OKTA - Earnings call transcript Q4 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for joining today to discuss Okta's Fourth Quarter Fiscal 2018 Conference Call. Today's conference is being recorded. I'd like to turn the call over to Catherine Buan, Vice President of Investor Relations. Ms. Buan, you may begin.

Catherine Buan

afternoon. Good and Buan, joining Relations call us Okta's fourth Catherine thank Okta, to of financial fiscal for XXXX you on quarter VP is at Investor and discuss results. This year fiscal today's conference With Co-Founder Okta's and me Officer. and the Chief Chief Chief McKinnon, Frederic and Losch, Co-Founder Financial Bill Operating today Officer; call Officer; Kerrest, Todd today's company's on are Executive the company's statements Reform pursuant the Statements of to safe positioning. made include on not of Litigation this harbor regarding outlook but Private including, forward-looking Securities statements our Act call XXXX provisions to, and the limited financial market

performance statements cause achievements by implied risks, forward-looking our unknown uncertainties expressed to statements. known performance the may results, results, that achievements or factors from or Forward-looking actual different involve be or and and materially other future any

should You as rely statements forward-looking not future predictions events. of upon

assumptions our such represent beliefs statements management’s made. statements are date Forward-looking as and of the only

are non-GAAP accordance their superior, related financial to of use during There for the non-GAAP or performance measures to discuss today’s call, of number versus are non-GAAP not GAAP. substitute of to and closest in prepared financial measures will GAAP In financial equivalents. addition, these we a measures. in with measures financial limitations These addition

Exchange comparison. in XX-Q quarterly included with Risk could usefulness measures results calculate and the to our may on the financial information evaluate that the as SEC. or with in which our the Commission is earnings previously non-GAAP Company’s For the we to example, other Factors time, time financial companies is available these the titled including Further may reconciliation filings Form release. from section other make of for use report and filed affect of Securities tools reduce non-GAAP A GAAP could and factors financial measures other measures non-GAAP differently in their all measures between performance, financial

financial statements includes also on posted and financial our more materials, our Website. key Investor trended information detailed supplemental in find Relations metrics can You which

McKinnon. like Todd? to I’d Todd over to Now, turn the call

Todd McKinnon

everyone, quarter in for the us Thanks, company versus This in the year, fastest-growing the revenue up grew SaaS public and of Subscription joining of XX% was markets. thanks, last today. up one Catherine, the for making company revenue quarter, million, XX% us even $XX.X with faster a record year-over-year.

were XX quarterly percentage improved year-over-year, addition, In cash margins billings up flow points. free XX% while

core is, Our highlights this, in year performance leverage beyond clearly is love that high But of our fiscal the shows the customers. there it both growth our that and value business. and number one importance over our increasing

our result, from Our to that total add XXX and mantra to on And over is focus they us. invest achieve our grow customer single as add highest customers, our in ever partnership. new Okta a net in the and a a quarter value of grew count success to X,XXX, quarter, representing customer continue ensuring net their long-term with customers

XX% now year-over-year, an of the dollar XX% quarter. Our as on with was months in accelerating January for XX growth past from over XX. the net rate previous $XXX,XXX an us, basis Furthermore, customers XXX annual XXX% retention spend of year-over-year increase

Here investing Okta in are customer wins some examples in their businesses. and the of why they for quarter key are

specifically Access our Management. legacy migration Directory, offering, away sign-on, Cloud to JetBlue a of Lifecycle from average targeted award-winning their QX and of First, customer in identity on support which single secured than in customers Management shows travel and by Okta Universal for their API premium service the flies part win TrueBlue was customer Their and program millions loyalty fueled booking API year reliable with million a providing is more technologies, growth JetBlue, and a daily strategy Identity XX experience products, an new Mint. X,XXX customer their and flights management. customers

OpenID The business-critical support the as to supply connect business customer looked all modern top help The roll five They support protocols portals a as to support BXB support new solutions and and did that modern to rapidly we Okta U.S. solution accomplish identity Cloud applications custom and extended Okta company the such not purchased chain. these changing integrations OAuth. costly, The second Legacy out to network needed its added three enterprise example, a model. customer. a in products its of its goals. Identity were wireless required

uses Adaptive employees currently help XX,XXX and Multi-Factor Lastly, to cloud this Okta technologies. on-premise Single Authentication its approximately quarter. an upsell Farmers securely Insurance connect with Sign-On and

for the our across enterprise as their solutions examples multiple and These evidence products case their potential increasing environments. hybrid two expanded customer and market, we demonstrate are products of Farmers and upsell This relationship several of they customers customer or Then have. our our with we provide was further also the applications identity. with quarter, start They dedication Many relationships customers the adding customer into of Okta quarter, as with penetration users. expand one may our more products. based on positive with experience, their this to

