Okta

EX-99.1 2 okta-7312026_ex991.htm EX-99.1 DocumentExhibit 99.1Okta Announces Second Quarter Fiscal Year 2027 Financial Results Q2 revenue grew 11% and subscription revenue grew 12% year-over-year Remaining performance obligations (RPO) grew 17% year-over-year current remaining performance obligations (cRPO) grew 14% year-over-year Operating cash flow of $234 million and free cash flow of $227 millionSAN FRANCISCO August 26, 2026 Okta, Inc. (Nasdaq OKTA), the leading independent identity provider, today announced financial results for its second quarter ended July 31, 2026. As AI agents transform every layer of technology, every agent needs a trusted identity and clear controls over what it can access and do, said Todd McKinnon, Chief Executive Officer and co-founder of Okta. As the leading independent and neutral identity provider, Okta helps organizations discover agents, secure their connections, govern their actions, and respond when something goes wrong, giving them the flexibility and control they need to deploy agents safely and at scale. Our Q2 performance was highlighted by accelerating cRPO, success with our largest customers, and strong profitability and cash flow, said Brett Tighe, Chief Financial Officer of Okta. Steady momentum from core Okta workforce and customer identity drove ACV acceleration in both businesses. Top-line growth also benefited from strong contributions from our portfolio of new products, led by Okta Identity Governance. Second Quarter Fiscal 2027 Financial Highlights Revenue Total revenue was $805 million, an increase of 11% year-over-year. Subscription revenue was $793 million, an increase of 12% year-over-year. RPO RPO, or subscription backlog, was $4.858 billion, an increase of 17% year-over-year. cRPO, which represents subscription backlog expected to be recognized over the next 12 months, was $2.585 billion, up 14% compared to the second quarter of fiscal 2026. GAAP Operating Income GAAP operating income was $107 million, or 13% of total revenue, compared to GAAP operating income of $41 million, or 6% of total revenue, in the second quarter of fiscal 2026. Non-GAAP Operating Income Non-GAAP operating income was $226 million, or 28% of total revenue, compared to a non-GAAP operating income of $202 million, or 28% of total revenue, in the second quarter of fiscal 2026. GAAP Net Income GAAP net income was $116 million, compared to GAAP net income of $67 million in the second quarter of fiscal 2026. GAAP basic and diluted net income per share were $0.67 and $0.65, respectively, compared to a GAAP basic and diluted net income per share of $0.38 and $0.37, respectively, in the second quarter of fiscal 2026. Non-GAAP Net Income Non-GAAP net income was $194 million, compared to non-GAAP net income of $169 million in the second quarter of fiscal 2026. Non-GAAP diluted net income per share was $1.05, compared to non-GAAP diluted net income per share of $0.91 in the second quarter of fiscal 2026. Cash Flow Net cash provided by operations was $234 million, or 29% of total revenue, compared to net cash provided by operations of $167 million, or 23% of total revenue, in the second quarter of fiscal 2026. Free cash flow was $227 million, or 28% of total revenue, compared to $162 million, or 22% of total revenue, in the second quarter of fiscal 2026. 1 Cash, cash equivalents, and short-term investments were $2.299 billion at July 31, 2026. During the quarter, the Company settled the remaining principal amount of the 2026 Notes for $350 million in cash.The section titled Non-GAAP Financial Measures below contains a description of the non-GAAP financial measures, and reconciliations between GAAP and non-GAAP information are contained in the tables below.Financial Outlook For Q3 and FY27 we continue to take a prudent approach to forward guidance.For the third quarter of fiscal 2027, the Company expects Total revenue of $813 million to $817 million, representing a growth rate of 10% year-over-year Current RPO of $2.590 billion to $2.600 billion, representing a growth rate of 11% to 12% year-over-year Non-GAAP operating income of $196 million to $200 million, which yields a non-GAAP operating margin of 24% to 25% Non-GAAP diluted net income per share of $0.92 to $0.94, assuming diluted weighted-average shares outstanding of approximately 184 million and a non-GAAP tax rate of 21% and Non-GAAP free cash flow of $175 million to $185 million, yielding a free cash flow margin of 21% to 23%.For the full year fiscal 2027, the Company now expects Total revenue of $3.216 billion to $3.226 billion, representing a growth rate of 10% to 11% year-over-year Reflected in the revenue guidance is an approximately one percentage point impact to total revenue growth resulting from our decision to accelerate the shift of professional services business to our partners. This change is expected to create a headwind to professional services revenue. Non-GAAP operating income of $830 