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Okta (OKTA) Up 19.5% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Okta (OKTA - Free Report) . Shares have added about 19.5% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Okta due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent catalysts for Okta, Inc. before we dive into how investors and analysts have reacted as of late.
OKTA Q2 Earnings Beat on Subscription Growth, FY27 View Raised
Okta reported second-quarter fiscal 2027 earnings of $1.05 per share, which increased 15.4% year over year and beat the Zacks Consensus Estimate by 9.38%.
Revenues increased 10.6% year over year to $805 million, beating the consensus mark by 1.62%. Subscription momentum supported the quarter, with subscription revenues rising 12% to $793 million.
Location-wise, revenues from the United States contributed 87.6% to total revenues in the fiscal second quarter. The figure increased 10.19% year over year to $638 million. International revenues contributed 22.9% to total revenues. The figure increased 12.08% year over year to $167 million.
OKTA's Subscription Growth Supports the Top Line
Subscription revenues accounted for nearly all of the top line, while Professional services and other revenues were $12 million, down 29.4% year over year from $17 million. Management said growth benefited from steady momentum across its core Workforce and Customer Identity businesses and contributions from newer products, led by Okta Identity Governance.
Workforce Identity represented 59% of annual contract value, or ACV, at quarter-end and grew 11% year over year. Customer Identity accounted for the remaining 41% and increased 13%, underscoring balanced growth across Okta’s two core identity businesses.
Okta's Backlog and Large Customers Expand
In the second quarter of fiscal 2027, remaining performance obligations, which represent subscription backlog, increased 17% year over year to $4.858 billion. Current remaining performance obligations (cRPO), a key indicator of future subscription revenues, advanced 14% year over year to $2.585 billion.
Customers generating more than $100,000 in ACV increased 6% year over year to 5,255. The trailing-12-month dollar-based net retention rate was 107%, up one percentage point from the year-ago period, reflecting expansion within the existing customer base after accounting for contractions and churn.
OKTA's Profitability Shows Operating Leverage
Non-GAAP gross margin was 81.9%, up 40 basis points year over year, while non-GAAP subscription gross margin improved 20 basis points to 83.9%.
On a non-GAAP basis, operating expenses increased 10.7% year over year to $434 million. Research and development expenses rose 16.5% to $127 million, while sales and marketing expenses increased 17.6% to $241 million. General and administrative expenses declined 15.4% to $66 million.
Non-GAAP operating income increased 11.9% year over year to $226 million. Non-GAAP operating margin expanded 50 basis points to 28.2%, highlighting continued profitability despite growth investments.
Okta's Cash Generation Remains Strong
Okta ended July 31, 2026, with $2.299 billion in cash, cash equivalents and short-term investments compared with $2.589 billion as of April 30, 2026.
Net cash provided by operating activities was $234 million, representing 29% of revenues, compared with $167 million, or 23%, a year ago. Free cash flow increased to $227 million from $162 million, while the free cash flow margin expanded to 28% from 22%.
OKTA Raises Its Fiscal 2027 Outlook
For the third quarter of fiscal 2027, OKTA expects revenues of $813-$817 million, implying 10% year-over-year growth. cRPO is projected at $2.59-$2.60 billion, implying growth of 11-12%. Non-GAAP earnings are expected between 92 cents and 94 cents per share, with free cash flow of $175-$185 million.
For fiscal 2027, management raised its revenue outlook to $3.216-$3.226 billion, suggesting 10-11% growth, from the prior $3.185-$3.205 billion range. Non-GAAP earnings are now projected at $3.90-$3.94 per share compared with the previous $3.79-$3.87 range. Free cash flow guidance increased to $910-$930 million from $855-$885 million, with an expected margin of 28-29%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 6.16% due to these changes.
VGM Scores
Currently, Okta has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Okta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
View the Zacks #1 Rank List
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Okta (OKTA) Up 19.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Okta (OKTA - Free Report) . Shares have added about 19.5% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Okta due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent catalysts for Okta, Inc. before we dive into how investors and analysts have reacted as of late.
OKTA Q2 Earnings Beat on Subscription Growth, FY27 View Raised
Okta reported second-quarter fiscal 2027 earnings of $1.05 per share, which increased 15.4% year over year and beat the Zacks Consensus Estimate by 9.38%.
Revenues increased 10.6% year over year to $805 million, beating the consensus mark by 1.62%. Subscription momentum supported the quarter, with subscription revenues rising 12% to $793 million.
Location-wise, revenues from the United States contributed 87.6% to total revenues in the fiscal second quarter. The figure increased 10.19% year over year to $638 million. International revenues contributed 22.9% to total revenues. The figure increased 12.08% year over year to $167 million.
OKTA's Subscription Growth Supports the Top Line
Subscription revenues accounted for nearly all of the top line, while Professional services and other revenues were $12 million, down 29.4% year over year from $17 million. Management said growth benefited from steady momentum across its core Workforce and Customer Identity businesses and contributions from newer products, led by Okta Identity Governance.
Workforce Identity represented 59% of annual contract value, or ACV, at quarter-end and grew 11% year over year. Customer Identity accounted for the remaining 41% and increased 13%, underscoring balanced growth across Okta’s two core identity businesses.
Okta's Backlog and Large Customers Expand
In the second quarter of fiscal 2027, remaining performance obligations, which represent subscription backlog, increased 17% year over year to $4.858 billion. Current remaining performance obligations (cRPO), a key indicator of future subscription revenues, advanced 14% year over year to $2.585 billion.
Customers generating more than $100,000 in ACV increased 6% year over year to 5,255. The trailing-12-month dollar-based net retention rate was 107%, up one percentage point from the year-ago period, reflecting expansion within the existing customer base after accounting for contractions and churn.
OKTA's Profitability Shows Operating Leverage
Non-GAAP gross margin was 81.9%, up 40 basis points year over year, while non-GAAP subscription gross margin improved 20 basis points to 83.9%.
On a non-GAAP basis, operating expenses increased 10.7% year over year to $434 million. Research and development expenses rose 16.5% to $127 million, while sales and marketing expenses increased 17.6% to $241 million. General and administrative expenses declined 15.4% to $66 million.
Non-GAAP operating income increased 11.9% year over year to $226 million. Non-GAAP operating margin expanded 50 basis points to 28.2%, highlighting continued profitability despite growth investments.
Okta's Cash Generation Remains Strong
Okta ended July 31, 2026, with $2.299 billion in cash, cash equivalents and short-term investments compared with $2.589 billion as of April 30, 2026.
Net cash provided by operating activities was $234 million, representing 29% of revenues, compared with $167 million, or 23%, a year ago. Free cash flow increased to $227 million from $162 million, while the free cash flow margin expanded to 28% from 22%.
OKTA Raises Its Fiscal 2027 Outlook
For the third quarter of fiscal 2027, OKTA expects revenues of $813-$817 million, implying 10% year-over-year growth. cRPO is projected at $2.59-$2.60 billion, implying growth of 11-12%. Non-GAAP earnings are expected between 92 cents and 94 cents per share, with free cash flow of $175-$185 million.
For fiscal 2027, management raised its revenue outlook to $3.216-$3.226 billion, suggesting 10-11% growth, from the prior $3.185-$3.205 billion range. Non-GAAP earnings are now projected at $3.90-$3.94 per share compared with the previous $3.79-$3.87 range. Free cash flow guidance increased to $910-$930 million from $855-$885 million, with an expected margin of 28-29%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 6.16% due to these changes.
VGM Scores
Currently, Okta has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Okta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.