of need use best the to Integration an provide system, best have and need and they If to and CIOs to use collaboration, each successfully technology, does move at our Box solutions When OneDrive, pace. products to I and any Cloud. and the and vendor and have use work have use the organization technology. CRM, networks to to with talk can Okta rarely and to to the to dominating their IT continuing all to the infrastructure. just use spend they systems we and dictating customers Okta best-of-breed, XXX and Slack, want the environment are the invest technologies. vendor of have not best wants the they cloud We to Through integrations products talk and replace also in one it, customers, hybrid Customers legacy devices, support don't need file customers in across or good CSOs enough their one Skype the one order best thanks Network, Office experience, the do they unified Identity other. can

their cloud help is I and Every sense other Okta thing, believe any solution to company convinced customers. our to users, feels that bearing all foundational turn organization, a urgency we organization's areas of hear of the fiscal company, start. is and Network. the as We focus to that the linchpin to to they customers all we want identity become use key is any like future. strategic With The consistently the has organization technology that for out. enable our results the our outside a Integration problem. today this in year: from to Okta to that from a systems been some security; securely connecting both the This remain are inside I toward this of identity this now they in need and move now With customer manage an Cloud mind, mission would and Identity to market; the technology their and

in we First, share and has believe we can social on front to security. our engineering-based increasingly The focus phishing spend increase shifted attacks of landscape on credentials.

has much breaches prevent access Cloud Okta gain it to been Identity that The compromised security positioned data. stolen more to weak the critical strategically to or make accounts credentials. help involve fact, In it is and enterprise XX% for stack in difficult of attackers reported

devices billions and of customers significant to redefined will Modern competitive into landscape. events visibility like will solutions ahead the represent Okta continue have authentication today’s stay edge of and attackers. across unique Our our help their of a users identity millions security sophisticated active

ways as Second, overstated but we want company every their scale we to significant its be referenceable become technology technology interact identity the their experience. and to The securely to enterprise win identity applications. identity, does. its in customer importance market. traction bring before leading customers big already company identity a cannot our find We infancy, the to with better competition customer an market and have deployments accounts With customer-facing is their to enhance has organization’s with doing

As engaging information and companies organizations their helps Okta Cloud by customers understand system streamlined are personal their secure. better. with protect Okta digital customer helps keep The it happy securing by keeping Identity and businesses experiences, helps them more control hardening access customers more their their customers information while own helping their and

We best-of-breed expand them single me important they a through partnered world, talk with integrated. major Integration In so over the most tell to the X,XXX make that best system continue Third, that allows Network. with we our applications is we vendors they We this leverage your technologies platforms. mode. do now all customers, use to integrations to prebuilt sure a providers. infrastructure I platform. technology will and Okta with and need When to believe competitive business. stays the to Okta have their thousands We and of run

any to vendor you any and connect choose can You relevant technology. can

immediately leveraged an enables a partner effect. one powerful our platform by leading of by be integration to customers network model all to customer Our

these in about We areas will more up XXth this Las focus Vegas. coming at May be Okta XXnd announcing through

President also Stay We’re have thrilled Obama tuned for all to the Barack keynoting. news.

we excited our ahead, potential. look As about we’re

have customers, but We the Identity Okta need more thousands X,XXX Cloud. over

broad from in the finally, customers we’re success of portfolio. adoption our in existing product greatly Our early can our XXXX. benefit And very further Global

I you making turn in you. A Okta. back Bill, call We’re at over And our and our investors, because capitalize hand like people to the work, hard I I’d years to sure to and to our And opportunity results. over it walk are this customers, success want through the at Bill? front our financial we of thank partners one quarter here to of both Bill us. the before our over like now on

Bill Losch

year up for into results in had the totaled million, quarter our the an $XX.X fourth year. thanks us. Thanks, last strong fourth the of of our over Revenue and for our XX% joining very million quarter, $XX go in successful the again of XX% $X.X XX% through Subscription comprised the year-over-year. outlook. service total for everyone increase of year-over-year Professional growing Todd, Okta. fiscal revenue from period marked getting which quarter quarter last I’ll before fourth XX% was revenue revenue, to an We for the year increase million, year. XX% same end fourth and a and QX first totaled

of breakdown, XX% revenue came the year. approximately QX to fourth compared the XX%, our XX% in respectively, last from geographic U.S., quarter outside of XX% U.S. terms and from came In and

growth, revenue to early on to for the outpace XXXX, overall continues of we our international while Our revenue remain nicely in year-over-year. international grow and revenue year International continues stages business international XX% grew fiscal opportunity. growth capitalizing

result billings billings to of last across be in and very quarter, QX the We billings with a in as by we strong calculated Moving on customers year. commercial Also, deal XX% over results of of was our release the increase as momentum of in achieved to upfront on customers in had multi saw an few existing sizes. million and mentioned driven the a well enterprise in year billing. quarter another billings. an billings we segments continues for partially growth $XXX.X preliminary XX, increase and as both February new with Strength

current momentum We the billings, believe at which our fourth business. also we in Current in XX% represent closely year-over-year the billings more grew quarter. look

base Our customer balanced customer consistently strong momentum, both driven and been our has with within new growth by billings additions.

