Okta Q1 Earnings Call Highlights

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Okta (NASDAQ:Okta) executives said the identity security company began fiscal 2027 with strong first-quarter momentum, citing large enterprise demand, partner engagement and contributions from newer products, while emphasizing artificial intelligence agents as a major emerging opportunity for the business.

Chief Executive Officer and Co-Founder Todd McKinnon said Okta’s core business remained durable across both the Okta and Auth0 platforms. He told investors that the company’s AI strategy was the top area of interest among customers and investors, describing AI agents as “the fastest-growing identity in the enterprise, but also the least governed.”

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McKinnon said Okta is positioning itself to manage AI agents as “first-class identities” within existing identity management systems. He said enterprises will need to answer three questions: where their agents are, what they can connect to and what they can do.

AI Agent Products Draw Early Pipeline Interest

Okta for AI Agents became generally available last month, according to McKinnon. The product is designed to give enterprises a control plane to discover, govern and manage agents. Auth0 for AI Agents is aimed at developers building secure agents into B2B, B2C and internal applications.

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McKinnon said pipeline generation in the first quarter was strong, helped in part by the two AI agent products. However, he cautioned that the products did not materially contribute to first-quarter results and are not a significant part of the company’s guidance.

“It’s still early,” McKinnon said. “They’re not materially contributing to the business in Q1.” He added that Okta is investing heavily in research and development around the opportunity.

Chief Financial Officer Brett Tighe said early AI-specific deals are “significantly larger” than the company’s average deal size, while noting that the market remains in its early stages. McKinnon said the AI pipeline is “bigger than anything we’ve ever seen,” but added that the challenge is converting that pipeline into revenue.

New Products Account for a Larger Share of Bookings

McKinnon said Okta’s newer product portfolio represented about 25% of first-quarter bookings, up meaningfully from the same quarter last year. He also said Okta sees a 40% annual contract value uplift when new products are included in a deal.

Okta Identity Governance was again the leading contributor among the company’s new products, according to McKinnon. President and Chief Operating Officer Eric Kelleher said governance has evolved from primarily being a cross-sell product to also serving as a landing product for new customers. He said Okta is seeing sizable opportunities tied to governance, including displacements of existing systems.

Kelleher also pointed to momentum in privileged access, while acknowledging that the product is earlier in its maturity curve than governance. He said Okta continues to invest in the portfolio, including capabilities added through the company’s acquisition of Axiom Security.

Enterprise and Partner Activity Strengthen

Tighe said Okta’s go-to-market organization showed improved performance after the company’s prior specialization of sales teams into Okta sellers focused on security and IT buyers, and Auth0 sellers focused on developer buyers. He cited increased sales productivity, strong pipeline build and low account executive attrition.

The company also reported improved partner activity. Tighe said partner-sourced bookings increased meaningfully in the quarter and included multiple deals worth more than $1 million. He said the decision to shift more professional services work to partners, particularly global systems integrators, is intended to increase partner-sourced business.

McKinnon said Okta is not stepping away from services, but instead shifting its internal services team toward architectural and consulting work while relying on global systems integrators for scale.

Large customers remain a major focus. Tighe said large customers now represent 85% of annual contract value, compared with a prior level of 80% referenced by analysts on the call. He attributed the shift to years of investment in large accounts and said the company saw growth among customers spending more than $100,000 and more than $1 million.

Guidance Calls for High-Single-Digit Revenue Growth

For the second quarter of fiscal 2027, Tighe said Okta expects:

• Total revenue growth of 9%.
• Current remaining performance obligation growth of 11%.
• Non-GAAP operating margin of 26%.
• Free cash flow margin of 20% to 21%.

For the full fiscal year 2027, Okta expects total revenue growth of 9% to 10%, non-GAAP operating margin of 25% to 26% and free cash flow margin of 27% to 28%.

Tighe said the full-year revenue outlook includes about a one percentage point impact from the company’s decision to shift more professional services business to partners. He said the free cash flow margin outlook includes about a one point impact from lower interest income due to the stock repurchase program and plans to settle remaining convertible notes in cash.

Balance Sheet and Buybacks

Okta ended the quarter with approximately $2.6 billion in cash equivalents and short-term investments, Tighe said. He noted that the company’s convertible notes mature next month and that Okta plans to settle the remaining $350 million principal amount in cash.

During the first quarter, Okta repurchased and retired just over 3 million shares for a total cost of $241 million. Tighe said $680 million remains under the $1 billion repurchase program launched in January.

Executives repeatedly framed identity security as a foundational area of spending as enterprises adopt AI agents. McKinnon said agentic AI is raising Okta’s strategic importance with customers and contributing to broader interest in governance, privileged access, posture management and identity infrastructure.

“We have the right team and the right organization to convert this huge pipeline,” McKinnon said near the end of the call.

About Okta (NASDAQ:Okta)

Okta, Inc is a publicly traded provider of identity and access management solutions, headquartered in San Francisco, California. Founded in 2009 by Todd McKinnon and Frederic Kerrest, the company completed its initial public offering in April 2017. Under the leadership of McKinnon as chief executive officer and Kerrest as chief operating officer, Okta has grown into a leading vendor in the cybersecurity space, focusing on secure user authentication, single sign-on and lifecycle management for digital identities.

At the core of Okta's offering is the Okta Identity Cloud, a suite of cloud-native services that enable organizations to manage user access across web and mobile applications, on-premises systems and APIs.

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