Why Is OKTA Stock Rising Today? Okta Surges After Q2 Earnings Beat and Raised Guidance

Okta (OKTA) shares rose 19.69% in pre-market trading after the identity security company reported a second-quarter earnings beat and raised its full-year guidance.

What Did Okta Report?

For the quarter ended July 31, Okta delivered adjusted EPS of $1.05, beating the $0.96 consensus estimate by nine cents. GAAP EPS came in at $0.67, well above the $0.40 estimate. Revenue of $805 million, up 11% from $728 million a year prior, cleared the $793 million consensus.

Subscription revenue grew 12% to $793 million. Current remaining performance obligations rose 14% to $2.59 billion against a $2.51 billion estimate, and total subscription backlog reached $4.86 billion, up 17% year over year. Operating cash flow was $234 million, with free cash flow at $227 million.

The company also topped estimates on GAAP earnings, reporting net income of $116 million, or $0.65 per share, compared with $67 million and $0.37 per share a year ago.

Why Did Investors React?

The earnings beat was only part of the move. Okta raised its full-year FY27 adjusted EPS guidance to a range of $3.90 to $3.94, up from the prior guidance of $3.79 to $3.87. Full-year revenue guidance increased to $3.22 billion to $3.23 billion, above the previous $3.19 billion to $3.21 billion outlook.

Third-quarter revenue guidance of $813 million to $817 million also beat the $808 million estimate, and Q3 adjusted EPS guidance of $0.92 to $0.94 matched consensus expectations.

The key theme behind the numbers is AI-driven demand for identity security. Okta's CEO Todd McKinnon told investors that as AI agents transform every layer of technology, every agent needs a trusted identity and clear controls over what it can access and do. The company positioned itself as the leading independent and neutral identity provider, helping organizations discover agents, secure their connections, and govern their actions.

New product offerings accounted for 30% of total bookings in Q2, with deals featuring a new product showing roughly 40% higher annual contract values. The company also secured a landmark multi-million-dollar agreement with a major healthcare organization.

What Comes Next?

With the earnings results released after Wednesday's close, Thursday's pre-market session is the first extended look at price action. Pre-market liquidity is typically thinner than regular trading, and regular-session volume will provide a better read on whether this momentum extends.

The earnings call transcript revealed Okta expects 10% to 11% revenue growth in FY27 alongside a 28% to 29% free cash flow margin. Management also highlighted the Permiso acquisition as an acceleration of identity threat protection capabilities and discussed ecosystem standards including support for Cross-App Access.

Investors will want to see whether the AI-driven demand narrative holds up in the Q3 report and whether new product bookings continue to account for a meaningful share of total deal flow. The raised guidance signals management confidence, but the regular session will show whether the market's enthusiasm extends beyond the pre-market rally.