XX% was largest of last enterprise these in last up quarter, ended strength we the segment, over the only ARR we discussed, we new quarter X,XXX over Todd did customers growth also market. having As customers, our net enterprise success saw see ongoing in but in additions the number quarter, commercial the quarter Not with than year-over-year. new over quarter the strength seen. we’ve in the also We year. representing The quarterly space. our majority quarterly greater fourth the with addition of the with fourth were addition ever customers, to largest of of $XXX,XXX customers XX% customers demonstrating of XXX the we’re saw Similar

over we in success net the our XX-months dollar-based strong Our expanding are base. demonstrates been for historically which XXX%, the ended XX. has within January having retention XXX% existing at customer This rate, trailing came ongoing

that Before turning point to like I results expense going be would I items will non-GAAP profitability, to and forward. out discussing

materials non-GAAP was up results, posted well on margin XXX last points found results, the XX.X%, Relations our and versus our year. between as can Investor the earnings financial Subscription quarter gross reconciliation release supplemental website. be basis as Our the in fourth with GAAP along GAAP

up XX.X% high a and Our quarter, basis XX.X% professional in was up negative points services gross compared trend new over profit fourth continues XX% quarter to was the gross last year. higher margin year-over-year. million, Total negative fourth in of Gross reached year-over-year. to the XXX margin $XX.X XX.X%

margin we steadily gross increased has have Our operational experienced improving been increasing leverage. as

that Turning our our on operating now We to proven for expenses. improving investments balancing model focused growth remain our has works. leverage, performance while and

improvement and points margin to year. consistent operating quarter We last demonstrate non-GAAP fourth XX margin have improved continued year-over-year in the over

we we on our quarterly as faster grow continue at We margin growth expect our subscription will our that rate our but as margins fluctuations a to operating our will annually operating business, see revenue expenses. improve operating to than total continue

to which in I’ll year. as a We benefit in last a This for million in to XX% marketing fourth of million compared revenue, discuss Sales XXX, of operating year. expect result $XX.X QX ASC a compared more XX% our represents also improvement see last minutes. detail few margins adoption $XX.X was the an and quarter QX of total to in to expense

We in but last $XX.X our compared remain in down we in are in beginning from strategies scale slightly the QX capitalize This QX expense as the efficiencies on we sales in year. to XX% go-to-market and revenue, million pleased QX with our investing last of XX% business, the see are $X.X D opportunity. operational to we marketing market substantial was year. to on we saw R& to equates million, focused

what a added in invest consistent with public have in fourth to to million grow G&A last XX% required infrastructure evolve QX fourth $X.X compared our for continue and continue G&A we at R&D the was a revenue, million company. personnel quarter to support the quarter, as We we year. the as systems year. expense we last basis products. pace absolute expenses an on saw in of $XX.X G&A and to was growth enhance our as moderate and

to negative Net to share the $XX.X Free per time. million year. the XXX quarter shares negative QX $X.X margin a last QX in was net million last. million in compares period flow year. loss to quarter negative $X.XX million outstanding. was in was per improvement, flow Operating share in last a was that loss $X.XX of loss loss QX million $XX.X $X.X with cash million the with in compared was last compared compared compared XX quarter XX.X% a negative This flow quarter basic to of positive compared a basic Operating shares in for in in cash at X.X%, million the year. XX% operating margin outstanding QX same fourth XX.X $XXX,XXX cash XX%, was $X.X last negative to fourth year. point the negative a negative to Free Our

collections. strong flow from Our in free benefited cash the quarter bookings and strong

due margin, are in with we improvement we to office working our our free free While ongoing expansion of variability in with with expect ongoing increased in cash flow see flow pleased cash to associated margin fluctuations along the coming quarters capital. CapEx

to cash and the $XXX.X with investments. the fourth in sheet. We million quarter equivalents balance Turning short-term cash, ended

potential to convertible in respond opportunities. approximately strategic additional that in $XXX resulting balance to flexibility raise capital business sheet the year-end, added Following and million scale us we financial any This fiscal the offering in from with help to we cash quarter, first note quickly February. closed senior our provided our

of Lastly, growing XXXX, over our XX% XXXX. total XX, headcount January was January XX, X,XXX as

