Summary
Okta closed FY2026 Q2 with total revenue of $728.0 million, up 12.7% from $646.0 million in the prior-year quarter. Gross profit rose 14.1% to $560.0 million, and gross margin improved to 76.9% from 76.0%, up 0.9 percentage points. RPO ended the quarter at $4.152 billion, up 18.5% year over year. cRPO was $2.265 billion, up 13%. The count of customers with annual contract value above $100,000 reached 4,945, a 7% increase. Okta reported a dollar-based net retention rate of 106%, down from 110%. Management attributed the subscription revenue increase to volume-driven new business and additional solutions sold to existing customers. It attributed the lower net retention rate to the macroeconomic environment and slower growth in ACV from existing customers.
Profitability swung sharply. GAAP operating income was $41.0 million, a swing from a loss in the prior-year quarter. Operating margin was 5.6% compared with -2.9%, an 8.6 percentage point improvement. GAAP net income was $67.0 million, up 131.0% from $29.0 million. Diluted EPS was $0.37, up 146.7% from $0.15. On a non-GAAP basis, operating income was $202 million, or 28% of revenue, and non-GAAP net income was $169 million. Non-GAAP diluted EPS was $0.91. Those non-GAAP figures exclude stock-based compensation, amortization of acquired intangibles, and other items.
Cash generation improved. Operating cash flow was $167.0 million, up 94.2% from $86.0 million in the prior-year quarter. Capital expenditures were $2.0 million, down 60.0%. Free cash flow, a non-GAAP measure, was $162 million, or 22% of total revenue, compared with $78 million in the prior-year quarter. Deferred revenue, current portion, was $1.550 billion, up 11.2% from the prior-year quarter. RPO growth of 18.5% outpaced revenue growth and points to a healthy backlog. Management warned that longer sales cycles could delay deal closings and create near-term headwinds for cash flow, RPO and billings growth.
Guidance frames a deceleration. For the third quarter of fiscal 2026, Okta expects total revenue growth of 9% to 10% year over year. The company expects current RPO of $2.260 billion to $2.265 billion, growth of 10% year over year. Non-GAAP operating income is guided to $160 million to $162 million, a 22% non-GAAP operating margin. Non-GAAP diluted net income per share is expected at $0.74 to $0.75, and non-GAAP free cash flow margin is approximately 21%. For the full fiscal year 2026, Okta now expects total revenue growth of 10% to 11% year over year. Full-year non-GAAP operating income is guided to $730 million to $740 million, a 25% to 26% non-GAAP operating margin. Full-year non-GAAP diluted net income per share is expected at $3.33 to $3.38, and non-GAAP free cash flow margin is approximately 28%. The announced acquisition of Axiom Security is expected to be immaterial to all guidance metrics.
Risks remain familiar but real. Okta faces worldwide economic and political uncertainty, tariffs, changes in government spending, inflation, and rising interest rates. The company has experienced cybersecurity incidents that harmed its reputation and customer relations, and it says the announcement of any security incident, even if not significant, could have these impacts. Customer growth has slowed in recent periods and could continue to decelerate. Sales cycles have lengthened, which could delay deals and pressure near-term cash flow, RPO, and billings. Okta also maintains a full valuation allowance on its U.S. deferred tax assets, and the timing of any release remains uncertain. The go-to-market specialization rolled out in the first quarter of fiscal 2026 is part of the context for the company's prudent approach to forward guidance. On the legal front, Okta disclosed a stipulation to settle stockholder derivative litigation, with a $2,250,000 fee and expense amount subject to court approval and new governance reforms, a reminder that oversight and compliance costs remain part of the operating backdrop.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $728.0M | $688.0M | +5.8% | $646.0M | +12.7% |
| Gross profit | $560.0M | $533.0M | +5.1% | $491.0M | +14.1% |
| Gross margin | 76.9% | 77.5% | -0.5 pp | 76.0% | +0.9 pp |
| Research & development | $160.0M | $154.0M | +3.9% | $164.0M | -2.4% |
| Sales & marketing | $246.0M | $237.0M | +3.8% | $238.0M | +3.4% |
| General & administrative | $113.0M | $103.0M | +9.7% | $108.0M | +4.6% |
| Total operating expenses | $519.0M | $494.0M | +5.1% | $510.0M | +1.8% |
| Operating income (loss) | $41.0M | $39.0M | +5.1% | -$19.0M | +315.8% |
| Operating margin | 5.6% | 5.7% | -0.0 pp | -2.9% | +8.6 pp |
| Net income (loss) | $67.0M | $62.0M | +8.1% | $29.0M | +131.0% |
| Net margin | 9.2% | 9.0% | +0.2 pp | 4.5% | +4.7 pp |
| Diluted EPS | $0.37 | $0.35 | +$0.02 | $0.15 | +$0.22 |
| Net retention rate | 106.0% | 106.0% | ±0.0 pp | 110.0% | -4.0 pp |
Risks
Adverse general economic, market and industry conditions and reductions in workforce identity and customer identity spending have reduced and may further reduce demand. MD&A notes longer sales cycles and says the dollar-based net retention rate decreased to 106% as of July 31, 2025 from 110% as of July 31, 2024, primarily due to the macroeconomic environment, with overall ACV from existing customers increasing at a slower rate.
MD&A states future growth may be impacted by longer sales cycles, which it has experienced, delaying deal closings and creating near-term headwinds for cash flow, RPO and billings growth. The risk factor cites increasing focus on larger organizations with lengthy purchasing approval processes and less predictable sales cycles.
Past incidents, including the January 2022 third-party service provider compromise and the October 2023 customer support system breach, harmed reputation and customer relations and adversely impacted financial results. MD&A says the announcement of any security incidents, even if not significant, could have these impacts.
Revenue growth depends on retaining and expanding existing customers. MD&A reports the dollar-based net retention rate for the trailing 12 months ended July 31, 2025 decreased to 106% from 110% a year earlier, and attributes the decrease primarily to the macroeconomic environment, with overall ACV from existing customers increasing at a slower rate.
Okta faces intense competition from larger, well-established companies and identifies Microsoft as its principal competitor. Larger competitors have greater resources and can bundle products or sell at zero or negative margins, which may cause price reductions, fewer orders, reduced revenue and gross margins and loss of market share.
The risk factors flag issues in the development and use of artificial intelligence combined with an uncertain regulatory environment, which may result in reputational harm, liability or other adverse consequences to business operations.
Evolving global Data Protection Laws, including the GDPR and a growing U.S. state privacy patchwork, impose heightened transparency, data transfer and retention obligations. Noncompliance can trigger significant fines, orders to change data processing and private litigation.
Success depends on executive officers and key employees, and the risk factor notes intense competition in the San Francisco Bay Area for software and SaaS engineers and experienced sales professionals. Okta began further specializing its sales force in fiscal 2026, which requires hiring, developing and retaining talented sales personnel to achieve anticipated revenue growth.
The 2025 Notes due September 1, 2025 and 2026 Notes due June 15, 2026 are classified as current liabilities as of July 31, 2025. If conversion features are triggered, settlement may require cash and adversely affect liquidity, and transactions relating to the notes may affect the value of Okta's Class A common stock.
SaaS KPIs
All quarters →Remaining Performance Obligations (RPO)
Current Remaining Performance Obligations (cRPO)
Free Cash Flow Margin
Free Cash Flow
Non-GAAP Operating Margin
Non-GAAP Operating Income
Customers with Annual Contract Value Above $100,000
Summary, forecast, risks and KPIs are extracted from Okta, Inc.'s SEC filings for Q2 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.