million to $840 million, which yields a non-GAAP operating margin of 26% Non-GAAP diluted net income per share of $3.90 to $3.94, assuming diluted weighted-average shares outstanding of approximately 184 million and a non-GAAP tax rate of 21% and Non-GAAP free cash flow of $910 million to $930 million, which yields a free cash flow margin of 28% to 29%. Reflected in the free cash flow guidance is an approximately one percentage point impact related to lower interest income due to the combined impact from the stock repurchase program and our settlement of the 2026 Notes in cash.These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements. Okta has not reconciled its forward-looking non-GAAP financial measures to their most directly comparable GAAP measures because certain items are out of Okta s control or cannot be reasonably predicted. Accordingly, reconciliations for forward-looking non-GAAP financial measures are not available without unreasonable effort.2Webcast Information Okta will host a live video webcast at 2 00 p.m. Pacific Time on August 26, 2026 to discuss the results and outlook. The prepared remarks and the news release with the financial results will be accessible from the Company s website at investor.okta.com prior to the webcast. The live video webcast will be accessible from the Okta investor relations website at investor.okta.com. A replay will be available on the Okta investor relations website following the completion of the event.Supplemental Financial and Other Information Supplemental financial and other information can be accessed through the Company s investor relations website at investor.okta.com. Okta uses its investor.okta.com website and okta.com blog websites (including the Security Blog, Okta Developer Blog and Auth0 Developer Blog) as a means of disclosing material non-public information, announcing upcoming investor conferences and for complying with its disclosure obligations under Regulation FD. Accordingly, you should monitor our investor relations and okta.com blog websites in addition to following our press releases, SEC filings and public conference calls and webcasts. Non-GAAP Financial Measures This press release and the accompanying tables contain the following non-GAAP financial measures non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP net margin, non-GAAP diluted net income per share, non-GAAP tax rate, free cash flow and free cash flow margin. Certain of these non-GAAP financial measures exclude stock-based compensation, non-cash charitable contributions, amortization of acquired intangibles, acquisition and integration-related expenses, restructuring costs related to severance and termination benefits and lease impairments in connection with the closing of certain leased facilities, certain non-ordinary course legal settlements and related expenses, amortization of debt issuance costs and gain on early extinguishment of debt. Acquisition and integration-related expenses include transaction costs and other non-recurring incremental costs incurred through the one-year anniversary of the transaction close.Stock-based compensation is non-cash in nature and is generally fixed at the time the stock-based instrument is granted and amortized over a period of several years. Although stock-based compensation is an important aspect of the compensation of our employees and executives, the expense for the fair value of the stock-based instruments we use may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. We believe excluding stock-based compensation provides meaningful supplemental information regarding the long-term performance of our core business and facilitates comparison of our results to those of peer companies. We also exclude non-cash charitable contributions, amortization of acquired intangibles, acquisition and integration-related expenses, restructuring costs related to severance and termination benefits and lease impairments in connection with the closing of certain leased facilities, certain non-ordinary course legal settlements and related expenses, amortization of debt issuance costs and gain on early extinguishment of debt from the applicable non-GAAP financial measures because these adjustments are considered by management to be outside of our core operating results. 