Okta Stock Jumps as AI Security Momentum Drives Record Bookings and Second Straight Guidance Hike

Okta shares jump 22% after Q2 earnings beat, AI-driven deals and raised guidance fuel optimism.

Investors piled into Okta shares on Thursday after the identity management specialist delivered a second-quarter earnings report that smashed analyst expectations and prompted management to lift its full-year outlook for the second consecutive quarter. The stock vaulted 22% to €141.32 in European trading, putting it within striking distance — roughly 1.9% — of its 52-week high.

The surge came after the company reported revenue of $805 million for the quarter ended July 31, an 11% increase year over year. Subscription revenue, the backbone of Okta's business model, grew 12% to $793 million. Adjusted earnings per share came in at $1.05, comfortably ahead of both the $0.91 posted in the prior-year period and the $0.97 consensus estimate. Net income for the quarter reached $116 million.

Big-Ticket Customers and AI-Fueled Deal Flow

A key driver of the momentum sits at the top of the customer pyramid. Okta grew its roster of clients with annual contract values exceeding $1 million by 20% to more than 600, while total remaining performance obligations climbed 17% to $4.86 billion. Roughly $2.59 billion of that backlog is expected to convert into revenue over the next twelve months.

Management pointed to artificial intelligence as a central catalyst, noting that AI-related deals are closing at higher average volumes than traditional contracts. New products contributed around 30% of total bookings during the quarter, with the company's "agentic AI security" push gaining particular traction — though executives acknowledged the financial contribution from that segment remains modest for now.

To cement its position in the AI security arena, Okta has been forging alliances with a who's who of the technology sector, including OpenAI, Anthropic, AWS, Cisco, Databricks, and Snowflake. The partnerships are designed to embed the company's identity platform more deeply into modern IT infrastructure. On the acquisition front, Okta completed its roughly $200 million purchase of cybersecurity firm Permiso Security on Wednesday.

Raised Guidance and Balance Sheet Discipline

The strong operating performance gave management the confidence to raise its full-year 2027 targets. The company now expects revenue in a range of $3.22 billion to $3.23 billion, with adjusted earnings per share projected between $3.90 and $3.94. For the current third quarter, Okta is guiding to revenue growth of approximately 10% and an operating margin between 24% and 25%.

The company paired its growth initiatives with continued financial prudence. During the quarter, Okta retired $350 million in convertible notes and repurchased 1.5 million of its own shares for $125 million. Cash and investments stood at roughly $2.3 billion at quarter-end.

Analysts Race to Update Price Targets

Wall Street responded swiftly to the print. Cantor Fitzgerald reaffirmed its "Overweight" rating and lifted its price target to $200, citing booking momentum and successful monetization of new products. Morningstar also made a dramatic adjustment, raising its fair value estimate from $124 to $200 on the strength of Okta's positioning in identity security and improved profitability.

The market's enthusiastic reception underscores a broader narrative: Okta appears to be transitioning to AI-powered security models faster than many had anticipated, while simultaneously expanding margins. With the stock now trading just shy of its prior peak, investors are betting that the combination of AI tailwinds, large-customer expansion, and disciplined capital allocation has more room to run.