Q3 2026 Okta Inc Earnings Call

December 2, 2025

Speaker #1: Everybody.

Brett Tighe: Everybody. To do their jobs, they need a lot of access. So I just gotta know, are you okay with all that access? Of course you are, because you secured your agent's identity with Okta. So you'll feel good turning it loose to do its job, knowing the right controls are in place. Ooh, sorry, buddy. That one's not for you.

[Unknown Speaker]: Everybody. To do their jobs, they need a lot of access. So I just gotta know, are you okay with all that access? Of course you are, because you secured your agent's identity with Okta. So you'll feel good turning it loose to do its job, knowing the right controls are in place. Ooh, sorry, buddy. That one's not for you.

Speaker #2: And to do their jobs, they need a lot of access. So I just got to know, are you OK with all that access? Of course you are, because you secured your agent's identity with Okta.

Speaker #2: So you'll feel good turning it loose to do its job, knowing the right controls are in place.

Speaker #1: Ooh, sorry, buddy. That one's not for you.

Speaker #3: Hi, everyone. Welcome to Okta's third quarter of fiscal 2026 earnings webcast. I'm Dave Gennarelli, Senior Vice President of Investor Relations at Okta. Presenting in today's meeting will be Todd McKinnon, our Chief Executive Officer and co-founder, and Brett Tighe, our Chief Financial Officer.

Dave Gennarelli: Hi, everyone. Welcome to Okta's third quarter fiscal 2026 earnings webcast. I'm Dave Gennarelli, Senior Vice President of Investor Relations at Okta. Presenting in today's meeting will be Todd McKinnon, our Chief Executive Officer and Co-founder, and Brett Tighe, our Chief Financial Officer. Eric Kelleher, our President and Chief Operating Officer, will join the Q&A portion of the meeting. At around the same time that the earnings press release hit the wire, we posted supplemental commentary to our IR website. 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. 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 by the forward-looking statements.

Speaker #3: Eric Kelleher, our President and Chief Operating Officer, will join the Q&A portion of the meeting. At around the same time that the earnings press release hit the wire, we posted supplemental commentary to our IR website.

Speaker #3: 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.

Speaker #3: Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual be materially different from those expressed or implied by the forward-looking results, performance, or achievement to statements.

Speaker #3: Forward-looking statements represent our management's beliefs and assumptions only as of the date made. 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.

Dave Gennarelli: Forward-looking statements represent our management's beliefs and assumptions only as of the date made. 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 measures. Though we may not state it explicitly during the meeting, all references to profitability are 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. A reconciliation between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP financial measures versus their closest GAAP equivalents are available in our earnings press release.

Forward-looking statements represent our management's beliefs and assumptions only as of the date made. 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 measures. Though we may not state it explicitly during the meeting, all references to profitability are 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. A reconciliation between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP financial measures versus their closest GAAP equivalents are available in our earnings press release.

Speaker #3: In addition, during today's meeting, we will discuss non-GAAP financial measures. Though we may not state it explicitly during the meeting, all references to profitability are non-GAAP.

Speaker #3: 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 #3: Irreconciliation between GAAP and non-GAAP financial measures, and a discussion of the limitations of using non-GAAP financial measures versus their closest GAAP equivalents, are available in our earnings press release.

Speaker #3: You may also find more detailed information in our supplemental financial materials, which include trended financial statements and key metrics posted on our Investor Relations website.

Dave Gennarelli: You may also find more detailed information in our supplemental financial materials, which include trended financial statements and key metrics posted on our Investor Relations website. In 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. Now I'd like to turn the meeting over to Todd McKinnon. Todd.

You may also find more detailed information in our supplemental financial materials, which include trended financial statements and key metrics posted on our Investor Relations website. In 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. Now I'd like to turn the meeting over to Todd McKinnon. Todd.

Speaker #3: In 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.

Speaker #3: And now, I'd like to turn the meeting over to Todd McKinnon. Todd?

Speaker #4: Thanks, Dave, and thank you, everyone, for joining us this afternoon. We're pleased to report Q3, we experienced strength with large customers and Okta workforce upsells, particularly with new products like Okta Identity Governance.

Todd McKinnon: Thanks, Dave, and thank you, everyone, for joining us this afternoon. We're pleased to report another solid quarter of results. In Q3, we experienced strength with large customers and Okta workforce upsells, particularly with new products like Okta Identity Governance. These results are driven by our unique ability to solve complex identity challenges across the entire enterprise landscape. In my comments today, I'm going to expand on our success with new products. I'll also share how Okta secures AI, which represents a significant new opportunity and a catalyst for growth. Brett will then cover our financial performance and provide an update on the progress we're seeing with the expanded go-to-market specialization. Okta's new products continue to make meaningful contributions to our results. Customers that are frustrated trying to manage sometimes dozens of different identity systems are turning to Okta for a modern, neutral, and unified identity platform.

Speaker #4: These results are driven by our unique ability to solve complex identity challenges across the entire enterprise landscape. In my comments today, I'm going to expand on our success with new products, while also sharing how Okta secures AI.

Speaker #4: Which represents a significant new opportunity and a catalyst for growth. Brett will then cover our financial performance and provide an update on the progress we're seeing with the expanded go-to-market specialization.

Speaker #4: Okta's new products continue to make meaningful contributions to our results. Customers who are frustrated trying to manage sometimes dozens of different identity systems are turning to Okta for a modern, neutral, and unified identity platform.

Speaker #4: We have been investing in innovation in our portfolio of new products that are allowing customers to dramatically reduce complexity while significantly improving their security posture.

Todd McKinnon: We have been investing in innovation, and our portfolio of new products are allowing customers to dramatically reduce complexity while significantly improving their security posture. New products include Okta Identity Governance, Okta Privileged Access, Identity Security Posture Management, Identity Threat Protection with Okta AI, Okta Device Access, and Fine-Grained Authorization. Many of these new products can now be delivered as part of product suites, which provide more value and further simplify the way customers can do business with Okta. We believe these new products will continue to provide incredible value to our customers and will be a growth driver for many years to come. Earlier in Q3, we had a record number of customers and partners come to Okta Inc in Las Vegas to hear how Okta secures AI.

We have been investing in innovation, and our portfolio of new products are allowing customers to dramatically reduce complexity while significantly improving their security posture. New products include Okta Identity Governance, Okta Privileged Access, Identity Security Posture Management, Identity Threat Protection with Okta AI, Okta Device Access, and Fine-Grained Authorization. Many of these new products can now be delivered as part of product suites, which provide more value and further simplify the way customers can do business with Okta. We believe these new products will continue to provide incredible value to our customers and will be a growth driver for many years to come. Earlier in Q3, we had a record number of customers and partners come to Okta Inc in Las Vegas to hear how Okta secures AI.

Speaker #4: New products include Okta Identity Governance, Okta Privilege Access, Identity Security Posture Management, Identity Threat Protection with Okta AI, Okta Device Access, and fine-grained authorization.

Speaker #4: Many of these new products can now be delivered as part of product suites, which provide more value and further simplify the way customers can do business with Okta.

Speaker #4: We believe these new products will continue to provide incredible value to our customers and will be a growth driver for many years to come.

Speaker #4: Earlier in Q3, we had a record number of customers and partners come to Octane in Las Vegas to hear how Okta secures AI. The simple way to think about it is that Okta is helping customers both build more secure AI agents and manage their AI agents in a secure and scalable way.

Todd McKinnon: The simple way to think about it is that Okta is helping customers both build more secure AI agents and manage their AI agents in a secure and scalable way. The emergence of agentic technology is redefining the identity security landscape. AI security is identity security. AI agents represent a new, powerful identity type. However, without proper security governance, they are also highly vulnerable. Securing AI agents and non-human identities is not a feature. It's essential for any businesses looking to safely scale their adoption and deployment of AI. If an organization does not secure its agents today, they risk undoing years of security improvements and leaving themselves vulnerable to new identity-based attacks. Okta has prioritized our efforts to focus on helping customers solve this business imperative and capture what we believe will be the next catalyst for growth and meaningful market within the identity security space.

The simple way to think about it is that Okta is helping customers both build more secure AI agents and manage their AI agents in a secure and scalable way. The emergence of agentic technology is redefining the identity security landscape. AI security is identity security. AI agents represent a new, powerful identity type. However, without proper security governance, they are also highly vulnerable. Securing AI agents and non-human identities is not a feature. It's essential for any businesses looking to safely scale their adoption and deployment of AI. If an organization does not secure its agents today, they risk undoing years of security improvements and leaving themselves vulnerable to new identity-based attacks. Okta has prioritized our efforts to focus on helping customers solve this business imperative and capture what we believe will be the next catalyst for growth and meaningful market within the identity security space.

Speaker #4: The emergence of agentic technology is redefining the identity security landscape. AI security is identity security. AI agents represent a new, powerful identity type. However, without proper security governance, they are also highly vulnerable.

Speaker #4: Securing AI agents in non-human identities is not a feature; it's essential for any business looking to safely scale their adoption and deployment of AI.

Speaker #4: If an organization does not secure its agents today, they risk undoing years of security improvements and leaving themselves vulnerable to new identity-based attacks. Okta has prioritized our efforts to focus on helping customers solve this business imperative and capture what we believe will be the next catalyst for growth and a meaningful market within the identity security space.

Speaker #4: Okta's neutral and unified platform, coupled with our installed base of over 20,000 customers, positions us best to become the identity layer for AI agents.

Todd McKinnon: Okta's neutral and unified platform, coupled with our installed base of over 20,000 customers, positions us best to become the identity layer for AI agents. That's why we're so excited about the recent launch of Auth0 for AI Agents. Auth0 for AI Agents allows customers to build secure agents, APIs, and users more effortlessly across their B2B, B2C, and internal app ecosystem. Based on our conversations, customers are expecting Okta to deliver the capabilities to help build and manage their AI agents. They're already turning to us to help guide them through the new security challenges that AI brings. Over just the past few months, we have experienced a surge in inbound interest for our agentic security solutions to manage agents: Okta for AI Agents.

