Executive Summary

Q2 FY26 delivered revenue of $728M (+13% YoY) with non-GAAP diluted EPS of $0.91; both beat S&P Global consensus, and non-GAAP operating margin expanded to 28% from 23% a year ago . The beat was driven by strength in public sector, Auth0, and new product adoption .
Remaining performance obligations (RPO) rose 18% YoY to $4.152B and cRPO rose 13% YoY to $2.265B, while operating cash flow was $167M (23% margin) and free cash flow $162M (22% margin) .
Guidance raised: FY26 revenue to $2.875–$2.885B (from $2.850–$2.860B), non-GAAP operating income to $730–$740M (from $710–$720M), EPS to $3.33–$3.38 (from $3.23–$3.28), and FCF margin to ~28% (from ~27%) . Management also removed the prior macro conservatism from guidance .
Stock-relevant catalysts: DoD-scale deployments (myAuth replacing DS Logon), strong federal renewals and largest deal in the quarter with a DoD agency, and the new Cross App Access protocol for securing AI agents, reinforcing Okta’s identity security fabric narrative .

What Went Well and What Went Wrong

What Went Well

Public sector momentum: five of the top ten Q2 deals were in U.S. public sector, including the largest deal with a DoD agency; renewals were strong, underscoring mission-critical status of Okta solutions .
AI and platform innovation: management previewed an “identity security fabric” and introduced Cross App Access to secure AI agents; Okta’s independence and neutrality positioned as strategic advantages versus platform entrants .
Go-to-market specialization: record pipeline generation, improved AE-driven pipeline, and partner touch on the top 20 deals, supporting productivity gains and second-half execution confidence . “We generated an all-time high for pipe in Q2” (Eric Kelleher) .

What Went Wrong

Procurement delays and contract restructuring at civilian agencies (headcount reductions), partially offset by upsells of new products within the public sector .
cRPO growth decelerated vs prior quarter YoY rates (Q4 FY25 cRPO +15% YoY vs Q2 FY26 +13% YoY), reflecting normalization after duration and comp plan changes last year .
Workforce ACV growth pace drew analyst scrutiny; management emphasized continued efforts to expand awareness and deployment of governance, privileged access, and threat protection to drive upmarket breadth .

Financial Results

Revenue, EPS, Margins vs Prior Periods and Estimates

Metric	Q4 FY25	Q1 FY26	Q2 FY26
Total Revenue ($USD Millions)	$682	$688	$728
GAAP Diluted EPS ($)	$0.13	$0.35	$0.37
Non-GAAP Diluted EPS ($)	$0.78	$0.86	$0.91
GAAP Operating Margin (%)	1%	6%	6%
Non-GAAP Operating Margin (%)	25%	27%	28%
Gross Margin (%)	77%	77%	77%
Non-GAAP Gross Margin (%)	82%	82%	82%

Segment Revenue Breakdown

Metric	Q4 FY25	Q1 FY26	Q2 FY26
Subscription Revenue ($USD Millions)	$670	$673	$711
Professional Services and Other ($USD Millions)	$12	$15	$17

KPIs and Cash Flow

Metric	Q4 FY25	Q1 FY26	Q2 FY26
RPO ($USD Billions)	$4.215	$4.084	$4.152
cRPO ($USD Billions)	$2.248	$2.227	$2.265
Operating Cash Flow ($USD Millions)	$286	$241	$167
Free Cash Flow ($USD Millions)	$284	$238	$162
Cash, Equivalents & ST Investments ($USD Billions)	$2.523	$2.725	$2.858

Results vs S&P Global Consensus

Metric	Q4 FY25	Q1 FY26	Q2 FY26
Revenue Consensus ($USD Millions)	$669.10*	$680.08*	$711.87*
Revenue Actual ($USD Millions)	$682	$688	$728
Primary EPS Consensus Mean ($)	$0.7362*	$0.7714*	$0.8460*
Non-GAAP Diluted EPS Actual ($)	$0.78	$0.86	$0.91

Values marked with an asterisk (*) were retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue ($USD Billions)	FY26	$2.850–$2.860	$2.875–$2.885	Raised
Non-GAAP Operating Income ($USD Millions)	FY26	$710–$720	$730–$740	Raised
Non-GAAP Diluted EPS ($)	FY26	$3.23–$3.28 (26% tax rate assumption)	$3.33–$3.38 (26% tax rate assumption)	Raised
Free Cash Flow Margin (%)	FY26	~27%	~28%	Raised
Total Revenue ($USD Millions)	Q3 FY26	N/A	$728–$730	New
cRPO ($USD Billions)	Q3 FY26	N/A	$2.260–$2.265	New
Non-GAAP Operating Income ($USD Millions)	Q3 FY26	N/A	$160–$162 (22% margin)	New
Non-GAAP Diluted EPS ($)	Q3 FY26	N/A	$0.74–$0.75 (26% tax rate)	New
Free Cash Flow Margin (%)	Q3 FY26	N/A	~21%	New

Management removed the prior macro “prudence layer” from guidance; go-to-market specialization effects remain embedded .

