Okta

Condensed Consolidated Balance Sheets as of July 31, 2026 and January 31, 2026 4 Condensed Consolidated Statements of Operations for the Three and Six Months Ended July 31, 2026 and 2025 5 Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended July 31, 2026 and 2025 6 Condensed Consolidated Statements of Stockholders Equity for the Three and Six Months Ended July 31, 2026 and 2025 7 Condensed Consolidated Statements of Cash Flows for the Six Months Ended July 31, 2026 and 2025 9 Notes to Condensed Consolidated Financial Statements 10 Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations 18 Item 3. Quantitative and Qualitative Disclosures about Market Risk 32 Item 4. Controls and Procedures 33 PART II. OTHER INFORMATION Item 1. Legal Proceedings 34 Item 1A. Risk Factors 34 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 34 Item 5. Other Information 34 Item 6. Exhibits 35 Signatures 37 FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as expect, anticipate, should, believe, hope, target, project, goals, estimate, potential, predict, may, will, might, could, intend, shall and similar expressions are intended to identify these forward-looking statements. These statements include, but are not limited to, statements about: our future financial performance, including our revenue, costs of revenue, gross profits, margins and operating expenses; trends in our key business metrics; the impact of general economic, business and market conditions, including economic downturns or recessions, market volatility, geopolitical events, inflation and interest rates and foreign currency fluctuations; our ability to retain and sell additional solutions to existing customers; our growth strategy and ability to compete; our ability to keep pace with technological change and evolving industry standards; our ability to adequately fund research and development, and introduce new solutions, enhance existing solutions and address new use cases; the sufficiency of our cash and cash equivalents, investments and cash provided by sales of our solutions to meet our liquidity needs; our ability to effectively sustain or manage our revenue growth and profitability; our ability to partner with third-party software vendors and system integrators; our ability to expand our international business operations and product sales; our ability to successfully identify, integrate and/or realize the benefits of strategic acquisitions or investments; our ability to successfully expand our existing marketing and sales capabilities, including further specializing our go-to-market organization; our ability to expand our product sales by promoting our brand and engaging channel partners; potential impacts of cybersecurity incidents to our reputation, customer relations and financial results; our ability to detect, minimize or prevent security breaches to our internal systems and our platforms; our ability to maintain the security and service performance of our and our third-party service providers systems or data or our customers data; the ability of our solutions to effectively integrate with third-party systems and technologies; our ability to maintain and protect our proprietary rights and intellectual property; our ability to comply with modified or new laws, regulations and industry standards; our ability to release the valuation allowance of our deferred tax assets in the United States; the attraction and retention of qualified employees and key personnel; the impact of recent accounting pronouncements on our financial statements; and our ability to successfully defend litigation or other claims brought against us. These forward-looking statements are made as of the date they were first issued and are based on current expectations and assumptions that are subject to a number of risks and uncertainties, which could cause our actual results to differ materially from those anticipated or implied by any forward-looking statements. Factors that could cause or contribute to such differences include, but not limited to, those discussed in Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K, as well as other documents that may be filed by us from time to time with the U.S. Securities and Exchange Commission (the SEC ). We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. PART I Item 1. Financial Statements OKTA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in millions, shares in thousands, except per share data) July 31, 2026January 31, 2026 (unaudited) Assets Current assets: Cash and cash equivalents$763 $858 Short-term investments1,536 1,695 Accounts receivable, net 469 687 Deferred commissions173 171 Prepaid expenses and other current assets148 233 Total current assets3,089 3,644 Property and equipment, net33 38 Operating lease right-of-use assets53 65 Deferred commissions, noncurrent331 332 Intangible assets, net80 91 Goodwill5,487 5,487 Other assets65 53 Total assets$9,138 $9,710 Liabilities and stockholders' equity Current liabilities: Accounts payable$10 $12 Accrued expenses and other current liabilities106 104 Accrued compensation158 213 Convertible senior notes, net 350 Deferred revenue1,751 1,875 Total current liabilities2,025 2,554 53 72 Deferred revenue, noncurrent30 30 Other liabilities, noncurrent57 55 Total liabilities2,165 2,711 Commitments and contingencies (Note 7) Stockholders equity: Preferred stock, par value $0.0001 per share; 100,000 shares authorized; no shares issued and outstanding as of July 31, 2026 and January 31, 2026 Class A common stock, par value $0.0001 per share; 1,000,000 shares authorized; 167,136 and 169,670 shares issued and outstanding as of July 31, 2026 and January 31, 2026, respectively Class B common stock, par value $0.0001 per share; 120,000 shares authorized; 7,681 and 7,687 shares issued and outstanding as of July 31, 2026 and January 31, 2026, respectively Additional paid-in capital9,348 9,553 Accumulated other comprehensive income 2 13 Accumulated deficit(2,377)(2,567) Total stockholders equity6,973 6,999 Total liabilities and stockholders' equity$9,138 $9,710 See Notes to Condensed Consolidated Financial Statements. 