Q4 2024 Okta Inc Earnings Call

Hi, everybody welcome to Okta as fourth quarter fiscal year 2024 earnings webcast.

Dave Gennarelli: everybody, to act as fourth quarter fiscal year 2024 I'm Dave Gennarelli, Senior Vice President of Investor Relations at Okta. With me in today's meeting, we have Todd McKinnon, our Chief Executive Officer and Co-Founder, and Brett Tighe. At around the same time that the earnings press release hit the wire, we posted supplemental, Posted Commentary contains a large What would historically be the opening, Including customer commentary, product related news, and a review of our This new format allows listeners to review that information before they, It also allows us to spend more time discussing other news items and strategy while leaving Today's meeting will include forward-looking statements pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act, Including but not limited to statements regarding our financial outlook.

Speaker Change: They've generally senior Vice President of Investor Relations at Okta with me in today's meeting we have Tom Mackinnon, our Chief Executive Officer, and cofounder and Brett tie our Chief Financial Officer.

Speaker Change: At around the same time that the earnings press release hit the wire, we posted supplemental commentary to the IR website. This posted commentary contains a large portion of what would historically be the opening commentary, including customer commentary product related news and a review of our financial results. This new format allows listeners to review that in.

Speaker Change: Permission before this call. It also allows us to spend more time discussing other news items and strategy, while leaving more time for Q&A.

Speaker Change: Today's meeting will include forward looking statements pursuant to the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995, including but not limited to statements regarding our financial outlook and market positioning.

Dave Gennarelli: Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from those expressed or implied. Board look and statements represent our management's beliefs and assumptions only as of the date Information on factors that could affect our financial results is included. In addition, during today's meeting, we will discuss non-GAAP financial measures. Although we may not state it explicitly during the meeting, all references to profitability are, These non The discussion of the limitations of using non-gap measures versus their closest gap equivalents is available in our, You can also find more detailed information.

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

Speaker Change: Forward looking statements represent our management's beliefs and assumptions only as of the date made.

Speaker Change: Information on factors that could affect our financial results is included in our filings with the SEC from time to time, including the section titled Risk factors in our previously filed Form 10-Q.

In addition, during today's meeting we will discuss non-GAAP financial results, though we may not stated explicitly during the meeting all references to profitability. Our non-GAAP. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP.

Speaker Change: A reconciliation between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalents is available in our earnings release can also find more detailed information in our supplemental financial materials, which include trended financial statements and key metrics posted on our Investor Relations website and.

Todd McKinnon: Supplemental Financial Materials, which include Trended Financial, Key metrics posted on our investor relationship website. Today's meeting will quote a number of numeric or growth changes. Financial Performance, and unless otherwise noted, reference represents a year-over-year comparison. Now, I'd like to turn the meeting over to Todd McKinnon. Thanks Dave and thank you everyone for joining us.

Speaker Change: Today's meeting we will quote a number of numeric or growth changes as we discuss our financial performance and unless otherwise noted each such reference represents a year over year comparison, and now I'd like to turn the meeting over to Todd Mckinnon Doug.

Todd Mckinnon: Thanks, Dave and thank you everyone for joining us. This afternoon, we're pleased with the strength of the business to closeout, our FY 'twenty for Q4 was highlighted by record quarterly profitability and cash flow and strong top line results. Our Q4 financial performance was solid and suggests minimal impact on our financial results.

Todd McKinnon: I'm pleased with the strength. Q4 Financial, The incident is now behind us, but we're using the learning. Productions, This new initiative... Okta Secure Identity, Elevate, We want. We are further, Unknown Attendee, Primary.

Unknown Attendee: In the last 30, and we're shaping the industry best in OctaFast. I encourage you to read more. All of this has to be back.

Todd Mckinnon: Stemming from the security incident. The incident is now behind us, but we're using the learnings to reassess and strengthen the security aspects of our own infrastructure as well as help ensure customers benefit from our experienced by further strengthening our products and policies. This morning, we launched an initiative called the okta secure.

Todd McKinnon: Okta has long been the leader in modern... We already have. For help organizing this event, please visit www.globalonenessproject.org. Time to time, we augment our organic, Earlier this month, we closed the Act I'm out of..., covers to our own. www.youtube.com.uk The second priority is reigniting. We need to focus on our overall go-to-market. The Bulletproof Executive 2013. This means investing in changes to reduce, Priority TORONTO 2015 Pan Am Games Visit toronto.ca for more information TORONTO 2015 Pan Am Games, I want to congratulate Eric.

Todd Mckinnon: Identity commitment, which is our long term commitment to lead the industry in the fight against identity attacks.

Todd Mckinnon: This new initiative encompasses project bedrock, which is aimed at hardening, our ancillary and corporate systems and further strengthening our products and services. The access secure identity commitment extends even further to champion customer and best practices that enable our customers to be highly protected and elevate our.

Todd Mckinnon: Our industry to be more secure from identity attacks, we want our customers to benefit from our depth of experience.

Todd Mckinnon: So we are further strengthening our customer policies to help ensure our products are deployed with okta as best security practices.

Todd Mckinnon: Identity has become a primary attack vector and okta is at the forefront of the fight against identity based attacks Okta threat insights has detected and prevented over 2 billion malicious requests in the last 30 days alone we've reduced credential stuffing attempts and malicious bot traffic by more.

Todd Mckinnon: Of the 90% for some of our largest customers.

Todd Mckinnon: Over the past 90 days.

Todd Mckinnon: And we're shaping industry best practices with 100% of Okta employees, using okta fast pass with fishing resistance password less authentication.

Brett Tighe: Elevated Role, Eric will take over, The Bulletproof Executive 2013 As we head into FY25, I've never been more, Transcribed by https://otter.ai, And we have a strong pipeline of products, powered by, we're well. And finally, I want to thank the entire Okta team. Thank you to our loyal customers. Now here's Brett to cover the financials about how we're Thanks, Dave said at the start of the call that we've evolved our earnings call. Most of my typical review of the quarterly financials was published on Okta's Investor Relations website. I'm going to cover a few of the financial highlights, but I'll focus my commentary on broader topics before getting into our business. Analyzing our key metrics, we couldn't attribute a quantifiable impact from the security incident. While not quantifiable Solid Q4 Financial Profit suggests minimal impact on our financial results stemming from security and, The macro environment during Q4 was relatively consistent with what we experienced in Q2 and Q3 of FY25. It's short, it's stable, but still challenging.

Todd Mckinnon: I encourage you to read more about the okta secure identity commitment and the blog. We posted today of course all of this has to be backed up with great products Okta has long been the leader in modern access management, we've started tapping into two more large market opportunities with the launch of okta identity governance last year.

Todd Mckinnon: And octave privilege access just a few months ago Okta is changing the game with our unified platform approach and we already have several customers that have turned to okta for the combined benefits of our access management governance and privilege access we're helping organizations make it easier for their employees.

Todd Mckinnon: <unk> and users to safely access their applications and help protect them from today's threat actors.

Todd Mckinnon: From time to time, we augment our organic innovation through M&A earlier. This month, we closed the acquisition of spare security and identity security platform to provide our customers with richer insights and technology to elevate their identity security posture management.

Todd Mckinnon: At the start of each new fiscal year I'd like to share with you our top priorities as an organization.

Todd Mckinnon: As you might expect security is our top priority as a company for FY 'twenty. Five this covers everything from driving a company culture with a security first mindset to our own security architecture as well as our products and services. The second priority is reigniting our growth.

Todd Mckinnon: Obviously end result, pertains to topline metrics across regions and products, but to get there we need to focus on our overall go to market operational excellence further increase our competitiveness in our core markets with enhancements to both our workforce and customer identity cloud and strengthen our growth vectors in key.

Todd Mckinnon: Industries newly introduced products and cross cloud initiatives, our third priority is scaling okta from a technical perspective, our goal is to set the company up for success in order to be a $5 billion and then a $10 billion plus company. This means investing in changes to reduce operational friction and drive global scale.

Brett Tighe: Moving on to some financial matters, I am pleased to achieve Rule of 40 again for FY20. For FY24, we generated a non-GAAP operating profit of 14% versus negative 1%. Tremendous progress for us. The 2004 financial performance was highlighted by record profitability.

Todd Mckinnon: This priority is intended to help fuel the first two priorities of security and growth before wrapping up my comments I want to congratulate Eric Kelleher on his promotion to president of customer experience and communications in this elevated role Eric will oversee marketing customer first and communications.

Todd Mckinnon: And continue to go lead the go to market organization with John Addison, Our Chief revenue Officer, Eric has been with Okta for seven years. Most recently as chief customer officer. His primary focus will be driving growth building brand loyalty and enhancing the overall customer experience I am pleased with the strength and stability.

Brett Tighe: We were encouraged by our strong, Weighted average term length for our contract signed in Q4 hit a two year, We continue to see an increase in the number of sales reps selling both Workforce Identity Cloud and Customer Identity Cloud services, and experienced particular Signed a record number of million-dollar-plus ARR contracts in, increased by over 30 We added 150 customers in the quarter. The sequential decline in new customer ads reflects ongoing business trends of increased weighting of upsell versus new business resulting from the current macro environment and strength, large enterprise customers versus, I'm going to address one of the actions we're taking to drive new business and re-ignite new customer activity. Starting at the beginning of this, We shifted our direct sales team that focuses on the S&B market in the Americas to what's commonly referred to as a hunter-farmer That means we now have a team of Account Executives focused on driving new customer acquisition and a separate team of Account, focused on upsells within our We believe that we're still very underpenetrated within our existing base of nearly 19,000, This natural evolution will enable us to drive better results with both new and existing, Our Indirect Partner Ecosystem, played an important role. In fact, 8 of our top 10 deals in Q4 were either resold or influenced. ISVs, System Integrators, and Solution Providers.

Todd Mckinnon: Our current leadership team going into the new fiscal year.

Todd Mckinnon: As we head into FY 'twenty, five I've never been more energized and excited about <unk> future, we're expanding on the world's most robust and modern identity platform and we have a strong pipeline of products and functionality powered by Okta AI. All told we are well positioned to capture the large market opportunity in front of us.

Todd Mckinnon: And finally I want to thank the entire ocular team for their tireless effort and thank you to our loyal customers and partners, who put their trust in US every day now here's Brett to cover the financial commentary and talk about how we're positioned for long term profitable growth.

Brett Tighe: Thanks, Todd and thank you everyone for joining us today as Dave said at the top of the call. We've evolved our earnings call format. Most of my typical review of the quarterly financials was published on <unk> Investor Relations website at the same time as the press release I'll cover a few of the financial highlights we will focus my commentary on <unk>.

Brett Tighe: Roger topics before getting into our business outlook I'll start by sharing our view on the security incident in the macro environment.

Todd Mckinnon: Analyzing our key metrics, we couldnt attribute a quantifiable impacts from the security incident on our Q4 results while not quantifiable the event likely had some level of impact will continue to monitor this as we move through FY 'twenty five.

Brett Tighe: These partners help us scale and provide tangible value-add. It is with all of them that we introduce a new partnering framework called Elevate. The new program recognizes and rewards. Total value they deliver to Okta and Find, Developing, and Influencing to Delivering, Managing, and Transitioning. Invoiced Through Our Indirect Channel, http://www.youtube.com.uk an even greater percentage of helping drive that number from the EWS continues to be a premier identity. EWS now generates over a hundred and seventy five million dollars in annual revenue, growing over 100. We look forward to even more success.

Todd Mckinnon: All things considered our solid Q4 financial performance suggests minimal impact on our financial results stemming from the security incident.

Todd Mckinnon: The macro environment. During Q4 was relatively consistent with what we experienced in Q2 and Q3 of FY 'twenty four ensure stable, but still challenging.

Todd Mckinnon: Moving on to some financial highlights we are pleased to achieve rule of 40 again for FY 'twenty quarter.

Todd Mckinnon: Our FY 'twenty four we generated a non-GAAP operating profit of 14% versus negative, 1% last year and free cash flow margin of 22% up from 3% last year is tremendous progress for a single year.

Brett Tighe: Also starting new market routes to broaden Okta's availability. We recently entered into an agreement with SoftBank Corporation. TopBank is embedding a customized version of Okta Workforce Identity Cloud into its recently launched business concierge, This allows us to reach the approximately 16,000 Japanese companies and 2.4 million devices that utilize The beginning of what we believe will be a new strategic path to market and the first step in an exciting new go-to-market motion, One last item I'd like to call out before turning to our outlet is shared delusions. The actions we've taken over the past two years to reduce dilution have yielded great, Building on that progress, starting in Q1, we will settle employees' tax obligations due at equity through the next year, will lower dilution because instead of issuing and settling shares into the market to cover the withholding FY 25 we expect, will reduce dilution by approximately 1.7 million shares compared to our prior, Ultimately, making for a 1% benefit to our base.., will have no impact.

Todd Mckinnon: Our Q4 financial performance was highlighted by record profitability and cash flow.

