Earnings call transcript Q4 2023

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Dave Gennarelli

Hi, everybody. Welcome to Okta’s Fourth Quarter Fiscal Year 2023 Earnings Webcast. I’m Dave Gennarelli, Senior Vice President of Investor Relations at Okta. With me in today’s meeting, we have Todd McKinnon, our Chief Executive Officer and Co-Founder; and Brett Tighe, our Chief Financial Officer.

Today’s meeting will 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.

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

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

for performance In addition, non-GAAP. financial meeting, not explicitly during measures not today’s will or are discuss substitute addition the non-GAAP These meeting, their state accordance reconciliation measures. in non-GAAP is we in measures all during profitability GAAP superior and are of may with Though to financial financial and financial references versus to we GAAP to available between it our limitations release. a a of measures closest A the non-GAAP measures discussion non-GAAP and earnings equivalents in using GAAP. of prepared

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

discuss number unless represents we today’s quote In as performance. comparison. numeric year-on-year otherwise a financial a will changes growth we noted, meeting, each reference our And of such

now, I’d And like to over to turn McKinnon. Todd? meeting Todd the

Todd McKinnon

for this afternoon. everyone, us joining you, thank And Dave. Thanks,

record increased macroeconomic customers navigate profitability for business FYXX with fiscal and positioned environment. an the flow. our organization with evolving our our go-to-market in to continued with into cash improvement going and was us cash improvement performance, as our the pleased Okta a new We’re We’ve QX and flow confidence close continued improved results profitability It and in the success giving year. strong to significant

that driven priorities organizations role Trust address not hybrid all grown adoption these world. enable need recession workforce from better long if less. have remain of identity around over term. three, a in at the security can projects; importance These least organizations top All trends all these the only and of of years: deployment do digital organizations are relevant the that with fare past trends a identity. for than IT; will more security, the has of the cloud and over emerging to Okta’s whether Zero more initiatives, Organizations helping powered in trends invest during around and and are innovation by efficient business more one, several and or mega transformation three The of initiatives and revenue-generating one, in the ever,

a that Remember Okta founded was during downturn.

positioned advance are heard Over some move leaders how many about us. for in well review is several dive business into with position to you have this I’ll FYXX. enabled Okta that months, finish to of our do new to leadership in toward deeper environment, quarter the Okta and has talk where more a market the with up efficiency, continues wrap comments to a efficiency? companies always And less. past increasing increased organizations striving

Platform and Identity to continues one mark that the well mid year, the to last by Cloud be we the approach Workforce received the and Cloud Cloud, two Identity introduced our The hit really Customer customers has and market partners.

number Our Cloud Customer upward of an structure, over team closed the line four quarters. Identity reps to the trend go-to-market enthusiastically see have has continue we deals that and embraced past sales the in

fantastic team to at annual week, last and kickoff event Just had momentum motivated was highly we the keep sales the is The the going. summit. our energy

bringing of total to our added XX,XXX, Turning in to customers our growth base QX representing results. new XXX quarter, XX%. We customer the

upsell, cross-sell continued is an area the strength Conversely, environment existing with Brett with is macroeconomic the affecting New our business will business. our customers. cover where customer growth believe we’re we experiencing

most see we in And with large are $XXX,XXX-plus of continue proud In to QX, customers we We the Sonos, the both to work world Identity. some XXX customers for Customer and brands Packard and MassMutual. important with added with Workforce Hewlett ACV. as Enterprise, growth such

base Our ACV now $XXX,XXX-plus and XX%. X,XXX at grew of total customers stands

Here are upsells QX, from just customer in industries. wide which notable a few of come wins examples a of range and

OpenAI, this the Cloud great company win Customer powering ChatGPT Identity was a quarter.

interested were popularity thanks support looked ease-of-use, Company increasing Identity able authentication technology, Okta’s as to security. With for the authentication of the the AI Customer to the Having Cloud bolster its Cloud influx for utilized tool. to and a Okta’s needs, customer, Identity Customer OpenAI’s of people Customer developers its in to using rapid Identity cutting-edge self-service reliability

administrative A this employees quarter. agriculture secure overhead. Workforce road and win of for improvement Okta home Cloud alignment. supply integrations, and global company The great XX,XXX while Okta chain partnerships Identity technology provide to breadth a its automation reduce X,XXX access selected with map the its increased will for company company was providing

to business company the to with Cloud A in and investment and With exciting this its developers’ quarter. Okta’s Identity reduce Customer technology Okta year on projects. its focus was replace solution its with friction differentiating time on-prem free eliminate incumbent expanded up the an selected the end-user identity this upsell workforce Fortune homegrown company upsell, company solution experience. insurance Workforce associated Identity to XXX last The complexity

of their became our as solution their stacks demand and customers across OIG, in identity helps it available early as visibility strong with very our the reductions. better tapping cost Okta time posture gain governance and faster just platform December. with It’s still silos. value for This to a globally unified security implement customers see identity overall early days remove to power OIG Governance and into to continue or Okta’s We are Identity improve

of from energy to across lot organizations business and manufacturing like productivity the XXXX various to a verticals seeing Notion, upstart are company. NOV, interest segments We Fortune company; a a

their had natural Okta step that OIG them. reporting upsell was OIG Cloud a implemented They satisfy regulatory and was this leveraging Since for NOV Workforce a been would Identity they XXXX for products had quarter. looking Workflows, Okta a great obligations. since were product already

on Reflecting a back we FYXX, tremendous accomplished amount.

revenue with targets $XXX,XXX RPO an reductions. our customers including added added We of made by we on of over Scope X, And or Identity hit XX%. expanded tremendous including XXX example, front, For validated setting more. $X the and portfolio science-based We emissions ACV products, progress Okta X,XXX increased We billion. for ESG Governance. customers. X X

FYXX learnings, was action challenges, of change. a year and

organization’s partner. we customers. component. a possible Our of vision, a do grounded And it’s just everything strategic strategic we’re make Okta infrastructure, part technology isn’t Identity and purpose, opportunity what in we for an a is just isn’t vendor,

FYXX with product going relationships We’re into our an expanding company a with deeper stronger customers portfolio. and

leaders our to become are looking world FYXX, today’s never ways create efficient environment, our in confident forward we’ve for go into so around ability we organizational more help customers been the to in more As and Company their as our of their for the Identity we too position solutions. own Okta create profitable our both, workforce next efficiencies efficiencies Customer within actions phase organization has growth. taken and several more for to

strategic with horizons. helpful Keep few align across strategy. are entire also Okta’s to FYXX. it our top are a in share for priorities thought shared These broader our multiyear I be these to of execution company mind, would the organization

started in market. first SIEM, tremendous believe The many getting is on Identity in $XX made still what is Customer just market We’ve winning respects, we opportunity. a but billion priority we are the progress

independent the We’ve market $XX broadest Second, neutral leadership well to the establish continuous workforce platform. XX innovation, market. our position done past level. to clear take Workforce billion over the core pushing with our Identity with to identity the and advance our value years next leadership of we’re Consistent in

lower-cost growth. geographies, durable have includes expanding to support This for the our growth Okta And benefits. also of third, both includes hardening scale which and organization automation presence throughout infrastructure. international margin security in Scaling increasing own durable our

free to be safely use strategy course, vision our continues Of any everyone underpinning to our to technology.

up, into want trust positioned in every our profitable and pleased team To our to partners finish place we’re thank things special and their customers us Okta you I entire believe FYXX for FYXX a wrap their the who going day. work and for and to growth to tireless with thank we’re beyond.

