Okta Inc (NASDAQ: OKTA) raised its fiscal year 2027 adjusted earnings per share guidance to $3.90–$3.94 from $3.79–$3.87, beating the analyst estimate of $3.84. The company also lifted its full-year revenue outlook to $3.216 billion–$3.226 billion, surpassing the prior range of $3.185 billion–$3.205 billion and the consensus estimate of $3.200 billion.

The guidance upgrade follows a strong second quarter performance where Okta reported adjusted EPS of $1.05, exceeding the consensus of $0.97 by 8.25%. Total revenue grew 11% year-over-year to $805 million, beating the expected $795.12 million. Shares rose 15.32% to $155 in extended trading following the results.

Financial Performance

Subscription revenue, the core business line, increased 12% to $793 million. This growth was driven by accelerating annual contract value in workforce and customer identity segments, alongside contributions from new products like Okta Identity Governance.

Operating cash flow reached $234 million, while free cash flow hit $227 million, expanding the margin to 28% from 22% in the prior year quarter. Non-GAAP operating income stood at $226 million, or 28% of total revenue, maintaining flat margins compared to the previous year.

Backlog and Balance Sheet

Remaining performance obligations (RPO) grew 17% year-over-year to $4.858 billion, indicating robust future revenue visibility. Current RPO, representing backlog recognized within 12 months, increased 14% to $2.585 billion.

As of July 31, 2026, Okta held $2.299 billion in cash, cash equivalents, and short-term investments. The company settled the remaining principal of its 2026 Notes for $350 million during the quarter.

What the Numbers Show

The divergence between GAAP and non-GAAP profitability highlights the significant impact of non-cash expenses on reported earnings. While GAAP operating income more than doubled to $107 million, non-GAAP operating income grew more modestly to $226 million. Stock-based compensation expense totaled $114 million for the quarter, representing a substantial portion of the difference between the two metrics and underscoring the capital-intensive nature of the company's compensation structure relative to its current revenue base.

Outlook

For Q3 FY27, Okta expects total revenue between $813 million and $817 million, implying 10% year-over-year growth. Non-GAAP operating income is projected at $196 million to $200 million, yielding a margin of 24% to 25%.

Full-year fiscal 2027 guidance includes total revenue of $3.216 billion to $3.226 billion, reflecting 10% to 11% growth. This outlook incorporates an approximately one percentage point headwind from accelerating the shift of professional services business to partners. Non-GAAP free cash flow for the full year is expected to be between $910 million and $930 million.

CEO Todd McKinnon highlighted the strategic importance of identity in the AI era. "As AI agents transform every layer of technology, every agent needs a trusted identity and clear controls over what it can access and do," McKinnon said. He added that Okta helps organizations discover agents, secure their connections, govern their actions, and respond when something goes wrong.

Okta, Inc., the leading independent identity partner, will announce its financial results for the second quarter of fiscal year 2027 ended July 31, 2026, after the U.S. market close on Wednesday, August 26, 2026. The company will host a live video webcast to discuss the results at 2:00 p.m. Pacific time (5:00 p.m. Eastern time) on the same day.

The event details are as follows:

A webcast replay will be accessible from the Okta investor relations website at investor.okta.com. The press release will be available on the investor relations website prior to the commencement of the event.

Disclosure Obligations

Okta uses its investor relations website (investor.okta.com) and blog (okta.com/blog), including the Security Blog, Okta Developer Blog, and Auth0 Developer Blog, as a means of disclosing material non-public information and complying with Regulation FD. Investors should monitor these channels in addition to press releases, SEC filings, and public conference calls.

About Okta

Okta, Inc. is The World’s Identity Company™. It secures AI, machine, and human identity so everyone is free to safely use any technology. Its workforce and customer solutions empower businesses and developers to protect AI agents, users, employees, and partners while driving security, efficiencies, and innovation.