Okta Inc. (NASDAQ:OKTA) stock surged in Thursday’s premarket trading after the identity management company reported strong fiscal second-quarter results and raised its full-year outlook.
The company cited continued momentum across its Workforce and Customer Identity businesses, along with early demand for its artificial intelligence products.
Okta also recorded its strongest bookings quarter outside a fourth quarter. Strong pipeline conversion and expanded customer deals supported the results.
AI Deals Gain Momentum
Okta secured dozens of AI-related deals during the quarter. Those included a multimillion-dollar agreement with a Fortune 50 health care company.
Under the agreement, Okta will provide a unified platform for discovering, securing and governing human, nonhuman and AI agent identities.
The company also expanded partnerships with Anthropic, AWS, Cisco, OpenAI, Databricks and Snowflake. It added more than 25 Cross App Access integrations.
Anthropic named Okta the first identity provider to support Enterprise Managed Auth for Model Context Protocol connectors. The technology allows companies to centrally manage Claude’s access to enterprise applications.
Meanwhile, the number of customers with more than $1 million in annual contract value rose more than 20%. Okta now serves over 600 such customers.
Channel partners participated in all 20 of Okta’s largest second-quarter deals. That included the company’s biggest partner-sourced deal.
Okta CEO Todd McKinnon said AI agent security could eventually become the cybersecurity industry’s biggest category. The company closed dozens of AI deals during the quarter, including several worth more than $1 million. However, McKinnon cautioned that the opportunity remains in its early stages and is still too small to materially affect Okta’s results.
Earnings Beat, Outlook Raised
Okta reported adjusted earnings of $1.05 per share, beating the 97-cent analyst estimate. Revenue rose to $805 million from $728 million a year earlier, topping the $795.12 million consensus estimate.
The company ended the quarter with about $2.3 billion in cash, cash equivalents and short-term investments. It repurchased 1.5 million shares for $125 million, leaving $555 million under its $1 billion authorization.
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. The free cash flow forecast includes a similar impact from lower interest income.
For the fiscal third quarter, Okta expects revenue growth of 10%, current remaining performance obligation growth of 11% to 12% and an adjusted operating margin of 24% to 25%. It projects a free cash flow margin of 21% to 23%.
OKTA Price Action: Okta shares were up 19.55% at $160.69 during premarket trading on Thursday. The stock is trading at a new 52-week high, according to Benzinga Pro data.
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