Shares of Okta (NASDAQ: OKTA) soared on Thursday after the identity management leader delivered strong quarterly profits.
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AI agents have the potential to automate huge swaths of the economy, boosting productivity and slashing costs along the way. Yet AI agents also pose a dangerous threat to digital infrastructure and traditional data protection systems.
High-profile breaches -- such as when OpenAI's models compromised parts of Hugging Face's systems -- are driving businesses to spend more on cybersecurity solutions. Okta, as a leading provider of identity and access management tools, is benefiting from this trend.
Okta's total revenue rose 11% year over year to $805 million in its fiscal 2027 second quarter, which ended on July 31.
"As AI agents transform every layer of technology, every agent needs a trusted identity and clear controls over what it can access and do," CEO Todd McKinnon said. "Okta helps organizations discover agents, secure their connections, govern their actions, and respond when something goes wrong, giving them the flexibility and control they need to deploy agents safely and at scale."
It's a lucrative position to hold. Okta's adjusted net income jumped 15% to $194 million, or $1.05 per share. The cyber guardian also generated $227 million in free cash flow, placing its FCF margin at an impressive 28%.
Okta now forecasts its full-year revenue to grow by roughly 11% to $3.2 billion. Management also projects adjusted earnings per share of $3.90 to $3.94 and free cash flow of $910 million to $930 million.
"The emerging use of AI by organizations and threat actors alike has further elevated the role identity plays within a company's security posture," McKinnon said during a conference call with analysts. "Organizations are accelerating their infrastructure modernization timelines to address this heightened threat environment."
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Okta. The Motley Fool has a disclosure policy.
Okta's Stock Is Surging. Here's Why This Top Cybersecurity Stock Is Still a Buy was originally published by The Motley Fool