Okta Inc. (OKTA) Stock: Rallies on Strong Q2 Earnings Beat and Analyst Outperform Rating

TLDR

Table of Contents

Okta (OKTA) shares jumped over 5% premarket after beating Q2 fiscal 2026 earnings expectations with adjusted EPS of $0.91 vs $0.85 consensus
Revenue grew 13% year-over-year to $728 million, driven by 12% subscription revenue growth to $711 million
Subscription backlog increased 18% YoY to $4.152 billion, showing strong future revenue pipeline
Company raised full-year guidance for both revenue ($2.875-$2.885 billion) and adjusted EPS ($3.33-$3.38)
Mizuho maintained Outperform rating with $120 price target, citing strong execution and attractive valuation

Okta stock climbed over 5% in Wednesday’s premarket trading session. The identity and access management company delivered second-quarter fiscal 2026 results that exceeded Wall Street expectations.

The company reported adjusted earnings per share of $0.91 for the quarter. This beat the Fiscal.ai-compiled consensus estimate of $0.85. The result also marked an improvement from $0.72 in the same quarter last year.

Revenue reached $728 million for the quarter. This represented a 13% increase compared to the prior year period. Subscription revenue, which makes up the bulk of Okta’s business, grew 12% to $711 million.

Okta, $OKTA, Q2-26. Results:
📊 Adj. EPS: $0.91 🟢
💰 Revenue: $728M 🟢
📈 Net Income: $67M
🔎 Strength in new product adoption, public sector wins, and cash flow fueled a solid quarter. pic.twitter.com/6d0ayKV3Nf
— EarningsTime (@Earnings_Time) August 26, 2025

The revenue figure surpassed analyst expectations of $711.87 million. Okta’s performance demonstrates continued strength in its core identity management offerings.

CEO Todd McKinnon highlighted the company’s market position. “Okta’s unified identity platform is winning customers ranging from the world’s largest global organizations to massive government agencies,” he said.

McKinnon emphasized several bright spots in the results. “Our solid Q2 results are highlighted by continued strength in new product adoption, the public sector, Auth0, and cash flow,” he noted.

Strong Backlog Growth Points to Future Revenue

Subscription backlog provided another positive indicator for investors. The metric climbed 18% year-over-year to reach $4.152 billion. This backlog represents future revenue that Okta expects to recognize over time.

Current remaining performance obligations (cRPO) grew 13.5% year-over-year. This exceeded Wall Street’s expectations of approximately 10.5% growth. The stronger-than-expected cRPO growth signals robust demand for Okta’s services.

Mizuho analyst commentary noted solid execution and generally good public sector activity. Public sector performance had previously been an area of concern for the company.

Raised Guidance Reflects Management Confidence

Okta provided optimistic guidance for the third quarter. The company expects adjusted EPS of $0.74 to $0.75. Revenue is projected to fall between $728 million and $730 million.

These projections compare favorably to consensus estimates. Analysts had expected $0.74 in adjusted EPS and $725.78 million in revenue for Q3.

Management also raised its full-year outlook. The new revenue range sits at $2.875 billion to $2.885 billion. Full-year adjusted EPS guidance now stands at $3.33 to $3.38.

Both metrics exceed previous consensus estimates. Analysts had expected $2.862 billion in revenue and $3.28 in adjusted EPS for the full year.

Mizuho maintained its Outperform rating on Okta stock. The firm also kept its $120 price target unchanged. The analyst firm cited Okta’s position as a clear leader in identity management.

Mizuho highlighted the company’s attractive valuation metrics. Okta trades at less than 5 times calendar year 2026 estimated revenue. The stock also trades at 16-17 times free cash flow.

Retail sentiment on Stocktwits improved to ‘extremely high’ levels. The sentiment score reached 96/100 by early Wednesday. Message volume also increased to ‘extremely high’ levels.

Okta stock has gained more than 16% year-to-date. The company currently trades at $91.56 with a market capitalization of $16.1 billion.

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