Okta Stock Rises on Strong Q4 Earnings and AI-Driven Identity Security Demand

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Shares of Okta (NASDAQ: OKTA) experienced a significant increase following the release of its second-quarter financial results, which exceeded expectations, alongside a revised full-year outlook driven by rising demand for AI-focused identity security solutions.

Financial Performance

For the fiscal second quarter ending July 31, the identity security provider reported revenue of $805 million, reflecting an 11% year-over-year growth. Subscription revenue climbed 12% to $793 million. The company recorded GAAP net income of $116 million, or 65 cents per diluted share, compared to $67 million, or 37 cents per share, in the same period last year. On a non-GAAP basis, earnings reached $1.05 per share, up from 91 cents in the prior-year quarter. Okta’s subscription backlog, measured as remaining performance obligations (RPO), grew 17% to $4.86 billion. Current remaining performance obligations (cPRO), representing revenue expected within the next 12 months, increased 14% to $2.59 billion. Operating cash flow rose to $234 million from $167 million, while free cash flow climbed to $227 million from $162 million in the second quarter of fiscal 2026. GAAP operating income more than doubled to $107 million.

Strategic Shift Towards AI

The financial performance coincides with Okta’s strategic shift toward securing AI agents, which can autonomously interact with enterprise systems, access sensitive data, and execute tasks on user behalf.

Okta co-founder and CEO Todd McKinnon emphasized that AI agents require trusted identities and controlled access parameters. The company is developing tools such as Okta for AI Agents and Auth0 for AI Agents to enable organizations to identify agents, secure their connections, manage permissions, and detect anomalies.

Acquisition of Permiso Security

Okta also expanded its identity threat detection capabilities through the acquisition of Permiso Security, finalized in July. Permiso’s cloud-native platform identifies and mitigates threats involving human, non-human, and agentic identities across multi-cloud environments. The acquisition enhances Okta’s ability to monitor post-authentication suspicious behavior, with Permiso’s P0 Labs threat research team integrating into Okta’s security operations.

Revised Revenue Guidance

Following the strong quarter, Okta revised its fiscal 2027 revenue guidance to a range of $3.216 billion to $3.226 billion, reflecting 10% to 11% growth.