Shares of Okta (OKTA) surged approximately 20% in early trading Friday, after the identity security company delivered better-than-expected fiscal first-quarter results and received a series of price target upgrades from Wall Street analysts.
The company reported adjusted earnings of $0.91 per share on revenue of $765 million, surpassing consensus estimates of $0.85 per share and $752 million in revenue. Adjusted earnings exclude certain accounting items such as stock-based compensation.
Revenue rose 11% year-over-year, matching the growth rate for subscription revenue. Current remaining performance obligations (cRPO), which represents the subscription backlog expected to convert into revenue over the next 12 months, climbed 12% year-over-year. Total remaining performance obligations increased 16% to $4.719 billion. Free cash flow came in at $271 million.
Following the results, RBC Capital raised its price target on Okta to $122 from $108, maintaining an Outperform rating. BMO Capital Markets analyst Keith Bachman lifted his target to $120 from $95, also keeping an Outperform call, citing a solid April quarter with revenue and cRPO beats as well as above-expectation July-quarter cRPO guidance. Mizuho increased its target to $110 from $100, maintaining an Outperform rating, noting that 12% cRPO growth beat both its own and the Street's estimate of about 10%.
CEO Todd McKinnon highlighted the role of artificial intelligence as a demand driver, stating that "AI agents are rapidly becoming a new workforce inside every organization." This refers to software agents that perform tasks and require access controls, a trend Mizuho described as "agentic AI momentum" that is still in early stages but beginning to accelerate.
For the fiscal second quarter, Okta forecasts revenue in the range of $790 million to $794 million, with adjusted earnings per share of $0.95 to $0.97. For the full fiscal year 2027, the company expects revenue between $3.185 billion and $3.205 billion, and free cash flow of $855 million to $885 million. Management cautioned that shifting more professional services work to partners is expected to trim about one percentage point from revenue growth.
Okta reported a 6% increase in customers with annual contract value over $100,000, reaching 5,180, while customers spending more than $1 million rose 19% to 570. CFO Brett Tighe pointed to "cRPO strength" and "robust free cash flow" as key positives.
Despite the strong rally, the stock now trades above the average analyst price target of $107.03, according to MarketBeat data covering 41 analysts, with one sell rating, nine holds, 30 buys and one strong buy. This leaves limited upside and sets up the stock for potential downside if enterprise spending softens or AI agent adoption takes longer than expected.
Competition remains intense in the identity management space, with Okta facing rivals Ping Identity and SailPoint. Analysts note that SailPoint faces pressure from both Microsoft and Okta. Companies are reassessing identity systems amid broader AI adoption and stricter security regulations.
Investors are rewarding execution in the current environment, but the sustainability of Friday's re-rating will depend on continued momentum from large accounts and the pace of AI-driven identity demand.
