Okta (OKTA) Q2 2026 earnings summary

Executive summary

• Q2 FY26 revenue increased 13% year-over-year to $728 million, with subscription revenue up 12% and representing 98% of total revenue.

• Net income for the quarter was $67 million, up from $29 million in the prior year; non-GAAP net income was $169 million.

• Strong growth in large customers, with $100,000+ ACV customers up 7% to 4,945 and $1 million+ ACV customers up 15% to 495.

• Announced acquisition of Axiom Security to enhance privileged access management, expected to be immaterial to FY26 guidance.

• Continued innovation in AI security, new product enhancements, and record pipeline generation, especially in public sector and large enterprise.

Financial highlights

• RPO rose 18% year-over-year to $4.152 billion; current RPO up 13% to $2.265 billion.

• Non-GAAP operating margin improved to 28% in Q2, up from 23% last year; free cash flow margin reached 22%.

• Cash, cash equivalents, and short-term investments totaled $2.858 billion at quarter end.

• Dollar-based net retention rate was 106% for the trailing 12 months.

• Non-GAAP gross margin was 81.5%, with subscription gross margin at 83.7%.

Outlook and guidance

• Q3 FY26 revenue expected at $728M–$730M (9–10% growth), non-GAAP operating margin at 22%, and free cash flow margin at ~21%.

• FY26 revenue guidance raised to $2.875B–$2.885B (10–11% growth), non-GAAP operating margin of 25–26%, and free cash flow margin of ~28%.

• Acquisition of Axiom Security expected to be immaterial to all guidance metrics.

• Immediate expensing of domestic R&D expenditures under new tax law expected to reduce cash tax payments and income tax expense for the remainder of FY26 and future periods.

• Removed prior conservatism related to macro and federal vertical uncertainty from guidance.