Q3 2024 Okta Inc Earnings Call

Speaker 1: felt strongly that sharing this information will help our customers better protect themselves against an increased risk of phishing and social engineering.

Sharing this information will help our customers better protect themselves against an increased risk of fishing and social engineering attacks.

Speaker 1: We have engaged a digital forensics firm to validate our findings and currently expect that they will complete their analysis in mid-

We have engaged a digital forensics firm to validate our findings and currently expect that they will complete their analysis in mid December.

Speaker 1: Once finalized, we will share the report with customers and public.

Once finalized we will share the report with customers and publicly.

Speaker 1: Now let me address what Okta is doing to better protect ourselves from security.

Now, let me address what okta is doing to better protect ourselves from security threats over the years, we have dedicated significant resources towards securing our product environment.

Speaker 1: Over the years, we have dedicated significant resources toward securing our product environment.

Speaker 1: Given recent events, we recognize that we need to do more to improve the security architecture of our broader operation.

Given recent events, we recognize that we need to do more to improve the security architecture of our broader operations that includes the applications. We use the hardware, we deploy and the vendors we work with over the past few weeks, we have taken several steps to further strengthen our security posture we've.

Speaker 1: That includes the applications we use, the hardware we deploy, and the vendors we work with.

Speaker 1: Over the past few weeks, we have taken several steps to further strengthen our security.

Speaker 1: We've initiated a hyper-focused security action plan by rallying the entire organization, as well as engaging with third-party security firms to fortify our team's

<unk> initiated a hyper focused security action plan by rally and the entire organization as well as engaging with third party security firms to fortify our team's efforts.

Speaker 1: The stakes are high and we will do whatever it takes to protect our current and future customers.

The Stakes are high and we will do whatever it takes to protect our current and future customers.

Speaker 1: Bolstering our security environment is, by far, the highest priority for Okta. The job of securing the Okta ecosystem will never be done, but during this hyper-focused phase, no other project or even product development area is more important. In fact, the launch dates for the new products and features that we highlighted at Oktane last month will be pushed out approximately 90 days.

Bolstering our security environment is by far the highest priority for okta the job of securing the okta ecosystem will never be done but during this hyper focused phase no other project or even product development area is more important in fact, the launch dates for the new products.

And features that we highlighted at octane last month will be pushed out approximately 90 days.

Speaker 1: The exception being Okta Privileged Access, which becomes generally available this time.

The exception being okta privileged access which becomes generally available this week.

Speaker 1: Now turning to our Q3 results, top line metrics were strong. We continue to experience particular strength with large customers.

Now turning to our Q3 results top line metrics were strong we continue to experienced particular strength with large customers similar to the past few quarters, our fastest growing cohort with customers with $1 million plus ACB with growth of over 40%.

Speaker 1: Similar to the past few quarters, our fastest growing cohort was customers with $1 million plus ACV with growth of over 40%

Speaker 1: It was also a strong quarter for new and upsells across our public sector verticals.

It was also a strong quarter for new and up sells across our public sector vertical. We also produced record non-GAAP operating profit and record free cash flow in the quarter as we continued to demonstrate the leverage in our model.

Speaker 1: We also produced record non-GAAP operating profit and record free cash flow in the quarter. As we continue to demonstrate...

Speaker 1: In other news, we're thrilled that John Addison, who has been our interim CRO since the start of this fiscal year, has been appointed to the permanent position. With John's appointment as CRO and our continued confidence in the go-to-market leadership team, we have closed the search for a president of worldwide field operations.

Other news, we're thrilled that John Addison, who has been our interim CFO since the start of this fiscal year has been appointed to the permanent position with John's appointment as CFO and our continued confidence in the go to market leadership team. We have closed the search for a president of worldwide field operations.

Speaker 1: Okta is driven by our vision to free everyone to safely use any technology. The measures we're taking to increase the security of Okta and our ecosystem gives us confidence in our ability to move forward. We will come out of this even stronger because Okta is the only modern platform for neutral and independent identity access management governance and now privilege access

After is driven by our vision to free everyone to safely use any technology. The measures, we're taking to increase the security of okta and our ecosystem gives us confidence in our ability to move forward. We will come out of this even stronger because okta is the only modern platform for neutral and independent identity access.

Management governance, and now privilege access before turning it over to Brett I want to thank our employees for their tireless efforts.

Speaker 1: Before turning it over to Brett, I want to thank our employees for their tireless efforts.

Speaker 1: I want to thank our customers and partners who put their trust in Okta every day. I also thank everyone who supported us at Oktane last month where we had over 4,000 people at the live event in San Francisco and over 19,000 viewing online. Now I'll turn it to Brett.

Want to thank our customers and partners, who put their trust in Okta every day I also thank everyone, who supported us at octane last month, where we had over 4000 people at a live event in San Francisco and over 19000 viewing online now I will turn it to Brett.

Speaker 1: to walk you through more details of our financial results and forward out.

To walk you through more details of our financial results and forward outlook.

Speaker 2: Thanks, Todd, and thank you, everyone, for joining us today. The actions we've taken over the past few quarters to drive efficiencies in our cost structure continue to yield impressive results.

Thanks, Todd and thank you everyone for joining us today the actions we've taken over the past few quarters to drive efficiencies in our cost structure continued to yield impressive results.

Speaker 2: I'll review our third quarter results in our outlook. But first, I'll start with some commentary on the macro environment.

I'll review, our third quarter results and our outlook, but first I'll start with some commentary on the macro environment.

Speaker 2: macro headwinds, while stabilized, continue to impact our business. Metrics that we use to gauge the macro environment, such as contract duration, average deal size, and pipeline mix, were largely consistent with what we experienced in the first half of the year.

Macro headwinds.

Stabilized continue to impact our business metrics that we use to gauge the macro environment such as contract duration average deal size and pipeline mix were largely consistent with what we experienced in the first half of the year.

Speaker 2: Separately, we published the advisory regarding the recent security incident on October 20th, which was 11 days ago in the quarter. While business at the close of the quarter slowed somewhat, our overall financial performance in Q3 was strong.

Separately, we published the advisory regarding the recent security incident on October 20th which was 11 days ago in the quarter, while business at the close of the quarter slowed somewhat our overall financial performance in Q3 was strong.

Turning to Q3 results.

Speaker 2: Total revenue growth for the third quarter was 21%, driven by a 22% increase in subscription revenue.

Total revenue growth for the third quarter was 21% driven by 22% increase in subscription revenue.

Speaker 2: Subscription revenue represented 97% of our total revenue.

Subscription revenue represented 97% of our total revenue international.

Speaker 2: International revenue grew 20% and represented 21% of our total revenue.

<unk> revenue grew 20% and represented 21% of our total revenue.

Speaker 2: FX had a minor impact on total revenue growth, but was a two-point headwind to international revenue growth. RPO, or subscription backlog, grew 8%. The general shortening of contract term links signed over the past several quarters has impacted total RPO growth. Our overall average term length remains just over two and a half years.

<unk> had a minor impact on total revenue growth, but was a two point headwind to international revenue growth our <unk>, our subscription backlog grew 8% the general shortening of contract term link signed over the past several quarters has impacted total ARPA growth.

Overall average term length remains just over two and a half years.

Speaker 2: Kern RPO, which represents subscription backlog we expect to recognize as revenue over the next 12 months, grew 16% to $1.83 billion. Turning to retention, consistent with prior quarters, gross retention rates remain strong in the mid 90%

Current RPI, which represents subscription backlog, we expect to recognize as revenue over the next 12 months grew 16% to $1 83 billion turning to retention consistent with prior quarters gross retention rates remained strong in the mid 90% range. Our dollar based net retention rate for the trailing 12.

Speaker 2: Our dollar-based net retention rate for the trailing 12-month period remained strong at 115% and was driven by both upsell and cross-sell activity.

<unk> period remains strong at 115% and was driven by both upsell and cross sell activities similar to the past few quarters macro related pressure resulted in smaller seat expansions than in previous years.

Speaker 2: Similar to the past few quarters, macro related pressure resulted in smaller seed expansions than in previous years. We believe this trend will persist in the

We believe this trend will persist in the current environment.

Speaker 2: The net retention rate may fluctuate from quarter to quarter as the mix of new business renewals and upsells fluctuates. As I've noted previously, we've experienced a macro-related shift in our business mix to more upsell and cross-sell versus new business.

The net retention rate may fluctuate from quarter to quarter at the mix of new business renewals and Upsells fluctuates as I've noted previously we've experienced a macro related shift in our business mix to more upsell and cross sell versus new business.

Speaker 2: Before turning to expense items and profitability, I'll point out that we'll be discussing non-GAAP results unless otherwise noted.

Before turning to expense items and profitability I'll point out that I'll be discussing non-GAAP results unless otherwise noted.

Speaker 2: Looking at operating expenses, total operating expenses for the quarter were lower than expected. The better than expected profitability is due to the combination of revenue over performance and our continued focus on spend efficiency measures.

Looking at operating expenses total operating expenses for the quarter were lower than expected the better than expected profitability is due to the combination of revenue over performance and our continued focus on spend efficiency measures.

Speaker 2: Total headcount at the end of Q3 slightly increased sequentially to approximately 5,900. Q3 free cash flow was a record $150 million yielding a free cash flow margin of 26%. Free cash flow was significantly better than expected driven by billions and strong collections.

Total head count at the end of Q3 slightly increased sequentially to approximately 5900 Q3 free cash flow was a record $150 million, yielding a free cash flow margin of 26% free.

Free cash flow was significantly better than expected driven by billings and strong collections.

Speaker 2: During the third quarter, we opportunistically repurchased $150 million of our 2026 convertible debt notes.

During the third quarter, we opportunistically repurchased $150 million of our 2026 convertible debt notes.

Speaker 2: This resulted in an $18 million gap-only gain.

This resulted in an $18 million GAAP only gain.

Speaker 2: Over the past three quarters, we've repurchased $900 million of debt resulting in a $91 million gap-only gain. We will continue to regularly evaluate our capital structure and capital allocation priorities.

Over the past three quarters, we have repurchased $900 million of debt, resulting in a $91 million GAAP only gain.