Okta's neutral and unified platform, coupled with our installed base of over 20,000 customers, positions us best to become the identity layer for AI agents. That's why we're so excited about the recent launch of Auth0 for AI Agents. Auth0 for AI Agents allows customers to build secure agents, APIs, and users more effortlessly across their B2B, B2C, and internal app ecosystem. Based on our conversations, customers are expecting Okta to deliver the capabilities to help build and manage their AI agents. They're already turning to us to help guide them through the new security challenges that AI brings. Over just the past few months, we have experienced a surge in inbound interest for our agentic security solutions to manage agents: Okta for AI Agents.

Speaker #4: That's why we're so excited about the recent launch of Auth0 for AI agents. Auth0 for AI agents allows customers to build secure agents, APIs, and users more effortlessly across their B2B, B2C, and internal app ecosystem.

Speaker #4: Based on our conversations, customers are expecting Okta to deliver the capabilities to help build and manage their AI agents. They are already turning to us to help guide them through the new security challenges that AI brings.

Speaker #4: Over just the past few months, we have experienced a surge in inbound interest for our agentic security solutions to manage agents: Okta for AI agents.

Speaker #4: These organizations are looking for a single control plane to observe and manage agents of all types in a way that offers flexibility as the technology continues to evolve.

Todd McKinnon: These organizations are looking for a single control plane to observe and manage agents of all types in a way that offers flexibility as the technology continues to evolve. They also want a solution that gives them control, like the ability to embed fine-grained access into every agent. Okta is here to deliver. The excitement is real, and the interest is tangible. It's very early days on this front, but we have already been engaged with over 100 of our current customers, which combined represent over $200 million in existing ARR. To give you a sense of the interest, I want to share a great early win with Okta for AI agents. It's with a financial services customer that is in the midst of deploying AI agents across their operations.

These organizations are looking for a single control plane to observe and manage agents of all types in a way that offers flexibility as the technology continues to evolve. They also want a solution that gives them control, like the ability to embed fine-grained access into every agent. Okta is here to deliver. The excitement is real, and the interest is tangible. It's very early days on this front, but we have already been engaged with over 100 of our current customers, which combined represent over $200 million in existing ARR. To give you a sense of the interest, I want to share a great early win with Okta for AI agents. It's with a financial services customer that is in the midst of deploying AI agents across their operations.

Speaker #4: They also want a solution that gives them control, like the ability to embed fine-grained access into every agent. Okta is here to deliver. The excitement is real, and the interest is tangible.

Speaker #4: It's very early days on this front, but we have already been engaged with over 100 of our current customers, which combined represent over $200 million in existing ARR.

Speaker #4: To give you a sense of the interest, I want to share a great early win with Okta for AI agents. It's with a financial services customer.

Speaker #4: That is in the midst of deploying AI agents across their operations. Given the sensitive nature of their data and the need to remain compliant with the regulatory environment, securing these agents was not optional.

Todd McKinnon: Given the sensitive nature of their data and the need to remain compliant with the regulatory environment, securing these agents was not optional. It was critical. They selected Okta for AI Agents to secure their AI footprint and provide them with enhanced visibility and remediation capabilities for the agent identities, enforce access control, identity governance, and threat detection. It was a great win-win. Okta is helping the customer to safely deploy AI across their business, and the addition of Okta for AI Agents represented a significant ACV uplift compared to their prior contract. We're successfully executing on our strategy to capture this emerging opportunity, and this deal demonstrates our ability to lead the market by moving beyond securing human identities to securing agentic identities. Okta is the essential identity layer to help customers build, observe, and manage AI agents.

Given the sensitive nature of their data and the need to remain compliant with the regulatory environment, securing these agents was not optional. It was critical. They selected Okta for AI Agents to secure their AI footprint and provide them with enhanced visibility and remediation capabilities for the agent identities, enforce access control, identity governance, and threat detection. It was a great win-win. Okta is helping the customer to safely deploy AI across their business, and the addition of Okta for AI Agents represented a significant ACV uplift compared to their prior contract. We're successfully executing on our strategy to capture this emerging opportunity, and this deal demonstrates our ability to lead the market by moving beyond securing human identities to securing agentic identities. Okta is the essential identity layer to help customers build, observe, and manage AI agents.

Speaker #4: It was critical. They selected Okta for AI agents to secure their AI footprint and provide them with enhanced visibility and remediation capabilities for the agent identities.

Speaker #4: Enforce access control, identity governance, and threat detection. It was a great win-win. Okta is helping the customer to safely deploy AI across their business, and the addition of Okta for AI agents represented a significant ACV uplift compared to their prior contract.

Speaker #4: We're successfully executing on our strategy to capture this emerging opportunity and this deal demonstrates our ability to lead the market by moving beyond securing human identities to securing agentic identities.

Speaker #4: Okta is the essential identity layer to help customers build, observe, and manage AI agents. We're the only company that is able to secure AI with a modern and neutral platform, allowing us to deliver even greater value to our customers.

Todd McKinnon: We're the only company that is able to secure AI with a modern and neutral platform, allowing us to deliver even greater value to our customers. In addition to helping customers build and manage AI agents, Okta is driving the industry to an architecture where identity is more valuable and more secure. Last quarter, you heard me talk about Okta's role in the development of Cross-App Access, which brings visibility and control to both agent-driven and app-to-app interactions. This allows IT teams to decide what apps are connecting and what information AI agents can access. I'm excited to share that as of last week, Cross-App Access is now an extension of Model Context Protocol known as MCP, which helps validate that identity providers like Okta will act as the indispensable control plane for the AI enterprise.

We're the only company that is able to secure AI with a modern and neutral platform, allowing us to deliver even greater value to our customers. In addition to helping customers build and manage AI agents, Okta is driving the industry to an architecture where identity is more valuable and more secure. Last quarter, you heard me talk about Okta's role in the development of Cross-App Access, which brings visibility and control to both agent-driven and app-to-app interactions. This allows IT teams to decide what apps are connecting and what information AI agents can access. I'm excited to share that as of last week, Cross-App Access is now an extension of Model Context Protocol known as MCP, which helps validate that identity providers like Okta will act as the indispensable control plane for the AI enterprise.

Speaker #4: In addition to helping customers build and manage AI agents, Okta is driving the industry to an architecture where identity is more valuable and more secure.

Speaker #4: Last quarter, you heard me talk about Okta's role in the development of cross-app access, which brings visibility and control to both agent-driven and app-to-app interactions.

Speaker #4: This allows IT teams to decide which apps are connecting and what information AI agents can access. I'm excited to share that, as of last week, cross-app access is now an extension of the model context protocol known as MCP, which helps validate that identity providers like Okta will act as the indispensable control plane for the AI enterprise.

Speaker #4: To wrap things up, we're pleased with another solid quarter of results, and we believe we're best positioned to win the exciting new market segment of securing AI.

Todd McKinnon: To wrap things up, we're pleased with another solid quarter of results, and we believe we're best positioned to win the exciting new market segment of securing AI. In this rapidly evolving environment, organizations of all sizes are looking to Okta to deliver modern and scalable identity security solutions that can seamlessly integrate across their networks. We are confident in our strategy and enthusiastic about the momentum of the business as we head into our seasonally biggest quarter of the year. I want to thank the entire Okta team for their tireless effort and also thank our loyal customers and partners who put their trust in us every day. And now here's Brett to cover the financial commentary and talk about how we're positioned for long-term profitable growth.

To wrap things up, we're pleased with another solid quarter of results, and we believe we're best positioned to win the exciting new market segment of securing AI. In this rapidly evolving environment, organizations of all sizes are looking to Okta to deliver modern and scalable identity security solutions that can seamlessly integrate across their networks. We are confident in our strategy and enthusiastic about the momentum of the business as we head into our seasonally biggest quarter of the year. I want to thank the entire Okta team for their tireless effort and also thank our loyal customers and partners who put their trust in us every day. And now here's Brett to cover the financial commentary and talk about how we're positioned for long-term profitable growth.

Speaker #4: In this rapidly evolving environment, organizations of all sizes are looking to Okta to deliver modern and scalable identity security solutions that can seamlessly integrate across their networks.

Speaker #4: We are confident in our strategy and enthusiastic about the momentum of the business as we head into our seasonally biggest quarter of the year.

Speaker #4: I want to thank the entire Okta team for their tireless effort, and also thank our loyal customers and partners who put their trust in us every day.

Speaker #4: And now here's Brett to cover the financial commentary and talk about how we're positioned for long-term profitability.

Speaker #4: And now here's Brett to cover the financial commentary, and talk about how we're positioned for long-term profitable growth. Thanks, Todd, and thank you, everyone, for

Eric Kelleher: Thanks, Todd. And thank you, everyone, for joining us today. My commentary will provide insights into our Q3 performance and then move into our outlook for Q4 and FY26. We remain pleased with the overall progress we're making to further specialize our go-to-market teams. Importantly, we continue to see improvement in sales productivity. Partially driving this is our average AE tenure, which has remained strong on the back of healthy attrition levels. The continued positive trends we are seeing across our go-to-market KPIs reinforce our confidence that this specialization strategy is the right path to accelerate long-term growth. Another area of sales specialization where Okta has seen strength over the past few years is the public sector. All things considered, the government shutdown didn't meaningfully change the outcome of our Q3 results. We remain very optimistic about expanding our presence with US.

Brett Tighe: Thanks, Todd. And thank you, everyone, for joining us today. My commentary will provide insights into our Q3 performance and then move into our outlook for Q4 and FY26. We remain pleased with the overall progress we're making to further specialize our go-to-market teams. Importantly, we continue to see improvement in sales productivity. Partially driving this is our average AE tenure, which has remained strong on the back of healthy attrition levels. The continued positive trends we are seeing across our go-to-market KPIs reinforce our confidence that this specialization strategy is the right path to accelerate long-term growth. Another area of sales specialization where Okta has seen strength over the past few years is the public sector. All things considered, the government shutdown didn't meaningfully change the outcome of our Q3 results. We remain very optimistic about expanding our presence with US.

