Key Highlights

● Total revenue was $805 million, up 11%.

● Free cash flow was $227 million, a 28% margin.

● Current remaining performance obligations grew 14%.

● Fiscal 2027 revenue guidance is $3.216 billion to $3.226 billion.

Okta, Inc. (NASDAQ:OKTA) reported second-quarter fiscal 2027 results on 26 August 2026, with total revenue of $805 million, up 11%, and free cash flow of $227 million, a margin of 28%. The company said its current remaining performance obligations, a measure of contracted revenue due within twelve months, grew 14%, which the chief financial officer described as an acceleration. The company's fiscal year ends on 31 January 2027, so this was the second fiscal quarter.

Business and sector

Okta provides cloud identity and access management software, including workforce identity for employees and customer identity for the applications that consumers and businesses use. Identity is a security layer that decides who or what can access a system, and demand is generally supported by remote working, cyber-attacks that exploit stolen credentials and the spread of software agents that also need managed access. The sector is competitive, with large platform providers and specialist vendors, and customers often buy through multi-year subscription contracts.

Latest reported results

For the quarter ended 31 July 2026, subscription revenue was $793 million, up 12%. Remaining performance obligations were $4.858 billion, up 17%, and current remaining performance obligations were $2.585 billion. GAAP operating income was $107 million, a margin of 13%, compared with $41 million, or 6%, a year earlier. Non-GAAP operating income was $226 million, a margin of 28%, the same margin as the prior-year quarter. GAAP net income was $116 million, or $0.65 per diluted share, and non-GAAP diluted earnings per share were $1.05, compared with $0.91. The chief financial officer cited accelerating cRPO, stronger annual contract value in workforce and customer identity, and contributions from new products led by Okta Identity Governance.

Financial performance and industry context

Operating cash flow was $234 million, or 29% of revenue, and free cash flow was $227 million, compared with $162 million, a margin of 22%, a year earlier. Cash and short-term investments were $2.299 billion at 31 July 2026, after Okta paid $350 million in cash to settle the remaining principal of its 2026 Notes. For the third quarter, ending 31 October 2026, it guided to revenue of $813 million to $817 million, cRPO of $2.590 billion to $2.600 billion, non-GAAP operating income of $196 million to $200 million and non-GAAP earnings per share of $0.92 to $0.94. For fiscal 2027 it expects revenue of $3.216 billion to $3.226 billion, non-GAAP operating income of $830 million to $840 million, non-GAAP earnings per share of $3.90 to $3.94 and free cash flow of $910 million to $930 million.

Risks and uncertainties

Revenue guidance includes a headwind of about one percentage point from moving professional services work to partners, and free cash flow guidance includes about one point from lower interest income, so the underlying trend differs somewhat from the headline figures. The third-quarter operating margin guidance of 24 to 25% is below the second-quarter result, which indicates higher costs or investment ahead. Growth of 11% is moderate for a software company of this scale, and competition from larger security platforms could affect pricing. The release did not disclose a customer count.

Product adoption and cRPO momentum

The third-quarter report will show whether cRPO growth is sustained and whether revenue lands within the guided range. Other points include adoption of Okta Identity Governance and other newer products, the margin trajectory relative to guidance, and cash generation as interest income changes. Management commentary on the contribution of newer products could also help show whether they add to long-term growth rather than only supporting renewals of existing contracts.