We will continue to regularly evaluate our capital structure and capital allocation priorities.

Speaker 2: our balance sheet remains strong, anchored by $2.13 billion in cash, cash equivalents, and short-term investments.

Our balance sheet remains strong anchored by $213 billion in cash cash equivalents and short term investments our cash cash equivalents and short term investments position net of remaining convertible debt is $820 million now lets turn to our business outlook for Q4, and FY 'twenty four and a preliminary look at FY 'twenty five.

Speaker 2: Our cash, cash equivalents and short-term investments position net of remaining convertible debt is $820 million. Now let's turn to our business outlook for Q4 and FY24 and a preliminary look at FY25. As always, we take a prudent approach to forward guidance. We are factoring in a stable but still challenging macro environment. We are also factoring in the recent security and security issues.

As always we take a prudent approach to forward guidance, we are factoring in a stable, but still challenging macro environment. We're also factoring in the recent security incident.

Speaker 2: For the fourth quarter of FY24, we expect total revenue of $585 million to $587 million, representing growth of 15%. Current RPO of $1.875 billion to $1.880 billion, representing growth of 11% to 12%.

For the fourth quarter of FY 'twenty four we expect total revenue of $585 million to $587 million representing growth of 15% current RVO of 187 5 billion to $1 880 billion reps.

Representing growth of 11% to 12%.

Speaker 2: non-GAAP operating income of 102 million dollars to 104 million dollars, which yields a non-GAAP operating margin of 17% to 18%.

non-GAAP operating income of $102 million to $104 million.

Which yield a non-GAAP operating margin of 17% to 18% and non-GAAP diluted net income per share of <unk> 50 to 51.

Speaker 2: and non-GAAP diluted net income per share of 50 cents to 51 cents, assuming diluted weighted average shares outstanding of $180 million. For FY24, we are raising our revenue outlook by $30 million at the high end of the range. We now expect revenue of $2.243 billion to $2.245 billion, representing growth of 21%.

Assuming diluted weighted average shares outstanding of $180 million through FY 'twenty four we are raising our revenue outlook by $30 million at the high end of the range. We now expect revenue of $2 $243 billion.

To two to four 5 billion rep.

Representing growth of 21%.

Speaker 2: We are raising our outlook for non-GAAP operating income by $65 million at the high end to $283 million to $285 million.

We are raising our outlook for non-GAAP operating income by $65 million at the high end to $283 million to $285 million, which yield a non-GAAP operating margin of 13% non-GAAP diluted net income per share is raised to $1 47 to $1 48, assuming diluted weighted average.

Speaker 2: which yields a non-GAAP operating margin of 13%. non-GAAP diluted net income per share is raised to $1.47 to $1.48, assuming diluted weighted average shares outstanding of $179 million.

Shares outstanding of $179 million.

Speaker 2: and we are raising our free cash flow margin outlook for FY24 to 19% from 15% previously. On a dollar basis, that's a raise of over $90 million and sets us up to close the year achieving the rule of 40. While we are still in the early phases of financial planning, we would like to provide a preliminary view of FY25. I'll reiterate that we are prudently factoring in a stable but challenging macro environment as well as potential impacts from the recent security incident.

And we are raising our free cash flow margin outlook for FY 'twenty, 4% to 19% from 15% previously on a dollar basis that they raised of over $90 million and sets us up to close the year achieving the rule of 40, while we're still in the early phases of financial planning, we would like to provide a preliminary view of FY 'twenty five.

I'll reiterate that we are prudently factoring in a stable the challenging macro environment as well as potential impacts from the recent security incident.

Speaker 2: We continue to focus on expense control and estimated non-GAAP operating margin of approximately 17%. We're also targeting free cash flow margin to be at least 19%.

We continue to focus on expense control and estimate a non-GAAP operating margin of approximately 17%. We're also targeting free cash flow margin to be at least 19%.

Speaker 2: From a revenue perspective, we estimate total revenue to be in the range of $2.460 billion to $2.470 billion, or growth of approximately 10%. We are applying a static 26% non-GAAP effective tax rate for FY24 and FY25.

From a revenue perspective, we estimate total revenue to be in the range of $2 $4 six zero billion.

To two $4 $701 billion.

Or growth of approximately 10% we are applying a static 26% non-GAAP effective tax rate for FY, 'twenty, four and FY 'twenty five.

Speaker 2: To wrap things up, we are confident that we've set the path of profitable growth for years to come. We continue to focus on initiatives to drive the top line while making significant progress to drive improvements to our operating and cash flow margins. With that, I'll turn it back over to Dave for Q&A.

To wrap things up we're confident that we've set the path of profitable growth for years to come we continue to focus on initiatives to drive the top line, while making significant progress to drive improvements to our operating and cash flow margins.

With that I'll turn it back over to Dave for Q&A, Dave.

Speaker 3: Thanks, Brett. I see that there are quite a few hands raised already, so I'll take them in order. And in the interest of time, please limit yourself to one question so that we can get to everyone. And then you're welcome to queue back up for additional questions. And with that, we'll go to Brian Essex at JPMorgan.

Thanks, Brett.

I see that there are quite a few hands raised already so I'll take them in order and in the interest of time. Please limit yourself to one question. So that we can get to everyone. And then will you are welcome to queue back up for additional questions and with that we'll go to Brian Essex at J P. Morgan.

Speaker 2: Great, thank you and thanks for taking my question. I guess I'll start off with the easy one and that's the preliminary fiscal 25 outlook. And I just want to ask in the context of I guess taking into consideration two.

Great. Thank you and thanks for taking my question.

I guess I'll start off with the easy one.

The preliminary fiscal 'twenty five outlets and I just wanted to ask in the context of I guess taking into consideration too.

Speaker 4: issues in particular. One would be the impact as you guys alluded to of the most recent breach on your pipeline, close rates, customer relationships. And the other would be

Issues in particular.

One would be the impact as you guys alluded to over the most recent breach on your pipeline close rates customer relationships and the other would be I.

Speaker 4: I guess the need for you to improve your relationship with channel partners in order to drive better growth. So, with regard to that preliminary outlook...

I guess the need for you to improve your relationship with channel partners in order to drive better growth so with regard to that preliminary outlook.

Speaker 4: How should we think about assumptions baked into that outlook, particularly as it relates to traction or churn with customers and contributions from partners considering these issues? And where in the spectrum of guidance being quote unquote kitchen sinked can we consider this forecast to be?

How should we think about assumptions bacon baked into that outlook, particularly as it relates to traction of our churn with customers and contribution from partners considering these issues and where in the spectrum of guidance being quote unquote kitchen sink can we consider this forecast debate.

Speaker 1: Hey Brian , thanks for the question and thanks for jumping on the release this morning early before the market. That was a little bit atypical given the situations of the customer advisory, but we appreciate you covering it and everyone else that covered it as well. We know it's extra, you know, something you weren't planning for us. We appreciate it.

Hey, Brian Thanks for the question and thanks for jumping on the release. This morning early before the market there was a little bit atypical.

Given the situations of the customer advisory, but we appreciate you covering and everyone else Victoria as well.

We know it is extra.

Something you are planning for us we appreciate it.

Speaker 1: I'll comment just on the business strategy behind the guidance. First of all, I think that might be helpful. The, we have, um, it's very important and it's very clear to everyone at Okta that security is the top priority. We've prioritized security at some level over the years. And, um, you know, it's been balanced with other priorities, growth, new, new product development and various things around the business and those efforts.

I'll comment just on the business strategy behind the guidance first of all I think that might be helpful.

No.

We have.

It is very important and it's very clear to everyone. A doctor that security is the top priority, we've prioritized security at some level over the years.

It's been balanced with other priorities growth new product development and various things to run the business in those efforts.

Speaker 1: I'm simplifying a little bit, but often have gone into product security, infrastructure, making sure that was very, very solid. We know now that we, that's not good enough. We have to do more. We have to do that.

Simplifying a little bit, but often have gone into product security infrastructure, making sure that was.

Very very solid and we know now that we know that's not good enough. We have to do more we know that okta is.

Speaker 1: Okta is one of the most targeted companies in the world because of the leadership position we have in this important market of identity access management and that makes us a...

One of the most targeted companies in the world because of the leadership position. We have in this important market of identity access management and that makes us.

Speaker 1: you know, along with other cybersecurity companies, extremely targeted and relentlessly attacked. And we have to raise our game to be able to defend ourselves and our customers against those attacks.

Along with other cyber security companies extremely targeted and relentlessly attacked and we have to raise our game to be able to defend ourselves and our customers against those attack. So were really upping the level of priority and it is very clear to everyone at okta.

Speaker 1: So we're really upping the level of priority and it's very clear to everyone at Okta.

Speaker 1: that for the end of this year and going into next year that the number one priority is securing Okta and securing our customers full stop.

<unk>.

For the end of this year and going into next year that the number one priority is securing okta and securing our customers full stop.

Speaker 1: and everything else is prioritized after that. And the second most, the number two priority is, after security, is growth and profitable growth, profitably growing the business.

And everything else is prioritize after the second most the number two priority is after security is growth and profitable growth profitable profitably growing the business and I think you you see that reflected in the business strategy in terms of the direction. We're giving teams that we have a 90 day all hands on deck in terms of focusing.

Speaker 1: And I think you see that reflected in the business strategy in terms of...

Speaker 1: the direction we're giving teams that we have a 90 day, all hands on deck in terms of focusing on bottoms up ideas and security efforts across the company, getting help from outside industry experts tops down to bolster our own experts.

On bottoms up ideas and security efforts across the company getting help from outside industry experts tops down to bolster our own experts we've done this in various degrees over the years, but we're really aggressively doing more of this to get all the best minds in best and put on these opportunities and problems for us.

Speaker 1: We've done this in various degrees over the years, but we're really aggressively doing more of this to get all the best minds and best input on these opportunities and problems for us. We're making sure that it's a it's not just a

We're making sure that it's a it's not just.

Speaker 1: of one year or one quarter change. It's really a continued accelerated evolution of our cultural change to really being.

Of one year or one quarter change. It. So it's really a continued accelerated evolution of our cultural change to really being.