Speaker #2: Joining us today. My commentary will provide insights into our Q3 performance and then move into our outlook for Q4 and FY26. We remain pleased with the overall progress we're making to further specialize our go-to-market teams.

Speaker #2: Importantly, we continue to see improvement in sales productivity. Partially driving this is our average AE tenure, which has remained strong on the back of healthy attrition levels.

Speaker #2: The continued positive trends we are seeing across our go-to-market KPIs reinforce our confidence that this specialization strategy is the right path to accelerate long-term growth.

Speaker #2: Another area of sales specialization where Okta has seen strength over the past few years is the public sector. All things considered, the government shutdown didn't meaningfully change the outcome of our Q3 results.

Speaker #2: We remain very optimistic about expanding our presence with U.S. government agencies, as well as state and local agencies, as we move forward. Over the past couple of years, we've done well to improve our margins to healthy levels while making investments for growth.

Eric Kelleher: Government agencies as well as state and local agencies as we move forward. Over the past couple of years, we've done well to improve our margins to healthy levels while making investments for growth. Our disciplined investment areas remain clear: improving sales productivity through go-to-market specialization, relentless product innovation, and further leveraging our channel partners. More recently, we've expanded our investment areas to drive future growth by increasing the number of quota-carrying sales reps. Our recent results and business momentum give us confidence to add sales capacity in order to service the demand next year and beyond. Moving on to our balance sheet. In September, the 2025 convertible notes reached maturity, and we settled the remaining principal amount of $510 million in cash.

Government agencies as well as state and local agencies as we move forward. Over the past couple of years, we've done well to improve our margins to healthy levels while making investments for growth. Our disciplined investment areas remain clear: improving sales productivity through go-to-market specialization, relentless product innovation, and further leveraging our channel partners. More recently, we've expanded our investment areas to drive future growth by increasing the number of quota-carrying sales reps. Our recent results and business momentum give us confidence to add sales capacity in order to service the demand next year and beyond. Moving on to our balance sheet. In September, the 2025 convertible notes reached maturity, and we settled the remaining principal amount of $510 million in cash.

Speaker #2: Our disciplined investment areas remain clear. Improving sales productivity through go-to-market specialization, relentless product innovation, and further leveraging our channel partners. More recently, we've expanded our investment areas to drive future growth by increasing the number of quota-carrying sales reps.

Speaker #2: Our recent results and business momentum give us confidence to add sales capacity in order to service the demand next year and beyond. Moving on to our balance sheet.

Speaker #2: In September, the 2025 convertible notes reached maturity, and we settled the remaining principal amount of $510 million in cash. We had another great quarter of cash flow in Q3 and ended the quarter with a strong balance sheet consisting of nearly $2.5 billion in cash, cash equivalents, and short-term investments.

Eric Kelleher: We had another great quarter of cash flow in Q3 and ended the quarter with a strong balance sheet consisting of nearly $2.5 billion in cash, cash equivalents, and short-term investments. We regularly evaluate our capital structure and capital allocation priorities, which includes investing in the business, M&A, and opportunistic repurchasing of the 2026 notes, of which $350 million remains outstanding. Now let's turn to our business outlook. For Q4 and FY26, we continue to take a prudent approach to forward guidance that factors in current market conditions. For the fourth quarter of FY26, we expect total revenue growth of 10%, current RPO growth of 9%, non-GAAP operating margin of 25%, and free cash flow margin of approximately 31%.

We had another great quarter of cash flow in Q3 and ended the quarter with a strong balance sheet consisting of nearly $2.5 billion in cash, cash equivalents, and short-term investments. We regularly evaluate our capital structure and capital allocation priorities, which includes investing in the business, M&A, and opportunistic repurchasing of the 2026 notes, of which $350 million remains outstanding. Now let's turn to our business outlook. For Q4 and FY26, we continue to take a prudent approach to forward guidance that factors in current market conditions. For the fourth quarter of FY26, we expect total revenue growth of 10%, current RPO growth of 9%, non-GAAP operating margin of 25%, and free cash flow margin of approximately 31%.

Speaker #2: We regularly evaluate our capital structure and capital allocation priorities, which include investing in the business, M&A, and opportunistic repurchasing of the 2026 notes, of which $350 million remains outstanding.

Speaker #2: Now let's turn to our business outlook. For Q4 and FY26, we continue to take a prudent approach to forward guidance that factors in current market conditions.

Speaker #2: For the fourth quarter of FY26, we expect total revenue growth of 10%, current RPO growth of 9%, non-GAAP operating margins of 25%, and free cash flow margin of approximately 31%.

Speaker #2: For the full year FY26, we are raising our outlook and now expect total revenue growth of 11%, a non-GAAP operating margin of 26%, and a free cash flow margin of approximately 29%.

Eric Kelleher: For the full year FY26, we are raising our outlook and now expect total revenue growth of 11%, non-GAAP operating margin of 26%, and a free cash flow margin of approximately 29%. We will issue FY27 guidance on our Q4 earnings call, which will provide a more informed view of FY27, especially as we exit this quarter, which is seasonally the biggest quarter of the year. To wrap things up, we're enthusiastic about the trends we're seeing across the business, from the adoption of new products to customer interest and how Okta secures AI. This gives us confidence to continue making critical investments to accelerate top-line growth. We're pleased with another solid quarter of results. We now look to close out FY26 strong and build on this year's success. With that, I'll turn it back to Dave for Q&A. Dave?

For the full year FY26, we are raising our outlook and now expect total revenue growth of 11%, non-GAAP operating margin of 26%, and a free cash flow margin of approximately 29%. We will issue FY27 guidance on our Q4 earnings call, which will provide a more informed view of FY27, especially as we exit this quarter, which is seasonally the biggest quarter of the year. To wrap things up, we're enthusiastic about the trends we're seeing across the business, from the adoption of new products to customer interest and how Okta secures AI. This gives us confidence to continue making critical investments to accelerate top-line growth. We're pleased with another solid quarter of results. We now look to close out FY26 strong and build on this year's success. With that, I'll turn it back to Dave for Q&A. Dave?

Speaker #2: We will issue FY27 guidance on our Q4 earnings call, which will provide a more informed view of FY27, especially as we exit this quarter, which is seasonally the biggest quarter of the year.

Speaker #2: To wrap things up, we're enthusiastic about the trends we're seeing across the business, from the adoption of new products to customer interest in how Okta secures AI.

Speaker #2: This gives us confidence to continue making critical investments to accelerate top-line growth. We're pleased with another solid quarter of results. We now look to close out FY26 strong and build on this year's success.

Speaker #2: With that, I'll turn it back to Dave for Q&A. Dave?

Speaker #3: Thanks, Brett. I see that there are quite a few hands raised already, and I'll take them in order until the top of the hour.

Todd McKinnon: Thanks, Brett. I see that there are quite a few hands raised already, and I'll take them in order until the top of the hour. In the interest of time, please limit yourself to one question. With that, we'll take the first question from Gray Powell of BTIG.

Dave Gennarelli: Thanks, Brett. I see that there are quite a few hands raised already, and I'll take them in order until the top of the hour. In the interest of time, please limit yourself to one question. With that, we'll take the first question from Gray Powell of BTIG.

Speaker #3: And in the interest of time, please limit yourself to one question. With that, we'll take the first question from Gray Paul of

Speaker #3: BTIG. Okay.

Gray Powell: Okay. Thank you very much, and congratulations on the good results. Can you hear me okay? It looks like I froze there.

Speaker #4: Thank you very much, and congratulations on the good results. Can you hear me okay? It looks like I...

Speaker #4: froze, sir. All right. Loud and clear, Gray. Great. So yeah, it's good to hear the commentary on platform momentum. And at a high level, I definitely think it makes a lot of sense.

Todd McKinnon: Loud and clear, Gray.

Dave Gennarelli: Loud and clear, Gray.

Gray Powell: All right. Great. So yeah, it's good to hear the commentary on platform momentum. And at a high level, I definitely think it makes a lot of sense. But I do have to admit, sometimes we pick up on conflicting data points in our fieldwork. Some partners say it's great. Others are a little skeptical. So I guess from your perspective, what gets customers over the hump and convinces them to consolidate IAM, governance, PAM, customer identity, and any other components to Okta? Are there any commonalities between customers who consolidate? And can you just kind of talk about why you see those win rates?

Speaker #4: But I do have to admit, sometimes we picked up on conflicting data points in our fieldwork. Some partners say it's great; others are a little skeptical.

Speaker #4: So, I guess from your perspective, what gets customers over the hump and convinces them to consolidate IAM, governance, PAM, customer identity, and any other components to Okta?

Speaker #4: Are there any commonalities between customers who consolidate? And can you just talk about why you see those win rates?

Speaker #5: I think the answer is it's always wrapped up in some other technological change. If you're not changing your data center, if you're not changing your apps, if you're not investing in AI, you're not going to change identity.

Todd McKinnon: I think the answer is it's always wrapped up in some other technological change. If you're not changing your data center, if you're not changing your apps, if you're not investing in AI, you're not going to change identity. So in all the customers I work with, it's about some other catalyzing technological change. For many years, it was cloud and building mobile apps and still cloud transformation. But what we're seeing more and more is companies are trying to move technology so they could take advantage of AI. They're modernizing apps. They're modernizing their security stack so they can give AI agents access to all of their data resources. And that's been a catalyzer. I think on the partner, we had actually a pretty strong quarter with the partner channel. Many of the largest deals went through a partner.

Speaker #5: So in all the customers I work with, it's about some other catalyzing technological change. For many years, it was cloud and building mobile apps, and still cloud transformation too.

