OKTA - Earnings call transcript Q3 2020

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Operator

Good day, welcome to the Okta Third Quarter Fiscal 2020 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Dave Gennarelli, Head of Investor Relations at Okta. Please go ahead, sir.

Dave Gennarelli

Good afternoon and thank you for joining us on today's conference call to discuss the financial results of Okta's third quarter of fiscal 2020. Co-Founder call Bill McKinnon, Financial Losch, Frederic the today's Chief Co-Founder Officer; on Officer. Kerrest Officer; Operating Executive the company's me are Okta's Todd and and With Chief and company's Chief

Today's call to Harbor but Act of positioning. provisions outlook not Reform statements limited Private Litigation regarding XXXX, the and our Securities financial Safe the of include will forward-looking pursuant including to statements market

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

statements assumptions is to Factors the section date could the Forward-looking XX-Q. the in management's in our factors our time, including our affect represent with beliefs time included only as that from Risk on Form Information and titled our of filed results previously financial filings made. SEC

in non-GAAP earnings we measures call, measures of financial between a using equivalents non-GAAP measures GAAP closest today's to is our accordance superior are during performance addition measures. release. and available financial non-GAAP substitute GAAP to discussion limitations in of addition, will and on the reconciliation and not prepared of These or GAAP with non-GAAP discuss versus In financial measures their for financial and

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

to we discuss represents performance. Todd over And call, a reference or to I'd comparison. turn financial quote number changes will our On Todd? now the as we unless numeric each year-on-year today's otherwise of And McKinnon. a such noted, call like growth

Todd McKinnon

thanks everyone for And Thanks, joining us Dave. today.

of grew or subscription results XX%, remaining revenue XX%, Total financial obligations to reflect performance. and quarter billion. execution third performance $X another XX% grew and strong grew over RPO quarter Our revenue

the new customer XXX bringing in added customers count over to our X,XXX. total quarter, We

$XXX,XXX of with broaden over and our contract value also to demonstrated were these than customers additions new XXX base greater annual the half from addition of enterprise of as We once customers continue customers. by again,

over XX% XX% customers year. plus global the we're of to customer-facing teams The with total as over last now making of our and business, XXX,XXX over is broadening progress great with on enterprise and deepening continue X,XXX investments increased we That's and number focus our since systems in the fiscal integrators. our beginning year-over-year relationships

the For about three tailwinds massive business. market help a drive that while we've now, secular our talked

First, organizations moving cloud. are to the

digital early still businesses trends. Zero transformation; Second, is a stages third very that embracing and market they each in are the of of are We're environments. security going tailwind these through the Trust

So, they are going to many be years to around for come.

Importantly, Across cases. a ability trends to Okta in complex broadest our to these of the capitalize set is address IT because on of environments. position unique use

customer able share stores are One adopted is these they favorite cloud-based how earnings drive identity in by calls of my being the to of home of because world. organizations and the most access our being management biggest innovative some for help solutions, parts and

websites become The the is to changed and build partners. more technology forever companies and has company and perimeter engage security every customers as to applications forced cloud their effectively with a company

a a of as new example that provider. thousands is employees. of This ago XXX turned a First, years with company Global, identity over a Okta tens with great manufacturing and founded win XX is of Fortune traditional packaging workforce its is identity company Berry large to

helpdesk employees, modern identity with self-service to looked secure itself and protect sign-on experience multi-factor password for resets, request will enhanced solution from authentication. for workforce threats reduce Okta needed security and enabling by improve the to security company its The an

order customer to improve The securely the when needed its access business Okta It a to maintenance faster customer was win. infrastructure over company new Next, services. they value. decrease key to Microsoft business and selected a Fortune XX costs, for and telecommunications time in provide experience company identity customers identity

noteworthy was we've lands global Japan seen ROI. a before, the and and which headquartered is company many Okta rolled upsell times group excited eventually upsell a pattern, advertising basis a value Group, how services a in marketing global Dentsu XXXX quarter. after in portion in first it a gets our this of I'm out because on and a illustrates about multinational demonstrating

employees. and success Okta company the of its enhance to in unify of After its Dentsu, to over the be initial global critical deployment technology of strategy part a security. the to company, of increase an XX,XXX broaden collaboration, division Okta decided will workforce its international entire

help services customer company XXX cloud Fortune momentum Most applications. This XX,XXX Okta Okta demonstrates to both UniFi to to purchased and on-premise with for access they we Gateway. easily continue Lastly, onboard enhanced and originally Okta the and over Access its employees. build purchased financial modernize security applications a how deployment expanded recently, secure cloud Access Gateway,

world's the neutrality, customers of important great is effects These to Okta growth and was are and an extensive increase turning large Cloud. Those overall increasing of of are our of the largest our breadth helps the integrations, organizations network because wins enterprise part large of business strategy Identity organizations catalog with Okta very products. our

products continued at generates make more for successful. flywheel positions in effect scale turn leadership. network data This market now and be is us can insights harnessed more our and to better This that that more build customers

platform year, this hooks. functionality the Okta customizable the opened extensibility and increased that unlimited with enable cases up the we Engine, Identity with into Earlier and blocks Okta use

to platform the We a connect products solution customers are pre-eminent create our offerings to any to help transitioning componentized from customizable to technology.