Speaker 1: Having the culture of one of the most secure companies in the world. Remember, Octa started as a, it was, our focus was enabling technology and making it easy to adopt a cloud. It wasn't necessarily started 15 years ago as a cyber company.

Having the culture of one of the most secure companies in the World Remember Okta started as our it was our focus was enabling technology and making it easy to adopt the cloud. It wasn't necessarily started 15 years ago as a cyber company now that changed a few years into the company and it's very clear to US now that it has been for the last few.

Speaker 1: Now that changed a few years into the company and it's very clear to us now that, and has been for the last few years, that the bar is the most secure company in the world. Full stop.

Or is that the bar is the most secure company in the world full stop.

Speaker 1: And so that's the number one priority, and that's what we're focused on. And then part of that, of course, is kind of the last pillar that we're really focused on now, which is making sure the products themselves.

So that's the number one priority and that's what we're focused on and then part of that of course is <unk>.

The last pillar that we're really focused on now which is making sure the products themselves.

Speaker 1: as customers use them, the actual security use cases on those products are prioritized incredibly highly. A great example of that is making sure that when we think about managing access to privileged resources...

As customers use them the actual security use cases on those products are prioritized incredibly highly a great example of that is making sure that.

When we think about managing access to privilege resources, we with our new privilege access management product, making sure we prioritize and make it work great with our own Aqua administration console because attackers are going after that because that's such a valuable target. So it's a wholesale clear communication to customers and to.

Speaker 1: with our new Privileged Access Management product, making sure we prioritize and make it work great with our own OCT administration console.

Speaker 1: because attackers are going after that because that's such a valuable target. So it's a wholesale clear communication to customers and to employees and to partners and investors that

Employees into partners and investors that security is the top priority full stop and we will stop at nothing to make sure. We become one of the most secure companies of the world because it's kind of clear to everyone that we're short of where we need to be now and we will fix that.

Speaker 1: Security is the top priority, full stop, and we will stop at nothing to make sure we become one of the most secure companies in the world because...

Speaker 1: it's kind of clear to everyone that we're short of where we need to be now and we will fix that.

Speaker 2: I'll just add a couple of comments there, Brian . Thanks for, one, nice to see you. Thanks for the question. But in terms of the guidance philosophy, really no difference from what we've done before. You know, I think we all know for years now we give this early look. It's a prudent look. We've got five quarters ago. We've got a big Q4 ahead of us.

I'll just add a couple of comments there Brian Thanks for not one nice to you. Thanks for the question but.

In terms of the guidance philosophy really no difference from what we've done before I think we all know for years now when you give this early look it's a prudent look we've got five quarters ago. We've got a big Q4 ahead of us and so we're factoring in two major factors like I said, a few minutes ago, which is around the macro and then also.

Speaker 2: And so, you know, we're factoring in two major factors, like I said a few minutes ago, which is, you know, around the macro and then also around the security incident and making sure we're being prudent about the guidance at this point, given, you know, how far out we are from the end of FY 25.

Around the security incident, and making sure we're being prudent about the guidance at this point given how far out we are from the end of FY 'twenty five.

Speaker 1: On the question to Brian about the channel partners. I think that's that's that I would say that's a continued thread and a continuation of what we've been doing this year with our enhanced partner program and clarifying the partners we're working with and investing on the ones that are really moving the needles, the things you've heard us talk about in previous calls, that's ongoing thing. And we're continuing to execute on that and seeing benefits from that in the business.

Just a question to Brian Brian about the channel partners.

That's that's the I would say that's a continue.

Continued thread and a continuation of what we've been doing this year with our enhanced partner program and clarifying the partners, we're working with and investing on the ones that are really moving the needle as the things you've heard us talk about it in previous calls that's ongoing thing and we're continuing to execute on that and seeing benefits from that in the business.

Speaker 5: Do you get the pipeline internally to hit that number without incremental improvement and partner contribution or You know how confident you are Very happy. We're very happy with where the pipeline is. Yeah, we're commenting what we've given you guys today Like I said, no change in the guidance philosophy. Yeah. Thank you. No problem

Is the pipeline internally to hit that number without incremental improvement in partner contribution or.

How confident we are.

So we're very happy we're very happy with where the pipeline is we're confident in what we've given you guys today like I said no change in our guidance philosophy.

Thank you Brian.

Let's go to Rob Owens at Piper.

Speaker 6: Great, thanks for taking my question. I appreciate the transparency and disclosure around the breach and realizing these things can take on a life of their own as time passes. But I was curious more so what you're doing for customers to assuage concerns around the breach itself, aside from pushing out some launch dates here and any proactive steps that you're taking to help future retention. Thanks.

Great. Thanks for taking my question I appreciate the transparency and disclosure around.

Around the breach and realizing these things can take on a life of their own as time passes but I was curious more so what youre doing for customers to assuage concerns around the breach itself aside from.

Pushing out some launch states here and any proactive steps that you're taking to help future retention. Thanks.

Speaker 1: Yeah, I've been I've had, you know, many, many conversations with customers over the last few weeks, as you can imagine, and the the reactions vary. Some are from, you know, thanks for the update. We appreciate the communication.

Yeah.

Ben I've had many many conversations with customers over the last few weeks as you can imagine in the.

The the reactions vary some are from.

You know thanks for the update we appreciate the communication.

Speaker 1: to the other extreme, which is, you know, a lot of frustration and concern. The common thread or the common theme is that we're incredibly important to our customers and they're relying on us for their critical infrastructure of their customer identity or their workforce identity. So it really matters. And the first thing they want to know is that do we know how

To the other extreme which as you know a lot of frustration and concern the common threat or the common theme is that we're we're incredibly important to our customers and they're relying on us for their critical infrastructure of their customer identity or their workforce identity. So it really matters in the first thing they want to know is that do we do we.

We know how important this is.

Speaker 1: And are we taking these things seriously? Do we have the right plan in place to react to these things and get better going forward?

And are we taking these things seriously do we have the right plan in place to react to these things and get better going forward and the when I talk to them that the themes that resonate are really.

Speaker 1: And when I talk to them, the themes that resonate are really clear priority, comprehensive look at all the threats and all the opportunities across product and infrastructure, making sure the cultural tone from the top is set appropriately. And I can do that in a way no one else in the company can do so I'm very clear about that. And then the last thing I talked about before is how the products can help them be more secure because

Clear priority.

Comprehensive look at all the threats and all of the opportunities across product and infrastructure.

Sure the cultural tone from the top is set appropriately and I can do that in a way no one else in the company can do so I'm very clear about that and then the last thing I talked about before is the is how the products can help them be more secure because there's always about the foundation for their security and once that foundation is solid and they can use our products to be you know.

Speaker 1: This all is about the foundation for their security. And once that foundation is solid, then they can use our products to further enhance their own security. So I think to your specific question about what we're doing specifically, I think it's.

Further enhance their own security so I think to your specific question about what we're doing specifically I think it's.

Speaker 1: Part of it is being open and transparent. One of the reasons why we thought this most recent disclosure, the one we did yesterday and then publicly this morning is that.

It's part of it as being open and transparent one of the reasons why we thought this most recent disclosure to the one we did yesterday and then publicly this morning is that when we talk to customers. The number one thing they want is transparency and they want to know as soon as possible. What are what is the risk increase.

Speaker 1: When we talk to customers, the number one thing they want is transparency.

Speaker 1: and they want to know as soon as possible what is the risk increase, what are the threats. And our commitment as on our journey to be one of the most secure companies in the world is to make sure we fulfill that commitment and make sure we're open and transparent and disclose all the information we have. So I know it seems a little strange right now, but in some ways what we did yesterday and today are executing on this plan and this commitment we've made today.

What are the threats and our commitment as on our journey to be one of the most secure companies in the world is to make sure we fulfill that commitment and make sure we're open and transparent and disclose all the information we have so I.

So it seems a little strange right now, but in some ways. What we did yesterday and today are executing on this plan and this commitment we've made to them.

Speaker 1: And then I think there's many more things we can do in terms of just making sure customers understand what happened and what we're doing about it. And you'll see us do more about these things toward these communication efforts.

And then I think there's many more things we can do in terms of just making sure our customers understand what happened and what we're doing about it and you'll see us do more about this thing toward these communication efforts.

Speaker 1: going forward. But at the end of the day, and I was talking to, I have a, I was talking, one of my conversations with a CSO of a large manufacturing company that's been heavily adopted on Okta, and he, and this is common to how these things go, he said, you know, Todd, this

Going forward, but at the end of the day.

When I was talking to.

I was talking to one of my conversations with what I.

See sort of a large manufacturing company that's been heavily adopted on okta and <unk> and this is common to how these things go. He said you know Todd This U R.

Speaker 1: you are, the position you are in the ecosystem industry, you are one of the most attacked and focused on from an adversarial perspective companies in the world. And we know that if you take this as seriously as you're saying you do, and you have these plans and these priorities in place to improve your make sure you're one of the most secure companies in the world.

Position you are in the ecosystem. The industry you are one of the most attacked and focused on from an adversarial prospective companies in the world and we know that if you take this as seriously as Youre, saying you do and you have these plans on these priorities in place to improve your make sure Youre one of the most secure companies in the world, that's that's going to be more than enough for.

Speaker 1: that's going to be more than enough for what we need because you're going to be attacked way more than we ever will. And so I think they see it as once we communicate the details and once they can understand our plans and our priority and our focus.

What we need because youre going to be attacked way more than we ever will and so I think they see it as once we communicate the details once they can understand our plans and our priority and our focus.

Speaker 3: they come away with more comfort. But again, at the end of the day, what they really want is no issues like this, and that's ultimately our goal, to try to prevent these whenever possible. Thanks for the color, Todd.

They come away with more comfort, but again at the end of the day, what they really want is no issues like this and that's and that's ultimately our goal to try to prevent these whenever possible.

Thanks for the color.

Okay, Let's go to Adam Tindle Raymond James.

Thanks, Dan Hey, Todd I wanted to ask a little bit more about the renewal process in light of the security incident, Brett mentioned that contract duration continues to shorten and so the thought would be the renewal process is likely happening more frequently moving forward I wonder what kind of processes you have in place to retain customers and any ideas.

John brings to.

