Okta (NASDAQ:OKTA) said its second-quarter fiscal 2027 performance was supported by broad-based demand across its workforce and customer identity platforms, with particular strength among large enterprises, channel partners and newer products.
Chief Executive Officer and Co-founder Todd McKinnon said annual contract value growth accelerated in both workforce identity and customer identity. He attributed momentum in part to organizations modernizing infrastructure as artificial intelligence adoption and AI-related security concerns increase.
New Products Account for 30% of Bookings
Okta said its newer products represented approximately 30% of bookings in the quarter, with Okta Identity Governance serving as the leading contributor. On average, including any new product in a deal generated about a 40% increase in ACV, according to McKinnon.
The company said its newer portfolio includes identity governance, privileged access, identity threat protection and AI-related offerings. McKinnon said customers are increasingly considering those products as an integrated suite rather than as separate identity categories.
Chief Financial Officer Brett Tighe called the period a record bookings quarter for a non-fourth-quarter period, citing pipeline conversion, deal expansions and sales-force productivity. Okta had more than 600 customers generating over $1 million in ACV, representing growth of more than 20% in that customer cohort.
Partner activity was also a factor in the quarter. Tighe said channel partners participated in all of Okta’s 20 largest deals, while the company’s biggest deal was sourced by a partner. Okta has shifted more professional-services work to global systems-integrator partners, contributing to professional-services revenue falling to about 1% of total revenue in the quarter.
AI Agent Security Opportunity Remains Early
McKinnon highlighted Okta for AI Agents, a generally available product designed to help enterprises discover, govern and secure AI agents. The company said it won dozens of AI-related deals during the quarter, including several deals worth more than $1 million.
However, management said the business remains too small to materially affect financial results. Tighe said AI-related revenue is expected to remain immaterial in fiscal 2027, though the company sees a possibility for a more meaningful contribution in fiscal 2028 and beyond.
Okta said its AI-agent offering is priced as an uplift to its per-user pricing model. McKinnon said the company may introduce more consumption-based elements over time as agent activity grows, noting that agents may log in more frequently than human users.
The company also launched Agent Gateway, which enforces policy at runtime across platforms and clouds. McKinnon said Okta’s strategy rests on its distribution to more than 20,000 customers, its product breadth and its position as a neutral identity provider able to operate across different cloud, application and AI-model environments.
McKinnon said customers are seeking clarity amid a fragmented market, identifying the core questions as where AI agents are located, what they can connect to and what they can do. He characterized those controls as “no regrets” investments that organizations can make even as broader AI technology choices continue to evolve.
- Okta said Anthropic named it the first identity provider supporting enterprise-managed authentication for MCP connectors.
- The company expanded work with AWS, Cisco, OpenAI, Databricks and Snowflake.
- Okta also cited more than 25 new Cross App Access integrations designed to govern how AI agents connect to enterprise applications and resources.
Acquisitions and Public-Sector Expansion
Okta said it completed the acquisition of Spera, described as a cloud-native identity-security platform focused on detecting and mitigating threats involving human, non-human and agentic identities in multicloud environments. The company said Spera will be integrated with its Identity Threat Protection and Identity Security Posture Management offerings.
Later in the question-and-answer session, McKinnon discussed the Promeso acquisition, saying it had officially closed that day. He said Promeso brings behavioral and post-authentication risk-detection capabilities, including 400 native risk detections compared with 90 in Okta’s existing Identity Threat Protection product.
In the public sector, Okta said it made Okta for AI Agents Core generally available for regulated environments, including FedRAMP and HIPAA settings. The company also said it received Impact Level 5 authorization, the highest unclassified cloud authorization for the U.S. Department of Defense, which it views as an important milestone ahead of the Defense Department’s 2027 Zero Trust mandate.
McKinnon said public sector remains less than 10% of Okta’s business but represents a significant opportunity. He added that the U.S. federal spending environment had begun to normalize after a disrupted start to the year.
Cash Flow, Capital Allocation and Outlook
Okta ended the quarter with approximately $2.3 billion in cash equivalents and short-term investments. In June, it settled the remaining $350 million principal amount of its convertible notes in cash, leaving the company with no convertible debt on its balance sheet.
During the quarter, Okta repurchased and retired roughly 1.5 million shares for $125 million. The company said $555 million remained under its $1 billion repurchase authorization.
For the third quarter of fiscal 2027, Okta forecast total revenue growth of 10%, current remaining performance obligations growth of 11% to 12%, a non-GAAP operating margin of 24% to 25%, and a free-cash-flow margin of 21% to 23%.
For the full fiscal year, the company expects revenue growth of 10% to 11%, a non-GAAP operating margin of 26%, and a free-cash-flow margin of 28% to 29%. Okta said its full-year revenue outlook includes roughly a one-percentage-point impact from shifting professional-services business to systems-integrator partners, while the free-cash-flow outlook includes about a one-point effect from lower interest income following share repurchases and debt settlement.
About Okta (NASDAQ:OKTA)
Okta, Inc is a publicly traded provider of identity and access management solutions, headquartered in San Francisco, California. Founded in 2009 by Todd McKinnon and Frederic Kerrest, the company completed its initial public offering in April 2017. Under the leadership of McKinnon as chief executive officer and Kerrest as chief operating officer, Okta has grown into a leading vendor in the cybersecurity space, focusing on secure user authentication, single sign-on and lifecycle management for digital identities.
At the core of Okta’s offering is the Okta Identity Cloud, a suite of cloud-native services that enable organizations to manage user access across web and mobile applications, on-premises systems and APIs.
