Okta Lifts Outlook as CEO Notes Economic Conditions ‘Better Than Expected’

Okta, the leading identity software company, saw its shares surge by 7% in extended trading on Tuesday after the firm reported quarterly results that outperformed Wall Street’s expectations. The company’s fiscal second-quarter earnings, which ended on July 31, highlighted strong financial performance and optimistic future guidance despite broader macroeconomic uncertainties.

According to the results, adjusted earnings per share came in at 91 cents, surpassing analyst expectations of 84 cents. Revenue was reported at $728 million, ahead of the projected $711.8 million. This represented a 13% year-over-year growth in revenue. Net income rose significantly to $67 million (37 cents per share) from $29 million (15 cents per share) during the same quarter last year. The growth underscores the company’s strong momentum in expanding its identity and security solutions across both commercial and government markets.

Okta’s co-founder and CEO, Todd McKinnon, emphasized in an interview with CNBC that business conditions turned out to be more favorable than previously anticipated. He described the results as “much better than we thought,” reinforcing confidence in the company’s resilience against economic uncertainties. Earlier in May, Okta had lowered its outlook due to macroeconomic challenges, but current performance suggests the company is navigating these headwinds effectively.

Despite some delays and restructuring of contracts with U.S. government civilian agencies—partly due to President Donald Trump’s launch of the Department of Government Efficiency in January—renewals across the federal sector remained strong. This was highlighted by Okta’s CFO, Brett Tighe, who reassured analysts that the mission-critical nature of Okta’s security and identity solutions continues to drive renewal strength across government clients.

Okta’s net retention rate—a measure of how much existing customers are expanding their spending—stood at 106%, unchanged from the previous quarter. McKinnon pointed out that as artificial intelligence becomes more integrated into corporate environments, companies will increasingly need software to manage the identities of AI agents. This is expected to drive further expansion with existing customers. Additionally, Okta plans to encourage adoption of its software suites, which bundle multiple products, to accelerate revenue growth.

For the upcoming fiscal third quarter, Okta forecasts adjusted earnings per share of 74–75 cents and revenue of $728–$730 million, closely aligned with analysts’ estimates of 75 cents EPS and $722.9 million in revenue. The company also projects current remaining performance obligations—essentially its subscription backlog—to be $2.260–$2.265 billion, slightly above consensus estimates of $2.26 billion.

Looking further ahead, Okta raised its fiscal 2026 forecast, signaling renewed confidence. The company now anticipates adjusted earnings of $3.33–$3.38 per share with revenue between $2.875–$2.885 billion, compared with the prior forecast of $3.23–$3.28 per share and $2.85–$2.86 billion revenue. Analyst consensus had expected $3.28 EPS on $2.86 billion in revenue, meaning Okta’s outlook is more optimistic than market expectations.

Strategically, Okta is also growing through acquisitions. On Tuesday, the company announced an agreement to acquire Israeli startup Axiom Security, which specializes in data access management. Financial details were not disclosed. This move is expected to enhance Okta’s product offerings and strengthen its competitive positioning in identity and security markets.

Meanwhile, competition in the cybersecurity space is intensifying. Palo Alto Networks, which already has a partnership with Okta, recently announced plans to acquire Okta’s rival CyberArk in a $25 billion deal. McKinnon criticized Palo Alto’s strategy of consolidating multiple cybersecurity services under one vendor, arguing that customers need flexibility and choice rather than being locked into a single provider for all their security needs.

By Tuesday’s market close, Okta’s shares had gained 16% year-to-date, compared with an 11% rise in the tech-heavy Nasdaq index, reflecting investors’ growing confidence in the company’s performance and future outlook.