The CRO role to this process and Brad if you could just touch on the assumptions on crush retention and NRI embedded I know you are factoring in the security incident, but I would imagine that's where it's going to hit most so that'd be really helpful to understand what the assumptions embedded arc. Thanks.

Speaker 7: And Brett, if you could just touch on the assumptions on gross retention and NRR embedded. I know you're factoring in the security incident, but I would imagine that's where it's going to hit most.

Speaker 7: So that would be really helpful to understand what the assumptions embedded are. Thanks.

Speaker 1: The renewals process and the execution of that is something where it's a very mature part of our company and we're very good at it. I think it leads to our, as we've talked about several times, the gross retention in the mid 90s, a healthy level. And so it's a strong muscle we have. Contract durations, as Brett mentioned, have been shortening. I think it's, you know, they're still on average two and a half years.

But then the renewals process and execution of that is something where it's a very mature part of our company and we're very good at it I think it leads to our.

We've talked about several times the gross retention in the mid Ninety's a healthy level.

So it's a it's a strong muscle we have contract durations as Brent mentioned had been shortening I think it's there's still on average two and a half years.

Speaker 1: And the reason they're shortening is, you know, this started happening during some of the more economic slowdowns last year. You know, it's just, I think across the board, people are not signing up for as much as they.

And the the reason they're shortening as this started happening during <unk>.

Some of the more economic slowdowns last year, it's just I think across the board people are not signing up for as much as they are in terms of length of subscription is they wanted to so I think that the renewals conversation will continue to be addressed effectively by our existing motion that we don't need some.

Speaker 1: in terms of length of subscription as they wanted to. So I think that the renewals conversation will continue to be addressed effectively by our existing motion that we don't need.

Speaker 1: some kind of new motion or some new conversation. I think it comes down to making sure that the adoption of the product is high, which we're very good at getting our products adopted, making sure that the value is being delivered and that the price they're being charged for is fair. So

Kind of a new motion or some new conversation I think it comes down to making sure that the adoption of the product is high which we're very good at getting our products adopted we're making sure that the value is being delivered and that the price. They are being charged for us there. So they'll definitely be some as we just communicate to customers about our prioritization of security and our focus on our execution.

Speaker 3: There'll definitely be some, as we just communicate to customers about our prioritization of security and our focus on it and our execution across that plan, that'll be funneled down to the renewals team as well. But I don't see any big changes to the overall renewal motion.

That plan that'll be funneled down to the renewals team as well, but I don't see any big changes to the overall renewal motion because of this.

Speaker 2: Yeah, I can also add on to that, Adam. Thank you for the question. So first on the contract duration, just to be clear, there's been a general shortening of contracts.

Yeah I can also add on to that Adam. Thank you for the question. So first on the contract duration just to be clear there has been a general shortening of contracts to what Todd was talking to a a part of the reason is actually the success. We've had in public sector, which typically is only a one year contract. So that business doing well is going to put a headwind on our contract duration. So I guess, that's a good issue.

Speaker 2: to what Todd was talking about, but part of the reason is actually the success we've had in public sector, which typically is only a one-year contract. So that business doing well is going to put a headwind on our contract duration. So I guess that's a good issue to have in terms of contract duration. So in terms of what we baked into the guidance for, you know, specifically NRR, net retention rate or gross retention rate in FY25.

You would have in terms of contract duration. So.

In terms of what we baked into the guidance for <unk>.

Specifically <unk> net retention rate, our gross retention rate in FY 'twenty five.

Speaker 2: We haven't gotten to that level of detail because we're so early in the planning process. But what I would say is we do believe both the macro puts a headwind on growth and also the security incident.

We haven't we haven't gotten to that level of detail gives them given we're so early in the planning process, but what I would say is we do believe.

Both the macro puts a headwind on on growth and also the security incident, and so where each of them comes through I mean macro we've talked about new business seat expansion is being impacted there from the security incident perspective, we think growth is impacted I can't give you exactly is it more up sell or is it more gross retention.

Speaker 2: where each of them comes through. I mean, macro, you know, we've talked about new business, seed expansions being impacted there. From the security incident perspective, we think growth is impacted. I can't give you exactly, you know, is it more upsell or is it more gross retention in terms of FY25. But what I can tell you is in terms of FY24, like we've talked about in the past, we did expect that number to tick down, that retention is going to tick down.

<unk>.

In terms of of FY 'twenty five, but what I can tell you is in terms of FY 'twenty for like we've talked about in the past we did expect that number to tick down in our retention is going to tick down.

Speaker 2: throughout the balance of this fiscal year. And, you know, we had a nice quarter in Q3, 115% flat with Q2. So we do still expect it to drop in Q4 based on those macro headwinds we've talked about with seed expansions.

Throughout the balance of this fiscal year.

We had a nice quarter in Q3 hundred 15% flat with Q2. So we do still expect it to drop in Q4 based on those macro headwinds we've talked about with seat expansions.

Speaker 3: But that hopefully helps you with a little bit more detail on how we're thinking about, you know, FY 25 as well as that net retention rate in the very near term next quarter.

But that hopefully helps you with a little bit more detail on how we're thinking about FY 'twenty five as well as that net retention rate in the very near term next quarter.

And next go to Rudy passenger at D. A Davidson.

Speaker 4: Great, thanks for taking my question and appreciate the candor as it relates to the breach. Todd, at Octane, it seemed pretty clear that, you know, you were hinting that you guys were close to hiring a new president of worldwide field operations or head of sales. And today, I know you're closing that search, you're moving John into the permanent role. So I guess I'm just

Great. Thanks for taking my question and appreciate the candor as it relates to breach.

Todd It octane.

Seem pretty clear that you were hinting that you guys were close to hiring a new president of worldwide field operations, our head of sales and today and how you're closing that surge here moving John into the permanent role. So I guess I'm just a couple of clarification.

Speaker 4: A couple clarifications did the breach impact your ability to land a new head of sales at all. And and secondly, just understanding the current structure is John going to be taking on both the head of sales and revenue officer roles or will you be remaining? I guess the head of sales for the time being.

Patients did the breach impact your ability to land a new head of sales at all and secondly, just understanding the current structure is John is going to be taking on both the head of sales and revenue officer roles or will you be remaining I guess that a sales for the time being.

Speaker 1: Yeah, thanks for asking for clarification. On the previous question, I forgot to answer the part about John .

Yes, thanks for thanks.

Thanks for asking for a clarification on the previous question I forgot to answer the part about John.

Speaker 1: The decision for the go-to-market structure was finalized before October 20th, so it was finalized in early October .

The the the decision for the go to market structure was finalized before October 20th So it was finalized in early October.

Speaker 1: So it had nothing to do with the security incident. I think

So it had no there's nothing to do with.

The security incident D. A I think there were.

Speaker 1: There were, since the search started in January of this year, late January , the timeline on it was we were going to make a decision to finalize things by October and we hit our timeline.

Since the search started in January of this year late January the the timeline on it was we were going to make a decision to finalize things by October.

And we had our timeline. So we didn't want to have an interim structure going into planning for FY 'twenty five so the goal is to finish it.

Speaker 1: We didn't want to have an interim structure going into planning for FY 25. So the goal is to finish it by the end of our program.

Speaker 1: I can't remember exactly the order of operations in terms of when the final decision was made versus when I made those comments, but what I knew at the time for sure is that we were going to finalize one of our finalist candidates, and John being one of those finalist candidates, we were going to finalize it soon and be ready to roll on our original schedule, which was, like I said, to wrap it up.

By the end of October.

We I can't remember exactly.

The.

The order of operations in terms of when the final decision was made versus when I made those comments, but what I knew at the time for sure is that we were going to finalize our one of our finalists candidates and John being one of those finalists candidates, we were going to finalize it soon will be.

Ready to roll on our original schedule, which was like I said to wrap it up in October the the decision came down to a few things one is that the I think that John is I talked to dozens and dozens of candidates and interviewed and looked everywhere and different levels of experience in <unk>.

Speaker 1: The decision came down to a few things. One is that

Speaker 1: I think that John is, I talked to dozens and dozens of candidates and interviewed and looked everywhere and different levels of experience and backgrounds and every person I talked to, the person doing the job was outperforming him. John was doing a great job. I was with him in customer meetings around the world. I was.

Grounds and.

Every person I talked to the the person doing the job was outperforming them John is doing a great job I was with him and customer meetings around the world I was more importantly, talking about strategy going forward and understanding his strategic vision is familiarity with the market in areas around the world and.

Speaker 1: More importantly, talking about strategy going forward and understanding his strategic vision and his familiarity with the market and areas around the world and with the product segments and the identity industry. And he would just really shine brightly. It's like the, you know, the nine month job interview and it really, it kind of made it hard for other candidates to compare.

With the product segments in the identity industry and he was just really shine brightly as like the you know the nine month job interview and it really the economy hard for other candidates to compare.

Speaker 1: And I think so once I made the decision that he was the right guy to be the chief revenue officer I also made the decision that I really liked the current structure of

And I think so once I made the decision that he was the right guy to be the Chief revenue Officer. I also made the decision that I really liked the current structure of <unk>.

Speaker 1: business operations under Eugenio as the president of business operations, global business operations. The marketing function under one of our strongest operational executives, Eric Kullher.

Business operations under you Hany, you anyhow as the president of business operations Global business operations.

The marketing function under one of our strongest operational executives are tell her and then John running sales and pre sales and partners reporting directly to me. So basically the flatter organizational structure, where I have direct the business operations customer success or customer chief customer officer marketing and then.

Speaker 1: and then John running sales and pre-sales and partners reporting directly to me. So basically the flatter organizational structure where

Speaker 1: I have direct the business operations, customer success, or customer, chief customer officer marketing, and then chief revenue reporting directly to me. It was the best thing for us going forward. So there's like two decisions. It was who's the best chief revenue officer in the world, and then do we need that extra layer of a president? And the best thing for Okta for the future is to finish out the search for president and.

Chief revenue reporting directly to me it was the best thing for Us going forward, there's really two decisions. It was who's the best Chief revenue officer in the World and then do we need that extra layer of a president and the best thing for Okta for the future is to to to finish out the search for president and.

Speaker 1: have these talented, capable people in place to drive us forward.

