OKTA - Earnings call transcript Q1 2019

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Catherine Buan

Good afternoon and thank you for joining us on today's conference call to discuss Okta's Fiscal First Quarter 2019 Financial Results. My name is Catherine Buan, VP of Investor Relations at Okta. With me today on today's call are Todd McKinnon, Okta's Co-Founder and Chief Executive Officer; Bill Losch, the Company's Chief Financial Officer; and Frederic Kerrest, the Company's Co-Founder and Chief Operating Officer. Statements made on this call include forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 including, but not limited to, statements regarding our financial outlook and market positioning.

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

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

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

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

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

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

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

Todd McKinnon

Catherine, joining Thanks, today. for and thanks everyone us

XX flow evolve operating year-over-year up in the year-over-year. favorably start to points, our a to marked to were Our year. our both great results positive growth and cash margin cash fiscal flow improved of we business the The calculated XX% QX continue quarter. by free Revenue financial new percentage be as strong economics continue and billings

growing aggressively our while structure. We’re cost managing prudently

recurring over in for revenue drivers deals the annual with the our while increase customer of number metrics expanding at faster XX% enterprise a XX% customers total grew XXX. robust grew our year-over-year This about growth, customer in reveal a proxy $XXX,XXX to our relationships. a QX over customer to lot base behind of by Our even and X,XXX is

rate our What's our additions, demonstrating and experience. Organizations help investment Beyond customer at in customers success our transform net the a this XXX% to both securely. continued to are customer commitment continued growth is can customer their cloud Okta. dollar-based they healthy to driving moving and We them do simple. want strong retention

have address third, align and network; the We customers; major significant needs areas first, with integration three of points security. that Okta These for pain and focus identity; customer areas our CIOs of the second, developers.

Here’re quarter a opportunity. scope adoption Mattel they years customers provide the expanded in seamless an analytics and for secure provide Group to access IT solutions. Okta their enterprise After their security Music new posture Identity adding to an in of XXXX. back Multi-Factor data our extended strategy FICO’s this of use its that exciting business-critical FICO Okta is investment examples and cloud. After to its Warner Okta customer market selected with applications and They sign-on, been layer Cloud in to its its of security infrastructure. single success, Mattel us are illustrations own Okta Okta employees expanded its diversity Authentication by continued an quarter. help advanced for has management, employees. extra as Authentication XX,XXX for Adaptive strengthen first customer adopted of Okta modernize Adaptive for enterprise-wide an using for few support its existing to cloud customer the with Multi-Factor great to the of and the access Okta in lifecycle deployment safe to their success, several internal

secure connect an solution to all Authentication partners experience identity used such their CMS experience. quality CMS as enhance rollout to With to they've with Medicare and for customer better both access thousands Okta, to security. illustrate for their APIs. Okta Medicaid services Okta. used applications. their to security in they now and payments need all for over quarter Multi-Factor the expanded a government U.S. their with grown existing extended will who others efficiency, partner increased customer added Identity centers applications Cloud the of products along customers federal across legacy These identity uses the customer access The platform program XX This management of use and the improved replace and Okta and API for Okta enterprise of a user the

and they While help identity industries and them. all need they cases, can represent use a variety of Okta

will XX just clear understand our We to become user of of on standard that completed choosing stage new joined take of was strategic experiences. event this many number This the more to as ability and in attended has is the every we identity Thousands largest successful the and platform annual we theme central than importance you event, value as prospects believe partners an our truly their independent Okta unveiled in neutral identity know, as today's customers Okta cloud our mainstream. customers, identity are conference year One accelerate increased essential they more a environment exciting that ecosystem. Okta that to-date, partnerships and products. and as share complex our OktaneXX. awareness for sixth organizations platform. see Decision makers As of their and and of most

Our two strengths. leadership and primary by driven identity is

applications is organizations modernize products IT their our to organizations set today. first customer Cloud our uniquely and helping help management customers build personalized secure environments our is contextual challenges to platform, The to the We with integration products, positioned of IT Okta simultaneously facing with platform, businesses opportunities our API facing their the expanded Identity and while our network. enable Okta Okta our addresses with capabilities. the are access and secure

everything that integration connect to Okta the to the through driver Okta us amplifies through to foundation do what network why ensuring network. of believe deepest integration of and core earlier. allow catalog industry. have is integrations mentioned we have value it's The network broadest network heavily them we platform I we the our in the This our ever-expanding is invested that brings the Identity The second The growth the of is Cloud. and first Okta we effects customers

is our possible. paradigm of We easy been most transition about this environments. enables customers, IT a adopting to choice, make not Okta it IT by and frictionless has technology At new capabilities technologies best-of-breed the In cloud that a announced above this two a all, We For modernizing to a as a with will which or secure. Sign making it's will In Okta of the in launched about OktaneXX, as we integration network to discover, hybrid best-of-breed necessity. take shift deploy, approach Okta Okta fraction manage integrate and to administer and the level. providers enable time. moving with more new