Todd Mckinnon: We were encouraged by our strong top line metrics and pipeline growth weighted average term length for our contract signed in Q4 hit a two year high.

Todd Mckinnon: We continued to see an increase in the number of sales reps selling both workforce identity cloud and customer identity cloud products and experienced particular strength with large customers. We signed a record number of $1 billion plus AOR contracts in Q4, capping a year in which the number of million dollar <unk>.

Todd Mckinnon: Contracts increased by over 30%.

Todd Mckinnon: We added 150 customers in the quarter the sequential decline in new customer adds reflects ongoing business trends of increased weighting of upsell versus new business, resulting from the current macro environment and strength with large enterprise customers versus smbs.

Speaker Change: Now I'm going to address one of the actions, we're taking to drive new business and reignite in new customer acquisition, starting at the beginning of this quarter, we shifted our direct sales team that focuses on the SMB market in the Americas to what's commonly referred to as a hunter farmer model.

Brett Tighe: Now let's turn to our Business Outlook for Q1 and FY20. Over the course of the past several quarters, we've put significant effort into positioning the company for profitable growth for years to come. Over the past 18 months, the actions we've taken to drive efficiencies in our... I've yielded an impression.

Speaker Change: That means we now have a team of account executives focused on driving new customer acquisition and a separate team of account executives focused on upsells within our installed base.

Speaker Change: We believe that we're still very underpenetrated within our existing base of nearly 19000 customers. This natural evolution will enable us to drive better results with both new and existing customers.

Brett Tighe: Account Reduction Action we took earlier this month was part of our ongoing,... Lower Cost Regions.

Speaker Change: Over the past several quarters, one of our strongest customer segment has been with large million dollar plus ACB customers. Our indirect partner ecosystem has played an important role in our success in this area. In fact eight of our top 10 deals in Q4 were either resold or influenced by partners from our traditional.

Brett Tighe: The majority of the approximately 400 positions that were eliminated were in supporting roles within the go-to market. As always, we take a prudent approach to forging, factoring in a stable but still challenging macro environment, and while our Q4 results were... We're incorporating some conservatism into our outlook as we continue to monitor potential risks related to the October security incident. And lastly, while we were still finalizing our FY25 model when we provided our preliminary FY25 Outlook last year, the expected cost savings from the headcount reduction was factored into those. Again, you can view the more granular guidance details in our press release or posted. For the first quarter of FY25, we expect total revenue growth of 16-17%, current RPO growth of 13%, and a non-GAAP operating margin of 18%. Free Cash Flow Margin of Approximately $25,000, which is inclusive of a cash impact of approximately 24 million dollars related to the headcount.

Speaker Change: Isd system integrators and solution providers. These partners help us scale and provide tangible value add to our customers.

Speaker Change: Paul that we introduced a new partnering framework called elevate last year, the new program recognizes and rewards partners for the total value they deliver to okta and <unk> customers from finding developing an influencing to delivering managing and transacting today more than 40% of our business mix is invoiced.

Speaker Change: Through our indirect channel partners up from about one third just a couple of years ago.

Speaker Change: And channel partners to help influence an even greater percentage of our business, helping drive that number is the strong contribution from the AWS marketplace. After continues to be a premier identity and access management partner for AWS globally.

Speaker Change: AWS now generates over $175 million in annual contract value per acre growing at over 130%. We look forward to even more success as we go forward.

Speaker Change: We're also starting new market routes to broaden office availability further we recently entered into an agreement with Softbank Corporation as a managed service provider in the Japanese market Softbank is embedding a customized version of okta workforce identity cloud into its recently launched business <unk> device management. This allows us to reach the <unk>.

Brett Tighe: We are raising our outlook across the board for the full year FY25. We are now Total Revenue Growth 10-11% Non-Gap Operating Margin 18-19% and a free cash flow margin of approximately $20,000. To wrap things up, we are confident that we've We continue to focus on initiatives to drive the top line while making significant progress to drive improvements to our operating and cash flow. With that, I'll turn it back over to Dave for Q&A. Great, thanks, Brett. I see that there are quite a few hands raised already, and I'll take them in order.

Speaker Change: Approximately 16000, Japanese companies and $2 4 million devices that utilize the managed service.

Speaker Change: At the beginning of what we believe will be a new strategic path to market in the first step in an exciting new go to market motion for Orca.

Speaker Change: One last item I'd like to call out before turning to our outlook as share dilution actions, we've taken over the past two years to reduce dilution have yielded great results building on that progress starting in Q1, we will settle employee's tax obligation do an equity vesting through the net share settlement method.

Dave Gennarelli: 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 with additional questions. So, first up, I see Brian Essex from J.P. Morgan.

Speaker Change: This will lower dilution, because instead of issuing and settling shares into the market to cover the withholding tax we will fund the estimated tax payments from corporate cash in FY 'twenty five we expect this change will reduce dilution by approximately $1 7 million shares compared to a prior tax withholding method.

Brian Lee Essex: Yeah, thanks, Dave. And congrats on the nice results, team Okta. Maybe Todd, for you, my one question, could you maybe address, you know, what you're seeing on the macro side?

Todd McKinnon: I understand, you know, your comments and Brett's comments and just trying to understand, you know, what you're seeing that may give you better confidence in, you know, better performance into next year. Are you seeing things improve? And do you anticipate better traction?

Speaker Change: Ultimately, making for a 1% benefit to our basic share count This will have no impact on free cash flow.

Speaker Change: Now, let's turn to our business outlook for Q1, and FY 'twenty five over the course of the past several quarters, we put significant effort into positioning the company for profitable growth for years to come over the past 18 months. The actions we've taken to drive efficiencies in our cost structure and yielded impressive results.

Todd McKinnon: In the mid market? Or are you going to continue to rely on large enterprises? And maybe part C of that, could you maybe disaggregate a little bit? Gross gross retention versus upsell cross sell so we can get an understanding of what the underlying the net dollar retention metrics is really moving from quarter to quarter. The macro is, I would call it stable, but it's definitely more challenging than it was.

Speaker Change: The head count reduction actions, we took earlier this month was part of our ongoing assessment to optimize our cost structure. <unk> also supports our strategy of increasing head count in high talent lower cost regions, such as India and Poland. The majority of the approximately 400 positions that were eliminated where in supporting roles within.

Speaker Change: The go to market team as always we take a prudent approach to forward guidance. We are factoring in a stable, but still challenging macro environment consistent with what we've experienced over the past few quarters.

Todd McKinnon: I mean, this is kind of an obvious statement, but it's definitely more challenging than it was a couple of years ago. So, as we look forward to the business in FY25 and beyond, we're kind of assuming that this is the new normal, that the macro is challenging but stable. And that's kind of how we're thinking about the business. The other, maybe more color there for you, is it's pretty different between large organizations, and I would call it mid-enterprise and below. I would say large organizations seem to be more willing to invest in technology, and I think it's a combination of, identity to them is maybe more of a priority to other segments because they have so much technology and they have such an imperative to move to the cloud and modernize, and the business value and the number of people that they can secure and manage, and the projects they can drive are a big ROI. So it's almost like the macro economy is better.

Speaker Change: And while our Q4 results were solid we are incorporating some conservatism into our outlook as we continue to monitor potential impacts related to the October security incident.

Speaker Change: And lastly, while we are still finalizing our FY 'twenty five model when we provided our preliminary FY 'twenty five outlook last quarter. The expected cost savings from the head count reduction was factored into those assumptions.

Speaker Change: Again, you can view the more granular guidance details in our press release or posted commentary.

Speaker Change: For the first quarter of FY 'twenty five we expect total revenue growth of 16% to 17% current RVO growth of 13% non-GAAP operating margin of 18% and free cash flow margin of approximately 25%, which is inclusive of a cash impact of approximately $24 million.

Speaker Change: Related to the head count reduction.

Speaker Change: We are raising our outlook across the board for the full year FY 'twenty five we now expect total revenue growth of 10% to 11% non-GAAP operating margin of 18%, 19% and a free cash flow margin of approximately 21% to wrap things up we're confident that we've set the path of profitable growth for years to come we can.

Todd McKinnon: Although I know technically that's probably not true, it seems better in the large enterprise for us, and I think you see that in the results with the million dollar deals up over 30% and Quick anecdote there, as I talked about in the prepared remarks we posted. I talked about a telecommunications company in North America that was a sizable transaction for us in Q4; they had their legacy identity product was coming off support. So they had no choice. It was like that they'd been there for 10-15 years, and it was coming off support, and they needed to replace it. So, I mean, and I don't think a lot of mid-market companies really have them. They have maybe an on-prem Active Directory.

Speaker Change: Continue to focus on initiatives to drive the top line, while making significant progress to drive improvements to our operating and cash flow margins.

Speaker Change: With that I'll turn it back over to Dave for Q&A David.

Dave: Great. Thanks, Brett I would say that there are quite a few hands raised already and 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 youre welcome to queue back up with additional questions.

Dave: First up I see Brian Essex from Jpmorgan, Brian.

Brian Lee Essex: Yeah, Thanks, Dave and congrats on the nice results.

Brian Lee Essex: Came off that.

Brian Lee Essex: Maybe Todd for you My one question could you maybe address what youre seeing on the macro side I understand.

Todd McKinnon: They don't really have much legacy identity So it's an example of why in the large enterprise some of these times it's not even a macroeconomic thing. It's like they have business problems they have to solve, and they have situations in their technology stack that are evolving, and we can be there to help them, right? Got it Yeah, your question on the US question about retention. Yeah, just as part of a Yeah, gross retention remains healthy in the mid 90s. I think the net retention number you saw came down a bit. I think in terms of growth, as growth slows down and we don't do as many upsells relative to what we did in the past, the year-over-year comparisons compress a little bit, but growth retention is healthy in the mid-90s, and as we continue to focus our efforts on re-accelerating growth, we expect that to happen over time.

Speaker Change: Your comments and <unk> comments, and just trying to understand.

Speaker Change: What youre seeing that.

Todd Mckinnon: That may give you a better confidence in.

Todd Mckinnon: Better performance into next year are you seeing things improve and do you anticipate better traction in the mid market or are you going to continue to rely on large enterprise and maybe.

Todd Mckinnon: Part C of that could you maybe disaggregate a little bit.

Speaker Change: Gross gross retention versus upsell cross sell so we can get an understanding of what what underlying the net dollar retention metrics is really moving from quarter to quarter.

Speaker Change: Okay.

Speaker Change: Macro is I would call it stable, but it's definitely more challenging than it was I mean, this is kind of an obvious statement, but it's definitely more challenging than it was a couple of years ago.

Speaker Change: As we look forward to the business in FY 'twenty and beyond.

Todd McKinnon: I would just add, Brian, one of those macro components that we look at are seat upsells on the workforce side and MAU upsells on the customer identity side. And that continues to feel a headwind, right, because there just isn't as much expectation in terms of economic activity, which can be seen in either one of those, either the workforce side or the customer identity side. So, really, the strength on the upsell side is really coming from cross-sell, right, so whether it be, you know, IGA or, you know, more, you know, customer identity or workforce identity going, you know, one direction or the other, you know, it's really in that cross-sell where we've seen the strength over the last few quarters we've talked about it. Yeah, so it's really still that, okay And you see that reflected in the net retention rate, as you see it here today. Thank you. And next, let's go to Eric Heath at KeyBank.

Speaker Change: We're kind of assuming that this is the new normal that the macro is challenging but stable.

Speaker Change: And that's kind of how we're thinking about the business.

Speaker Change: Other maybe more color. There for you is it's pretty different between large organizations and I would call it mid enterprise and below.

Speaker Change: I would say large organizations are seem to have more willing to invest in technology and I think it's a combination of.

Speaker Change: Identity to them as maybe more of a priority to other segments because they have so much technology in such an imperative to move to the cloud and modernizing the business value and the number of people that they can secure and manage in and the projects that can drive a big rois. So it's almost like.

Speaker Change: The macro economy is better although I know technically that's probably not true it seems better in large enterprise for us and I think you'll see that in the results with the million dollar deals up over 30%.

Speaker Change: <unk>.

Speaker Change: Quick anecdote there.

Speaker Change: Talked about in the prepared remarks, we posted I talked about a telecommunications company in North America.

Speaker Change: It was a sizable transaction for us in Q4.

Eric Michael Heath: Thanks, Dave. And I'll also echo a nice set of results here. Todd, I wanted to follow up on your opening remarks. I'm curious to hear more about those comments about the security incidents behind you at this point. Was that more so a comment about the security enhancements you implemented internally? Or is that more so a comment about sales cycles and customers at this point getting more comfortable with the steps you've implemented and their willingness to make a commitment to Okta? And then, if I could ask one for Brett, just along the same line of questioning, the customer logo ads were a little bit weaker this quarter. So just curious if there are any others, in any case.

Speaker Change: Had there legacy identity product was coming off support so they had no choice. It was like they had been there for 10 15 years and it was coming off support they needed to replace it so.

