OKTA

Image source: The Motley Fool. Wednesday, Aug. 26, 2026 at 5 p.m. ET Senior Vice President of Investor Relations - Dave Gennarelli Chief Executive Officer and Co-Founder - Todd McKinnon Chief Financial Officer - Brett Tighe President and Chief Operating Officer - Eric Kelleher Dave Gennarelli: Hi, everyone. Welcome to Okta's Second Quarter Fiscal 2027 Earnings Webcast. I'm Dave Gennarelli, Senior Vice President of Investor Relations at Okta. Presenting in today's meeting will be Todd McKinnon, our Chief Executive Officer and Co-Founder; and Brett Tighe, our Chief Financial Officer. Eric Kelleher, our President and Chief Operating Officer, will join the Q&A portion of the meeting. Around the same time that the earnings press release hit the wire, we posted supplemental commentary to the IR website. Today's meeting will include forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our financial outlook and market positioning. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Forward-looking statements represent our management's beliefs and assumptions only as of the date made. Information on factors that could affect our financial results is included in our filings with the SEC from time to time, including the section titled Risk Factors in our previously filed Form 10-K. In addition, during today's meeting, we will discuss non-GAAP financial measures. Though we may not state it explicitly during the meeting, all references to profitability are non-GAAP. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalents are available in our earnings release. You can also find more detailed information in our supplemental financial materials, which include trended financial statements and key metrics posted on our Investor Relations website. In today's meeting, we will quote a number of numerical growth changes as we discuss our financial performance. And unless otherwise noted, each such reference represents a year-over-year comparison. And now I'd like to turn the meeting over to Todd McKinnon. Todd? Todd McKinnon: Thanks, Dave, and thank you, everyone, for joining us this afternoon. Our Q2 financial performance was driven by broad-based strength across our core workforce identity and customer identity platforms. Particular areas of strength were once again with large enterprises, partner engagement and contribution from our newer products. This afternoon, I'll walk through the strength of our core business, the momentum of our portfolio of new products and our investments in product innovation and breadth. And finally, with AI security remaining top of mind for our customers, I'll share the advancements we're making with AI product development and early customer wins. We were pleased to see an acceleration in annual contract value growth for both workforce identity and customer identity, driven by strong execution and sales productivity. Additionally, the emerging use of AI by organizations and threat actors alike has further elevated the role identity plays within a company's security posture. Organizations are accelerating their infrastructure modernization time lines to address this heightened threat environment, and we're seeing conversations that begin with securing AI broaden into identity modernization initiatives. Our portfolio of new products are an important and fast-growing component of our solution set. In Q2, new products represented approximately 30% of bookings. Okta Identity Governance was once again the leading contributor. On average, the ACV uplift when any of the new products are included in a deal is about 40%. Product innovation is a primary investment area aimed at accelerating top line growth. Those efforts have already resulted in faster product velocity, including advancements in our AI products and in the public sector. We're excited about the launch of Agent gateway, which enforces policy at run time and delivers vendor-neutral protection across platforms and clouds, including Claude Code, Cursor, GitHub Copilot, Salesforce Agentforce and any agent pointed at an MCP endpoint. The public sector has been one of our best-performing verticals over the past few years. We look to build on this momentum with the general availability of Okta for AI Agents-Core. With this new SKU, Okta became the first independent neutral identity platform to bring AI agent governance to highly regulated environments, including FedRAMP and HIPAA. We're also unlocking more U.S. federal opportunities with the recently earned Impact Level 5, or IL5, the highest level unclassified cloud authorization for the U.S. Department of Defense. Achieving IL5 authorization is a critical milestone as defense organizations aim to meet the DoD's 2027 Zero Trust mandate. In addition to our organic product innovation, we have a successful track record with our tuck-in acquisition strategy, which helps accelerate our product road map. We just completed the acquisition of Permiso, a cloud-native identity security platform that detects and mitigates threats across human, nonhuman and agentic identities in multi-cloud environments. Permiso will be integrated into a unified security offering with our existing ITP and ISPM solutions. The combination strengthens Okta's AI security offerings with enhanced visibility into autonomous agent behaviors and additional runtime controls to ensure secure agentic activity in real time. While there's been a lot of talk by other companies about identity security for AI, Okta has generally available products that are already delivering real value for our customers. Okta's proven leadership in identity uniquely positions us to secure the AI era. Identity is the primary control plane for securing AI and customers are extending the trusted foundation they already rely on with Okta's neutral, modern enterprise-grade identity platform to now cover agents. We continue to build on 3 unique advantages to help our customers navigate this shift: distribution, product breadth and neutrality. While adoption remains in its early stages, momentum is growing, and those advantages are translating into customer demand reflected in the dozens of AI deals we won in Q2. Our product breadth was a key driver in securing a multimillion-dollar Okta for AI Agents deal with a Fortune 50 healthcare company. AI was spreading across their organization, and they couldn't tell where their agents were, what those agents were connected to and what they could do. Okta will give them a single control plane to discover, secure and govern those agents, helping them meet strict HIPAA compliance requirements. Okta will manage their entire identity fabric, including agent governance, privileged access and identity security, helping to ensure every human, nonhuman and agent identity is managed. Our distribution advantage comes from the reach and trust we've built as the identity system of record for more than 20,000 customers. We saw it at work with a global business management consulting firm that was racing to put its own AI agents into production. After considering an in-house build, the firm chose Okta for AI agents for its single control plane for human and nonhuman identities, faster deployment and lower cost of ownership. Okta will carry the agent's identities through every handoff, binding the agents to the original employees' delegation with a verifiable record that can satisfy client and regulator requirements. Our neutrality was critical to an Okta for AI agents deal with one of the world's largest asset managers where AI was rolling out faster than their security team could govern. Thousands of agents from multiple vendors were running in production, creating risks the organization couldn't consistently see or control. Only Okta's independent and neutral platform could cover their heterogeneous environment from employees and devices to AI agents without vendor lock-in. Okta will provide visibility across all agents and enforce least privileged access so every agent gets only what it needs. The common theme across these 3 wins and the other AI deals we've closed is that customers want to move quickly without compromising on security and control. Okta for AI agents lets them do both by helping them discover, govern and protect every agent. More broadly, the fragmentation of the AI landscape creates significant opportunities for Okta. As enterprises deploy agents across models, clouds, applications and infrastructure, they need a neutral identity layer that can secure it all. That's why we partner with industry leaders, including Anthropic, which this quarter named Okta the first identity provider supporting Enterprise Managed Auth for MCP connectors. Now generally available, Enterprise Managed Auth enables IT teams to centrally authorize and govern how Claude connects to enterprise applications. We also recently expanded our work with AWS, Cisco, OpenAI, Databricks and Snowflake, alongside more than 25 new Cross-App Access integrations, providing a standardized way to govern how AI agents connect to a growing ecosystem of enterprise applications and resources. In just a few weeks, we'll talk more about AI security and product innovation at Oktane, our annual customer conference. We'll bring the market's leading minds together to lay out the industry blueprint, open standards and new innovations required for building the Secure Agentic Enterprise. In addition to the keynotes and product demos, we will host a Q&A for analysts and investors. Come join us in Las Vegas or join us online for the AI security event of the year. To wrap things up, we're pleased with the strength and durability of our core workforce and customer identity businesses, and we're enthusiastic about the early success we're having with our AI products as customers recognize our advantage as the leading neutral modern identity platform. It was a strong start to the first half of FY '27, and we look to build on our momentum as we move through this year and beyond. I want to thank the entire Okta team and our loyal customers and partners who put their trust in us every day. And now here's Brett to cover the financial commentary. Brett Tighe: Thanks, Todd, and thank you, everyone, for joining us today. Our strong Q2 financials build on the momentum we've generated over the past several quarters. We continue to focus on operational efficiencies throughout the organization while driving top line growth by investing in product innovation, go-to-market and our partner ecosystem. As a result, we experienced acceleration in many of our top line metrics while also maintaining very healthy profit and free cash flow margins. I'll provide insights into our Q2 performance and then move into our outlook for Q3 and FY '27. Q2 was a record bookings quarter for a non-Q4, driven by strong pipeline conversion and deal expansions. We continue to see productivity gains within our go-to-market organization, aided by our stable sales force that has low attrition and high AE tenure rates. Strength with large enterprise customers was punctuated by over 20% growth in $1 million-plus ACV customers. We now have over 600 customers with greater than $1 million in ACV. Additional areas of strength included our upsell and cross-sell motion and pipeline build. The investments we've been making into our partner ecosystem are resulting in positive outcomes for the business. When our partners are involved, our average deal size is bigger and the close rates improve. Channel partners were engaged in all of our top 20 deals in Q2, and our biggest deal of the quarter was partner sourced. At the beginning of this fiscal year, we made the decision to shift more of our professional services business to our GSI partners. This change is reflected in the decrease in Q2 professional services revenue to approximately 1% of total revenue. We believe this change will lead to greater long-term benefits to fuel top line growth by deepening the relationship with these important partners and increasing our business with large enterprises. Moving on to our balance sheet and capital allocation. We had another strong quarter of cash flow in Q2. While Q2 is typically our seasonal low for cash flow, it was much better than expected based on strong operating profitability and collections. We ended the quarter with a healthy balance sheet consisting of approximately $2.3 billion