We and which strengthen. and customers, also Okta more we to the and These new over of The providers announcements to announced integrations integrations accelerate forward our over the deeper technologies. effect. we launch organizations With powerful this network make be to X,XXX effect to network to valuable integration already become Okta can able believe we’ll continues X,XXX technology is discover integrate enable Onramp for customers. more it offer and and deploy to the thinking easier we faster

and customer opportunity a for management Okta our seeing is products. functionality We The user second to uniquely versus address remains is customer authentication that What is decision identity. API is either a able build Okta. driver from believe a organizations, we're build like that buy significant it growth with or provider this identity buy

easy for an up directories Many of offer customers products today our the and for API complex spectrum by it Okta multiple making products runs product and environment. much a same entry Oktane enterprise And decision get it our started MGM developer the functionality we developer it a At backend our tools One from addresses to we middle such which with multiple can more ways as solution. with API for to of way organizations scale to applications are support point. We only products. App offering enterprise at in our products unveiled API all which additional largest products, started, millions to users. managed get path developers can the and offers users We ground, support millions XX, to call JetBlue API scenarios are a API using more as Resorts an or across accessible like of

our Okta page. By But select components business. a We identity their of Okta are this, way path, in branded include the for it also expand this functionality we've we great by to establishing rather in and easier which sign offering with to we're than made logo upgrade feel App build house. Okta land clear the organizations doing also product on One

converging driver The when. across understanding will around to action the device policies security. third and security all can research addresses to that industry team input for their using called We around is they by take on better access give Okta's the the We organizations as couple enforce customer growth of of well believe new the context experience this their a ThreatInsight. customers our Okta security built users a additional secure inform base. as real-time activity us gets our has feed adaptive multifactor identity are what, our with authentication curated a this be management IP the enables insight to and believe for will ThreatInsight We context is of flexible a our at who Okta that this on on these users Okta's rules policy define engine reasons. ability We based of the game and deliver changing threatening time. capabilities, products will that concept same enabled business to better contextual customers access with a

that the for organizations the on more everyone valuable the more First, ThreatInsight, it network. use becomes

our eliminate for the context user with our and to combination our integrations device we’re users. enabling ThreatInsight customers their Second, policy of engine and passwords

accept employee access to to announced from day, We less OktaneXX, of of of the believe applications So an by phones, also password to key address no IP can checks offer time power we password required. their device their clicking boxes to they because access are responsibly we all networks. location our simply At trust positioned the on partnerships. best if two

partner and of enterprises a simple as modern an secure First announced Facebook Okta's to App] project joined partnership give [ph]. integration also inaugural Facebook to a way and by Workplace [One collaboration. Okta product by enable Workplace

Second, we device in seamless technology products experience Okta's the a Workspace with to network. tightly and the are in ONE identity to VMware's our secure enable from integrating mobility every products

These to partnering in result are world. We most innovative companies be in our the are of partnerships of market of proud the and technology. the value our the with presence two

success. and of maintain the all I'd is partners Okta areas our customer thank who now the that the to to driving these to force made security. technology, vast organization Okta Okta I and walk are our at how to growth the three our getting significant everyone over announcements are been focus, and customers our This the remains opportunity durable integration serve any Since the results. notice Bill? will best You'll started. has customers to to financial network, mission tie enable want while founded fuel to over behind our back term. Bill long just identity we progress use call and we've we any like turn through market and

Bill Losch

again to thanks us. joining and Todd, everyone Thanks for

this provided standard quarter, with although the our The summarize website be new you 'XX. want supplemental fiscal of Last to we an and data. historical ASC update I of as our the 'XX results, historical will materials description updated comprise change finalized XXX there remind no are highlight relations Before is impact of models. billings I tables include this supplemental sure posted updates but investor XXX components make year billings that the ASC go tables calculated financial previously consistent quarter calculated on included estimated data immaterial, that the I numbers. accounting The XXX. for that please you our under would over your reported financial that presented to of also all updated today and ASC quarter's

same year-over-year. the for great a to and totaled year results Subscription had the first quarter quarter revenue with an Now in quarter 'XX, revenue, XX% year. year-over-year services our our Professional million, $XX.X moving fiscal first of year. in a first consistent the the an totaled strong last period saw on XX% million $X.X $XX.X year. million, we Revenue increase was our quarter, total of revenue first XX% to we of XX% growing for the was QX last and of over start what increase