$XX.X XX% board across the million, support full over as earlier, year totaled growing Calculated Current billings the XX% increase revenue more million, billings, negative a revenue, $XXX.X finally, of Subscription year-over-year. of fiscal XX% And mentioned or was cash which, was add up negative were million for on totaled our touching increase million as of to Operating momentum business, fiscal revenue XX% in of $XXX the XX.X% the XX.X%, of million business. an Gross highlights in revenue, continue to $XXX.X XXXX. we was the headcount last meaningfully our improving $XX.X million, revenue. growth full XXXX in or $XX.X year. increased an closely million, Quickly free from of fiscal financial compared XX% totaled I year-over-year. flow year. of XX% margin XX.X% fiscal the We Revenue year-over-year. XX.X% loss XXXX. or represent from $XX.X

course, XXX of Before into are full new we going in discuss overall. revenue adjustment posted is will which, expect $X our adopted $X I our will headwind will to X, million the marketing the and approximately to full of adjusted to method, the expenses, We revenue, million. our adjustments headwind operating outlook, net sales $X year, loss revenue the resulting and our of the to the and $X approximately which expect this million of and we year see improvement impact expect an and in million and there XXXX. for standard our accounting adoption get non-GAAP we lower flow. XXXX occurred the lead our I’ll on financial of from provide I’m results financials ASC standard, the summarized minimal recognition described materials about to ASC no XXX February XXX. using fiscal impact compare under retrospective the website. adjusted I’m our to guidance be corresponding that standard XXXX the our fiscal the about and growth on to provide on in just historical new Investor Relations for adjustments free to includes business has I accounting guidance cash to rates XXX, our Note that The XXXX a under Under forward

the first XX% $XX.X $XX.X million expect growth range million million operating a of outstanding. of quarter XXXX, Non- range range to revenue loss in per weighted $X.XX, to we GAAP to XXX million. $XX GAAP net fiscal shares a $XX in representing the loss For the of Non- million to year-over-year. XX% rate $X.XX share of in assuming

weighted $XXX GAAP full to rate to fiscal $XXX of million. expectations you for growth range million over-year. given a XXX in our outstanding. to color San to in on of we Francisco headquarters. XXXX representing shares per XX% the like net of Non- in loss operating to investments fiscal some loss XXXX, new assuming also $XX $XX a CapEx Non-GAAP the give year in range revenue million the expect our $X.XX million range of For $X.XX the million year- XX% I'd

associated will move, As on which our guidance have fiscal been quarter, incorporated XXXX. our be expenses there for the we mentioned operating with call last into

also year, In capital quarter. resulting from course We see in remind would the great the of we expenditures you we over the a expect million fiscal $XX to summary, had of the space. build-out that new

year questions. our note. public will our have a and the forward company ahead. out Todd, look We building on to I We as fiscal in that, momentum to take quarters pleased your on high first are Frederic closed With Operator? a

Operator

Thank you. Please with our go Humphrey. from first Robinson [Operator Instructions] ahead. we'll And question Tillman SunTrust Terry take

Terry Tillman

whether as afternoon great it's all in Agile you it identity? privilege good relates a businesses, the quarter the extremely what to traction. adjustments. making apps that into on commercial it a well opportunity? that infrastructure of about Where the Todd, other first just, areas Bill I’m or that congratulations see obviously, in workers just as with are first Hey, getting in are question DevOps and the just lot businesses, for and and are secure easier for was interesting the and like doing enterprise – guys a you? development, And for cloud But thanks more or way. just helping opportunity Todd, of an things sure around you such proliferation detail And work. really Businesses knowledge and these deal how great is there use @ event have you that. to the And report, Work was different question

Todd McKinnon

Yes.

defined identity is and things areas Cloud about all that it. a Identity of lot platform around cool the there's of One of type this interesting really, we've this, around the new

the core is, you main mentioned focused is big you couple two about. identity, But and talked I So One then of identity. the things and that. employee really we're customer that really mentioned, like areas on as yes, DevOps them, a

technology customers customer of thinking about is they that. If and how be connecting better a more you securely of company about those every customer can big websites, company, think apps identity and mobile build a to part

us third area exciting the really then Okta priority we expand continue And mentioned very to that a that's is for So for us. big Integration Network. the

markets. of So come other these up. do – of lot a we're big but And adjacencies as broad also – about yes, a but also momentum, work they lot opportunistic we have we're on have we to

Terry Tillman

what And with vary these which focus. products? to apps. early interact traditional of of to the customer kind Okay, And on great. had of with engage a and you can lead in Maybe just is sell how would a then in in there big versus to your terms wins learnings all design just being and selling what just be important able you trying they have developed being have go-to-market that follow-up all out an that identity, quarters Thanks. developers just because is customer – identity update motion

Todd McKinnon

identity mentioned last Customer JetBlue identity sure. A robust quarter. I Insurance, very was comments about in is the win a examples customer really the Farmers a new then Yes, about for very well. I great which customer, prepared used, at upsell was strong. and of and the was my us That couple was as customer upsell identity

does have calls, solutions a talked about engineers this previous at in there and So because constituency potential building customers. robust, the the the and – we've are momentum there really of as business new potential that's and The our – does there, that part developers it the the these on mentioned, growth is big. growth and it – the you new have – the there there a is

those with enabled out and the and – where identity packaged prebuilt – kits is SaaS product or from and involve engineering identity, applications, we've things. UIs made employee developer technology offering most So tons for team and languages. are different the vendors all developer-facing our of those usually best, product building stride has about the team applications or the software last community And customer the development year or to API and modern reaching that's

yes, driving so of and in it's some there, progress about excited identity market. that success super we're our customer And we're – the

Frederic Kerrest

Frederic. And this is

had represented weeks everything couple just ago, integrated I to add conference ago the about I a It to developer-focused are start. team are that, from there. San that and in first Francisco. Stormpath tangible great from lot that, and we'll a first documentation, leading partners here seen great how those great moving companies our some that's just Iterate some of do and called uptake good We into more a hosted by developer a best examples expect – other company software of our to was we some in forward year the think of I our we the since we're think out Just we've of traction library there.

