Okta Surges 20% After Exceeding Q2 Earnings Estimates Amid AI Demand

Okta's stock jumped 20% in after-hours trading following its fiscal second-quarter results, which exceeded Wall Street expectations amid rising demand for AI-focused identity security.

The company reported adjusted earnings per share of $1.05, surpassing the estimated 97 cents, and revenue of $805 million, beating the $795 million forecast. This marked an 11% increase from $728 million a year earlier. Net income rose to $116 million, or 65 cents per share, compared to $67 million, or 37 cents per share, the previous year.

Okta expanded availability of its Okta for AI Agents tool across its customer base during the quarter. New products contributed 30% of total bookings, and the company secured multiple AI-related contracts, including a multi-million-dollar deal with a healthcare provider.

CEO Todd McKinnon highlighted the growing security challenges posed by agentic AI and said the market opportunity remains early stage.

"The network is the biggest cyber category now, but if you look out five or 10 years, with millions of agents running around, it's definitely going to be identity," McKinnon said. "Not trying to spread ourselves too thinly across all these other categories, I think it's really going to pay off."

McKinnon also cited recent high-profile incidents like the OpenAI Hugging Face hack as catalysts for increased interest in identity security.

To address new AI threats, cybersecurity firms including Okta have been actively acquiring startups to enhance their capabilities. Okta recently completed its acquisition of Permiso Security, a threat detection startup valued at about $200 million.

"You'll see us do more of these tuck-in things," McKinnon said. "We're not going to buy some big legacy company just to have more revenue."

Okta's subscription backlog, or remaining performance obligations, increased 17% year-over-year to $4.86 billion, beating analyst estimates of $4.70 billion. The portion expected to be recognized within the next 12 months rose 14% to $2.59 billion.

The company raised its full-year revenue guidance to a range of $3.22 billion to $3.23 billion, up from the prior forecast of about $3.19 billion to $3.21 billion and above an earlier estimate of $3.2 billion. Adjusted earnings per share are now expected between $3.90 and $3.94, compared to Wall Street’s estimate of $3.84.