to years want eight-plus Jon has and mid-September. Before our for member I’m I through to the key past member since over our founded I seven-plus Runyan. I the turn team Deputy an special years, and a Freddy has a who Chief serve past Counsel, executive promoted legal it General Jon to Larissa outgoing very adviser been thank Company, Brett, Schwartz, General that to being been a Counsel, is you give adviser excited as to will of Officer. team the continue the Okta over an Legal

more Now this profitability improved our here’s through financial outlook for to and details walk of the you Brett meaningfully year. QX

Brett Tighe

And Todd. everyone, thank today. for joining us Thanks, you,

future our I’ll I’ll start maintaining growth, month. action cost our have over many the pleased past key results set macro review the to made first, we’re fuel investments growth. fourth announced our progress significantly our with with commentary we that on two restructuring to outlook years the the confident and path the some We’re last for while structure of reduce quarter But we for environment profitable quarters. We’ve and taken FYXX. we’ve and

to With have or last change a macro the close quarter, regards we to environment, meaningful experienced in similar cycles not rates. sales

long-term they commitments. as with conservative requesting contract their customers shorter-term However, more become are links

business Additionally, our upsells overall enterprise. weighted was across more SMB both versus new business towards and

are our numbers we line generation experience was reported to into New top minor and our more finally, FX And upsells. towards continue pipeline on weighted which outlook. also headwinds metrics, incorporated

go-to-market that restructuring early we organization United located charge February, biggest a functions vast of were million the affected majority with we’ve in the announced GAAP within the were the many in regards in teams. With approximately were There QX. to The in taken $XX States. the reductions G&A and that

was Turning total Subscription total growth represented quarter revenue to revenue. for XX% XX% and a International revenue in revenue. grew revenue results. our of represented by QX of fourth XX% driven subscription our XX% revenue. our increase the Total XX%,

XX% grew represented the Looking Identity Customer Customer total XX% between represented XX% at ACV. and Identity of Workforce total ACV and ACV. grew ACV split ACV XX% and Identity. of Workforce

we term, with expect Over growth trend healthy to businesses. the both the long towards in mix XX-XX

and billion term hit or general total the contracts. growth mark. lengths recently is of Impacting $X RPO RPO, grew signed backlog, the shortening of XX%

which length can as the RPO X.X to metric recognize view due is XX billion. years. Current next XX% timing RPO, term $X.XX and performance which fluctuations in to We invoice expect to noted, calculated better a our subscription current we’ve represents revenue to as average noisy months, be duration. quarterly over to assess relative just Our we billings, over grew

billings and XX%. calculated current XX% grew Calculated grew billings

the formal this our As we’ve final noted referencing time performance billings be is we’ll commentary. in previously,

Turning to retention.

upsell in dollar-based Our rate retention trailing downtick strong our a remains XXX%. rate at for sequential decrease with net primarily the in The the was by driven SMB the rate retention net period XX-month customers.

remain very new from retention fluctuate as fluctuates. gross mix always, the upsells in may quarters, quarter-to-quarter rates mid-XX% healthy As Consistent and net rate prior the renewals of the retention with range. business,

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

of Looking is headcount for The measures. restructuring expenses. lower at is expected. reflect profitability Total next not total. to Total quarter end does number overperformance spend over That and combination expenses headcount operating incorporated better-than-expected due primarily the outcomes efficiency the at will revenue from X,XXX, the which just operating quarter’s be flat were in QX which was than of quarter-over-quarter. the action, better-than-expected

We areas to critical backfill and in positions. will open continue hire

Moving flow flow. investments. billion balance strong, we’re year million. QX cash, nearly Overall, strong and equivalents free by QX a to pleased $XX cash record with the results. producing $X.XX seasonally sheet our short-term with We anchored cash was in a ended cash

FYXX. our to turn and Now, business outlook for QX let’s

we’ve While the projections the macroeconomic pleased past uncertainties with environment. continue over of our two improved factor been to in execution the quarters,

in last the of half we leadership in year. also transition the faced challenges go-to-market We’re the first factoring and

increasing process bases. increase facilities’ efficiency several Europe taking scope reduce operations our product and including eliminating focusing rationalizing automation, we’re reducing in fantastic on R&D Asia on and lower-cost core in X%, focus our regions actions development, and organization, software have narrowing an redundant tools, and headcount We’re cost our to as Pacific talent by structure to building our footprint, systems that

of weighted of representing operating XX%; as XX%; expect to current billion, outstanding million million diluted $XXX non-GAAP a million. assuming of income $X.XX FYXX, RPO shares total of of XXX diluted million, average revenue of to net income growth per approximately representing first of $XX $X.XXX million; and $XX to of quarter backdrop, growth share billion non-GAAP for to With $X.XX that $X.XX, the we $XXX

billion to we outlook our XX% expect at million growth non-GAAP For FYXX, end. of XX%. approximately our raising $X.XXX control achieve the We profitability revenue are billion, high With $XX representing plan now the we year. to $X.XXX by for continued revenue to full expense of

weighted non-GAAP a of of net diluted $X.XX, $X.XX margin to to XXX operating million shares million. income which X%. outstanding million, income operating approximately $XXX share We non-GAAP assuming expect to $XXX of yields per average approximately Non-GAAP of X%

margin to XX%. impact will free expect restructuring, We paid $XX cash for approximately cash the includes FYXX approximately improve of which organizational QX. out a in to flow This to be million related

Lastly, to which Keep our versus viewing Okta. three a modeling results, help margins. with that days, fewer impacts QX want to revenue our I when provide few in comments has gross QX QX and mind projections

non-GAAP build cash to operating we through as to to is fiscal be year. flow. expect years seasonal low margin past, expected progress the the QX We for Similar

investments. rates significant we non-GAAP effective we higher foreseeable our rate, interest expect Partially offsetting non-GAAP in tax We to is future. on tax that are and applying profitable the increase to static for related cash now a expect XX% income rate interest effective a be higher the

a reduce acquisition. points but X due to of FYXX, remains largely are also to elevated continuing SBC stock-based decreased revenue AuthX the compensation. in by We as percentage our percentage

We in We to roll the of expect SBC off. grant acquisition SBC dilution hiring, to over SBC the committed long low to XX% sizes as remain The begins is the FYXX. term. driven and impacts be from by reducing improvement further AuthX decreased the being range and in revenue slower

that To wrap we’re progress two past quarters. with I’ll over reiterate the things up, we’ve made the pleased

growth. we the years while significantly and we’ve still more maintaining cost to our growth, profitable many Our but of confident do. fuel future investments structure business to has We’ve we’re there’s for recognize reduced key positioned performance that company improved, work our

back that, it for I’ll to turn Q&A. Dave Dave? With

Dave Gennarelli

Great. so queue can with in get see quite question, order. then, to so raised I’ll And there’s up everyone. take Thanks, time, hands you’re them that back of already, to Brett. questions. that few please limit I interest in welcome to a additional And the we one yourself

first the Piper. take from let’s that, Owens with Rob Rob? at So, question

Rob Owens

we how thinking DBNRR Curious Thanks, about Dave, guys. and throughout good you’re year. afternoon, the as move

script. You’ve you SIEM we of the front, Thanks. But it some we guardrails addressed think you seen OIG year? be the in some as you’re that pressure where could I move ramping on activity cross-sell there, obviously, throughout contemplate and the around can especially as the some put this seeing

Todd McKinnon

It’s to see for Hey the nice Rob, thanks question. everyone.

the think of pleased one foundation the which the to customer are with And that solidity I gross We’re the results. remains consistent themes healthy net in range. of retention success. the are the business and very rate, the of in foundation core And the is results And the the solid. is retention mid-XX% that rate,

and because be amount I think be the forward, change you’ve seen largely headwinds in the the upsells, will as the factor. just the change, and going the business the of of And amount rate projecting are that’s to on of sequentially upsells. change there changing

you for impact the going also We we lot business that in macroeconomic trying overall But have have forward. positives, we’re to account like a of the mentioned.

been side. the the We quarter And cross-sells have Customer improved in have on and terms our exceeded Identity execution And full and then a performance which got our get generally we it’s really of in this markings have in it’s we FYXX. market one OIG, with expectations, hit. available since will December, That that expect only product, It’s is with we all finished. year record in but just going we’re early, the continue. to

So, we’re super about that. excited

Brett Tighe

thanks just that. Rob, would add I Yes. for that to question.

a I saying, everything it’s totally XX% think saying for that a travel that to very seen Todd gross to range he’s now. retentions. around We -- be think agree put point what while mid-XX% we’ve was finer in on I with stable going

rate we think that little bit you are describing. going a upsell were see in I to net

the then we think bit less I one -- have would means other saying were around little FYXX. new which in will close many around we think into is for And as of is upsell see liked, reasons as in the macro. you customers to customers I didn’t headwind a FYXX there we

through as think retention little a I rate we net headwind do we So of a travel that see on bit FYXX.