Terry Tillman

Thank you.

Operator

And we'll Rob question next take Capital our from KeyBanc with Owens Markets.

Mike Casado

This Casado Owens. on is Mike for Rob

the additions seen Given customer in quarter this upside? of as comment that we've with to equipments, record additions as an well on the customer deal momentum the in large relative two can activity additions, consecutive record expansion you quarters cohort, deal quarter's explaining large contribution

Todd McKinnon

try happy on to color give We're Yes. that. to

and identity, And numbers think, forward. represented of all customers, customer to why we've at of the I especially you metrics the the bigger but and paying focus neutrality big the us Okta things over drove Network, disclosed the the by a Integration consistent they're more with I what part they, before. customers of describe doing this about, of going think kind relevant to look customers, deals. which things, customer strategic we and even our more customers apply – new going upside, what these size, forward, these apply and is heterogeneity larger security the that's $XXX,XXX the our and customers that's more ARR, if more kind count that's focus that talked Those

I upside the characterize there. So how that's really would

Frederic Kerrest

actually seeing time the very it's sign Frederic. in a solutions add – more and enterprise we're not seeing back, cloud your early with you companies Yes. and adoption. just that shift Mike, mentioned help them trend. that more enterprise acceleration. to question, think so we the of taking that, but can that and powerful is you're growth that this It's just this of opportunity of kind that the an increased a and I'd first adopting step – ongoing this And in I the it's

Mike Casado

context No. planning potential at we've year set the sense. the speak the floors rep targeting into you for Thanks, can sales organization, you makes metrics guys hires, in scaling heading to look as may then Fred. productivity that's momentum at the in incremental of you're the throughout internal whether or you the least year? or That seen, And

Todd McKinnon

The several sales now paid look want we and also be basically Yes. time. possible, and we floor that at, marketing and this cost And fast our is want as that managed back. – years payback grow to investment that as want to that's at we've to way marketing right, of sales we to the for we over look but so

grow and point where So not cost make investment you're as a sure your it you can as but it's like doing that becoming marketing sales fast and is inefficient.

So we're years last that. been we've and the how that business, the kind – that's of we done that's manage consistent for four

Mike Casado

the taking for Thanks guys. sense. makes question, That

Operator

from And our we'll take next JPMorgan. question Sterling Auty with

Sterling Auty

that introductions means Thanks. we those Hi, that guys. what to new product Wanted this for goals? to ask, Todd, translate you possible or interpret do laid XXXX. into How out the accomplish priorities year for

Todd McKinnon

give up, so strategic that – say, customer Okta and Network. I the well, away areas broadly the identity can't I have areas, are Integration that Oktane security, we speaking, but I coming everything would outlined think because I focus

aren't those Lifecycle things are that specific products, like Single Sign-On, API notice Management, Management. Our Universal Directory, products You'll right? Access

those be those So our can do broaden areas lot – we with can those focus we really focus areas. within focus current products, product can portfolio a also those in our and areas

on both year have working and after hard that. And some we're we're next the at excited years the kind and dimensions, about Oktane. of we'll So updates

Sterling Auty

good. one Sounds follow-on. And

you least of qualitatively customers? how in product quarter seeing to areas, the those strength kind at terms look where you the at of As rank you're of choices the order the would biggest in pull-through

Todd McKinnon

wins I identity, from questions was different we materially just in in identity It or customer employee subscriptions – this is wasn't that examples or really think new and from is bigger identity upsell. now of I And then gave that really quarter: a be Okta. to Customer over which to which companies like Farmers, previous mix new customers JetBlue, – number response terms would there strong. bigger The quarters. us is ago, are of the we're buying adding was think paying or to, of also evidence customer; good that identity of I mentioned also We $XXX,XXX. – couple I an anything previous there some customer product the – continued as the customers.

of So hitting momentum is and cylinders, terms the all like in on growth powerful.

Sterling Auty

Thank Good. you.