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

most for international from area an We business is coming the continue opportunity. of and market U.S. however; remains us emerging to see of our

billings, calculated XX% $XX.X with Moving totaled was last billings billings on an QX billings quarter first calculated of over growth consistent year-over-year. for at XX% to million, increase the calculated year. Current

We very describing demand with underlying in the clearly growth are happy our our billings business.

was dynamic had strong exceptionally certain to QX in last Our the beneficial linearity quarters other the similar the timing rate due to quarter high rate especially year. growth in of compared saw billings, an year-over-year invoices. We where and growth year better-than-expected in

XX% new our Our X,XXX. the driven the customers new base been year. the of in over That represents customer total of last and at strong additions. the momentum, billings with up end The has in number addition an XXX quarter quarter quarter customer net over at growth of both customers within first by of came

mentioned, year-over-year to grow ARR total XXX saw we with our than XX% of Todd As customers a customers. $XXX,XXX greater

for dollar within ended retention rate This last and existing April months customer success demonstrates our ongoing XXth consistent Our XX base. the based having with expanding are XXX%. trailing we quarter the was

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

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

was in XX% margin XXX improvement year-over-year. up utilization and As often gross to the up improvement QX services higher-than-expected deployed million, points XX.X% margin professional services you first was showed basis professional business was is profit QX. The team in year-over-year. in our due quarter, quarter. know, Gross in from continued Total $XX.X the

our record we new continue Our gross a to margin highs represented scale platform.

growth seen Non-GAAP operating Turning points percentage operating and in year our we as high now XX more operating over result remain expenses, a first to than even as we negative growth. in quarter margins the to we've on improvement generate to line focused XX%. responsible continue continued margin improved last top the

faster our quarterly last represents million in expenses. million heavily business, but that of invest than focus rate fluctuations that margin on XX% with revenue improvement as and to expect QX We total continue total expect will continued in revenue We for XX% a X to in QX $XX.X our year. point see This a to improve investment to but at leverage. grow to to operating marketing operating to Sales a last operating annually compared operating as we subscription opportunity, $XX.X large compared year. the first capture margins grows expenses market continue quarter was balance

year. QX XX% of of came last at $X.X At QX to to represents a Identity in QX R&D network. This reduction on year. in the million see a to sales heavily saw quarter first time As million as integration expense continue should continue the expense was you us margin year. from the the R&D revenue result, in invest a last marketing rate same of percentage last the Cloud revenue $XX.X and we revenue, as last in platform G&A $XX.X basis. G&A XX% improvement Okta in our XX% compared in quarter first the compared expense of Okta for growth million $XX.X XX% we full QX improve an and was million from year was in a a XX% year.

QX to million Our quarter of in in compared the year. operating of last loss $XX.X loss $XX.X a was

important quarter same hit in with XX.X% in was an million in outstanding to operating cash from came negative first Free as loss compares year. the in to our share This year. last quarter negative million this from in seasonally a Our was negative high share time. We quarter million operating QX million Net amount last QX basic statement the benefited milestone XX% in at last of the compared last cash flow outstanding. year $X in generating XXX.X loss a year. in as with net XX.X $X.X positive a million to per $X.XX compared the a flow, in to margin period $-X.X basic negative collections strong $X.XX of QX QX. shares QX we This per million compares shares $XX.X

free negative Our flow was a improvement margin negative cash point QX last XX year. X.X% to for XX.X% compared

in ongoing with to flow expect quarters to we office before, mentioned cash due have along working margin expansion free coming and increased capital. our fluctuations associated we As variability CapEx with in the headquarters see

quarter sheet, balance This convertible cash the cash, investments. net $XXX the offering approximately note to short-term quarter. first we the includes $XXX and proceeds million in closed ended of that this with equivalents senior Turning we million from

X,XXX head was as Lastly growing XX% of QX XXXX, year. count over our April total XX, last of

We continue we to growth as add business. the our board across head support count the of

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

fiscal company. to net range operating loss year our growth in expect loss $XXX your in of non-GAAP revenue first the a to building in where had shares for consistent weighted range rate Todd, year $XX additional take $X.XX million look through we year questions. we pleased continued will of innovation, ahead the to as range and in now $X.XX strong outstanding. partnerships opportunities to XXXX, share for expansion. see start the quarters that, With and I'm growth the a full and momentum per international the to $XX million summary, public year-over-year. we $XXX million in demonstrated we XX% forward of the a Frederic of million, For XX% a We XXX In the execution very our with assuming representing Non-GAAP million, Operator? I

