Okta’s shares rose sharply after the company delivered a second-quarter performance that beat expectations and increased its full-year forecast. Behind the momentum is a clear shift in customer priorities: AI identity security is moving from a niche concern to a mainstream requirement as more organizations prepare to deploy AI agents that can act on their behalf.
In extended trading, Okta stock climbed by more than 19% to above $160, following a regular-session close at $134.42. The rally reflects both operational strength in the quarter and a more optimistic outlook for the fiscal year.
Stronger Q2 results and raised guidance
For the quarter ended July 31, Okta reported revenue of $805 million, an 11% increase compared with the same period a year earlier. Subscription revenue reached $793 million, up 12%, reinforcing that demand continues to concentrate in recurring services rather than one-time revenue.
Profitability also improved. Okta posted GAAP net income of $116 million (65 cents per diluted share), up from $67 million (37 cents per share) in the prior-year quarter. On an adjusted basis, earnings were $1.05 per share, compared with 91 cents a year earlier.
Equally important, the company raised its full-year fiscal 2027 forecast. Okta now expects annual revenue between $3.216 billion and $3.226 billion, representing growth of 10% to 11%.
Backlog growth signals sustained demand
Beyond the headline results, Okta highlighted customer commitment through subscription backlog metrics. The company’s subscription backlog, measured as remaining performance obligations (RPO), increased 17% to $4.86 billion. It also reported current remaining performance obligations (cPRO)—expected to be recognized over the next 12 months—rising 14% to $2.59 billion.
These figures matter because they suggest that demand is not only present today, but also continues to build for the periods that follow. In practical terms, stronger RPO and cPRO can indicate that customers are signing up for future identity security capabilities rather than pausing purchasing decisions.
Cash flow and operating income improvement
Okta’s results also showed strength in cash generation. Operating cash flow increased to $234 million, up from $167 million in the prior-year comparison. Free cash flow climbed to $227 million, compared with $162 million in the second quarter of fiscal 2026.
On the operating side, GAAP operating income more than doubled to $107 million. Together, these changes help explain why investors responded positively to the quarter.
Why AI identity security is gaining traction
Okta’s management tied the stronger outlook to a trend that is increasingly hard to ignore: customers want better ways to secure identities and permissions in environments where AI agents can connect to systems, access sensitive information, and perform actions.
Traditional workforce and customer identity management remains important. However, Okta described an expansion of focus beyond those basics toward protecting AI agents—systems that may act independently and require clear governance over what they can access and do.
As AI agents move from experimentation into real deployments, the identity layer becomes a control point. Without appropriate authentication, authorization, and monitoring, organizations risk granting agents access that is too broad—or failing to detect suspicious activity once an agent is already operating.
What Okta says it is enabling for AI agents
Okta co-founder and CEO Todd McKinnon emphasized the need for trusted identity and explicit controls for each agent. In his view, as AI changes how technology layers work, each agent should come with a reliable identity foundation and guardrails defining its permissions.
According to Okta, it helps organizations in several steps of an agent rollout:
- Discover AI agents within the environment.
- Secure connections between agents and enterprise systems.
- Govern what agents can access and what actions they are allowed to perform.
- Respond when problems arise or suspicious behavior is detected.
Okta also points to specific offerings aimed at agent-focused deployments. The company includes products such as Okta for AI Agents and Auth0 for AI Agents, which are intended to support discovery, connection security, permission governance, and response to suspicious activity.
Security expansion through the Permiso acquisition
Okta is also strengthening its identity security capabilities through acquisition. The company announced an agreement in July and reported that the transaction has now closed.
Permiso Security provides a cloud-native platform designed to detect and mitigate threats involving human, non-human, and agentic identities across multi-cloud environments. Okta said this extends its reach into identity threat detection and response by improving visibility into suspicious behavior that can occur after authentication.
Okta plans to combine Permiso’s runtime detection and identity posture management capabilities with its existing identity security platform. The company also said that Permiso’s P0 Labs threat research team will join Okta’s research organization.
For teams thinking about AI identity security, this direction is significant: agent risk may show up not only at login or initial authorization, but during ongoing runtime activity—when an agent interacts with systems and data based on the access it has been granted.
What this shift means for enterprise security leaders
If you’re responsible for identity and access management, the recent results underline a broader message: AI agent adoption is likely to accelerate pressure on identity security programs. Organizations that previously focused primarily on user authentication and standard access policies may now need to treat AI agents as first-class actors.
That can translate into practical priorities such as:
- Defining identities and permissions for agents with clear boundaries.
- Monitoring agent connections to enterprise resources.
- Detecting unusual behavior after authentication, not just at sign-in.
- Building response processes that can act quickly when something goes wrong.
Okta’s emphasis on discovery, governance, and response maps to those needs, especially as AI agents become more autonomous.
Bottom line
Okta’s latest quarter delivered both strong financial performance and an upward adjustment to its fiscal outlook. With revenue growth, improving cash flow, and growing backlog metrics, the business momentum is evident.
Just as important is the narrative behind the numbers: Okta is positioning its platform for a world where AI agents need trusted identities and enforceable controls. With growing market demand for AI identity security, and with additions to its threat detection capabilities through the Permiso acquisition, the company appears focused on helping customers secure agent-driven workflows safely and at scale.