Access innovations November of event October, a few the now Showcase happy spend I'll product with Okta which this in on minutes were announcement on We highlighting. Gateway announce to Okta that progress further feature and inaugural made generally available from our We've became recent X.

that This rely organizations on-premise applications access together on enterprise at have management significant premise. their report Our on apps. legacy to modernize one-third technology of access Many to their organizations stacks. least look solution digital access their of cobbled challenges provide still shows companies running large presents XX% as to management

to difficult Access single a makes administrators manage it point needed their for to of users to management access delivers one end and applications for applications drawbacks management the required the Gateway Cloud for middleware, identity without across for legacy jobs. and both by their of all legacy apps, administrators go and systems. servers to users do access This databases, to place Okta and

pleased of We're opening opportunities. Okta already traction more initial Gateway, the with sales which is Access many

showcase. from a have security also security That insights to information contractors, launched and accessing gives been Okta partners at problem, We Organizations a has everywhere. complexity historically chance organizations insights employees, but with at admin the product remediation with network and detection levels. capabilities end size of security security and their to our customer innovations customers user greater create the family leverage that personalized help

suspicious Okta health practice as security brought activity threat sprain, This customized insight attacks and user now for threat insight, force, to reporting detects and combat which best and for such brute together password for administrators automatically users, prepared to end better includes customers with insight dynamic response for landscape. are recommendations today's

Okta dynamic high launched offering the we Identity scale showcase, at Customer that and for trafficked the transformative finally, capacity a largest apps sites. enables scale most and And highly businesses

the minute. shopping a weekend. a peak use and our traffic XXX,XXX burst need entire identity marketing support release, it's within of campaign, spectrum per new Whether authentications burst to can cases. meets any of use This a product up major viral extended virtually scale authentication Dynamic or

of the just in power hours, XX XX Amazon's XX,XXX XXX already minute. million and of that's That sold of is buyers dynamic one items on And this items scale, could Using market. minutes. Day, only Prime example, the in over one of average our authenticate For used an these they customers is each per dynamic every in being scale.

In to a today, support include rapidly including separate which users, announced its caregivers, of we press customer its that enable scale, it will and Okta's products tens to of scale patients, providers, use athenahealth will staff. release expand of to identity millions dynamic

are Our Okta. the customers for strategy as tremendous and excited at and received to year been we've analysts accolades about innovation this vision well, execute. noticing our have very ability Industry

the security heels recognized market. Zero Forrester the leader the our Wave month, a in as incredible the position last Magic On Quadrant, in Gartner Trust Zero for of Trust Okta leadership

identity thing addition only over like say Okta be January we'll releasing having the that before our in is Bill of to it Okta report which businesses at hand XX. I included report, highest of the the across I'd sixth our the half is evaluation to company last The on possible score as recognized criteria. work

commonplace. I Integration they Okta at several the exploring know, workforces it's used be from an revealing they apps in-depth and report love how investors the fastest growing organizations the before great this this to data report services into become been look analysts industries more productive. work people well Network, and applications and Using in because and trends takes and today and customers

continued by was So, a I'll quarter momentum. strong execution market for driven summarize saying very and it us, by

on opportunity great us. fronts We and front in all are remain massive seeing traction focused the of on capturing

Thanks time, the and our financial over to again results. for your to call turn I’d to now Bill walk like Bill? through

Bill Losch

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

our the available is IR I started on developed and our Before to presentation that results. out that call financial new I want a get detailed results, we earnings website on contains

find a my of highlights cover such, a for time only notable afternoon I I the to summary few will think be Q&A. commentary in it you'll this useful more leaving as and

Total RPO including revenues momentum mentioned, as strong and Todd key of billings year in revenue. XX% total the XX% board, experience our we increase the strength the the increased XX%, free of such driven As cash a in represents half and revenue we Subscription built revenue, flow. subscription first maintain across revenue. by metrics

with first through to reflects just unbilled This the over growth contracts or we've the contracted length. milestone, $X that as and is and much both RPO a RPO billion for larger backlog, large be billed $X us in success the total exceptional which subscription cross to enterprise recognized RPO the total The value yet tend Total XX% billion. is not been for marks customers, in been revenue, time. longer experiencing mark in but

we continue months next Current over we which experienced of XX strong As the term revenue, expect winning with length organizations, upwards contract success trend to growth over largest the represents continue and average size to also recognize to we subscription XX%. time. to RPO, expect see world's the