3In addition to these exclusions, we subtract an assumed provision for income taxes to calculate non-GAAP net income. Effective February 1, 2026, the beginning of our first quarter of fiscal 2027, we are using a fixed long-term projected non-GAAP tax rate of 21% in our computation of the non-GAAP income tax provision. Through fiscal 2026 we used a tax rate of 26%. The non-GAAP tax rate is subject to change for a variety of reasons, including changes in tax laws and regulations, significant changes in our geographic earnings mix, or other changes to our strategy or business operations. We will periodically reevaluate the projected long-term tax rate, as necessary, for significant events based on our ongoing analysis of relevant tax law changes, material changes in the forecasted geographic earnings mix, and any significant acquisitions.We define free cash flow, a non-GAAP financial measure, as net cash provided by operating activities, less cash used for purchases of property and equipment, net of sales proceeds, and capitalized software. Free cash flow margin is calculated as free cash flow divided by total revenue. We use free cash flow as a measure of financial progress in our business, as it balances operating results, cash management, and capital efficiency. We believe information regarding free cash flow provides investors and others with an important perspective on the cash available to make strategic acquisitions and investments, to fund ongoing operations, and to fund other capital expenditures. Free cash flow can be volatile and is sensitive to many factors, including changes in working capital and timing of capital expenditures. Working capital at any specific point in time is subject to many variables, including seasonality, the discretionary timing of expense payments, discounts offered by vendors, vendor payment terms, and fluctuations in foreign exchange rates.We periodically reassess the components of our non-GAAP adjustments for changes in how we evaluate our performance and changes in how we make financial and operational decisions, and consider the use of these measures by our competitors and peers to ensure the adjustments remain relevant and meaningful. Okta believes that non-GAAP financial information, when taken collectively with GAAP financial measures, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses that are required by GAAP to be recorded in the Company s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by the Company's management about which expenses are excluded or included in determining these non-GAAP financial measures. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP.Okta encourages investors to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company s business. 4Forward-Looking Statements This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook, business strategy and plans, market trends, opportunities and positioning. These forward-looking statements are based on current expectations, estimates, forecasts and projections. Words such as expect, anticipate, should, believe, hope, target, project, goals, estimate, potential, predict, may, will, might, could, intend, shall and variations of these terms and similar expressions are intended to identify these forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. For example, adverse macroeconomic conditions could reduce demand for our solutions we and our third-party service providers could experience additional cybersecurity incidents we may be unable to manage or sustain our revenue growth and profitability we may fail to keep pace with technological change our financial resources may be insufficient to effectively compete in our market we may be unable to attract new customers, or retain or sell additional solutions to existing customers we may fail to maintain strategic partnerships to promote or enhance our solutions we may experience challenges expanding our existing marketing and sales capabilities, including further specializing our go-to-market organization our customer growth could further decelerate interruptions or performance problems could adversely impact our technology and we and our third-party service providers could fail to fully comply with applicable privacy and security requirements. Further information on potential factors that could affect our financial results is included in our most recent Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. The forward-looking statements included in this press release represent our views only as of the date of this press release and we assume no obligation and do not intend to update these forward-looking statements.About OktaOkta, Inc. is The World s Identity Company . We secure AI, machine, and human identity so everyone is free to safely use any technology. Our workforce and customer solutions empower businesses and developers to protect their AI agents, users, employees, and partners while driving security, efficiencies, and innovation. Learn why the world s leading brands trust Okta for authentication, authorization, and more at okta.com.Investor Contact Dave Gennarelli investor okta.comMedia Contact Eddie McGrawpress okta.com5OKTA, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in millions, shares in thousands, except per share data) (unaudited) Three Months EndedJuly 31, Six Months EndedJuly 31, 2026 2025 2026 2025 Revenue Subscription $ 793 $ 711 $ 1,543 $ 1,384 Professional services and other 12 17 27 32 Total revenue 805 728 1,570 1,416 Cost of revenue Subscription(1) 145 147 295 283 Professional services and other(1) 19 21 39 40 Total cost of revenue 164 