Okta (OKTA) Q2 FY2027 Earnings Call: Q&A Summary

Q: Eric Heath at KeyBanc asked about the materiality of the Anthropic partnership and the uplift seen in AI agent deals.

A: Todd McKinnon noted the partnership is strategic for ecosystem standards like cross-app access. Brett Tighe added that while AI deals are larger than average, they are still nascent and not yet material to total revenue.

Q: Brent Darling at Jefferies asked about competitive dynamics and whether customers are coming to Okta without bake-offs.

A: Todd McKinnon stated the biggest competitor is customer confusion. He emphasized that Okta's neutral, foundational approach is a no-regrets investment for customers.

Q: John DiFucci at Guggenheim asked when AI will turn into meaningful revenue.

A: Todd McKinnon highlighted record bookings and a large pipeline. He noted the product is generally available and they are focused on converting that pipeline, though it is too early to quantify the exact timing of material revenue contribution.

Q: Matthew Hedberg at RBC asked about the drivers of CRPO acceleration and if deal cycles are faster.

A: Todd McKinnon ranked large enterprise strength and product breadth as top drivers. He noted that AI conversations are catalyzing broader platform consolidation deals.

Q: Joshua Tilton at Wolfe Research asked if AI security concerns are accelerating legacy migrations.

A: Eric Kelleher explained that AI exposure is driving customers to modernize their identity fabric, which often leads to replacing legacy providers.

Q: Rudy Kessinger at D.A. Davidson asked if Q3 CRPO guidance assumes the same strong execution seen in Q1 and Q2.

A: Brett Tighe confirmed they are maintaining their prudent guidance philosophy despite the strong Q1 and Q2 performance.

Q: Shrenik Kothari at Baird asked if CISO concerns about small AI vendors are driving pipeline toward Okta and if simplified pricing is helping.

A: Todd McKinnon noted CISOs prefer Okta's stability over small, potentially unstable vendors. He added that their per-user pricing model provides predictability for customers.

Q: Steven Koenig at Macquarie asked about competition with Microsoft, Salesforce, and ServiceNow.

A: Todd McKinnon argued that Microsoft is copying Okta's vision, while partnerships with ServiceNow and Salesforce allow Okta to add value in those ecosystems without direct conflict.

Q: Trevor Rambo at BTIG asked about the performance of Okta Identity Governance and if it is driving new lands.

A: Todd McKinnon stated the new product portfolio, led by OIG, outperformed internal plans. He emphasized that selling these products as a suite is driving performance.

Q: Jonathan Ho at William Blair asked how the Premiso acquisition expands the product set and the opportunity in post-authentication behavioral security.

A: Todd McKinnon explained that Premiso adds deep, correlative risk detection capabilities. Brett Tighe noted this is a successful tuck-in acquisition strategy.

Q: Yun Suk Kim at Luke asked how AI agent adoption is incorporated into deals and if there are consumption limits.

A: Todd McKinnon explained the current pricing is per-user, but they are building the framework for consumption-based pricing as agent usage scales.

Q: William Kingsley Crane at Canaccord asked about the importance of being the default in developer environments.

A: Todd McKinnon confirmed that showing up in developer tools and LLMs is a high priority.

Q: Mark Cash at Raymond James asked how much the raise in the outlook was due to AI.

A: Brett Tighe reiterated that AI is still immaterial to the FY '27 outlook.

Q: Junaid Siddiqui at Truist asked if agentic workloads increase the strategic importance of Privileged Access Management.

A: Todd McKinnon argued that PAM is too narrow for the broad needs of agentic identity, which requires a broader IDP foundation.

Q: William Vandrick at Scotiabank asked if the Agent SSO release is a way to upsell the broader Okta for AI agents product.

A: Todd McKinnon explained that Agent SSO spreads the core identity foundation, which serves as a base for future upsells like governance and policy management.

Q: Jack at UBS asked about the outlook for the public sector given the IL-5 certification and DoD Zero Trust mandate.

A: Todd McKinnon stated that public sector is a significant opportunity, currently less than 10% of business, and that the environment is normalizing after a slow start to the year.