Speaker #5: But what we're seeing more and more is that companies are trying to move technology so they can take advantage of AI. They're modernizing apps and their security stacks so they can give AI agents access to all of their data resources, and that's been a catalyzer.

Speaker #5: I think, on the partner channel, we had actually a pretty strong quarter. Many of the largest deals went through a partner.

Speaker #5: It's actually transacted, and the services were fulfilled through a partner. So it's an area of strength. I think just compared to other companies, a lot of times we're not as deep or reliant on partners.

Todd McKinnon: It's an area and actually transacted, and the services were fulfilled through a partner. So it's an area of strength. I think just compared to other companies, a lot of times we're not as deep and reliant on partners. So maybe that's why some of the partner checks are coming up inconsistently. But increasing that reach with partners and presence with partners has been a big priority. And I think on all our internal data, it's manifesting itself quite prevalently. So we're very excited about that.

It's an area and actually transacted, and the services were fulfilled through a partner. So it's an area of strength. I think just compared to other companies, a lot of times we're not as deep and reliant on partners. So maybe that's why some of the partner checks are coming up inconsistently. But increasing that reach with partners and presence with partners has been a big priority. And I think on all our internal data, it's manifesting itself quite prevalently. So we're very excited about that.

Speaker #5: So maybe that's why some of the partner checks are coming up inconsistently. But increasing that reach with partners and presence with partners has been a big priority.

Speaker #5: And I think on all our internal data, it's manifesting itself quite prevalently. So we're very excited about it.

Speaker #5: that. Yeah.

Eric Kelleher: Yeah. I would add to that, Gray, and thanks for the question. I think another area to consider with customers as far as consolidating all these use cases with Okta as their identity partner is enterprises, as they get more and more mindful of the importance of securing identity across human, non-human, and agentic. They're realizing that the legacy architectures they've built with multiple products for multiple vendors and multiple stacks is fragile. And with that fragility comes insecurity. It's harder for them to have confidence that they're managing securely all their identity use cases in a way that they're confident in their ability to protect against identity-based cyber attacks. And so they see value in consolidating on one partner with Okta so that they have confidence they've got a single pane of glass to manage all of that.

Speaker #3: I would add to that, Gray. And thanks for the question. I think another area to consider with customers, as far as consolidating all these use cases with Okta as their identity partner, is enterprises, as they get more and more mindful of the importance of securing identity across human, non-human, and agentic.

Speaker #3: They're realizing that the legacy architectures they've built with multiple products for multiple vendors and multiple stacks is fragile. And with that fragility comes insecurity.

Speaker #3: It's harder for them to have confidence that they're managing securely all their identity use cases in a way that they're confident in their ability to protect against identity-based cyber attacks.

Speaker #3: And so they see value in consolidating on one partner with Okta, so that they have confidence they’ve got a single pane of glass to manage all of that.

Speaker #3: By removing complexity, eliminating vendor distribution, and consolidating on Okta's platform, they're able to better manage and have increased confidence in their security posture against threats.

Eric Kelleher: So by removing complexity, removing vendor distribution, consolidating on Okta's platform, they're able to better manage and be more confident in their security posture against threat actors.

So by removing complexity, removing vendor distribution, consolidating on Okta's platform, they're able to better manage and be more confident in their security posture against threat actors.

Speaker #3: actors. Understood.

Gray Powell: Understood. That's helpful. Thank you.

Speaker #4: That's helpful. Thank

Speaker #4: you. Okay.

Speaker #5: Let's go to Itai Kidron at Oppenheimer.

Todd McKinnon: Okay. Let's go to Itay Kidron at Oppenheimer.

Dave Gennarelli: Okay. Let's go to Itay Kidron at Oppenheimer.

Speaker #6: Thanks, guys. Solid quarter. I guess, Todd, a very interesting commentary, needless to say, about AI and the 100 customers we're trialing it. Can you give us a little bit of color on, A, do I have to be an Okta customer to specifically deploy your AI capabilities?

Ittai Kidron: Thanks, guys. Solid quarter. I guess, Todd, a very interesting commentary needless to say about AI and the 100 customers who are trialing it. Can you give us a little bit of color on, A, do I have to be an Okta customer to specifically deploy your AI capabilities? Or those could be applied to any company, even if they don't use you for core access management, number one. Number two, when you think about the full deployment of this, how do I think about the dollar potential here when you have customers that are spending $100,000 with you? By how much can AI truly elevate that total bill for them?

Speaker #6: Or any company, even if those could be applied to, don't use you for core access management. Number one. Number two, when you think about the full deployment of this, how do I think about the dollar potential here when you have customers that are spending $100K with you?

Speaker #6: By how much can AI truly elevate that total bill?

Speaker #6: for them? Yeah.

Todd McKinnon: Yeah. I've been personally, and the entire company is blown away by how interested customers and prospects are in this capability. I haven't seen anything like this in my experience at Okta with a new capability or a new product set. So it's very, very exciting. And if you step back and think why, everyone, no surprise, big shock, they're trying to take advantage of AI and build AI workflows into their enterprise workflows. And a lot of them are stuck. And I think it's why you see some of the adoption rates of some of these platforms like Salesforce or ServiceNow or others is below what people want. And they're stuck because right now they have a couple of choices. They can either deliver agentic apps that look very much they don't have any access to the company's data.

Speaker #5: I've been personally in the entire company as blown away by how interested customers and prospects are in this capability. I haven't seen anything like this in my experience at Okta with a new capability or new product set.

Speaker #5: So it's very, very exciting. And if you step back and think why, it's no surprise—big shock—they're trying to take advantage of AI and build AI workflows into their enterprise workflows.

Speaker #5: And a lot of them are stuck. I think it's why you see some of the adoption rates of some of these platforms, like Salesforce or ServiceNow, are below what people want.

Speaker #5: And they're stuck because right now they can either deliver agentic apps, or they have a couple of choices. They can look very much like they don't have any access to the company's data.

Speaker #5: They look very much like public Gemini or public ChatGPT, generic chatbots, and they can't get any insight from the company's data. That's one choice.

Todd McKinnon: They look very much like public Gemini or public ChatGPT, generic chatbots, and they can't get any insight from the company's data. That's one choice. Or the other choice is you take all the company's data and you shove it in a big data warehouse like Snowflake or Databricks or Palantir, and then the agents have way too much access. They can just see everything, and they do unintended things. And so people are stuck, and they're paused, and they're saying, "Wait a minute, we're not going to roll these things out." And there's a huge, huge cohort of companies that are trying to do something with AI, and they're stuck.

They look very much like public Gemini or public ChatGPT, generic chatbots, and they can't get any insight from the company's data. That's one choice. Or the other choice is you take all the company's data and you shove it in a big data warehouse like Snowflake or Databricks or Palantir, and then the agents have way too much access. They can just see everything, and they do unintended things. And so people are stuck, and they're paused, and they're saying, "Wait a minute, we're not going to roll these things out." And there's a huge, huge cohort of companies that are trying to do something with AI, and they're stuck.

Speaker #5: Or the other choice is you take all the company's data and you shove it in a big data warehouse like Snowflake, Databricks, or Palantir, and then the agents have way too much access.

Speaker #5: They can just see everything, and they do unintended things. And so, people are stuck and they're paused, and they're saying, "Wait a minute, we're not going to roll these things out." There's a huge, huge cohort of companies that are trying to do something with AI, and they’re stuck.

Speaker #5: And then they come to us because what we can do is, what we're very good at, is figure out who can access what. Not only for people, but now for AI agents and help them filter who has access to what, how you deploy these applications in a way that gives the right information to the agent and the right security level, and lets them observe the behavior and build the right use cases for the business and not without over-permissioning at all.

Todd McKinnon: And then they come to us because what we can do is what we're very good at is figure out who can access what, not only for people, but now for AI agents, and help them filter who has access to what, how you deploy these applications in a way that gives the right information to the agent and the right security level, and lets them observe the behavior and build the right use cases for the business and not without over-permissioning at all. It is early days. We announced and released these products just in the last couple of months after our conference in September. So it's early days. But we do have several deals that have been transacted for these products. We gave the example of the financial company that is rolling out these agents and purchased the product. It's early days, but it's incredibly exciting.

And then they come to us because what we can do is what we're very good at is figure out who can access what, not only for people, but now for AI agents, and help them filter who has access to what, how you deploy these applications in a way that gives the right information to the agent and the right security level, and lets them observe the behavior and build the right use cases for the business and not without over-permissioning at all. It is early days. We announced and released these products just in the last couple of months after our conference in September. So it's early days. But we do have several deals that have been transacted for these products. We gave the example of the financial company that is rolling out these agents and purchased the product. It's early days, but it's incredibly exciting.

Speaker #5: It is early days. We announced and released these products just in the last couple of months after our conference in September. So, it's early days.

Speaker #5: But we do have several deals that have been transacted for these products. We gave the example of the financial company that is rolling out these agents and purchased the product.

Speaker #5: It's early days, but it's incredibly exciting. And I think it's because longer term, if you look at our market, we have $50 billion TAM for workforce identity, a $30 billion TAM for customer identity.

Todd McKinnon: I think it's because longer term, if you look at our market, we have a $50 billion TAM for workforce identity, a $30 billion TAM for customer identity. Owning and governing the agentic identity layer and securing AI can be a bigger TAM than both of those. I mean, it's several years out, and it's going to be a lot in change and growth there, which, by the way, is I think one of the reasons why companies are coming to us, because talk about a dynamic environment. You have a new model release coming out every couple of months. And Gemini's better now. OpenAI is better, and then Anthropic's better. And the technology is all shifting around it, and customers don't want to get locked in. They're hesitant to commit to the Microsoft stack or the Google stack. They want flexibility.