in cash, cash equivalents and short-term investments. In June, our convertible notes reached maturity, and we settled the remaining principal amount of $350 million in cash. Okta no longer has any convertible debt on the balance sheet. Over the course of Q2, we repurchased and retired approximately 1.5 million shares for a total cost of $125 million. $555 million remains under the $1 billion repurchase program. We continue to regularly evaluate Okta's capital allocation priorities to ensure we're well positioned to deliver sustainable long-term value to our shareholders. Now let's turn to our business outlook. We continue to take a prudent approach to forward guidance. For the third quarter of FY '27, we expect total revenue growth of 10%, current RPO growth of 11% to 12%, non-GAAP operating margin of 24% to 25% and free cash flow margin of 21% to 23%. For the full year FY '27, we now expect total revenue growth of 10% to 11%, non-GAAP operating margin of 26% and a free cash flow margin of 28% to 29%. As a reminder, the FY '27 revenue guidance includes about a 1-point impact related to a strategic decision to shift more of our professional services business to our GSI partners. In addition, the FY '27 free cash flow margin guidance includes about a 1 point impact related to lower interest income due to the stock repurchase program and our cash settlement of the remainder of the 2026 notes. To wrap things up, we're pleased with the first half of FY '27 and are optimistic about the trend we're seeing in the business. We're investing for growth while remaining disciplined with our cost structure. Our strong core business and growing portfolio of new products provides the foundation to extend Okta's leadership in identity security. We're well positioned to deliver profitable growth for years to come. With that, I'll turn it back to Dave for Q&A. Dave? Dave Gennarelli: Thanks, Brett. There's quite a few hands raised already, and I'll take them in order until the top of the hour. And in the interest of time, please limit yourself to one question. With that, we'll go to Eric Heath at KeyBanc. Eric Heath: Congrats on the strong results, Todd and Brett. Maybe sticking with the theme for Okta for AI agents. Todd, I was curious to hear just how material the Anthropic partnership you're having is contributing to the go-to-market and kind of the product maturity that you're delivering? And secondarily, maybe for you, Todd or Brett, but just the uplift you're seeing on these deals for Okta for AI agents and maybe just some sort of perspective on what the ratio is looking like in terms of the agents to humans thus far. Todd McKinnon: Yes. We're really excited about the quarter. It was an amazing quarter on a lot of fronts. Specifically, one of the highlights is that our place in the ecosystem. Our place in the ecosystem is super important and super strategic. And it's not just me saying that, I think it's in all these customer conversations. I'm having many, many customer conversations and flying around, meeting these customers that are trying to solve these security challenges in general, and particularly around AI agents. And they see us as like the natural -- naturally well positioned to secure this agentic future. And so we're going after that on all fronts. Okta for AI agents is the main product front there. But it's also -- in short term, we can solve these problems in a lot of different ways. We can help them roll out agents today. We can give them visibility. I think longer term is something we're working on as well. I think longer term, the entire industry needs to work more -- they need to work better together. The industry right now in security, everyone is coming at the customer saying they have the only answer. They can secure agents. They're going to be the one to do it. And the reality is it's going to take us all working together. And so Okta has been working on this. You know on these calls, the last 5 or 6 calls, we've talked about standards and ecosystem. And we made a huge step forward in terms of one of the main standards we've been working on, which is the standard we've talked about called Cross-App Access. And so the huge step forward this time is when the biggest AI agent in the world, Claude is supporting Cross-App Access. They released Enterprise Managed Auth, which is the first time an AI agent has been compatible with this protocol. And Okta is the first identity provider to support this protocol. Now it's an open protocol. So we hope every identity technology company supports it, and we hope every other AI agent supports it. And then also everyone in the resource side of the equation is starting to support it as well. We announced 26 top SaaS vendors are supporting from a resource perspective, this protocol. So this is one example of many things we're going to be doing in the ecosystem to make this whole world fit together better because that's what customers need. We need to stop everyone confusing the customer by saying one company is going to do it all and start defining how we can all work together to bring concrete solutions to these customers. In terms of like where the products stack up in the quarter, we had, as I mentioned, the quarter was strong across almost every dimension, particularly strong was the 30% of the new bookings were from new products. Okta for AI agents inside of that bucket, there were dozens of deals in the quarter, including several million dollar-plus deals, which is super exciting. But the reality is it's still very early. We do thousands of transactions every quarter. And as exciting as that is, Okta for AI agents, it's still -- it's too small to show up in the numbers right now. But going forward, especially over the next couple of years, we're super optimistic. We think this being the system of record for Agentic for agents in the enterprise and being the system of record for agent identity, in the fullness of time, it could be the biggest category of cyber. That's how bullish we are on it. It's going to take us some time to get there, but I think we're off to a good start. Brett Tighe: Yes. I would just add, Eric, like Todd said, we did close to $1 million deals in the quarter, and we've got dozens of customers. But what I said last time around, the average deal size for AI deals being bigger than the average deal size for the rest of Okta, that still remains the case. But like Todd said, it is very early on. We are still very -- it's a very nascent opportunity for us. And so looking forward to continuing to execute against that opportunity going forward. Dave Gennarelli: We'll take the next question from Jefferies. Grant Darling: This is Grant Darling on for Jo Gallo. Results were super impressive, and it was great to see those early AI security wins. I wanted to touch a little bit more on just competitive dynamics. Could you help us understand that scene right now? Maybe what are bake-offs looking like? Is competition more the Wild West? Are you seeing more existing customers going to you without bake-offs? Just anything on competitive dynamics would be helpful. Todd McKinnon: Two interesting trends there. First is that the biggest competitor is confusion. We're competing against confusion. So our solution has to be clarity. And customers are confused because there's so much excitement and so much opportunity in AI. It's the natural tendency of every vendor to say, what we are doing is and what we've done in the past is critical to AI. We have the answer. We have the one answer. And I think that confuses the customer because they have 17 vendor meetings and every vendor tells them they have the right answer. So one of the things we're very focused on is getting close to the customers and learning from them and pouring that quickly back into our product road map. And that process not only enables us to build a better product, a product that will deliver value to the customer and cut through the hype. It also that those experts on the ground help clarify in the customer's mind what needs to be done. And the simple fact is that it's a big trend. AI security is going to take a lot of different vendors working together. And we don't have all the answers. But what we do know is that there are some no regrets investments. We know that every customer is going to have to figure out where their agents are. They're coming from all over the place. They're going to have to figure out what they can connect to, and they're going to have to figure out what they can do. And no matter what happens at the model layer or the platform layer or the app layer or if applications build their own agents or they get disrupted with agents, what the companies build themselves, what -- that's all going to unfold what model is the best? Is it an open source model? Is it a frontier model, some comb -- that's all going to unfold as it will over the next several years. But the no regrets decision is you have to have this foundation of where are my agents, what can they connect to and what can they do? And this no-regret decision is what's leading to this momentum. It's leading to these dozens of deals, these million-dollar deals. And they look at us as they say, "Hey, most of the use cases for agents now, they're working on behalf of a user. They're automating workflows, helping users. And so it's a very natural place for the identity provider across the enterprise to step in there and answer these questions. Eric Kelleher: One thing I would add to that is in addition to the Agentic competition and the confusion, and Todd really well articulated the conversations we're having with customers right now on that front. In addition to that, the overall core business also had a very strong quarter in every category. And as we talked about our workforce strength and customer identity strength. And the competitive dynamics there, our differentiators remain the same as they've been. We have broad distribution with over 20,000 companies that already trust Okta to secure identity for their humans, to secure identity for their service accounts and having an adjacent conversation about how we are now also going to be able to secure identity for their agents as they're deployed is a natural extension for us, and it's how we can bring clarity to that overall conversation. So that distribution helps. Our neutrality has always been a key differentiator for us as well. You hear us talk here about how we have over 8,000 integrations. Todd talked earlier about the expansive partnerships we have in the AI space and with the frontier models and technology providers, the platform providers and the hyperscalers. Our customers know that their stack is going to evolve, and they know that they're going to need to work with all of these technologies because they're advancing so rapidly. And Okta is the neutral provider that allows them to work with all of that. And so the standards that Todd mentioned, the distribution we have, the neutrality that we have, all positions us very well to be able to win this next opportunity. Dave Gennarelli: Thanks, Eric. Next up, we'll go to John DiFucci at Guggenheim. John DiFucci: Todd and Brett and Eric, listen, subscription revenue growth has really stabilized over the last 4 quarters. And our calculations of new ACV, which is going to drive future revenue growth looks really strong for this quarter against the toughest comp of the year. I guess at the same time, you've talked a lot about AI and securing AI agents. And per our work, that message is really resonating well with customers and partners in the field. But you also say it's really early. And by the way, we hear that in the field, too. I guess I'm just curious, I think we're all curious, based on your expertise and experience, when do you think this is going to turn into meaningful revenue? I know you said you had some deals that -- and it sounds like it's starting. But do you think we're going to have to wait until something really unfortunate happens in the world? Or will corporate customers get ahead of this before something like that happens? Todd McKinnon: John, the quarter was really, really a successful quarter. The bookings in the quarter, you mentioned ACV. The bookings in the quarter were a record all-time for Q2. They're also, by the way, a record all-time for Q1 and Q3. So