Okta's AI Security Story Shifts from Pipeline to Bookings
Record non-Q4 bookings, 30% new product mix, and a $1B buyback — but AI is still immaterial, just less so.
OKTA · Earnings Call · 2026-08-26
The AI Story Moves from Pipeline to Bookings
For two quarters, Okta has been talking up Okta for AI agents as the next big thing, but the pipeline was ahead of the revenue. That changed this quarter. Management reported a record non-Q4 bookings quarter, with 30% of bookings now coming from new products, and dozens of AI deals closed, including several million-dollar-plus deals. Todd McKinnon was characteristically blunt about the numbers: “It's still very early. We do thousands of transactions every quarter. And as exciting as that is, Okta for AI agents, it's still -- it's too small to show up in the numbers right now.” — Todd McKinnon, Chief Executive Officer and Co-Founder · 2026-08-26 But the tone has shifted from possibility to proof of concept. Brett Tighe echoed this on the guidance call: “Still immaterial. Still very small. We're very early innings.” — Brett Tighe, Chief Financial Officer · 2026-08-26 The difference is that the AI security story is now leading to direct revenue, even if small. The company's positioning as the neutral identity layer for agents is starting to resonate, with a concrete example of a customer going from 50 to 1,500 Claude agents in weeks, a vivid illustration of the urgency.Enterprise Strength and Platform Consolidation
Beyond AI, the core business is accelerating. Annual contract value growth picked up for both workforce and customer identity, and large enterprise momentum is unmistakable: customers with $1M+ ACV grew over 20% to more than 600. Eric Kelleher highlighted that “81% of the CISOs that we talk to are aware right now that they are exposed with agents deployed in their enterprises where they do not yet have an adequate security platform in place.” — Eric Kelleher, Senior Executive (likely Chief Revenue Officer or similar) · 2026-08-26 This awareness is driving conversations that often expand beyond AI into broader identity consolidation. Todd gave a concrete example: a customer evaluating Okta for AI agents ended up standardizing on Okta across an acquired company's legacy identity, because the AI conversation catalyzed the decision. The Identity platform breadth is the wedge.Financial Discipline and Prudent Guidance
Despite the optimism, Brett Tighe is holding the line on guidance philosophy, maintaining the “get closer to the pin” approach. The company raised full-year revenue growth slightly to 10-11% and maintained non-GAAP operating margin at 26%. Free cash flow margin guidance of 28-29% reflects strength, but the shift of professional services to GSI partners is a deliberate trade-off for longer-term growth. As Brett said: “We're applying the same guidance philosophy we have for several quarters now. We've talked about getting closer to the pin.” — Brett Tighe, Chief Financial Officer · 2026-08-26 The company's free cash flow margin already sits healthy at 20.8% of revenue, with operating margin at 10.2% — a testament to disciplined execution. Free cash flow margin (less SBC) reached 20.8% in Q2, up 4.5pp year-over-year, reflecting the company's ability to convert revenue into cash while still investing in AI.Competition and Neutrality
The competitive landscape is getting crowded, with Microsoft, Salesforce, and ServiceNow all pitching their own agentic security visions. Todd's response was pointed: “I think Microsoft is copying us... it's really hard to be neutral.” — Todd McKinnon, Chief Executive Officer and Co-Founder · 2026-08-26 He argued that Okta's neutrality is a structural advantage because customers don't want to be locked into any single cloud or model provider. This theme has been consistent across calls, but now it's backed by partnerships like Anthropic's support for Cross-App Access, which Todd called a “huge step forward.” The company is positioning itself as the connector across a fragmented ecosystem, not as a control tower that dictates the stack.Our solution has to be clarity. Customers are confused because there's so much excitement and so much opportunity in AI. It's the natural tendency of every vendor to say, what we are doing is and what we've done in the past is critical to AI.