Okta's Q1 earnings cleared Wall Street expectations, and the company believes a massive market for AI-agent identity management is brewing on the horizon.

Okta's new-product portfolio saw strong demand during the April quarter.

Identity-management software company Okta delivered a revenue and earnings beat Thursday - the latest sign that identity security is becoming increasingly important in a world full of artificial-intelligence agents.

For the first fiscal quarter of 2027, Okta reported revenue of $765 million, up 11% year over year and clearing the $752 million FactSet analyst consensus estimate. Okta reported 91 cents in adjusted earnings per share; analysts had been anticipating 85 cents.

Shares of Okta climbed 9% in Thursday's after-hours session toward a 10-month high on the news, after closing the regular session up 5.8%.

Revenue growth was driven by strength in Okta's core business lines and particularly its new-product portfolio, which drove 35% of bookings during the quarter, company co-founder and CEO Todd McKinnon told MarketWatch.

Additionally, McKinnon sees identity products for AI agents becoming a prominent growth driver down the road, as enterprises look to manage and secure autonomous nonhuman actors. He anticipates Okta becoming a centralized platform that customers use for both human and AI agent identities.

"We have this future potential wave of business and demand from these AI agent products that isn't even really in the results right now," McKinnon said. "We're not even totally factoring much into the guidance, so consider that huge upside potential."

Current remaining performance obligations - or the amount of signed customer contracts expected to convert to revenue in the next 12 months - came out to $2.50 billion, above the $2.42 billion anticipated by Wall Street analysts.

For the current quarter, Okta guided for revenue between $790 million and $794 million, in line with the $791 million analysts were expecting. The company expects between 95 cents and 97 cents of earnings for the July quarter, in line with a Wall Street consensus of 96 cents at the midpoint.

For its full 2027 fiscal year, Okta guided for revenue between $3.19 billion and $3.21 billion, surpassing analyst expectations of $3.18 billion.

After being caught in the broader software selloff earlier this year, shares of Okta have since rebounded. They're up 28.6% in May through Thursday, but up just 9.5% year to date. That compares with the S&P 500 index's SPX 10.5% rise this year.

McKinnon also emphasized the company's share-buyback plan, which was introduced in January of this year. Okta has committed to buying back up to $1 billion in stock, and spent $248 million repurchasing shares during the first quarter.

"I strongly believe it's undervalued. That's why we're buying it back," McKinnon said. Other software companies like Salesforce (CRM) and Palo Alto Networks (PANW) are following a similar share-buyback playbook.