all-time record outside of Q4. And even if we had a competition for Q4, it would almost be on the podium, not quite, but close to be on the podium for Q4. So yes, we're very excited about the momentum. And like you said, the materiality of the AI contribution, the business is $3 billion roughly in revenue, and you saw the cRPO growth. It's a big number. And so we're optimistic about it moving the needle on that. And we think we're on the right path. And one interesting thing is that I'm not -- the conversations I have, it's kind of like a -- it's almost like an infrastructure foundational conversation. It's not necessarily like, oh, a breach happened and now we're reacting. So I think that's good for what you said because I don't want a big breach to like knock this all down, the industry. I want customers to proactively put these no regrets investments in place and then have the right foundation to be successful. So I'm optimistic that kind of we're on the right track there in terms of like clarifying the message for customers, having the right product in the market. And by the way, one of the things that's true and helping cut through the confusion is that we have a GA product. It's been generally available for a couple of months now. That's pretty rare actually. If you go around and ask all the vendors, is your product generally available? You get no a lot of the times or it's an acquisition that's kind of still running as an acquisition. So we have a generally available product. We've shipped 24 significant enhancements to that product in the last 2 months. We're moving fast. We're innovating. We're listening to customers. And we're trying as hard as we can to make sure we turn this into solid top line acceleration across the board as soon as possible. John DiFucci: So I guess maybe just real quick, Dave, on the same topic, Todd, like what percentage of your customers are you having these conversations with, with AI security? Is it just about all of them? Is it half of them? And because that -- just trying to understand timing a little bit. Todd McKinnon: We have -- one of the things we've put the organization in place to -- like I mentioned, we have a dedicated expert team in the field helping customers have these conversations. And as many smart, motivated people as we put in that team to have these conversations, we fill up their calendar. And they're working 6 days a week, 12 hours a day, and we keep adding people and keep filling up the conversations. And that's leading to this record pipeline we have. Last year, we talked about -- or last quarter, we talked about record pipe. The pipe is even bigger. And there's more pipeline. Now the question is how fast it will convert, right? And we don't have 4 years of history on conversion. So when we think about the future, there's obviously some degree of being prudent about how fast that's going to convert, but the pipeline is there. Now it's up to us to take this generally available product and convert it as fast as possible. Eric Kelleher: Yes. And John, this product went GA on April 30, right? So 90 days ago, so it's relatively new. But to your question around how many customers, a stat that might be valuable for you, and we published this, I think, with our posted commentary today, recent surveys we run across our customers, 81% of the CISOs that we talk to are aware right now that they are exposed with agents deployed in their enterprises where they do not yet have an adequate security platform in place. So a very high percentage of our customers know that they have the need. And as Todd mentioned, our teams are working aggressively to schedule as many customer conversations as we can to make it really clear how we can help. So this has been -- we're very pleased with what we've seen in Q2. Dave Gennarelli: Next up, we'll go to Matt Hedberg at RBC. Matthew Hedberg: Congrats from me as well. I think one of the most encouraging elements here is the 200 basis points of cRPO acceleration, and it doesn't feel like it's even being driven by AI, yet I think we all see the pipeline. So I guess, are you seeing -- could you sort of force rank the most important elements for that cRPO acceleration? And I guess as a follow-up to that, are you seeing deal cycles accelerate? Todd, you just mentioned the pipe is as big as ever. With AI-driven concerns, even if it's not AI-specific products, are you seeing faster deal cycles in this environment? Todd McKinnon: I would rank them as follows. The first #1 thing is large enterprise. You see the 22% growth in $1 million-plus customers. So large enterprise, it has been for several quarters is a very important part of this -- the performance of the business. The second thing I would say is that we're the only identity vendor with this broad range of products. You see the 30% of bookings and new product introductions. That's a little bit of AI, governance, privilege, identity threat protection. We have this broad platform of products, and you're seeing that really shine. So this message of you can get -- you can be -- you can buy from a one-stop shop for identity. I was having a conversation with a large Fortune 25 customer yesterday, and they have 200 identity vendors, 200. They're already paying a significant amount of money for the part of their identity we're doing. But that -- I mean, 200, they could replace -- they could save tens of millions of dollars by standardizing on us across the board. And we're the only identity vendor that can do that. Everyone else has a silo, whether it's just access management or it's really tied to their own stack or it's very privileged or governance. We're the only one that has that breadth of products. So that's very important. And then the third thing, which is really exciting is that these conversations about AI and our ability to help clarify how they can secure AI and how this ecosystem can fit together to help them secure, it's catalyzing change conversations that are resulting in deals for other products. So you might go in and have an AI conversation and they're like, you know what, we've been talking about upgrading our governance legacy product for 6 years. We just have to do that. Oh and by the way, we should probably think about customer identity. And so you're starting to see that happen. So that's not an AI deal per se, but it's kind of like a large enterprise. It has a bunch of vendors that wants to take out, and it's coming to the company that seems smart about AI and has a GA product and has real success there. And by the way, it has a large platform. It's a powerful combination. Dave Gennarelli: Next up, we'll go to Josh Tilton at Wolfe Research. Joshua Tilton: Hedberg sort of stole my question, so I'm just going to maybe ask it, but a little bit more directly. Are you seeing strength in the core business because it is accelerating the pace of legacy migrations? Said differently, are customers coming up to you and saying, like, I might not need the AI security product today, but I definitely need to replace my core product because I know the legacy product I have is definitely not going to support my AI strategy whenever I get there. And then maybe the second part to that question is just 15% short-term bookings growth year-to-date. It sounds like most of that is not from AI. Like how do we think about the durability of that growth profile when AI really starts to layer into the model? Eric Kelleher: For the first part of your question, we absolutely believe that the exposure our customers are feeling to agents proliferating in their organizations and not yet being able to secure them is starting a lot of conversations. And those conversations, as Todd just mentioned, can expand into other areas of the portfolio. So your question around legacy migrations are people looking to the future and ensuring they have the Identity Security Fabric, the platform that can solve all those use cases, that's absolutely part of the conversations that we're seeing evolve with customers. In that sense, the agent conversation is bringing a more acute awareness to perhaps their lack of readiness and their need to find an identity -- a secure identity partner that they can have confidence is going to solve for their challenges, both today and in their road map in the future. So that's absolutely something that we think is contributing. But overall, as you look at the core business, and Todd and Brett mentioned this, we saw strength upmarket in the $1 million and $100,000-plus cohort. We saw strength down market. We saw strength in public sector. Our largest deal of the quarter was a public sector deal. So we continue to have confidence in the durable strength of the core business, as we're also starting to convert the pipe we talked about in Q1 and continue to build in Q2 for these new AI products that have come out. And as mentioned, with multiple million dollar wins just in this first quarter of availability. Todd McKinnon: I'll give you a very specific example. I was -- a couple of weeks ago, I was in Pennsylvania, talking to a large customer of Okta, it's a retailer. And the conversation was about a big M&A they were doing. And the company they bought had a legacy identity provider. And the conversation I had was all about AI, AI agents, Okta for AI agents, how we answer these 3 questions. And that conversation and the POC and the sales cycle that's just starting there absolutely helped us win the consolidation business to consolidate the acquired company all on Okta because it wasn't on Okta. It had legacy identity. And of course, when you kind of bring a big company in like that, everyone wants to evaluate which vendor should we use? Is this better for this? And that AI conversation catalyzes the whole thing to be, hey, Okta knows where they're going. They are the leaders here. Let's just get rid of all that old stuff and standardize on Okta. So that's a very concrete example of this phenomenon you just outlined in the abstract, but it's for sure happening day-to-day. Dave Gennarelli: Next up, we'll go to Rudy Kessinger at D.A. Davidson. Rudy Kessinger: Congrats on the strong results here, especially given it doesn't really sound like AI is really kicking in yet. Brett, questions for you. Your cRPO outperformance, this was the largest since fiscal Q4 of '25, which was obviously a really, really strong quarter. The outperformance in Q1 and Q2 were stronger than Q1 and Q2 last 2 years. And so does your Q3 cRPO guidance, does it assume that any of this level of stronger execution and conversion rates, et cetera, that you've seen in Q1 and Q2, does that Q3 guide assume any of that continues? Or does it still have the same kind of prudent assumptions that your Q1 and Q2 cRPO guidance have? Brett Tighe: Yes. I mean you hit the nail on the head, Rudy, Q1 and Q2 this year have been quite strong in Q2, like we talked about, record non-Q4 bookings -- record non-Q4 bookings quarter for us. It was really good. So when we think about the guidance going forward, we're applying the same guidance philosophy we have for several quarters now. We've talked about getting closer to the pin. So that's really -- yes, it's pretty -- it's quite simple, right? We had a great quarter in Q2, great quarter in Q1. Q3, we're applying that same guidance philosophy. So no change in terms of any of the variables that you just mentioned. Dave Gennarelli: Next up, we'll go to Shrenik Kothari at Baird. Shrenik Kothari: Congrats on the great results. So just to follow up on an earlier competitive question and Todd and Eric, you touched upon it a bit. We are increasingly hearing on the field, the CIO/CISOs who are exploring agentic identity, also becoming wary of these AI-first private vendors like OSS, Alteryx getting acquired, further creating that integration road map uncertainty. Are you seeing that also catalyze a move in terms of pipeline towards scaled sort of independent platform by you guys? And just on a related note, importantly, since you and Eric mentioned the phrase no regret investment a couple of times, with the simplified agent pricing that you launched and overall packaging also designed to remove this procurement friction and more scalable as deployment scale. Is that also pulling a lot of these evaluations towards other areas, as you said, and customers wanting