I think it's because longer term, if you look at our market, we have a $50 billion TAM for workforce identity, a $30 billion TAM for customer identity. Owning and governing the agentic identity layer and securing AI can be a bigger TAM than both of those. I mean, it's several years out, and it's going to be a lot in change and growth there, which, by the way, is I think one of the reasons why companies are coming to us, because talk about a dynamic environment. You have a new model release coming out every couple of months. And Gemini's better now. OpenAI is better, and then Anthropic's better. And the technology is all shifting around it, and customers don't want to get locked in. They're hesitant to commit to the Microsoft stack or the Google stack. They want flexibility.

Speaker #5: Owning and governing the agentic identity layer and securing AI can be a bigger TAM than both of those. I mean, it's several years out, and there's going to be a lot of change and growth there, which, by the way, is I think one of the reasons why companies are coming to us—because talk about a dynamic environment.

Speaker #5: You have a new model release coming out every couple of months. And Gemini is better now. OpenAI is better. And then Anthropic is better.

Speaker #5: And the technology is all shifting around it. And customers don't want to get locked in. They're hesitant to commit to the Microsoft stack or the Google stack.

Speaker #5: They want flexibility. By creating this access layer as an independent and neutral third party, they feel like they're going to have choice as this amazing platform of agentic enterprise unfolds.

Todd McKinnon: By doing this access layer and an independent and neutral third party, they feel like they're going to have choice as this amazing platform of agentic enterprise unfolds. So it's very exciting. The company's number one priority now is to take advantage of this opportunity. So we're very clear in our R&D and our go-to-market. We're going to focus on this opportunity. That's how big we think it is. So it's incredibly exciting.

By doing this access layer and an independent and neutral third party, they feel like they're going to have choice as this amazing platform of agentic enterprise unfolds. So it's very exciting. The company's number one priority now is to take advantage of this opportunity. So we're very clear in our R&D and our go-to-market. We're going to focus on this opportunity. That's how big we think it is. So it's incredibly exciting.

Speaker #5: So it's very exciting. We've the company's number one priority now is to take advantage of this opportunity. So we're very clear in our R&D and our go-to-market.

Speaker #5: We're going to focus on this opportunity. That's how big we think it is. So it's.

Speaker #5: incredibly exciting. Todd, do you

Ittai Kidron: Todd, do you think that the go-to-market around this can change, meaning instead of you selling it to the enterprise, actually talk to the agent companies and have them bundle already ahead of time your identity security with their agents such that the customer agents do this?

Speaker #4: think that the go-to-market around this can change? Meaning instead of you selling it to the enterprise, actually talk to the agent companies and have them bundle already ahead of time your identity security with their agents such that the customer needs to do this?

Speaker #5: Absolutely. And we're already doing this with trying to set the industry standards around access. We've mentioned before cross-app access, which was an industry standard around how you actually give access to these agents across multiple agent platforms connecting to multiple end repositories of information, whether it's a database, a warehouse, an application.

Todd McKinnon: Absolutely. Absolutely. We're already doing this with trying to set the industry standards around access. We've mentioned before Cross-App Access, which was an industry standard around how you actually give access to these agents across multiple agent platforms connecting to multiple end repositories of information, whether it's a database, a warehouse, or application. We're really excited that the MCP standard now recognizes Cross-App Access as an extension of MCP. So think about that now. If you're using MCP protocol to standardize some of these interactions between agents and resources, Cross-App Access fits right into that now. So it's a very insightful question, and we're working hard on that as well.

Speaker #5: And we're really excited that the MCP standard now recognizes cross-app access as an extension of MCP. So think about that. Now, if you're using MCP protocol to standardize some of these interactions between agents and resources, cross-app access fits right into that now.

Speaker #5: So, it's a very insightful question. And we're working hard on it.

Speaker #5: that as well. And just as an example

Eric Kelleher: Just as an example for our customers, customers that are using Auth0 for AI Agents to build agents will get support for Cross-App Access out of the box, meaning any agents that they build with Auth0 for AI Agents will be discoverable by an IDP that also supports the Model Context Protocol. Okta's IDP also supports Cross-App Access and the Model Context Protocol. Customers developing agents with our technology will be producing agents that any company can secure more precisely. The Okta platform will help customers discover agents that have been deployed and then manage those agents as well. We're already well on the path to ensuring that we're productizing this opportunity using our existing capabilities.

Speaker #4: For our customers, customers that are using Auth0 for AI agents to build agents, we'll get support for cross-app access out of the box. This means any agents that they build with Auth0 for AI agents will be discoverable by an IDP that also supports the Model Context Protocol.

Speaker #4: And Okta's IDP also supports cross-app app access and the model context protocol. So customers developing agents with our technology will be producing agents that any company can secure more precisely.

Speaker #4: And the Okta platform will help customers discover agents that have been deployed and then manage those agents as well. So we're already well on the path to ensuring that we're productizing this opportunity using our existing capabilities.

Speaker #4: Thank

Speaker #4: you. Yeah.

Todd McKinnon: Thank you. Yeah. Let's go to John DiFucci at Guggenheim.

Ittai Kidron: Thank you.

Dave Gennarelli: Yeah. Let's go to John DiFucci at Guggenheim.

Speaker #5: Let's go to John DeFucci at...

Speaker #5: Guggenheim.

Speaker #6: Thanks, Dave.

Ittai Kidron: Thanks, Dave. And listen, guys, in the past, I'm going to ask the question that I think we're all going to have to answer. But in the past, you've given an early look to next year, and you didn't do that this year, which I think is the right call given how much next year depends on the fourth quarter, like Brett said. I also realize that there are other reasons to give that early look because you had other things happening at the company in prior years. But even if no new numbers, you don't give any numbers, can you give just some subjective commentary about how the world looks for Okta over the next year, just generally even? Because this quarter looks good. It's stock down a little bit after hours because, I think, what I'm saying, you didn't give that guide and people are used to it.

John DiFucci: Thanks, Dave. And listen, guys, in the past, I'm going to ask the question that I think we're all going to have to answer. But in the past, you've given an early look to next year, and you didn't do that this year, which I think is the right call given how much next year depends on the fourth quarter, like Brett said. I also realize that there are other reasons to give that early look because you had other things happening at the company in prior years. But even if no new numbers, you don't give any numbers, can you give just some subjective commentary about how the world looks for Okta over the next year, just generally even? Because this quarter looks good. It's stock down a little bit after hours because, I think, what I'm saying, you didn't give that guide and people are used to it.

Speaker #6: And listen, guys, in the past, I’m going to ask the question that I think we’re all going to have to answer. But in the past, you’ve given an early look to next year.

Speaker #6: And you didn't do that this year, which I think is the right call given how much next year depends on the fourth quarter, like Brett said.

Speaker #6: I also realize that there are other reasons to give that early look because you had other things happening at the company in prior years.

Speaker #6: But even if no new numbers you don't give any numbers, can you give just some subjective commentary about how the world looks for Okta over the next year, just generally, even because this quarter, this quarter looks good.

Speaker #6: The stock's down a little bit after hours because I think what I'm saying. You didn't give that guide and people are used to it.

Speaker #6: But they'll get over that. This quarter does look good. It sounds like there's a lot of even more traction behind the numbers happening. So just a little commentary on that would be

Ittai Kidron: But they'll get over that. This quarter does look good. And it sounds like there's a lot of even more traction behind the numbers happening. So just a little commentary on that would be helpful.

But they'll get over that. This quarter does look good. And it sounds like there's a lot of even more traction behind the numbers happening. So just a little commentary on that would be helpful.

Speaker #6: helpful. Todd, do you want to take it?

Todd McKinnon: Todd, do you want to take it? I can talk to the guidance.

Brett Tighe: Todd, do you want to take it? I can talk to the guidance.

Speaker #5: I can talk to the

Speaker #5: I can talk to the guidance. I was just going to say one thing I was.

Eric Kelleher: I was just going to say one thing I was going to say about the fourth quarter is it is our biggest seasonally. It's our biggest quarter of the year. The opportunity is tremendous for us at Q4. We're very focused on executing that well across all of the product lines, all the regions, and all the ways we execute in the fourth quarter. It's a big quarter, but we're set up to deliver success there. So that's very optimistic. Brett, maybe you can talk about a little bit of the guidance philosophy.

Todd McKinnon: I was just going to say one thing I was going to say about the fourth quarter is it is our biggest seasonally. It's our biggest quarter of the year. The opportunity is tremendous for us at Q4. We're very focused on executing that well across all of the product lines, all the regions, and all the ways we execute in the fourth quarter. It's a big quarter, but we're set up to deliver success there. So that's very optimistic. Brett, maybe you can talk about a little bit of the guidance philosophy.

Speaker #3: going to say about the fourth quarter is it is our big seasonally, it's our biggest quarter of the year. And the opportunity is tremendous for us at Q4.

Speaker #3: And we're very focused on executing that well across all of the product lines, all the regions, and all the ways we execute in the fourth quarter.

Speaker #3: And we're it's a big quarter, but we're set up to deliver success there and so that's very optimistic. Brett, maybe you can talk about the it's a little bit of the

Speaker #3: Guidance philosophy. Well, I was actually going to touch

Brett Tighe: I was actually going to touch John on just the business momentum before I get into the guidance because I think that's more of your question than I'm happy to get into, which is, look, Q3 was another really solid quarter for us. You heard Todd talk about it. You heard me talk about it. I'm sure Eric will touch on it throughout this call. But we're pleased with the traction that specialization is getting. We're seeing that AE productivity number, the number you've heard me talk about for years now, get into a region that we're quite pleased with. Yes, it's not perfect everywhere, but it is exciting to see it from an overall perspective because that means the specialization is working. And we're excited about that. And what that's doing is that's giving us confidence to be able to start to add more reps into the system.

Speaker #5: John: On just the business momentum. Before I get into the guidance, because I think that's more of your question than I'm happy to get into, which is, look, Q3 was another really solid quarter for us.