Had these talented capable people in place to drive us forward.

Great, Let's go to arms at Morgan Stanley.

Speaker 8: Hi, thanks for taking my question. Todd, on a high level, could you speak to the switching costs of your products? And based on your very early conversations, would you anticipate, you know, some customer churn as a result of this incident?

Alright, Thanks for taking my question Todd on a high level could you speak to the switching costs are of your products and based on your very early conversations would you anticipate some customer churn as a result of it et cetera.

Speaker 1: I think the switching costs vary. And it's one of the great things about both the customer identity products and the workforce identity products are that they're very flexible. You can implement them very quickly and easily. And then you can also implement them in a way that's quite comprehensive and connected to everything and very.

I think the switching costs vary and it's one of the great things about.

Both the customer identity products and the workforce at any products or that you can they're very flexible.

Flexible you can implement them very quickly and easily and then you can also implement them in a way that's quite comprehensive and connected to everything and very.

Speaker 1: complete and cover every technology and every resource in the customer's environment. So the switching costs vary. I mean there are companies that have a relatively light implementation and the switching costs are pretty low and then there are implementations that are very deep and broad and lots of custom integrations and so forth and the switching costs are higher. So I think it varies. I think there's various reasons why people switch off and I think it's

Complete and cover every technology and every resource in the customer's environment. So the switching costs Barry I mean, there there are companies that have a relatively light implementation in the switching costs are pretty low and then there are our customer their implementations that are very deep and broad and lots of custom.

<unk> and so forth and the switching costs are higher so I think it varies I don't I think there's various reasons why people switch off and I think it's it's pretty hard and it's always in the customers that are less likely adopted and have lower switching costs, which is seems pretty obvious but that's true.

Speaker 1: pretty hard and it's always in the customers that are you know less likely adopted and have lower switching costs which is seems pretty obvious but that's true and I think that

And I think that.

Speaker 1: you know, I think we're, we've seen some people switching off, you know, various reasons. Sometimes it's, you know, like, like we've said, our gross retention is mid 90s. But so that means by definition, there's some percentage that are switching off various reasons for doing that. And I think

You know I think where we've seen some people switching off various reasons, sometimes it's like like we said our gross retention is mid ninety's, but so that means by definition. There are some percentage that are switching off various reasons for doing that.

And I think.

Speaker 1: At the end of the day, it's going to be hard to directly ascribe it to one thing. I think we're just trying to make customers successful and provide huge value in the products. Our strategy of a converged platform on the workforce side and covering every identity use case with customer and workforce. We have prudent assumptions in the forward guide about what is the best solution for

At the end of the day, it's it's gonna be hard to directly ascribe it to one thing so.

So I think we're just trying to make customer successful and.

Provide huge value in the products and our strategy of a converged platform on the workforce side and cover covering I'd read into use case with customer and workforce.

And we have I think prudent assumptions in the forward guide about you know what is baking in security incident or Bacon in macro we're comfort comfortable with that guidance and we're going to go out there and execute our plan and I think it's gonna be.

Speaker 1: Baking in security incident or baking in macro, we're comfortable with that guidance and we're going to go out there and execute our plan and I think it's going to be in the long term, we're going to show a lot of success and deliver a lot of value to customers and that's going to drive success across the board.

In the long term, we're going to show a lot of success and deliver a lot of value to customers and that's going to drive success across the board.

Thank you.

Joe Gallo at Jefferies.

Speaker 9: Hey guys, thanks for the question. Impressive margin performance this quarter and guidance next year. Can you just further unpack the drivers of leverage there and then just talk through whether that inhibits the growth algo at all? And then just maybe whether, you know, how do you think about longer term growth? Do these margins kind of reflect a new reality of potentially lower long term sustainable growth?

Hey, guys. Thanks for the question impressive margin performance this quarter and guidance next year can you just further unpack the drivers of leverage there and then just talk through whether that inhibits the growth algorithm at all and then just maybe weather does how you think about longer term growth do these margins kind of reflect the new reality of potentially lower long term.

Annabelle growth thanks.

Speaker 2: And thanks, Joe. Nice to see you. So, in terms of the, how we're achieving this, this is really something we've been working on.

Sure. So in terms of the how we're achieving this this is really something we've been working on.

Speaker 2: for probably about 18 months at this point. I don't know if you remember, last year we started this, you know, cost structure efficiency, whether it be from, you know, moving headcount to lower cost regions or rationalizing software or rationalizing real estate. It's been a long time, a long time effort for us to be able to really set up this structure to be able to deliver these types of margins. I'm really excited.

Or probably about 18 months at this point or if you remember last year. We started this cost structure efficiency, whether it be from.

Moving head count to lower cost regions or rationalizing software rationalizing real estate, it's been a long time, a long time effort for us to be able to really set up the structure.

To be able to deliver these types of margins I'm really excited.

Speaker 2: But actually we can talk about Rule of 40 this year because that's how we look at the business and manage the business and, you know, kind of think about it from a, you know, the lens of growth versus profitability. But ultimately all this hard work is allowing us to offer up and guide with confidence.

But actually we can talk about rule of 40 this year because thats, how we look at the business and manage the business.

And kind of think about it from a.

You know the lens of growth versus profitability, but ultimately all of this hard work because it is allowing us to offer up in guide with confidence.

Speaker 2: these margins that you see in the FY 25 guidance, you know, 17% non-GAAP operating margin, at least 19% free cash flow margin. And so, you know, that's a really good shift for us. We've set up that structure to be able to drive that efficiency, drive the leverage in the business.

These margins that you see in the FY 'twenty five guidance, 17% non-GAAP operating margin at least 19% free cash flow margin.

So.

That's a really good shift for us we've set up that structure to be able to drive that efficiency drive the leverage in the business.

Speaker 2: And, you know, as far as, you know, growth versus, you know, margin, we're always going to balance the two and ultimately look to balance the two. So I can't give you anything beyond FY 25, but we're always going to manage the business through that lens of the rule of 40, something we're very proud of that we feel we can achieve this year. And we'll always target as we move forward into FY 25 and beyond. It's something we really kind of pride ourselves on doing overall.

As far as.

Growth versus margin, we're always going to balance the two in and ultimately.

Look to balance the two so I can't give you anything beyond FY 'twenty five, but we're always going to manage the business through the lens of the rule of 40, something we're very proud of that we feel we can achieve this year and we'll always target as we as we move forward into FY 'twenty five and beyond it's something we really kind of pride ourselves on doing overall.

Speaker 1: Next up we're actually going to go to Madeline Brooks at B of A. She got knocked out of the queue and putting her back in the spot.

Thank you.

Next up we're actually Gonna go to Marilyn Brooks at Bofa, She got knocked out of the queue and putting her back and they're in the spot here.

So much Dave appreciate it.

Guaranteed earmarked.

But really want to emphasize.

So the question is right.

Right.

And this quarter my quick math.

Great.

Yeah.

That's a cute burger.

This number.

It began with contributions from net new customers.

Thanks, Matt.

Speaker 10: The first part is why do you think the trend in your numbers is different than other cyber peers?

Zero.

Why do you think that trend in your numbers is different than others.

The second is there any concern that heading.

Heading into next year existing customer base are already saturated seeking less room for upside, especially with this 90 day push out of new products in that potential headwind from the new debt.

Speaker 10: will already be saturated leaving less room for upside especially with this.

Given the recent security event.

Speaker 2: Sorry, Madeline, you broke up a little bit on me, but I think you were saying the mix on CRPO was related more to.

Sorry, Maryland, you broke up a little bit on me, but I think you were saying the mix on <unk> was related more to.

Speaker 2: Upsell versus new businesses that she said she calculated 90% of the CRPO came from existing. Yeah, okay Yeah, I can't say that I have that number to hand Madeline But what I will say is as we've talked about in the past

Upsell versus new business.

She said she would calculate 90% of the CRP O came from existing yeah. Okay. Yeah, I can't say that I have that number at hand, but what I will say is as we've talked about in the past.

Speaker 2: You know, our mix of business has shifted more toward upsells. We believe that's related directly to the macro side of the house, you know, really putting pressure on new business.

Our mix of business has shifted more toward Upsells, we believe that's related directly to the macro side of the house.

Are really putting pressure on new business and so I think thats why youre seeing those numbers I think we had a nice quarter from a new customer adds net net ads was up 400, you heard Todd talked about the million dollar customers, great and Hunter Kay customers had a nice addition, as well.

Speaker 2: And so I think that's why you're seeing those numbers. I think we had a nice quarter from new customer ads. Net ads is up 400. You heard Todd talk about the million dollar customers. Greater 100K customers had a nice addition as well, an increase, you know, sequentially versus Q2. So we, you know, we do see new business helping us out, but we do see a headwind there due to the macro headwinds that, although have stabilized, still are a headwind to our growth in the business.

Increase sequentially versus Q2.

We do see we do see new business, helping us out, but we do see a headwind there due to the macros macro headwinds that although has stabilized still a headwind to our growth.

In the business.

Speaker 1: Yeah, and one thing I can add there, hopefully it's helpful, is the new products. We have, you know, with, we have three...

Yeah, and one thing I can add there hopefully its helpful is the new products, we have with <unk>.

We have three.

Speaker 1: amazing products to sell our existing customers. I mean, some customers have customer identity, but we still have a lot of customers to sell our customer identity to. And then we have many, many customers to sell Okta identity governance to. That thing is just starting to roll. It's had some early success, but it's been GA a little over a year now, starting to get a ton of traction. We had a couple of really important deals with one I mentioned in my comments that we posted at the site was.

Amazing products to sell our existing customers I mean, some customers have customer identity, but we still have a lot of customers does all customer identity too and then we have many many customers does so okta identity governance to that thing is just starting to roll. Its had some early success, but it's been a little over a year now starting to get a ton of traction we had a couple of real.

Important deals with a what I mentioned in my comments that we're closer to the site was.

Speaker 1: A large global pharmaceutical company had a big OIG upsell. And then the new GA of PAM. So I think we have.

A large global pharmaceutical company had a big Oh, Oh, Gee upsell and then the new J F. Pam. So I don't I think we have a ton of new products from the pipeline to sell our customers and.