Dave Gennarelli

go BTIG. Let’s Powell with Gray to

Gray Powell

I for One to correctly. results really understood to want sure was great. see And good thing guidance. questions. Okay, here. happy I Thank you I make that the the taking

we Anything your thinking QX? full just needed seems the less then, of else implies And in services three that’s revenue calendar -- conservative. of confidence going macro, the around just guidance, the at that really revenue or from in selling be less days around understand the it days, looking in but the growth. ramp should hit QX is commentary on three QX. I flat it Just level guide that year sequential just to terms

Brett Tighe

with Yes. Gray, has XX more versus it’s days. XX do it days Yes, a good question. really to that

on Just for revenue a basis. we as recognize daily a reminder everybody,

these and levels become dollar rates material very these us. growth at So, for does

the Obviously, about we’re leadership prudent then approach we’ve for challenges last the the full we’re guide terms We’ve headwinds. year. talked macro talked very given taking also still about, early confident. line had In we’re the top year. fiscal go-to-market and of of And some we year, in a the obviously, transition

quarters not that We’re good thoughtful to want in we’re Identity Despite we’ve how -- had field for deals, we also the in two the momentum, I are done. in of good row given in participation fiscal the year. the also fact but and attrition Customer be about both excited field a early job the saying

Todd McKinnon

that we until increased. when say, I execute guide line first ability months this now, top in you I the -- point if gave would that has, ago, three And our Yes. from year think to confidence that

business So, the talked with some I direction in the positives of we’re in we’ve along turning think about. the right

Gray Powell

Thank work. perfect. That’s you Nice very much.

Todd McKinnon

with Thanks. you. speak Nice to

Dave Gennarelli

Thanks, Gray.

Fodderwala go to Next, Morgan Stanley. at Hamza we’ll

Hamza Fodderwala

OpenAI the Todd, congrats on win.

Todd McKinnon

Thanks, Hamza.

Hamza Fodderwala

finer if you execution. an been particular. I looked like to force down sales Customer the the is looking I could sales given the at wanted a effectively ask, give Identity quarter. mean XX%, around what wondering slowed it’s I growth for now bit, from running at any standpoint, in us the a points attrition execution I was you’ve about obviously,

that I Customer of the you you Identity. in imagine just ahead with opportunity satisfied So, can’t given be

So, curious, to I’m of when starts stabilize? that sort

Todd McKinnon

a I’m of that’s type general, not lot with a things. In person of satisfied

always think business, yes, -- we think can across improve. can So we the I I

go-to-market the bunch organization, there. it’s a important of terms of have very In been part of changes obviously There Okta.

me group. So, the set let level just

President all, through February. here of So of our outgoing Susan, was of the first go-to-market, end

job teams also and So obviously, see good And can Steve They leaving, a who’s did Rowland, good you cranked her their QX. a in it the numbers. and did out. job delivering

Chief Now, up. with was Okta have we now, couple leaders stepping interim he been Jon Officer Addison the -- has leaving, Revenue Europe, on side in them years at role. and of is been CRO interim a running the has

for Now, looking great and of a it. over I’m spending -- we’re go-to-market President of time the looking ton next all

Kelleher. So until marketing, so we’ve be success, and organization we with under collapsed services focused customer find the everything I’ll working leader, veteran, one that involved Eric more also obviously Okta that person, Jon. But and is

two moving to be go-to-market part we So, as running which me, then change, to leaving we’re over go-to-market of Okta. have is the is marketing Marketing And another change, our leaders Eric, with under Officer, that’s going led that Chief them. leader also

amazing change is up. QX. a which as a very team a two But psyched it trained reiterated key we’ve and psyched Las There’s the well. The metric where last and deep which better Jon, messaging CIC attrition, people of has getting deals, the positive really -- had year. We a quarters They’ve of we the great. sales -- for terms that are delivered positioning that’s Vegas, that’s got in product trends just rep couple positive. had number got QX, are So, and about we in under lot have terms attrition, quarters, doing which from and talked low of is got of really Eric, The we’ve everyone up reps is this consolidated the back under kickoff bench. an of is for the

have there. great So, team And go there’s in FYXX. a a lot this happening out of confident very things to very and positive I’m

Dave Gennarelli

William Jonathan at have up, Blair. Next Ho we

Jonathan Ho

translate just million of to guidance on at cost want Congratulations margin do of the you. the operating actions. savings that well leverage? strong into growth think to a look deeper How the sort take into reacceleration guide. is Thank and XXXX? how in going the a And cost as little restructuring showing between and bit quarter I and drive that about $XX as sort forward the we operating balance margin for going operating

Brett Tighe

at to FYXX. you if in operating say Yes. for you the there look we it’s producing FYXX, FYXX relative about free produced what or really single flow cash action that’s not just margin I a the non-GAAP just would X-point a margin look And are at that. for both, increase

restructuring quarters. It’s right? over really the up action, actions the multiple a few brought we’ve tale You that been last of taking

I’ve rationalization. of efficiency you real see QX quarters, in quarters, like And you our QX, large the slowing down pretty talked on you hiring. non-GAAP talked I’ve margin couple cost estate see If expectations about and remember, last about operating beats those for the software results rationalization, both right? measures of both

that And been we’ve really have we cost up plan a working we’re enter set done it’s be as FYXX. while been But was in now don’t FYXX. to to so, envelope for that we think to going into it a ourselves --

that’s to and able all few not We’re business. about we’re ago X% okay, all going scale on to to to strategic set way. done the continuing our initiatives And that be to and a It’s automating this about business about business. we’re merry scaling heard our you Todd why X grow around profitably and this was going X minutes talked go of to X%, be

want beyond. able also we this business, but in profitably grow So, just and be to ‘XX, to not ‘XX

that’s of in just one and growth that keep to mind, But thing Jonathan. profitability. balancing So, also

but about. doing automation a make scale the way in focus about investments, our responsible then profitability and that initiatives as Identity, Customer in really Workforce possible, things are solidifying can how talked the investments the Identity, we of a in I in year’s our and it those our that we from budget leadership perspective. capturing Those talked just more three us for fast this around grow One of about we did is strategic obviously, focus market as

like continue forward. And going as we’ve it growth and margin to done continue just to so, do now, and we’re to we’re years to for going balance we move

Dave Gennarelli

Oppenheimer. Next have up, Ittai from Kidron we

Ittai Kidron

But a maybe that come a bit customer, you I’m us entering Todd, percent to greenfield? Thanks, Dave. traction on Number a are Year, color the one. Do the into Great you. bit bit a that? guys deal the can deployments there. give I in little would great. is me. want on broad for starting that little of or Any ones One can maybe more what solid congrats, guess if color dig OIG little there And they’re And into couple $XXX,XXX can go changes plan any if comp, the of flavor. on New could a comp to adopt quarter. small If you uptake a I to to give sizes a basis? that. I you two, there off on open OIG, then, are just Clearly, more give could Number you’re into a displacement-driven? you be find you space start white mostly us you’re