As billings additional with metric RPO RPO to in when you gauge viewed meaningful and is metric more along know, in Year-over-year an growth viewed a current revenue as be should growth. subscription performance the quarter. our

increased strength XX%. calculated be XX%, and to all our Total driven continues The and grew billings billings both in existing across calculated customers by new current billings markets.

dollar was retention deal is XXX%, from a enterprise decrease the period for our initial trailing by rate retention, decrease expected, larger large were slight sizes X-point driven achieving with QX. The to customers. the XX-month net Turning based as

quarter-to-quarter. a the we net retention may As mentioned, fluctuate bit rate from

it as with deal initial our the to in very experience growth largest and expect to we business sizes, continue grow remain organizations. We world's healthy as we

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

capture at investments sales grew operating we for increase the Total driven is prior and of large quarters, expenses with expenses. as looking market. look marketing to Now more operating QX XX%. by Consistent our addressable primarily

be: platform, expanding largest the strategic to priorities expanding with Our driving and our presence in Identity, investment the our network investing organizations, security, continue strengthening of geographically. Customer world's effects business with

usual, related initiatives. As headcount to increase the strategic scaling is spend to component of biggest the support these

attracting customer total great marketing an success our in and led over and by headcount the grew successful acceleration been We've of half XX%, growth the and talent in year, teams. first retaining sales,

as our we durable We in growth. for invest continue business to scale

$X.XX ended topline the operating margin, million of share and cash per better equivalents, in short-term a loss, operating $X third better-than-expected billion increase to growth investments, We net sequentially. with cash than and contributed loss quarter expected flow. Our cash,

The convertible portion by senior offset a partially of $XXX billion the convertible million the of by existing issuance senior approximately of $X increase primarily notes. driven notes, was our of repurchase,

is raising only for optimistic on opportunities Moving bias Consistent current based outlook, to year, growth, outlook. quarter competitive investments with approach reinvest will we we demand with a and believe on continue will strong And do our our third to we that positioning, our throughout meaningful business our results, we are this fuel to our our our environment products. remain full-year about the return. of further upside, innovation in so our but platform, have enhance

free be to expect positive and QX, again full-year. We for cash flow in the

fluctuations Going enterprise in we ongoing to the to continued capital, variability our expect see in factors. growth in flow forward, cash and working seasonal business, margins, due

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

per a representing to revenue of loss $XX.X non-GAAP total of shares million, $XXX the assuming expect now of weighted non-GAAP $XXX million, $X.XX For fiscal million million. $X.XX loss million to rate of XXX net we operating outstanding growth full-year year-over-year, of share XXXX, $XX.X approximately to XX%

planning, to Although year. for we’re financial the view of outlook in revenue preliminary like would early our I phases provide of next a

For fiscal estimate year to which the currently assumes in million revenue demand global million, healthy environment the $XXX no XXXX, range we’re we experiencing. of change $XXX to

on In and out had quarter we leadership summary, to building forward the positioned as to our We in year. we close another the market. the we strong remain extend look tailwinds and market our progress capitalize on uniquely

expect We operating have leverage model a substantial to benefit over and from powerful financial time.

us. the to encouraged look are and the by front progress of market capitalizing on forward We in we've achieved tremendous opportunity

will and Todd, Frederic, that, Operator? I take questions. your With

Operator

with Melissa from Thank you. We'll Morgan go Instructions] Stanley. [Operator question Please first ahead. our take Franchi

Hamza Fodderwala

my longer was cycles I slowdown Hamza to Melissa revenue for lower the in Fodderwala that anything from be standpoint XX% it nice XX% a is question. XX% in seeing in in might taking have that Bill, one Really or the that just macro sales And on from was This guys. driving growth, more dig international there is up so just might a growth? Franchi. question QX, you're just be I'm results. in follow. QX, for for I QX wondering, Thanks Hi and it wanted

Todd McKinnon

talked question Hi, trends secular geography; demand to in every very, be Hamza. – the healthy every it's digital secure. thanks environment of needed Thanks segment, the bunch, these for it's a every comments. in really and transformation, but The the Cloud, massive very we and is and company for about

So, we're trends board. enterprise continuing that's from the take these Particularly is – the the invest in comments advantage clear, segment, across I to results. clear think very prepared strong of was was to the and pretty

the I some on international follow-ups though. think, Bill specifically probably piece, has