4 OKTA, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in millions, shares in thousands, except per share data) (unaudited) Three Months Ended July 31,Six Months Ended July 31, 2026202520262025 Revenue: Subscription$793 $711 $1,543 $1,384 Professional services and other12 17 27 32 Total revenue805 728 1,570 1,416 Cost of revenue: Subscription145 147 295 283 Professional services and other19 21 39 40 Total cost of revenue164 168 334 323 Gross profit641 560 1,236 1,093 Operating expenses: Research and development163 160 326 314 Sales and marketing273 246 551 483 General and administrative98 113 196 216 534 519 1,073 1,013 Operating income 107 41 163 80 Interest expense (1)(1)(2) Interest income and other, net19 27 42 57 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 See Notes to Condensed Consolidated Financial Statements. 5 OKTA, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) (unaudited) Three Months Ended July 31,Six Months Ended July 31, 2026202520262025 Net income $116 $67 $190 $129 Other comprehensive income (loss): Net change in unrealized gains or losses on available-for-sale securities (3)(4)(5)(2) Foreign currency translation adjustments(4) (6)15 Other comprehensive income (loss)(7)(4)(11)13 Comprehensive income $109 $63 $179 $142 See Notes to Condensed Consolidated Financial Statements. 6 OKTA, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (dollars in millions, shares in thousands) (unaudited) Three and Six Months Ended July 31, 2026 Class A Common Stock Class B Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders Equity Shares Amount Shares Amount Balances as of January 31, 2026169,670 7,687 $9,553 $13 $(2,567)$6,999 Issuance of common stock, net1,017 3 3 Taxes withheld related to net share settlement of equity awards (50) (50) Common stock repurchased(3,027) (242) (242) 119 119 Other comprehensive loss (4) (4) Net income 74 74 Balances as of April 30, 2026167,660 7,687 $9,383 $9 $(2,493)$6,899 Issuance of common stock, net1,012 25 25 Taxes withheld related to net share settlement of equity awards (52) (52) Common stock repurchased(1,542) (125) (125) Conversion of Class B common stock to Class A common stock6 (6) 117 117 Other comprehensive loss (7) (7) Net income 116 116 Balances as of July 31, 2026167,136 7,681 $9,348 $2 $(2,377)$6,973 Class A Common Stock Class B Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders Equity Shares Amount Shares Amount Balances as of January 31, 2025 165,650 7,809 $9,219 $(12)$(2,802)$6,405 Issuance of common stock, net1,446 166 9 9 Taxes withheld related to net share settlement of equity awards (54) (54) Conversion of Class B common stock to Class A common stock65 (65) Stock-based compensation 128 128 Other comprehensive income 17 17 Net income 62 62 Balances as of April 30, 2025 167,161 7,910 $9,302 $5 $(2,740)$6,567 Issuance of common stock, net1,146 47 24 24 Taxes withheld related to net share settlement of equity awards (49) (49) Conversion of Class B common stock to Class A common stock130 (130) Settlement of capped calls related to convertible senior notes 2 2 Stock-based compensation 147 147 Other comprehensive loss (4) (4) Net income 67 67 Balances as of July 31, 2025 168,437 7,827 $9,426 $1 $(2,673)$6,754 20262025 Cash flows from operating activities: Net income$190 $129 Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation231 272 Depreciation and amortization37 48 92 76 Deferred income taxes 3 4 4 Changes in operating assets and liabilities: Accounts receivable217 201 Deferred commissions(96)(80) Prepaid expenses and other assets17 (9) Operating lease right-of-use assets10 9 Accounts payable(1)(2) Accrued compensation(56)(75) Accrued expenses and other liabilities7 (11) Operating lease liabilities(17)(14) Deferred revenue(124)(143) Net cash provided by operating activities511 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-sale1,157 848 Proceeds from sales of securities available-for-sale and other84 1 Purchases of intangible assets(2) Payments for business acquisitions, net of cash acquired (3) Net cash provided by investing activities193 118 Cash flows from financing activities: (350) Taxes paid related to net share settlement of equity awards(100)(102) 2 Repurchases of common stock(372) Proceeds from stock option exercises 4 10 Proceeds from shares issued in connection with employee stock purchase plan24 23 (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 period864 415 Cash, cash equivalents and restricted cash at end of period$769 $884 Cash paid during the period for: $19 $18 Non-cash activities: 2 Cash and cash equivalents$763 $876 Restricted cash, current included in prepaid expenses and other current assets 2 Restricted cash, noncurrent included in other assets6 6 Total cash, cash equivalents and restricted cash$769 $884 See Notes to Condensed Consolidated Financial Statements. 9 OKTA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. Overview and Basis of Presentation Description of Business Okta, Inc. (the Company ) is the leading independent identity provider. The Company s Okta Platform and Auth0 Platform enable customers to securely connect the right people to the right technologies and services at the right time. For IT and security leaders, the Okta Platform governs the seamless and secure access by human users and non-human identities ( NHIs ) to the applications they need to do their most important work. Developers leverage the Okta Platform and Auth0 Platform to securely and efficiently embed identity for both human users and, increasingly, artificial intelligence ( AI ) agents into the software they build, allowing them to innovate and focus on their core mission. The Company is headquartered in San Francisco, California. Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements, which include the accounts of the Company and its wholly owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States of America ( GAAP ) for interim periods. Accordingly, they do not include all of the financial information and footnotes required by GAAP for complete financial statements. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated balance sheet as of January 31, 2026, included herein, was derived from the audited financial statements as of that date. In the opinion of the Company s management, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary for a fair statement of the results of operations for the interim periods presented but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year ending January 31, 2027 or any future period. The Company s fiscal year ends on January 31. References to fiscal 2027, for example, refer to the fiscal year ending January 31, 2027. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company s Annual Report on Form 10-K filed with the Securities and Exchange Commission ( SEC ) on March 5, 2026. Segments The Company conducts business globally and is managed, operated and organized by major functional departments that operate on a consolidated basis. As a result, the Company operates as one reportable segment. The Company employs a Software-as-a-Service ( SaaS ) business model and generates revenue primarily by selling multi-year subscriptions to its cloud-based offerings. The Company s chief operating decision maker ( CODM ) is the chief executive officer. The CODM utilizes consolidated GAAP and non-GAAP measures of profit and loss to evaluate the Company s overall performance and inform resource allocation to support strategic priorities and capital allocation needs. The profit and loss measure most consistent with GAAP used by the CODM is consolidated net income. The CODM is regularly provided with budgeted expense information and consolidated expense data. Accordingly, significant segment expenses are inherently reflected in the condensed consolidated financial statements and related notes. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates are based on historical experience and on other assumptions that management believes are reasonable under the circumstances. Actual results could vary from those estimates. The Company s most significant estimates include the valuation of deferred income tax assets, 10 OKTA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) uncertain tax positions, assets and liabilities acquired in business combinations and loss contingencies related to litigation. 2. Accounting Standards and Significant Accounting Policies Significant Accounting Policies For a summary of the Company s significant accounting policies refer to Note 2. Summary of Significant Accounting Policies of its Annual Report on Form 10-K for the fiscal year ended January 31, 2026. Recent Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued guidance requiring the disclosure, in the notes to financial statements, of specified disaggregated income statement expense information. This guidance is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this guidance. In September 2025, the FASB issued guidance to modernize the accounting for internal-use software costs to current development practices and enhance disclosure requirements. The guidance removes all references to software development stages and introduces the concept of significant development uncertainty, which if present, prevents capitalization. This guidance is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual periods, with early adoption permitted. Entities can adopt the new standard using a prospective, modified, or retrospective transition approach. The Company is currently evaluating the impact of adopting this guidance, including the timing of adoption (early or standard) and the selection of an appropriate transition method. 3. Cash Equivalents and Investments Cash Equivalents and Short-term Investments In estimating fair value, the Company uses a three-tier fair value hierarchy as follows: Level 1 Valuations based on observable inputs that reflect quoted prices for identical assets or liabilities in active markets. Level 2 Valuations based on other inputs that are directly or indirectly observable in the marketplace. Level 3 Valuations based on unobservable inputs that are supported by little or no market activity. The following tables present the estimated fair value of cash equivalents and short-term investments: As of July 31, 2026As of January 31, 2026 (dollars in millions) Money market funds (Level 1) $530 $654 16 530 670 Short-term investments (Available-for-sale): 1,399 1,459 Corporate debt securities (Level 2)117 180 Certificates of deposit (Level 2)20 56 Total short-term investments1,536 1,695 Total$2,066 $2,365 11 OKTA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited) The following table presents the contractual maturities of the Company s short-term investments: $1,090 446 $1,536 Six Months Ended July 31, 2026202520262025 (dollars in millions) Cost of revenue Subscription$15 $21 $31 $38 Professional services and other1 2 3 5 Research and development36 51 77 98 Sales and marketing32 35 61 67 General and administrative30 35 59 64 Total$114 $144 $231 $272 Weighted-average remaining period (in years)$645 2.2 years12 1.8 years74 1.4 years8 0.5 years$739 2025Class BClass B Basic net income per share: $111 $5 64 $3 166,614 7,684 7,845 $0.67 $0.67 0.38 $0.38 $111 $5 64 $3 5 $116 $5 67 $3 166,614 7,684 7,845 4,438 72 456 7,756 178,808 7,756 8,301 $0.65 $0.65 0.37 $0.37 2025Class BClass B$182 $8 123 $6 167,512 7,686 7,893 $1.09 $1.09 0.74 $0.74 $182 $8 123 $6 8 $190 $8 131 $6 167,512 7,686 7,893 2,591 136 621 308 7,822 178,233 7,822 8,514 $1.07 $1.07 0.72 $0.72 Six Months Ended July 31, 2026202520262025 (shares in thousands) 695 1,227 3,194 2,835 Six