Operator

the callers And Please [Operator from the you. time several Instructions] Sachs. question in queue. Bellini ahead. Thank go Goldman Heather we’ve to at this from take like We’d first

Heather Bellini

how momentum could driver key if us that I up am revenue just much And of like that of guess would you I if two QX, just by driven great? kind what and your look there, on how And building what under then one security in what X% and being well in the great I kind just guess wondering Just, implying would how guess the Bill I another ones. happen first? things Todd One the for be just business? question if sequential sequential share or quick Bill had Todd I kind would sequential momentum the looks to I are be first, results it to I you’re customer given you you of now right for I given into might of flat can guide. conversations for touch be Freddy. have be would see kind the second all kind guys your you of posting Freddy of your that you It you’re is guidance did had guess guess flat with revenue growth circumstances like then related that’d guys to for at to just of or I strong factored

Todd McKinnon

enable happening question selling and came when enabling to started like years things, Chief enabling for talked really the The the identity year were just login, first last well over then being first to the were chime as is, five rollout -- really the key started we into of this That to really wasn’t the and right is we some we identity can security customers, of what's in security. about and until chime users Security take Freddie world make concepts an as are thing in to the make on Company from easy world identity merging platform and of I’ll and zero we would he easy which to conversation. it person, perimeter every can And has one trust, with Bill evolution enabling being technology I it the the been every second and interesting. this identity really to Officer. say end security is it really It’s manage device. us to like question. four, the post the really network building CSO, that for have it apps, really where becoming And like on you

a think -- you seen so and our just level I number, all driver we've and that kind card credit mention your that every and our board get that mind, breaches and huge and as business, in think to watching in driving everyone's you big reset that things these I you’ve we thing to forth is know notice not business it's a every conversation in time a of are the time as have news well.

Bill Losch

Heather we that that just I about would think of we add and it’s trend. Yes, use the this big both see in cases

when experience First all enterprise, employees, sure do job this customer ensuring the also simple need making secure it secure. you it’s resetting on companies a just very have username to two access for better is and the a all sites easy contractors, to But about mobile their that -- Web device. access authentication but management, and SMS longer have infrastructure these sure comes customer to easy their with identity or it’s that and are extended applications factor to just that phones, they use any with no making that of just password, at

importance paramount today. for a it’s companies think I

Todd McKinnon

QX dynamics two and what about address relevant revenues, that our happened to question we think are for there I you And we had Heather think informed forecast us the on QX was. QX gave as in that I outlook were the thought

closing higher QX, a in we end had had services. utilization of did lot those we large deployments services our significantly had versus what beat our deals anticipated, the QX, professional professional and exceeded we from primarily much enterprise for the of a that all, of at First is revenue reason

revenues real some uptick what anticipated we So saw from we in from that.

business course is we more we thing during about played thought we of linearity things in the QX had quarter, those second the dynamics took into how than And anticipated. those the The both of as forecast strong feeling QX business, on We are about this the bullish and very certainly QX are market and the factored prudent the underlying it but and is. into guidance like what the business. that market in consideration a underlying had out a feel is very lot we we very our landscape,

Operator

next Capital from from Rob hear We’ll Owens KeyBanc Markets.

Mike Casado

This is Owens. Mike Rob for Casado on

you the be In activity of might sale speak contribution And to ThreatInsight. aiding cross the would and how the adaptive order with early hoping in product? by in the reception access I terms MFA? for pass SSO guess the of promise of how you this pipeline quarter, relatedly, can particular, adaptive rank the And I’m

Todd McKinnon

to is So related ThreatInsight the impact answer the to of products. the which

lifecycle we’ve And So list, going in a is the the also be continued players had quarter, as differentiator, also more strong driver against market. management of well continued down see and the some in our customer the products MSA other the narrow big the traditional access remain very identity a adaptive identity. we’ve strong, business as management then, to core especially

had more that, company company them every helps how become and quarter a that as and figure well. of can strong So with they identity a technology

Mike Casado

also had and in been UK, the Okta I that Canada. know Australia

and contribution that put the Paris eye thinking that about the you're partnership next So broadly, as you in the opportunity? list? can considerations international you more Thanks. And how Stockholm help understand us

