 1.5% beat)
- Adjusted EPS: $1.05 vs analyst estimates of $0.96 (8.9% beat)
- Adjusted Operating Income: $226 million vs analyst estimates of $206.6 million (28.1% margin, 9.4% beat)
- The company slightly lifted its revenue guidance for the full year to $3.22 billion at the midpoint from $3.20 billion
- Management raised its full-year Adjusted EPS guidance to $3.92 at the midpoint, a 2.3% increase
- Operating Margin: 13.3%, up from 5.6% in the same quarter last year
- Billings: $681.2 million at quarter end, down 5.4% year on year
- Market Capitalization: $23.36 billion
StockStory’s Take
Okta’s second quarter results were marked by strength across both its core workforce and customer identity platforms, as well as significant traction with new products. Management attributed the outperformance to increased adoption among large enterprises, greater partner engagement, and the growing relevance of AI security. CEO Todd McKinnon emphasized, “The emerging use of AI by organizations and threat actors alike has further elevated the role identity plays within a company’s security posture.” The combination of broad product adoption and successful execution within the sales organization contributed to record non-Q4 bookings and robust growth in large-account contracts.
Looking ahead, Okta’s guidance is shaped by continued investment in AI-driven product development, expanding partner ecosystems, and a focus on operational efficiency. Management highlighted early but meaningful customer demand for its new AI agent governance solutions and expects this momentum to build as organizations modernize their security infrastructure. CFO Brett Tighe stated, “Our strong core business and growing portfolio of new products provides the foundation to extend Okta’s leadership in identity security.” Okta is positioning itself to capture the expanding opportunity as enterprises accelerate adoption of AI and prioritize comprehensive identity management.
Key Insights from Management’s Remarks
Management pointed to several factors underpinning the quarter’s growth, including the acceleration of AI security conversations, product breadth, and enhanced partner collaboration.
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Large enterprise traction: Okta saw notable strength among large enterprise customers, with over 20% growth in accounts generating more than $1 million in annual contract value. This upmarket momentum was a consistent driver across both workforce and customer identity segments.
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AI security product adoption: The company’s new AI-focused offerings, such as Okta for AI Agents, contributed approximately 30% of new bookings. While still early in their lifecycle, these solutions are catalyzing broader modernization efforts and increasing average contract values by roughly 40% when included in deals.
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Ecosystem and standards leadership: Okta advanced industry standards through its work on the Cross-App Access protocol, becoming the first identity provider to support Enterprise Managed Auth for Claude, Anthropic’s AI agent. This move strengthens Okta’s position as a neutral platform amid growing fragmentation in the AI landscape.
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Partner-driven deal expansion: Channel partners played a role in all of Okta’s top 20 deals for the quarter, with the largest deal sourced by a partner. Shifting more professional services to global system integrator partners is expected to deepen relationships and support continued enterprise growth.
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Acquisition of Permiso: Okta completed the acquisition of Permiso, a cloud-native identity security platform, which will be integrated to enhance Okta’s identity threat protection capabilities—providing more advanced risk detection and extending coverage to both human and AI agent identities.
Drivers of Future Performance
Okta’s outlook is anchored by anticipated demand for AI identity solutions, deeper enterprise penetration, and ongoing investments in product innovation and operational efficiency.
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AI product momentum: Management expects demand for AI agent governance and security products to increase, as more organizations recognize identity as a core requirement for securing AI-driven workloads. Early wins and pipeline growth are seen as signs of this trend, though material revenue contribution is expected to build gradually over time.
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Enterprise and public sector growth: Okta is targeting further expansion among large enterprises and the public sector, especially as regulatory mandates like the U.S. Department of Defense’s Zero Trust framework accelerate procurement cycles. The company’s recent IL5 authorization opens doors to additional federal opportunities.
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Operational discipline and partner leverage: Maintaining strong non-GAAP profitability and free cash flow margins remains a priority, with cost discipline paired with investments in R&D and go-to-market initiatives. The strategy of leveraging partners for service delivery and deal sourcing is expected to drive scalable, long-term growth.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be tracking (1) the pace at which enterprises adopt Okta’s AI agent governance solutions and whether these products begin contributing meaningfully to revenue, (2) ongoing penetration in the public sector following recent certifications, and (3) continued growth in large enterprise accounts through partner channels. Additional focus will be on how Okta integrates Permiso and evolves its product suite to address emerging security needs.
Okta currently trades at $167.72, up from $136.97 just before the earnings. Is there an opportunity in the stock? See for yourself in our full research report (it’s free).
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