Speaker Change: And I don't think a lot of many mid market companies. They don't really have they have maybe on prem active directory. They don't really have much legacy identity. So there's an example of why.

Speaker Change: In the large enterprise some of these if not even a macroeconomic factor its like they have business problem. They have to solve in their situations and their technology stack that are evolving and we can be there to help them alright.

Speaker Change: Got it.

Speaker Change: Yes your question on the.

Speaker Change: Hum do a quick comment on the.

Speaker Change: You asked a question about retention, yes, as part of that yeah, yeah. The grocery retention remains healthy in the mid nineties I think the net retention number as you saw in the results came down a bit.

Todd McKinnon: A little bit more pressure on the new logo as a result of that. Yeah, Eric, it's interesting. When we say this, the issue is behind us. What we really mean is that the specific issue from October, closing that out, having a third-party report released, and addressing customer-specific concerns about that incident. That's what we mean when we say behind us.

Speaker Change: I think the.

Speaker Change: In terms of growth is the growth slows down we don't do as many upsells relative to what we did in the past the year over year comparisons.

Speaker Change: Perhaps a little bit but were the gross retention is healthy in the mid nineties.

Speaker Change: We continue to focus our efforts on re accelerating growth we expect.

Todd McKinnon: But security is an ever-present thing, and we're as we have after this issue, and we continue to really ramp up the whole cyber focus of the entire company internally and externally, in fact, the thing we just launched today, which is a very important initiative for Okta, which is called the Okta Secure Identity Commitment. That's our way to talk about this plan broadly over the next several quarters and several years, all the things we're doing from hardening our corporate infrastructure continuously and with a heightened focus on making sure our products not only come out of the box by default secure, but we're investing in product capabilities that will proactively secure all identities in an infrastructure, whether it's identity threat protection with Okta AI or a new acquisition of a company called 85% of data breaches involve identity. And there's an identity attack, there's an account loss, there's a password stuffing attack as part of the attack chain.

Speaker Change: That will happen over time.

Speaker Change: Yes.

Speaker Change: As Ed Brian.

Speaker Change: One of those macro components that we look at it our seat upsells on the workforce side, an MAA upsells on the customer.

Speaker Change: That continues to feel a headwind right.

Speaker Change: Alright, because there just isn't as much expectation in terms of economic activity, which can be seen in either one of those out of the workforce side of the customer identity side. So really the strength on the upsell side is really coming from cross sell so.

Speaker Change: So whether it being.

Speaker Change: Iga or customer identity or workforce that Danny going one direction or the other.

Speaker Change: It's really in that cross sell where we've seen the strength over the last few quarters, we've talked about it so.

Speaker Change: So it's really still Thats Taylor being prudent about license count. So I think there is something that people are still doing out there and you see that reflected in the net retention rate as you see it here today.

Speaker Change: Got it helpful. Thank you.

Speaker Change: Next let's go to Eric <unk>.

Speaker Change: Keybanc.

Speaker Change: Thanks.

Eric Kelleher: I'll also echo nice set of results here thought I wanted to follow up on your on your opening remarks, I'm curious to hear more about those comments about the security incident and behind you at this point.

Todd McKinnon: And so it's a big opportunity to prevent and impact overall cyber crime by elevating the whole industry's posture toward identity-based attacks. And we want to make sure that customers specifically learn from our experience with this issue. And when I talk to customers, as I have, as you can imagine, dozens and dozens and dozens of in-depth conversations about security and our security issues, they want to know about this issue, and we talk about the specifics of this issue. But then, very quickly, it moves to, all right, Okta, help me as a partner, how do we comprehensively think about our own security and our posture? And how can we be protected better against identity attacks?

Eric Kelleher: More so a comment about the security enhancements implemented internally or is that more so a comment about sales cycle than customers at this point and getting more comfortable with the steps implemented.

Eric Kelleher: Their willingness to make a comment and then if I could ask one for Brad.

Eric Kelleher: A lot of the similar line of questioning.

Brad: Customer logo adds were a little bit weaker this quarter. So just curious if theres all in any case.

Brad: A little bit more pressure on the on the new logo adds as a result of that.

Brad: Yeah, Eric it's interesting when we say this the issue the issue is behind us.

Brad: We're really mean is that the specific issue from October.

Todd McKinnon: And it's very proactive. And so it's an ongoing thing. And it's what the customers expect of us. And it's what we expect of ourselves.

Speaker Change: Closing that out.

Speaker Change: The third party report released.

Speaker Change: And addressing customer specific concerns about that incident.

Brett Tighe: And we'll continue to focus on it. Yeah, I just added that in the sense of from a financial perspective. You heard Todd talk about our top priorities for the year. You know, those were in funding order, right?

Brad: What we mean, when we say behind us, but security is an ever present thing and we're as we have after this issue and we continue to really ramp up the whole.

Brad: Cyber focus of the entire company internally and externally in fact are.

Brett Tighe: So security is number one. So we are definitely investing a lot of money into the variety of areas that Todd talked about there to ensure that we bolster those. So it's just to make sure if you guys are thinking about your P&L, it's something we are definitely investing in a heavy way. Because it is the number one priority for us as a company, we take it very seriously.

Brad: The thing we just launched today, which is a very important initiative for okta, which is called the okta secure are there any commitment that's our way to talk about this plan broadly over the next several quarters and several years all of the things we're doing from hardening, our corporate infrastructure continuously and with a heightened focus to making sure our products.

Brad: Not only come out of the box by default secure but also we're investing in product capabilities that will proactively secure all identities.

Brett Tighe: To your question, Eric, around customer accounts, look, the customer account trend, you know, adding 150 net ads, as you saw in the quarter, is really just an extension of the trends that we've seen over the last several quarters. If you remember what we talked about in the past, you know, I'd say about four or five quarters ago, the mix of business, both from a bookings perspective and a pipeline perspective, has been much more tilted toward upsell than historically it has been. And so you see that outcome in terms of the customer account numbers that we're showing you here today. But, you know, it's also something to highlight that Todd was actually talking about earlier, around having success in larger businesses and being a little bit more challenged in small and medium-sized businesses. It's the reason why we're going to this hunter-farmer model in the small and medium-sized business segment in the Americas.

Eric Kelleher: And infrastructure, whether it's Disney threat protection with Okta, AI or new acquisition of a company called Spira.

Eric Kelleher: We're very excited about the specific identity security capabilities in our products and then elevating the entire industry to protect help protect against any attacks, 85% of data breaches involved identity and theres an identity tack, there's an account losses, a password stuffing attack and part of the attack chain. So it's a big opportunity.

Eric Kelleher: To prevent an impact overall cyber but by elevating the whole industries posture toward identity based attacks and we want to make sure that <unk>.

Eric Kelleher: Customers, specifically learned from our experience.

Eric Kelleher: With this issue.

Eric Kelleher: When I talk to customers as I have as you can imagine dozens and dozens and dozens of customers in depth conversations about security and our security issue.

Eric Kelleher: They want to know about this issue and we talk about the specifics of this issue, but then very quickly it moves too alright ought to help me as a partner, we comprehensively to think about our own security and our posture and how can we be protected better against identity attacks and it turns very proactive them. So it's an ongoing thing and it's what customers expect of us.

Eric Kelleher: So that's what we expect of ourselves.

Brett Tighe: So we want to be able to have the team focus on new logo acquisition because we want to be able to acquire new logos. If you remember the investor presentation from, I think, November 22 at Okta, and I showed you guys a slide where we talked about annual cohorts and how they upsell over time, and they're very consistent over time. So as we looked at the data throughout the fiscal year and contemplated a change, you know, new logo acquisition was clearly at the top of the list.

Eric Kelleher: We'll continue to focus on it.

Speaker Change: Yes, I'd just add to that in in the sense of from a financial perspective, you heard Tom talk about our top priorities for the year.

Speaker Change: Those were in funding order rates of security being number one so we are definitely investing a lot of money into into the.

Eric Kelleher: Variety of areas that Todd talked about there to ensure.

Eric Kelleher: We bolstered us so it's just to make sure. If you guys were thinking about your P&L. It's something we are definitely investing in a heavy way because it is the number one priority for us as a company we take it very seriously.

Brett Tighe: And we're thinking about this change to 100 farmers in the commercial area of our business. And obviously, new logos are important, but upsells are just as important as well. So that's why we want to focus on that area as well because, bottom line, we've got a lot of products to sell now. So we need to add a little bit of specialization to the field and help them be because, I mean, look at all these great products we've been coming out. Governance, PAM, you look at the customer identity side, you see, fine-grained authorization, you think, you know, C security center, highly regulated identity, I mean, there's a lot of stuff coming out, and we want to be able to enable the field to So ultimately, the 100 farmer here is something we've been thinking about.

Eric Kelleher: To your question, Eric around customer count customer count trend.

Eric Kelleher: Adding 115 net adds as you saw in the quarter. It was really just an extension of the trends that we've seen over the last several quarters. If you remember what we've talked about in the past.

Eric Kelleher: I'd say about four or five quarters.

Eric Kelleher: The mix of business, both from a bookings perspective, and a pipeline perspective have been much more tilted toward upsell than historically has been and so you see that outcome and in terms of.

Eric Kelleher: In terms of the customer account numbers that we're showing you here today.

Eric Kelleher: But.

Eric Kelleher: It's also something to highlight that Todd was actually talking about earlier around having such success in the larger businesses and being a little bit.

Eric Kelleher: A little more challenge in the small and medium sized businesses. That's the reason why we're going to this hunter farmer model in the small and medium sized business.

Eric Kelleher: Segment in the Americas right. So we want to be able to focus on how the team focused on new logo acquisition, because we want to be able to acquire new logos. If you remember the.

Brett Tighe: And now we're implementing it as we go into FY 25 because we think it's the best way to profitably grow the business. Okay, let's go to Hamza Fodderwala and Morgan Stanley. Good. Good evening.

Eric Kelleher: The Investor presentation from I think November 20 to November 'twenty two of.

Hamza Fodderwala: Thank you for taking my questions and congratulations on a strong finish to the year. Brett, I was really surprised by your comment around the average contract term. I think you said it was at a two-year high.

Eric Kelleher: Octane I showed you guys, a slide where we talked about annual cohorts and how they upsell over time and Theyre very consistent overtime. So as we looked at the data throughout the fiscal year and contemplated a change.

Eric Kelleher: New logo acquisition was clearly at the top of the list when we're thinking about this change to a 100 farmer in the commercial area of our business.

Brett Tighe: I think the trend was maybe shifting, shifting down a little bit on the duration front. So I'm curious, how did you guys turn that around? What do you think it means as far as customers, you know, committing with Okta longer term? And is there anything that we should consider throughout the year as it relates to RPO and CRPO metrics with respect to duration? Thank you.

Eric Kelleher: And.

Eric Kelleher: <unk>, new logos is important but up southern just as important as well. So that's why we want to focus there.

Eric Kelleher: In that area as well because bottom line is we've got a lot of products. So now so we need to add a little bit of specialization into the field in and help them be because when you look at all these great products, we've been coming out.

Brett Tighe: Yeah, we're very pleased to see the contract duration uptick. It increased actually across all of the major categories, if you think about new business versus renewals. So we saw it on both sides.

Eric Kelleher: <unk> Pam and you look at the customer identity side, you see fine grained authorization, you think see security center highly regulated identity, I mean, theres, a theres a lot of stuff coming out and we want to be able to enable the field to be as productive as possible.

Eric Kelleher: Ultimately the Hunter farmer here is something we've been thinking about.

Brett Tighe: So I think it's, it's really just indicating how much people are committing to us. But also, at the same time, we talked about earlier in the book of business that, you know, the incremental book of business in Q4 was mostly larger customers, and larger customers tend to sign longer deals, right? So if you do a bunch of small deals, you're going to see a little bit of a headwind on contract duration. If you sign a bunch of larger customers, typically, you're going to see a little longer contract duration.

Eric Kelleher: Now we're implementing as we go into FY 'twenty five because we think it's the best way to profitably grow the business.

Eric Kelleher: Okay, Let's go to Hamzah <unk> with Morgan Stanley.

Hamzah: Great. Good evening. Thank you for taking my questions and congrats on a strong finish to the year.

Hamzah: Brett I was really surprised by your comments around average contract term.

Hamzah: You said being at a two year high.

Hamzah: I think the trend was maybe shifting shifting down a little bit.

Peter Marc Levine: So yeah, we're pleased to see the uptick in total RPO growth, you know, 13% from I believe it was 8% last quarter. And so I can't comment in terms of what it looks like going forward. But, you know, it does, it does, it does, you know, look good for us right now, and we're excited about how FY25 may play out, assuming this trend continues. And next up, we have Peter Levine at Evercore. Thanks, guys, for taking my question. You know, maybe Todd, just for the quarter, I think your commentary about not seeing as much of an impact.

Hamzah: On the duration front. So I'm curious how did you guys turned that around what do you think it means as far as customers.

Hamzah: Committing with okta longer term and is there anything that we should consider.