Frederic Kerrest

think about throughout I the expansion across think us the seen offices continue our we when that have we expand years obviously to you as grow. you’ve

doubling San year footprint now at us last Jose saw there. You the

this great move. Francisco continue Internationally When the Paris with -- expansions is a see consolidating couple us later to can office well, on there. you mentioned, think Street headquarters, business I those about see of and as you things San a you Stockholm, specifically which You think XXXst the year, expand. see

of mobile where we First they’re expansion and applications. all, cloud see markets adoption of quick

only not think So about when you Europe.

been years fastest actually one software-as-a-service adopters global is Nordics the as growing of had about of because And think indicators, have would number years. I a adopting Good company we've like are performance energy examples applications now. I countries. been for from to really very which think of flags a long-term. Europe [NG] more solid lot play But our folks those over our we offices more in as [ph] sign headquarters, grow it's in France openings France. for well. territory a there of a strong fast the the large planting servicing the and of office think for We've customers U.K. have countries But of then number growing players with throughout and continues those to software-as-a-service good those with in lagging

Operator

Auty JPMorgan, line your Sterling is open. from

Sterling Auty

and mix deal definitely is feels because wanted growing? in expansion with start both how, like quarters, traction in of the if the more large at it to I all, deals products initial of has your then of your couple deals change the last

Todd McKinnon

lifecycle, breadth benefit as from you've a year customers of seen, and there products, course meaning products and more throughout with those we think we more have, deepen obviously functionality that of the to I in the all So we of software continue development released the that. the is agile

more feature think is more products of means and becoming those that each what starts I complete.

with thing. see both a you inside of our really is to which any you so both So use and we growth large why those of logos, year past first for inside the that's were see ARR. opportunity Over more to us the half of enterprises. cases. the from And we’re landing organization, products internal first can doing new all, the this start in see $XXX,XXX over in use But of land opportunities, and these continue more the and quarter large increased logos those cases, external net growth you it also

help each can of we and of very, the products the those into organization about can As we very more cases I'm you’ve personally use ahead. products where use go in cases, large deepen that got more excited something and the both times

Sterling Auty

And then coming you that the one in and with monetize follow-up. does How should relationship ramp how new we VMware, think the about quarters? how

Todd McKinnon

the VMware is with And love about. announcement of great. at frankly he who Technology at you day Officer into of right show, a great which two we’re put going very we hey, the those that actually and have something and the play, I not partnership from just said, customer ago, Oktane, which JetBlue Chief about to On on were For it's thrilled announced Digital couple is something very, stage. I'm already weeks we yesterday,

to is we perspective the opportunities Okta as our obviously that broaden continue not both the to going coming all So customer of can friends VMware continue on customer only the that. product to at see experiences, we should improve and see but build go base to those, for the as months great work to also partnership with What we’re well after. you'll to in you expect go-to-market out,

specific enterprise that and indication to not on we partnership. important a for couple are next that quarters And the But that larger of revenue planning next market. certainly, or very from of the address larger I partnership. I overtime can could uplift good think think the also and We go it's quarter, partnerships do any a it be and enterprises

Sterling Auty

you. Thank

Frederic Kerrest

broadly work that leverage strategy as and that important important is become to in the drives with across a just partnership would the forward. the market up, we’ve the ecosystem we've the built add and collaboration for And representation compelling our us partner integrate of a for with. we market the companies some going try of to the for really It's it's largest I deeply software Sterling, world just and me, how presence and entire in in

Operator

and Henderson next will from Needham Alex We Company. from hear

Alex Henderson

gets your XX% tell calculations. a there of change looking the count network broader the the attention us competitive and me house obvious that deals. Are dynamics huge scale you’re a have your around was let the as Just a Have onset, Are integration you huge And ask are for fewer you as competitor they conference with competitive getting. OktaneXX in out you success? that your the seems turnout of been running the Can valuation any you that very larger you and reactions any to what might metrics profitable if of there. -- pretty give into network, up ending while out see clear showing any question, these the falling impressive up up, keeping you seen how result integration really It you're guys from landscape space any competitors? so want could share with get larger?