Todd McKinnon

On nothing same the for go-to-market changes, whether we’ve but for comp year comp kept into in obviously changes. org plan territory FYXX it’s comp, have it’s this structure thing much able that was, there think it’s relative so to to terms focused, the and plans, consistent rep of to I the the changes, is changes, last whether continuity which There change, are through. to there. It’s are positive far of lot a year, whether We’ve territory structures. one Okta’s and far, is that’s navigate the that the for the more going retrospect, team largely was fewer of hard the cut things in there and organizational that pretty sell, some, really mix good product for things last year, very year, this sales like comp Last year. plans changes be and

tried to also simple. keep We’ve it

forth. make and to Customer plans successful a complex, think of keep customers it make Identity, to lot better I companies Identity, comp overly it’s and sometimes so Workforce try simple.

there. part the talk that’s that’s confident I think So -- in of when terms being contributor the I of a about change in big year,

So color that hopefully, you there. some gives

the to natural On OIG the specifically, that it adjacency I think it’s for the is a -- way on about -- think us.

you in what gives and roles -- profiles et and sign-on, access log If access management that gives think it you you resources, you does about it it cetera. as time it and single does gives creates and is it and checks in and to you real

to reports that it’s on natural who can system does So, reporting place. a going where and extension on make can exception tightly to and that It’s to people go compliance the the are where, coupled have who right and the reporting right sure it go system.

a it’s So natural a adjacency. It’s natural upsell.

companies I in the unnatural think which side. leader independent way, Okta. these off governance the identity, no independently because is management, had an the basically governance reason or history management solutions to up There create was that was grew so of is access to there in than no and neutral of access

to I them think thing together. it’s natural bring a

and The -- the be be success tend to out implementations. pretty of We sold been product there the to enterprises interesting. actually IGA has solutions complex more larger

and thought at smaller be expected. more much bottoms would seen companies success than our so, enterprise And a balanced product we we’ve and And the start success more we up. that mid-market

that a question your simple small is call, to and the product $XXX,XXX, that selling $XX,XXX to And it about And about to a might -- it governance solution. for a the way think $XX,XXX be upsell if I think is the $XXX,XXX it’s customer, company, a the the examples the innovative I relatively in our gave gets small. Notion And mature relatively as gets motion company, great just more on mature. more increase will

But the this magical a -- Okta company. And access Fortune energy -- first. it’s is of of is NOV it’s as actually Identity Fortune them Governance them. for a It’s of You very impactful. XXXX think cloud Okta large combination management

the of our good. ability thing We I again, exceeded -- last greenfield would about RFPs. to in our have exceeded majority it the win thought it it’s net And what is is the replacements But greenfield has our greenfield. think new, be expectations is And versus expectations. also

We’ve infrequent. exceeded some many, pretty but think would RFP of our have wins I the be expectations. replacements seen And some. then we those, not thought

do, of lot really to a it’s a have off but We to start. work good

Ittai Kidron

That’s Good luck. great.

Dave Gennarelli

Tindle let’s Next, Adam Raymond to go James. at

Adam Tindle

profitability Todd, seen obviously you’ve market. about can opportunity on the based you I the significant so proving do. billion business this talk slides, $XX wanted to you’re in business, of At in how time lot the of early in same this improvement acknowledge what a the

this. given So, in I a now we a metrics to the if cash of on with billion growth on the do why little fiscal growth the more the profit, right strategy, trading seeing focusing guess, you. and sheet end at question of bit of philosophical you’re in? right coming is what $X.X the or ask Thank the deceleration more balance And profit of concurrent you with off moderation do year are for

Todd McKinnon

about more in related. more the it marketing, The bucket. broadly we and very grow. in growth rate marketing, buckets. sales the we think spend One in spend is two and those I one the are and sales things That’s

macroeconomic that And go rate expense, with don’t two so, -- rate the the factors. of macro in there’s balancing prudent sales about we’re the least We limit the economy. forward, marketing and At with terms There’s limit. we’re expense. when about you think growth being there’s a growth how

sales and market our our in So that invest rate. and growth investment gates

challenges into growth. The again, whether growth. back it that which ramp, is of second the a time them year. down brings and having cost, takes last We which bunch translates to we the the hiring execution And it’s brings just down up people the attrition, factor had ramp now some had of

-- is are of So, by some there this some It’s the improvement. are there leading and opportunity. not execution, which factors macro market being to profitability we’re that limited

because that could -- be macro of without challenges. profitability the improvement our without want issue maybe could execution or we we some we growing faster you Although that don’t argue

side, -- second but of and it also of were bucket thinly, the many, need Now we’re the call and and discipline like lived it’s growth, interest being business And the investing R&D from ROI is the better in I and dose we making we spreading growth. other areas many just ourselves And were too we’re zero a efficient healthy. efficiency running rigorously. lot And efficient. the go-to-market and and years more growth, of side, of G&A both think rates we need companies, a highest -- being through not sure things. more We

that why we workforce month reduction about drove that’s did So the ago. a

be our Okta pillar of make Because run rate strategy, durable scale when have hugely sure that $X And as -- next down -- we a and and which road, we’re efficiency for the billion our is very is as around billion $X years, and it the to that. the in and it this the now billion. also But growth billion of cognizant and impactful $XX investments build third now, we $X company can several core goes value. we’re is right we’re over

generating little cash point bit about a toward was outlook it little final we cash, turning the raise that now on of we’re and sheet, bit the run of sheet, we profitability business. on on you’ve balance when margin as and And and cash safety really we our about of a the that money And it we’re is as that. -- think the balance seen build that up to the

strategic open M&A we’re things of The our that. and portfolio way still what we’re for The expand the is makes to those second to a right funds go-to-market the customers be from can for perspective. and we’re will synergistic at be doing tend at looking smaller. that point, sense we is a to use how in And

some that we’re are ways sheet we a at it’s balance. always option managing think the overall, have, So, good to those about and balance looking but

Brett Tighe

Yes. obviously optionality options. about converts we the cash and obviously, just at flow does those year as more Todd give point, I your them. looking yes, Adam, we’re us going XX even do this about would But think we’re that additional was to XX to what generate just add, to saying, with what

like that growth that just just variety capital let’s more ways you optionality. are So become Todd were company, it’s more saying, balancing a of in little to I efficient us need also to for we want us aspect saying already think a make allocation, while around we obviously, give as of that’s helps become. a a We’ve it you talking But to, it’s progress more made to win-win was but that progress, ourselves continue just about. lot something a

Todd McKinnon

were gold of and back me this providing. with on at top to that all identity still And and prioritizing large company. challenges our our and macroeconomic challenges a this, their And structural industry, having over through built we’re lot that and of to there’s -- in meeting priorities a global three telling thing build we we was customers, a improve one A I stuff trying our And lot this global that’s have of our vision, to this is there’s we over, year. it’s been change foundation our fulfill you’re whole really they’re as a work our company go that’s of of execute a identity. media company, strategic CIO stuff, but we one I a of when they themselves. --

a a you work that that can mind of and kind may If for of have issues building that give and a customer short-term success. of through it what to you’re lot long-term foundation company, kind share, you success be focus really a

Dave Gennarelli

Okay.

