Okta Q2 Earnings Call Highlights

New offerings accounted for about 30% of bookings, and deals including a new product generated roughly 40% higher annual contract value on average. Large-enterprise growth, partner involvement and a record non-fourth-quarter bookings period also supported results. AI-agent security is a growing but early opportunity: Okta won dozens of AI-related deals and launched products to discover, govern and secure AI agents, but management expects AI revenue to remain immaterial in fiscal 2027 and become more meaningful from fiscal 2028 onward. Okta maintained disciplined capital allocation and issued steady guidance: The company ended the quarter with approximately $2.3 billion in cash, repurchased $125 million of shares and eliminated its convertible debt. Full-year guidance calls for 10%–11% revenue growth, a 26% non-GAAP operating margin and a 28%–29% free-cash-flow margin.

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.

“We are seeing conversations that begin with securing AI broaden into identity modernization initiatives,” McKinnon said.

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.

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-us...