Todd McKinnon

that, look key -- we track think as broadening and primary of capabilities. a really the the set win customer focus cases, and competition more lot buy. we definitely versus has more platform cases it’s And lot addressing things on a competitive Customer of So other the -- build announcements is I And rates, different the than value of think at specifically you employee that question. of more the lot I'll that And more our use Oktane on think competitors applicability, the use around a add competitive -- about I -- customers. identity identity -- are a thing mentioned, a is identity. and it's landscape. The is

this a at your themselves challenges alternative better strategy there sure as the experience app in make the So better all there can to building and customer Okta Web the use that of customer product is so component that on to or world site a you that's or and that mobile these major and is better, identities side. create make to communicate we

question, very say, And whose On platform Salesforce the one your seeing with numbers the the it there the the have think the about identity Salesforce they competitive customers like platform. happy the of -- folks side, mentioned you namely They the worldview all environment, and successful we’re a of used think even to broad can on. about our that. us, competitive we’ve or Microsoft. their by seen be say or of -- regardless internal that we’re platform Microsoft, of the like They employee story several would than I strong what be over might that big I I last don't different years, it identity would sale platform consistent growth we think positioning about and a players is in the ecosystem see so technology, of run tell

product and providers and to why a were perspective type up competitors win you just a other rates other just worldview bunch them think executing point or more was I just that’s are a scale we're And that providers, see scale, in and that’s on folks. seeing. think thing identity I you So strength against different success and that's said a the adding of competitive the those

Alex Henderson

in in So change pricing no success? your reacting to

Todd McKinnon

seeing not we’re No, that.

Alex Henderson

share count? the And

Bill Losch

after have that I call. don’t asking profitability. about that to fully pace the Alex, were at But back get you my since we fingertips you on on if we’ll that were

Operator

Robinson from hear Tillman [Operator Humphrey. Instructions] SunTrust Terry from We'll next

Terry Tillman

me you okay? Can hear

Todd McKinnon

Yes, static everyone on line. we’re the us well. can as Hopefully, hear little a

Terry Tillman

on going I'm phone. my it to blame

getting asking questions a This to of it’s CapEx end But strong have of worthwhile. I have still relegated up like are quarter hopefully that actually question. when a we I like couple questions. a this, couple

this for the First Is see customer accelerate just landings, type if business I at learn actually you test app. actually dynamic, already and do you could a will? up or Okta that API guess identity it least or one this

Todd McKinnon

in it result second business we've customer it at needed at but enterprise needed of something and was a year products, this the definitely then this result from level, to isn't do is traditionally that. high the be way concept that, Oktane, year multi-directory, all introduced a a so one identity there something And years now the was for the not in said. for learning they And high was It's that learn we've the developers. PSE. thing of app that’s developer And -- you enterprise beyond for for the of products entered last products developer side, learning and It's we meaning a that load. learned business test that multi-application, was API API -- API Oktane middle. more that scale, before the for developers quick user complex, few up proof They a the the

we're really our another important for going So give landing us of think that about and point business. excited we to this part this, it's

Terry Tillman

selfishly there nice relates up in to and a And question app as to side, packaged of a -- terms from on where me the it’s Adobe? customer you developed it an like situation are job. trends getting identity opposed custom customer or as Thank ISV like education guys wins maybe you identity an as this just follow is a notable demand or differences type

Todd McKinnon

a The building they're it software vendor business being identity is Web is themselves. customer the mobile app of -- or a site versus majority them a

majority app. inside of Web We that experience of component building. is those, they're Okta a mobile as their building the have the something it's example FICO a modernizing many that experience but customer The or call company we on site gave transforming FICO using the customer earlier their by a

Frederic Kerrest

seeing more I touched will is I piece. trend that, we're add that. the you say, of just I that Adobe think -- a do but wouldn't more and on I mean, it's

start the Networks, example, us then access have or enterprise, right then and customers they for Splunk product. they using identity ServiceNow, for value using we management their the us start they us For or Alto putting Palo like actually where and inside just extended of see customer

broadly, So that and to for company and them every very technology access management, and more work with. their excited But a we're excited providers become and customers to leading has technology identity vendors, to where very some and company their and help opportunity there. is their out is something of partners customer that's we're interfaces experiences better something about the the with yes, provide

Operator

next to Holt William Jonathan from We'll move Blair.

Jonathan Holt

I your maybe evidence of wanted wanted of your central guess, kind that the how I one and deal delve back is identity I now platform. what their in to partners little will I with terms a maybe around guess go just implications more further bit that claim the customers comments Company suppliers? to, becoming are of supports to and what other then the and understand