this no-regret "durable, economically scalable plane across humans and agents"? I know it's a couple of questions, but yes. Eric Kelleher: I think there are about 3 in there. Let me approach the first one, and then Todd and Brett can comment on the second. The -- we absolutely believe that the uncertainty in the market right now around -- that customers are faced with. In fact, I was with a customer event last week abroad and had an opportunity to talk to a half dozen CISOs on their plans for how they're solving both core workforce and customer identity and also Agentic identity. And they share the concern that you just articulated, which is the various players in the space and the venture fund companies are moving very rapidly, and it's difficult for them to have confidence in predicting what the future is going to be. And one of the reasons that they come to Okta and talk to Okta is specifically because we are a proven company. We've been solving this problem for 17 years for over 20,000 customers, and we've earned the trust of those customers and the partners that we work with to solve these problems. And so they have confidence in our ability to work with them for the long term as well, not just for the short term. In addition to that, this also, again, highlights the importance of our neutrality as they know the various stack components that they're using, the various frontier models they're using, all of those technologies are evolving and leapfrogging each other regularly. And they know that a bet with Okta is a bet that's going to carry them with continuity through whatever happens elsewhere in the technology landscape. So that's absolutely one of the primary reasons our customers have confidence that Okta is a smart long-term bet. Todd McKinnon: One of the interesting things is that a lot of these little companies are pivots. So they started off as like trying to detect service accounts or trying to do service account discovery or agent discovery, and they've more recently pivoted into this comprehensive vision like we have of discovery, where are my agents, what can they connect to, what can they do? And so a lot of their products end to end are quite immature. They might be strong in one area, but end-to-end. And that's pretty frustrating for these CISOs and CIOs I talk to because they don't want -- they're hesitant enough about buying a small vendor because they're worried about getting it acquired or having it go away or run out of money. But then they sure don't want to have to buy 5 of them to get the solution that we have. And so generally available product, comprehensive vision, iterating quickly, that really resonates. Like, I talk to CIOs and CISOs that are amazed. We're iterating faster than startups, and they're amazed by that. And yes, it's tough to go wrong when you have a trusted vendor that's already in front of all your people, in your infrastructure and trusted security vendor. It's a good position to be in. Dave Gennarelli: Let's go to Steve Koenig at Macquarie. Steven Koenig: Todd, a question for you. Maybe pivoting from these -- talking about these small upstarts, trying to do AI identity and looking at some of the majors that are all claiming to have like control towers or control planes or what have you. You got Microsoft, Salesforce, ServiceNow. Maybe just can you give us some perspective about, like, to what extent do those products overlap and compete with your Okta for AI agents? Or to what extent are they useful even if you have Okta, if you're, say, a Salesforce customer. Maybe just some perspective on are you really competing with those products? And how are you differentiated from them? Todd McKinnon: Yes. I think Microsoft is copying us, which I think they have been for 15 years. So I think they're copying what we're doing, and they see the value of an agent registry. And I think the challenge for them is going to be -- it's really hard to be neutral, and it's really hard to make an agent registry that works as well for Amazon and Google and OpenAI and Anthropic as it does for Azure and Microsoft. But I think they have a similar vision, and it looks at least from their blogs. I don't know if they have a real product yet, but at least from their blogs, it seems like they are copying us. And then I think ServiceNow and Salesforce are like every vendor, I think they're coming at the problem from their perspective. ServiceNow is coming at it from a very like an asset management, workflow management perspective. And we found it very valuable to work with them because we can add a lot of value in that environment. We can really help them sever the connections. The trusted connections between agents and the rest of the ecosystem, we're at that level of detail. We have the tokens, we have the protocols so that can really help the control tower from ServiceNow actually come to fruition with a control -- a kill switch that can actually kill the connections. That's been a really valuable partnership. Salesforce is similar. It's like they're coming from more of the service and support and platform layer to some degree, but guess what, people log in to Agentforce through Okta. And we can help people securely connect Agentforce to everything else in the ecosystem because the more Agentforce agents are connected to data across the ecosystem, the better, and we can help with that. So everyone is kind of sticking in their own lane. And lucky for us, our lane is perfect for this world. Our lane is people to technology and then technology to multiple different vendors with multiple different plays in the technology space, we're very good at that. We've existed in that middle for 17.5 years. And it's a muscle we have in the company. It's a culture we have in the company, and it's really paying off. Dave Gennarelli: Let's go to Trevor Rambo of BTIG. Trevor Rambo: This is Trevor on for Gray Powell. So maybe looking at the rest of the portfolio, it seems like OIG is getting more and more mature every quarter from a technology standpoint. And while the AI side of the business is very exciting and doing well, it feels like OID is contributing more to the business right now. So maybe we take a step back, can you give us a sense of how that product performed in Q2? And are you starting to see more net new lands there? Or it's still mostly just expansion from the core base? Todd McKinnon: It's -- the whole new product portfolio is super strong. OIG is the biggest bucket in there. So you're right, it's the biggest bucket. The whole bucket outperformed. Like I mentioned, 30% of bookings. Performance was across the board. Everything -- I think every product in there beat our plan internally, which is great. And more and more, you're seeing the -- I think when you think about OIG and Privileged Access Management and Access Management, the most important thing is that we're starting to see them be sold as a suite more because we're transforming the identity industry. We're going from an identity industry that was very stovepiped. It was OIG was separate than access management was separate than customer was separate than privilege, was separate than -- so that world is going away. And we're the only vendor that has everything under one vendor, and we can -- it's all integrated. It works great. It's not a bunch of stuff that was bought and slammed together. I mean it's been a product that -- there's some acquisitions in there, but the vast majority of it is organically developed, and -- which is better for customers. Customers want a real platform that works together, not a platform that was bought and renamed and slammed together and sold from one salesperson. And that's really resonating. So yes, that part of the business, like I've said before in a couple of answers, that's what's driving the -- that's what drove the overperformance is the new products and the core business, workforce and customer both accelerated since the ACV growth accelerated since we last released it in Q4. So that's kind of the secret sauce there. And you can't -- and you have to build that up over years, right? We've been working on OIG and Privilege and for 6 years, 6.5 years. And it just takes time. You can't slap stuff together and have a leading product. Leading products take time. As much as I'd like to rename it and have it be something cool and new, you can't do it, it takes time. Dave Gennarelli: Next, we'll hear from Jonathan Ho at William Blair. Jonathan Ho: Congratulations on the strong quarter. Todd McKinnon: What do you think? Do you think we should rename everything? Jonathan Ho: It'd be pretty interesting. You usually have Okta in front of everything. So... Todd McKinnon: It used to be Azure Active Directory and then they rename it to Entra. Yes. It sounds exactly like Okta. Why did they do that? Jonathan Ho: Good question. Good question. With the Permiso acquisition, can you help us understand how this sort of expands your product set? And what is post authentication behavioral, what does that opportunity look like, particularly in the AI-driven world? Todd McKinnon: We see an interesting phenomenon in the customer base. 80% of breaches are identity-based attacks. And -- but when you look at our customer base, relatively small percentage have the most advanced Identity Threat Protection product. Identity Threat Protection, we've talked about it for a while, Jonathan. It's like very, very important and very unique. And by the way, very differentiated. None of the other IDPs have this. It's not only evaluates session risk at the time of login, but also post login, continuously monitors it, looks for risk signals, not only from Okta, but risk signals from the ecosystem from CrowdStrike and Palo Alto Networks and takes those all together and can shut down sessions after login. So it's -- any company that is running identity without this technology, it's -- you're at risk and you're behind, but not everyone is upgraded to it. So I guess this is a plug. Everyone should upgrade to this thing. And if it's not -- you don't get it from Okta, force your vendor to build it and so you can get it or you can just buy it from us. Now Permiso, the way to think about Permiso, it's like the next generation of that. So instead of 90 native risk detections, they have 400 native risk detections. So it's a much richer and deeper set of correlative processes and machine learning that can really look at a session deeply across many vectors and many variables and detect risk. And of course, that's going to pay off in just person log in. It's going to pay off in just an agent log in. They also have a very strong threat research team they bring to the company. And it's most -- this is probably the most exciting thing. It's the perfect size for Okta to take and add to our products and extend our products for what's going to be a big area for us is this advanced identity threat protection over time. Yes, we're really lucky to have them on board, and it's been great to get to know them. We just closed, I think the acquisition actually officially closed only today. So we've been working with them preliminarily, but now it's going to be great to dig in with them and build something great together. Jonathan Ho: I asked ChatGPT and it said to call the product Okta Nexus. Todd McKinnon: Okta Nexus. Jonathan Ho: There you go. There you go. Brett Tighe: Jonathan, I would just add, this is another one of these tech tuck-in M&As that we've done over the last several years. You've seen them be very successful in a variety of products. So we've got a good track record here, and we think this is going to be another nice addition to the portfolio of products, like Todd just said, it's pretty exciting for us. So looking forward to selling a bunch of this in the future. Dave Gennarelli: Let's go to Yun Kim at Loop. Yun Suk Kim: First, congrats on the quarter. Just given how quickly agentic AI adoption is happening out there? How are you incorporating the number of AI agents in your deal because that number will probably grow really, really fast. Are those numbers staged over a period of time, so you would expect renewals to happen pretty quickly as customers will probably underestimate what they need initially? Todd McKinnon: I'll tell you an interesting story. We were -- in terms of -- you mentioned that the -- you