Speaker 1: of new products from the pipeline to sell our customers and that's what we're making sure we operationalize those newer products and execute well and allowing those...

That's what we're making sure we operationalize those newer products and execute well and selling those.

Speaker 1: And I think you know the 90-day delay on some of the new products

And I think you know the the 90 day delay on on some of the new products.

Speaker 1: could potentially be impactful at some point, but we're not short of products.

Could potentially be impactful at some point, but we're not short of products.

For FY 'twenty four for sure.

Sorry, FY 'twenty five for sure.

Got it thanks, so much.

Yeah.

Eric Heath <unk> Keybanc.

Thank you.

Todd it's great to Saint Pat's getting rolled out this week I guess kind of two parts to the pound.

Opportunities so I wonder what learnings can you draw from O I G to rely that into some of our early success in Japan number one and then number two just <unk>.

Given Pam can be used to protect our customers on Oct environment is this something that you could potentially make available to customers at no extra charge just as it relates to protecting their own okta environment.

Speaker 1: I think there's, we're really excited about privilege access. And I think the biggest, I think there's a couple lessons from OIG that are just

I think there's a we're really excited about privilege access and I think the biggest Ah I think theres a couple lessons from O I G that or just.

Speaker 1: I would call them independent of any product area. So just new product introductions across the board, things like best practices to when do enable broadly, when do enable different segments of the market. Like one of the learnings from OIG was that, you know, it's having much more success in larger enterprises than we expected. And so I think we'll roll that out learning to PAM and we'll enable the larger enterprise sellers sooner than we did with OIG.

I would call them independent of any product area. So just new product introductions across the board things like best practices to window enable broadly want to enable different segments of the market like one of the learnings from O. I G was that you know, it's having much more success in larger enterprises than we expected and saw.

So I think well, we rolled out our learning to Pam and will enable the larger enterprise sellers sooner than we what we did with LNG because we anticipate that it could have the same phenomenon.

Speaker 1: Because we anticipate that it could have the same phenomenon exceed our expectations and.

Exceed our expectations in the larger enterprise another another interesting phenomenon for O I G was that.

Speaker 1: larger enterprise. Another interesting phenomenon for OIG was that OIG is exceeding our expectations in kind of brownfield environments where they already have an existing governance solution so we'll bring those lendings to the PAM product as well.

Oh, Gee is exceeding our expectations and kind of call them brownfield environments, where they already have an existing governance solution.

We'll bring those learnings to the Tam product as well that on the product direction. One one area that is.

Speaker 1: The on the product direction one area that is

Speaker 1: through the early access phase and now that we move into GA, one of the learnings on the product directions is that

Through the the early access phase and now that we move into J, one of the learnings on the product directions as that.

Speaker 1: Customers the products main focus has been

Customers with.

Products, our main focus has been.

Speaker 1: through the LEA limited or sorry through the early access has been on.

Through the early a limited or sorry through the early access has been on.

Speaker 1: servers, so Linux and Windows servers, Kubernetes clusters, managing access to these things, these kind of infrastructure type resources. Customers find a lot of value in having us manage the privileged accounts in SAS.

Servers, so Linux and Windows servers, kubernetes clusters, managing access to these things these type of infrastructure type resources.

Find a lot of value in having us manage the privileged accounts in SaaS apps. So we're connected to Salesforce. We're connected to work day were connected to Github manage the privilege accounts in there so.

Speaker 1: So we're connected to Salesforce, we're connected to Workday, we're connected to GitHub, manage the privileged accounts in there. So that's an exciting direction. As you mentioned, what is one of the most critical privileged account systems in the world? It's Okta Admin.

So that's an exciting direction is as you mentioned you know what is the one of the most critical privileged.

Count systems in the World, It's okta admin console. So we're exploring ideas to better integrate that and that's gonna be a big focus.

Speaker 3: So we're exploring ideas to better integrate that, and that's gonna be a big focus. And your idea about offering it for free to every Okta customer is a very interesting one, and this might be the first time ever I've taken product input on an earnings call, but I do take it.

And you're in your idea about about offering it for free to every.

Customer is a very interesting one and.

This might be the first time ever I've taken product input on our earnings call, but I do take it.

Great excellent go to great Paula P T I D.

Speaker 9: Okay, great. Thanks for taking the questions. So yeah, I guess kind of a modeling question here. Normally I would expect sequential growth in CRPO in Q3 to be at a similar level to that of what you've seen in Q2. At least that's what you've seen the last couple of years.

Okay, great. Thanks for taking the questions. So yeah I guess.

<unk> got kind of a modeling question here.

Normally I would expect sequential growth in C. R. P O in Q3 to be at a similar level to that of what you've seen in Q2 at least that's what you've seen that the last couple of years.

Speaker 9: This year you added $54 million in net new CRPO. Last quarter you added $71 million. So I know this is kind of rough, but like, is it safe to say that the main difference there was the breach happening with like 10 or 11 days left in the quarter and then customers just taking a pause?

This year, you added $54 million and net new C. R. P O.

Last quarter, you had $71 million. So I know this is kind of rough but like is it safe to say that the main difference there was the breach happening with like 10 or 11 days left in the quarter and then and then customers just taken a pause.

Speaker 9: Or is there something else that I should be thinking of? And then the other part of the question would be, as we think of Q4 trends, like how much of a hangover is?

Or is there something else that I should be thinking of.

And then the other part of the question would be as we think of Q4 trends like.

How much of a hangover is there how much should we expect that the lingering impact of the breach to be on on conversations with customers yeah. Thanks, Greg.

Speaker 9: Should we expect the lingering impact of the briefs to be on conversations with customers? Yeah. Thanks, Greg.

Speaker 2: So from a sequential perspective, I think I wouldn't do that math in terms of backing into the impact associated with the incident.

So from a sequential perspective, I think I wouldn't do that math in terms of backing into the impact associated with the incident I would more think about renewals timing that can have a heavy impact on CRP O quarter to quarter. So.

Speaker 2: more think about renewals timing that can have a heavy impact on CRPO quarter to quarter. So, you know, we felt we had a really nice quarter in terms of Q3, you know, growing 16%, you know, $1.83 billion in current RPO. So, yeah, I wouldn't read too much detail into that. In terms of Q4, all of it's baked in all of what we think the potential impact is associated with the security incident that is in the guidance that we've given you here today, you know, 11 to 12%.

We felt we had a really nice quarter in terms of Q3, you know growing 16%.

One $3 billion in Qunar P. O. So, yes, I wouldn't read too much detail into that.

In terms of Q4 all of it's baked in all of what we think the potential impact is associated with the security incident that was in the guidance that we've given you here today, 11% to 12% and $1 $88 billion at the top end of the range. So yes.

Speaker 3: and you know, $1.88 billion at the top end of the range. So, yeah, that's kind of how we think about things. All right, fair enough.

Yeah, that's that's kind of always think about things.

Fair enough. Thank you.

Go to Peter Reed at Bernstein.

Speaker 9: Thank you. It looks like the change in your anticipated growth in quarter four came down relative to what you implied last quarter by almost three percentage points. And you know, I think you said that this is the impact of the outage.

Thank you.

Yeah.

It looks like.

The change in your anticipated growth in quarter, four came down relative to what you implied last quarter.

By almost three percentage points and I think you've said that this is the impact of the outage.

Speaker 9: Is that experiential? In other words, there are some things that you've already seen occur that are leading you to believe that you will definitely see that. Is that turning up in customers' minds?

Is that experiential in other words like there are some things that you've already seen occur.

That are leading you to believe that you will definitely see.

See that in is that you know.

Turning up in customers that are kind of showing that theyre going to leave it at that.

Speaker 9: showing that they're going to leave is that people are failing to upgrade at the pace that they have been before, is that it's harder to win new customers. So you anticipate you had a really nice quarter, actually, getting new customers sequentially up. You anticipate that to take a dive. I'm trying to figure out like.

People are you know.

Failing to upgrade you know at the pace that they had been.

Before is that it's harder to win new customers, who you anticipate you had a really nice quarter actually getting new customers sequentially up.

Do you anticipate that to take a dive I'm trying to figure out like where that shows up kind of in the stack of where you would have normally thought that kind of sequential growth quarter over quarter that seems to have been kind of eliminated.

Speaker 11: where that shows up kind of in the stack of where you would have normally thought that kind of sequential growth quarter to quarter that seems to have been kind of eliminated as a result of the outage.

As a result of of the outage.

Yeah.

Speaker 3: Yeah, the incident. So, you know, if you look at every quarter, Peter, there's always deals that push from quarter to quarter. It's just a natural part of our business.

Yeah the incident so.

If you look at every quarter, Peter there's always deals that pushed from quarter to quarter. It's just a natural part of our business. We saw an elevated level of that and we we ascribe that that potentially could be related to to the security incident. So we're taking that into our guidance. When we think about Q4 and and thinking about it from a <unk>.

Speaker 3: We saw an elevated level of that and we ascribe that potentially could be related to the security incidents, so we're taking that into our guidance when we think about Q4 and thinking about it from a prudent perspective, especially given how big the number can be in Q4 and setting the trajectory for fiscal year 25. So that's how we're thinking about things.

Prudent perspective, especially given how big the number can be in Q4, and and setting a trajectory for fiscal year 'twenty five so that's how we're thinking about things.

So it's actually more just there are deals to state of the pipeline, but you just anticipate they may push out of this quarter into the next quarter.

Speaker 11: their deals to stay in the pipeline, but you just anticipate they may push out of this quarter into the next quarter. Yeah, we did already from Q3 and the Q4 wouldn't that like give you deals so it would be closing in this quarter that should point some of that gap.

She's already from Q3 into Q4 wasn't that like give you deals that would be closing in this quarter that should put some of that gap. So you'd have to really push out a lot of deals out of Q4 and Q1 at that point, yeah, and you're right. We actually have already seen some of those deals close in Q4, which is a good sign but we're being prudent given the environment out there today given both the <unk>.

Speaker 3: So you'd have to really push out a lot of deals out of Q4 and the Q1 at that point. Yeah, and you're right. We actually have already seen some of those deals close in Q4, which is a good sign, but we're being prudent given the environment out there today, given both the macro and the impact associated with the security incident. So we're just being.

