Identity management company Okta (NASDAQ: OKTA) reported Q2 CY2026 results topping the market’s revenue expectations, with sales up 10.6% year on year to $805 million. Guidance for next quarter’s revenue was better than expected at $815 million at the midpoint, 0.9% above analysts’ estimates. Its non-GAAP profit of $1.05 per share was 8.9% above analysts’ consensus estimates.
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Okta (OKTA) Q2 CY2026 Highlights:
- Revenue: $805 million vs analyst estimates of $792.8 million (10.6% year-on-year growth, 1.5% beat)
- Adjusted EPS: $1.05 vs analyst estimates of $0.96 (8.9% beat)
- Adjusted Operating Income: $226 million vs analyst estimates of $206.6 million (28.1% margin, 9.4% beat)
- The company slightly lifted its revenue guidance for the full year to $3.22 billion at the midpoint from $3.20 billion
- Management raised its full-year Adjusted EPS guidance to $3.92 at the midpoint, a 2.3% increase
- Operating Margin: 13.3%, up from 5.6% in the same quarter last year
- Free Cash Flow Margin: 28.2%, down from 35.4% in the previous quarter
- Billings: $681.2 million at quarter end, down 5.4% year on year
- Market Capitalization: $22.7 billion
Company Overview
Named after the meteorological measurement for cloud cover, Okta (NASDAQ: OKTA) provides cloud-based identity management solutions that help organizations securely connect their employees, partners, and customers to the right applications and services.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Okta’s 24.7% annualized revenue growth over the last five years was solid. Its growth beat the average software company and shows its offerings resonate with customers.
Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Okta’s recent performance shows its demand has slowed as its annualized revenue growth of 11.9% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
This quarter, Okta reported year-on-year revenue growth of 10.6%, and its $805 million of revenue exceeded Wall Street’s estimates by 1.5%. Company management is currently guiding for a 9.8% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 8.8% over the next 12 months, a deceleration versus the last two years. This projection doesn’t excite us and indicates its products and services will face some demand challenges.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Okta’s billings came in at $681.2 million in Q2, and over the last four quarters, its growth was underwhelming as it averaged 6.8% year-on-year increases. This alternate topline metric grew slower than total sales, meaning the company recognizes revenue faster than it collects cash - a headwind for its liquidity that could also signal a slowdown in future revenue growth. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
It’s relatively expensive for Okta to acquire new customers as its CAC payback period checked in at 101 months this quarter. The company’s slow recovery of its sales and marketing expenses indicates it operates in a highly competitive market and must invest to stand out, even if the return on that investment is low.
Key Takeaways from Okta’s Q2 Results
We were impressed by how significantly Okta blew past analysts’ adjusted operating income expectations this quarter. We were also glad its full-year EPS guidance exceeded Wall Street’s estimates. On the other hand, its billings missed. Overall, this print had some key positives. The stock traded up 16.3% to $158.07 immediately following the results.
Big picture, is Okta a buy here and now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
