Okta beats forecasts & raises full-year revenue guidance

Okta reported second-quarter revenue of USD $805 million and raised its full-year revenue guidance, beating Wall Street expectations and sending its shares up nearly 20%.

Revenue rose 11% from a year earlier, while subscription revenue increased 12% to USD $793 million. Remaining performance obligations reached USD $4.858 billion, up 17%, and current remaining performance obligations rose 14% to USD $2.585 billion.

Profitability also improved. GAAP operating income rose to USD $107 million from USD $41 million a year earlier, while GAAP net income increased to USD $116 million from USD $67 million. Operating cash flow was USD $234 million and free cash flow was USD $227 million.

For the full year, Okta now expects revenue of USD $3.216 billion to USD $3.226 billion, up from its earlier outlook and broadly in line with the USD $3.23 billion figure investors highlighted after the results. It forecast non-GAAP operating income of USD $830 million to USD $840 million and free cash flow of USD $910 million to USD $930 million.

The quarter comes as Okta argues to customers and investors that digital identity will become more central to cyber security as businesses deploy more AI agents across their organisations. That view has gained traction as companies test software agents that can access systems and take actions with limited human involvement.

Security concerns around those systems have become more visible after incidents in which agents acted beyond their intended roles. That has sharpened interest in controls that determine what an agent is, what it can access and what tasks it is allowed to perform.

Okta is trying to place itself at the centre of that shift by extending identity tools traditionally used for employees and contractors to AI systems. Earlier this week, it made Agent SSO generally available, allowing companies to bring AI agents into the same identity framework used to manage workforce access.

Todd McKinnon, chief executive officer and co-founder of Okta, tied that strategy directly to the company's latest results and longer-term position in security.

"As AI agents transform every layer of technology, every agent needs a trusted identity and clear controls over what it can access and do," said Todd McKinnon, chief executive officer and co-founder of Okta. "As the leading independent and neutral identity provider, Okta helps organizations discover agents, secure their connections, govern their actions, and respond when something goes wrong, giving them the flexibility and control they need to deploy agents safely and at scale."

Okta also pointed to strength in its established workforce and customer identity businesses alongside newer products.

"Our Q2 performance was highlighted by accelerating cRPO, success with our largest customers, and strong profitability and cash flow," said Brett Tighe, chief financial officer of Okta. "Steady momentum from core Okta workforce and customer identity drove ACV acceleration in both businesses. Top-line growth also benefited from strong contributions from our portfolio of new products, led by Okta Identity Governance."

Acquisition push

Alongside the earnings report, Okta completed its USD $200 million acquisition of Permiso. The deal adds threat-detection technology to Okta's platform, giving it a broader role not only in managing access but also in spotting suspicious behaviour after access has been granted.

That matters because identity security is increasingly extending beyond log-in controls. As AI agents and machine identities proliferate, security teams are looking for ways to monitor whether legitimate credentials are being used in unexpected ways, particularly across cloud systems and automated workflows.

Okta ended the quarter with USD $2.299 billion in cash, cash equivalents and short-term investments. During the quarter, it settled the remaining principal amount of its 2026 notes for USD $350 million in cash, a move that affected interest income assumptions in its free cash flow outlook.

Investor focus

Investors appear to be weighing two stories at once: a company still delivering double-digit top-line growth and expanding margins, and a business trying to define a new phase of the security market around identity for humans, software and machines. The near-20% jump in the share price suggests the market was encouraged both by the quarterly beat and the improved full-year forecast.

For the third quarter, Okta expects revenue of USD $813 million to USD $817 million, implying year-on-year growth of 10%. It also forecast current remaining performance obligations of USD $2.590 billion to USD $2.600 billion, up 11% to 12%.

Its full-year revenue outlook includes about a one percentage point impact from accelerating a shift in professional services work to partners. Even with that headwind, the updated forecast points to continued growth as Okta tries to build its case that identity will become one of the defining categories in cyber security over the next decade, with millions of AI agents expected to come into use.