Okta Inc. (NASDAQ: OKTA) shares jumped 19% in premarket trading Thursday after the identity management company delivered a solid fiscal second-quarter performance and lifted its full-year forecast. The company pointed to continued strength in its Workforce and Customer Identity segments, plus early traction with its artificial intelligence offerings.
It was a standout quarter for bookings, with Okta recording its best performance outside of a fourth quarter. Strong pipeline conversion and expanded customer deals helped drive the results.
AI Deals Gain Momentum
Okta inked dozens of AI-related deals during the quarter, including a multimillion-dollar agreement with a Fortune 50 healthcare company. Under that deal, Okta will provide a unified platform for discovering, securing, and governing human, nonhuman, and AI agent identities.
The company also deepened partnerships with Anthropic, AWS, Cisco, OpenAI, Databricks, and Snowflake, and added more than 25 Cross App Access integrations. Notably, Anthropic named Okta the first identity provider to support Enterprise Managed Auth for Model Context Protocol connectors, a technology that lets companies centrally manage Claude's access to enterprise applications.
Customer momentum was evident: the number of customers with more than $1 million in annual contract value grew over 20%, bringing the total to more than 600. Channel partners were involved in all 20 of Okta's largest Q2 deals, including its biggest partner-sourced deal to date.
CEO Todd McKinnon sees a huge opportunity ahead. He said AI agent security could eventually become the cybersecurity industry's biggest category. The company closed several AI deals worth over $1 million each during the quarter, but McKinnon cautioned that the opportunity is still in its early stages and too small to materially affect Okta's financials right now.
Earnings Beat, Outlook Raised
Okta reported adjusted earnings of $1.05 per share, beating the 97-cent analyst estimate. Revenue came in at $805 million, up from $728 million a year earlier and above the $795.12 million consensus.
The company ended the quarter with roughly $2.3 billion in cash, cash equivalents, and short-term investments. It also repurchased 1.5 million shares for $125 million, leaving $555 million under its $1 billion buyback authorization.
Looking ahead, Okta raised its fiscal 2027 adjusted earnings forecast to between $3.90 and $3.94 per share, above the $3.84 estimate. It also lifted its revenue outlook to between $3.22 billion and $3.23 billion, compared with the $3.2 billion consensus.
The company expects full-year revenue growth of 10% to 11%, an adjusted operating margin of 26%, and a free cash flow margin of 28% to 29%. The revenue outlook includes an impact of about 1 percentage point from shifting more professional services work to global systems integration partners, while the free cash flow forecast reflects a similar impact from lower interest income.
For the fiscal third quarter, Okta projects revenue growth of 10%, current remaining performance obligation growth of 11% to 12%, and an adjusted operating margin of 24% to 25%. It also expects a free cash flow margin of 21% to 23%.
OKTA Price Action: Okta shares were up 19.55% at $160.69 during premarket trading Thursday, hitting a new 52-week high.