Speaker Change: Throughout the year as it relates to our <unk> metrics with respect to duration. Thank you. Yes, we're very pleased to see the contract duration uptake uptick actually across all of the major categories. If you think about new business versus renewals. So we saw it on both sides. So I think it's it's really just indicating how much people are committing to us but.

Todd McKinnon: Is there anything different that you have done over the past couple of months versus, you know, the incident in 22 that kind of gave customers a little bit more reassurance around what you're doing, product security? Yeah, it's interesting. It feels very similar to me.

Speaker Change: Also at the same time, we talked about earlier around the book of business that the.

Speaker Change: The incremental book of business in Q4 was more larger customers and larger customers tend to sign longer deals right. So if you did a bunch of small deals youre going to see a little bit of a headwind on contract duration, you signed a bunch of larger customers typically youre going to see a little longer contract duration.

Todd McKinnon: And the playbook is pretty straightforward. It's a lot of communication, a lot of specific meetings for customers that have concerns about this issue, concerns about broader issues of cyber security in the company. And again, evolving to a conversation that's more proactive about what we can do together as partners. So it feels very similar to me in terms of the motion of the company afterwards. I do think that the, You know, it definitely is, we spent so much time on it.

Speaker Change: So yeah, we're pleased to see the uptick in total RPM growth.

Speaker Change: 14%.

Speaker Change: I believe it was 8% last quarter and so I can't comment in terms of what it looks like going forward, but.

Speaker Change: It does it does it does.

Speaker Change: Look good for US right now and we're excited about how FY 'twenty five may play out assuming this trend continues.

Speaker Change: Next up we have Peter Levine at Evercore.

Peter Levine: Great. Thanks, guys for taking my question.

Peter Levine: Yes, let me talk just for the quarter I think your commentary around not seeing as much of an impact is there anything different that you did over the past couple of months versus <unk>.

Peter Levine: The incident in 'twenty, two that kind of gave customers a little bit more reassurance around what youre doing the product security.

Peter Levine: Yes, its interesting it feels very similar to me and the playbook is.

Todd McKinnon: And I don't just mean the executive team myself, but the entire go-to-market organization, which, by the way, did an amazing job in Q4. I really want to call out the entire go-to-market organization for stepping up and delivering a solid, solid result in Q4. But, but it's a lot of time.

Peter Levine: Pretty straightforward, it's a lot of communication a lot of specific meetings for customers that have concerns about this issue concerns about broader issues of cyber and the company.

Peter Levine: And again evolve into their conversation, it's more proactive about what can we do together as partners. So it feels very similar to me in terms of the the motion of the company afterwards.

Todd McKinnon: It's a lot of focus, a lot of conversations, a lot of managing. And in sales cycles, especially ours, a lot of our deals are strategic and, and they can get complex. And anytime you have to manage through an escalation about a security issue, it's, you kind of, it kind of slows things down.

Peter Levine: I do think that the.

Peter Levine: Okay.

Peter Levine: Definitely we spent so much time on it and I don't just mean, the executive team and myself, but the the entire go to market organization, which by the way. It did an amazing job in Q4, I really want to call out the entire go to market organizations for step.

Todd McKinnon: And that's, that's the headwind to closing deals. So it clearly had some impact, but it's just, it's hard to quantify it. When you look at close rates, when you look at the results versus guidance, when you look at growth, it's, you know, it's hard to close it. It's hard to quantify it.

Peter Levine: Stepping up and delivering a solid solid result in Q4.

Peter Levine: And but it's a lot of time its a lot of folks a lot of conversations a lot of managing and then sales cycles, especially are a lot of our deals are strategic and.

Peter Levine: They can get complex and anytime you have to manage through an escalation about a security issue, it's kind of a bit.

Peter Levine: Slows things down.

Peter Levine: That's a headwind to closing deals so.

Todd McKinnon: So we're happy with the results and will continue to be more vocal and more proactive about communicating about security and specifically around how we can do more to help against overall identity-based attacks. And people don't realize that every, in the last 30 days, we blocked 2 billion malicious, malicious attacks against our customers. So identity attacks are, you know, we had an identity attack against us in October and they happen all the time, and we all need to do a better job of stepping up and... and proactively defending our customers and the entire industry against them. And that's, You'll see a lot of the focus shifting toward that proactive level of dialogue and discourse versus more of the reactive that we started from in October. I do.

Peter Levine: It's clear.

Peter Levine: Clearly had some impact but it's just it's hard to quantify when you look at close rates when you look at the.

Peter Levine: The results versus guidance when you look at growth.

Peter Levine: It's hard to close it's hard to quantify it so were.

Peter Levine: Sure.

Peter Levine: Happy with the results and then continuing even being more vocal and more proactive about communicating about security and specifically around how we can do more to help against overall identity based attacks and people don't realize that.

Peter Levine: Every last 30 days, we blocked 2 billion malicious.

Peter Levine: Malicious attacks against our customers.

Peter Levine: Identity attacks or we had an idea of the attack against Us in October.

Peter Levine: They happen all the time and we all need to do a better job of stepping up.

Peter Levine: And proactively defending our customers and the entire industry against against them and that's it.

Peter Levine: You'll see a lot of the focus shifting toward that proactive level of dialogue and discourse versus more of the reactive that.

Peter Levine: Started from in October.

Speaker Change: Alright, thank you.

Peter Levine: Now, let's go to Marilyn Brooks at Bofa.

Madeline Nicole Brooks: Let's go to Madeline Brooks at BofA. Hi, team, thanks for taking my question. I guess if I look at the results of 16% CRPO growth versus 12%, that's a pretty sizable beat, especially given today's economy. So I'm just wondering if there were any, you know, one-off larger deals, I know you mentioned just larger deals in general, but any that were larger than just that 1 million mark versus, you know, or was this just more of a broader base pickup, I mean, I guess I'm just trying to marry the size of the beat and see if there's anything that could be like a one-time factor versus going forward, a trend that's reversing. We had nothing.

Madeline Nicole Brooks: Hi, Tim Thanks for taking my question.

Madeline Nicole Brooks: If I look at results of 16% CRP outgrowth versus 12%, that's a pretty sizeable feed, especially given today's economy.

Madeline Nicole Brooks: Wondering if there are any one off more large deals I know you mentioned just larger deals in general, but any that were more larger than just about 1 million.

Madeline Nicole Brooks: Mark versus or was that just more of a broader base pick up in the pipeline.

Madeline Nicole Brooks: I guess I'm, just trying to marry the size with Eden <unk>.

Madeline Nicole Brooks: Could you like a one time factor versus going forward, a tranche of our phone.

Speaker Change: We had nothing.

Todd McKinnon: I mean, the overall trend of million dollar deals was strong, as we mentioned, going 30%. Then, there wasn't a one-off big deal out that was really outsized compared to prior periods. So yeah, I would say it's more of a broad range or broad based strength and the large customers. Yeah, I would just add in there Madeline, just echoing what Todd said. We just said it really well. Q&A Q&A Q&A Q&A Q&A Q&A Q&A Q&A Q&A Q&A Q&A Q&A Q&A Q&A Q&A Q&A Q& I'm gonna echo what Todd said I should have said in the first answer, which is go to market did a great job and we're both super proud. And just to clarify, I mean, I guess this was more of a surprise on your end. Or was it like a kind of pull-forward demand that you could see?

Speaker Change: The overall trend of million dollar deals was strong as we mentioned growing 30%. The there wasn't a one off big deal that was really outsized compared to prior periods.

Speaker Change: So yeah, I would say, it's more of a broad range or broad based.

Madeline Nicole Brooks: The strength in the large customers.

Speaker Change: Yes, I would just add in there Matt I'm, just echoing what Todd said, we just had a really good.

Madeline Nicole Brooks: Quarter from large deals in general, but when I say large deals not just $1 million deals.

Madeline Nicole Brooks: A lot of deals from 100, K up right because if you think about the 100 K customers. The average ACB is the largest it's ever been so going in penetrating those large customers and getting good sized deals out of them. In addition to those million dollar contracts that are contracts, which was a record in the quarter.

Madeline Nicole Brooks: It's just all around there was a lot of good momentum in large deals.

Todd McKinnon: I think the large deal pipeline was healthy, so it was nice to see it materialize, especially given some uncertainty with the security issue. It was nice to see it materialize, but it wasn't unforeseen.

Madeline Nicole Brooks: Just really nice job just with market team just in general across the board I'm going to Echo what Todd said I should have said in the first answer which is go to market did a great job.

Madeline Nicole Brooks: We're both super proud of them.

Madeline Nicole Brooks: And.

Madeline Nicole Brooks: Just to clarify and then I guess this is.

Todd McKinnon: We knew we had a healthy, large-scale pipeline, and that's true for the pipeline overall going into FY25. The pipeline overall for FY25 is quite a bit stronger than it was going into FY24, so it's one of the reasons why, as we guide to FY25, we have a level of comfort in that guidance. Thank you so much. And next up, let's go to Rudy Kessinger at DADCO.

Madeline Nicole Brooks: A more of a surprise on the on your end or was that kind of a pull forward of demand that you could see.

Madeline Nicole Brooks: I think the large deal pipeline was healthy so it was nice to see it materialize, especially with given some uncertainty with the security issue.

Madeline Nicole Brooks: It was nice to see it materialize, but it wasn't it wasn't unforeseen we knew we had a healthy large deal pipeline.

Madeline Nicole Brooks: And that's true for the pipeline overall going into FY 'twenty five.

Madeline Nicole Brooks: The pipeline overall for FY 'twenty five is quite a bit stronger than it was going into FY 'twenty four so it's one of the reasons why as we guide to FY 'twenty five or have a level of comfort in that guidance.

Rudy Grayson Kessinger: Hey guys, thanks for taking my question. Not much commentary, I think, in the prepared remarks you posted or the early part of the call here about privilege access. I know it's only been out a few months now, but just what's been the early traction with it?

Speaker Change: Great. Thank you so much.

Speaker Change: And next up let's go to Rudy Kissinger Deco.

Speaker Change: Hey, guys. Thanks for taking my question not much commentary I think in the prepared remarks, you had posted or the early part of the call here about peripheral it's access.

Todd McKinnon: What kind of pricing uplift are you seeing with customers who are adopting it? And any other color you can share? I would say it's on track. It may be exceeding expectations. It is very early.

Speaker Change: And that's only been out a few months now, but just what's been the early traction with that what kind of pricing uplift are you seeing with customers who are adopting it and any other color you can share on that front.

Speaker Change: Now I would say, it's on track maybe exceeding expectations.

Todd McKinnon: We were successful in converting the early access customers that we had targeted. They like the product. They're seeing results with the product. And more importantly, I think they're seeing the synergy with the rest of our platform. That's the idea. It's really a new kind of privilege access. It's a privilege access that's modern. It's quicker to deploy. It's cloud native.

Speaker Change: It's very early we were successful in converting the early access customers that we had targeted there they're liking the product theyre seeing results with the product and more importantly, I think it's they're seeing the synergy with the rest of our platform. That's the idea, it's really a new kind of privilege access it's a it's a privilege access.

Speaker Change: It's modern it's quicker to deploy its cloud native its and its integrated to the governance and the rest of the access management stack that.

Todd McKinnon: And it's integrated with governance and the rest of the access management stack that Okta provides. So it's not just a if you think about the privilege access market and a potential TAM for us, and we've talked about this before, I think the better way to think about it is really a new TAM, which is the companies that really don't have a privilege access solution today versus the companies that have deployed legacy on prem. Privileged Access Solutions that they host as software in their own data centers.

Speaker Change: <unk> provides.

Speaker Change: So it's a it's not only just if you think about the privilege access market.

Speaker Change: Potential Tam for us and we've talked about this before I think the better way to think about it is really a new Tam which is the companies that really don't have a privilege access solution today versus the companies that have deployed legacy on Prem.

Speaker Change: Privileged access solutions that they host the software in their own data centers.

Todd McKinnon: This is like a new kind of product, and it's built for more modern infrastructures with cloud-based servers and Kubernetes clusters, and most importantly, it's built to really sit next to Okta Access Management and phishing-resistant authentication into these things and governance products that are modern and connects into collaboration tools to make the governance process seamless. That's the target, and we're seeing early but positive indications of customers having And we think that just to quantify the potential uplift, we think the normal workforce spend is X. We think governance can be a 30 percent uplift over that. Privilege can be another 30% as well.

Speaker Change: This is like a new kind of product and it's it's built for more modern infrastructures with cloud based servers and kubernetes clusters and most importantly, it's built to really sit next to okta access management and fishing resistant authentication into these things and our governance products, it's modern and.

Speaker Change: Connects into collaboration tools to make the government governance process seamless that's the target and we're seeing early but positive indications of customers, having that kind of value proposition and we think that the just to quantify the.

Speaker Change: Potential uplift we think.

Speaker Change: The normal workforce spend is X, we think governance can be a 30% uplift over that and then.