168 334 323 Gross profit 641 560 1,236 1,093 Operating expenses Research and development(1) 163 160 326 314 Sales and marketing(1) 273 246 551 483 General and administrative(1) 98 113 196 216 Total operating expenses 534 519 1,073 1,013 Operating income 107 41 163 80 Interest expense (1) (1) (2) Interest income and other, net 19 27 42 57 Interest and other, net 19 26 41 55 Income before provision for income taxes 126 67 204 135 Provision for income taxes 10 14 6 Net income $ 116 $ 67 $ 190 $ 129 . Net income per share, basic $ 0.67 $ 0.38 $ 1.09 $ 0.74 Net income per share, diluted $ 0.65 $ 0.37 $ 1.07 $ 0.72 . Weighted-average shares used to compute net income per share, basic 174,298 175,460 175,198 174,827 Weighted-average shares used to compute net income per share, diluted 178,808 180,966 178,233 181,356 (1) Amounts include stock-based compensation expense as follows Three Months EndedJuly 31, Six Months EndedJuly 31, 2026 2025 2026 2025 Cost of subscription revenue $ 15 $ 21 $ 31 $ 38 Cost of professional services and other 1 2 3 5 Research and development 36 51 77 98 Sales and marketing 32 35 61 67 General and administrative 30 35 59 64 Total stock-based compensation expense $ 114 $ 144 $ 231 $ 272 6OKTA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in millions) (unaudited) July 31, January 31, 2026 2026 Assets Current assets Cash and cash equivalents $ 763 $ 858 Short-term investments 1,536 1,695 Accounts receivable, net 469 687 Deferred commissions 173 171 Prepaid expenses and other current assets 148 233 Total current assets 3,089 3,644 Property and equipment, net 33 38 Operating lease right-of-use assets 53 65 Deferred commissions, noncurrent 331 332 Intangible assets, net 80 91 Goodwill 5,487 5,487 Other assets 65 53 Total assets $ 9,138 $ 9,710 Liabilities and stockholders' equity Current liabilities Accounts payable $ 10 $ 12 Accrued expenses and other current liabilities 106 104 Accrued compensation 158 213 Convertible senior notes, net 350 Deferred revenue 1,751 1,875 Total current liabilities 2,025 2,554 Operating lease liabilities, noncurrent 53 72 Deferred revenue, noncurrent 30 30 Other liabilities, noncurrent 57 55 Total liabilities 2,165 2,711 Stockholders equity Preferred stock Class A common stock Class B common stock Additional paid-in capital 9,348 9,553 Accumulated other comprehensive income 2 13 Accumulated deficit (2,377) (2,567) Total stockholders equity 6,973 6,999 Total liabilities and stockholders' equity $ 9,138 $ 9,710 7OKTA, INC. SUMMARY OF CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(dollars in millions) (unaudited) Six Months EndedJuly 31, 2026 2025 Cash flows from operating activities Net income $ 190 $ 129 Adjustments to reconcile net income to net cash provided by operating activities Stock-based compensation 231 272 Depreciation and amortization 37 48 Amortization of deferred commissions 92 76 Deferred income taxes 3 Other, net 4 4 Changes in operating assets and liabilities Accounts receivable 217 201 Deferred commissions (96) (80) Prepaid expenses and other assets 17 (9) Operating lease right-of-use assets 10 9 Accounts payable (1) (2) Accrued compensation (56) (75) Accrued expenses and other liabilities 7 (11) Operating lease liabilities (17) (14) Deferred revenue (124) (143) Net cash provided by operating activities 511 408 Cash flows from investing activities Capitalized software (11) (5) Purchases of property and equipment (2) (3) Purchases of securities available-for-sale and other (1,033) (720) Proceeds from maturities and redemption of securities available-for-sale 1,157 848 Proceeds from sales of securities available-for-sale and other 84 1 Purchases of intangible assets (2) Payments for business acquisitions, net of cash acquired (3) Net cash provided by investing activities 193 118 Cash flows from financing activities Payments upon maturity of convertible senior notes (350) Taxes paid related to net share settlement of equity awards (100) (102) Proceeds from settlement of capped calls related to convertible senior notes 2 Repurchases of common stock (372) Proceeds from stock option exercises 4 10 Proceeds from shares issued in connection with employee stock purchase plan 24 23 Net cash used in financing activities (794) (67) Effects of changes in foreign currency exchange rates on cash, cash equivalents and restricted cash (5) 10 Net increase (decrease) in cash, cash equivalents and restricted cash (95) 469 Cash, cash equivalents and restricted cash at beginning of period 864 415 Cash, cash equivalents and restricted cash at end of period $ 769 $ 884 8OKTA, INC.Reconciliation of GAAP to Non-GAAP Data(dollars in millions, shares in thousands, except per share data)(unaudited)Non-GAAP Gross Profit and Non-GAAP Gross Margin We define non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin, adjusted for stock-based compensation expense included in cost of revenue, amortization of acquired intangibles and acquisition