Bill Losch

that think that there. products seeing to opportunities to the we're say out demand for strong feel invest we're the there continuing We're we very would our here, the is point big I seeing that trends Todd’s of Yes, the outside certainly Internationally, outside we U.S. And there. U.S. long-term like is

very feeling good that. about we're So,

Hamza Fodderwala

then, it. versus on growth. just the RPO billings Got And current

about variance booking’s at If look two, it was the So, in that sort just perspective, metric growth. XX% the in of widening, you're and be the that XX%. RPO, RPO is guys XXXX? to billings that changes there look to the a bookings because be any there revenue big current taking wondering is we mindful duration a seeing QX if getting up for we any variance One just that change versus between be sequential in the going a is change from plus current RPO And – there, growth of any growth to reason I'm of you impact current and it at? seems linearity should seems sort into

Bill Losch

very the both mean, billings current look call talked I at also on you we is The about billings growth year-over-year. XX% if think very and at as XX% growth strong strong RPO so Yes, I RPO, year-over-year.

is the pretty you're and what duration, believe both you we’ve so and a the think with conjunction eliminate, should that is, RPO that can does picture, the say, the well. current is that's growing current have current RPO gives strong of very metric a billings them situations subscription billings a invoice IPO reason seeing we really strong clearer as fact dynamics, introduced let's timing revenue, are with like a invoice and – of I of in very, that strength business you why probably the metric look think but we

business, RPO, and said, billings, quarters at results QX RPO going fairly seven evaluate to it, and the as in renewals the looking which RPO it's also our strength best especially with the as so RPO some strong. and know, have as think to way been has current together based very renewals, far you for we dynamics we've us, we is on timing of early of but reported quarters You of you're now prior

Hamza Fodderwala

much Okay, very Thank you guys.

Operator

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

Heather Bellini

we up in Great, of comments replace than you, the Access to more end I'm for legacy priority of the Thanks. I seeing? I you're typical coming be your a obviously, thank wondering cycle you're aging there offering but just it modern help huge of was to wondering a just, if tipping in legacy Todd, the access deployment remains might know life you have a the of Gateway to even are management point had following that drive is, about of you. just some is, what of this like the faster sense going installed for the you base replace on where question migration terms Hi life that like and systems, to a what or could that anything and products if and

Todd McKinnon

these on there go don’t there. that's of think basis, people and know know to adopt SI pressure that couple are big static, is something new putting to little Okta And and bill is is tools on deployments bit the how tools things people legacy justified there lot big times just and even And upgrade in of of wanting and times Yes, a to change really that to one work, digital speed I a even a that, required wanting how lot it trend. One ROI a cloud they work do like big people huge transformation anymore. that to a consider these to to initiatives general. a that flexibility just companies that's by on have that's is,

and they've the in even big are go-forward is, the like that of a mean, in going cloud set I there, things they've a that with management other identity like away do. even from industry. transaction identity going – management else The perspective products forward. Microsoft their legacy with the that of on abandoned did I is any investing because associates specific shifted in Oracle management is terms trend Broadcom way they realize to computer solution kind of has less everyone that with

It's the helping of seeing with they it big in business, large Where Myriad as use Access our is that, are in course, that. technologies is us making as enterprises, to All lifecycle. premise of hard organization, of well. are Okta of products big a especially every say. our and vendor-specific much overall we’re is So, know as me have, part we agility and I is to built and products make easy cloud sure part a and those Gateway we're to on these for

Heather Bellini

Great, very yes, much. really put you deck thank I the Bill, out. that And like you slide

So, thanks that, Dave. for and thanks

Bill Losch

you, Heather. thank Yes,

Operator

question next Piper Please our from Owens take Jaffray. We'll Rob ahead. from go

Rob Owens

for Yes, hi, some landscape some time. for touch guys. the afternoon lot of competitive talking on large and them even of good to that hearing I identity though a about category the the focus competitive the in been rhetoric we’re being from just they’ve a wanted players are

So, move by market, anything to add as numbers helpful? you you or color are and more seeing up do seeing evidenced aggressive Microsoft today, them can Thanks. you are point, this at the which more you is would be

Todd McKinnon

obviously on big then And can platform It's have like mean, breadth scale smaller have It's do never and technologies. we longer are array Microsoft, consistent. to against been been just are big, a and amount the a either companies I put than we scale differentiation see wide of we think that that you us the a newer clear resources, or got have a that competitors. companies of very you have all as very very, problem. either companies which them companies I around

them giving and from vendor the technologies with deploy a the products focused it the of is differentiation companies but matters management, have really the customer story, the platform there, choice and allowing the do they've any or platform all really and mark it access legacy differentiation themselves, that to some like built from some very flexibility the websites, of resonates us their market. tools and we're with customers – everything it of don't on for things Oracle good companies cloud And an and

couple model, see, means, which to Trust user basically can for it's who basically move important. example, sure security trust know a the means you everyone to model, Zero because Make network. wants anything that; is. do security very to particular I of things Trust the a mean You don't are this Zero on

identity First to it. company as center is of of the all, you at have that an have

to user at And know want log to every you because what core you and in, developer If that. give on multi-platform identities companies biggest device, every are piece of who piece and have access, every can implicitly and network, infrastructure, of the tooling, they so and verify users and can't every every the firewall, it's you secondly, even of platform on. every the

hybrid especially things those every two this big we're which perspective. success it's we're clearly at platform world. a large every of mean companies, from right, a breed have best implicitly things has from large despite So, enterprise the And I enterprise, companies large probably few and in our to those least differentiated that because able company, think platform

will Finally, not noise about can it and realizing making deliver the to results we this able is be deliver. important

