Okta stock surged 15% after the identity security company beat second-quarter earnings expectations and raised full-year guidance, signaling strong momentum in AI-driven security demand. The San Francisco-based company reported Q2 FY2027 revenue of $805 million, up 11% year-over-year, exceeding the analyst estimate of $793 million, and posted adjusted earnings per share of $1.05, beating the consensus forecast of $0.97.
Okta’s subscription revenue, which represents the vast majority of its business, grew 12% year-over-year to $793 million. The company also reported operating cash flow of $234 million and free cash flow of $227 million for the quarter, demonstrating strong profitability and cash generation as the business scales.
The company raised its full-year fiscal 2027 revenue guidance to $3.216 billion to $3.226 billion, representing 10% to 11% growth, and lifted adjusted EPS guidance to $3.90 to $3.94, up from prior expectations. CEO Todd McKinnon emphasized the opportunity in AI agents, stating that “as AI agents transform every layer of technology, every agent needs a trusted identity and clear controls over what it can access and do.”
Okta’s remaining performance obligations (RPO), a measure of contracted future revenue, grew 17% year-over-year to $4.858 billion, while current RPO expected to be recognized within 12 months grew 14% to $2.585 billion. This acceleration in contracted backlog suggests customers are committing to larger deals and longer-term partnerships with the company.
The earnings beat arrives as enterprises rapidly deploy AI agents across their operations, creating new security and identity governance challenges. Unlike traditional software users, AI agents require their own identity controls and access permissions to operate safely at scale. Okta has positioned its platform as the solution for managing what it calls “agentic identity”—the authentication and authorization framework for non-human entities. The company launched Okta for AI Agents earlier this year to address this emerging market, and early adoption signals suggest the product is resonating with large customers.
Analysts have remained broadly bullish on Okta’s positioning in identity security. The company operates in a market where enterprises view identity management as foundational infrastructure—a shift that has improved Okta’s ability to expand deals with existing customers and land new ones. Similar to other software companies that beat earnings, Okta’s ability to raise guidance signals management confidence in near-term demand and execution.
For Q3 FY2027, Okta expects revenue of $813 million to $817 million (10% year-over-year growth) and non-GAAP operating margin of 24% to 25%. The company is also benefiting from strong contributions from newer products like Okta Identity Governance, which helps enterprises manage access across hybrid IT environments and is increasingly being bundled into larger customer deals.
Sources
- Okta Investor Relations — Official Q2 FY2027 earnings announcement and financial results
- Investors.com — Okta earnings beat report and adjusted EPS detail
- SeekingAlpha — Post-earnings stock surge and agentic AI context
- Yahoo Finance — Earnings video coverage and revenue guidance raise