Macro and the impact associated with the security incident, So we're just being thoughtful.

Speaker 1: Yeah, I mean, if you think about the chronology of it, it's 11 days left in the quarter and then, you know, we're only, you know, just a month into the fourth quarter. So we, in terms of the window to see the impact, we're a little bit limited on a window to see the impact. So I think that drives some of the pragmatism in the guide.

Yeah, I mean, if you think about the chronology of it it's 11 days left in the quarter and then.

We're only.

Just a month into the fourth quarter so.

In terms of the window to see the impact we're little bit limited on a window to see the impact so I think that drive some of the pragmatism in the guide.

Yeah.

Alright, let's go to Adam Borg with Stifel.

Speaker 12: Awesome. Thanks so much for the question. Maybe a bigger picture question here. So international is still about 20, 21% of the mix. And just given the size of the company, just seems like there's a lot of international opportunity ahead. So just as you think about the channel investments, and you think about the new CRO and CMO in place.

Awesome. Thanks, so much for the question.

Maybe a bigger picture question here. So international is still about 2021% of the mix and just given the size of the company.

Just seems like there's a lot of international opportunity ahead. So just how do you think about the channel investments. When you think about the new CRO and CMO in place what are the thoughts about kind of accelerating opportunity in the international theater.

Speaker 1: What are the thoughts about accelerating opportunity in the international theater to potentially help accelerate growth? Thanks. I think it's a big opportunity. I do think from a macro perspective, in terms of the stabilized macro, but still a challenging macro, I think the macro impact internationally has probably been more pronounced from my observation than in North America over the last year or so. We also have, in terms of the...

Actually help accelerate growth.

But I think it's a big opportunity I do think from a.

Macro perspective in terms of the stabilized macro but.

But still a challenging macro I think the macro impact internationally has probably been more.

Pronounce from observation that in North America over the last year or so we.

We also have in terms of the.

Speaker 1: interim to permanent CRO with John . That also gives us the opportunity to backfill John as the general manager of Europe and we have some candidates in the late stage pipeline for that. So that's more leadership stability internationally. Couple that with a great leadership team in Asia Pacific which is performing well. You have a really good opportunity for

Interim to permanent CRM, John that also gives us the opportunity to backfill John as the general manager of Europe.

Have some candidates in our late stage pipeline for that so that's more leadership stability internationally.

All of that with a great leadership team in Asia Pacific, which is performing well you have a really good opportunity for.

Speaker 1: solid performance internationally, which has to be an important part of our future if you just look at the numbers. The market is, half the market is probably outside the US over time in terms of identity management, using rough numbers, and over the next five to ten years we're going to make sure we get that mix higher than it is now in terms of a percentage of revenue.

Solid performance internationally, which is has to be an important part of our future. If you just look at the numbers. The market is half the market is probably outside the U S. Over time in terms of identity management using rough numbers and so over the next five to 10 years are going to make sure we get that mix higher than it is now in terms of a percentage of revenue.

Speaker 5: I'd also add, just John being an international person himself, like he brings that lens, right? And so we're really excited about that. And the opportunity out in front of us, because I agree with Todd, we've got a lot of opportunity internationally. Awesome. Thanks so much. Okay, next step.

I'd also add John being an international person themselves like he brings that that that lens right and so we're really excited about that.

And the opportunity out in front of us because I agree with what we've got a lot of opportunity internationally.

Awesome. Thanks, so much.

Next up is Matt hedberg of RBC.

Great Todd a product question.

Speaker 13: You know, in your prepared remarks, you noted you're pleasantly surprised, I think, by the size of organizations adopting your identity governance product.

You know in your prepared remarks, you noted you're pleasantly surprised I think by the size of organizations adopting I your identity governance product you.

Speaker 13: I think a year ago, it probably would have surprised a lot of us. I think we would have thought maybe some of the traction would have been from smaller organizations or mid-sized organizations. So I guess, maybe, why the success of market do you think at this point? And then, Brad, when you think about the impact from governance in your 25 outlook, I assume you're taking a very modest approach, but just thoughts on how you think about that product next.

I think a year ago that probably would've surprised a lot of it I think we would have thought maybe some of the traction that would've been from smaller organizations are mid sized organization. So I guess, maybe why the success up market do you think at this point and then Brad when you think about the impact.

From a governance and your 25 outlook I just think we're taking a very modest approach, but just thoughts on how you're thinking about that product next year.

The I just think that large organizations have it's there's a lot of complexity and I think maybe we underestimated our ability I think we looked at some of these larger organizations and what they were doing with the existing governance solutions and we assume that they were these solutions recovering the SAP piece.

The Oracle apps, the legacy apps and assuming that they would also be covering all the cloud stuff and all the new stuff I think that assumptions has proven to be maybe not as accurate as we thought I think a lot of these legacy products arent covering where the where the center of gravity is moving which is cloud centric application workloads and cloud infrastructure.

So the product is as you know a better fit for these large companies than we thought I think also just our overall the last you know call it five or six quarters with when the macro environment changed.

Seen a.

More success for Okta and the bigger companies. So I think it's I think <unk> has a big future in.

Mid enterprise and SMB, but I think that segment is just the slower segment right now so we're not seeing any attaches with OID there that we could over time, so I think you're it looks better because more people are having a problem are finding value from it in the large enterprises and also large enterprises, just doing so well with 40% growth in October.

Bolton a C V of those deals and in customer kind of those deals in.

In Q3, so I think attaching Oh, Gee, there's more opportunities to attach their.

Relative to the entire business, so we like that.

Fluids and the perception as well.

Yeah, and I would add although we're very excited about the progress so far Matt I mean, yes, we are being much with our expectations and the guidance. We've given you here today, one thing that I I know you guys have asked in the past is how much and we've told you. We keep keep tell me we're going to update you every time, we get a new number but that third of workforce spend being <unk>.

<unk> continues to hold steady through the end of Q3. So that's the number we've given you in the past and it continues to be that so the upsell associated with it is significant and were very pleased with how things are going just like Todd said.

Great next Jonathan Ho at William Blair.

Hi, good afternoon with regards to the branch can you give us a little bit more detail on maybe what's still left in that third party validation and investigation and how confident are you that you know this is going to be the last finding that that comes out of this investigation. Thank you yeah. It's a great question, Jonathan when I when I E.

Many many conversations with customers. The this comes up like speed of disclosure and where they want to know all the information as fast as possible and why does disclosure take time and what else is left to disclose etcetera. So it is on everyone's mind, obviously I think the general philosophy. We're taking is that we're trying to disclose as much as we know as quickly as possible.

I think a couple of weeks after a couple weeks after the incident, where we had our first disclosure we disclosed everything we knew at the time.

And we just kept looking like you're talking about the the log files from our.

Support system are quite voluminous and the team went over them click by click robot ROE a line by line kind of take a first pass in and looked at all the things. They thought were incredibly sensitive and took a quick run of some of these reports and found that it wasn't much interesting data and then publish the first RCA and.

And remediation steps and then you know like a good security company would kept looking and kept digging and made sure. We had everything covered and found more and we were more thorough about these reports and random completely and saw the data was there and made the decision to do a further disclosure based on risk of fishing like we like we've outlined.

And so I think the way I characterize it as now our internal team has gone over it many many times and our internal investigation has done like we don't think there's anything else productively. We can look at it we've worked with the vendor and got supplemental logs, we've come through it we've done everything you know three or four or five times to check it.

But we're still want to make sure we cover all the bases. So we brought on this firm that has started a couple of weeks ago and they were looking at it.

We were doing it obviously to be very.

Throw in clear them.

I think it's a relatively low priority that they'll find anything Additionally, but we'll have to wait and see in mid December when they're done with their analysis.

Okay I'd like to welcome back the team of Bologna from Citi.

Thank you I appreciate the question and Todd you were very categorical about securing Oct I say your customers are secure as being the number one priority.

<unk> for you is is that a.

People process or technology, or maybe all of the above conversation and then maybe Brad it's not immediately apparent in your.

Your margin guidance that you are going to be taking in making these investments. So can you just sort of help us understand and kind of what envelope a lot of this.

Up leveling and reinforcing of your internal security architecture, what shape or form is that gonna take yeah. It's a super insightful question Fatima. The it's as you guessed, it's all of the above and I think we <unk> the program and turtle it internally it was called.

Program bedrock building the bedrock Foundation.

And it has four pillars.

I'll call them pillars. The first one is.

There's just.

Bottoms up get all the ideas on the table of everything we know that the team thinks it would be great ideas to make us the most secure company in the world.

And like a good example of something from this pillar is.

Like this thing that we're advising customers.

To do with the latest notification around having MSA for all administrator accounts.

That really should be required there shouldn't be an option to not again over the years we.

We are in some cases made the choice for convenience and speed of implementation or frictionless adoption instead of security, but as we march toward being the most or one of the most secure companies in the world that's going to change. So we have to make that required and got to work through that because theres a reason sometimes customers do.

Don't have them off they required maybe its a service account maybe theres a specific workflow, but everyone is we do this bottoms up effort. It's like a lot of good ideas on how we can make that better and not and that whole bucket of bottoms up we have a lot of awesome smart people on the team that have the time and space now to let those ideas come out.

And they're gonna, we're gonna have time and space to implement them as well. So that's the bottoms up track. The second track is really call it tops down which is.

Making sure from our internal security architecture perspective, specifically in overall business operations and I T operations as inclusive of obviously product and infrastructure, but I'm getting the top experts in the world and to give us their opinion on how we should be architected or this part of our <unk>.

<unk> posture in architecture, and there's people that do this for them.

The most secure companies in the world and we want to take those experts and combine them with our experts internally to make sure. We have the best security blueprint from an architectural perspective. So we have bottoms up we have tops down and then the third pillar is really cultural.

And that starts with me and the leadership team in setting this clear priority in setting the expectation that we are going to be the most.

Our goal is to be one of the most secure companies in the world and we're going to prioritize that number one when you think about executing well. It's it's can be pretty straightforward. You know it's like you have to make sure you have a clear vision and we want to be one of the most secure companies in the world. We want you've got to set clear priority and get the right amount of resources on it and that kind of sets up this cultural component to be successor.