Rob Owens

color. Great. it informs anything sequential sequentially. level, us. And you back the is for a second were, guidance Bill, that fourth I there you're Appreciate size And of a maybe one-sixth not to saw quarter kind your the if million to look X.X is goes change, you apparent when at that that the as then

a That's So, I Thanks. renewal. any conservatism not quarter on third is this in guess, happening? pull your forward, part? Was the there is there or

Bill Losch

Rob. Yes,

we with very full and our at obviously is and third year full we strong. fourth quarter, pleased good XX% versus growth, we’re for we guidance on back performance the that which million our think what very in as year-over-year the based fiscal into XXXX, August and felt went is in forecasted quarter guidance we’re raising $XX year raising I that about the

as be thing note is the one quarter, it to bookings. the a to is, the quarter as fourth tends far bit loaded little think fourth because do I back-end

so going normally derived is you really of demand. much derive demand but as what is quarter not be So, would in are bookings very that's product to seeing the see, strong, there, feeling amount about might – in-quarter good we're revenue you're as our from we

no there’s point so, out. And other things would I

Rob Owens

you. Thank

Operator

Walter take go next question from ahead. from Pritchard Citi. We'll our Please

Walter Pritchard

Thanks. Todd start question I guess, out. for to

on year? a Access sort of becoming some of compare if about year, drivers, guided and on how how and the Gateway cycles into new the the to and year this just as the bigger of And much about sales next Just the you the envelope like is much, enterprise enterprise sort next how being you do business, specifically swing an think how part you think things with factors last you year, going year around year? given this of those drivers numbers, guide

Todd McKinnon

driver enterprises think it's I a And and very, about still very our that overall. very business the I there important reality the to success fairly is is, think is but optimistic of it, think it's us we're I X that considering ads X for of sizes market. over been know have significant or Okta. $XXX,XXX what, you would when us Even us the early ago deals size recurring that you revenue, to at look years in at for our big customers

actually solve problems big small the Now, what these they're relative are these very but we considering to the past, in overall did customers. for we deals can

address How go we're and massive, cases? that's those we success? upside customer double the think really products about use focused there to from continue down from on out everything excited but enterprise, we're the we to to How market? on we build how So, build is the we the why very

which sure their we platform extensible or do this are. oriented anything strong building that always make been cloud on-premise it's what and platform incredibly out, this we that's to we've in the is connect whether we we environment, way were why and How to

Frederic Kerrest

would is a Walter, just I things. of couple And add Frederic. this

organizations, the to executives in any at not is, long not thing that I forklift prospects one them telling they're these when one we story value The see go a we're that for large first our walking going into a appreciated, really think with upgrade time.

time ourselves. land with results business where and opportunity in grow for expand earn their walking deliver that story then and trust we're over and a and their to going We're

So, that on-premises. one favor. companies swing that in big our and having large lot enterprise plays about that's think those our to talk have I When thing traditionally of challenges of out you kind resiliency a have swing

is, value add perspective opportunity Access earlier large and inside commentary Okta Okta more thing just second companies, my more us potential organizations. in I from talking The to with Gateway, to these Fortune great and for XXX Heather's CIOs on at organizations would to it's for your question and unlock a

to unlocks, going platform standardize IT very the the Cloud We've We've workforce, value of hybrid new identity and and websites that ahead. digital for them very, on their to out in to the lot across that think a both to story OAG new quarters very I at create and on-premises, the but Cloud always power that migration. see the you're of always in the been really be potential good trying there at transformation seeing good end-to-end been applications, us for the are when now or

Walter Pritchard

you. thank Great,

Operator

And, we'll go ahead. next DA our Davidson. Nowinski with Andrew Please from take question

Andrew Nowinski

you nice much thank quarter. great, a and very That's congrats on

you you RPO now drivers use the at ago installed have you it's so for more larger and versus you a of of question, question, in last that and – look base, it Todd cases piggybacking First much kind have demand, growth that seems the terms many new those of have where support, if are trends. integrations, is your you current maybe reflective on of key a you year

if wondering the year us company's where could ago? your you position just and I'm you a were you how give think So, now versus views

