Key Takeaways Okta shares skyrocketed approximately 20% in extended trading following second-quarter results that showed revenue reaching $805 million, an 11% year-over-year increase that exc
Shares of Okta (OKTA) experienced a substantial surge of roughly 20% during after-hours trading on Wednesday following the identity and access management company’s release of fiscal second-quarter 2027 financial results that exceeded Wall Street’s expectations across key metrics.
The company reported quarterly revenue of $805 million, representing an 11% climb from the same period last year and outpacing the Street’s consensus forecast of $793 million. Adjusted earnings per share reached $1.05, comfortably beating analyst estimates of $0.96.
Chief Executive Officer Todd McKinnon highlighted the emerging role of AI agents in fueling customer demand. “Every agent needs a trusted identity and clear controls over what it can access and do,” McKinnon explained. The company achieved record bookings for any quarter outside of its traditional strong fourth quarter.
Current remaining performance obligations, which serve as an indicator of future revenue, expanded 14% to reach $2.59 billion. The enterprise identity platform now serves over 600 customers each generating annual contract values exceeding $1 million, representing growth of more than 20% compared to the prior year.
$OKTA Q2’27 EARNINGS HIGHLIGHTS
Revenue: $805M (Est. $795M)
; +11% YoY
FY27 Guide:
— Wall St Engine (@wallstengine) August 26, 2026
Recently launched products comprised approximately 30% of quarterly bookings, with Okta Identity Governance emerging as the standout performer. Transactions that featured at least one new product delivered average contract values roughly 40% higher than those without new product attachments.
Okta introduced Okta for AI Agents during the period, a specialized solution enabling organizations to discover, manage and secure artificial intelligence agents. The identity security vendor closed dozens of AI-focused transactions throughout the quarter, with several exceeding the $1 million threshold.
Leadership tempered near-term expectations, however. Chief Financial Officer Brett Tighe indicated that AI-driven revenue will likely remain minimal throughout fiscal 2027, with more substantial contributions potentially materializing in fiscal 2028 and beyond.
The company’s channel ecosystem proved instrumental in closing business. Partners participated in all 20 of the company’s largest transactions during the quarter, with its single biggest deal being entirely partner-sourced.
Okta also finalized the acquisitions of both Spera and Promeso during the quarter. The Promeso acquisition brings behavioral and post-authentication risk detection capabilities, including 400 native risk detections compared to just 90 in Okta’s current offering. Additionally, Okta secured Impact Level 5 authorization from the U.S. Department of Defense.
Unlevered free cash flow totaled $227 million, representing 28% of revenue and marking an improvement from the 22% margin recorded in the year-ago period. The company closed the quarter holding $2.3 billion in cash while eliminating all convertible debt following settlement of its remaining 2026 notes.
During the quarter, the company executed share repurchases of approximately 1.5 million shares for $125 million, leaving $555 million available under its $1 billion share buyback program.
Management elevated its full-year fiscal 2027 revenue outlook to a range of $3.216B-$3.226B, up from the previous guidance of $3.185B-$3.205B. The adjusted EPS forecast was similarly increased to $3.90-$3.94 from the prior range of $3.79-$3.87.
For the third quarter, management projects revenue between $813M-$817M, current RPO of $2.59B-$2.60B, and free cash flow reaching up to $185 million.
The analyst community maintains a Strong Buy consensus recommendation on OKTA stock, supported by 29 Buy ratings, four Hold ratings and one Sell rating issued over the past three months. The average analyst price target of $148.79 suggests approximately 11% upside potential from current trading levels.
The post Okta (OKTA) Stock Soars 20%: Is This Identity Security Leader Worth Buying Now? appeared first on Blockonomi.