Let’s go Borges to Gabriela Goldman. at

Gabriela Borges

how does get are books this -- right minus growth look you I the on and what can normalized on I follow little love long-term normalized thinking a it’s the bit profitability. for preliminary up business your to the appreciate what’s preliminary little I’d of bit wanted targets. of a of on a you. comments early And Thank growth macro the too profile get happening now? like to about

Brett Tighe

it for mean, right? in I I doing to invest going But that as balance our something want growth we’ve to business, to is -- there’s And is forward. areas the grow obviously, we years. we want around be as stoke like of to payoff those as right? growth, little was of investments. ROI, to we’re thoughtful high Todd efficient, that a talking going We so probability investments do and trying that more And about. it’s just acceptance high to what mean will profitability are profitably can that bit have goal so, we can we I been long go and say if sure we’re make

-- give beyond ‘XX, to try obviously, the do we want you continue But grow to can’t And I in growth I going expand margins, over to so, try I but as exact to but number, to and you both that responsible can, we’re time. as We it an profitability tell mean, balance going a fast the Gabriela. to way. we’re can we’re

Todd McKinnon

impactful, question. -- having to there and a give them the the choice We partner is the so It’s such for there’s to technology lot independent for one-stop think thanks not we strategic think about customers we and to independent to an shop see nice so identity want of identity. to a is having strategy an basically, and that them will Gabriela, value -- is you. One be for want in. thing neutral lock a I

that, a and which balance have to the terms do Workforce we Customer cases, really to of use of in So have Identity. lot Identity are

has get mix, growing pace. business more the to of So XX-XX both healthy -- to at very a a

if So there. numbers big TAM think look We XX-XX. about the now, you at a they’re there’s over

when for So and long this do a up, -- a we if grower all profitably that it’s time. you healthy add right, it’s

Dave Gennarelli

Rudy Kessinger at D.A. is Next up Davidson.

Rudy Kessinger

go completely I impacts the on it the XX% maybe with to of impacts kind out that do guess something cuts the that to of question, made grow? your IGA, related in macro have is improves, traction is, you capacity if you guess better capacity deliver curious what I’m Is to doable? your of like how kind the The the I maybe question. severe growth maybe to and question maybe S&M, restructuring, I’m execution XX% And you right? curious get is or if Gabriela’s things

Brett Tighe

about I Okay. could capacity I we for year’s making it’s having have the capacity in in have think have ‘XX. I and when can’t the mean it, folks we for were to the half really, it But about built we’re but this what sacrifice give is capacity amount say hire have. a But capacity plan, when we right, number, we for going the exact we of ‘XX about half. could also Because we ‘XX, small going for capacity second first Rudy. you to -- some the reality, plan, the sure when about FYXX, right? is thought you build for the will you think

skis in one So in we’re over to period not our the other or period getting not sacrificing one other. growth the and

So in years. very how build been for capacity about we’re thinking of both we’ve about the thoughtful terms fiscal that

Todd McKinnon

the just And the it’s like year of the half said, specifically we headcount the business going board the for QX said, is, are people the year. this on next kind Brett number capacity you restating that way going the like the end is bullishness on really is growth by year. next that, is really Because drive year, Yes. into this of run to build in more capacity on tells second that the and growth he of the what the

Dave Gennarelli

RBC. at to go Let’s Matt Hedberg

Matt Hedberg

I’ll offer Todd, a maybe well. higher-level my congrats as question.

customers of put COVID, a During lot provider. we wanted heard a to stay on just that legacy identity

as SIEM, were management, ask didn’t more to from a so like material side. talk and greenfield within could obviously, about we a few I be IGA the partners lot there removed, think replacement PAM, you Now, talked that more maybe of there less opportunity Can the years a a legacy long-term catalyst opportunity?

Todd McKinnon

super a it’s It’s think, question. great insightful. I

but maybe Workforce their with they’re those progressive. getting to it’s are the or we or or legacy I is building solutions. saying, still think to you’re mainstream, a relatively the more Oracle computer that is sorry, do And not choose the going or just deciding do that progressive or and It’s That’s customizing the from thing. organization mainstream, associates the a traditional not opportunity identity which of -- have cloud. still companies biggest what security or maybe more That’s Identity one actually more mainstream. IBM mainstream own of

opportunity. this is big a So

going is And access, economical but governance we not more part integrated and do get of just privilege, future. The that how can to is and natural. it’s so us. help functionality And help. a But The thing, cloud benefits buyers. more if of provides it which Okta is the being is to -- these an it’s that’s another they from vendor, whether smart, going are just more one it’s flexibility

identity of the they a But counterintuitive of ours. significant big They’re that me. they’re world? mainstream thing, the -- coming us have world for making the both wanting And boon what another And huge is are to competitor a in cloud for we’re But company -- is Identity. mainstream. sound do all -- competitors, what think the telling go whole it’s terms biggest is I for telling and to model this is security. we’re And whole it use which Microsoft, the opportunity might we maybe because they’re Workforce this from

tools, the against be major on going confident that wants business your to value on is security, we technology that provide, the differentiation or our to independent very choice our tomorrow more more And do you neutral successful, choice in security I’m best-of-breed to make which another integration, any whether today is win out. broader provider, to identity, platform platform Microsoft there it’s want

where a So you IDC still the can this see fragmented pretty numbers it’s in market.

You see Microsoft.

Okta. see You

leader to in You benefit to little slices to bunch are see of graph and be eventually go going from up continue that the a to set other we’re the that to cloud, it.

Dave Gennarelli

Okay.

Stephens. at is up Next Colley Brian

Brian Colley

larger you other limited market impact as in the is or U.S. geographies macro or quarter, bleed have it mostly the to customers in -- of last macro in that impacting any seen companies still mean, SMB? to U.S. So well, acutely. talked start you SMB the impact about most I

Brett Tighe

quant. Brian. what the in mainly perspective, Yes, we point this U.S. from It’s at see our at least can

into so and enterprise enterprise, bit a business SMB new Brian, point, in -- to enterprise it it’s have now. in versus the leaking your from of But terms into upsell is, mix both little so SMB. to perspective. starting that In we seen it’s More that leak

-- the, international, there, heard or in qualitative will projects regions, from budgets to it or tighter most the if they have hey, perspective, But being quantitative a delayed but we seen haven’t I quite In leadership are are just talk terms as being of sales a we of from budgets perspective. delayed. are much

of like got to well quarters. then last qualitative to we’ve got we’ve hit couple it, the that out it as side So, of side it macro of in that quant prove feel the the kind started does us of has and

Todd McKinnon

my interesting the big deals perspective Yes. there well. in doing from enterprise, One that that’s are is thing

the on our macro wins headwinds prepared that’s company a So, I through. counterbalanced if one some that it’s by dynamic have big biggest I mentioned there well-known the remarks, insurance a upsell. an this deal in was is being there deals theory enterprise, and of big going that there’s was a

questions the our going things be the perspective. these -- economy which though aggregate, quantitative are from the might big at enterprise of some headwinds look we economy, out even I is are in it when through, think business, these a there’s about deals some So, at balancing any

Dave Gennarelli

All right.

is up Eyal Next TD Shaul Cowen. from

Shaul Eyal

or Todd Brett, improvement. Todd as so notable ongoing the business on Congrats the on fundamentals, remains indicated. solid

macro new We’re seeing predominantly. logos the impacting

guidance, think the you about in we about that how be ‘XX logos context? fiscal should As thinking the new

Brett Tighe

in that’s see it’s it there Yes. to macro really and FYXX, love business happen say do both grow -- we exist. be we’d headwind likely fast not the situation. possibly probably probably -- mean, to happen I would I not where and want do is we’d can, have we want frankly, will upsells. grow believe we headwind, more if to new the as that as we that to But a both

and a right? today a of in it, go see going you But trust I you’re mean just the it today, love, think numbers produce. to to about you customer vendors the can some likely if you’re And or we company that

Our in customers time retention love gross rate, the now. solid that’s been for us. that mid-XXs or at Look strong very long a

a see for rate growth, retention into comes than count see can which those current net the and growth customer from greater can customers, of the You it in lot our the the XXX,XXX in it’s -- cohorts. upselling you

will just customers to macro partnerships unknown hesitant little you at be more of the situation unknown, the if time this new see engage in fear an or will. is there a there can because bit I So, how out

obviously we side. business upsells. actively do new more the try us a bit business it both So, new hit to sell on believe we’re will little to But working and

expectations our point. with this prudent being just at We’re

Dave Gennarelli

Great.

