Global identity authentication leader Okta Inc. (OKTA.US) released its fiscal 2027 second-quarter earnings on August 26, covering the period ending July 31, 2026. The results showed broad beats across key metrics, driven by accelerating enterprise demand for AI security solutions, and the company lifted its full-year revenue outlook for the second time this year. Shares jumped more than 19% in after-hours trading following the announcement.
Second-quarter total revenue reached $805 million, an 11% year-over-year increase that surpassed the $793 million consensus estimate. Subscription revenue rose 12% to $793 million. GAAP net income came in at $116 million, or $0.65 per diluted share, representing a 73% surge from the $67 million ($0.37 per share) reported in the same period last year. Adjusted earnings per share of $1.05 also exceeded the $0.97 that analysts had projected.
As a critical gauge of future revenue, total remaining performance obligations (RPO) hit $4.858 billion, up 17% year-over-year and ahead of the $4.7 billion StreetAccount consensus. Current RPO, expected to be recognized within the next twelve months, totaled $2.585 billion—a 14% increase that also topped the $2.51 billion forecast. Chief Financial Officer Brett Tighe noted that both the workforce identity and customer identity segments posted accelerated annual contract value (ACV) growth during the quarter.
The company's "Okta for AI Agents" offering, now fully available to all customers, has emerged as a key growth driver in the AI agent identity security space. Chief Executive Officer and co-founder Todd McKinnon said, "To reach $10 billion, $20 billion, or even $30 billion in revenue, we need catalysts like this." New products accounted for 30% of total bookings during the quarter, with transactions including new products delivering roughly 40% higher annual contract value on average. McKinnon disclosed that the company has signed dozens of AI-related deals, including a multi-million dollar contract from the healthcare sector. He cautioned, however, that these new offerings have not yet made a material contribution to current RPO.
Backed by the robust performance, Okta raised its full-year fiscal 2027 revenue growth forecast from 9%-10% to 10%-11%, setting the annual revenue target at $3.216 billion to $3.226 billion. For the third quarter, the company guided to approximately $815 million in revenue, representing about 10% growth and beating the $808 million analyst projection. This outlook defied earlier market expectations that growth would decelerate to single digits starting in the second quarter.
Operational efficiency continues to improve, with GAAP operating profit reaching $107 million—13% of revenue, compared to $41 million or 6% in the prior-year quarter. Non-GAAP operating profit held steady at $226 million, maintaining a 28% margin. Operating cash flow reached $234 million (29% of revenue), while free cash flow totaled $227 million (28% of revenue), both showing significant year-over-year gains. The company ended the quarter with approximately $2.3 billion in cash, cash equivalents, and short-term investments.
During the quarter, Okta also repaid the remaining $350 million of convertible notes and repurchased about 1.5 million shares. In after-hours trading, shares surged over 19% to $160.50, hitting a new 52-week high. The stock has gained roughly 55% year-to-date, bringing the company's market capitalization to approximately $23.4 billion.
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