After reporting better-than-expected Q2 results and announcing the acquisition of Israel-based Axiom Security in response to the growing demand for AI-driven identity software, Okta's shares jump 16%.

Following the release of data that above expectations, including adjusted earnings of 91 cents per share as opposed to the 84 cents anticipated and sales of $728 million, which exceeded predictions of $711.8 million, Okta shares surged 7% in after-hours trading on Tuesday.

At the end of July 31, Okta's fiscal Q2 sales increased 13% year over year, and its net income increased from $29 million (15 cents per share) to $67 million (37 cents per share). CEO Todd McKinnon told CNBC the results were better than anticipated, despite the previous guideline reduction brought on by macroeconomic uncertainties. However, following the Department of Government Efficiency's January debut, U.S. government clients continue to exercise caution.

Brett Tighe, Okta's finance officer, told investors that federal renewals were robust, highlighting the importance of its solutions, even in the face of certain contract restructuring and procurement delays with civilian agencies. At 106%, net retention remained constant. According to CEO Todd McKinnon, who spoke to CNBC, businesses will require identification software for AI agents more and more, opening up prospects for development. He also said that offering packaged goods could help firms expand even more. Management forecasted sales of $728–730 million and adjusted EPS of 74–75 cents for the fiscal third quarter, which was somewhat higher than LSEG's revenue estimate of $722.9 million. Okta increased its fiscal 2026 prediction, abandoning prior economic conservatism, and projects current remaining performance commitments of $2.260–$2.265 billion, which is somewhat over StreetAccount's average.

With $2.875 billion to $2.885 billion in revenue, Okta now reports full-year adjusted profits per share of $3.33 to $3.38. According to the LSEG average, $2.86 billion in revenue translated into $3.28 adjusted profits per share. Okta reported $3.23 to $3.28 per share and $2.850 billion to $2.860 billion in sales for the entire fiscal year in May.

Palo Alto Networks, a cybersecurity company that extended its alliance with Okta in July, revealed intentions late last month to pay around $25 billion to purchase Okta rival CyberArk. As no single provider can satisfy every demand, McKinnon claimed in a CNBC interview that Palo Alto's strategy of combining all security services restricts consumer choice. Palo Alto said it would not comment. Okta said earlier Tuesday that it will buy the data access management firm Axiom Security, based in Israel. The terms were not revealed. The Nasdaq increased 11%, and Okta shares ended the day up 16%.