Earnings Call Themes & Trends

Topic	Q4 FY25 (Q-2)	Q1 FY26 (Q-1)	Q2 FY26 (Current)	Trend
AI/Technology Initiatives	Record results and focus on modern identity security; raised FY26 outlook	Solid start with record operating profit; continued innovation across Okta & Auth0	Identity security fabric narrative, Cross App Access protocol; AI agent security positioning	Rising AI-focused innovation and narrative coherence
Public Sector/Federal	Strength in public sector; accelerating RPO/cRPO	Continued momentum; cautious macro overlay in guidance	Strong renewals; 5/10 top deals in public sector; largest with DoD; procurement delays but offset by upsells	Net positive; scale-up with DoD
Go-to-Market Specialization	Announced specialization approach	Rolled out in Q1; prudence in guidance	Improved AE pipeline, record pipe, partner engagement; removal of macro prudence	Executing, productivity improving
RPO/cRPO & Duration	RPO +25%, cRPO +15% YoY	RPO +21%, cRPO +14% YoY	RPO +18%, cRPO +13% YoY; duration normalization after comp changes	Normalizing growth; steady cRPO
Competitive Landscape	Focus on breadth and flexibility	Emphasis on independence and neutrality	“Platform entrants validate identity; independence/neutrality matter” re: PANW-CYBR	Okta confident; narrative differentiation
Estimates/NRR	Beat on revenue/EPS	Beat on revenue/EPS	Beat on revenue/EPS; NRR seen stabilizing around recent levels (mix-dependent)	Persistent beats; NRR stabilization

Management Commentary

“Okta’s unified identity platform is winning customers… Our solid Q2 results are highlighted by continued strength in new product adoption, the public sector, Auth0, and cash flow” (CEO Todd McKinnon) .
“We are seeing encouraging signals from our newly specialized go-to-market teams… Securing AI is the next frontier, and our introduction of a new open standard called cross app access is a key part of the solution” (CEO) .
“We’re removing [macro conservatism] from our outlook for the remainder of the fiscal year… increased specialization will drive long-term growth” (CFO Brett Tighe) .
“We generated an all-time high for pipe in Q2… 20 of the top 20 deals were all touched by a partner” (COO Eric Kelleher; CFO support) .
On public sector: “Renewals across all of federal were strong… biggest deal of the quarter with a DoD agency” (CFO) .

Q&A Highlights

NRR stabilization: CFO reiterated NRR expected to be roughly around recent levels, depending on new vs upsell mix; macro caveat removed given no differentiation observed in Q2 .
Federal restructuring: Civilian agency restructuring due to layoffs reduced users but offset with upsells of new products, boosting stickiness and renewal rates .
Sales specialization: Gains in productivity; record pipeline; increased AE-sourced opportunities; extensive partner involvement across largest deals .
RPO vs cRPO dynamics: Duration normalized after prior comp plan adjustments; current RPO and cRPO relationship reflects contract mix/tenor .
AI monetization: Near-term monetization through Privileged Access, Governance, Identity Security Posture Management for non-human identities; longer-term plan to manage AI agents within identity system for monetization .

Estimates Context

Q2 FY26: Revenue $728M vs $711.9M consensus; non-GAAP EPS $0.91 vs $0.846 consensus — both beats, driven by federal/public sector wins, new product adoption, and improved sales productivity .
Q1 FY26: Revenue $688M vs $680.1M consensus; non-GAAP EPS $0.86 vs $0.771 consensus — beats amid record operating profit and robust FCF .
Q4 FY25: Revenue $682M vs $669.1M consensus; non-GAAP EPS $0.78 vs $0.736 consensus — beats alongside record profitability and cash flow .

Values marked with an asterisk (*) in tables were retrieved from S&P Global.

Key Takeaways for Investors

Identity remains central to security architectures; Okta’s independence and neutrality support vendor-agnostic consolidation, an increasingly strong competitive stance vs platform entrants .
Federal/public sector is a durable growth vector; the DoD myAuth rollout and largest-deal win point to enterprise-scale validation and multi-year opportunity .
GTM specialization is working: record pipeline, stronger AE-sourced demand, and robust partner engagement suggest near-term momentum and improved execution .
Financial quality improving: sustained non-GAAP margin expansion and FCF strength provide operating leverage and capital flexibility (e.g., 2025 notes cash settlement) .
Raised FY26 guidance and removal of macro prudence indicate heightened confidence; watch cRPO trajectory and NRR mix to gauge growth normalization .
AI agent security is an emerging catalyst: Cross App Access and identity security fabric could unlock monetization across non-human identities and agent management in 2026+ .
Non-GAAP framing: Results and guidance rely on non-GAAP measures excluding SBC, intangibles amortization, and certain legal/other items; monitor reconciliations for underlying profitability trends .

Okta, Inc. (OKTA)·Q2 2026 Earnings Summary