Okta Earnings on Deck: Can Identity Security’s AI Playmaker Avoid a Breakdown Below $88

Okta (NASDAQ:OKTA), the identity security leader, will report its fiscal second quarter (FQ2 2026) earnings after the close on Tuesday, August 26. For investors, this is a crucial update not just on the company’s fundamentals, but on the broader demand for cybersecurity platforms positioned to secure the next wave of AI-driven enterprise adoption. Identity security has become central to corporate IT strategy as companies consolidate legacy tools into unified platforms, and Okta’s ability to execute here will determine whether it can regain investor confidence after a volatile year for the stock. Shares sit below key moving averages heading into earnings, with critical support at $88. A weak print or conservative guidance could risk an earnings gap lower, while a beat-and-raise quarter could reinvigorate the bullish case.

Analysts expect Okta to post adjusted EPS of $0.85 on revenue of roughly $711.8 million, both up about 10% year over year. Needham forecasts $711.9 million and $0.84, just above consensus, and believes Okta can outperform the high end of its revenue guide. Management itself guided Q2 revenue between $710 million and $712 million, implying 9.9–10.2% growth. Subscription revenue, the backbone of Okta’s model, is forecast at $696.6 million, while current remaining performance obligations (cRPO) are expected around $2.20 billion. Okta has topped both EPS and revenue estimates in every quarter over the past two years, but recent guidance conservatism has weighed on sentiment.

Several analysts have taken more positive stances into the print. Truist recently upgraded shares to Buy from Hold, raising its price target to $125, citing Okta’s all-in-one identity platform and momentum in $100K+ enterprise accounts. Truist sees potential tailwinds in identity governance and privileged access management, alongside emerging opportunities in AI-driven security. KeyBanc also flagged positive checks, including large new federal and Fortune 100 wins and encouraging adoption of Okta Verify by the Department of Defense. Stifel, meanwhile, trimmed cRPO forecasts but acknowledged management’s tendency toward caution. Across the board, analysts are calling identity one of the most strategic categories in cybersecurity, with Okta positioned as a consolidator.

Investors will focus on a few key metrics in tonight’s release. Subscription revenue growth and cRPO trajectory are front and center: cRPO growth slowed to 14% year over year in Q1, and guidance for 10–11% growth in Q2 disappointed the market. Net revenue retention (NRR) slipped to 106%, raising concerns about seat expansion and upsell momentum. Bookings metrics also decelerated. Management has emphasized its go-to-market specialization strategy as a long-term growth lever, but the near-term impact remains under scrutiny. Guidance will therefore be the biggest swing factor: analysts want to see either stable or slightly accelerating growth expectations for the second half of FY26.

Q1 provided a mixed picture. Okta reported EPS of $0.86 and revenue of $688 million, both ahead of consensus. The company delivered record operating profitability, a non-GAAP operating margin of 26%, and strong free cash flow. CEO Todd McKinnon highlighted progress in large enterprise accounts, strong Auth0 momentum, and traction in the U.S. public sector, with two of the top three deals from federal agencies. He also pointed to accelerating adoption of Okta’s governance portfolio and the growing role of AI in identity, citing new launches like Okta Identity Governance, Privileged Access, and Identity Threat Protection with Okta AI. CFO Brett Tighe noted solid pipeline trends and early positive signs from the new sales specialization model. Despite these wins, conservative cRPO guidance overshadowed the beat, and shares fell sharply after the release.

The strategic priorities remain clear: expand Okta’s unified identity platform, scale Auth0 in developer-led opportunities, deepen penetration in high-value enterprise accounts, and strengthen the public sector footprint. AI represents another major theme. Okta is positioning itself to secure “non-human identities” and support GenAI application security, which could emerge as new growth vectors in the medium term. Investors will also watch progress in Identity Governance and Access Management (IGA) and Privileged Access Management (PAM), both multibillion-dollar addressable markets.

The primary focus for investors tonight will be whether Okta can demonstrate stabilization in growth metrics and provide guidance that reassures on its second-half trajectory. A clear signal that seat count pressures and go-to-market transition headwinds are abating would help restore confidence. Conversely, further deceleration in cRPO or cautious commentary on customer budgets could reinforce fears of slowing growth in FY26.

Heading into earnings, Okta carries an average analyst price target of $120, compared to its current $92 stock price. With the shares down 5.6% over the past month and trading below key moving averages, the technical setup underscores the importance of tonight’s numbers. A beat in revenue and EPS, coupled with guidance that meets or exceeds expectations, could drive a recovery toward resistance levels. Anything less risks a gap down toward $88 or lower.

For a company at the crossroads of identity, AI, and cybersecurity, Okta’s results will serve as more than a quarterly check-in. They will shape the market’s view of whether Okta can reaccelerate into the mid-teens growth profile investors expect from leading security platforms—or whether conservatism and competitive pressures will keep it on the defensive.