Speaker Change: Privilege can be another 30% as well so that's kind of how we're thinking and we're seeing early indications that that's true obviously, we have much more data on the governance side. We just had a full year in <unk>, we see very strong track record of 30% plus uplift for the governance product over and above workforce and the early indications are from Pam or similar in terms of the potential.

Todd McKinnon: So that's kind of how we're thinking, and we're seeing early indications that that's true. Obviously, we have much more data on the governance side, which is at a full year in GA, and we see a very strong track record of 30% plus uplift for the governance product over and above workforce. And the early indications from PAM are similar in terms of the potential increase. The only other thing I might add is what Todd was talking about having this product suite across access management, governance, and Pam, having a single pane of glass, if So exciting early times for us in terms of that, you know, the three pillars on the workforce side of All right. Yeah, that's one more on that. Sorry Dave.

Speaker Change: Central uplift.

Speaker Change: The other thing I might add is what Todd was talking about having this product suite across access management governance, and Pam having a single pane of glass. If you will and we've already got a handful of customers that have all three this early on.

Speaker Change: And see that that vision and believe in that strategic direction that we are doing so.

Speaker Change: Exciting early times for us.

Speaker Change: In terms of that.

Speaker Change: The three pillars on the workforce side of the house.

Speaker Change: Alright, that's what Martin sorry, Dave that is very differentiated no one else has that.

Todd McKinnon: That is very differentiated. No one else has access management, privilege access, and governance. CyberArk has Privilege, of course, super strong in that, and they have some access management with an acquisition they did, and governance is lacking. Other vendors don't have privilege, as well as governance, and we're the first vendor to have all three, so. If this theory is right, and customers want this converged platform, and it can lead to better security outcomes and more flexibility, we're going to benefit from that for a long Super. Let's go to Rob Owens at Piper.

Speaker Change: No one else has access management privilege access and governance.

Speaker Change: Cyber.

Speaker Change: Cyber Ark has privilege of course super strong in that math.

Speaker Change: Access management with an acquisition they did and governance is lacking.

Speaker Change: The other vendors don't have privilege as well as governance and were the first vendor to have all three so.

Speaker Change: This theory is right and customers want this converged platform and it can lead to better security outcomes and more flexibility, we're going to benefit from that for a long time.

Speaker Change: So let's go to Rob Owens with Piper.

Robbie David Owens: Great. Thanks for thanks for taking my question I was hoping you could drill down a little bit around that enter our metric and just noting that it had been flattish kind of the prior three quarters. So with this fall off just kind of trying to understand that point in time and there are relative to a lot of your commentary.

Robbie David Owens: Great, thanks for taking my question. I was hoping you could drill down a little bit on the NRR metric and just note that it had been flattish kind of the prior three quarters. So, with this follow-up, just kind of trying to understand that point in time NRR relative to a lot of your commentary in terms of seeing no fall off and or kind of the upsell, cross sell motion that you saw success with. Thanks.

Robbie David Owens: In terms of seeing no falloff and archiving upsell cross sell motion that you saw success with thanks.

Speaker Change: Yeah, Thanks, Rob in.

Brett Tighe: Yeah, thanks, Rob. In terms of NRR, I know you've been following along, but for everybody else, there's a lot there have been several quarters. Now we've talked about how this is going to decline, right?

Speaker Change: In terms of IRR.

Speaker Change: I know Rob you been you've been following along but for everybody else Theres a lot of.

Speaker Change: There has been several quarters now we've talked about how this is going to decline right, which I think we started talking about in late FY2023.

Brett Tighe: I think we started talking about this in late FY23, and it's on the back of the macro challenges that we've seen out there in terms of what I was talking about earlier around seat upsells, right? Cross-sells have been doing well, but we're not doing as well on those seat upsells or MAU upsells on the customer identity side, and that creates a headwind. To the NRR metric, and so we did land roughly in the range where we expected to.

Speaker Change: And it's on the back of the macro challenges that we've seen out there in terms of what I was talking about earlier around seat upsells.

Speaker Change: Crossover had been doing well, but we're not doing as well on the seat upsells or MAA upsells on the customer identity side and that creates a headwind to the end of our metric.

Speaker Change: And so we did land roughly in the range, where we expected to.

Brett Tighe: So, nice job by the finance team predicting that, but it landed right on 1-11, and I think probably the question behind the question, Rob, is like, where do we think it's going to go from here? Right? I mean, it's on the back.

Speaker Change: So nice job by the finance team predicting that but Atlanta raise of 111.

Speaker Change: And I think probably the question behind your question, Rob, It's like where do we think it's going to go from here right. I mean, it's on tobacco, yes, I mean, we like we said today earlier, we had good gross retention.

Brett Tighe: Yeah, I mean, like we said today, earlier, we had good gross retention, you know, mid 90s, like we've talked about for several quarters now. And so. You know, where do we think it's going in FY25? Well, based on our new business versus upsell mix expectations for FY25, based on what we can see in the pipeline today, based on how the business has performed throughout FY24, we see us kind of trending in this 111 range. Now, there's potential for the balance of FY25. We haven't done anything beyond FY26.

Speaker Change: Mid 90 days like we've talked about for several quarters now and so.

Speaker Change: <unk>.

Speaker Change: Where do we think it is going into FY 'twenty five based on our new business versus upsell mix expectations in FY 'twenty five based on what we can see in the pipeline today based on how the businesses performed throughout FY 'twenty four we see us kind of trending in this 111 range now there is a potential for the balance of <unk>.

Speaker Change: 25, we haven't done anything at outposts beyond FY 'twenty six.

Brett Tighe: But there is a potential it could swing a couple points either way, and that's really going to boil down to how good our new business versus upsell mix assumptions are. So if we have more new business in a quarter and it crowds out upsell, well, that's going to be a little bit of a headwind in that retention. If we have a little bit better upsell quarter than we expected in terms of mix, well, it's going to be a little bit of a tailwind to net retention. So we think we will trend in this kind of channel of a couple of points plus or minus this 111 where we are today for the balance of FY25. Thanks for the call, Brett. No problem. Let's go to Joe Gallo at Jeff.

Speaker Change: But there is a potential it could swing a couple of points either direction and that is really going to boil down to how good our new business versus upsell mix assumptions are so if we have more new business in a quarter and it crowds out up so well that's going to be a little bit of a headwind in that retention. If we have a little bit better upsell quarter than we expected in terms of.

Speaker Change: Mix, well, it's going to be a little bit of a tailwind to net retention. So we think we trend in this kind of channel of a couple of points plus or minus this 111, where we are today for the balance of FY 'twenty five.

Speaker Change: Thanks for the color Brett Roth.

Speaker Change: Now, let's go to Joe <unk> at Jefferies.

Joe: Hey, guys. Thanks for the question and nice fourth quarter I understand conservative maybe just walk us through your <unk> guide and <unk>, which I think is the first ever sequential decline and then Todd your second priority with reigniting growth what are the biggest upside catalysts there.

Joseph Anthony Gallo: Hey guys, thanks for the question and nice fourth quarter. I understand conservative, but maybe just walk us through your CRPO guide in one cue, which I think is the first ever sequential decline. And then Todd, you know, your second priority was reigniting growth. What are the biggest upside catalysts there? Is it international, SIAM, IGA, PAM, cross sell?

Joe: A national Siam Iga, Pam Cross sell maybe just help us unpack, where the highest ROI upside catalysts are.

Todd McKinnon: Maybe help us unpack where the highest ROI upside catalysts are in the top? Yeah, we're, we'll start with that one. We're super focused on that. I think the biggest catalyst is Sales Productivity. We've talked about this for a while.

Todd Mckinnon: Well I'll start with that one we're super focused on that.

Joe: I think the biggest catalyst is sales productivity, we've talked about this for a while we the pattern of ramping tenure of the sales team.

Todd McKinnon: The pattern of ramping tenure of the sales team and the familiarity with both of our major product lines, the workforce, and customers. And we're seeing sales productivity; it's really at a nice place now in terms of, I'm sorry, we're seeing sales tenure really at a nice place now. And we're also starting to see the productivity ramp up. It still has a ways to go, I think we could still see more ramp up over the next couple of quarters, but that's going to be a nice boost overall for growth.

Pam Cross: The familiarity with both of our major product lines workforce and customer and we're seeing sales productivity, it's really at a nice place now in terms of I'm sorry.

Pam Cross: We're seeing sales tenure it really had a nice place now and we're also starting to see the productivity ramp into that it still has a I think we could still see more ramp over the next couple of quarters.

Pam Cross: But that's going to be a nice boost overall for growth, but I would say that most of the most near term.

Todd McKinnon: But I would say that's the most near-term, most quantifiable potential driver there, which is something we've managed in terms of enabling salespeople and making sure they have a chance to be successful and stick around. We focused a lot on the transition into this fiscal year in terms of keeping stability in terms of quota-carrying reps and assigning them to territories and targets and having continuity there to get off to a fast start in the first half of this year. Again, coming off what I thought the team did a great job in Q4.

Pam Cross: Most quantifiable potential driver there, which is something we've managed in terms of.

Speaker Change: Enabling salespeople and making sure.

Speaker Change: They have a chance to be successful and stick around we focused a lot on the transition into this fiscal year in terms of keeping stability in terms of quota carrying reps and assigning them to territories and targets and having.

Speaker Change: Continuity there to get off to a fast start the first half of this year.

Speaker Change: Again coming off what I thought the team did a great job in Q4, So I'd say, that's the big driver, particularly in the short term I think then after that I would say the biggest driver is.

Todd McKinnon: So I'd say that's a big driver, particularly in the short term. I think that after that, the biggest driver is opportunity in large deals, large enterprises. It's an area where, relatively speaking, Okta has had a lot of potential.

Speaker Change: Opportunity in the large deals large enterprise, it's an area where relative at least speaking okta has had a lot of potential I would call us really are.

Todd McKinnon: I would call us really a mid-enterprise company and one of the global 2,000 largest enterprises in the world. We've made good progress, but we can do a lot more. And I think that's a big growth driver going forward. I think maybe it's kind of a parallel to that second one, which is customer identity. It's still a big opportunity for us. We think over time it could be half of the business. And the stats we talked about today show it's still 40% of the business and growing faster than the workforce, but I think it could grow even faster than it is now. So those are just three I would highlight, but there's a lot that goes into all those from just broadly speaking, running highly efficient, highly effective go-to-market organizations, continuing to have the products evolve so that they can address really compelling use cases, both in customer identity and workforce identity. They can address the needs of small companies, medium companies, and large companies across the board.

Speaker Change: Enterprise mid Enterprise company.

Speaker Change: <unk> Global 2000 largest enterprises in the World. We've made good progress, but we can do a lot more and I think that's a big growth driver going forward.

Speaker Change: I think maybe it's kind of a parallel to that second one which is customer identity is still.

Speaker Change: Big opportunity for us as we think over time it could be half of the business in the stats, we talked about today, it's still 40% of the business and grow.

Speaker Change: Growing faster than workforce, but I think it could grow even faster than it is now.

Speaker Change: So I think those are a couple three I would highlight but those there's a lot that goes into all of those from just broadly speaking and running a highly efficient highly effective go to market organizations continuing to have the the products evolve so that the products can address the really compelling use cases, both in customer identity workforce identity. They can address.

Speaker Change: The needs of small companies medium companies large companies across the board. There's a lot that goes into those growth drivers, but we are.

Speaker Change: Very focused on growth. We think this is a big market opportunity. We think there's various reasons why our growth has decelerated, we're not satisfied with that we want to.

Todd McKinnon: There's a lot that goes into those growth drivers, but we are very focused on growth. We think this is a big market opportunity. We think there are various reasons why our growth is decelerated. We're not satisfied with that.

Speaker Change: I'm going to go in the other direction as fast as we can.

Speaker Change: Yes, I would just add before I get into the current RP O question.

Speaker Change: The customer identity side, you heard me talk about earlier about the percentage of reps selling customer identity continues to go up into the right.

Brett Tighe: We want to Get it going the other direction as fast as we can. Yeah, I would just add before I get into the current RPO question, on the customer identity side, you know, you heard me talk about earlier about the percentage of reps selling customer identity continues to go up. But it's still not, to Todd's point, if we want to be a 50-50 business, it's still not 50-50, right? So we can improve there. And one of the things we did last week at our sales kickoff, we spent a good amount of time enabling the field around customer identity. We took almost all of Friday to do that.

Speaker Change: But it's still not to Todd's point, if we want to be a 50 50 business. It's still about 50 50 right. So we can improve there and one of the things we did actually last week at our sales kickoff.

Speaker Change: Spend a good amount of time, enabling the field.

Speaker Change: And customer identity, we took almost all Friday to do that and so.

Speaker Change: It's an important area for US we're also going to change some.

Speaker Change: Some of the ways, we do operations internally like when Youre talking about deals you're talking about pipeline management.

Speaker Change: A little bit more of a telephone customer identity versus workforce identity. So theres some things under the covers that we're doing that that effectively are very operational in nature, but ultimately we believe will result in better productivity from our customer identity perspective.

