Okta, Inc. OKTA framed its second-quarter fiscal 2027 call around improving core identity momentum, while positioning AI security as an early-stage opportunity rather than a current revenue driver.
Management paired stronger bookings and cRPO growth with a higher full-year outlook, but kept forward assumptions prudent. AI discussions are already helping broaden customer conversations into identity modernization.
OKTA Core Business Carries Near-Term Momentum
CEO and co-founder Todd McKinnon said ACV growth accelerated in both workforce and customer identity. He called Q2 a record bookings quarter outside Q4.
CFO Brett Tighe said customers above $1 million in ACV grew more than 20%, taking that group above 600. cRPO reached $2.585 billion, up 14%.
Revenue rose 11% to $805 million, beating the Zacks Consensus Estimate of $792.14 million. Non-GAAP earnings of $1.05 per share topped the Zacks Consensus Estimate of $0.96.
Okta Turns AI Interest Into Broader Identity Deals
CEO and co-founder Todd McKinnon said Okta for AI Agents closed dozens of Q2 deals, including several million-dollar-plus transactions, but remains too small to materially affect companywide results.
Todd McKinnon also said AI security discussions are expanding into governance, customer identity and legacy-platform replacement, giving Okta another route into broader identity modernization projects.
President and COO Eric Kelleher said 81% of CISOs in a recent customer survey knew agents were deployed without an adequate security platform. He said Okta's teams are aggressively scheduling customer conversations around that need.
OKTA Lifts Guidance But Keeps Assumptions Prudent
For the fiscal third quarter, Okta expects revenue of $813 million to $817 million, up 10%, and cRPO growth of 11% to12%. Non-GAAP operating margin is projected at 24% to 25%.
Fiscal 2027 revenue is now expected at $3.216 billion to $3.226 billion, up 10% to 11%. Non-GAAP operating margin is projected at 26%, with free cash flow margin at 28% to 29%.
The forecast includes about a one-point growth headwind from shifting professional services to partners. CFO Brett Tighe said AI remains immaterial to fiscal 2027 but could become material in fiscal 2028 and beyond if current trends continue.
Okta Expands Product Breadth and Partner Leverage
CEO and co-founder Todd McKinnon said newer products represented about 30% of Q2 bookings, led by Okta Identity Governance. Including a newer product in a deal produces an average ACV uplift of about 40%.
Todd McKinnon also highlighted Agent Gateway, Okta for AI Agents-Core and the Permiso acquisition. Permiso is intended to deepen identity threat detection across human, nonhuman and agentic identities.
CFO Brett Tighe said partners participated in all top 20 Q2 deals, and the largest deal was partner-sourced. Management expects the services shift toward global systems integrators to deepen enterprise relationships.
OKTA Q&A Tests AI Timing, Pricing and Competition
A Guggenheim Securities analyst asked when AI security could become meaningful revenue. CEO and co-founder Todd McKinnon emphasized strong pipeline activity but acknowledged limited conversion history for the recently launched offering.
A Loop Capital Markets analyst asked about pricing as agent use expands. CEO and co-founder Todd McKinnon said the current model is a per-user uplift, while Okta is establishing a framework for consumption-based agent SSO pricing.
A Macquarie analyst asked about competition from larger platforms. CEO and co-founder Todd McKinnon stressed Okta's neutrality and ability to connect across models, clouds and applications as its primary differentiation.
Okta Keeps Profitability Alongside Growth
CFO Brett Tighe said Okta will keep investing in products, go-to-market execution and partners while maintaining cost discipline. Q2 non-GAAP operating margin was 28%, while free cash flow totaled $227 million.
CEO and co-founder Todd McKinnon and CFO Brett Tighe centered the company's posture on durable core demand, enterprise penetration and broader product adoption, with AI treated as a longer-term growth vector rather than a near-term forecast driver.
OKTA Rank and Style Scores Give Mixed Readout
OKTA carries a Zacks Rank #2 (Buy). Its Momentum Score of B is favorable, while the Value Score of F, Growth Score of C and VGM Score of D provide a mixed Style Score profile. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Style Score framework favors Zacks Rank #1 and #2 stocks paired with A or B individual or VGM scores. The Zacks Rank can change as estimates are revised after the just-reported results.
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Okta, Inc. (OKTA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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