Okta just delivered a surprise earnings beat that sent shares up 4% in after-hours trading, with CEO Todd McKinnon crediting economic conditions that proved 'much better than we thought.' The identity management giant raised its full-year forecast while navigating a shifting cybersecurity landscape marked by Palo Alto Networks' massive CyberArk acquisition.
Okta just proved the cybersecurity earnings season isn't dead yet. The identity management company delivered a clean beat across the board Tuesday, sending shares up 4% after hours as CEO Todd McKinnon told CNBC that economic conditions were 'much better than we thought.' The results mark a sharp turnaround from May's cautious guidance adjustment that had investors bracing for macro headwinds. Instead, Okta posted 91 cents in adjusted earnings per share against the 84-cent consensus, while revenue of $728 million topped Wall Street's $711.8 million estimate. The 13% year-over-year revenue growth signals the enterprise software recession may finally be loosening its grip on identity management spending. McKinnon's optimism reflects a broader theme emerging from this earnings cycle - companies that survived the 2023-2024 software downturn are finding their footing again. Even U.S. government customers, who've been 'more careful about signing up for deals' since President Trump launched the Department of Government Efficiency in January, according to McKinnon's interview with CNBC, haven't derailed Okta's momentum. 'But even under that additional review, we did really well,' the CEO noted. The results gain extra significance against the backdrop of Palo Alto Networks' aggressive $25 billion acquisition of CyberArk announced last month. That megadeal, which creates a cybersecurity giant spanning from network security to identity management, puts direct competitive pressure on Okta's core business. McKinnon didn't mince words about Palo Alto Networks' strategy during Tuesday's results call. 'Palo Alto is going to be like, "You have to buy security from us, and your endpoint from us and your SIEM from us and your network from us,"' he told analysts, according to the CNBC transcript. 'We just think that's wrong, because customers need choice. It's very unlikely they're going to get every piece of technology or every piece of security from one vendor.' The philosophical clash reflects a broader industry debate over whether customers prefer integrated security suites or best-of-breed solutions. 's bet on the latter approach appears to be paying off, at least for now. The company's net retention rate held steady at 106%, indicating existing customers are expanding their deployments even as the competitive landscape shifts. Looking ahead, raised its full-year fiscal 2026 guidance to $2.875-2.885 billion in revenue, up from May's $2.850-2.860 billion range. The company also boosted its adjusted earnings outlook to $3.33-3.38 per share from the previous $3.23-3.28 range. Those numbers suggest management sees the current momentum as sustainable rather than a one-quarter blip. The AI angle provides another growth vector. McKinnon highlighted how 'companies will need to buy software to manage the identities of artificial intelligence agents working in their environments,' positioning to capture spend as enterprises deploy more AI tools internally. It's a smart positioning play that connects 's core identity management strengths to the hottest trend in enterprise IT. also moved to strengthen its portfolio with Tuesday's acquisition of Israeli startup , which specializes in data access management software. While financial terms weren't disclosed, the deal signals 's intent to expand beyond traditional identity management into adjacent security categories. The timing couldn't be better for shares, which have gained 16% year-to-date compared to the 's 11% rise. Tuesday's after-hours pop suggests investors are buying into management's thesis that the identity management market has room for multiple winners, even as consolidation accelerates around them.