Speaker Change: Because like I said the trends are in the right direction, but we keep tweaking and make a few changes we think we can do even better.

Brett Tighe: And so it's an important area for us. We're also going to change some of the ways we do operations internally, you know, like when you're talking about deals, you're talking about pipeline management, putting a little bit more of a tilt on customer identity versus workforce identity. So there are some things under the covers that we're doing that are, effectively, very operational in nature, but ultimately, we believe will result in better productivity from a customer identity perspective.

Speaker Change: To your question on churn and IPO.

Speaker Change: One just as a reminder, these growth levels.

Speaker Change: We will see it's kind of like revenue.

Speaker Change: Q1 has some interesting dynamics to it in terms of current RP O E.

Speaker Change: Because Q1 is our seasonally smallest bookings quarter compared to Q4 is our seasonally usually the largest bookings quarter you can get this mechanic of quarter over quarter decline in terms of dollars and so that's something to expect not just this year, but in gears going forward. So this won't be a hopefully a surprise when we talk.

Speaker Change: In 12 months time, the mechanic is likely going to happen again, just because of the seasonality of our business and as Todd and I have talked about a lot of it today.

Speaker Change: We're an enterprise focused business and that usually means.

Speaker Change: The seasonal trends mean that Q4 is the biggest one in Q1 is the smallest one in terms of.

Brett Tighe: .. .. .. .. .. .. .. .. .. .. .. .. .. ....

Trevor Rambo: Thanks, guys. Let's go to Trevor Rambo at BTIG. Well, hi, guys. This is Trevor on The Gray.

Speaker Change: Bookings.

Speaker Change: Thanks, guys.

Speaker Change: Okay. Let's go ahead, Trevor Rambo of BTG.

Trevor Rambo: Hi, guys. This is Trevor on for Brian. Thanks for taking my question and congrats on a great quarter.

Todd McKinnon: Thanks for taking my question. And congrats on a great quarter. Maybe we can touch back on OIG.

Trevor Rambo: Maybe touching back on <unk>. So it's been live for a little over a year now when do you think you guys are going to give out any stats on ACB or revenue has become instead of a more material part of the business and kind of what's in a broader sense. What's your longer term vision for the product and how big do you think it could get relative to your core workers.

Todd McKinnon: So it's been live for a little over a year now. When do you think you guys are going to give out any stats on ECB or revenue as it becomes kind of a more material part of the business? And kind of in a broader sense, what's your longer-term vision for the product? And how big do you think it could get relative to your core workforce IAM in the next two, three, four years? We're very excited about it.

Trevor Rambo: Workforce I am in the next 234 years.

Trevor Rambo: We're very excited about it and it's really has since we.

Trevor Rambo: Put it in the G. A year ago, it's exceeded our expectations quarter after quarter after quarter. The one part of that the impact of it is it not only as an upsell and we've talked about the 30% to 30% plus upsell it could be for workforce customer and also just makes the whole vision more compelling and makes our.

Todd McKinnon: And it's really has since we, , , , , , , , , , , , , , , , , , , , , We could we could kind of size it out but I think the and you could look at IDC and IDC breaks down the various segments of identity and they give it a certain portion but I think over time it's going to be harder to really it's going to be harder to tease out the um how many new customers were landed because we had this suite how many customers were really the the killer thing they wanted was privileged access and they bought the other the access management and the features and capabilities there and the and the identity governance how much that was kind of along for the ride you're going to kind of think about it as just one compelling offer for workforce. But that's that's kind of how we think about it. Great, thank you. Yeah, let's go to Peter Weed at Bernstein.

Trevor Rambo: Product suite, especially once you add Pam to the mix it makes the whole product suite more compelling.

Trevor Rambo: <unk>, even beyond the revenue from that skew it has even a bigger impact strategically to our workforce business than that.

Trevor Rambo: One interesting thing and I think over time that is also the answer to your question about how big could it be I think.

Trevor Rambo: We can we could kind of size it out, but I think the and you can look at IDC and IDC breaks down the various segments of identity and they gave it a certain portion, but I think over time, it's going to be harder to really it's going to be harder to tease out the.

Trevor Rambo: How many new customers were landed because we had the suite how many customers were really the killer thing. They wanted was privileged access and they bought the other the access management and the features and capabilities there in the.

Trevor Rambo: And then I didnt governance, how much that was kind of along for the ride if youre going to kind of think about it as just one compelling offer for workforce, but that's kind of how we think about it.

Speaker Change: Alright, thank you.

Speaker Change: Yeah, Let's go to Peter Reed at Bernstein.

Peter Weed: Thank you.

Peter Weed: And let's see the expanding pre-cash flow. I know it's been a long effort, and it's really great to see that direction going on. You know, I think this quarter, the one thing that kind of jumped out at me was kind of the more modest number of net new customers that were landed. And particularly, you've emphasized, saw a churn go up. And so technically, you landed on the same number, but it was just because there was drag from fewer businesses coming in.

Peter Weed: And <unk> expanding our free cash flow I know, it's been a long effort and it's really great to see that direction going on.

Peter Weed: I think.

Peter Weed: This quarter, the one thing that kind of jumped out at me.

Peter Weed:

Peter Weed: It was kind of the more modest number of kind of net new customers that were landed in particularly a you've emphasized solid churn went up and sell like technical you added you know let's.

Peter Weed: Let's say in one number but it was just because there was drag problem.

Peter Weed: Fewer businesses coming in.

Todd McKinnon: You know, when you look at that result, is that kind of a new normal? Or is that something where you'd anticipate it starting to step back up? The sales programs that you're putting into place with the hunters, you know, versus the farmers. If this gets back into the last few quarters, we've been plus or minus 50, around 400 net new customers. What was unique about Q4 where, I would have thought Q4 was a period where you could outperform, right? Because that is where there are like more bookings, more customers doing deals than in that period, like what was unique about this fourth quarter, where that really kind of sank down? Yeah, we don't want this to be the case. This is not the new normal.

Peter Weed: When you when you look at.

Peter Weed: At that result.

Peter Weed: Is that kind of a new normal.

Peter Weed: Or is that something where you would anticipate it start starting to step back up that the sales programs that that youre putting into place with the hunters versus farmers. If this gets back into the last few quarters, we've been plus or minus 50 around 400 net new.

Trevor Rambo: Customers like what was unique about Q4, where like I would've thought Q4 is a period, where you could outperform right because that is where there's like more bookings more customers doing deals that that period like what was unique about this fourth quarter, where that really kind of dragged down yeah. We don't this is we don't want this to be the case. This is not the new normal.

Todd McKinnon: We want to drive growth, and we are aggressively trying to work on and prioritize and focus on things that will drive growth. And customer account is one of those areas. So I think we have a, we've talked about the focus of the go-to-market team in the corporate segment, North America, to be focused on upselling and existing customers versus going out and attracting new customers. And that's a big structural change. And I think you're seeing it's one of many changes that we've made coming into this fiscal year that really you're seeing John and Eric and Eugenio really lay down what they think are the strategic priorities for going to market. But Brad talked about only a couple of them.

Trevor Rambo: We want to drive growth.

Trevor Rambo: We're gressett really trying to work on and prioritize and focus on things that will drive growth in customer count is one of those areas. So I think we have a.

Trevor Rambo: We've talked about the the the focus of the go to market team and the corporate segment North America to be focused on upselling existing customers versus going out and attracting new customers.

Trevor Rambo: And that's a big structural change and I think youre seeing its one of many changes that we've made coming into this fiscal year that are really youre seeing John and Eric in your Hiney O.

Trevor Rambo: Really lay down what they think are the strategic priorities for go to market, but I talked about a couple of them. In addition, whether it's the operational changes in the.

Todd McKinnon: In addition, whether it's the operational changes and we to make it easier, more effective to sell customer identity, whether it's the hunter farmer change in corporate North America, is really important. A lot of the pipeline and marketing execution changes have been done by Eric and carried out by the marketing team. So, you're seeing a lot of very strategic, thoughtful programs put in place that are going to have this goal, which is to reignite growth, which is incredibly important, specifically in customer accounts. I think when I look at the numbers, Q4 is, I think it's just an example of, for whatever reason, the big, big companies perform better than the customer accounts in the smaller companies. Maybe just a 1 off.

Trevor Rambo: To make it easier and more effective to solve customer identity, whether it's the hunter farmer change in corporate North America is really important a lot of the pipeline and marketing execution changes have been done by Eric and carry and the marketing team. So you're seeing a lot of very strategic thoughtful programs put in place.

Trevor Rambo: So they're going to have this goal, which is to reignite growth, which is incredibly important specifically on customer count I think when I look at the numbers.

Trevor Rambo: Q4 is I think it's just an example of for whatever reason.

Trevor Rambo: The big Big companies perform better than the customer count in the smaller companies.

Trevor Rambo: Maybe just a one off I don't think it's a like I said I don't think it's a new normal I do think we have to remember that the.

Todd McKinnon: I don't think it's a new normal, like I said. I do think we have to remember that the The customer account is largely driven by smaller customers, so the variations there show up much bigger in that cohort of customers. The specific things we're doing for customer accounts, we mentioned Beyond 100 Farmer. One of the things is that we have a program we're really excited about is this Managed Service Provider program. We mentioned SoftBank, and they now have an MSP version of Okta, the workforce productivity product, that they are selling as a managed service to their 16,000 companies in Japan.

Trevor Rambo: The customer count is largely driven by smaller smaller customers. The variations there show up much bigger than that in that cohort of customers. The specific things. We're doing for customer account, we mentioned beyond a hunter farmer are one of the things are is that we have.

Trevor Rambo: A program. We're really excited about is this managed service provider program, you mentioned Softbank and.

Trevor Rambo: They now have a.

Trevor Rambo: Custom M.

Trevor Rambo: MSP version of Okta, the workhorse products that they are selling as a managed service to there.

Trevor Rambo: 16000 companies in Japan, and now we're not going to we're not going to report those as our customers.

Todd McKinnon: Now, we're not going to report those as our customers. We're not you know that would be maybe not really apples to apples but it is a it is a prior it is an example of something we're prioritizing to to broaden our reach now we we will have the capability as we do more of those MSP deals around the world over time those will not only impact the number of customers that those MSPs can move over to Okta but also we will have some opportunities depending on how those deals flush out over time and how we how we arrange them we'll have the opportunity to upsell those those customers so it'll be like a channel for for to gain customers in a more scalable way than and then direct which is pretty powerful the last thing I'll mention on customer account it's kind of like MSPs but we have we have many many customers that are actually self-service customer identity customers that don't show up in our our customer accounts and they they do well they don't show up in our customer accounts when they're paying us as a self-service customer but when they upgrade to enterprise they do so it's a this this the self-service procurement from customer identity cloud is a similar channel we've been invested in will continue to invest in that can lead to broader new customer growth over time than just the direct model which I think if you really want to get broad in the smaller companies you have to have some of these programs to drive that expansion over time, Thank you.

Trevor Rambo: We're not that you know that would be maybe not really apples to apples, but it is a it is a prior it is an example of something we're prioritizing to broaden our reach now we will have the capability as we do more of those MSP deals around the world over time, those will not only impact the number of customer.

Trevor Rambo: Or is that those MSP is can move over to auto but also we will have some opportunities depending on how those deals flush out over time and how we how we arrange them we will have the opportunity to upsell them.

Trevor Rambo: Those customers so it'll be like a channel for for gain customers in a more scalable way than the direct which is pretty powerful the last thing I'll mention on customer count, it's kind of like Msp's, but we have we have many many.

Trevor Rambo: Customers that are actually self service customer did any customers that don't show up in our customer counts and they they do well they don't show up in our customer accounts when they are paying us as a self service customer, but when they upgrade to enterprise. They do so it's this this the self serve.

Trevor Rambo: This procurement from customer at any cloud as a similar channel we've been investing and will continue to invest in that can lead to broader new customer growth over time than just the direct model, which I think if you really want to get broad in the smaller companies you have to have some of these programs to drive that expansion over time.

Speaker Change: Thank you.

Todd McKinnon: Yeah, I would just add one comment to that in the sense that I echo what Todd said; this is not the customer ads that we want to have. But it demonstrates that we can put together a pretty nice quarter just by going after the 19,000 plus 19,000 ish customers we have today. There's a tremendous amount of room to run in our current customers, And that's just something we're really proud of, and we can really still access. And one of the reasons we go to the 100 Farmers is for the farmers to be able to go out and get additional business. So, yeah, I echo everything Todd just said, but I just want to make sure you guys heard that as well. Next up is John DiFucci at the Guggenheim.

Speaker Change: I would just add one comment to that in the sense that.

Speaker Change: I Echo what Todd said this is not the customer adds that we want to have.

Speaker Change: But it demonstrates that we can put together a pretty nice quarter just by going after the 19019 thousand ish customers. We have today there is a.

Speaker Change: This amount of room to run in our current customer base.