Speaker #5: You heard Todd talk about it. You heard me talk about it. I'm sure Eric will touch on it throughout this call. But we're pleased with the traction that specialization is getting.

Speaker #5: We're seeing that A, productivity number, the number you've heard me talk about for years now, get into a region that we're quite pleased with.

Speaker #5: Yes, it's not perfect everywhere, but it is exciting to see it from an overall perspective because that means the specialization is working. And we're excited about that.

Speaker #5: And what that's doing is is that giving us that's giving us confidence to be able to start to add more reps into the system.

Speaker #5: So, you know, for a while, that's something you and I have talked about, and a bunch of us on this call have talked about is, do we have the right amount of capacity out in the field to be able to address the demand?

Brett Tighe: So, you know, for a while, that's something you and I have talked about, and a bunch of us on this call have talked about, is do we have the right amount of capacity out in the field to be able to address the demand? And so we started adding capacity last quarter. We've added more in Q3. We're going to add more in Q4. We expect to add more in FY27. So that tells you we have confidence in the opportunity for a whole host of reasons, right? It could be what Todd has talked about earlier. Okta securing AI is a massive opportunity for us. You can talk about the other new products like governance, PAM, highly regulated identities on the Auth0 side. We feel like the organization is headed in the right direction.

So, you know, for a while, that's something you and I have talked about, and a bunch of us on this call have talked about, is do we have the right amount of capacity out in the field to be able to address the demand? And so we started adding capacity last quarter. We've added more in Q3. We're going to add more in Q4. We expect to add more in FY27. So that tells you we have confidence in the opportunity for a whole host of reasons, right? It could be what Todd has talked about earlier. Okta securing AI is a massive opportunity for us. You can talk about the other new products like governance, PAM, highly regulated identities on the Auth0 side. We feel like the organization is headed in the right direction.

Speaker #5: And so we started adding capacity last quarter. We've added more in Q3. We're going to add more in Q4. We expect to add more in FY27.

Speaker #5: So that tells you we have confidence in the opportunity for a whole host of reasons, right? It could be what Todd has talked about earlier: Okta securing AI is a massive opportunity for us.

Speaker #5: You can talk about the other new products, like governance, PAM, and highly regulated identities on the Auth0 side. We feel like the organization is headed in the right direction.

Speaker #5: And that's why you see us growing sales and marketing expense the last two quarters year over year. That's something you haven't seen in a while.

Brett Tighe: That's why you see us growing sales and marketing expense the last two quarters, year over year. That's something you haven't seen in a while because we're having that confidence in the organization to be able to go out and address this opportunity. So we're excited about what we're seeing in the business. So hopefully that gives you more of the context. I'm happy to talk about the guidance. I mean, I can get into that for a second just so we're all on the same page. Todd touched on it a second ago. Because Q4 is so large, it creates a need for us to be able to embed an amount of conservatism in there that makes a guidance five quarters out not that helpful. Frankly, the whole point of guidance is to be helpful. And if it's not helpful, we shouldn't do it.

That's why you see us growing sales and marketing expense the last two quarters, year over year. That's something you haven't seen in a while because we're having that confidence in the organization to be able to go out and address this opportunity. So we're excited about what we're seeing in the business. So hopefully that gives you more of the context. I'm happy to talk about the guidance. I mean, I can get into that for a second just so we're all on the same page. Todd touched on it a second ago. Because Q4 is so large, it creates a need for us to be able to embed an amount of conservatism in there that makes a guidance five quarters out not that helpful. Frankly, the whole point of guidance is to be helpful. And if it's not helpful, we shouldn't do it.

Speaker #5: Because we're having that confidence in the organization to be able to go out and address this opportunity. And so we're excited about what we're seeing in the business.

Speaker #5: And so, hopefully that gives you more of the context. I'm happy to talk about the guidance. I mean, I can get into that for a second just so we're all on the same page.

Speaker #5: Todd touched on it a second ago. Because Q4 is so large, it creates a need for us to be able to embed an amount of conservatism in there that makes a guidance five quarters out not that helpful.

Speaker #5: And frankly, the whole point of guidance is to be helpful. If it's not helpful, we shouldn't do it. So we're not going to do it this time.

Brett Tighe: So we're not going to do it this time. We will update all of you after we get past our seasonally largest quarter of the year at the end of Q4. So then we can give you a much cleaner look at the world and not have to embed some conservatism associated with our largest quarter. Now, with that said, John, I got to bring up current RPO because I know we've got to talk about it. If you want a number for FY27, or if you want to approximate a number for FY27, I would take a look at the Q4 guided current RPO and apply a coverage ratio to it. That annualized coverage ratio you guys have all heard me talk about for the last few years.

So we're not going to do it this time. We will update all of you after we get past our seasonally largest quarter of the year at the end of Q4. So then we can give you a much cleaner look at the world and not have to embed some conservatism associated with our largest quarter. Now, with that said, John, I got to bring up current RPO because I know we've got to talk about it. If you want a number for FY27, or if you want to approximate a number for FY27, I would take a look at the Q4 guided current RPO and apply a coverage ratio to it. That annualized coverage ratio you guys have all heard me talk about for the last few years.

Speaker #5: And we will update all of you after we get past our seasonally largest quarter of the year at the end of Q4. Then we can give you a much cleaner look at the world and not have to embed some conservatism associated with our largest quarter.

Speaker #5: Now, with that said, John, I got to bring up current RPO because I know we've got to talk about it. And if you look at if you want a number for FY27, or if you want to approximate a number for FY27, I would take a look at the Q4 guided current RPO and apply a coverage ratio to it.

Speaker #5: That annualized coverage ratio— you guys have all heard me talk about for the last few years. Go ahead and take current RPO, divide by the coverage ratio, and then add some professional services on top.

Brett Tighe: Go ahead and take current RPO divided by the coverage ratio, and then add some professional services on the top. And that's going to get you to a rough approximation from a revenue perspective. Now, obviously, the piece of the formula I haven't given you is the coverage ratio. That coverage ratio, I probably would use something in the region of FY26. So hopefully that gives you a little bit of, John, on how the business is doing and why we're excited and optimistic about Q4 and, frankly, beyond Q4, and also a little bit why we decided to hold off on giving a guidance for FY27 because we didn't feel like it was being helpful to all of you anymore.

Go ahead and take current RPO divided by the coverage ratio, and then add some professional services on the top. And that's going to get you to a rough approximation from a revenue perspective. Now, obviously, the piece of the formula I haven't given you is the coverage ratio. That coverage ratio, I probably would use something in the region of FY26. So hopefully that gives you a little bit of, John, on how the business is doing and why we're excited and optimistic about Q4 and, frankly, beyond Q4, and also a little bit why we decided to hold off on giving a guidance for FY27 because we didn't feel like it was being helpful to all of you anymore.

Speaker #5: And that's going to get you to a rough approximation from a revenue perspective. Now, obviously, the piece of the formula I haven't given you is the coverage ratio.

Speaker #5: That coverage ratio, I probably would use something in the region of FY26. So hopefully that gives you a little bit of insight on how the business is doing and why we're excited and optimistic about Q4.

Speaker #5: And frankly, beyond Q4. We also wanted to explain why we decided to hold off on giving guidance for FY27, as we didn't feel it was being helpful to all of you anymore.

Speaker #6: That all makes I really appreciate

Ittai Kidron: That all makes sense. I really appreciate all that. Thank you.

John DiFucci: That all makes sense. I really appreciate all that. Thank you.

Speaker #6: all that. Thank you. Yeah.

Eric Kelleher: Yeah. Just a little added color commentary to Brett's comments as well. We've talked throughout this year on the changes we made in February and go to market to specialize in the platforms. We've talked about one of the key reasons for that strategy is we had decided that specializing on the buyer persona was important, but also that our pace of product innovation on both the Okta platform and Auth0 platform had accelerated to the point where it was just really hard for one seller to keep pace with all the capabilities coming out on the platform. We talked in Q1 about how we were on track for our plan for this year to implement that change and absorb the cost of change management. We talked about having a solid Q2. You've heard us here talk about a solid Q3.

Speaker #5: Just a little added color commentary to Brett's comments as well. We've talked throughout this year on the changes we made in February in our go-to-market strategy to specialize in the platforms.

Speaker #5: And we've talked about one of the key reasons for that strategy is we had decided that specializing on the buyer persona was important. But also that our pace of product innovation on both the Okta platform and Auth0 platform had accelerated to the point where it was just really hard for one seller to keep pace with all the capabilities coming out on the platform.

Speaker #5: And we talked in Q1 about how we were on track for our plan for this year to implement that change and absorb the cost of change management.

Speaker #5: We talked about having a solid Q2. You've heard us here talk about a solid Q3. One indicator that we've shared of how successful we're being in executing that strategy, what Brett talked about earlier, is that our AE attrition right now is near a multi-year low.

Eric Kelleher: One indicator that we've shared of how successful we're being executing that strategy, what Brett talked about earlier, that our AE attrition right now is near a multi-year low and our eight-year, ten-year is near a multi-year high. AE productivity is sequentially increasing. So when we think about how we're doing implementing that significant shift in territory assignments and account assignments and in go-to-market motion overall, we've got a lot of indicators that this strategy is the right strategy for us. It's also created space in our sellers to be able to take on new initiatives. We're talking today about Okta Secure's AI and just how impressed we've been with how much that story is resonating for our customers right now, is a hugely strategically important need.

One indicator that we've shared of how successful we're being executing that strategy, what Brett talked about earlier, that our AE attrition right now is near a multi-year low and our eight-year, ten-year is near a multi-year high. AE productivity is sequentially increasing. So when we think about how we're doing implementing that significant shift in territory assignments and account assignments and in go-to-market motion overall, we've got a lot of indicators that this strategy is the right strategy for us. It's also created space in our sellers to be able to take on new initiatives. We're talking today about Okta Secure's AI and just how impressed we've been with how much that story is resonating for our customers right now, is a hugely strategically important need.