Months Ended July 31, 2026202520262025 (dollars in millions) Revenue: Subscription$793 $711 $1,543 $1,384 Professional services and other12 17 27 32 Total revenue805 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 revenue164 168 334 323 Gross profit641 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) 98 113 196 216 534 519 1,073 1,013 Operating income107 41 163 80 Interest expense (1)(1)(2) Interest income and other, net19 27 42 57 19 26 41 55 Income before provision for income taxes126 67 204 135 Provision for income taxes10 14 6 Net income $116 $67 $190 $129 (1) Includes stock-based compensation expense as follows: Three Months Ended July 31,Six Months Ended July 31, 2026202520262025 (dollars in millions) Cost of subscription revenue$15 $21 $31 $38 Cost of professional services and other revenue1 2 3 5 Research and development36 51 77 98 Sales and marketing32 35 61 67 General and administrative30 35 59 64 Total stock-based compensation expense$114 $144 $231 $272 21 OKTA, INC. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) The following table sets forth our results of operations for the periods presented as a percentage of our total revenue: Three Months Ended July 31,Six Months Ended July 31, 2026202520262025 Revenue Subscription99 %98 %98 %98 % Professional services and other1 2 2 2 Total revenue100 100 100 100 Cost of revenue Subscription18 20 19 20 Professional services and other2 3 2 3 Total cost of revenue20 23 21 23 Gross profit80 77 79 77 Operating expenses Research and development20 22 21 22 Sales and marketing35 34 35 34 General and administrative12 15 13 15 67 71 69 71 Operating income13 6 10 6 Interest expense Interest income and other, net3 3 3 4 3 3 3 4 Income before provision for income taxes16 9 13 10 Provision for income taxes2 1 1 Net income14 %9 %12 %9 % 22 OKTA, INC. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Comparison of the Three and Six Months Ended July 31, 2026 and 2025 Revenue Three Months Ended July 31, 20262025$ Change% Change (dollars in millions) Revenue: Subscription$793 $711 $82 12 % Professional services and other12 17 (5)(33) Total revenue$805 $728 $77 11 % Percentage of revenue: Subscription99 %98 % Professional services and other1 2 Total100 %100 % Six Months Ended July 31, 20262025$ Change% Change (dollars in millions) Revenue: Subscription$1,543 $1,384 $159 12 % Professional services and other27 32 (5)(17) Total revenue$1,570 $1,416 $154 11 % Percentage of revenue: Subscription98 %98 % Professional services and other2 2 Total100 %100 % Three and six months ended For the three and six months ended July 31, 2026, the increase in subscription revenue was primarily due to an increase in users and sales of additional solutions to existing customers and the addition of new customers. The increase in revenue was attributable to increased revenue from existing customers as reflected in our 107% Dollar-Based Net Retention Rate as of July 31, 2026 and an increase in the number of customers as detailed in our Key Business Metrics. For the three and six months ended July 31, 2026, professional services and other revenue decreased as a result of the shift of our professional services business to global systems integrators. We expect professional services and other revenue to decline as we shift more engagements to our partner ecosystem. 23 OKTA, INC. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Cost of Revenue, Gross Profit and Gross Margin Three Months Ended July 31, 20262025$ Change% Change (dollars in millions) Cost of revenue: Subscription$145 $147 $(2) % Professional services and other19 21 (2)(8) Total cost of revenue$164 $168 $(4)(1)% Gross profit$641 $560 $81 14 % Gross margin: Subscription82 %80 % Professional services and other(70)(24) Total gross margin80 %77 % Six Months Ended July 31, 20262025$ Change% Change (dollars in millions) Cost of revenue: Subscription$295 $283 $12 4 % Professional services and other39 40 (1)(2) Total cost of revenue$334 $323 $11 4 % Gross profit$1,236 $1,093 $143 13 % Gross margin: Subscription81 %80 % Professional services and other(49)(25) Total gross margin79 %77 % Three months ended For the three months ended July 31, 2026, cost of subscription revenue decreased primarily due to a $7 million decrease in amortization expense associated with acquired developed technology, and a $6 million decrease in stock-based compensation expense, offset by an $8 million increase in hosting fees and a $3 million increase in software costs. Our gross margin for subscription revenue increased to 82% for the three months ended July 31, 2026 compared to 80% for the three months ended July 31, 2025. The increase was primarily driven by lower amortization expense associated with acquired developed technology and improved spend efficiency resulting in lower relative cost of subscription revenue. For the three months ended July 31, 2026, cost of professional services and other revenue remained relatively flat. Our gross margin for professional services and other revenue decreased to (70)% for the three months ended July 31, 2026 compared to (24)% for the three months ended July 31, 2025 as a result of lower professional services and other revenue while associated costs remained relatively flat. Six months ended For the six months ended July 31, 2026, cost of subscription revenue increased primarily due to an increase in hosting fees of $16 million, software costs of $5 million and labor costs of $4 million, offset by decreases in stock- 24 OKTA, INC. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) based compensation expense of $7 million and amortization expense associated with acquired developed technology of $6 million. Our gross margin for subscription revenue improved to 81% for the six months ended July 31, 2026 compared to 80% for the six months ended July 31, 2025. The improvement was primarily driven by lower amortization expense associated with acquired developed technology and improved spend efficiency resulting in lower relative cost of subscription revenue. For the six months ended July 31, 2026, cost of professional services and other revenue remained relatively flat. Our gross margin for professional services and other revenue decreased to (49)% for the six months ended July 31, 2026 compared to (25)% for the six months ended July 31, 2025 as a result of lower professional services and other revenue while associated costs remained relatively flat. Operating Expenses Research and Development Expenses Three Months Ended July 31, 20262025$ Change% Change (dollars in millions) Research and development$163 $160 $3 2 % Percentage of revenue20 %22 % Six Months Ended July 31, 20262025$ Change% Change (dollars in millions) Research and development$326 $314 $12 4 % Percentage of revenue21 %22 % Three months ended For the three months ended July 31, 2026, research and development expenses increased due to an increase in labor costs of $10 million and hosting fees of $5 million, offset by a decrease in stock-based compensation expense of $15 million. The decrease in research and development as a percentage of total revenue was primarily driven by improved spend efficiency. Six months ended For the six months ended July 31, 2026, research and development expenses increased due to an increase in labor costs of $21 million and hosting fees of $8 million, offset by a decrease in stock-based compensation expense of $21 million. The decrease in research and development as a percentage of total revenue was primarily driven by improved spend efficiency. 25 OKTA, INC. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Sales and Marketing Expenses Three Months Ended July 31, 20262025$ Change% Change (dollars in millions) Sales and marketing$273 $246 $27 10 % Percentage of revenue35 %34 % Six Months Ended July 31, 20262025$ Change% Change (dollars in millions) Sales and marketing$551 $483 $68 14 % Percentage of revenue35 %34 % Three months ended For the three months ended July 31, 2026, sales and marketing expenses increased primarily due to increases in labor costs of $25 million and marketing costs of $2 million, offset by a decrease in stock-based compensation expense of $3 million. Six months ended For the six months ended July 31, 2026, sales and marketing expenses increased primarily due to increases in labor costs of $54 million and marketing costs of $8 million, offset by a decrease in stock-based compensation expense of $6 million. We expect our sales and marketing expenses will continue to be our largest operating expense category for the foreseeable future. General and Administrative Expenses Three Months Ended July 31, 20262025$ Change% Change (dollars in millions) General and administrative$98 $113 $(15)(13)% Percentage of revenue12 %15 % Six Months Ended July 31, 20262025$ Change% Change (dollars in millions) General and administrative$196 $216 $(20)(9)% Percentage of revenue13 %15 % Three months ended For the three months ended July 31, 2026, general and administrative expenses decreased primarily due to decreases in stock-based compensation expense of $5 million and the impact of timing of Okta for Good grants of $4 million. The decrease in general and administrative as a percentage of total revenue was primarily driven by improved spend efficiency. We expect general and administrative expenses as a percentage of total revenue to decrease as our total revenue grows. 26 OKTA, INC. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Six months ended For the six months ended July 31, 2026, general and administrative expenses decreased primarily due to decreases in stock-based compensation expense of $5 million and the impact of timing of Okta for Good grants of $6 million. The decrease in general and administrative as a percentage of total revenue was primarily driven by improved spend efficiency. We expect general and administrative expenses as a percentage of total revenue to decrease as our total revenue grows. Interest and Other, Net Three Months Ended July 31, 20262025$ Change% Change (dollars in millions) Interest expense$ $(1)$1 (68)% Interest income and other, net19 27 (8)(29) $19 $26 $(7)(27)% Six Months Ended July 31, 20262025$ Change% Change (dollars in millions) Interest expense$(1)$(2)$1 (61)% Interest income and other, net42 57 (15)(27) $41 $55 $(14)(26)% Three and six months ended For the three and six months ended July 31, 2026, interest and other, net decreased primarily due to lower interest income from our short-term investment holdings. We expect interest income to decrease in fiscal 2027 following the cash settlement of our 2026 Notes and as we deploy investable cash to fund our Share Repurchase Program. Provision for Income Taxes Three Months Ended July 31, 20262025$ Change% Change (dollars in millions) Provision for income taxes $10 $ $10 Not Meaningful Six Months Ended July 31, 20262025$ Change% Change (dollars in millions) Provision for income taxes $14 $6 $8 117 % Three and six months ended For the three and six months ended July 31, 2026, our provision for income taxes increased by $10 million and $8 million, respectively. This change was primarily driven by the increase of forecasted pre-tax income for the full fiscal year 2027 and the tax impacts of the Axiom integration. We periodically evaluate the realizability of our deferred tax assets based on all available evidence, both positive and negative. The realization of the net deferred tax assets is dependent on our ability to generate sufficient future taxable income during the periods prior to the expiration of tax attributes to fully utilize these assets. Given 27 OKTA, INC. