Okta Inc (NASDAQ:OKTA) Surpasses Q2 FY2026 Estimates with Strong Revenue and Profit Growth

Okta Inc (NASDAQ:OKTA) delivered a robust performance in its second quarter fiscal 2026 results, surpassing analyst expectations on both revenue and earnings per share. The identity management specialist reported revenue of $728 million, exceeding the consensus estimate of $726.3 million, while non-GAAP diluted EPS came in at $0.91, comfortably ahead of the $0.86 projection.

Financial Performance Highlights

The company demonstrated solid growth across key financial metrics during the quarter. Total revenue increased 13% year-over-year, with subscription revenue growing 12% to $711 million. Remaining performance obligation, a key indicator of future revenue, showed strong momentum with an 18% year-over-year increase to $4.15 billion. Current RPO, representing subscription backlog expected to be recognized over the next 12 months, reached $2.27 billion, up 13% from the prior year period.

Profitability metrics showed significant improvement as Okta transitioned to GAAP operating income of $41 million, compared to a $19 million loss in the same quarter last year. Non-GAAP operating income expanded to $202 million, representing 28% of total revenue versus 23% in the prior year period. Cash flow generation proved particularly strong with operating cash flow of $167 million and free cash flow of $162 million, representing 23% and 22% of revenue respectively.

Market Reaction and Guidance Analysis

The market responded positively to these results, with shares gaining approximately 3.8% in after-hours trading following the earnings release. This positive sentiment likely reflects both the earnings beat and the company's forward guidance, which generally aligns with or slightly exceeds analyst expectations.

For the third quarter, Okta anticipates revenue between $728-730 million, representing 9-10% year-over-year growth, compared to analyst estimates of $738 million. The company expects non-GAAP operating income of $160-162 million and non-GAAP EPS of $0.74-0.75. Full-year guidance was also updated, with revenue projected at $2.875-2.885 billion (10-11% growth) and non-GAAP EPS of $3.33-3.38.

Strategic Positioning and CEO Commentary

Chief Executive Officer Todd McKinnon emphasized the company's positioning in the age of AI, noting that Okta's "independence and neutrality will continue to give organizations the freedom to innovate securely and on their own terms." The company highlighted strength across new product adoption, public sector business, Auth0 platform, and cash flow generation.

The balance sheet remains strong with $2.86 billion in cash, cash equivalents, and short-term investments as of July 31, 2025. This financial stability provides Okta with flexibility to continue investing in growth initiatives while maintaining profitability.

For more detailed earnings information and future estimates, readers can review the earnings and estimates page.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Readers should conduct their own research and consult with financial advisors before making investment decisions.