Todd McKinnon

managing time on customer they’re maybe the solve. it's and use project logging has out the Okta we trying or good more we types really they’re think use of comes identities versus that it to that Web partners, that they’re And comments partners when very or take immediate into a managing different their Okta then to ecosystem down into customers, identities lot that organization it about logging build. in and whether I identity, they’re of and collaborate the the flexibly in more over application one we that Okta happens, employees, we’re types that through then a and a it's cases, release more standard in material when as we to be more and call, And It’s through rolled cases preparing to of or an a lot. say get journey question, the And the become use times new and begins -- we’re a trying using as and customers think for site, Okta employees -- with solving the problem the that’s right, and standard cases. the

is it stuff. design your I growing to different allows question us allows benefits challenge in complexity, about friction different that do, technology versus the our And think different presence about patterns. this different that talk like market, on some think in complexity, customers allowing we our and standards, a us to the I and are ecosystem lot reducing this is done, protocols and pluming. of help to what the focus in things to that of and And ways, standardize and to

with more experience the this from trying customer reinvent wheel to security. identity standardizes and the we’re zero to a more more and more complexity them things things done of the the goals it that's we the to, really core the trust can customers’ we and do. we standardize how environments, connect without parameter the what from you partners identity, that How So can are achieve be we and how can removing of their of we business get to approaches effective world more of and helping faster you the create get prevalence work and and having

Frederic Kerrest

and even organization add, as the innings. Okta I about what’s talking modernizing very thinking companies Allergan, that identity how for CIO think extended for foundational very early it’s is CISO start both really their throughout platform exciting. as IT, customer a is They of Fortune But enterprise Jonathan, management, were I and they which more in Okta about of they’re exciting Cardinal you and XXX Health problems. the specific seeing just And solving Fortune Okta folks and you would if so heard XX after like

enterprise in in is penetration just exciting. ahead is years very and opportunity starting, Our the the

Jonathan Holt

given margins the of think strength And the about services? follow-up should margins that as over a be in How we the this the quarter. professional then just just on over-performance course the given about -- the gross we thinking just on year as

Bill Losch

of in was seasonally we of strong said, that you’ve and thought coming done have a QX I deployments the do those an QX. because a QX, -- those and of exceptional in fact when end you Like it’s business lot at the quarter quarter

So very, quarter. very we that had strong utilization in

I think fundamental gross making -- in assumptions. we’re any that our changes changing not margin going forward

same extent professional think, the continue on rest will over some margin, perform keeping think services do overall, upside. of I assumptions we’re But the be there to going to the year. I we the through

Operator

Shaul Eyal from Oppenheimer, please go ahead.

Shaul Eyal

over GDPR can playing conversion couple the you equation, few interest are quarters past revenues. actual just us to how you into share a from with of accelerated Todd, seeing

Todd McKinnon

to talking time It’s trying prevalent. technology their as these about, trends definitely transform experience. And all very are at on everyone's mind, the conversations customer and we’re same environments, happening the it's their modernize companies other companies

every be sometime trying to will GDPR perspective to like looking out on -- do. impact do company the for people So by themselves. help for that is everything what customers driving from how a looking customers’ maps expertise you trying looking figure I partners inevitable regulatory that. can what. about to regulations, an compliant apart is And and tell that and are trying this to But how that know tease the both this that and to they’re internal perspective. from They hard customer have way, compliant for They’re they’re it’s people what other that them do, their to

very compliance our in. own the then we’re we've in become industry that, in So and both conversant

are resonating helping conversation and We’re having that productive customers.

do data we're all effectively the to And balance the very all that an lot regulate industry and as to regulators it's these to positive of our there's competing a priorities, I I think to overall, I privacy, and push and think think with to industry. personal customers with happy compliance. I for forward. But us for thing So security, work think, of a work also

Shaul Eyal

here. a them a would perspective, be little are up And Even my many question XXX pure tricky new that displacement, -- just from could how you qualitative as think do how net customers define your I this follow was many of you quarter. booked at greenfield? looking

Todd McKinnon

I [multiple it’s Yes, speakers]. number actually it It’s know know I because the why the don’t happens numbers, think right. gradually, like don’t like don’t I I know.

installation over motion at a time, displace value even quickly. Our alone we end dollar is global And we start solving of deliver up into let very might legacy it and problems account anything, sizable multimillion identity before the suite.

add then say value default more it’s years with over and overtime and us the a I’d and So and use is the motion standard, more more of coexistence capabilities, cases becoming for and a displacement. number more

their years, customers been that's sense few in is is place more think motion where last it the pattern I move amount what better do the makes it the and than to continuously technologies cloud displace and incredible as cloud the a lot more displacements, in of to over of legacy we it’s a more modern the ever. architectures see. yes, obvious technology see So than And identity put -- the using our that's because improved. product and Obviously, and we trend gotten we continue to

than forward. So -- been, to prevalent and they that expect we to more those continue are have going we continue

