Okta Surges 20% After Record Q2 Bookings and Raised Full-Year Guidance Powered by AI Security Demand

Okta reported fiscal second-quarter 2027 revenue of $805 million, up 11% year over year from $728 million and ahead of Wall Street estimates of roughly $794 million, driving shares up more than 20% in Thursday trading to a new year-to-date high. The company posted record Q2 bookings, with new products accounting for 30% of bookings, a surge the company attributed in part to its Permiso acquisition. Subscription revenue grew 12% and the company settled its remaining $350 million in convertible notes with cash, eliminating all convertible debt.

Large enterprise customers now represent 85% of total annual contract value, and net revenue retention stood at a robust 107%. Okta raised its full-year revenue growth guidance to 10-11%, and targets a 26% non-GAAP operating margin alongside a 28-29% free cash flow margin for fiscal 2027. Management cited accelerating enterprise demand for identity and agentic AI security platforms as the primary growth driver, though near-term financial contributions from AI products remain immaterial.

The results triggered a wave of analyst action: Bank of America upgraded Okta from Underperform to Neutral and more than doubled its price target to $170 from $75, BMO Capital Markets raised its target to $187 from $168, RBC lifted its target to $195, and Citizens set a new target of $180. The broader cybersecurity sector rallied in sympathy, with CrowdStrike jumping roughly 13-19% on its own beat-and-raise quarter and the First Trust Nasdaq Cybersecurity ETF rising 3%.