Okta (OKTA) Q2 2027 earnings summary

Executive summary

• Q2 FY27 revenue grew 11% year-over-year to $805 million, with subscription revenue up 12% to $793 million and representing 99% of total revenue.

• Remaining performance obligations (RPO) increased 17% year-over-year to $4.86 billion, with current RPO up 14% to $2.585 billion, indicating robust future revenue visibility.

• Net income rose to $116 million, with GAAP operating income of $107 million (13% margin) and non-GAAP operating margin at 28%.

• Strong customer growth in large accounts, with $100,000+ ACV customers up 6% to 5,255 and $1 million+ ACV customers up 22%, and over 20,000 total customers.

• Expanded product portfolio and strategic partnerships in AI and security, including acquisitions of Permiso and Axiom Security, and integrations with Cisco, Google Cloud, Anthropic, Databricks, Snowflake, and AWS.

Financial highlights

• Subscription revenue was $793 million, accounting for 99% of total revenue; non-GAAP gross margin was 81.9%, and free cash flow margin reached 28%.

• TTM dollar-based net retention rate was 107%; non-GAAP net margin was 24%.

• Cash, cash equivalents, and short-term investments totaled $2.299 billion at quarter end.

• Operating income increased to $107 million from $41 million year-over-year.

• Free cash flow was $227 million, up from $162 million in Q2 last year.

Outlook and guidance

• Q3 FY27 revenue expected between $813–$817 million (10% growth); current RPO $2.590–$2.600 billion (11–12% growth).

• FY27 revenue guidance raised to $3.216–$3.226 billion (10–11% growth); non-GAAP operating income $830–$840 million (26% margin); free cash flow $910–$930 million (28–29% margin).

• Q3 non-GAAP operating income projected at $196–$200 million (24–25% margin); non-GAAP diluted EPS $0.92–$0.94.

• FY27 non-GAAP diluted EPS $3.90–$3.94; guidance reflects a 1% headwind from shifting professional services to partners and lower interest income due to share repurchases and debt settlement.

• Free cash flow for Q3 guided to $175–$185 million (21–23% margin).