Todd McKinnon

is biggest of and lot a a there’s lots, there think of change lot been would the I changes say is positive evolution. I

things. to would I all headline is that be the these think, would central say I market the recognition identity in that the

they maybe more centric access that to initiatives, at If different they it faster, how in a was these have allows was, are traditionally have have keep firewall more secure where build way technology, and People it look all – people transformation, that now. seamless you also to anywhere. it's projects it be these with about any flexible, digital for from centric, trends, it platform but thought or was seeing

which trends, the identity the that to What change year. is is last kind kind in positive – see they that's for is of That's or in different side. evolution has of positive now those been central Okta most market

side, scalable. the talked of On our platform made in about more think We the wrapping a progress, that we've that making offering. and into product product success terms ton capability I of there scale a dynamic in

which course capability the have set We more Okta blocks We’ve much flexible play. the catalog and catalog helps be componentized as a Okta in talked a most, which of engine, far serving of a away use building is We the called really and of about the industry. that extensibility a Premier terms up breadth customers way. Hooks, an in it really released in identity depth to continues integration integration that is

unrivaled, really and those dimensions. It's along we've progress made

So, central to this of lot not to realization macro, massive trends, the that, that's secular also that's but these identity coming to a being these market addressing important those.

Andrew Nowinski

the revenue guess, your year, range of growth Great, for billings follow-up a growth look the just you RPO certainly the would why those for at outlook fiscal only for we range XX% appreciate XX.X% I all XXXX? to all been in thank the when Bill. fiscal been XX% XX% year have you. in given in And metrics. expect growing then I current but XXXX, maybe your has

Bill Losch

our strongest planning is, to I and said as Andy, still close. make which comment other still is remarks, I my early we're financial seasonally quarter. QX, our yet in prepared in would Well, the we're

next preliminary is So, a this really for year. view

seeing positioning, strong But our you're evidenced strong right, our RPO, strong cycles. business, to but we longer enterprise as customers. are and have because approach momentum with our very confident engagements guidance measured are the those by remain in We in sales typically we

does that less visibility. result in So, near-term

planning we're financial process. just this early I our So, in prudent think being

Andrew Nowinski

us good the work, guys. Keep great. That’s

Todd McKinnon

Thank you.

Operator

We'll go Jonathan William with take ahead. next question Ho Blair. our from Please

Jonathan Ho

use of some around just afternoon. product how contextual us and has wanted maybe I are and of trust start with may give impacted of deal seeing around access, be can certain products, good to, this maybe any number coalesce be Hi, you sense may sizes, the newer family? zero cases you a maybe customers

Todd McKinnon

a it's because is it Access the think increases drive and, helping you Framework, couple doing Access the realize be you if I where Directory, it's, for zero a based modern Active you think you're, to business modern Framework, Directory need to of flexible not model, urgency especially a you contextual have know, of active, I in you access to adopt us. whether that’s One whether trust have things legacy know, Management new you or Management Active it's a terms you know, when a you going based it's access premise to solution. that firewall get on get that's

capabilities multi-factor security customers urgency buy not about, something has the capabilities around showcase adaptive at helps the to authentication, includes raises access security modern really of where, and and our insight talked mention which the side dynamic It contextual adaptive all – factor event. a to the solution, we we our multi management, on authentication we which Okta, SSL, can upsell also upsell adaptive product, us inside you know, capabilities. can but the upsell So,

So, on both help dimensions. us

story. of big part that trust an is integration much still, very Another it too is, zero

that breadth that to we have accessed depth the applications need or be everything. partners one scenario to that's, come different know, application have and ways, different And trust back network and you you – you business integration zero And support for every, to various just and and which is device us, if everything. want want scenario, don't for broad want you one every know, it every you to in catalogue. foundation to for of You integration

Jonathan Ho

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

capabilities up little open that, a about opportunity and forward? scale put talked use of you Thank you. the cases, competition or You around bit does just specifically go new you ahead this the the bursting as understand

Bill Losch

native which competition ahead all example approach, built but per authentications writing the don't which puts dynamic which And you know in we don't of terms but you is We buy numbers. biggest we need. of the even their minute, gave the you Cloud comments, in our that capability XXX,XXX in Okta, code. customers a scale if their given started we us [burstiest] service the Yes, capability, as They Amazon disclose and world. to day websites is numbers, exact of get basically Prime our the dynamic cloud the that up this exact from the supports prepared scale, what the

Oracle us running very customers can for it rapidly, and would up like, Identity, add something take and this require, to package capability if doesn't you possible you're was advantage know, spend and of require, big It going. dollars And right? to in add It it bunch SI relatively this were of to to a would and a it able millions customers ask in get come year a we our you to offer rapidly.

