AI security demand surges: Okta (OKTA.US) exceeds second-quarter performance expectations and raises full-year revenue guidance for the second time this year

According to reports from Zhihui Finance APP, on August 26 local time, Okta (OKTA.US), a global leading independent identity authentication service provider, announced its financial results for the second quarter of fiscal year 2027, ending July 31, 2026. Driven by the continued rise in enterprise demand for AI security, Okta’s performance for the quarter far exceeded market expectations, and the company raised its full-year revenue guidance for the second time this year. After-hours trading saw shares surge by more than 19% at one point.

The financial statements show that Okta's total revenue for the second quarter reached $805 million, an increase of 11% year-over-year, surpassing analysts’ expectations of $793 million. Of this, subscription revenue was $793 million, up 12% year-over-year. GAAP net profit for the quarter was $116 million, equivalent to earnings per share of $0.65, a substantial 73% increase over the $67 million ($0.37 per share) in the same period last year. Adjusted earnings per share were $1.05, higher than the market expectation of $0.97.

Subscription Backlog Orders Reach Record High

As a key measure of future income, Okta's Remaining Performance Obligations (RPO, i.e., subscription backlog orders) reached $4.858 billion, up 17% year-over-year, exceeding StreetAccount-surveyed analysts’ expectations of $4.7 billion. Of these, the current RPO (cRPO) expected to be recognized in the next 12 months was $2.585 billion, up 14% year-over-year, also surpassing analysts’ estimates of $2.51 billion. Okta’s Chief Financial Officer Brett Tighe stated that this quarter, both the core workforce identity and customer identity business achieved accelerated growth in Annual Contract Value (ACV).

AI Agent Identity Security Becomes Core Growth Engine

This quarter, Okta officially launched its "Okta for AI Agents" tool to all customers, designed to manage and secure the identity of AI agents. Okta CEO and co-founder Todd McKinnon said in an interview: “If we are to achieve $10 billion, $20 billion, or even $30 billion in revenue, catalysts like this are essential.”

The financial report shows that new products accounted for 30% of total orders for the quarter, and deals involving new products typically brought an approximate 40% boost in annual contract value. McKinnon revealed the company had signed dozens of AI-related deals, including a multi-million dollar contract in the healthcare sector. However, he also noted that new products such as Okta for AI Agents have not yet made a substantial contribution to the current remaining performance obligations.

Upward Guidance Shatters Slowdown Expectations

Based on its strong performance, Okta once again raised its full-year revenue guidance for the fiscal year 2027. The company now expects full-year revenue growth to increase from the previous estimate of 9%-10% to 10%-11%, with a full-year revenue target range of $3.216 billion to $3.226 billion. For the third quarter, the company expects revenue of approximately $815 million, representing roughly 10% year-over-year growth and surpassing analysts’ forecast of $808 million. This outlook dispels previous market expectations that Okta’s growth rate would slow to single digits starting from the second quarter.

Operational Efficiency Continues to Improve, Strong Cash Flow

In terms of profitability, Okta’s GAAP operating profit for the quarter was $107 million, accounting for 13% of total revenue, far exceeding the $41 million (6% margin) from the same period last year. Non-GAAP operating profit was $226 million, with an operating margin remaining at 28%. Operating cash flow reached $234 million (29% of revenue), and free cash flow was $227 million (28% of revenue), both showing significant growth compared to the same period last year.

At the end of the quarter, the company’s cash, cash equivalents, and short-term investments were approximately $2.3 billion. In addition, Okta repaid the remaining $350 million of convertible bond principal and repurchased approximately 1.5 million shares of stock during the quarter.

Boosted by strong earnings, Okta's share price soared more than 19% in after-hours trading to $160.5, hitting a new 52-week high. Since the beginning of the year, Okta's stock price has risen by approximately 55%. At the time of publication, the company's market capitalization was about $23.4 billion.