and integration-related expenses. Three Months EndedJuly 31, Six Months EndedJuly 31, 2026 2025 2026 2025 Gross profit $ 641 $ 560 $ 1,236 $ 1,093 Add Stock-based compensation expense included in cost of revenue 16 23 34 43 Amortization of acquired intangibles 3 11 14 21 Non-GAAP gross profit $ 660 $ 594 $ 1,284 $ 1,157 Gross margin 80 % 77 % 79 % 77 % Non-GAAP gross margin 82 % 82 % 82 % 82 % Non-GAAP Operating Income and Non-GAAP Operating Margin We define non-GAAP operating income and non-GAAP operating margin as GAAP operating income and GAAP operating margin, adjusted for stock-based compensation expense, non-cash charitable contributions, amortization of acquired intangibles, acquisition and integration-related expenses, restructuring costs related to severance and termination benefits and lease impairments in connection with the closing of certain leased facilities and certain non-ordinary course legal settlements and related expenses. Three Months EndedJuly 31, Six Months EndedJuly 31, 2026 2025 2026 2025 Operating income $ 107 $ 41 $ 163 $ 80 Add Stock-based compensation expense 114 144 231 272 Amortization of acquired intangibles 3 17 21 34 Acquisition and integration-related expenses 2 2 Non-GAAP operating income $ 226 $ 202 $ 417 $ 386 Operating margin 13 % 6 % 10 % 6 % Non-GAAP operating margin 28 % 28 % 27 % 27 % 9Non-GAAP Net Income, Non-GAAP Net Margin and Non-GAAP Diluted Net Income Per ShareWe define non-GAAP net income and non-GAAP net margin as GAAP net income and GAAP net margin, adjusted for stock-based compensation expense, non-cash charitable contributions, amortization of acquired intangibles, acquisition and integration-related expenses, amortization of debt issuance costs, gain on early extinguishment of debt, restructuring costs related to severance and termination benefits and lease impairments in connection with the closing of certain leased facilities and certain non-ordinary course legal settlements and related expenses. In addition, we subtract an assumed provision for income taxes to calculate non-GAAP net income. Effective February 1, 2026, the beginning of our first quarter of fiscal 2027, we are using a fixed long-term projected non-GAAP tax rate of 21% in our computation of the non-GAAP income tax provision. Through fiscal 2026 we used a tax rate of 26%.We define non-GAAP diluted net income per share, as non-GAAP net income divided by GAAP weighted-average shares used to compute net income per share, basic, adjusted for the potentially dilutive effect of (i) employee equity incentive plans, excluding the impact of unrecognized stock-based compensation expense, and (ii) convertible senior notes outstanding. In addition, non-GAAP net income per share, diluted, includes the impact of our capped call agreements on convertible senior notes outstanding. The capped call agreements are intended to offset potential dilution to our Class A common stock upon any conversion or settlement of the convertible senior notes under certain circumstances. Accordingly, we did not record any adjustments for the potential impact of the convertible senior notes outstanding under the if-converted method. Three Months EndedJuly 31, Six Months EndedJuly 31, 2026 2025 2026 2025 Net income $ 116 $ 67 $ 190 $ 129 Add Stock-based compensation expense 114 144 231 272 Amortization of acquired intangibles 3 17 21 34 Acquisition and integration-related expenses 2 2 Amortization of debt issuance costs 1 Tax adjustment (41) (59) (82) (109) Non-GAAP net income $ 194 $ 169 $ 362 $ 327 Net margin 14 % 9 % 12 % 9 % Non-GAAP net margin 24 % 23 % 23 % 23 % Weighted-average shares used to compute net income per share, basic 174,298 175,460 175,198 174,827 Non-GAAP weighted-average effect of potentially dilutive securities 10,150 9,767 9,042 9,386 Non-GAAP weighted-average shares used to compute non-GAAP net income per share, diluted 184,448 185,227 184,240 184,213 Net income per share, diluted $ 0.65 $ 0.37 $ 1.07 $ 0.72 Non-GAAP net income per share, diluted $ 1.05 $ 0.91 $ 1.96 $ 1.77 10OKTA, INC.Reconciliation of GAAP to Non-GAAP Financial Measures(dollars in millions)(unaudited)Free Cash Flow and Free Cash Flow MarginWe define free cash flow, a non-GAAP financial measure, as net cash provided by operating activities, less cash used for purchases of property and equipment, net of sales proceeds, and capitalized software. Free cash flow margin is calculated as free cash flow divided by total revenue. Three Months EndedJuly 31, Six Months EndedJuly 31, 2026 2025 2026 2025 Net cash provided by operating activities $ 234 $ 167 $ 511 $ 408 Less Purchases of property and equipment (1) (2) (2) (3) Capitalized software (6) (3) (11) (5) Free cash flow $ 227 $ 162 $ 498 $ 400 Net cash provided by investing activities $ 271 $ 238 $ 193 $ 118 Net cash used in financing activities $ (501) $ (22) $ (794) $ (67) Operating cash flow margin 29 % 23 % 33 % 29 % Free cash flow margin 28 % 22 % 32 % 28 % 11