01—Abstract
Summary
Summary of the 10-Q filed August 27, 2026. Cited figures are marked; the original filing is the authoritative source.
Okta, Inc. reported second-quarter fiscal 2027 results (three months ended July 31, 2026) with total revenue of $805 milliona, up from $728 million a year earlier, an increase the filing states as 11%.
Subscription revenue was $793 millionb, and net income was $116 million compared with $67 million. Operating income rose to $107 million from $41 million. For the six months, total revenue was $1.57 billion and net income was $190 million.
Subscription revenue made up 98% of total revenue for the six months. Gross margin improved to 80% for the quarter from 77% a year earlier, and remaining performance obligations reached $4.86 billionc, with $2.59 billion expected to be recognized over the next 12 months. Cash, cash equivalents and short-term investments totaled $2.30 billion as of July 31, 2026.
During the six months the company used $366 milliond to repurchase Class A common stock under its $1 billion authorization, leaving $555 million available. It also settled the remaining $350 million principal of its 2026 convertible notes in cash at maturity on June 15, 2026. Operating cash flow was $511 million for the six months, compared with $408 million a year earlier.
The filing also discloses a subsequent event: on August 26, 2026, Okta completed its acquisition of Permiso Security Inc., a cloud-native identity security platform. The company continues to maintain a full valuation allowance on its U.S. deferred tax assets, and management said it may release a significant portion of that allowance in the future, which would reduce income tax expense in the period of release.
02—Key points
Key Highlights
- Total revenue of $805 million for the quarter, up 11% from $728 million; subscription revenue of $793 million, up 12%.
- Operating income of $107 million versus $41 million a year earlier; net income of $116 million versus $67 million.
- Gross margin of 80% for the quarter, up from 77%, with subscription gross margin at 82% versus 80%.
- Remaining performance obligations of $4.86 billion, of which $2.59 billion is expected to be recognized over the next 12 months.
- Dollar-based net retention rate of 107% as of July 31, 2026, and 5,255 customers with ACV above $100,000, up from 4,945.
- Cash, cash equivalents and short-term investments of $2.30 billion; $366 million of shares repurchased in the six months, with $555 million remaining under the $1 billion program.
- Acquisition of Permiso Security Inc. completed on August 26, 2026, a subsequent event to the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2027, Okta kept $0.14.
- Revenue$805.0M100.0%
- Cost of revenue−$164.0M20.4%
- Gross profit$641.0M79.6%
- Operating costs−$534.0M66.3%
- Operating income$107.0M13.3%
- Interest, other & tax$9.0M1.1%
- Net income$116.0M14.4%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2027filed August 27, 2026Financial Statements
Q2 FY2027 against Q2 FY2026
| Line item | Q2 FY2027Q2 FY2026 | Change |
|---|---|---|
| Revenue | $805.00M$728.00M | +10.6% |
| Cost of Revenue | $164.00M$168.00M | −2.4% |
| Gross Profit | $641.00M$560.00M | +14.5% |
| R&D Expenses | $163.00M$160.00M | +1.9% |
| Operating Expenses | $534.00M$519.00M | +2.9% |
| Operating Income | $107.00M$41.00M | +161.0% |
| Net Income | $116.00M$67.00M | +73.1% |
| EPS (Basic) | $0.67$0.38 | +76.3% |
| EPS (Diluted) | $0.65$0.37 | +75.7% |
| Shares Outstanding (Basic) | 174.30M175.46M | −0.7% |
| Shares Outstanding (Diluted) | 178.81M180.97M | −1.2% |
05—Questions
Frequently Asked Questions
How did Okta's revenue and profitability change in the second quarter?
Total revenue rose to $805 million from $728 million, an 11% increase. Operating income increased to $107 million from $41 million, and net income rose to $116 million from $67 million. Gross profit increased to $641 million from $560 million.
What happened to the convertible senior notes and how is the company returning capital?
The 2026 convertible senior notes matured on June 15, 2026, and the company settled the remaining $350 million principal in cash. During the six months, it repurchased $366 million of Class A common stock under its $1 billion program, leaving $555 million available. The company also said it expects interest income to decrease in fiscal 2027 following the note settlement and deployment of cash for repurchases.
What is the company's liquidity position?
As of July 31, 2026, cash, cash equivalents and short-term investments totaled $2,299 million. Net cash provided by operating activities was $511 million for the six months, compared with $408 million a year earlier. The company stated its existing resources are sufficient to meet projected working capital and capital expenditure needs for the foreseeable future.
What is the significance of the Permiso acquisition?
On August 26, 2026, Okta completed its acquisition of Permiso Security Inc., a cloud-native identity security platform that detects and mitigates threats across human, non-human and agentic identities in multi-cloud environments. The company said the deal is expected to broaden its identity threat detection and response capabilities, and it is still evaluating the measurement of consideration transferred.
Could the company's tax expense change in future periods?
The company recorded a provision for income taxes of $14 million for the six months on pre-tax income of $204 million, with an effective tax rate of approximately 6.6%. It maintains a full valuation allowance on U.S. deferred tax assets and said it may release a significant portion of that allowance in the foreseeable future. Such a release would reduce income tax expense in the period recorded, though its timing and amount remain uncertain.
06—Continue