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) our current and anticipated future earnings, we may release a significant portion of our valuation allowance in the foreseeable future if there is sufficient positive evidence that outweighs the negative evidence. The release of the valuation allowance would result in the recognition of certain deferred tax assets and a corresponding decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of any potential valuation allowance release remains uncertain and is subject to change on the basis of the level of profitability that we are able to actually achieve. As of July 31, 2026, we continue to maintain a full valuation allowance on our deferred tax assets in the United States. Key Business Metrics We review a number of operating and financial metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. As of July 31, 20262025 (dollars in millions) Customers with annual contract value ( ACV ) above $100,000 5,255 4,945 Dollar-based net retention rate for the trailing 12 months ended107 %106 % Current remaining performance obligations$2,585 $2,265 Remaining performance obligations$4,858 $4,152 Number of Customers with Annual Contract Value Above $100,000 The number of customers who have greater than $100,000 in annual contract value ( ACV ) with us was 5,255 and 4,945 as of July 31, 2026 and 2025, respectively. We expect this trend to continue as larger enterprises recognize the value of our platforms and replace their legacy identity access management infrastructure. We define a customer as a separate and distinct buying entity, such as a company, an educational or government institution, or a distinct business unit of a large company that has an active contract with us or one of our partners to access our platforms. For purposes of determining our customer count, we do not include customers that use our platforms under self-service arrangements only. Dollar-Based Net Retention Rate Part of our ability to generate revenue is dependent upon our ability to maintain our relationships with our customers and to increase their utilization of our platforms. We believe we can achieve these goals by focusing on delivering value and functionality that enables us to both retain our existing customers and expand the number of users and solutions used within an existing customer. One way that we assess our performance in this area is by measuring our Dollar-Based Net Retention Rate. Our Dollar-Based Net Retention Rate measures our ability to increase revenue across our existing customer base through expansion of users and solutions associated with a customer as offset by churn and contraction in the number of users and/or solutions associated with a customer. Our Dollar-Based Net Retention Rate is based upon our ACV, which is calculated based on the terms of that customer s contract and represents the total contracted annual subscription amount as of that period end. We calculate our Dollar-Based Net Retention Rate as of a period end by starting with the ACV from all customers as of twelve months prior to such period end ( Prior Period ACV ). We then calculate the ACV from these same customers as of the current period end ( Current Period ACV ). Current Period ACV includes any upsells and is net of contraction or churn over the trailing twelve months but excludes ACV from new customers in the current period. We then divide the Current Period ACV by the Prior Period ACV to arrive at our Dollar-Based Net Retention Rate. Our Dollar-Based Net Retention Rate is inclusive of ACV from self-service customers. Our Dollar-Based Net Retention Rate is primarily attributable to our healthy gross retention, an expansion of users and upselling additional solutions within our existing customers. Larger enterprises often implement a limited initial deployment of our platforms before increasing their deployment on a broader scale. 28 OKTA, INC. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Remaining Performance Obligations ( RPO ) RPO represent all future, non-cancelable, contracted revenue under our subscription contracts with customers that has not yet been recognized, inclusive of deferred revenue that has been invoiced and non-cancelable amounts that will be invoiced and recognized as revenue in future periods. Current RPO represents the portion of RPO expected to be recognized during the next 12 months. RPO fluctuates due to a number of factors, including the timing, duration and dollar amount of customer contracts and fluctuations in foreign currency exchange rates. Liquidity and Capital Resources As of July 31, 2026, our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $2,299 million, which were held for working capital and general corporate purposes, including potential future acquisition activity. Our cash equivalents and investments consisted primarily of U.S. government securities, money market funds, corporate debt securities and certificates of deposit. Recent macroeconomic events, including changes in interest rates, global inflation and bank failures, have led to further economic uncertainty in the global economy. To mitigate risk, our cash and cash equivalents are distributed across large financial institutions. In addition, we have policy restrictions in place on the types of securities that can be purchased as part of our available-for-sale securities portfolio. These restrictions take credit quality, liquidity and diversification into consideration among other criteria. We continue to monitor the impacts of this situation; however, there can be no assurances that conditions in the banking sector and in global financial markets will not worsen and/or adversely affect us. In January 2026, our board authorized a stock repurchase program of up to $1 billion of our outstanding shares of Class A common stock. We have repurchased and may continue to repurchase shares of our Class A common stock from time to time through open market purchases, in privately negotiated transactions, or by other means. Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18. We may also, from time to time, enter into Rule 10b5-1 trading plans to facilitate repurchases of shares. The timing and the amount of stock repurchases under the Share Repurchase Program will be based on our evaluation of factors including business and market conditions, corporate and regulatory requirements, and other considerations. The Share Repurchase Program does not obligate us to repurchase any specific number of shares and may be modified, suspended, or terminated at any time. During the six months ended July 31, 2026, we repurchased and immediately retired 4,569,262 shares of our Class A common stock for an aggregate amount, including commissions, of $366 million under the Share Repurchase Program. As of July 31, 2026, $555 million of the originally authorized amount under the Share Repurchase Program remained available for future repurchases. We satisfy employee tax withholding obligations due upon the vesting of share-based awards through net share settlement using available cash. This practice reduces our equity dilution rate and impacts liquidity as our cash requirements for these obligations are primarily driven by the market price of our Class A common stock at the time of vesting. During the six months ended July 31, 2026 and July 31, 2025, cash paid to satisfy these employee tax withholding obligations was $100 million and $102 million, respectively. The 2026 Notes matured on June 15, 2026, and we settled the full remaining $350 million principal amount outstanding in cash. We believe our existing cash and cash equivalents, our investments and cash provided by sales of our solutions will be sufficient to meet our short-term and long-term projected working capital and capital expenditure needs for the foreseeable future. Our future capital requirements will depend on many factors, including our subscription growth rate, subscription renewal activity, billing frequency, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the expansion of our international operations, the introduction of new and enhanced product offerings, and the continuing market adoption of our platforms. We continue to assess our capital structure and evaluate the merits of deploying available cash. We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights; additionally, we have repurchased, and may in the future, repurchase shares of our Class A common stock from time to time under our Share Repurchase Program. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash 29 OKTA, INC. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) flows necessary to expand our operations and invest in new technologies, this could reduce our ability to compete successfully and harm our results of operations. A significant majority of our customers pay in advance for annual subscriptions. Therefore, a substantial source of our cash is from our deferred revenue, which is included on our condensed consolidated balance sheet as a liability. Deferred revenue consists of the unearned portion of billed fees for our subscriptions, which is recognized as revenue in accordance with our revenue recognition policy. As of July 31, 2026, we had deferred revenue of $1,781 million, of which $1,751 million was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met. Cash Flows The following table summarizes our cash flows for the periods indicated: Six Months Ended July 31, 20262025 (dollars in millions) Net cash provided by operating activities$511 $408 Net cash provided by investing activities193 118 Net cash used in financing activities (794)(67) Effects of changes in foreign currency exchange rates on cash, cash equivalents and restricted cash(5)10 Net increase (decrease) in cash, cash equivalents and restricted cash$(95)$469 Operating Activities Our largest source of operating cash is cash collections from our customers for subscription and professional services. Our primary uses of cash from operating activities are for employee-related expenditures, marketing expenses and third-party hosting costs. During the six months ended July 31, 2026, cash provided by operating activities was $511 million, an increase of $103 million compared to the six months ended July 31, 2025. The increase was primarily attributable to an increase in cash received from customers and improved spend efficiency. Investing Activities During the six months ended July 31, 2026, cash provided by investing activities was $193 million compared to cash provided by investing activities of $118 million during the six months ended July 31, 2025. The change was primarily driven by higher proceeds from sales, maturities and redemption of available-for-sale securities partially offset by higher purchases of securities available-for-sale. Financing Activities During the six months ended July 31, 2026, cash used in financing activities was $794 million, an increase of $727 million compared to the six months ended July 31, 2025. The increase was primarily attributable to an increase in common stock repurchases and payments upon maturity of the 2026 Notes. The cash outlay for common stock repurchases and taxes paid on net share settlement of equity awards are generally predicated on the closing price of our stock on the respective transaction dates. 30 OKTA, INC. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Material Cash Requirements Contractual Obligations The following table represents our known short-term (i.e., the next twelve months) and long-term (i.e., beyond the next twelve months) obligations as of July 31, 2026: Short-termLong-termTotal (dollars in millions) 36 55 91 Purchase obligations(1) 445 696 1,141 Total contractual obligations$481 $751 $1,232 (1) Purchase obligations primarily relate to data center hosting services and other sales and marketing obligations. Indemnification Agreements In the ordinary course of business, we enter into agreements of varying scope and terms pursuant to which we agree to indemnify customers, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by us or from intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with our directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No material demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our condensed consolidated balance sheets, condensed consolidated statements of operations, condensed consolidated statements of comprehensive income, or condensed consolidated statements of cash flows. Critical Accounting Estimates There have been no significant changes to our critical accounting estimates for the six months ended July 31, 2026 from those discussed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026. 