said that the number of agents is growing fast. So this is -- I want to be super concrete. I think it's the most helpful for everyone on the call when I'm super concrete about stuff. So we were talking to a company that ended up being a nice Okta for AI agents deal in the quarter. And when the evaluation started, we were -- we ran our technology and we detected 50 instances of a Claude agent in the environment. And they were thinking about what they wanted to do, and then we came back a few weeks and there was 1,500 Claude agents in the environment. So it's like 52 weeks, 1,500. So it's -- these customers are -- it's really tangible, the risk that they're seeing and the way this is coming into their organization. So this is catalyzing some of these deals, this onrush of agents. To your question about licensing and pricing and renewals and so forth. The -- everyone is figuring out how to price this stuff. Now I mentioned a lot of companies don't have a GA product, so they can get up here and talk about like what they might do in this and that and the other and talk about all the stuff. We have to have a pricing model because we're in the market. And so our pricing model is per user. So if you want to buy Okta for AI agents, it's an uplift to your per user charge. The product works across different use cases. So it can be login for the user and the agent. It can be passing the agent credential across the whole chain of command. It can be governing the agent, but the pricing is per user, an extension of the per user price. Now the first thing everyone says is, well, that's crazy. Seats are going away and you got to charge per agent. That all may be true. But the way customers are using agents now and the way they want to buy is per user. And one of our advantages is we're super close to the customers. And as I'm sure this is for sure going to evolve and as we come up with ways that work for the customer and work for Okta, how to package it and price it differently, we'll iterate quickly and give them what they want. But for now, they like the predictability. They like the investments matches the business value they see. It's helping these deals move faster. So I think that's the winning formula for now. Yun Suk Kim: Is there any consumption limit on those per-user pricing? Todd McKinnon: Yes. It's an interesting question, like we haven't -- in our products, we haven't done that much, but we're starting to add that stuff because particularly, I don't know if you guys saw the announcement we did about supporting agent SSO in our base edition across the board as we did it on Monday. Agents are going to log in way more than people. So in that product, we actually have a cap of agent SSO that we're actually not going to enforce right away, but we're putting the framework and the scaffolding in there to have a consumption-based pricing eventually because it's very likely that with agents proliferating and how they behave that the usage is going to be quite high. Dave Gennarelli: Let's go to Kingsley Crane at Canaccord. William Kingsley Crane: Great. I want to ask on CIAM. So Todd, you mentioned you're talking to customers, enterprises all the time in developer CIAM, you won the hearts and minds of developers, but how Devs source products is somewhat changing with AI? Todd McKinnon: Completely... William Kingsley Crane: Yes. Well, of course, yes. But so they may be amenable to whatever vendor has suggested as an example. So like how important is it for you to be the default... Todd McKinnon: Super important. William Kingsley Crane: Those kinds of environments? And what can you do? Todd McKinnon: Yes. We have like the last 6 months, we have tons of focus on this. You have to show up in the LLMs, you have to show up -- agents are searching for tools. And so you have to be at the top of the leaderboard there. So we're really focused on making that happen. We made a ton of progress. Yes, it's really important. Dave Gennarelli: Let's go to Mark Cash at Raymond James. Mark Cash: Yes, on for Adam today. I don't know if this is for Todd or Brett, but last quarter, you mentioned how AI contribution was significant to the guide. Maybe they're a little bit expected to get big. Now 90 days later, I completely understand that AI is still relatively small compared to your scale in the quarter. But maybe can you talk about how much of the raise in the outlook was due to AI? Brett Tighe: Still immaterial. Still very small. We're very early innings. But like we've talked about here, we're excited about the long-term opportunity. So for FY '27, we don't think it's going to be material. But '28 and beyond, we do -- if things keep going the way that they're going, then we do think that there is a real possibility for this to be material for the business in the long run. Dave Gennarelli: Great. We've got about 5 minutes left. Let's try to get to the rest of the questions. We'll go to Junaid at Truist. Junaid Siddiqui: Todd, you've noted identity governance being a leading contributor in your new products bucket, and it's matured into a land product. You've talked about PAM remaining earlier in its life cycle and more of a cross-sell product with AI agents requiring capabilities like token vaulting, credential management and just-in-time privileged access. Are you seeing Agentic workloads materially increase the strategic importance of PAM? And could Agentic identity be the catalyst that drives PAM from this cross-sell motion towards a much more... Todd McKinnon: I think that this association between PAM and Agentic is maybe -- was overemphasized. I think there was this mindset 3 years ago that agents needed privileged access, and so PAM was going to be the right place to do agents. I think it's wrong. I think it's wrong. I think agents do need privileged access for sure, but it needs to start on a much broader base. PAM is too narrow. PAM was -- had a very small number of users in super lockdown environments. Agents, the whole dream of agents is that they're there for everyone. So it doesn't make sense to start your agent journey and figuring out where the agents are and what they can do and what they connect to. It makes no sense to start it from the most locked down thing sitting next to the Oracle database on a sun server. It makes sense to start it from the broad IDP, whether it's customers or whether it's employees and then start from there and say, hey, how can I take this token that was generated for this user and pass it through with traceability and accountability all the way through the chain it needs to go through? That's what we're seeing in the industry. It's a much better place to start, which is, I think a lot of these vendors are seeing that, and that's why it's hard for them to get their products out, and that's why the products are more narrowly adopted, and I think you're seeing us be really well positioned, which is why I think if you look at what Microsoft is doing or it's companies with the access to more users that are at an advantage there versus narrow security vendors that were more boxed in. Dave Gennarelli: Next up is Joe Vandrick at Scotiabank. William Vandrick: You've got Joe Vandrick here on for Patrick Colville. So Todd, we did see the release of agent SSO a couple of days ago, which is now included in the core SSO product. So we were wondering if this is a way for Okta to give your existing customers a taste of that AI agent solution? And then what will eventually cause a customer to upgrade into purchasing that broader Okta for AI agents product? Todd McKinnon: You described it exactly right. It's spreading the kind of the core, core foundation of Okta for AI Agents, which is the directory entry that tracks the identity of an agent that puts that everywhere, ubiquitous. And so what the upsell is, is like policy, how you want to do governance, how you want to have a software MCP gateway, a virtual MCP server. There's 5 or 6 or 7 really key upsells. But in SSO addition is the core entry in the directory. There's another more important strategic reason to do it, and that's because we're on this mission to standardize AI security and particularly this agent single sign-on across the industry. And we're doing that on many fronts. The biggest front right now is this Cross-App Access protocol. And we mentioned a huge step forward where Anthropic is supporting Cross-App Access in what they call Enterprise Managed Authorization. And we're the only identity provider that speaks this language, and they're seeing it solve a customer -- a problem in their customer base. So they're putting it in cloud, and we're trying to get every agent company to follow their lead. That's all very important. Now imagine going to every app, Salesforce, Slack, Asana, all these companies, hundreds and hundreds of these SaaS companies and tell them, hey, we want you to support this new protocol for agent single sign-on. The first question is how many customers can do it? And now the answer is 20,000. So that's the reason to do it. It's to spread the standard and really catalyze this whole industry with customers benefiting the most. Dave Gennarelli: We're getting to what looks to be our last question from UBS. Jack Fyda: This is Jack Fyda on for Roger Boyd. Brett and Todd, I wanted to understand a little bit on the Fed side as we head into 3Q here. You mentioned you had a good 1Q on the pub sec side and where there was a nice customer identity solution win in the prepared remarks with the DoD here. So now as we enter 3Q with the IL5 certification, the DoD Zero Trust mandate, Brett would love to understand just what's baked into 3Q guidance relative to last year with the federal mandate? Todd McKinnon: Public sector overall is really important, and I'm pumped up about it. We've done so much work. I was recently in Maryland and Virginia, talking to top government people. And like everyone else, they're really, really excited/freaked out about AI. And we have super relevant offerings for them, both on just talk about legacy identity. I mean they have the most legacy of the legacy identity and also an understanding of how critical it is. So we're -- U.S. federal DoD, public sector in general is tremendous opportunity for us. It's only -- it's less than 10% of our business right now. So we have tons of success, but -- or tons of momentum, but tons of room to run there, which is quite impressive. The other interesting thing in U.S. federal specifically, I don't know if you're hearing this from other companies, but the first part of this year was kind of a mess. It was DOGE, no one knew they're going to have a job, every spending was being scrutinized. It's starting to normalize now. It's starting to get back to, hey, they know they have projects to do. It's like more of a same environment. They have to invest. They have to make long-term decisions. I think that's benefiting us. And like we mentioned its largest deal in Q3 was in U.S. federal. And if you look at the next couple of quarters for us, there's tons of big opportunities out there. We're working hard to close. Dave Gennarelli: Okay. Great. Well, apologies, we weren't able to get to everybody. Before you go, just let you know that in addition to the on-site and virtual bus tours coming through this quarter, we've, of course, got our Oktane Conference the week of September 21. We'll be at the Goldman Sachs Conference in San Francisco on September 9, the Wolfe Conference in San Francisco on September 10, the Piper Sandler Growth Conference in Nashville on September 15 and the JPMorgan Software Forum in Napa on October 2. So we hope to see you at one of those events. Thanks. Todd McKinnon: Thanks, everyone. Before you buy stock in Okta, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Okta wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Okta. The Motley Fool has a disclosure policy. Okta (OKTA) Q2 2027 Earnings Call Transcript was originally published by The Motley Fool

