Okta, the identity security firm, saw its stock pop roughly 15% in extended trading after its fiscal second-quarter results blew past expectations. The company says the surge in AI agents, the software programs that can act on their own, is driving a wave of demand for security products. As organizations deploy more autonomous systems, the need to verify and manage their access becomes a critical foundation.
The company's adjusted earnings hit $1.05 per share, beating the 97 cents analysts had expected. Revenue also came in strong at $805 million for the quarter, which was ahead of the $795 million projection.
That works out to an 11% jump in revenue compared to the $728 million the company pulled in during the same period last year. The bottom line looked even better. Net income was $116 million, or 65 cents a share, compared with $67 million, or 37 cents a share, in the same quarter last year. The improvement reflects both higher sales and disciplined cost management.
Okta also gave investors a reason to look further down the road. The company's remaining performance obligations, which is basically the backlog of subscription payments it expects to collect, increased by 17% from the prior year, reaching $4.86 billion. That beat the $4.70 billion analysts were looking for.
The backlog figure for the next 12 months also rose 14% to $2.59 billion. These figures signal that customers are committing to longer-term contracts, a positive indicator for recurring revenue stability.
The company isn't just cashing in on existing products. The company has made "Okta for AI Agents" - a tool for managing and securing AI agents - generally available to its entire customer base. New offerings made up 30% of all bookings in the quarter.
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Okta also reported that it completed numerous AI agreements, one being a multi-million-dollar contract with a healthcare company. This shift reflects a broader trend where identity management moves beyond human users to include machine identities.
Okta also finalized its acquisition of Permiso Security, a threat detection startup, for roughly $200 million on Wednesday. That fits with a strategy CEO Todd McKinnon described to CNBC as focused. "Not trying to spread ourselves too thinly across all these other categories, I think it's really going to pay off," he said. The deal enhances Okta's ability to detect and respond to threats across both human and non-human identities.
Okta isn't alone in riding this wave. Peers like CrowdStrike and Palo Alto Networks have hit record-high stock prices amid a wave of acquisitions across the cyber industry. The market is rewarding companies that can show they're ready for a world where software runs itself. As AI agents become more prevalent, the security layer that governs their actions is becoming a strategic imperative.
Identity security has become a critical foundation as organizations deploy more autonomous systems, and Okta's contract backlog suggests customers are making long-term bets on that shift. The Permiso acquisition adds threat detection capabilities that span both human and non-human identities, giving Okta a broader platform to sell into the AI era.
McKinnon acknowledged the opportunity is still "very early," but Okta is positioning itself for a long game. "You'll see us do more of these tuck-in things," he said, referring to small, strategic acquisitions. "We're not going to buy some big legacy company just to have more revenue." The company raised its full-year revenue guidance to a range of $3.22 billion to $3.23 billion, up from the earlier forecast of $3.19 billion to $3.21 billion. Adjusted earnings are now projected at $3.90 to $3.94 per share, compared to the $3.84 consensus.
For your portfolio, the takeaway is about the shift happening under the hood of the AI boom. The hardware race gets the headlines, but the software that keeps those systems safe is where a growing pile of cash is landing. Okta's shares have already gained 55% this year, and if the company's bet on AI agents is right, the security layer could be one of the most durable ways to play this cycle.