Hi everyone, welcome to Okta's Second Quarter of Fiscal 2026 Earnings Webcast. At around the same time that the earnings press release hit the wire, we posted supplemental commentary to the IR website. Today's meeting will include forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our financial outlook and market positioning. A reconciliation between GAAP and non-GAAP financial measures, and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalents, are available in our earnings release.
In today's meeting, we will quote a number of numeric or growth changes as we discuss our financial performance, and unless otherwise noted, each such reference represents year-over-year comparison. We are pleased to report solid Q2 results with continued strength with large customers, Auth0, new products, the public sector, and cash flow. They needed a single identity platform to unify workforce identity and scale with growth. In a move that we believe will further accelerate Okta Privilege Access growth, I'm delighted to announce that we've signed a definitive agreement to acquire Axiom Security, a modern PAM vendor.
Once we close the acquisition, which we anticipate will be later this quarter, we will support Axiom's customer base while we work to integrate their technology into Okta Privilege Access. At our Octane Conference next month, we will share how we are enabling every organization to build, deploy, and manage AI agents safely, securely, and at scale. I look forward to seeing all of you at Octane, and now here's Brett to cover the financial commentary and talk about how we're positioned for long-term profitable growth. My commentary will provide insights into our Q2 performance and then move into our outlook for Q3 and FY2026.
| Metric | Period | Current guidance |
|---|---|---|
| Total revenue growth | Q3 FY2026 | 9%-10% |
| Current RPO growth | Q3 FY2026 | 10% |
| Non-GAAP operating margin | Q3 FY2026 | 22% |
| Free cash flow margin | Q3 FY2026 | approximately 21% |
| Total revenue growth | FY2026 | 10%-11% (raised) (raised) |
| Non-GAAP operating margin | FY2026 | 25%-26% (raised) |
| Free cash flow margin | FY2026 | approximately 28% (raised) |
| Metric | YoY | Note |
|---|---|---|
| Customers over $1 million in ACV | up 15% (to 495) | Bigger customers getting bigger driven by upsell/cross-sell as new products are added |
| cRPO growth | 13% (referenced) | Strength across the board including enterprise and public sector |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Removal of macro/federal conservatism from guidance | Conservatism introduced last quarter for macro and federal uncertainty | Neither materialized; removed from outlook for remainder of fiscal year | Improving |
| Go-to-market specialization | Rolled out at beginning of fiscal year; prior specialization in public sector and U.S. SMB | Two quarters in; improved sales productivity and record pipeline; productivity gains in line with plan | Improving |
| Net revenue retention (NRR) | Downsell pressure expected to subside in back half | Stabilized around 106%; expected to stay plus or minus a little depending on business mix | Stable |
| Securing AI / agentic identity | — | Identity security fabric, cross-app access open standard, Auth0 for AI agents, NHI management as next frontier | Expanding |
| Independence and neutrality | — | Palo Alto Networks/CyberArk deal seen as validating identity's importance but not meaningfully changing competitive landscape | Stable |