Okta Smashes Earnings, Breaks Key Resistance — Cybersecurity Stock Poised to Run

Okta delivered a clean and confident fiscal second quarter, reinforcing momentum in the cybersecurity sector after Palo Alto Networks’ strong results last week. Shares of Okta jumped about 5% in early trading, breaking above their 200-day moving average at $96.50 and testing the $100 psychological barrier before pulling back slightly. The move puts the BUG ETF back on traders’ radar, as back-to-back beats from leading cybersecurity names underscore identity and security spending as resilient in an uncertain macro environment. From a technical perspective, Okta’s setup looks constructive, with a newly established base above key resistance levels hinting at more upside if execution continues.

Financially, Okta’s numbers spoke for themselves. The company posted adjusted earnings per share of $0.91, comfortably ahead of consensus estimates of $0.84. Revenue grew 13% year-over-year to $728 million, topping the Street’s $711.8 million forecast. Subscription revenue accounted for $711 million, continuing to anchor Okta’s recurring revenue profile. Net income was $67 million, or $0.37 per share, sharply higher than $29 million, or $0.15 per share, a year ago. On a non-GAAP basis, operating margin improved to 22%, reflecting greater efficiency in go-to-market execution.

One of the standout figures was current remaining performance obligations (cRPO), which rose 13.5% in the quarter, beating consensus expectations of about 10%. That figure, closely watched as a leading indicator of demand, reassured investors that new business and renewals remain robust despite ongoing macro uncertainty. Guidance for Q3 cRPO at 10% growth came in line with estimates, signaling continued stability. Analysts noted that five of the top 10 deals in the quarter came from the U.S. public sector, including the single largest deal of the quarter with a Department of Defense agency tied to the rollout of Okta’s myAuth product. Public sector exposure has become a recurring strength, reflecting Okta’s alignment with Zero Trust mandates across government clients.

Guidance reinforced the bullish tone. For the third quarter, management forecast revenue of $728–730 million versus consensus at $722.9 million, with adjusted EPS of $0.74–0.75, essentially in line with estimates. For the full fiscal year, Okta raised its outlook across the board: revenue now expected at $2.88–2.89 billion versus $2.86 billion consensus, and EPS at $3.33–3.38 compared with $3.28 expected. Free cash flow margin guidance was also raised by a full percentage point, with operating margins lifted by 50 basis points, showing confidence in continued leverage. Importantly, management removed some of the macro conservatism embedded in prior guides, signaling more confidence in pipeline and execution.

Analysts were broadly positive, with KeyBanc reiterating its Overweight rating and lifting its price target to $140, citing broad-based strength and better-than-expected cRPO growth. UBS maintained a Buy and $130 target, noting improved go-to-market execution and higher confidence in accelerating growth through specialized sales channels. Cantor Fitzgerald also kept an Overweight, pointing to momentum in new product areas such as Identity Governance, Privileged Access, and Identity Threat Protection. Even more neutral voices, such as Piper Sandler, acknowledged stronger execution relative to Q1 while maintaining a cautious stance on the pace of a second-half inflection.

The key drivers behind Okta’s outperformance center on both customer and product expansion. Enterprise adoption continues to climb, with management highlighting strong growth among customers with over $100,000 and $1 million in annual contract value. Cross-selling into large enterprise accounts has driven steady increases in net retention, which held at 106% for the quarter. New products such as Identity Governance, Privileged Access, and Okta AI-driven threat protection added meaningful contributions, validating management’s strategy to broaden the platform into a comprehensive identity security fabric. The recently announced acquisition of Axiom Security, a modern privileged access management (PAM) vendor, is expected to bolster this suite further, eliminating standing privileges and securing both human and nonhuman identities.

Investors should also note the emerging role Okta is playing in securing AI environments. Management emphasized the need for identity solutions to extend to AI agents, highlighting innovations like Cross App Access that control what AI agents can access across technologies. Interest from major partners, including AWS, Zoom, and Box, points to potential traction in this frontier use case. Okta’s leadership in consolidating identity across humans, devices, and AI agents positions it well for long-term relevance, even as AI adoption across enterprises is still early.

While the print was strong, there are issues for investors to track. The company acknowledged that contract restructuring and procurement delays in the civilian federal space created some near-term friction, even if renewals were strong. The guidance for Q3 cRPO at 10% suggests some deceleration, and analysts remain watchful on whether specialized go-to-market restructuring will consistently deliver results. Competition from larger platform players, including Palo Alto Networks’ recent move into identity via its CyberArk acquisition, will also be an ongoing storyline. However, management emphasized that Okta’s neutrality and focus as an independent identity provider remain differentiators.

In summary, Okta’s second quarter was another proof point that cybersecurity demand remains resilient, with identity security a growing priority. The company delivered across key metrics—beating on revenue, EPS, and cRPO—while raising guidance for the year and highlighting strong execution in both enterprise and public sector channels. Technicals are improving, with the stock breaking above the 200-day moving average and testing key resistance near $100. Combined with improving fundamentals, new product momentum, and an expanding role in AI security, the setup looks favorable for continued gains. For traders eyeing the cybersecurity space, the BUG ETF may offer a diversified way to play the trend, but Okta’s strong print makes it a compelling individual story as well.