Speaker #5: And our eight-year and ten-year is near a multi-year high. And AE productivity is sequentially increasing. So, when we think about how we're doing in implementing that significant shift in territory assignments, account assignments, and in go-to-market motion overall, we've got a lot of indicators that this strategy is the right strategy for us.

Speaker #5: And it's also created space in our sellers to be able to take on new initiatives like we're talking today about Okta Secures AI. And just how impressed we've been with how much that story is resonating for our customers right now is a hugely strategically important need.

Speaker #5: We can attack that need now because we've got more focus on that particular use case for that particular buying persona. So we're very optimistic about the strategy playing out.

Eric Kelleher: We can attack that need now because we've got more focus on that particular use case for that particular buying persona. So we're very optimistic on the strategy playing out.

We can attack that need now because we've got more focus on that particular use case for that particular buying persona. So we're very optimistic on the strategy playing out.

Speaker #6: That all makes sense, Eric. Thank you. And it's showing. It's showing.

Ittai Kidron: That all makes sense, Eric. Thank you. It's showing. It's showing. Thanks.

John DiFucci: That all makes sense, Eric. Thank you. It's showing. It's showing. Thanks.

Speaker #6: Thanks. Okay.

Todd McKinnon: Okay. Next up, we'll go to Fatima Boolani at Citi.

Dave Gennarelli: Okay. Next up, we'll go to Fatima Boolani at Citi.

Speaker #5: Next up, we'll go to Fatima Boulani at Okta Inc.

Speaker #5: City. Hey, good

Fatima Boolani: Hey, good afternoon. Thank you for taking my question. Can you hear me okay?

Speaker #7: Afternoon. Thank you for taking my.

Speaker #7: Question: Can you hear me okay? Yeah.

Todd McKinnon: Yeah. Loud and clear, Fatima.

Dave Gennarelli: Yeah. Loud and clear, Fatima.

Speaker #5: Loud and clear, Fatima.

Speaker #7: Good. Great. Todd, this one's for you. We've been really fascinated with the broader themes around agentic commerce. So I wanted to get your pulse on where the portfolio is most relevant to capitalizing on that opportunity and where do you see effectively your customer identity business playing a very meaningful role in that?

Fatima Boolani: Good. Todd, this one's for you. We've been really fascinated with the broader themes around agentic commerce. So I wanted to get your pulse on where the portfolio is most relevant to capitalizing on that opportunity. And where do you see effectively your customer identity business playing a very meaningful role in that? And I guess, Eric, just to even loop you into the conversation, how are conversations with customers trending with respect to building a stack behind some of these really interesting opportunities that are going to unfurl in the next couple of years? Thank you.

Speaker #7: And I guess, Eric, just to even loop you into the conversation, how are conversations with customers trending with respect to building a stack behind some of these really interesting opportunities that are going to unfurl in the next couple of years?

Speaker #7: Thank you.

Todd McKinnon: I think it's a big deal. I think agentic commerce, and if you have a website that's doing customer support or e-commerce, you're going to have some version of agents on there very quickly if you don't already. And if you're building those agents, Auth0 for AI Agents is the right solution. It shortcuts the ability to have those agents connect to multiple systems on the back end. It helps you put fine-grained authorization inside of your agentic flow. So it's purpose-built. And I think it's a big trend we're talking about here. It's the same trend we're talking about here, whether you're managing agents for internal deployment to help people get work done in their enterprise workflows, or your B2C use cases moving toward a more agentic interface versus the person interface in the past. It's the big trend we're talking about.

Speaker #5: Think agentic commerce. If you have a website and you're doing customer support or e-commerce, you're going to have some version of agents on there very quickly if you don't already.

Speaker #5: And if you're building those agents, Auth0 for AI agents is the right solution. It shortcuts the ability to have those agents connect to multiple systems on the back end.

Speaker #5: It helps you put fine-grained authorization inside of your agentic flow. So it's purpose-built, and we're, I think, it's a big trend we're talking about here.

Speaker #5: It's the same trend we're talking about here. Whether you're managing agents for internal deployment to help people get work done in their enterprise workflows, or you're in your B2C use cases moving toward a more agentic interface versus the person interface in the past, it's the big trend we're discussing.

Speaker #5: Yeah. And I'll add to that. We talked about at our in the quarter at our user conference, Octane, we talked about the customer conversations around this challenge.

Eric Kelleher: Yeah. And I'll add to that. We talked about in the quarter at our user conference, Okta Inc, we talked about the customer conversations around this challenge. And we shared a survey that we had run of a few hundred enterprise customers reporting that 91% of them had agents in production and only 10% of them were confident they had them secured. The need is very acute, and it's very urgent. And it's a key reason why this is elevated. It's such a prominent conversation. Todd talked about one example of where our customers are struggling with this in Fine-Grained Authorization. So for builders of agents, they need to solve for at least two distinct challenges. One is ensuring their agents can be discovered. And the second is ensuring that agents are only authorized to do specific things, that they have access to specific corporate assets and not others.

Speaker #5: And we shared a survey that we had run of a few hundred enterprise customers, reporting that 91% of them had agents in production and only 10% of them were confident they had them secured.

Speaker #5: The need is very acute, and it's very urgent, and it's a key reason why this has elevated to such a prominent conversation. Todd talked about one example of where our customers are struggling with this.

Speaker #5: In fine-grained authorization, builders of agents need to solve at least two distinct challenges. One is ensuring their agents can be discovered.

Speaker #5: And the second is ensuring that agents are only authorized to do specific things; that they have access to specific corporate assets and not others.

Speaker #5: And Auth0 provides the capabilities to solve both of that with support for cross-app access and model context protocol. Agents built through Auth0 can be discovered and managed properly, and Auth0's fine-grained authorization allows agents to be built in a way that their privileges can be very, very finely tuned, which is hugely important to our customers.

Eric Kelleher: Auth0 provides the capabilities to solve both of that with support for Cross-App Access and Model Context Protocol. Agents built through Auth0 can be discovered and managed properly. Auth0's Fine-Grained Authorization allows agents to be built in a way that their privileges can be very, very finely tuned, which is hugely important to our customers in that space. But the second part of that challenge that our customers have is they don't know. They tell us they don't know what agents are deployed in their environment. They don't know what their users have turned on and what their users' agents don't have access to. This is the challenge of discoverability and being able to discover agents. On the Okta Platform side, our Identity Security Posture Management product scans corporate networks to find service accounts and the privileges of those service accounts.

Auth0 provides the capabilities to solve both of that with support for Cross-App Access and Model Context Protocol. Agents built through Auth0 can be discovered and managed properly. Auth0's Fine-Grained Authorization allows agents to be built in a way that their privileges can be very, very finely tuned, which is hugely important to our customers in that space. But the second part of that challenge that our customers have is they don't know. They tell us they don't know what agents are deployed in their environment. They don't know what their users have turned on and what their users' agents don't have access to. This is the challenge of discoverability and being able to discover agents. On the Okta Platform side, our Identity Security Posture Management product scans corporate networks to find service accounts and the privileges of those service accounts.

Speaker #5: In that space, the second part of that challenge that our customers have is they don't know. They tell us they don't know what agents are deployed in their environment.

Speaker #5: They don't know what their users have turned on and what their user agents don't have access to. And this is the challenge of discoverability and being able to discover agents.

Speaker #5: So on the Okta platform side, our identity security posture management product scans corporate networks to find service accounts and the privileges of those service accounts. But it will also now help discover agents that are implemented and deployed as long as they support the cross-app access protocol, the extension to MCP.

Eric Kelleher: But it will also now help discover agents that are implemented and deployed as long as they support the Cross-App Access protocol, the extension to MCP. So the problem of discoverability is something they need help with. And we're well-positioned to help them with that. And the other related challenge is not only knowing that they exist, but then protecting the identity of those agents to ensure the agents can't themselves be impersonated by a threat actor and to ensure that those agents are properly authorized to take the actions that they're attempting to access. So the Auth0 platform on the build side is hugely important for our customers. And the Okta platform on the discover and manage side is important for them as well.

But it will also now help discover agents that are implemented and deployed as long as they support the Cross-App Access protocol, the extension to MCP. So the problem of discoverability is something they need help with. And we're well-positioned to help them with that. And the other related challenge is not only knowing that they exist, but then protecting the identity of those agents to ensure the agents can't themselves be impersonated by a threat actor and to ensure that those agents are properly authorized to take the actions that they're attempting to access. So the Auth0 platform on the build side is hugely important for our customers. And the Okta platform on the discover and manage side is important for them as well.

Speaker #5: So, the problem of discoverability is something they need help with, and we're well-positioned to help them with that. The other related challenge is not only knowing that they exist but also protecting the identity of those agents to ensure that the agents can't themselves be impersonated by a threat actor and to ensure that those agents are properly authorized to take the actions that they're attempting to access.

Speaker #5: So the Auth0 platform on the build side is hugely important for our customers, and the Okta platform on the discover and manage side is important for them as well.

Speaker #5: That also includes things like privileged access, allowing the agents to have tokens that are appropriately vaulted and governance—having them provisioned and de-provisioned based on just-in-time requirements so they don't have agents living with standing privileges when they don't need to.

Eric Kelleher: That also includes things like privileged access, allowing the agents to have tokens that are appropriately vaulted, and governance, having them provisioned and deprovisioned based on just-in-time requirements. So they don't have agents live with standing privileges when they don't need to be standing.

That also includes things like privileged access, allowing the agents to have tokens that are appropriately vaulted, and governance, having them provisioned and deprovisioned based on just-in-time requirements. So they don't have agents live with standing privileges when they don't need to be standing.

Speaker #5: To be standing, yeah. I think the most... I think.

Fatima Boolani: Yeah. I think we should see the commercial impact in both your businesses as opposed to what intuitively I would think would just be on the customer identity side.

