Okta pops 19% after topping estimates as AI threat spikes demand for identity security

Okta shares surged 19% in extended trading after the identity software provider surpassed Wall Street's fiscal second-quarter estimates.

Here's how the company did compared to LSEG estimates:

Revenue rose 11% from $728 million a year ago, Okta said. Net income totalled $116 million, or 65 cents per share, up from $67 million, or 37 cents per share a year ago.

During the quarter, the company made its Okta for AI Agents tool for managing and securing agents widely available to all customers. New products accounted for 30% of total bookings, and Okta said it closed dozens of AI deals, including a multi-million-dollar deal with a healthcare company.

The growth of agentic AI and the rise of cyber hacks orchestrated by agents are forcing companies to invest in more tools to manage swarms of new identities.

CEO Todd McKinnon told CNBC that the agentic AI security opportunity is still "very early" and recent incidents, like the OpenAI Hugging Face hack, are only "catalyzing interest."

"Network is the biggest cyber category now, but if you look out five or 10 years, with millions of agents running around, it's definitely going to be identity," he said. "Not trying to spread ourselves too thinly across all these other categories, I think it's really going to pay off."

Against this backdrop, cyber companies have undertaken a massive acquisition spree to scale capabilities to meet new AI threats. That's driven up stock prices of peers like CrowdStrike and Palo Alto Networks to record highs. Okta shares have surged 55% this year.

Okta on Wednesday closed its deal for threat detection startup Permiso Security, valued at roughly $200 million. McKinnon said Okta will continue leaning into smaller acquisitions that complement its current stack.

"You'll see us do more of these tuck-in things," he said. "We're not going to buy some big legacy company just to have more revenue."

Remaining performance obligations, or subscription backlog, jumped 17% year over year to $4.86 billion, surpassing a $4.70 billion estimate from analysts polled by StreetAccount. Current remaining performance obligations, or subscription backlog to be recognized in the next 12 months, rose 14% to $2.59 billion.

The company bumped up its full-year guidance. Okta now expects revenue in the range of $3.22 billion and $3.23 billion. That's up slightly from the roughly $3.19 billion to $3.21 billion provided last quarter and a $3.2 billion estimate from LSEG.

Adjusted earnings are expected to range between $3.90 and $3.94 per share, versus a $3.84 estimate from Wall Street.

Okta stock chart