Strong earnings reports often create some of the best momentum setups in the market, especially when a stock gaps sharply higher, holds those gains and then begins consolidating near its highs. That combination can signal that investors are not simply reacting to a one-day surprise, but actively repricing the business as earnings expectations improve. When that initial move is followed by a tight continuation pattern, it can create an attractive setup for another leg higher. Okta (OKTA), Gartner (IT) and Salesforce (CRM) each fit that profile today. All three delivered strong earnings results, gapped higher on the news and are now forming constructive technical patterns that could set the stage for fresh breakouts. Image Source: Zacks Investment Research Okta was one of the biggest post-earnings winners last week, with shares surging nearly 29% after the identity-security company delivered a better-than-expected quarter. Second-quarter revenue increased 11% year over year to $805 million, while subscription revenue climbed 12%. More importantly, current remaining performance obligations, a useful indicator of near-term subscription demand, accelerated 14% to $2.59 billion. Free cash flow also jumped to $227 million from $162 million a year earlier. There is also a compelling AI angle developing around the business. As companies deploy autonomous AI agents across their operations, those agents increasingly require identities, permissions and controls just like human employees. Okta is positioning its identity platform as a critical security layer for this emerging infrastructure. That narrative appears to be gaining traction alongside improving fundamentals. Okta currently carries a Zacks Rank #2 (Buy), and the strong quarter could provide additional support to earnings estimates. Technically, the earnings gap was unusually powerful. Rather than immediately giving back the move, OKTA shares have held near their highs and are now pressing against resistance around $173.50. A decisive move through that level would represent a fresh breakout and could open the door to another leg higher. On the downside, the $164 area is an important near-term support level. As long as shares remain above that zone, the post-earnings setup remains constructive. Image Source: TradingView Gartner offers a somewhat different setup, combining improving earnings momentum with an unusually inexpensive valuation. The research and advisory company reported adjusted second-quarter earnings of $4.37 per share, up nearly 24% year over year and comfortably above expectations. Free cash flow increased 9% to $378 million, while management raised its full-year outlook for adjusted EBITDA, earnings and free cash flow. Gartner also repurchased $547 million of stock during the quarter. The stock now carries a Zacks Rank #1 (Strong Buy), while valuation remains compelling. IT shares trade at just 13.8x forward earnings, despite long-term EPS expectations of roughly 20.1% annual growth, giving the stock a PEG ratio of only 0.68. The technical setup is also increasingly constructive. Gartner shares are consolidating beneath resistance around $203, creating a well-defined breakout level. A sustained move above $203 could signal the beginning of another leg higher. Meanwhile, the $190 area has emerged as an important support zone. That gives investors a relatively clear framework: strength above $203 confirms the breakout, while a loss of $190 would weaken the setup. Image Source: TradingView Salesforce may be the most interesting name of the three because its earnings report directly challenged one of the market's most persistent narratives this year. Software stocks were hit hard as investors worried that generative and agentic AI could disrupt traditional SaaS businesses. Salesforce was caught directly in that selloff. But its latest earnings report suggested AI may ultimately prove to be considerably more opportunity than threat. Second-quarter revenue increased 11% year over year to $11.3 billion, while non-GAAP diluted EPS more than doubled to $5.90. Free cash flow surged 81% to $1.1 billion, and Salesforce raised its full-year revenue outlook. Current remaining performance obligations also accelerated to 14% growth. Perhaps most important, the company's AI businesses are gaining substantial traction. Agentforce and Data 360 annual recurring revenue reached nearly $3.9 billion, up more than 210% year over year, while Agentforce ARR exceeded $1.5 billion and grew more than 240%. Investors responded by sending CRM shares more than 22% higher in the following session. Even after that move, Salesforce trades at only around 17.5x forward earnings, while long-term EPS is forecast to grow roughly 18% annually. The stock currently carries a Zacks Rank #3 (Hold), although the report is still fresh and upward estimate revisions following the quarter could potentially improve that rank. Technically, CRM has not even produced the clean consolidation seen in OKTA and IT yet. Momentum has been so strong that shares continue to push higher following the gap. That makes Salesforce one to watch closely. Ideally, shares would form a tight bull flag or another short consolidation that establishes a cleaner breakout level. More aggressive momentum investors may choose to participate in the runaway move, but waiting for a defined setup would provide a clearer risk-reward profile. Image Source: TradingView What makes these three setups particularly interesting is that they share a broader narrative. Okta, Gartner and Salesforce were all pressured to varying degrees by concerns that AI could disrupt established software and information-services businesses. Investors spent much of the year asking which companies AI might replace. Recent earnings are beginning to suggest that the market may have pushed that thesis too far. Salesforce is already generating rapidly growing AI revenue, Okta may become an increasingly important security layer for autonomous agents, and Gartner continues to produce strong earnings and cash flow despite fears surrounding AI disruption. If investors continue to reconsider the idea that AI is inherently bearish for established software and information businesses, the rerating of these stocks may have considerably further to go. With earnings momentum improving and technicals turning bullish, all three stocks deserve a place near the top of investors' watchlists. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Salesforce, Inc. (CRM) : Free Stock Analysis Report Gartner, Inc. (IT) : Free Stock Analysis Report Okta, Inc. (OKTA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Okta OKTA shares jumped 28.63% after the company reported second-quarter fiscal 2027 results on Wednesday, reflecting better-than-expected results, accelerating bookings indicators, strong large-enterprise execution and rising investor enthusiasm around AI-agent security. In the second quarter of fiscal 2027, revenues increased 11% year over year to $805 million, while subscription revenues rose 12% to $793 million. Adjusted earnings of $1.05 per share exceeded the Zacks Consensus Estimate by 9.38%, while revenues topped the consensus mark by 1.62%.More importantly, forward-looking demand metrics strengthened. Remaining Performance Obligation (RPO) increased 17% to $4.86 billion and current RPO (cRPO) rose 14% to $2.59 billion. The cRPO growth accelerated while workforce identity and customer identity ACV increased 11% and 13%, respectively. Free cash flow margin also expanded 580 basis points to 28.1%. However, is this enough for the investors to jump into the stock? Let’s find out. Okta is benefiting from strong enterprise demand. In the second quarter of fiscal 2027, the number of customers generating more than $1 million in Annual Contract Value (ACV) increased more than 20%, taking the total above 600. Upsell, cross-sell and pipeline generation also remained healthy. Anthropic selected Okta as the first identity provider supporting Enterprise Managed Auth for MCP connectors, while Okta has expanded relationships with AWS, Cisco, OpenAI, Databricks and Snowflake and added more than 25 Cross-App Access integrations. The company’s installed base of more than 20,000 customers gives Okta an established distribution channel through which to introduce AI-security products.New products accounted for roughly 30% of the quarterly bookings, while adding a new product to a transaction generates about a 40% average ACV uplift. Okta for AI Agents secured dozens of deals during the quarter, including several million-dollar-plus transactions. Okta Identity Governance, Privileged Access, Identity Threat Protection and other newer offerings are increasing the amount customers spend on the platform. Okta’s investments in cloud marketplaces, global system integrators and channel partners are also improving deal economics.The rapid deployment of enterprise AI agents is expanding Okta’s addressable identity-security opportunity beyond human users to machine and agent identities. Okta for AI Agents provides agent discovery, governance, access control and runtime protection, while Auth0 for AI Agents addresses developers building agentic applications. Okta noted that AI security conversations are increasingly expanding into broader identity-modernization projects, potentially creating cross-selling opportunities across Okta's platform.These factors are expected to help OKTA shares appreciate. The company is facing stiff competition from the likes of Microsoft MSFT, CrowdStrike CRWD and Cisco Systems CSCO. YTD, CrowdStrike, Cisco and Microsoft have returned 94.5%, 45.6% and 4.5%, respectively. Image Source: Zacks Investment Research For fiscal 2027, OKTA expects revenues between $3.216 billion and $3.226 billion, indicating 10-11% growth from the figure reported in fiscal 2026. Okta expects fiscal 2027 non-GAAP earnings between $3.90 and $3.94 per share. For the third quarter of fiscal 2027, OKTA expects revenues between $813 million and $817 million, indicating 10% growth from the figure reported in the year-ago quarter. Okta expects fiscal 2027 non-GAAP earnings between 92 cents and 94 cents per share. The Zacks Consensus Estimate for Okta’s fiscal 2027 earnings has increased by a penny to $3.84 per share over the past 30 days. The earnings estimate suggests 9.71% growth over the figure reported in fiscal 2026. The consensus estimate for revenues is currently pegged at $3.21 billion, suggesting 9.96% growth from the figure reported in fiscal 2026. Okta, Inc. price-consensus-chart | Okta, Inc. Quote The Zacks Consensus Estimate for Okta’s third-quarter fiscal 2027 earnings has been steady at 93 cents per share over the past 30 days. The earnings estimate suggests 13.41% growth over the figure reported in the year-ago quarter. The consensus estimate for revenues is currently pegged at $813.2 million, suggesting 9.6% growth from the figure reported in the year-ago quarter. OKTA shares are trading at a premium as suggested by the Value Score of F.In terms of forward 12-month price/sales (P/S), Okta is trading at 8.91X, higher than the median of 5.06X and Cisco’s 6.16X. However, OKTA is cheaper than Microsoft and CrowdStrike, shares of which are trading at 9.36X and 34.77X, respectively. Image Source: Zacks Investment Research Despite its premium valuation, Okta’s improving growth indicators, expanding large-enterprise footprint and increasing contribution from newer products strengthen its investment case. Rising adoption of Okta for AI Agents could provide an additional growth avenue as enterprises increasingly seek to secure AI agents and machine identities. Accelerating cRPO growth, healthy cross-selling opportunities, expanding free cash flow margins and an encouraging fiscal 2027 outlook further support prospects. Okta currently has a Zacks Rank #2 (Buy), which implies that investors should start accumulating the stock right now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Okta, Inc. (OKTA) : Free Stock Analysis Report Microsoft Corporation (MSFT) : Free Stock Analysis Report Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report CrowdStrike (CRWD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Palo Alto Networks, Inc. PANW is scheduled to report its fourth-quarter fiscal 2026 results on Sept. 1. Palo Alto Networks projects fiscal fourth-quarter revenues in the range of $3.34-$3.35 billion, which suggests a year-over-year increase of 32%. The Zacks Consensus Estimate is pegged at $3.35 billion, which implies growth of 32.1% from the year-ago reported figure. For the fiscal fourth quarter, the company expects non-GAAP earnings per share between 96 cents and 98 cents. The consensus mark for PANW’s fiscal fourth-quarter non-GAAP earnings has remained unchanged at 98 cents per share over the past 30 days, which indicates a 3.2% increase from the year-ago quarter’s earnings. Image Source: Zacks Investment Research Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 7.03%. Palo Alto Networks, Inc. price-eps-surprise | Palo Alto Networks, Inc. Quote Our proven model does not conclusively predict an earnings beat for Palo Alto Networks this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. Palo Alto Networks has an Earnings ESP of -2.66% and carries a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here. Palo Alto Networks’ fourth-quarter fiscal 2026 performance is likely to have benefited from the robust traction stemming from deal wins, along with continued progress in its platformization strategy. The increased adoption of its AI-powered XSIAM, SASE and software firewall offerings, which enable enterprises to advance zero-trust network security, is expected to have contributed to the growing share of incremental Next-Generation Security (NGS) Annual Recurring Revenues (ARR). Through its platformization strategy, Palo Alto Networks is enabling larger customers to adopt its full security platform, which is helping the company grow faster and secure bigger deals. In the third quarter of fiscal 2026, PANW’s NGS ARR grew 60% year over year to $8.13 billion, where the platformization strategy was a key driver.  