Okta’s second quarter results were shaped by strong demand from large enterprise and public sector clients, as well as ongoing adoption of its new identity security products. Management cited robust contributions from offerings such as Okta Identity Governance, Okta Privilege Access, and Okta AI-powered threat protection. CEO Todd McKinnon highlighted that consolidating identity systems remains a strategic priority for customers, especially as organizations seek to simplify operations and boost security. Notably, Okta’s increased focus on go-to-market specialization—targeting specific buyer personas and market segments—helped drive record pipeline generation and improved sales productivity.
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Okta (OKTA) Q2 CY2025 Highlights:
- Revenue: $728 million vs analyst estimates of $711.6 million (12.7% year-on-year growth, 2.3% beat)
- Adjusted EPS: $0.91 vs analyst estimates of $0.85 (7.6% beat)
- Adjusted Operating Income: $202 million vs analyst estimates of $184.1 million (27.7% margin, 9.7% beat)
- The company slightly lifted its revenue guidance for the full year to $2.88 billion at the midpoint from $2.86 billion
- Management raised its full-year Adjusted EPS guidance to $3.36 at the midpoint, a 3.1% increase
- Operating Margin: 5.6%, up from -2.9% in the same quarter last year
- Annual Recurring Revenue: $2.85 billion vs analyst estimates of $2.81 billion (12.5% year-on-year growth, 1.3% beat)
- Billings: $720 million at quarter end, up 10.6% year on year
- Market Capitalization: $16.35 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Okta’s Q2 Earnings Call
- Brad Zelnick (Deutsche Bank): Asked how stabilized net revenue retention (NRR) and the removal of macroeconomic caveats shape future guidance. CFO Brett Tighe explained that macro headwinds have subsided, and NRR trends should stay steady, with minor fluctuations based on business mix.
- Matt Hedberg (RBC Capital Markets): Inquired about adoption trends among AI-native customers. CEO Todd McKinnon noted these organizations are growing quickly and require both workforce and agent security solutions, but their core needs mirror other segments.
- Gregg Moskowitz (Mizuho): Sought updates on upsell and cross-sell rates for SMB and enterprise customers, as well as early demand for newly launched product suites. CFO Brett Tighe and President Eric Kelleher indicated upsell momentum continues, especially as customers adopt more products through bundled suites.
- John DiFucci (Guggenheim Partners): Asked about the ongoing impact of recent go-to-market changes and whether guidance now aims for “closer to the pin” targets. Tighe acknowledged that prudence for macro headwinds has been removed, but transition costs from sales specialization are still factored into future projections.
- Annick Baumann (J.P. Morgan): Questioned growth drivers outside the U.S. public sector and how Okta plans to unlock international opportunities. Management cited large enterprise strength and a focused investment strategy in the company’s top ten international markets.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the pace of integration and customer uptake following the Acxiom Security acquisition, (2) the impact of sales team specialization on large deal momentum and pipeline conversion, and (3) customer adoption of new AI-focused identity products, particularly cross-app access and agent security features. Continued progress in public sector renewals and international expansion will also be key indicators of execution.
Okta currently trades at $92.60, up from $91.63 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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