Todd McKinnon

Sterling Thanks,

Operator

our Alex And Henderson with take ahead. next Needham. from Please question we'll go

Alex Henderson

much. could. very couple got you you a I questions for I've if Thank

price people The points hone the first are could Centrify pressure mentioned question like of just the or them was on sense context the also landscape, of bit little CyberArk I or outperforming would some of was guys but in like and the or partnerships had that of if that you reciprocated talk wondering how talk any one guys, be get is Duo about. help category. they helpful that some Clearly, and can the alternate that conference, your price you trying your you – highlighted at they business, other the competitive direction. a And to to all I companies second in are them, about that, over they

and companies that they and that of in, on that? So need to your the a is project big is portion in. other you what your relative of bring a in pulled structure, of of is partnership offering you are lead you're piece then book partnership see a in much question with going a how How function

Frederic Kerrest

order. a your that. I'll happy Thanks, to appreciate. about in talk bit questions little is This Alex. Frederic. Greatly take I'm

managing our and spaces management, right? quarters, about you these one in outlined remarks certainly first of and access and as competitive follow-on a we're there's the – after in the we've So being the very I think when on going prepared the enterprise identity and the opportunities, dollars market as previous side, in earlier think that large every are opportunities market to securing extended billions customer tens year. of about spent think then you So

obviously, have going these when So large competition. be market is to you opportunities, very there

that some some traditionally together. trying mentioned applications them. bundle of are the of of You There's platform their also to some players

independence, Identity a we're Cloud, I So of are important. of key fortunate think we're I seeing and a that very and specifically characteristics that is very the in reason think, business lot particular, of the the couple success the in Okta

a any technology, applications, As are I systems, that, enable when enterprise can about, that networks, organization to we played really be. the mobility large to across is our talked not really right? swizzling the collaboration these so applications. use And And the we our picking case So role that suite, beholden has operating think any lot they're across apps, doing devices, that do apps, advantage. we're across – best you obviously, of product they're in mission any whatever world, to deploying and across best a of we best-of-breed play may to it enterprises

success we be seen Specifically of lot comes But we any fortunate that also to really a have carefully. when to on competition, watching the We're Obviously, always in change not it continue paranoid have and competitive changed market, in survey we're the front. and right? folks, rates. very nothing's

the We When I the good they the to business think helping it's deploy, around advantage pre-integrated broadest out made the of second have applications, and the have X,XXX Integration do is infrastructure we broadly, integrations investments right, it to the and Network, very operating into into which question these a Okta why we're and network legacy applications is modern mobility but plays CyberArk. all you good of all about them. of Okta technologies all good best want more integrations existing and the of today. A these partnership the of have that think your to example modern north right? devices, providers, take the with advantage Network have all we technologies, systems the is there, organizations which CyberArk, in, all also take Integration they a also example

was of our There's to But grow the good new with just about. we customers products look Todd opportunity and in what there, set new customers build product always lot our and same problem with like we a things of have I a think and and CyberArk. build talking to the it's we're existing can't investments go opportunities organically that broader, we help everything existing other to going sets. time, at and out at example have deeper know

we're with it's I we example think good the with something working reliable our serving successful. our very very So make in customers all have a market, customers best-of-breed them, think, that's, that I the of there a sure and to a joint out well making us very good integration, partnership technologies

Alex Henderson

any into point. additive any as one How footprint? throw around Could pulling there is And up to a additional decision-making. of obviously you that's degree transaction you with how if often the a of driver which period? technology follow facilitating in that's are a transformations digital given numbers can any quantification I – SD-WAN a and of driving lot

Frederic Kerrest

Yes. Sure, absolutely.

work a on have sales In don't into. system We or have both the us talked numbers technology global motion partnership before, CyberArk today. about partnership distribution bring direct do I we've So any partners, we what as integrators. closely with and other general, specific the largely go-to-market

seen is see announce going and there. cyber practice have continue any might But building great. You I numbers they're KPMG we that And you today as a you're practice don't Okta, expand our to have to which that to give just – around particularly around internationally. specific

modern always the point, latter become to or seems company mean digital more transformation everything the it of when term everyone. their laugh. to every yes, might infrastructure. days it common overused down, these break kind you when has most makes On me Certainly, existing comes and It to enterprise look, to be

competitors they company to are company has company happen. You their to then have employees. things their make have customer costs. continue And are because better improve that. their that degree, reduce right? some has user a technology don't, to their to the to a They and technology every the to going to do become side, interactions, to experiences if have experience They customer-facing to vendor Every more secure. on provide partner Those

the trends there. have those are And in lot so a personally certainly, terms I a and very think, in innovation I mean, we're those I market. again, of into – pretty of early projects baked lot that, I are tied the that certainly somewhere believe broad But mean, yes,

Alex Henderson

you very Thank much.

