OKTA FY3Q26: Marginal Improvement Similar to Last Quarter, but This Quarter Still Unlikely to Mark a Major Inflection Point

Okta’s Q2 performance came in largely inline with its bogey, showing signs of incremental improvement but not a material business inflection. Based on channel checks, Q3 appears broadly similar: growth is improving at the margin, but the new AI products are contributing very little at this stage. Only a limited subset of partners noted that Agentic Identity has entered POC stages, and revenue contribution remains immaterial. Most partners have not built meaningful acceleration assumptions into their forecasts. Feedback also indicates that pricing, deployment, and go-to-market motions around AI remain unclear—suggesting the company itself is not yet fully ready for scaled commercialization.

The strategic value of identity in the AI Agent era is becoming increasingly evident. Multiple ecosystem developments reinforce this trend, including acquisitions and product launches, including:

• Palo Alto Networks acquiring CyberArk (Jul-2025);

• ServiceNow announcing its intent to acquire Veza (Nov-2025);

• Twilio acquiring Sytch (Nov-2025);

• CrowdStrike launching NG Identity Security (Sep-2025);

• Cisco introducing a new IAM product (May-2025)

• Continuous updates from Microsoft in 2025, including expanded Passkey support, stricter MFA policies for external users, and using Security Copilot to enhance Entra’s IGA capabilities

Although Okta’s core business remains resilient and may even modestly re-accelerate, the competitive landscape has intensified. The company launched capabilities designed to manage AI Agents last quarter, but the solution is viewed as complex, suggesting that customer adoption may take longer.