Summary
Okta reported $805 million of total revenue for the second quarter of fiscal 2027, up 11% from the prior-year quarter. Backlog tells a better story than the headline. RPO reached $4.858 billion, up 17%, and cRPO, the portion of that backlog expected to convert within the next 12 months, was $2.585 billion, up 14%. Management called out accelerating cRPO as a highlight and pointed to steady momentum in both the workforce and customer identity businesses, with newer products led by Okta Identity Governance adding to growth. The professional services line is shrinking on purpose. Okta is moving implementation work to global systems integrators, which drags on that revenue stream and takes approximately one percentage point off total revenue growth for the full fiscal year.
Profitability improved far more than the top line. Gross profit was $641 million, up 14.5%, and GAAP gross margin was 79.6%, up 2.7 percentage points. Operating income was $107 million, up 161.0%, and the operating margin rose to 13.3%, up 7.7 percentage points. Net income reached $116 million, up 73.1%, and diluted earnings per share were $0.65, up 75.7%. Non-GAAP results moved less. Non-GAAP operating income was $226 million, or 28% of revenue, matching the prior-year non-GAAP margin, and non-GAAP diluted net income per share was $1.05. Okta's non-GAAP definitions exclude stock-based compensation, amortization of acquired intangibles, acquisition and integration-related expenses and other items, so the two sets of numbers frame the cost base differently.
Cash flow was the cleanest signal of the quarter. Operating cash flow was $234 million, up 40.1%, and capital expenditures were only $1 million, down 50.0%. Free cash flow, a non-GAAP measure that subtracts property and equipment purchases and capitalized software from operating cash flow, was $227 million, or 28% of revenue. Through the first six months of fiscal 2027, operating cash flow was $511 million, up 25.2%, and free cash flow was $498 million. The balance sheet ended the quarter with $2.299 billion in cash, cash equivalents and short-term investments. Okta settled the remaining $350 million principal on its 2026 Notes during the quarter, a cash outlay that management says will reduce interest income this year, and it repurchased 4,569,262 Class A shares for $366 million under a $1 billion authorization, leaving $555 million available. Current deferred revenue was $1.751 billion, up 13.0%.
Guidance points to a steady stretch ahead. For the third quarter of fiscal 2027, Okta guides to total revenue growth of 10% and current RPO of $2.590 billion to $2.600 billion, or 11% to 12% growth. Non-GAAP operating income is guided to $196 million to $200 million, which yields a 24% to 25% non-GAAP operating margin, and non-GAAP diluted net income per share to $0.92 to $0.94. Non-GAAP free cash flow guidance is $175 million to $185 million, a 21% to 23% free cash flow margin. For the full fiscal year 2027, the company guides to total revenue growth of 10% to 11%, with an approximately one percentage point drag from shifting professional services work to partners. Full-year non-GAAP operating income is guided to $830 million to $840 million for a 26% margin, non-GAAP diluted earnings per share to $3.90 to $3.94, and non-GAAP free cash flow to $910 million to $930 million for a 28% to 29% margin, which includes an approximately one percentage point hit from lower interest income.
Customer counts and retention held steady. Okta had 5,255 customers with annual contract value above $100,000 at July 31, 2026, up from 4,945 a year earlier, and its dollar-based net retention rate for the trailing 12 months was 107%, compared with 106%. The company expects interest income to decline in fiscal 2027 now that the 2026 Notes are settled and cash is going toward buybacks. It also maintains a full valuation allowance against its US deferred tax assets and notes that a release could come in the foreseeable future if profitability holds. Risks remain the familiar ones. Okta cites past cybersecurity incidents, macroeconomic and political uncertainty, and longer sales cycles as factors that could hurt results. Longer sales cycles would show up first in cash flow, RPO and cRPO growth.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2027 | Q1 FY2027 | QoQ | Q2 FY2026 | YoY |
|---|---|---|---|---|---|
| Revenue | $805.0M | $765.0M | +5.2% | $728.0M | +10.6% |
| Gross profit | $641.0M | $595.0M | +7.7% | $560.0M | +14.5% |
| Gross margin | 79.6% | 77.8% | +1.8 pp | 76.9% | +2.7 pp |
| Research & development | $163.0M | $163.0M | ±0.0% | $160.0M | +1.9% |
| Sales & marketing | $273.0M | $278.0M | -1.8% | $246.0M | +11.0% |
| General & administrative | $98.0M | $98.0M | ±0.0% | $113.0M | -13.3% |
| Total operating expenses | $534.0M | $539.0M | -0.9% | $519.0M | +2.9% |
| Operating income (loss) | $107.0M | $56.0M | +91.1% | $41.0M | +161.0% |
| Operating margin | 13.3% | 7.3% | +6.0 pp | 5.6% | +7.7 pp |
| Net income (loss) | $116.0M | $74.0M | +56.8% | $67.0M | +73.1% |
| Net margin | 14.4% | 9.7% | +4.7 pp | 9.2% | +5.2 pp |
| Diluted EPS | $0.65 | $0.42 | +$0.23 | $0.37 | +$0.28 |
| Net retention rate | 107.0% | 107.0% | ±0.0 pp | 106.0% | +1.0 pp |
Risks
Okta states that future growth may be impacted by longer sales cycles, which it has experienced, and that this could delay deal closings and create near-term headwinds for cash flow, RPO and current RPO growth, with potential trailing impacts on revenue growth and other key metrics. Current RPO was $2,585 million as of July 31, 2026 versus $2,265 million a year earlier, while RPO rose 17.0% to $4,858 million over the same period.
Past incidents, including the January 2022 third-party service provider incident and the October 2023 breach of the third-party customer support system, harmed reputation and customer relations and adversely affected financial results, and management expects they will continue to adversely affect future financial performance. It also notes that announcement of any security incident, even if not significant, could have these impacts given the nature of the identity business.
Professional services and other revenue declined 33% for the quarter to $12 million and 17% year to date to $27 million as Okta shifts engagements to global systems integrators, while associated costs stayed relatively flat. As a result, gross margin for professional services and other fell to (70)% for the quarter compared to (24)% a year earlier and to (49)% year to date compared to (25)%, and management expects professional services and other revenue to continue to decline.
Management cites worldwide economic and political uncertainties and negative trends, including financial and credit market fluctuations, tariffs and increasing trade protectionism, changes in government spending levels, uncertainty in the banking sector, changing interest rates and inflation, as having adversely affected or potentially adversely affecting results. Liquidity is concentrated in cash, cash equivalents and short-term investments of $2,299 million distributed across large financial institutions.
Interest income and other, net declined 29% for the quarter to $19 million and 27% year to date to $42 million, primarily from lower interest income on short-term investment holdings. Management expects interest income to decrease in fiscal 2027 following the cash settlement of the 2026 Notes and as investable cash is deployed to fund the Share Repurchase Program, which had $555 million remaining available as of July 31, 2026.
The provision for income taxes rose to $10 million for the quarter from zero a year earlier and increased 117% year to date to $14 million, driven by higher forecasted full-year fiscal 2027 pre-tax income and the tax impacts of the Axiom integration. Okta continues to maintain a full valuation allowance on U.S. deferred tax assets, and any release, while potentially reducing income tax expense, remains uncertain in timing and amount and depends on actual profitability achieved.
SaaS KPIs
All quarters →Remaining Performance Obligations (RPO)
Current Remaining Performance Obligations (cRPO)
Free Cash Flow Margin
Non-GAAP Gross Margin
Non-GAAP Operating Margin
Summary, forecast, risks and KPIs are extracted from Okta, Inc.'s SEC filings for Q2 FY2027 (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.