Trevor Rambo: And that's just something we're real proud of and we can really still accessing one of the reasons to go to the Hunter farmers said for the farmers to be able to go out and get additional business. So.

Speaker Change: Echo everything Todd you said I just want to make sure you guys heard that as well.

Trevor Rambo: Next up is John Fucci of Guggenheim.

John Stephen DiFucci: Thank you.

John Stephen DiFucci: Thank you. I think this question is for both of you guys, Todd and Brett. You have so much going on with changes to go to market and also early opportunities in IGA, PAM, and even SIAM. I guess, how do you think about balancing those huge opportunities with delivering that great cash flow this year? Peter talked about what you did this quarter, but you increased your cash flow guidance for the year. And I almost hate asking this question, because I think investors really appreciate what you're doing. I like cash flow. But Brian asked my first question, my first two questions out of the seven that he asked.

John Stephen DiFucci: I think this question is for both of you guys tightened Brett.

John Stephen DiFucci: You have so much going on with changes to the go to market and also early opportunities in Iga and Pam and even Siam.

John Stephen DiFucci: How do you think about balancing those huge opportunities with delivering that great cash flow. This year, Peter talked about what you did this quarter, but you would increase the cash flow guidance for the year.

John Stephen DiFucci: I almost hate asking this question because I think investors really appreciate what youre doing on cash flow, but Brian asked My first question. My first two questions with the seven that he has so I guess I just want to make sure you're comfortable with your investments in both go to market and product be able to to sort of satisfy those because.

Todd McKinnon: So I guess I just want to make sure you're comfortable with your investments in both go to market and product to be able to sort of satisfy those because it just seems like, you know, Todd, you painted that picture of the platform that's huge and compelling. I think some of it is. There's really three levers I look at.

John Stephen DiFucci: It just seems like Todd you painted a picture of the platform.

John Stephen DiFucci: That's huge and compelling.

John Stephen DiFucci: I think some of it is.

John Stephen DiFucci: There's really three levers I look at one is just with slower growth, there's more leverage which is how it works I mean, we we invest in go to market and that that investment is take some time to play often when growth slows in whether it's in the macro opportunity. It was macro economy, that's hit us over the last couple of years or something.

Todd McKinnon: One is just with slower growth; there's more leverage, which is how it works. I mean, we invest in going to market, and that investment takes some time to pay off. And when growth slows, and whether it's the macro opportunity or the macro economy that's hit us over the last couple of years, or some of the execution challenges we've had over the last couple of years, that drains leverage, and the model has a lot of leverage. So that shows up as cash or net income.

John Stephen DiFucci: Execution challenges, we've had over the last couple of years that pours leverage in the model. There's a lot of leverage so that shows up as cash or or or.

John Stephen DiFucci: Net income the other lever is that we I think.

Todd McKinnon: The other lever is that we, I think, like a lot of companies, we're being more careful with our money. And we're being more disciplined on our spending. And I think throughout the entire company, culturally, people are understanding that money is, you know, it's not zero interest rates, money is not free, it's not growth at all costs, we have to be more disciplined. And you're seeing, we have a really smart, capable team, and they're coming up with a lot of frugality, savings, and efficiency.

John Stephen DiFucci: I think like a lot of companies, where we are.

John Stephen DiFucci: Being more careful with our money and we're being more disciplined on our spending I think throughout the entire company culturally people are understanding that it's money is you know, it's not zero interest rates money's not free it's not growth at all costs, we have to be more disciplined and you have seen we havent really smart capable team and theyre coming up with a lot of frugality and savings and efficiency.

John Stephen DiFucci: And that we're able to either return to shareholders our shows profitability or we're able to.

Todd McKinnon: And that we're able to either return to shareholders or show us profitability, or we're able to, we're able to invest in other areas that can drive this growth. People ask me a lot about how are you funding this, this really the Okta Secure Identity Commitment, how are you funding that? And isn't that costing you a lot of money?

John Stephen DiFucci: We're able to invest in other areas that can drive this growth people ask me a lot about how are you funding. This.

John Stephen DiFucci: Really the okta secure identity can and then how are you funding that isn't that costing you a lot of money how could you be increasing profitability when you're spending there and part of the answer is well we are really doing a good job finding efficiencies in other areas, but that specific example, it's it's a lot of them, it's not as much spend as it is like what are you prioritizing.

Todd McKinnon: How could you be increasing profitability when you're spending there? And part of the answer is, well, we're really doing a good job finding efficiencies in other areas. But that specific example, it's a lot of the, it's not as much spend as it is, like, what do you prioritize? And making sure we prioritize security and have people focus on that and do things like we did in Q4 with a 90-day sprint and a 90-day focus on that area and prioritize that. And then the last thing on this, John, is that there are some long-term structural things that we're investing in that are actually investments that are decreasing some of the profitability in the short term but are going to make sure that as we grow over the years to 5 billion and 10 billion and beyond, we're going to be set up to improve, to, to repeat these kinds of growth at these profitability levels far into the future. Whether it's investing in internal systems And I think I'm very proud of the company for the progress we've made and recognizing that we still have a lot of work to do and a lot of opportunities ahead of us. Yeah, I would add.

John Stephen DiFucci: And making sure we prioritize security and have people focus on that and do things like we did in Q4 with a 90 day sprint in 90 day focus of that area and prioritize that and then the last thing on this John is that the there are some long term.

John Stephen DiFucci: The structural things that we're investing in that are actually.

John Stephen DiFucci: Investments that are decreasing some of the profitability in the short term, but are going to make sure that as we grow over over the years to $5 billion 10 billion and beyond we're gonna be set up to improve to repeat these kind of growth at these profitability levels far into the future whether it's investing in internal systems, whether that's making sure we have.

John Stephen DiFucci: Have a healthy balance of high talent low cost regions around the world.

John Stephen DiFucci: Whether that's just internal automation projects that I've shared with many of you in one on one conversations before.

John Stephen DiFucci: So it's it's it's a little bit of a lot of that stuff and I think I'm very proud of the company for for the progress we've made in.

John Stephen DiFucci: Recognizing that we still have a lot of work to do and a lot of opportunity ahead of us.

Speaker Change: Yeah, I would add.

Brett Tighe: Yeah, thank you, the entire company, for helping us on this. It's not just me and Todd; we get to deliver the good news. So it's really appreciated, really appreciated by both of us. But I would add to that, John, there are levels of, because I think what you're getting at is, are we spread too thin, right?

Speaker Change: Thank you for the entire company for helping us on this it's not just me, it's how do we get to deliver the good news. So it's really appreciate it and I really appreciated by both of us, but I would add to that Jon there is levels.

John Stephen DiFucci: What youre getting at is are we.

Brett Tighe: And like, how many things can we cover? And so, if you look at some of the things we talked about today, it actually is a little bit of specialism, right? The hunter farmer model itself is definitely a specialist approach because it's going to allow folks to be able to focus in on, okay, what's working really well here, as opposed to, let's do a little bit of everything.

Speaker Change: <unk> right.

Speaker Change: How many things can recover and so.

Speaker Change:

Speaker Change: If you look at some of the things we talked about today. It actually is a little is driving towards specialism right. The Hunter farmer model itself, there's definitely a specialist approach because it's going to allow folks to be able to focus in on okay. What's working really well here as opposed to let's do a little bit of everything.

Brett Tighe: Right. And like, for example, on the farmer side, you're going to know what your customers are doing, how they're using it, and what identity use cases we could solve. And so it'll force some specialization in the field, right, just on that, by itself, right.

Speaker Change: Unlike for example on the pharma side.

Speaker Change: You're going to know where your customers are doing.

Speaker Change: How they are using it and what identity use cases, we could solve and total for some specialization in the field that just on that that by itself right. So I think that's one of the main reasons. We're doing the Hunter farmer model is to be able to create that specialism because of what I said earlier. There is so much product out there right now and just like you've basically alluded to we've got a lot of new.

Brett Tighe: So I think that's one of the main reasons we're doing the 100 Farmer model is to be able to create that specialism. Because, as I said earlier, there's so much product out there right now. And just like you basically alluded to, we've got a lot of new products coming out, which is great, but we need to enable the field. And that's why we spend all that time at SKO enabling, trying to enable the field.

Speaker Change: It's coming out which is great, but we need to enable the field and that's why we spent all that time.

Speaker Change: S K O, enabling trying to enable the field even more on customer identity right. So it's trying to take these focus bets in certain areas to be able to help ourselves not just do scattershot and have us have an efficiency.

Brett Tighe: And more on customer identity, right. So it's trying to take these focus bets in certain areas to be able to help ourselves, not just do scattershot and have the efficiency that we've been driving for the last four to six quarters, where you see these pre-cash flow margin results or non-gap operating margin or any one of the margins that you could look at today. So we are focusing, we are trying to drive some levels of specialization. Good to spread to you guys. It makes sense, guys. Keep it up. Thank you. Jonathan Ho, William Blair. Hi, good afternoon.

Speaker Change: We've been driving for the last.

Speaker Change: Four to six quarters, where you see these free cash flow margin results are a non-GAAP operating margin or any one of the margins that you could look at today. So it is where we're focusing we are trying to drive some levels of specialization. So we don't.

Speaker Change: Spreadsheets and so it makes sense guys keep it keep it up thank you.

Speaker Change: Hey, Jonathan Ho William Blair.

Jonathan Frank Ho: Hi, good afternoon.

Jonathan Frank Ho: Just in terms of your channel engagement commentary, can you talk a little bit about what actions you're taking and what you expect to see? I guess, like, how do we measure your success in terms of, you know, that indirect channel engagement and, you know, things like the AWS marketplace? Thank you. Yeah, I can take that one.

Jonathan Frank Ho: Just in terms of your channel engagement commentary can you talk a little bit about what actions, you're taking and what you expect to see I guess like how do we measure your success in terms of that indirect channel engagement and things like the AWS marketplace. Thank you.

Speaker Change: Yeah, I can take that one.

Brett Tighe: You know, in terms of partners, like you heard us talk about earlier, relaunching our partner program, Elevate, early last year, and focusing our efforts on a smaller number of partners. It's just actually kind of what Sean's question was a second ago. Instead of doing so many things across the Partner Channel, we want to be able to drive focus. And so that's why you see the success in AWS. I mean, growing 130% year over year.

Speaker Change: In terms of partners look like you were just talking about earlier re launching our.

Speaker Change: Our partner program elevate Lai early last year, and focusing our efforts into a smaller number of partners.

Speaker Change: It's actually gone with John's question was a second ago instead of doing so many things across the partner channel, we want to be able to drive focus and so that's why you see the success and AWS I mean growing 130% year over year, I mean at a $175 million of ACD, that's a pretty large business just by itself.

Brett Tighe: I mean, at $175 million in ACV, that's a pretty large business just by itself, right? And so it's enabling focus, and it's also tilting our company to be more partner-friendly, right? And so this metric that we gave you, the 40% of total that is done on partner paper, you know, we feel like that's a pretty good indicator of our progress. We were about a third of that a couple years ago. We're up to 40. But the influence level is higher than that, right? I mean, that's just purely based on what the paper was sold on, not necessarily the influence.

Speaker Change: And so it's enabling focus and it's also tilting our company to be more partner friendly alright, and so this metric that we gave you the 40% of total.

Speaker Change: That is done on partner paper.

Speaker Change: We feel like that's a pretty good indicator of our progress we were about a third a couple of years ago are up to 40. The influence level is higher than that right. I mean, that's just purely on what the paper was sold on not necessarily the influence and so I think you should definitely continue to ask us questions about how that is trending up over time.

Brett Tighe: And so I think you should definitely continue to ask us questions about how that is trending up over time, that percentage, or the percentage influence. How is it really going for us? We see a lot of good signs, but this is one of these areas that is heading in the right direction, but we still feel like we could do a lot better in a variety of areas. And so you definitely keep asking questions about it. Go ahead, Todd.

Speaker Change: That percentage or the percentage influence how is it how is it really going for us we see a lot of good signs that this is one of these areas.

Speaker Change: It's heading in the right direction, but we still feel like we could do a lot better.

Speaker Change: With a <unk> and a variety of areas and so definitely keep asking questions about it.

Jonathan Frank Ho: For me Jonathan.

Todd McKinnon: For me, Jonathan, qualitatively, our success and our presence and our... Our impact and their impact with the global SIs is really important. As we move more and more into the global 2000 and bring our identity platform to the largest organizations in the world, the global SIs are a really important partner there. And I've been personally spending a fair amount of time working with The Global SIs and our team that's working and fostering those relationships and driving those forward because all of these every big company that ever goes through an identity transformation or makes a big identity decision has a strong partner in one of the Global SIs. And I think we've, in the past, not done as good of a job as we need to as being the right partner for the Global SIs.

Jonathan Frank Ho: Qualitatively, our success and our presence in our.

Jonathan Frank Ho: Uh huh.

Jonathan Frank Ho: Our impact and their impact with the global size is really important.

