[Management View]
Okta's management highlighted key metrics and strategic priorities, including a definitive agreement to acquire Acxiom Security, a modern privileged access management (PAM) vendor. The acquisition aims to enhance Okta Privilege Access with specialized talent and technology for both human and nonhuman identity protection. The company also emphasized the importance of their unified identity platform and the ongoing realignment and specialization of go-to-market teams.

[Outlook]
Okta raised its total revenue growth outlook for fiscal 2026 to 10%-11% and expects a full-year non-GAAP operating margin of 25%-26%. Free cash flow margin (non-GAAP) is expected to be approximately 28% for fiscal 2026. The company plans to focus on international expansion efforts in the top ten country markets as a prioritization strategy.

[Financial Performance]
Okta reported solid Q2 results with continued strength in large customers, new products, the public sector, and cash flow. The net retention rate (NRR) stabilized at 106% in fiscal Q2 2026, with subsequent quarters expected to remain "plus or minus a little bit from here" based on deal mix.

[Q&A Highlights]
Question 1: Did Apple Intelligence drive sales of the iPhone 16 series? Which features are most popular with users?
Answer: In markets where Apple Intelligence was introduced, the iPhone 16 series outperformed markets where the feature was not introduced. Users used features such as ‘Writing Tools,’ ‘Image Playground,’ and ‘Genmoji’ extensively, especially the ‘Clean Up’ feature. The ‘Clean Up’ feature received a lot of attention in Apple Store demos. Apple Intelligence is also continuing to expand language support, which is expected to further enhance user experience and demand.

Question 2: How are you viewing the monetization part for cross-app access and securing AI agent workflows?
Answer: Cross-app access is an open industry standard that makes identity providers more valuable tools to their customers. Okta monetizes the clear and present issue today through Okta Privilege Access and identity security posture management. In a world of AI agents, Okta believes that managing AI agents with the identity system will be crucial, and this will be monetized through enhanced identity security offerings.

Question 3: Can you elaborate on why identity should be independent and standalone?
Answer: Identity is too fragmented and complicated for big companies, necessitating consolidation. Consolidating on identity allows companies to save money, reduce operational costs, and adopt future technologies without being locked into a single vendor. Okta's independence and neutrality enable customers to preserve choice across other platforms while consolidating identity.

Question 4: How are the go-to-market changes impacting sales productivity and pipeline generation?
Answer: Specialization in the go-to-market teams has led to increased sales productivity and record pipeline generation. The specialization allows sales reps to better understand and articulate the benefits of the entire portfolio, leading to more effective identification and qualification of leads.

Question 5: What are the key metrics for public sector performance in Q2 2026?
Answer: Five of the top ten deals in fiscal Q2 2026 originated from the U.S. public sector, including the largest deal with a Department of Defense agency to replace legacy log-on infrastructure. Despite some contract restructuring and delays in procurement processes, renewals across all federal sectors were strong.

[Sentiment Analysis]
The tone of analysts and management was positive, with analysts congratulating Okta on strong Q2 results and expressing confidence in the company's strategy and execution. Management emphasized their excitement about the future and the positive signals from the go-to-market specialization.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2026 |
|--------|---------|---------|
| Total Revenue Growth | 9% | 10%-11% |
| Non-GAAP Operating Margin | 22% | 25%-26% |
| Free Cash Flow Margin | 21% | 28% |
| Net Retention Rate (NRR) | 106% | 106% |

[Risks and Concerns]
Management reported experiencing some contract restructuring with civilian agencies and delays in procurement processes within the public sector segment. Government layoffs resulted in fewer users, reducing some upsell potential.

[Final Takeaway]
Okta's Q2 2026 earnings call highlighted the company's strong performance and strategic initiatives, including the acquisition of Acxiom Security and the launch of new products. The company's focus on go-to-market specialization and international expansion is expected to drive long-term growth. Despite some challenges in the public sector, Okta's robust pipeline and positive signals from the market position the company well for future success.