Next is Joe at Gallo up Jefferies.

Joe Gallo

focused? just a you there appreciate is widen, double ‘XX. the for market? the what’s you you it top Is question. really to laid I click fiscal to or go-to-market on that need more win priorities SIEM out can needed love your Todd, And I technical moat

Todd McKinnon

primary talked that big a the product the that distinct It’s engineering work should at generation, company -- it’s second going. it’s a that is whole it’s -- not product, it’s be as the to more and I motion. of marketing, ways to in say in demand maturing hard Okta I’d I lot guess, go-to-market we Company end-to-end precise. that focus, it’s the about, but require the whole Because act related, opportunity, get

like systems, things messaging. the talked that’s to -- the the clarity execute there. that’s that the together That’s all things about of stuff enablement. last We like portfolio. coming year product So clarifying things like That’s

provider market the ways, more There’s the general it new the and what There a of a of and what lot is are and a users. lot be included boundaries data use to how in the how think, -- also functionality means Identity Customer of will and but that a interesting be or overlaps of with gray of it’s in eventually finding market, marketing category be case I an what size won’t just it to interesting, areas will because customer crystallize be included. mature the

of market of there. have in get integration more detection, kind solutions strategy a functionality. And verification, business partner marketplace you identity like can around we now The fraud is that

value terms boundaries that in these comes not as customers that as the help it’s but in puts created ways, So, that, being gives category from only of platform years like in many it’s keep ton of in out. but a a innovating almost on the with And advantage around mature it define customers now. execute us eventually market position how what status integrations, the the important final it itself. also we define play will market, gives it And a market the -- it in and into is is several it to a

by not it’s It’s leader even be close, an far. to in. the and so We’re exciting place

Dave Gennarelli

at to Adam go We’ll Borg Stifel.

Adam Borg

growth macro. bit is changes across that Todd headcount headcount Obviously, how top more headcount us in about line correlated base industries. talked about we to the some Maybe for you remind the Okta’s guys on little hearing just Maybe be installed overall. reduction your we’ll a made, the of broadly and just reductions

Todd McKinnon

it’s to is Customer products, the whether are that The their our Workforce understand Identity Identity, -- subscription. first licensed or recurring on thing

minimum. average business, So, years. this the subscriptions card Customer accepting -- over everything self-service one-year else, the credit the business, is there’s -- is X.X But The that. it’s Identity on

these subscriptions less that there’s aren’t employees. So, usage-based usage downsized subscriptions month-to-month if can less or get or pure

just one that’s about level that’s of business. a So, level -- set the

on case in monthly active users Customer a Identity licensed the number in employee a users the of They’re number case. of or

going So, to or more be more less all things being up to come less. equal, when the contracts money, users for renewal, more is and employees be going is

So, some there is correlation.

times, seen we’ve with products. of or selling because come some the can duration. other business in much there up and just of users when made the for which is difference lot is have contract a they companies is more much insulation are up that the the employees then them renewal do And What dimension, less, just more be

of there’s increase employees fewer because life and workforce workflows you or So well, the reduction, upselling multifactor or by maybe say, the side a let’s go you on authentication. into contract the flat can it management even keep or cycle renewal advanced

our some insulate think dimensions, those insulates gross product foundations what contracts retention our of seen. NRR we’ve It and the two I and portfolio So, to usage, our degree.

dynamics course, Of how important are about some how there. -- over about talked trend time, we that could it that earlier but will those

Brett Tighe

there, diversity base. One factor thing to of other is Adam, our the customer in Yes.

think but everyone tech don’t. we thinks sell to sometimes I we companies, just

quite the that the at of Day, look at we slide Investor you If diversity good. is industry have

look on of of is total fact, greater XX% at no our industry contract value. that that In back go it, there’s and portfolio annualized slide, if you than

amount a hasn’t it been hit at much. yes, as rest So of economy, a you if of the -- tech. look fair there’s it the layoffs But of lot quite in

company. here. why universal It’s not versus has. big universal so everybody problem. a small think not or of that U.S. this not a I And a problem our It’s we’re financials that’s It’s product. the problem. company international a That’s It’s tech problem. It’s that benefits one not identity of is solving a problem a

Dave Gennarelli

All right.

to Sterling MoffettNathanson. Auty go at Let’s

Billy Fitzsimmons

keep you. is This Auty. on guys. it I’ll Billy for Fitzsimmons Hey quick for Sterling

QX year You But back compared how about how -- for ago, I’m a XXXX? of QX. close talked QX quarter XXXX compared to rates from guys to in did QX curious, macro so end

Brett Tighe

seen either. Close rates we there time that fairly sales been change a frame. duration, have across Also, haven’t sales similar cycles,

haven’t the of with when macro, talking versus our other and leadership. then two were factors talking we business talking mix, were around and So just duration factors been about rates sales those that new -- mentioned just you the is upsell more other just it we about Those -- changed. the cycles major qualitative the changed. It’s I of one sales same. it and contract hasn’t -- Close

Dave Gennarelli

Okay.

Research. Next is Wolfe up

UnidentifiedAnalyst

Patrick This on is Josh. last Similar the to from vein question.

and of security you’re of changes any, customer of and in kind noticed, also regard identity kind now the year Just you have into with in months specifically that What budget like to dynamics, the budgets? both within budgets. XXXX the general selling two Thanks. into then priority if

Todd McKinnon

it’s We’re early. so pretty only month our into fiscal, a

Our fiscal starts Feb X.

get is change, to noticed I haven’t pretty -- the haven’t good for think honest we but read I answer early a that. a that it’s really

about in at talking to and our plan. reps in to last confident ability to ability year, successful We their sales the for they’re kickoff sales the be plan confident year. execute our are the And their plans

So, confident, factor. when me -- I or that’s at big the what makes a comfortable look

get the I macroeconomic the are look before buying real like in things behavior. figuring a think I months are. a get we we’ve good So of to Because a we think customers few maybe on out times, customer got situation more lot

Dave Gennarelli

Great.

to go Eric Let’s KeyBanc. Heath at

Eric Heath

the And and Dave. to Thanks, good here, Brett strong results Todd. see Great.

two for guess questions So, you Brett, on just I margins. the

it’s been subscription kind for of now. margins, gross of handful If quarters at look improving quarter-over-quarter you a

were back driving to improvement? Okta higher of EBIT I guidance X I about two, saw flow calls that for pre margins there. than forward? kind and delta points one. about how then the I think what’s your your this that cash your curious, That’s And XX margins year points of were, typically Just that if going AuthX, about free for think look to And pre-COVID,

So talk just about be on as that happening front maybe that well, might dynamics any too.

Brett Tighe

Yes, sure.

in gross improvement Those on, kind margin, that of focused see we same about as in of terms across of through in FYXX the are terms of the do just you’re margins the about travel in I’ve terms kind two more the we’re seeing general. to is measures. in efficiency board, things hiring, the subs the just reason of as talking the the In really half probably down been slowing second becoming gross efficient what FYXX. cost of roughly could do you year percentage We expect margins why

and the to margin. operating little a collect faster, growing the cash a numbers And the little just the and billings flow obviously, business are then you’re a little going or get right? that little cash that growing of on down a bit build op the you You bit between that’s flow Okta of bit faster, faster, -- slowing you’re question a between if between going to and the two free a and bit cash little delta around AuthX of And delta have you’re function non-GAAP so margins, little compression less. bit, bit

Dave Gennarelli

Okay.

can many We’re I running get over little Weed try we up to a can. we on but at Bernstein. We’ll to as the hour, and as bit think time go Peter go here

Peter Weed

And the continued the you. on Thank congratulations momentum in business.