Operator

from Powell hear Gray next Deutsche Bank. from We’ll

Gray Powell

modules I'd to in curious MSA more on contract a at couple So to in customers buys conference purchasing a what's be a addition you talked about customer the of certain how increase SSO one. typical is it if weeks ago, Thanks. are day just users? company, And be then all it or to the expand phase really directory. the users at priority high of a like subset that customer in common universal would for

Todd McKinnon

they’re priced think is a for there things the one per basis. there about, of I on different more talked you customers the purchase as was first product couple So that products a

that pay as obviously, them like you product. specific would in virtually go as So you addition up something multi-factor indication, modules, for from family single in versus call more you and adding would add

of the when feature products. rich is a that different what's think take each back these now can of you a that land we I step more any with exciting still products are

family single certainly then in products So example, where start see layer be we But that where authentication. which about. single multifactor point case, purchase of off on it that been and this authentication situation quarter, universal family products solution. universal as each a directory those see directory We talked might you a customer Mattel to specific also examples like you added can the have a they've for be for using and while a the multifactor

by facing a provide they specific looking financial high For example, quarters authentication individuals, network couple properties customer talked across wanted Web their institution, call and were we multifactor on for enhance large to ago for piece. this to they that the

for good a externally would that to identity be extended able enterprise would management be customer and later that on. we go with internally start So back opportunity then

So start I either land you is with to in what cases. you really products of these any see can of the think use

Operator

Walravens Your final Pat question JMP today from will from Securities. come

Patrick Walravens

you I'm that Fredie, or does centers -- for the not one of that position comment like Todd what guys so government, pipeline maybe future and Medicare sure position help things? federal in who. for you and is or look But help can you opportunity Medicaid and on deals,

Frederic Kerrest

the done We've done example And we the the ton think everyone this the in of the citizens bring on more for like compliance big that or mean, lot agencies you to agencies us. of of we of technology for a with the federal government I are earlier, on can deal And part and economy. strong. security. it’s problems, how a balance help world center more And for definitely we demands terms government big of of important them figuring also work but is it’s evidence the services and GDPR good of their and area a of the work Medicare we've part Yes, that. they mentioned -- I board regulations. solve spoke other out a of realities else, Medicaid leverage is

Patrick Walravens

being you for get same Also one? a my I path like there when whatever to a citizen able do need if use the as that have a is to for login Medicaid renewed, passport later to I

Frederic Kerrest

sites and that a Web different like reality. be be behind success we’d possible of with them. some there. could have have But we've it's not think involved the And decently properties had of eventually of all to leverage lot parts we there’s mean I we in and different potential. government, and Okta can It's

Todd McKinnon

seeing seeing very often working just government, in and would enterprise with for think but dynamics been federal I I similar add the time. you’re you’re state federal in think to particular I -- we’ve some the what is the government them where Pat, what it's local

we’re For an you to services example, to their the progress for early is extended sell good as this very of it's a But mentioned up early, actually more opportunity. enterprise giant we’re through we to lot partners. market, there's make integrate it's continue and which as go. we’re going And which now, a an up that. couple continuing mentioned for moderate by department year we certified they’ve you justice. on were sponsored sell, actually years customer CMS of is the to an give been idea, of ago, you build and a To

Operator

would I closing turn over the time, to this conference comments. at Mr. And Todd McKinnon additional or like back for to any

Todd McKinnon

I’m Thanks And quote -- going the one fact, a everyone. Chief time. quote of with appreciate leave to as you in this this I he's from it’s thought. love customers We who -- Digital our final and

Identity Technology is the So Chief he keep Officer aviation is in key you us this JetBlue. to is And secure. and you to are everything starts with of the quote and airline who a success Digital do. at what safe and the

is and industry JetBlue all every connect of world it to to aviation, important so -- make identity the people it's technologies the becoming a industry just But that not really they every manifestation and how it’s industry. to with strive important in easy and secure. it’s is So it make -- that their as

strategic the foundational is long-term sustained our in and that be durable to growth. a that's we we truly going we’re talked believe areas and the platform, investing So And identity all these cloud about. to key

the market and the still immense opportunity So is days. we’re early in

on out of energy into about and one-on-one with go when meet look in a we excitement talked I we’ve marketplace forward that you coming So this today the to the and months. we’re road the bunch seeing and in some bringing

until and soon. So attention, you for forward I speaking to then look thanks your with

Operator

We you your this evening’s teleconference. for That does participation. conclude thank all

Okta (OKTA) 6 Jun 182019 Q1 Earnings call transcript