In the third quarter of fiscal 2026, the company added 110 new platformized customers, including 20 from the CyberArk and Chronosphere acquisitions. Total platformized customers reached approximately 2,280 at the end of the third quarter. PANW's platformized customers currently have a 120% net retention rate and single-digit churn. This means existing customers continue to buy more PANW products over time, while very few leave the platform. During the fiscal third quarter, the company shared examples of customers expanding their deployments. A large U.S. power producer adopted next-generation firewalls and SASE in an $80 million deal, while a global consulting company signed a contract worth more than $20 million to use Prisma AIRS for securing its AI applications and agents. These gains show that large enterprises are consolidating security budgets with PANW as customers want fewer tools and simpler security operations, which is likely to have boded well for the company’s prospects in the to-be-reported quarter. However, PANW’s fiscal fourth-quarter prospects are expected to be weighed down due to rising integration and acquisition-related costs. As a result of back-to-back acquisitions, PANW is incurring high integration-related costs, including onboarding employees, aligning go-to-market teams and integrating systems and operations. Acquisition-related costs in the third quarter of fiscal 2026 amounted to $113 million, a whopping increase from $5 million incurred in the prior quarter. These costs are expected to have hurt the company's profitability in the to-be-reported quarter before the benefits of synergies from acquisitions are fully realized. Further, PANW’s near-term prospects might be hurt by softening IT spending due to the current uncertain macroeconomic environment. Enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues. This is expected to have hurt Palo Alto Networks’ prospects in the to-be-reported quarter. Palo Alto Networks’ shares have surged 100.5% over the past year, outperforming the Zacks Security industry and its peers, including Okta Inc. OKTA, Qualys Inc. QLYS and Zscaler ZS. The Zacks Security industry has jumped 63.1% over the past year. Shares of Okta and Qualys have surged 84.6% and 38.8%, respectively, while Zscaler shares have lost 32.6%. Image Source: Zacks Investment Research Now, let’s look at the value Palo Alto Networks offers investors at the current levels. Palo Alto Networks is currently trading at a premium with a forward 12-month P/S of 22.45X compared with the industry’s 16.77X. Image Source: Zacks Investment Research Palo Alto Networks stock also trades at a higher P/S multiple compared with other industry peers, including Okta, Qualys and Zscaler. At present, Okta, Qualys and Zscaler have P/S multiples of 8.92X, 8.45X and 7.68X, respectively. PAWN’s rally reflects strong investor confidence in AI-related cybersecurity demand, putting it above industry and peers in terms of valuation, reflecting the high growth expectations of the company in the long term. Palo Alto Networks remains well positioned to benefit from the growing demand for cybersecurity as enterprises consolidate security tools and adopt AI. Its platformization strategy is helping the company win larger deals and expand spending among existing customers. The strong growth in NGS ARR and the 120% net retention rate among platformized customers indicate that customers are increasing their use of PANW’s broader security portfolio. The company is also seeing growing demand for AI security, SASE and next-generation firewall products. The expansion of Prisma AIRS and XSIAM should provide additional growth opportunities as enterprises look to secure AI applications, agents and cloud environments. The company is combining network security, AI security, security operations, identity and observability on a single platform and aims to reach more than 4,000 platformized customers and $20 billion in Next-Generation Security ARR by fiscal 2030. Rising AI adoption should continue to increase demand across these product areas and help PANW expand its addressable market and support its long-term ARR target. Palo Alto Networks remains a leader in cybersecurity, with a strong long-term growth trajectory, continued AI-driven innovation and a shift toward a more predictable recurring revenue model. Strong traction in Palo Alto Networks’ platform-based security offerings, supported by large enterprise deals and increasing customer adoption, provides a favorable long-term growth opportunity for the company. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Palo Alto Networks, Inc. (PANW) : Free Stock Analysis Report Qualys, Inc. (QLYS) : Free Stock Analysis Report Okta, Inc. (OKTA) : Free Stock Analysis Report Zscaler, Inc. (ZS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Okta OKTA reported second-quarter fiscal 2027 earnings of $1.05 per share, which increased 15.4% year over year and beat the Zacks Consensus Estimate by 9.38%. Revenues increased 10.6% year over year to $805 million, beating the consensus mark by 1.62%. Subscription momentum supported the quarter, with subscription revenues rising 12% to $793 million.Location-wise, revenues from the United States contributed 87.6% to total revenues in the fiscal second quarter. The figure increased 10.19% year over year to $638 million. International revenues contributed 22.9% to total revenues. The figure increased 12.08% year over year to $167 million. Subscription revenues accounted for nearly all of the top line, while Professional services and other revenues were $12 million, down 29.4% year over year from $17 million. Management said growth benefited from steady momentum across its core Workforce and Customer Identity businesses and contributions from newer products, led by Okta Identity Governance. Okta, Inc. price-consensus-eps-surprise-chart | Okta, Inc. Quote Workforce Identity represented 59% of annual contract value, or ACV, at quarter-end and grew 11% year over year. Customer Identity accounted for the remaining 41% and increased 13%, underscoring balanced growth across Okta’s two core identity businesses. In the second quarter of fiscal 2027, remaining performance obligations, which represent subscription backlog, increased 17% year over year to $4.858 billion. Current remaining performance obligations (cRPO), a key indicator of future subscription revenues, advanced 14% year over year to $2.585 billion.Customers generating more than $100,000 in ACV increased 6% year over year to 5,255. The trailing-12-month dollar-based net retention rate was 107%, up one percentage point from the year-ago period, reflecting expansion within the existing customer base after accounting for contractions and churn. Non-GAAP gross margin was 81.9%, up 40 basis points year over year, while non-GAAP subscription gross margin improved 20 basis points to 83.9%.On a non-GAAP basis, operating expenses increased 10.7% year over year to $434 million. Research and development expenses rose 16.5% to $127 million, while sales and marketing expenses increased 17.6% to $241 million. General and administrative expenses declined 15.4% to $66 million. Non-GAAP operating income increased 11.9% year over year to $226 million. Non-GAAP operating margin expanded 50 basis points to 28.2%, highlighting continued profitability despite growth investments. Okta ended July 31, 2026, with $2.299 billion in cash, cash equivalents and short-term investments compared with $2.589 billion as of April 30, 2026.Net cash provided by operating activities was $234 million, representing 29% of revenues, compared with $167 million, or 23%, a year ago. Free cash flow increased to $227 million from $162 million, while the free cash flow margin expanded to 28% from 22%. For the third quarter of fiscal 2027, OKTA expects revenues of $813-$817 million, implying 10% year-over-year growth. cRPO is projected at $2.59-$2.60 billion, implying growth of 11-12%. Non-GAAP earnings are expected between 92 cents and 94 cents per share, with free cash flow of $175-$185 million.For fiscal 2027, management raised its revenue outlook to $3.216-$3.226 billion, suggesting 10-11% growth, from the prior $3.185-$3.205 billion range. Non-GAAP earnings are now projected at $3.90-$3.94 per share compared with the previous $3.79-$3.87 range. Free cash flow guidance increased to $910-$930 million from $855-$885 million, with an expected margin of 28-29%. Okta currently carries a Zacks Rank #2 (Buy).Some other top-ranked stocks in the broader Zacks Computer and Technology sector include Dell Technologies DELL, Docusign DOCU and Hewlett-Packard HPE. While Dell Technologies sports a Zacks Rank #1 (Strong Buy), Docusign and Hewlett-Packard carry a Zacks Rank of 2 each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Dell Technologies shares have gained 268.4% in the year-to-date period. Dell Technologies is set to report second-quarter fiscal 2027 results on Sept. 1.Shares of Docusign have plunged 13.3% year to date. Docusign is set to report second-quarter fiscal 2027 results on Sept. 3.Shares of Hewlett-Packard have rallied 129.9% year to date. Hewlett-Packard is slated to report fiscal third-quarter 2026 results on Sept. 2. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Okta, Inc. (OKTA) : Free Stock Analysis Report Dell Technologies Inc. (DELL) : Free Stock Analysis Report Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report Docusign Inc. (DOCU) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The S&P 500 Index ($SPX) (SPY) is up by +0.39% today, the Dow Jones Industrial Average ($DOWI) (DIA) is up by +0.08%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up by +0.84%.  E-mini S&P futures (ESU26) are up +0.30%, and September E-mini Nasdaq futures (NQU26) are up +0.71%. Stock indices are moving higher today, with the S&P 500 and Nasdaq 100postign 1-week highs.  Stellar earnings from Nvidia are powering technology stocks higher today. Nvidia is up more than +6%, leading chipmakers and AI-infrastructure stocks higher after issuing a revenue growth forecast for fiscal 2028 far above expectations.  Also, a $31 billion joint venture between Sandisk and Kioxia Holdings to ratchet up flash memory production added to the bullish tone in technology stocks.  