Jonathan Frank Ho: You move more and more into the global 2000, and bring our identity platform to the largest organizations in the world. The global S is a really important partner there and I've been personally spending a fair amount of time working with the global our size and our team that's working and fostering those relationships and driving those.

Jonathan Frank Ho: Forward because all of these all every big company that ever goes through an identity transformation of it makes a big identity decision has a strong partner in one of the global size and I think we've in the past we haven't done as good of a job as we need to as being the right partner for the global size and I think some of the things in the market that are changing.

Jonathan Frank Ho: <unk> are really helping us there I think one of them is that.

Jonathan Frank Ho: The largest enterprises in the world more and more every day are doing more and more transition to the cloud and this is the same thing you. We've all been talking about for seven plus years and since we've been meeting as okta as a public company that cloud transformation really really forces the need for identity and modernized.

Todd McKinnon: And I think some of the things in the market that are changing are really helping us there. I think one of them is that the largest enterprises in the world, more and more every day, are doing more and more transitions to the cloud, and this is the same thing we've all been talking about for seven plus years, and since we met as Okta as a public company. That cloud transformation really, really forces the need for identity and modern identity because the old models of identity don't work, and some of these large organizations are going through that now, And they go to ask the global SIs what they should do, and the stronger our relationships can be with them and strong as a partner for them, as we're seeing, it's going to benefit us, so we're spending a lot of time on that.

Jonathan Frank Ho: Because of the old models of I didn't don't work in some of these large organizations are going through that now and that puts a really fine point on their need for a new identity platform and they go to ask the global size, what they should do and the stronger our relationships can be with them and.

Jonathan Frank Ho: Strong as a partner for them as we're seeing that's going to benefit us. So we're spending a lot of time on that and the other thing that's happening in the market is that there are some other traditional identity focused companies that are now private equity owned and are worried about merging roadmaps and what platform is going to survive and what platform is not.

Jonathan Frank Ho: It's really causing the global size and some of the large customers to question who's the right partner.

Jonathan Frank Ho: And I think you have a confluence of things happening there that really set us up to be successful.

Speaker Change: Personally I spent a lot of time on and very excited about.

Speaker Change: Excellent. Thank you.

Todd McKinnon: And the other thing that's happening in the market is that some of the traditional identity-focused companies that are now private equity-owned and are worrying about merging roadmaps and what platform is going to survive and what platform is not. It's really causing the global SIs and some of the large customers to question who's the right partner, and I think you have a confluence of things happening there that really set us up to be successful that I'm Excellent Thank you. Okay, we're going to take two more questions. The first one is from Roger Boyd, and the second one is from Andy Nowinski.

Speaker Change: Okay, we're going to take two more questions. The first one from Roger Board.

Roger Foley Boyd: And the second one from Andy Nowinski.

Roger Foley Boyd: Oh, great. Thanks, Thanks for squeezing me in.

Roger Foley Boyd: As it relates to spirit and just the broader suite of identity security solution Youre building out what's been the early feedback from customers on that direction can you just remind us about how you're thinking about monetizing or speaking in some of these security solutions like I C. E. D. R. As you push towards the goal of a more secure okta customers.

Roger Foley Boyd: R R.

Speaker Change: Super interested in.

Roger Foley Boyd: Roger. Oh, great. Thanks. Thanks for squeezing me in.

Speaker Change: They're super interested in both identity security and specifically.

Todd McKinnon: As it relates to Spira and just the broader suite of identity security solutions you're building out, what's been the early feedback from customers on that direction? And can you just remind us about how you're thinking about monetizing versus baking in some of these security solutions like ITDR as you push towards the goal of a more secure Octave? Thanks.

Speaker Change: The the.

Speaker Change: The spirit acquisition.

Speaker Change: And I think it's you're seeing the whole identity security approach our market evolve from.

Speaker Change: Five years, there's really three years ago. It was a very small kind of idea in market and it was really around on Prem active directory.

Speaker Change: Like are there any security means mixture on Prem active directory doesn't have vulnerabilities or you can detect issues there and now it's really starting to move toward as more companies move towards modern identity stocks like okta, it's really moving toward not only how can you better secure things like okta, but how can you better secure things.

Todd McKinnon: Customers are super interested in both identity security and specifically The Spirit of Acquisition. And I think it's, you're seeing the whole identity security approach or market evolve from. It was really three years ago, it was a very small kind of idea and market, and it was really around on-prem Active Directory. It was like identity security meant making sure on-premises Active Directory doesn't have vulnerabilities, or you can detect issues there. And now it's really starting to move toward, as more companies move toward modern identity stacks like Okta, it's really moving toward not only how can you better secure things like Okta but how can you better secure things like all the apps and all the cloud infrastructure. So you want a comprehensive view of all your identities and the risks of your identities, not only in on-premises Active Directory, but you also want it in Okta and Azure Active Directory and Amazon and Google and Salesforce and all these things.

Speaker Change: All of the ops and all of the cloud infrastructure. So you want a comprehensive view of all your identities and the risks of your identity is not only an on Prem active directory, but you also wanted an okta and Azure active directory, and Amazon and Google and Salesforce and all these things and so youre seeing customers.

Speaker Change: Really starting to as they lean in and do more with modern identity. There also at the same time, saying.

Speaker Change: What is this class of tools and technologies and capabilities, you're going to protect that and that's where offerings like underneath our protection with doctor AI or or the.

Speaker Change: The Spiro Spiro product are really going to help and so I think in terms of how we're going to price and package and monetize these things I think of the they're they're both additional they're both additional capabilities with an additional.

Todd McKinnon: And so you're seeing customers really starting to lean in and do more with modern identity, but they're also, at the same time, saying, "What class of tools and technologies and capabilities are going to protect that, and that's where offerings like identity threat protection with Okta AI or The Spiro Project, the Spiro product. Okta Identity Threat Protection is the next version above Advanced Multi-Factor Authentication. Think about it as, you know, AMV has some phishing-resistant factors and some other capabilities in policy. Okta Identity Threat Protection with Okta AI is the next version above Advanced Multi-Factor Authentication, which has some phishing-resistant factors and some other capabilities in policy.

Speaker Change: Licensing fee and I didn't answer I protection is kind of like the next version above advanced multi factor authentication and think about it as you know advanced multi factor authentication has some fishing resistant factors and some other capabilities and policy okta identity theft protection with Okta AI is really better integration.

Speaker Change: With your entire security ecosystem an awesome.

Speaker Change: Awesome powerful actions like Universal log out so it's really the the next rung up in terms of the value in the pricing and then spirit will be a similar thing it'll be a capability that gives you visibility into not only okta as posture, but also all the applications around okta and gives you the central data warehouse to see these things in.

Speaker Change: It'll be priced independently as well.

Andina Winski: And our last question goes to Andina Winski Andy.

Speaker Change: Thank you I appreciate you squeezing me in today and congrats on a nice quarter.

Speaker Change: So I wanted to you talked a lot about the power of the platform today and then you mentioned a number of go to market strategies that you're implementing but it doesn't sound like you're pursuing a similar strategy as Palo Alto, where they're incentivizing customers to buy the whole platform.

Todd McKinnon: Okta Identity Threat Protection with Okta AI is really better integration with your entire security ecosystem and awesome, powerful actions like universal logout. So it's really the next rung up in terms of the value and the pricing. And then Spira will be a similar thing.

Speaker Change: I guess did you consider a strategy like that to get to that revenue growth reacceleration that you're that you're targeting to maybe get there sooner. Yeah. We think about all kinds of different strategies to price and package and do things like that.

Todd McKinnon: A capability that gives you visibility into not only Okta's posture but also all the applications around Okta and gives you the central data warehouse to see these things, and it'll be priced independently as well. And our last question goes to Andy Nowinski.

Speaker Change: And I think the when you look at it the.

Speaker Change: How we've priced governance and privilege, particularly.

Andrew James Nowinski: Thank you. I appreciate you squeezing me in today, and congratulations on a nice quarter. So I want to you talked a lot about the power of the platform today, and you mentioned a number of go-to-market strategies that you're implementing, but it doesn't sound like you're pursuing a similar strategy as Palo Alto, where they're incentivizing customers to buy the whole platform. I guess, did you consider a strategy like that to get to that revenue growth reacceleration that you're targeting to maybe get there sooner?

Speaker Change: Sure.

Speaker Change: It's very conducive to buy them all.

Speaker Change: And in the pricing that we've announced it's different than a and it's because they are so tightly related and it's so obvious that the buyer of one of those is going to want to buy all three the way we've built the products and the way the specifics you use cases they attach.

Speaker Change: Tamara identity and workforce identity is a little different that it's often times, it's a different buyer it's.

Speaker Change: It's a different member of the C suite and so the there is there is some pricing advantage of getting them both from one vendor.

Todd McKinnon: Yeah, we think about all kinds of different strategies to price and package and do things like that. And I think when you look at it, the way we've priced governance and privilege, particularly, it's very conducive to buy them all at the prices that we've announced. It's different than a book; it's because they're so tightly related, and it's so obvious that the buyer of one of those is going to want to buy all three.

Speaker Change: But it's not as powerful as it is just having the workforce product that's usually sold directly to security directly to I T.

Speaker Change: So I think the customer identity part is a little bit little bit I'm, not as directly related and something that we will consider overtime as we broaden and expand but we haven't changed that we haven't really considered changing that.

Speaker Change: The one thing that is kind of the core of your question, which is really important is that and this is back to John's question too about trying to do so much in but what are we focused on how do we prioritize at all.

Todd McKinnon: The way we've built the products and the way the specific use cases they attach, customer identity and workforce identity is a little different because it's oftentimes a different buyer. It's a different member of the C-suite. And so there is, there is some price advantage of getting them both from one vendor, but it's not as powerful as just having the workforce product that's usually sold directly to security, directly to IT. So I think the customer identity part is a little bit, a little bit not directly related and something that we will consider over time as we broaden and expand, but we haven't changed that. We haven't really considered changing that.

Speaker Change: A lot of the efforts were in whether its customer identity, whether it's in any security whether it's.

Speaker Change: The different product areas, you're going to it's delivering deliver it's directed by a very clear strategy, which is we are the leading independent and neutral identity company by far and we also believe strongly that there the market in the whole industry needs, an independent and neutral leader, because that's going to mean choice and flexibility and better integration.

Speaker Change: With the entire ecosystem and better value for customers better security and if you're going to do that you have to have a product in every category you have to have customer identity, you have to have a leading product and access management and privilege and governance and so it's almost like our strategy has dictated that we have to have these product foot footholds.

Todd McKinnon: The one thing that is kind of the core of your question, which is really important, is that, and this goes back to John's question too, about trying to do so much and what are we focused on, and how do we prioritize it all? A lot of the efforts we're in, whether it's customer identity, whether it's identity security, whether it's the different product areas we're going to, are delivered and directed by a very clear strategy, which is that we are the leading independent neutral identity company by far. And we also believe strongly that the market and the whole industry needs an independent, neutral leader because that's going to mean choice and flexibility and better integration with the entire ecosystem and better value for customers, and better security. And if you're going to do that, you have to have a product in every category. You have to have a customer identity.

Speaker Change: All of these areas and that's what you're seeing us execute on it.

Speaker Change: Then strategically consistent message that we've all talked about for seven plus years and you'll see US continue to March forward for the next seven years and beyond toward that goal.

Speaker Change: Thanks Todd.

Todd Mckinnon: Okay, well I appreciate everybody attending today apologies to those we didn't get to we keep running long.

Speaker Change: So just to note this quarter, we will be participating in the Morgan Stanley TMT Conference in San Francisco next Tuesday to fit the Keybanc emerging technology summit in San Francisco next Wednesday, the sixth and the William Blair Tech investors.

Speaker Change: Virtual conference on March 15th and that's it for today. If you have any follow up questions you can reach us at investor at Okta Dotcom. Thanks.

Speaker Change: Thanks, everyone Bye bye.

Speaker Change: [music].

Todd McKinnon: You have to have a leading product in access management, privilege, and governance. And so it's almost like our strategy dictated that we have to have these product footholds in all of these areas. And that's what you're seeing us execute on. And it's been strategically a consistent message that we've all talked about for seven plus years, and you'll see us continue to march forward for the next seven years and beyond toward that goal. Got it. Thanks, Todd. Okay, we appreciate everybody attending today. Apologies to those we didn't get to; we keep running late. So just to know, this quarter, we'll be participating in the Morgan Stanley TMT conference in San Francisco next Tuesday, the fifth, the KeyBank Emerging Technology Summit in San Francisco next Wednesday, the sixth, and a William Blair Tech Investors virtual conference on March 15. And that's it for today. If you have any follow-up questions, you can reach us at investor@okta.com.

Speaker Change: Okay.

Speaker Change: [music].

Dave Gennarelli: Thanks. Thanks, everyone. Bye-bye. Here comes the sun, and I say it's alright. Little darling, the smiles are returning to their faces. Little darling, it seems like years since it's been here. Little darling, I feel that I am slowly melting. Little darling, it feels like years since it's been clear.