Dave Gennarelli

I just we knows to want go make that weren’t results over sure strong. if would everyone the even

Peter Weed

It’s fun... more even

Dave Gennarelli

cherry not We’re picking.

Peter Weed

We celebrate carry on now. theme. right something And that we maybe

a hey, of January annualizing kind not Yet, Like, that I rate relative was having reason credible that of out. quarter-over-quarter set a there what year four and ended whether an guide, things for kind February, you that to type out questions look in deterioration rates, a it’s think kind up talking were forward. those at half right? any X% we fourth of to to just February year, fall this in and January at you’re might I for you So, been not year, deceleration growth seeing year, know or accelerated results quarter-over-quarter of if played continuing could of and recently seeing you the that, in and you year the of new that the last here that answered entire you of this seen year to the you’re that’s clarified seen are seeing And kind beginning has saying, relative last at continue without about the on this of second quarter. path think when couple the what why we this I if see in what second going on half such to of like apart huge result quarters, annualize what a relative guidance basis, the been be quarter growth hum and problems? take X% upcoming how or

Brett Tighe

the half a keep the periods, because works, and Well, rates revenue of second model the -- of are revenue obvious accounting mind, so of right, way works. the the growth in reflection the prior revenue the year,

those being Customer In terms given... guidance Cloud. thoughtful XX the year, the going in in in changes. aggressive around to getting point, very But talked talked year, go-to-market left our the of mean We just this about too got We’ve the and macro. leadership expectations the at in we’re and right? attrition that forward, we’re We’ve we’re make all not thoughtful we right? being early still about just about about months with factors, I sure want we’ve Identity field talked

Peter Weed

I reasons further which I customers may I to pipelines see to believe that that okay? some worry heard, to we’re deteriorate that any little are to think you SMBs what hey, there’s like, specific seeing But think look sales you bit are a we’ve started You relative things maybe be hey, SMBs bottoming. weaker. new Are going seeing, said, indications

lake a there. down not maybe like So

the upgrade. you great going reasons fewer saying, to on the customers. fall would have you’ve that a NRR because had what you headwind like you you we should for most from relatively enterprise? something over out on. that’s hey, enterprise seeing hey, time, number got it’s what So you up that people NNR didn’t be an because look new around I tell point new keeps see off a standpoint, the small forward, watch big customers, a be us, that to might is night Are to to going think like worry? with worried the you just at fewer But just cliff when figure trying when you’re like I’m

Brett Tighe

it’s dangerous What Yes, night. got about think expecting already think keeps I’ve said at of we’re answers want really just me We right? is the things. things just around worse, to about thoughtful Todd’s the so sure as But field, a right, get sure talked just what earlier well. I one on making that variety actions, we’re the the thoughtful no, right better the being productivity things. That’s some point. right like get the in about And items a are up the I’m the sum do doing from question. in to fronts, our to of and this here macro going be I year, on doing the not we expectations So, that’s

Dave Gennarelli

BMO. at Bachman Keith to go Let’s

Keith Bachman

ask going I’m question. to

employee? X lines. over to just enterprise plan changing want have know the to A, for anything wanted top. find, terms you to transition the B, XX about is large I changed, at just X it’s might -- of this a you Todd, I strategies and there’s think, win in broaden rates could I talk that the to sounds I along those in not may sure SMB territories whether But with or understand out the -- categories then, quarters how versus wanted last like I or particular much. market. make those you. your they’re SIEM lot to of go kind or of And Comp that any about of on or to regard

a go-to-market you talk but I just kind including other that involved comp or broaden stable, in about relatively any just is or wanted geo any might highlighted changes? go-to-market be to geo different out go-to-market -- of changes the comp But to plans. that had than redistributions previously broadly think I question, plans, more

Todd McKinnon

Yes.

countries the the because plans. more entering territories It’s question adjust it’s of of insightful leadership And really but go-to-market to talked organizational I the at changes team around. or about strategy think aren’t to we or not whether the and our it pivot sum changes go-to-market or down entering a not or just has all just is many comp it’s that there changed. at has them, top, shifts than --

and there and you have SIEM, and we which executing is there when consistent Revenue success, team, is have week, saying so, off what win gets the who to very kicks about on we and Eric And they’re talk the up interim last Kelleher about to year keep customer workforce. SKO to Officer professional -- services Jon Chief up Addison sounds as the gets

The -- a rates. you asked win question about

be situation are Our really or Identity now, it -- you news And ChatGPT it. it’s whether to healthy, I to and where the everyone a very win in, it’s right going on are think build from in good it’s is and it Customer is we talking you things the like remain rates very going super have buy about Okta? to side a

So, there. we had success some

product the the deal it takes which us. that So, when a sudden, of very for and that product, that product it’s -- huge was market, put the found use And we nascent. all in as is off, it it when the identity log-in and developers illustrate to was a

there engineering build it we about should best use are in teams use for they thinking is identity. to should and huge about that’s places lot in happening But There’s open a customer of thinking advantage. they And which what source, a that have developers, product the themselves.

the for forces, well -- expiring. execute solid with to whether our lots it’s continue identity and yes, of. work maintenance cloud and I like there’s it’s On security just message we of like solutions foundation workforce independence it’s the neutrality. to And legacy we to are use to a mentioned, going off something, it’s and and -- There’s Okta, great contracts side, it’s reasons of use whether

Keith Bachman

-- you when I changed in say they quarters? asking, push last one two much you say When just the Okay. to was on to that, healthy, just have

Todd McKinnon

for healthy a time. been long They’ve No.

Dave Gennarelli

at to Madeline Brooks go Let’s BofA.

Madeline Brooks

additionally, to Just side, you Thank be some cross-sell get color any the discounting what new you. bundling. sense to of a for between needed really and upsell business give an and implement a the on us quick here. quarter, if just over one Okta just is to split new And you business. last would wanted then I further able ideal or

Brett Tighe

hasn’t of very actually consistent It’s one the the has things as of we changed terms been discounting just well. much. discounting, In those it very that --

business want of and be business now, is. between In terms right mix to the higher it it upsell we new new than

it towards it’s but weighted to upsells, we it’s of be the the we’re could in got We’re -- and too like something definitely macro, at focused business doing better and but -- on, future. get that’s a factor new

Todd McKinnon

-- were about Yes. talking this We right were now, this earlier week. we

ramping another in double reps. to versus upsell customer on their about relationships that’s business is down think on that talked vendor new place. I factor wants Brett a

what’s ramping, the new you’re a that company to? has to the already sales customer sell If a that’s relationship. easiest thing rep A

I as so make just think us So see you’ll there progress reps ramp.