In addition, cybersecurity stocks are stronger today after better-than-expected earnings from Okta and CrowdStrike Holdings, and software stocks are climbing after Salesforce forecast Q3 revenue above consensus. Warren Buffett Says Peter Thiel Can Quit Giving Pledge If It’s Too ‘Woke’ for Him — ‘A Lot of Reasons Why Rich People Don’t Like Other Rich People’ Elon Musk Says We’re ‘1000% Going to Go Bankrupt’ Without Al and Robots — ‘We’re Totally Screwed’ as Interest on National Debt Tops $1 Trillion Nvidia Reports $7.8 Billion in Q2 Gains on Equity Portfolio That Includes SpaceX, Intel, CoreWeave, and More Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. Signs of strength in the US labor market are positive for economic growth and stocks after weekly initial unemployment claims unexpectedly fell -4,000 to 203,000, showing a stronger labor market than expectations of an increase to 208,000. Comments today from Kansas City Fed President Jeff Schmid were hawkish and bearish for stocks and bonds when he said current Fed policy is not restraining the economy at a time when inflation continues to run above its 2% target. He added that the interest rate setting "might be accommodative on the short end" and that "we've got work to do." Oct WTI crude oil prices (CLV26) are moving higher today on a Bloomberg report that said Russia was planning to escalate the war in Ukraine, which could disrupt Russian crude output and lower global oil supplies.  Crude prices fell to a 2-week low on Wednesday after Iran’s military said it reached a revenue-sharing agreement with Oman on the reopening of the Strait of Hormuz.  Crude prices have fallen more than -8% this week on signs of easing tensions in the Middle East and a partial resumption of crude supplies through the Strait of Hormuz. On Tuesday, The New York Times reported the US State Department is preparing to send US diplomats back to embassies in the Middle East that were evacuated before and during the war with Iran, suggesting that the Trump administration does not anticipate a return to all-out hostilities with Iran. The outlook for strong Q2 earnings is a bullish factor for stocks. The S&P 500 is tracking for earnings growth of almost 32% in Q2, well above projections of +23%, and nearly four times the average earnings growth rate outside of the Covid period since Q4 of 2013, according to Bloomberg Intelligence.  AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2.  So far, earnings results have been positive, with 86% of the 478 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data. The markets are discounting a 35% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16. Overseas stock markets are mixed today.  The Euro Stoxx 50 is down -0.23%.  China's Shanghai Composite climbed to a 1-week high and closed up +1.13%.  Japan's Nikkei-225 Stock Average fell from a 1-week high and closed down -0.20%. Interest Rates September 10-year T-notes (ZNU6) are unchanged today.  The 10-year T-note yield is unchanged at 4.660%.  T-notes are little changed today amid strength in stocks, which is curbing safe-haven demand for government debt securities.  Supply pressures are negative for T-notes as the Treasury will auction $44 billion of 7-year T-notes later today.  In addition, an unexpected decline in weekly US jobless claims is bearish for T-notes.  Finally, hawkish comments today from Kansas City Fed President Jeff Schmid undercut T-notes when he said current Fed policy isn’t in restrictive territory. European government bond yields are mixed today.  The 10-year German bund yield is up +1.7 bp to 3.251%. The 10-year UK gilt yield is down -0.1 bp to 5.030%. Eurozone July M3 money supply rose +3.4% y/y, weaker than expectations of +3.5% y/y. The German Sep GfK consumer confidence index rose +2.8 to a 6-month high of -26.6, stronger than expectations of -29.5. Markets are discounting a 97% chance of a +25 bp ECB rate hike at its next policy meeting on September 10. US Stock Movers Chipmakers and AI-infrastructure stocks are rallying today after Nvidia reported Q2 revenue of $96.22 billion, well above the consensus of $92.38 billion, and projected fiscal 2028 revenue to grow about 70%. The iShares Semiconductor ETF (SOXX) is up %.  Nvidia (NVDA) is up more than +7% and ARM Holdings (ARM) is up more than +5%.  Also, Intel (INTC) and Broadcom (AVGO) are up more than +2%, and Lam Research (LRCX), Sandisk (SNDK), and Marvel Technology (MRVL) are up more than +1%. Software stocks are moving higher today, led by a +18% jump in Salesforce (CRM) to lead gainers in the Dow Jones Industrials after it forecasted Q3 revenue of $11.42 billion to $11.50 billion, with the midpoint above the consensus of $11.42 billion. Also, Datadog (DDOG) and ServiceNow (NOW) are up more than +7%, and Atlassian Corp (TEAM) is up more than +5%.  In addition, Adobe Systems (ADBE), Autodesk (ADSK), Palantir Technologies (PLTR), and Workday (WDAY) are up more than +3%, and Oracle (ORCL) is up more than +1%. Cybersecurity stocks are stronger today, following stellar earnings results from Okta and Crowdstrike Holdings.  Okta (OKTA) is up more than +23% after boosting its 2027 revenue forecast to $3.22 billion to $3.23 billion from a previous forecast of $3.19 billion to $3.21 billion, above the consensus of $3.20 billion.  Crowdstrike Holdings (CRWD) is up more than +14% to lead gainers in the Nasdaq 100 after raising its 2027 adjusted operating income forecast to $1.50 billion-$1.51 billion from a previous forecast of $1.45 billion-$1.48 billion, better than the consensus of $1.47 billion.  Also, Palo Alto Networks (PANW) and Zscaler (ZS) are up more than +9%, and SentinelOne (S) is up more than +7%. In addition, Cloudflare (NET) and Fortinet (FTNT) are up more than +4%. Veeva Systems (VEEV) is up more than +17% to lead gainers in the S&P 500 after reporting Q2 adjusted EPS of $2.35, above the consensus of $2.22, and raising its 2027 adjusted EPS forecast to $9.21 from a previous forecast of $9.05, stronger than the consensus of $9.06. Nutanix (NTNX) is up more than +6% after reporting Q4 revenue of $757.1 million, better than the consensus of $738.1 million. Dollar General (DG) is up more than +4% after reporting Q2 net sales of $11.29 billion, stronger than the consensus of $11.19 billion, and raising its 2027 comparable sales forecast to up +2.5% to +2.9% from a previous forecast of +2.2% to +2.7%, higher than the consensus of +2.42%. Wendy’s (WEN) is down more than -12% after Reuters reported that Trian Fund Management has no plans to make a bid at this time to take the company private. Hormel Foods (HRL) is down more than -7% to lead losers in the S&P 500 after reporting Q3 net sales of $2.96 billion, below the consensus of $3.03 billion, and cutting its full-year net sales forecast to $12.1 billion to $12.2 billion from a previous forecast of $12.2 billion to $12.5 billion, weaker than the consensus of $12.24 billion. HP Inc. (HPQ) is down more than -5% after forecasting Q4 adjusted EPS of 69 cents to 79 cents, the midpoint above the consensus of 67 cents, but without an 8-cent-per-share boost from tariff refunds, the outlook would be below consensus. Dollar Tree (DLTR) is down more than -2% after forecasting Q3 net sales of $5.0 billion to $5.1 billion, the midpoint below the consensus of $5.06 billion. Earnings Reports (8/27/2026) Affirm Holdings Inc (AFRM), Autodesk Inc (ADSK), Best Buy Co Inc (BBY), Burlington Stores Inc (BURL), Dollar General Corp (DG), Dollar Tree Inc (DLTR), Elastic NV (ESTC), Forgent Power Solutions Inc (FPS), Gap Inc/The (GAP), Hormel Foods Corp (HRL), IREN Ltd (IREN), Marvell Technology Inc (MRVL), Rubrik Inc (RBRK), SentinelOne Inc (S), Ulta Beauty Inc (ULTA), Workday Inc (WDAY). On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com

Okta surged 18% and CrowdStrike climbed 9% after twin Q2 beats, with CrowdStrike raising its full-year net new ARR growth outlook by 630 basis points. CIBR gained 3% Thursday and is up 31% year to date, with Palo Alto Networks rising 5% on the sector read-through from both reports. Okta's billings dropped 5.4% to $681 million, a bookings softness that could test the AI-agent identity rally in analyst follow-up notes. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and CrowdStrike didn't make the cut. Grab the names FREE today. Cybersecurity stocks are outrunning the broad market Thursday after twin fiscal Q2 2027 earnings beats from Okta and CrowdStrike reported Wednesday after the close. The First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR) is up 3% to $96.20 in early Thursday trading. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is up 0.3% to $768.17, a fraction of the sector's move. Okta (NASDAQ:OKTA) stock is surging 22% to $163.98 after fiscal Q2 2027 results reframed the identity leader as the security layer for AI agents. Meanwhile, CrowdStrike Holdings (NASDAQ:CRWD) stock is climbing 13% to $213.70 following its own beat-and-raise report. Okta stock was up 55% year to date through Wednesday's close, and CrowdStrike stock was up 61% over the same period. Peers Palo Alto Networks (NASDAQ:PANW) and Fortinet (NASDAQ:FTNT) are riding the read-through as the platform trade in cybersecurity gets fresh validation. Palo Alto Networks stock is up 5% to $356.17, and Fortinet stock is up 1% to $159.51. Both names sit among CIBR's largest disclosed cybersecurity-focused positions alongside CrowdStrike. Okta reported revenue of $805 million, up 11% year over year, and adjusted EPS of $1.05 topped consensus. CEO Todd McKinnon stated, "As AI agents transform every layer of technology, every agent needs a trusted identity and clear controls over what it can access and do." Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and CrowdStrike didn't make the cut. Grab the names FREE today. CrowdStrike posted revenue of $1.47 billion, up 26% year over year, with adjusted EPS of $0.31 clearing estimates. CrowdStrike raised its full-year net new ARR growth outlook by 630 basis points, and CEO George Kurtz declared, "Q2 was the best quarter in CrowdStrike's history. Delivering record Falcon Flex results, record net new ARR, and accelerating growth, the Falcon is soaring." CrowdStrike posted the faster growth and larger guidance raise, yet Okta stock is climbing nearly twice as much Thursday morning. Okta had lagged the group heading into the report, slipping 2% over the trailing month through Wednesday's close, while CrowdStrike stock had gained 5% over that same stretch. That setup created a sharper snapback when the identity thesis received fresh AI-agent fuel. The re-rating reflects growing appreciation for the agentic identity category McKinnon has been building. Speaking with CNBC, McKinnon added, "Network is the biggest cyber category now, but if you look out five or 10 years, with millions of agents running around, it's definitely going to be identity." Okta also closed its purchase of threat detection startup Permiso Security in a deal worth around $200 million. CrowdStrike was already priced for excellence entering the report, carrying a market cap near $188.7 billion versus Okta's $22.9 billion. Wall Street's average price target sits at $210.53 for CrowdStrike and $146.34 for Okta, meaning both stocks are pushing past those consensus levels Thursday morning. That valuation gap helps explain why the same beat-and-raise pattern is producing very different reactions. The blemish worth naming: Okta's billings came in at $681.2 million, down 5.4% year over year, a gap between headline strength and underlying bookings that will draw questions on the call. Okta's raised full-year revenue range still implies growth in the low double digits, well under CrowdStrike's revenue pace and net new ARR trajectory. Investors can watch for whether Okta stock holds Thursday's rally into next week, as the billings soft spot will bump up against the AI-agent narrative in follow-up analyst notes. Traders could look for signs that the read-through extends to Palo Alto Networks and Fortinet as the cybersecurity platform trade absorbs the twin reports. CrowdStrike generated free cash flow of $377.4 million in the quarter, and Okta produced $227 million in free cash flow versus $162 million a year earlier. Both companies are pairing accelerating fundamentals with expanding cash generation, which keeps the cybersecurity platform trade a favored destination for growth capital. The cybersecurity ETF was up 31% year to date through Wednesday's close, well ahead of the SPDR S&P 500 ETF's 12% year-to-date gain. Investors should size their positions with that stretch in mind, since much of the beat-and-raise setup is now reflected in prices. Even the bulls may want to leave room for guidance revisions and follow-on analyst commentary to drive the next leg. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and CrowdStrike didn't make the cut. Grab the names FREE today. Contact [email protected] for any questions or corrections.