Okta CEO: AI Agent Security Could Become Cybersecurity's Biggest New Market

Okta Inc. shares surged in premarket trading Thursday after the identity management company reported strong fiscal Q2 2026 results and raised its full-year guidance.

The company said its Workforce and Customer Identity businesses continue to see growth momentum, while early demand is emerging for its AI products.

Okta also recorded its strongest booking quarter outside of Q4. Strong pipeline conversion rates and expanded customer deals underpinned the performance.

AI Deal Momentum Builds

Okta closed dozens of AI-related deals during the quarter, including a multi-million-dollar agreement with a Fortune 50 healthcare company.

Under that agreement, Okta will provide a unified platform to discover, protect, and manage identities for humans, non-humans, and AI agents.

The company also expanded partnerships with Anthropic, AWS, Cisco, OpenAI, Databricks, and Snowflake. It added more than 25 cross-application access integrations.

Anthropic designated Okta as the first identity provider to support enterprise-managed authentication for Model Context Protocol connectors. The technology allows enterprises to centrally manage Claude's access to enterprise applications.

Meanwhile, the number of customers with annual contract value exceeding $1 million grew by more than 20%. Okta now serves over 600 such customers.

Channel partners participated in all 20 of Okta's largest Q2 deals, including the company's largest partner-sourced transaction.

Okta CEO Todd McKinnon said AI agent security could eventually become the largest category in the cybersecurity industry. The company closed dozens of AI deals in the quarter, several worth over $1 million. However, McKinnon cautioned that the opportunity remains early-stage and too small to materially impact Okta's results.

Earnings Beat, Guidance Raised

Okta reported adjusted earnings per share of $1.05, beating analyst expectations of $0.97. Revenue rose to $805 million from $728 million in the same period last year, surpassing the market consensus of $795.12 million.

The company ended the quarter with approximately $2.3 billion in cash, cash equivalents, and short-term investments. It repurchased 1.5 million shares for $125 million, leaving $555 million remaining under its $1 billion authorization.

Okta raised its fiscal 2027 adjusted EPS forecast to between $3.90 and $3.94, above the market expectation of $3.84. It also raised its revenue outlook to between $3.22 billion and $3.23 billion, versus a market consensus of $3.2 billion.

The company expects full-year revenue growth of 10% to 11%, an adjusted operating margin of 26%, and a free cash flow margin of 28% to 29%.

The revenue outlook includes an approximately 1 percentage point impact from shifting more professional services work to global system integrator partners. The free cash flow forecast includes a similar impact from lower interest income.

For fiscal Q3 2026, Okta expects revenue growth of 10%, current remaining performance obligation growth of 11% to 12%, and an adjusted operating margin of 24% to 25%. The company projects a free cash flow margin of 21% to 23%.

OKTA Price Action: Okta shares rose 19.55% in premarket trading Thursday to $160.69. The stock is trading at 52-week highs.