Brett Tighe

good point. That’s a

Madeline Brooks

remind of stands Sorry. fourth quarter? us the Can just you between for the as percentage breakout them it

Brett Tighe

We retention, just don’t which XXX%. talk net about that. usually talk about was We

Dave Gennarelli

JPMorgan. at Essex Brian to go We’ll

Brian Essex

if like with as -- deeper and It one Keith’s very guess, so taking well. could regard sounds I sales workforce All right. And between I how force Maybe still congratulations organization, you But it. layer from that’s relatively maybe are much. siloed it’s going you Thank to seems on to kind I structured, platform question deals? better of understand lot seeing maybe be SIEM. of SIEM a with what plus siloed? of or relatively are you more keep sales you Or a multiproduct approach? -- a shifting a envision do stick workforce are you anywhere And those towards land more approach forces me to

Todd McKinnon

Yes. one team. The -- sales sales there’s

And rep from the rep promote has them So Okta. workforce every customers. customer one products, sells our OIG, all

it’s there’s call I’ve it time compared first specialists, some I there’s it’s model. -- to There’s -- but -- myself one IBM. think IBM I people the -- think no that’s ever the technical So

the there’s It’s that’s reps a to partner identity, we idea to their to Anyways, great strategic be that company. And sales is to incumbent on appeal use It’s company. for advantage harder sales is of want the The centers the one that capability a so do rep. buying and train great you right, our line in platform. it’s it’s get the sometimes that’s it can that of strategy disadvantage of to in and enable. company. higher if their strategic is you The different with being

help the to. team. with they sales all products when and selling specialist’s help it’s They’re one fair when presales’ it’s need So, it

Brian Essex

a they specific or platform, they to has to into customer incentivized the they case use sell and that problem? go like a Are go solve in do

Todd McKinnon

comp incentivized which identity. -- there’s they’re incented -- a incentivized to. priority, they’re sell There’s they’re sell Well, are to they them and plans, more, is kicker little multiyear. our customer but a the simple, bit we to of for And kept

for of thing with And Customer quarter a OIG, really or whether versa really, is to or vice you’re inside I think the important a Cloud think cross-sells. the we I other really and good had company is see And starting starting work, which workforce. this it’s modules selling workforce Identity

So it’s a positive energy.

Brian Essex

under And as then well? is or that that same those responsible completely is for separate, team umbrella developers, that

Todd McKinnon

there’s a the a team. Customer from Identity But -- rep, experience once developer developer to to that and to that’s once one to all in Yes, for that dedicated so going making deal, gets OpenAI APIs different -- card motion, There’s the online a team credit one team team. up one a there’s documentation. Yes, of read we’re that’s so sales -- self-service about that their found do team a sales and developer it rep, that a customer Cloud team. the sales lot learned the That’s put lead a and goes getting bigger

of to from demand addition get off their loves gen, they leads the in Customer get normal to leads, because a this So Identity team sales they bunch self-service.

that they we’ve ready have So, they’re it. talked be sure once to about, have and to starts ramp Okta. at to salesperson a like they a to happen, to to we But time -- -- it’s sell make them good be have

Dave Gennarelli

Okay. to I’m we can can going call a here, here. X-minute warning as if get we as many

Koujalgi to at Wedbush. Tez go Let’s

Tez Koujalgi

Brett, that reflective Brett. and capacity the implies I question have guide your capacity in Would a sales for year. the at increase X% the Is X% of same for sales growth your OpEx quarter the for also rate? increase?

Brett Tighe

in like I FYXX is up capacity for number set earlier, -- able sales designed and bookings hit also us Our be designed to the to said hit FYXX. success to

right to we’re quota the after what able that capacity the right in the year sure places, on go -- year other, ultimately, this to right out in this be quota there we’re street increase opportunity, So the segments, fiscal is. right one the and or people geos we’ve both saying exactly making or ‘XX. the got not way we’re But

Tez Koujalgi

quick One please. follow-up,

very conservative, QX before. cRPO cRPO into the... implies to Your there from guide you That’s QX. is built just Are stepping getting down with being backlog happening something never happened or seasonality,

Brett Tighe

would mean, mind, at flat. imply bookings. bookings. lowest Yes. quarter QX of in seasonally I top But mean keep is of QX it I seasonally our end, quarter is remember, our the about biggest

incorporating today. And just in so, and making that guys we’re thoughtful for we’re guidance you sure being about the

Tez Koujalgi

than booking mix nothing Because But QX in terms by had QX? of always QX, changing usual your going quarter? up. the a in that you cRPO shaping QX the but smaller being you’ve Like, is in mix are versus smaller mix

Brett Tighe

so have mind, QX different see the you’ll slightly you before Keep result look if quarters were Yes. QX, growth rates to when that. at higher, though, the and a in you from

more you’re So, lower a around. that little what seasonality like slightly growth a bit about rate, to talking time have a this we’re looks going

we of having growth of years just So nothing really bookings, in different the seasonality from the have past. slower results it’s an overall than

Dave Gennarelli

to go at Patrick We’ll Colville Scotiabank.

Patrick Colville

the of look ACV me very which guess much gave, Thank you results. helpful. non. guys. extremely a on is been whereas kind congrats I up is of have I customer having the, in at so the XQ question the like you And workforce set held is When my Hey, and numbers, around segment. solid guys the take XX I the that guess, trailing months, has in over really very disclosure robustly my deltas

missing? it plateauing that the or take increasing? for customer can would So, is Street thinks maybe I One that workforce at in customer start a is maturing even growth the in to segment Okta. sneak I guess, in -- two-parter? that segment And Street is What the bit what you

Todd McKinnon

both. about excited very We’re

I Street workforce. think the is underestimating

focused I think disagree narrative that workforce I so that is they couldn’t -- Customer problem on more. there’s been there’s with it. Identity a because Okta much this is

to think independent -- identity, we long partner We be these term. and I you one-stop a this to want and great to build got it’s opportunity shop both. for neutral businesses have want

So Identity Customer can grow. I workforce grow. can that think

number, at of greatly workforce see If an Identity those overrated, that the just you numbers, our look I think some besides for is thinking there’s see better in -- opportunity of you Customer execution. you depth the

with set even we to that think we’re we whether whatever, that. And I the macro, all better do it’s talked things execute about, up Identity. can Customer in

smaller. got the bunch a stuff because getting it’s well -- And one to we’ve leader improve that. that of We’re as done about confident growing by that and I’m still far, faster we

XX% That higher, saw You a are XX%. should coming rate be it’s rates the growth and customer growth given off base. lower

Dave Gennarelli

Okay.

last from We’ll to you question to Carson, time. Apologies Boolani We’re the take Citi. to next Brad. get going at Fred Fatima and

Todd McKinnon

Next first. time, you’re Carson,

Fatima Boolani

taking for last Brett, Thanks make I’ll for XXXX. Ladies you. quick question. in my it

you’re relates the guidance and of and in -- duration the of it what assuming duration quantified us But contractual your I’m So, some you Todd, some for the with wondering to there. dynamics between you your a up especially by contract that shortening you. any cautious are cohorts renewals that you’re more And maybe renewals of there’s related matter, contract way being Thank of business. if large particularly duration? with coming as as about

Brett Tighe

no contracts, spreads out. That’s real these mean, wildly everything of just having than cohort Yes. a the that’s good I that’s There’s other. longer different question. the one benefits duration of

So, there’s a nothing terms of really perspective. like we’re to about what speak in assumptions terms thinking of of major from renewals in

talked net as teams We to for strengths We’ve about gross talked earlier of from our the do a the right? to do long forecast, we value can this of telling really what retention. stable gross time retention a And deliver business, from a on going the we are continue that really basis. and we day-to-day us the business, expect about We see in our that believe that being because subset what one retention that reflects remain of the be stable. the to

probably put kind And I’d so to. how yes, it’s it of

Dave Gennarelli

today. we the That’s time Okay. have

San on Francisco conferences you and I next Before Morgan we’ll couple We’ll that be us events. the this attending at on the hope the and conference San quarter. to a want reach week know be Thanks. ir@okta.com. at KeyBanc Xth Francisco in the investor in Stanley we those go, let one to you you can any we And you see conference questions, have Xth, of follow-up of at other if

Okta (OKTA) 1 Mar 232023 Q4 Earnings call transcript