Q2 FY2027 results
| Metric | Result | Change |
|---|---|---|
| Cash, cash equivalents, and short-term investments | $2.3 billion | Not stated |
| Professional services revenue | 1% of total revenue | Decrease |
| Customers with $1 million-plus ACV | Over 600 | Over 20% growth |
| New products as a percentage of bookings | 30% | Not stated |
Guidance and outlook
- For the third quarter of FY '27, we expect total revenue growth of 10%, current RPO growth of 11% to 12%; non-GAAP operating margin of 24% to 25%, and free cash flow margin of 21% to 23%.
- For the full year FY '27, we now expect total revenue growth of 10% to 11%, non-GAAP operating margin of 26% and a free cash flow margin of 28% to 29%.
How management sounded
Positive (+6 on our -10 to +10 scale). Management highlighted record bookings, strong enterprise performance, and a growing pipeline, while maintaining a prudent approach to guidance. Management sounded more upbeat than on 8% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
AI Agent Revenue Materiality
Asked: When will AI agents become meaningful revenue?
Answer: It is still early and immaterial to current numbers, but management is optimistic about the long-term potential as they build the system of record for agent identity.
Competitive Dynamics
Asked: Are you seeing more Wild West competition or direct customer interest?
Answer: The biggest competitor is customer confusion, but Okta is cutting through this by offering a generally available product and a neutral, foundational platform.
CRPO Acceleration
Asked: What is driving the CRPO acceleration?
Answer: Strength in large enterprise customers, the breadth of the product platform, and the catalyzing effect of AI conversations on other product deals.
Premiso Acquisition
Asked: How does the Premiso acquisition expand the product set?
Answer: It provides next-generation identity threat protection with 400 native risk detections, enhancing visibility into sessions and agent behaviors.
What to watch before the next call
- The conversion rate of the record-sized pipeline for AI products.
- The impact of the strategic shift of professional services to GSI partners on long-term growth.
- The adoption rate of the newly launched Agent Gateway and other AI-specific SKUs.