31 Item 3. Quantitative and Qualitative Disclosures about Market Risk Foreign Currency Exchange Risk The functional currencies of our foreign subsidiaries are the respective local currencies. Most of our sales are denominated in U.S. dollars, and therefore our revenue is not currently subject to significant foreign currency risk. Our operating expenses are denominated in the currencies of the countries in which our operations are located, which are primarily in the United States, Canada, United Kingdom, and Australia. Our condensed consolidated results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments. During the six months ended July 31, 2026 and 2025, a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our condensed consolidated financial statements. Interest Rate Risk We had cash, cash equivalents and short-term investments totaling $2,299 million as of July 31, 2026, of which $2,066 million was invested in U.S. government securities, money market funds, corporate debt securities and certificates of deposit. Our cash and cash equivalents are held for working capital and general corporate purposes, including potential future acquisition activity. Our short-term investments are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes. Our cash equivalents and our investment portfolio are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely affected due to a rise in interest rates. Due in part to these factors, our future investment income may fall short of our expectations due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. However, because we classify our short-term investments as available-for-sale, no gains are recognized due to changes in interest rates. As losses due to changes in interest rates are generally not considered to be credit-related changes, no losses in such securities are recognized due to changes in interest rates unless we intend to sell, it is more likely than not that we will be required to sell, we sell prior to maturity, or we otherwise determine that all or a portion of the decline in fair value is due to credit-related factors. As of July 31, 2026, a hypothetical 10% relative change in interest rates would not have had a material impact on the value of our cash equivalents or investment portfolio. Fluctuations in the value of our cash equivalents and investment portfolio caused by a change in interest rates (gains or losses on the carrying value) are recorded in other comprehensive income, and are realized only if we sell the underlying securities prior to maturity. Convertible Senior Notes In June 2020, we issued the 2026 Notes due June 15, 2026 with a principal amount of $1,150 million. Concurrently with the issuance of the 2026 Notes, we entered into separate capped call transactions. The 2026 Capped Calls were completed to reduce the potential dilution from the conversion of the 2026 Notes. The 2026 Notes matured on June 15, 2026, and we settled the full remaining $350 million principal amount outstanding in cash and the associated remaining outstanding 2026 Capped Calls expired unexercised. Following this settlement, market risks associated with these instruments, specifically fair value exposure to interest rate and stock price fluctuations, no longer apply. 32 Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act ), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Inherent Limitations on Effectiveness of Controls Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. 33 Part II. OTHER INFORMATION Item 1. Legal Proceedings The information set forth under Legal Matters in Note 7 to our condensed consolidated financial statements, Commitments and Contingencies is incorporated by reference herein. Item 1A. Risk Factors Our business, results of operations, financial condition, reputation, growth prospects and stock price can be materially and adversely affected by a number of risks and uncertainties, whether currently known or unknown, including those described under Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K filed with the Securities and Exchange Commission ( SEC ) on March 5, 2026 (the 2026 Form 10-K ). There have been no material changes to our risk factors since the 2026 Form 10-K. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Issuer Purchases of Equity Securities Share repurchases of our Class A common stock for the three months ended July 31, 2026 were as follows: Period Total Number of Shares Purchased (in thousands) Average Price Paid Per Share(1) Total Number of Shares Purchased as Part of Publicly Announced Program (in thousands) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program(2) (in millions) May 1 - 311,542$81.06 1,542$555 June 1 - 30 555 July 1 - 31 555 Total1,542$81.06 1,542$555 Adoption DateExpiration DateAggregate Shares to be Sold (#) Eric Kelleher President and Chief Operating Officer June 12, 2026Earlier of when all shares are sold and September 8, 2027 Indeterminable(1) Larissa Schwartz Former Chief Legal Officer and Corporate Secretary July 1, 2026Earlier of when all shares are sold and January 31, 2027 Indeterminable(2) Shibu Ninan Chief Accounting Officer July 8, 2026Earlier of when all shares are sold and September 30, 2027 Up to 16,956 Brett Tighe Chief Financial Officer July 15, 2026Earlier of when all shares are sold and January 28, 2027 Indeterminable(3) 34