Operator

Ho from first William take We'll Instructions] with our Jonathan Blair. question [Operator

Jonathan Ho

congratulations and afternoon of expand of how U.S. markets or you outside Good to into and on business, the give the how of the you faster your international like those start potentially, And strong adoption? with maturity quarter. just sense drive markets the I'd some There's think do out of a about something

Frederic Kerrest

is Yes, This absolutely. Jonathan. Thanks, again. Frederic

there expansion, I for growth think but think is it's I early international obviously the days for our opportunity tremendous.

that very you opportunities there's in big at America, Europe business continuing existing for ever opportunity newer surprise, for started segments in in strides business, no Europe, the North and last look are opportunity to great North financial quarter America, to It's If international all making here, quarter, that lot you're the good particular, some the in Europe new joining in that. overall, we to example, was a and has you're had But start just continue great new us customers right? EMEA is penetrate was that the to my continue going that with strongest us services, Company that have to in that This in, growth going a services one us, us. across opportunity to customer financial – for in joined segments. to we're see and start opinion. of

He's I GM think about we hired a six months. of been onboard Europe. new

to go. progress his continue of him, I I think expect as under to great feet he's and we getting that job see a doing

one and ways things particularly to ahead. Asia is last questions, I those Europe from and hear partners do in to think but and Pacific, expect continue the the quarters years on distribution just us that more are of just more going direct should in the and that you trailing not we're to internationally

Jonathan Ho

it. then quick a just And follow-up. Got as

talk to you bit factor terms authentication accelerated well. little the of and added this dynamics there's of of things? your the one standards about of a been that understand win any you shift Can there maybe core dynamics potentially whether as multifactor? I in the and Has terms adoption guys two rates the as around think base in wanted product. the I just

Todd McKinnon

So But time very, did. and to the It's continues been Adaptive the the – multi-factor well. do I adoption product, the – authentication standard at market by very product, our continues. our Sign-On, in to Single The also Authentication best fantastic. momentum We added far. that has And product think there we it's the Factor Sign-On of basic Single same Multi- that

– And so the having companies default, – can driving which at Multi-Factor has the of and the same time, is your objective phone there. do technology. in into like Authentication upsells then the And the and all use was by components of product, push you Sign-On there product been more factors accomplished Adaptive our basic we're multifactor Single that's better security means advanced

the around factor advanced have cetera. for You cetera, second certain policies a prompted, resource et can is et when

in "the and have Multi-Factor which the market to Sign-On, the the seem there momentum upsell we've both with Authentication. really, So Single of the Adaptive growth hit is product," product, and terms basic

Jonathan Ho

Great. Thank you.

Operator

next And question we’ll from take Gray with our Powell Bank. Deutsche

Gray Powell

the questions congratulations on report. thanks the guys, Hi, taking for and

Todd McKinnon

Thanks.

Gray Powell

legacy what cloud way couple And a Just quick at opportunity think then do to of you of inning displace a roughly applications your we’re mix support growth the on-prem or of the questions. stage there from what versus the Is with solutions? quantify apps? on-premise to coming that’s

Todd McKinnon

It’s a cloud number growth don’t I from about on-prem driven really good being – apps have apps. number is question. I like don’t a have of versus what terms in the

cloud. belief think the pretty We IT just company I’ll center to be was this always pragmatic. to that of think But was that going gravity say the a I to some we’re that that of started shift on on-premise they’ll degree. also,

a a that cloud and – of their that but can on and people big built us And it platform, and factors success cloud-based accelerating, on it’s connect the the the and happening, I one choosing our are shift right? So – on-premise can more that’s in people why is and more and more driving are very is is of we’ve cloud think connect cloud. powerful platform picture on. that’s workloads to And the it’s and

innings. we think out early joke definitely those Like, X terms but to it. the one say have we of are we’re in, been In about – inning in of and starting where a it’s second Like, first we XX games the it’s and been like while. the – the it’s both pitchers we it’s it’s innings, what for knocked going on or like

day. fun day, day a to ballpark long fun the at So but be a it’s going

Frederic Kerrest

on-premise to that would just when a I would of incumbents things. the it I would to providers, is some I Frederic. this – expect, Gray, that that, just would legacy add identity traditional couple comes you add

is not strong "Great." to and next that’s your the I we two off the let’s Oracle or about This earned a in They on-premise you’re enterprise. IBM and typically, turn program. expansion talk we’ll buy right, very existing or Now program. technology. come her it’s him the you all, of a and a What this we work is to here’s trying deployment. to very trying XXX they in have talk They’ll their or see meaning works that why They they’re We new specific say, well environment. have solve. roll problem go continue employees, not initiative a wide back we’ve "That and out the and and big that very integrate they’re on is bang all solve. over problem get for quarters, XX to us So And rates this anything XX rolled or the running "How That well a right see They out and to road IT great." quarter retention We infrastructure, trying They have going the map office forklift think this out that We to Workday then might they roll infrastructure. with CIO a net through or Oracle we or do months to the infrastructure." And running a the that lights integrate to existing First gradual a upgrade them. them don’t And frankly, deployment say, hybrid us. was They’re that specific within try on-premise. experience?" up customer. dollar Oracle throw IBM, to into for have to continued that process, IBM They was to or say, get away. quickly.