Todd McKinnon

in press customer an and using ours. athenahealth, today for and management a millions their had And their just example They releases access time, been an They've all provider we as patients that you doctors, how about that healthcare portals. existing they tens millions out our of capability think support of access dynamic look, they users. to both Jonathan, and of if of ID And customer add providers, would purchased these I some all IT that's a of scale put services. leading

do And trying to want something to it introduced of that kind example information, product you immediately adopted manner. at good being that you scale. secure can do they and do, scalablely a think when obviously, And it can brand-new of very I customers sure you're can make always by innovation in that's access a reliably, you

Operator

take question Please go will Jonathan ahead. next from our Baird. with Ruykhaer We

Jonathan Ruykhaer

support just curious on talk traction that the you good gives a with about hi, channels confidence you've what impact little investments there the made I'm the afternoon. having business, if you size, could enduring opportunity? that Yes, just can our bit

Todd McKinnon

opportunity terms comes when be investments in specifically then a seeing We're reach big the that's channel that for it global of integrators. in to making pay think thanks over partnered and the years going off. the question. the been we've system the scale. and global Yes, to We Certainly,

on that these critical they're getting for more deployments Accenture, of more more All trained consultants seeing work us. big their and and transformative Deloitte certified ones do IT more the of PWC projects there them all out and we're and

that's It's opportunity. early think days. very a we also big So,

to deployments we're There we're and that's what opportunity just up Cloud. system more you I on that successful their and getting global can running see think largest in integrators first more something ahead. Okta doing. world's more them certainly coming a is Identity and and lot just And interested the and are get into organizations aren't as As imagine, of part the of the

looking for they be to I huge of take are to Access and transformation, they those large do hybrid IT to add infrastructure of of also that it on-premises they a internally, more Gateway ecosystem, reality in advantage the would products really organization, unlock Okta which cloud at looking new legacy they've made us the allow they need that like potential might because is, investments. might decades investments in digital but be

So, something allows of the to all integrators. Okta way the the back kinds infrastructure those really us deepest with integrations global Access Gateway the is to the that obviously on-premises legacy are deployments system very – and in very from and tie cloud, are it end-to-end that appealing story to

Operator

Guggenheim And we'll take our question Koujalgi next Taz Please from go with ahead. Partners.

Taz Koujalgi

Hi that think forward? the question out which is they've question. guys, the anything first about going seen quarter, expecting to adds, of customer quarter, I and call time guys my there last year-over-year think adds ever new terms I customer we've gone were thanks think I taking this year-over-year, in flat what customer had for adds down a new the you new for and I that,

Todd McKinnon

excited results We're Yes, very the thanks the about question. we've for that shown.

would at few the the middle of number have think been quarters, adds always net again though. there XXX right between XXX. point in things the I – XXX past I for customer and out a we’re

customers. you at all, if $XXX,XXX of the above First and look

ACV year-over-year. If you at growth look the

we which the It's that XX over net logos also new XX%, is the top you to XXX obviously those second-best are XX% customers first that RPO And over exciting. year, XX% a really results for of which larger to compared number We which great. I year-over-year would at all point all-time. those and time is quarter ever, of the plus had of those customers, about the million, TCV added in in which had contracts total was last we've the growth. is new see XXX QX, to $X is the the us,

and we're really larger very, going larger up and largest world's very that that about organizations making you're in in what bear really quarters that getting the the of bullish very and we're the purchases, are the and we're to into doing excited on really very on engagements, seeing bullish that customers is fruit, organizations, the is, we're starting we're So, really ahead. larger investments quality it's

Operator

from ahead. next Keith our with question Please take is BMO. Bachman we'll go And

Keith Bachman

could? if I year, on could to question, about questions, comment I retention quarters, some next from think follow-up you Access we in specifically about over Hi, you the thank other you of but a I very much. rate? The wanted ask to two net been previous think The that number mentioned, net if see as down ticking products retention the rate has you last wanted Gateway, think that stabilizes? you do if of

Bill Losch

really we're talked Yes, initial retention that saw net more our mean and about is think, I customers, as more I deals drop large is with which doing this point quarter the enterprise landing it for and we because RPO a larger value the rate, of really the large longer-term plays healthy to growth and strategic really bigger the Okta testament for the indicators XX% enterprises. by these evident business and is that deals like that are we

significant accounts expansion So, those for over we in do there’s think time. opportunity

a it, a look have range XXX%. a be up as about think may think there'll we for a be retention think be thinking to at further you before, or still down we XXX% I we've that's bit maybe bit talked We range or receipt rate. to said about fluctuations net a reasonable of

Operator

from We with will take and our Please Company. next Nick Yako Cowen ahead. question go

Nick Yako

strategy? to in developer earlier I company buying from the of developer’s engine taking wanted that community terms noticeable identity ask since go-forward important community is Great, launching with work you've and questions. and in willingness if about this then year thanks my the the you're how standing to change the seen Hooks any maybe for to and