And then the last one is is I think I've mentioned before is in the products. We have to make sure that the products themselves are beyond just being valuable and powerful for our customers. They have to be built in a way that ensures the security of our customers as well and the Best example for this is after the.

After the notification of this incident in October we quickly implemented this feature which actually Cryptographically binds.

Administrator console session to a specific network. So this is the kind of thing that that you know.

It is very valuable for customers and keeps them secure and as we think about it more and go through the entire product architecture and overview. There's many more of these things that can put us closer to be in from a product perspective and products that protect our customers and their use of it in their deployments of it the most secure company in the world and that's that's the fourth pillar. So it's quite.

Comprehensive the I think that the 90 day focus it gives everyone space and clarity to have no confusion about this being the priority anything after 90 days what Youll see is youll. Obviously these kind of efforts have they've been going on in some shape or form for many years and they will continue after this 90 days, but right now we just need this real clear alignment on.

Getting ourselves closer to that goal of being the most secure company in the world.

I appreciate that thank you.

And then for the second part of your question for teammates really there's two things one we're already investing a good amount in FY 'twenty four.

So to step up and the margins not like we're starting at zero. So we're investing in.

A good amount right now we're going to invest more in Q4, but this is one of the benefits of these structural efficiencies that we've found.

And driven over the last 12 months to 18 months. It allows us to expand non-GAAP operating margin from 13% to 17%. While also investing more in these critical areas like security and so on.

We've invested a lot already but we're going to invest even more in FY 'twenty five, but while also being able to balance it with the margin that you mentioned so that's.

It's one of those benefits of us doing what we've been working so hard on for the last 12 to 18 months. Thank.

Thank you Brad from.

Okay, we're going to try to get through a couple more let's go to Josh to them at Wolfe Research.

Hey, guys can you hear me loud and clear Josh.

Alright, great.

Hi, I wanted to clarify a previous question does the guidance for Q4 embed some conservatism around the recent incident, because you are anticipating to see something or because you are already seeing an impact.

And then just a follow up is Todd you mentioned that you spoke to customers and they kind of understand why it's an identity provider you guys are being targeted by hackers so much.

Is that is that raising any questions from the customer base as to whether or not it makes sense to go all in with all of your identity needs from one provider or given that you guys are the center of the security ecosystem and the number one.

For hackers does it maybe make sense to diversify some of your identity risk across a different Pam vendor and a different governance.

Josh I'll take the first part so anticipating as the answer short answer since we're running out of time, because we did see like I said earlier, an elevated amount of pushes or deal pushes from Q3 into Q4, and so we're just anticipating that as we go through the quarter because as a reminder to everybody. We do not have a linear bookings quarter. It is.

Very back end weighted and so we're.

We're just taking into account what we saw at the end of Q3 and looking in.

Making sure weird.

Put that into our expectations for Q4, yeah and on the question on the.

The you know getting everything from one vendor versus spreading out your risk with different vendors I think it comes down to it at.

The actual physical layer and how the products are implemented how you mitigate that risk of getting everything from one vendor and then second thing is the product there has to be a lot of value in getting them from one vendor like in terms of decreasing risk.

The operational simplicity that the power of how you can secure things because things are better integrated so that's the equate in fact I was having this exact conversation with a customer just a few days ago about the risks and reward of consolidated around one vendor versus the.

Spread things around spread the risk perspective, and I think that's the those are the variables in the equation that people think about.

John the future of Guggenheim.

Thanks, Dave.

So Todd.

My question's a follow up to <unk> question I Gotta remember that tried to get ahead of her because she.

It's hard to follow her but I thought that was a really good question.

And thank you for all the detail you gave around that the Pope.

Program bedrock.

But in the end still like how long is it going to take to get to as you say raise your game to get to a point.

No no you never going to be comfortable but relative comfort when you can actually sit down with the customer and tell them that you're there and you never quite there, but you are there.

Now listen we were we worry about it every day, we don't want this to happen ever again.

That's not to say it never will but how long do you get to a point, where you have that relative comfort.

Through that it's a simple smart question Susan a question I think I would add color. It. This way. This has been something we've been very focused on for.

Several years, particularly since lapses bridge a couple of years ago, we've been very focused on it.

And actually made a quite a bit of progress to make us feel comfortable about our progress towards being one of the most secure companies in the world I think the reason for the 90 day sprint and focus our as there are there are there is a calculation of Ah I and the management team think that there are enough things that will.

Decrease the risk at a significant level.

Now that the risk is incredibly high but there's enough things that will decrease the risk at a significant level that we think it's worth a spread here, but probably more importantly, John it's kind of cultural it's it's.

Execution requires clear priority and nothing makes the priority clear for everyone. Then our full focus and in 90 day sprint.

So beyond the decrease in risk and getting us closer to this.

Area as you describe it where we feel real comfortable.

As we progress towards being one of the most secure companies in the world. There is just a cultural tone studying thing, which I think is very important for customers and for investors and for.

Players as well.

So it's the 90 days and then.

Just keep just keep going.

And it's not like we've never been focused on security because we've absolutely had a huge focus on it like I said very very specific and mature in areas of the product and their infrastructure I think we're not as mature and we haven't had the comprehensive approach on the overall operations and overall company operations.

But it's something we've been doing for a long time, and we're going to have the sprint and they will keep doing for a long time. After because we have to be you know like I've said it many times, we have to be one of the most secure companies in the world given the position we're playing in the critical role we fill for our customers and that's what they expect from us and that's what we expect from ourselves as well.

Thank you very much and it listen I sat back one last thing something I'd never say.

Actually I think you guys did a good job I mean, this quarter numbers look good and even some given everything that's going on I.

I guess nice job yeah I appreciate it.

A lot of hard work from the team.

Great I know we're into overtime here, we're going to take a friend and then shrink and we're gonna have to cut it off at that point, but Fred Meyer from Macquarie go ahead.

Thank you I think many good questions have been asked so I think Todd what I would like to ask is.

As we from the outside or looking at what you were doing it after what sort of concrete checkpoints might we expect to see to understand what progress youre, making here at towards improving your overall security posture understanding also that no news is good news with respect of data breaches and secondly on that one.

Upcoming SEC disclosure timeframe of requirements do you feel that you have been reporting frameworks in place to comfortably meet all those requirements.

Second question, so feel really good about that the disclosure framework and so forth something we I think in some ways where are the the the role we play in the industry and and the tone and the transparency. We're trying to set with customers. We have a lot of things in place that put us in good standing there in terms of our ability.

You don't those disclosures on.

The first question you asked is I think there's further work.

We have a really good answer on the product visible things, we're gonna be reporting those out like as we would do product releases or feature capabilities. These you know like the two examples I mentioned are the.

The network binding for session tokens and.

Requiring NSA, that's going to be published and so youll see the roadmap for those things and you'll see that I think published publicly into customers I think the internal stuff. The you know the things that the team comes up with in terms of improving our operational security and comprehensive look at the security and taken an outside experts we are.

To think more about how to how to communicate that broadly to customers, but I think it's just as important because not only is it just gives customers confidence and how seriously and how aggressively we're taking us but also it can help them learn because every customer I talked to their their thinking like what can we learn from okta because after us on this journey to be one of the most secure companies in the world.

I can learn from that so I think theres value, ensuring that not just from a truck perspective, but also from a learning and helping customers through that through that education.

Thank you.

Last question to Shrek authority of Baird.

Thanks for taking my question and I appreciate the transparency Tiger and Brad.

Just to follow up on your point, Todd on products with <unk> focus and investment Securities brokers.

In light of the recent happens.

And I think we're all a ban seem to be elevating and becoming.

We are in more kind of broad based I forget to see that go back to a focus on Pam just not only product is on track Bush's other product features maybe around ACA review back in the lab.

How are you positioning Pam in your customer conversations are more Margaret how are customers responding.

And how has the customer feedback and volunteering who's this happens again on one hand of course, everybody knows Pam is going to be a key piece of puzzle into SAP landscape.

On the Greenfield and perhaps leading to excellent reception of perhaps.

Perhaps not adequate in litigation, our four pronged solution within your internal environment on the other hand. So if you can provide your thoughts there.

Yeah, no. It's a good I think every specific incident is different and Pam and the definition of pan addresses some of them better than others. So I won't comment specifically on this recent incident and what our Pam product does or doesn't do but broadly speaking what you say, what you're saying is right all of these attacks whether it's.

Or highlighting the need for very strong fishing resistant access management governor identity governance, and then privilege access management and control.

The reception that we've seen with customers is basically it's very simple our positioning is very simple it's like.

You're using okta to manage the user lifecycle and the access for for many business applications. You should use the same engine and the same access control for your privilege execute privilege servers in containers and as I mentioned earlier in the future really is coming relatively quickly for your SaaS applications.

And for the Okta I've been console itself. So that's the pitch and what customers like is that they get this comp.

Comprehensive integrated workflow across all of the access points. They are trying to secure whether that's servers ops a business applications different kinds of applications and that's what resonates and then they can report that back to their auditor and they get complete visibility from our.

Governance risk and compliance assessments and that's the value prop for them. So.

It is it as you know the.

The market, we serve and the opportunity for our products is only getting bigger and bigger and the threat landscape is part of that there's many other drivers of the market size, we're going after and it's one of the reasons why we're so optimistic and bullish about the long term future.

Given all the work and focus we're putting into the products in the company and the team.

It's a there's some bright and sunny future ahead of US we're excited about it.

Alright, Thanks, Matt that's a long time.

Okay. Thanks, everybody. That's it for today's meeting if you have any follow up questions you can email us at investor at Okta Dotcom. Thanks.

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Hum.

Okay.

Right.

Okay.

Okay.

Right.

Uh huh.

Yes.

Uh huh.

Okay.

Okay.

Got it.

Thank you.

Wow.

Yeah.

Okay.

Okay.

Sure.

[music].

Yeah.

Thank you.

Uh huh.

Okay.

Okay.

No.

Uh huh.

Thank you.

Okay.

Okay.

Okay.

[music] manufacturer.

Yeah.

[music].

Hum.

Thank you.

Okay.

[music].

Yeah.