Gray Powell

it. Got helpful. Thank you. really That’s

Operator

take from we’ll question next And our Davis with Canaccord. Richard

Richard Davis

thanks. Hey,

So quick two I guess questions.

how et systems. support the Okta and working I with to they developers like it’s you team, but of terms is your about, developer the Android, think So cetera, in talk SDKs, source important Java, that Could with of stuff of that’s work about of of strong experience part that? one ecosystem think things Angular, open kind and

Todd McKinnon

more big and open you’re so our and tools we mean, something and want you’ve six choosing reach languages a into them. or a source announcements developers lot platforms, are if of And be the APIs months the – experiences every native all of developer wants that’s their developer specific those of right, And in – about like mapping of Cloud core those the because environments, That’s broadening those Okta platforms. language. the And busy building support for to – part. think seen I Yes. and think of that. the doing to last what languages, we’re Identity on doing over more they’re

that You and years ahead. the months to see over of can more expect

Richard Davis

up. just then follow And quick

do didn’t that things – authentication dodge like Because you there guess, bad was bypass dudes trying get a those the SAML guys workflow? you those are bullets? to have out mess there Is what vulnerability. allows – to I hit Or You up. with it

Todd McKinnon

right? mean, see One there’s that the in and things I with and happened inevitable, important. a couple – security like is You bugs chips vulnerabilities security are of it’s and problems, security with that Yes. what’s around things really Meltdown Spectre.

You’ve years, the seen seen different vulnerabilities – different over you’ve compromises. and

kind we’ve advantage have it’s once what And then And architectural centrally, we those kind we’re also integration true Okta is month. the a true it’s security of how It’s to required, well similar It’s accrue any and advantage no We immediately if at fix release the for big architected we and is centrally, to a new and we vulnerabilities, that to patched we it’s us. can they’re for of how right? We one – features issue. customers. effectively scale playing regardless specifics There’s upgrade to service. maintain velocity right? that’s doing, just our and integrations can we of can maintain it’s – enhanced centrally, fix huge manage release, model. can of and of everywhere. to think system of cloud all and advantage huge them out I benefits And superiority to our thousands like we it it’s do a of that an the an high our

Richard Davis

Got it. That’s helpful. Thanks.

Operator

And Please last Goldman we’ll Bellini take our ahead. from go Sachs. Heather question with

Heather Bellini

Most you. just asked had still Great. just Thank been of a these Yes. had. have I that question. already one but I

about, spending, customer. now guys been But Thank about over how and of growth ACV, know you. your you $XXX,XXX been roadshow, past you has the And course over about large You talk talked those the talked can on the over customers customers they’ve $XXX,XXX XXX that rate. you year? cited trending I the ACV spend had per you

Bill Losch

Heather. Yes,

internally. you very at customers that So those on importantly, you the externally at from those sequential increasing look been contract has and look look metric a annual has from increasing value trend The more how frankly, positive standpoint been if basis each we customers the whatever but been quarter.

Heather Bellini

Okay.

in also the you talked the that updated guys about guys On then? you numbers cohort different discussing cohorts, roadshow, terms the cohorts. were any Do of you have the stats back

Bill Losch

to gross have the that mean, those cohorts and roadshow combination for posting I subscription growing, talked net profitability in I our more of fact rates were gross been the the margin, – cohorts retention strong we’ve for particular margin, talking and we continue the been think, especially, on us. addition the to about generate that has Yes, those more subsequently, about

to us point. that’s really for feel this So how working we good been about

Heather Bellini

Great, Okay. thank you.

Operator

We’ll And Owens Capital question one take from Robin… we our last question. more KeyBanc Markets. have Rob with

Todd McKinnon

already Rob. maybe was wasn’t asked think It one. It Michael. I maybe they

Mike Casado

guys, Hey for mute Mike was Owens. Casado here it about Rob that, a button. sorry

Todd McKinnon

Mike. Hi,

Mike Casado

Hi.

that commitments. of retention any and you’ve me, seen changes a strength initial healthy very the ask to in one you sort from if given for just in guys cadence wanted still posted more up seen to Heather’s related the Just you’ve cross-sell question. I Recognizing rate,

Bill Losch

seen strong I continue see I – the expansion in business. very upsell Yes. that to we mean think we’ve cross-sell and

did you across with upsell also. customers the making, good commitments are But on we the – expansion And the board have cross-sell. and seen initial have traction increase good and we’ve positive we rate net point, strong have a We quarter, those too. also both bit, seen retention this ticked actually mention in I think retention that, one rate, very only past our to up but a important not gross is thing

Mike Casado

Fantastic. Bill. Thanks,

Operator

And back to that does session the Todd closing or like I’d conclude turn to for our question-and-answer conference over today. any additional for comments.

Todd McKinnon

the attention, love building talking And also are and support do we’ve everyone look the begun believe had as large, to while thank on years very success. we’ve we up company. the And we’re very like on continues quarters about some a to and and business. for Thank just and success, future, thank working you on that story only – to and we much. important, just the we – we that this follow technology we as very focused journey, to long-term, forward the continue out the successful story I’d play and on and we very, next

Operator

presentation. thank may all today’s concludes disconnect. for and that We again now once participation And you you your

Okta (OKTA) 7 Mar 182018 Q4 Earnings call transcript