Todd McKinnon

that been And something the very are identity in. stake. such if very, marketing lot it's developers. management the a the project, customer projects course identity the strong around of of lot customer or a is, security the developers service equation, There's and And interested, IT technology important. course we've Right. the side, traditionally, team, are from but you on investing we're typical technology team, team of team, especially important, customer These lots it's, a are very It's the there about there of team companies. strategic for these stakeholders is company or team, with think that in the the the

what how documenting is it is – you a and does the basic the it have documenting and clearly it energy your investments only what developer.okta.com, of terms there part and documentation our years are engagement – use the that the last off perspective of best part and forth on to few So, patterns just our and around overall from product functionality, sure that just and traffic and in so seeing over ideas community. the but just pay not practices design making of communicate and we're

relatively and up critical, identity is early. and it the that I how big you say core exactly you identity choose what would relevant can need I it way use need the exact product, in how think the the order APIs it's other part but what's that's it and engine And that work you and and it the it's that's composable then it whether engine, right. how of parts about And of and platform set is also and is

you'll why Okta and and the quarters at suspected in and things that roll that broader It's – invested beta invest we in to in that it's it's the used us we're to great getting exactly and customers right in feedback valuable which as the and audiences companies. platform, it incredibly, It being out possible were ahead. we is see in not possible now, capability before continue to broader the makes from these learning incredibly beta we're that

Operator

Pat We'll ahead. next take JMP Walravens Please Securities. go with from question our

Unidentified Analyst

question. the Thank my XXXX? Congrats Young] This you model taking I is for for on you on for FY your you. just could and quarter, provide [Joe if was update Pat. wondering, an thank target

Todd McKinnon

for about, your update guidance fiscal to preliminary our models. for be some as revenues, you in talked thought early So, gave start we're as year We you – year. we XXXX we helpful would on planning next which

we've I I think profitability, going through it's demonstrated process, strong said, that the about being planning still fact the I model. before, so, think in That again, said think as should early. on mean and that we're leverage you we've that

track we're We stages so opportunities big growing invest are are and to large really two continue what very to growth, and shared we identity, model October in invest consistent markets are investments year. feeling model that early we or and that on October both the optimize these last innovation last going we're think in to and and customer in the and go-to-market workforce of we for in with but still Day our are back Analyst

Operator

And with ahead. we’ll question Auty our JPMorgan. go from next Sterling Please take

Unidentified Analyst

is guys, Hi on my this questions. [Sahil] Sterling. taking for Thank you for

access advanced identity infrastructure how we into the the should server the in existing customer and Thank new opportunity traction is So, how base, see ramp? you.

Todd McKinnon

seeing it in technology be available that and servers, take – also is to products in customers to uptake are and Advanced companies back or more can cloud new think to become for single sign-on powerful, very websites they're which Oktane server to servers we're companies especially launch about that access to to are that largely, with trying on apply you build cloud and single – at it now want to trying April, access their existing and early, done if or is servers just doing control sign their products their on back so that it generally became and was and apps infrastructure, Okta has what – it’s traditionally solid enhance environments.

up access you that and and have of are challenge. pressing on of today thousand management ten and rack servers more down you they're tomorrow security. and even These the more – management challenges servers terms that a are become and in that's the issue a might of access in kind that static burst put IT environment have and a up six dynamic the thousands not servers very environments and traditional They're that of,

in going driver So, the like I about that but still said, a success launched us for there back it relatively just excited being big forward. GA early, we're is, April, it's

Operator

& Please next ahead. hear We from will Company. Roger go Needham with Boyd Instructions] [Operator

Roger Boyd

where thoughts you Henderson. hiring to you be, a count I'm growth this can to on Great, if to is on expected see but down your bit would Wonder head accelerate thank it get for like Alex or to you XX%, you. more? environment. little Nice

Todd McKinnon

count we an talked acceleration is growth. about strong also as XX% half of the which at The over year, our of the growth Yes. very head was XX% first

our target feel retain ability And develop, for good so, and hire, hiring. really about to we're talent. our We on

So, like folks retaining far pleased we're the feeling and across folks we're hiring we're all as in in are pretty with as company. Board on the the bringing success target and our areas

Operator

Mr. the would This like to to concludes additional any today's session. remarks. over for question-and-answer back Gennarelli turn or closing I call

Dave Gennarelli

We'll as Conference XX. the be a the operator. weeks, Needham of January as over York tours Growth number well several Thanks, next in attending hosting bus New on

So, one you to events. see And those thank we time your of for at this hope afternoon. you

Operator

conference. Thank you your today's participation. Once again that for concludes

disconnect You lines. phone may now your

Okta (OKTA) 5 Dec 192020 Q3 Earnings call transcript