Speaker #7: You should see the commercial impact in both your businesses, as opposed to what intuitively I would think would just be on the customer identity side.

Speaker #5: Yeah. I think Fatima, I could think of a meeting I just had a couple of weeks ago, and this was how it all comes together.

Todd McKinnon: Yeah. I think, Fatima, I could think of a meeting I just had a couple of weeks ago. This was how it all comes together. So this company is a large mortgage company, online mortgage company. They think about it as when people come to their website and they start browsing for mortgages and they answer the customer's question in an agentic workflow. Then it actually flows all the way through their origination business on the back end, which is very much enterprise workflows where people have to use human-in-the-loop system to make approvals for mortgages that are over a certain amount. They have to maybe automate the entirety of the mortgage process so they can fulfill it without anyone, any person. So it's like external facing on their website in the B2C. It also goes all the way back into the enterprise.

Speaker #5: So there's this company, a large mortgage company, an online mortgage company. They think about it as when people come to their website and start browsing for mortgages, and they answer the customer's questions in the agentic workflow. Then it actually flows all the way through their origination business on the back end, which is very much enterprise workflows where people have to use a human-in-the-loop system to make approvals for mortgages that are over a certain amount.

Speaker #5: entirety of the mortgage process so they can They have to maybe automate fulfill it without any person. So it's like external-facing on their website in the B2C, and it's also goes all the way back into the enterprise.

Speaker #5: And they want all of that to come together in the business value for them, which is very simple. It's their conversion rates on the mortgages that are up 5X if there's no delay.

Todd McKinnon: They want that all to come together. The business value for them is very simple. Their conversion rates on the mortgage is up 5x if there's no delay. There's no delay in the approval, or they don't have to go for some other thing. It's a very clear ROI. Before they were talking to us, they're really stuck on these questions we're talking about. How do we make sure that the consumer-facing agent has the right access to the back-end systems? How do we make sure that the enterprise-facing agents have the right permissions as we automate some of those workflows and don't give overly permissive access to these agents? The enterprise all comes together in that very concrete example.

They want that all to come together. The business value for them is very simple. Their conversion rates on the mortgage is up 5x if there's no delay. There's no delay in the approval, or they don't have to go for some other thing. It's a very clear ROI. Before they were talking to us, they're really stuck on these questions we're talking about. How do we make sure that the consumer-facing agent has the right access to the back-end systems? How do we make sure that the enterprise-facing agents have the right permissions as we automate some of those workflows and don't give overly permissive access to these agents? The enterprise all comes together in that very concrete example.

Speaker #5: There's no delay in the approval, or they don't have to go for some other thing. So it's a very clear ROI. And before they were talking to us, they were really stuck on these questions we're discussing.

Speaker #5: How do we make sure that the consumer-facing agent has the right access to the back-end systems? How do we make sure that the enterprise-facing agents have the right permissions as we automate some of those workflows and don't overly give overly permissive access to these agents in the enterprise?

Speaker #5: It all comes together in that.

Speaker #5: very concrete example. I appreciate

Fatima Boolani: I appreciate that. Thank you.

Speaker #7: that. Thank

Speaker #7: you. And next up is Josh Tilton at

Todd McKinnon: Next up is Josh Tilton at Wolfe.

Dave Gennarelli: Next up is Josh Tilton at Wolfe.

Speaker #5: Wolf.

Speaker #8: Hey, guys. Thanks for sneaking in. Can you hear me? You're good, Josh.

Josh Tilton: Hey, guys. Thanks for sneaking me in. Can you hear me?

Speaker #5: Logging in.

Todd McKinnon: Logging in.

Dave Gennarelli: Logging in.

Josh Tilton: You're good, Josh. Brett, not to put you on the spot here, I do appreciate the color and how to think about next year's revenue. But to kind of simplify it without the math, bookings growth year to date is kind of growing where Street is for revenue growth next year. So how do we think about that? What you're doing so far this year, what it implies for next year? Are you comfortable with where the Street sits? But I'm just trying to understand. Bookings growth has been good. It's kind of in line with the implied or where the Street is for revenue next year. How do you feel about where the Street sits today?

Speaker #8: Brett, not to put you on the spot here, I do appreciate the color and how to think about next year's revenue. But to kind of simplify it without the math, bookings growth year to date is kind of growing where the street is for revenue growth next year.

Speaker #8: So how do we think about that? What you're doing so far this year, what it implies for next year, are you comfortable with where the Street sits?

Speaker #8: But I'm just trying to understand. Bookings growth has been good. It's kind of in line with the implied or where the Street is for revenue next year.

Speaker #8: How do you feel about where the street sits?

Speaker #8: Today, I think in general, if you were to...

Todd McKinnon: I think in general, if you were to take our comments and boil them into a couple of little simple things, which is one, you can feel the business momentum growing. Right? Eric talked about it a few minutes ago around how we had to make some changes at the beginning of this year to further specialize the field. You can feel that business momentum growing as we go into Q4. We think that that business momentum, on the back of us specializing in the field, is helping, in addition to the market seems to be in a good place for us for all these new products, whether it's Okta Securing AI, whether it's governance, or all these new products that we've talked about over the last several quarters.

Brett Tighe: I think in general, if you were to take our comments and boil them into a couple of little simple things, which is one, you can feel the business momentum growing. Right? Eric talked about it a few minutes ago around how we had to make some changes at the beginning of this year to further specialize the field. You can feel that business momentum growing as we go into Q4. We think that that business momentum, on the back of us specializing in the field, is helping, in addition to the market seems to be in a good place for us for all these new products, whether it's Okta Securing AI, whether it's governance, or all these new products that we've talked about over the last several quarters.

Speaker #5: Take our comments and boil them into a couple of little simple things. One, you can feel the business momentum growing, right? Eric talked about it a few minutes ago.

Speaker #5: Around how we had to make some changes at the beginning of this year to further specialize the field, you can feel that business momentum growing as we go into Q4.

Speaker #5: And we think that the business momentum, on the back of us specializing in the field, is helping. In addition, the market seems to be in a good place for us for all these new products, whether it's Okta securing AI, whether it's governance, or all these new products that we've talked about over the last several quarters.

Speaker #5: So, I don't have an exact answer for you in terms of where the street is and bookings growth and all that sort of stuff, but the really important thing is you can see the growing confidence in the organization, and you can see the productivity.

Todd McKinnon: So I don't have an exact answer for you in terms of where the Street is and bookings growth and all that sort of stuff. But the really important thing is you can see the growing confidence in the organization, and you can see the productivity. You can see the optimism. You can see all these things headed in the right direction. And that's why you can kind of hear the tone from the three of us and the way we've been talking about it throughout this call as being very positive. And we feel like the goal that we've been talking about for a while of accelerating growth in the medium term is something that is on the horizon for us, which is exciting. I'm not saying when it's going to happen or how it's going to happen.

So I don't have an exact answer for you in terms of where the Street is and bookings growth and all that sort of stuff. But the really important thing is you can see the growing confidence in the organization, and you can see the productivity. You can see the optimism. You can see all these things headed in the right direction. And that's why you can kind of hear the tone from the three of us and the way we've been talking about it throughout this call as being very positive. And we feel like the goal that we've been talking about for a while of accelerating growth in the medium term is something that is on the horizon for us, which is exciting. I'm not saying when it's going to happen or how it's going to happen.

Speaker #5: You can see the optimism. You can see all these things headed in the right direction. And that's why you can kind of hear the tone from the three of us and the way we've been talking about it throughout this call as being very positive and we feel like the goal that we've been talking about for a while of accelerating growth in the medium term is something that is on the horizon for us, which is exciting.

Speaker #5: I'm not saying when it's going to happen or how it's going to happen. I'm just saying that we do feel that that business momentum is headed in the right direction, and that's why we're adding capacity, like I said a few minutes ago, to go out and address that demand.

Todd McKinnon: I'm just saying that we do feel that that business momentum is headed in the right direction. And that's why we're adding capacity, like I said a few minutes ago, to go out and address that demand.

I'm just saying that we do feel that that business momentum is headed in the right direction. And that's why we're adding capacity, like I said a few minutes ago, to go out and address that demand.

Speaker #8: Super helpful. Thank you.

Josh Tilton: Super helpful. Thank you.

Speaker #5: No, no problem. Next up is Jonathan Ho at William Blair.

Todd McKinnon: No problem. Next up is Jonathan Ho at William Blair.

Brett Tighe: No problem.

Dave Gennarelli: Next up is Jonathan Ho at William Blair.

Speaker #9: Hi, good afternoon. I wanted to see if you could update us a little bit on your sales realignment efforts earlier this year and how maybe the product suites have had an effect on that go-to-market.

Jonathan Ho: Hi. Good afternoon. I wanted to see if you could update us a little bit on your sales realignment efforts earlier this year and how maybe the product suites have had an effect on that go-to-market. Lastly, how do we think about sort of the pace for net retention over time? It's been sort of sitting at this 106% level for a bit. I know that's from prior periods. But how do we think about maybe the mechanics of that recovery? Thank you.

Speaker #9: Lastly, how do we think about the pace for net retention over time? It's been sort of sitting at this 106 level for a bit, and I know that's from prior periods, but how do we think about maybe the mechanics of that recovering?

Speaker #9: Thank you.

Speaker #5: Yeah. Hi, Jonathan. I'll take the first part of that question; I'll let Brett take the second part. The go-to-market specialization for us, as we've said throughout this call, we feel it's been very effective, and there's a few ways that that has played out for us.

Todd McKinnon: Hi, Jonathan. I'll take the first part of that question. I'll let Brett take the second part. The go-to-market specialization for us, as we've said throughout this call, we feel it's been very effective. And there's a few ways that that has played out for us. On the front end, the top of the funnel, we have specialized our demand gen teams for their brand generation work, their pipe generation work. And we are pleased with the pipe that we've been able to generate in the business. We also have had more focus on our distinct personas. So we've had an opportunity in our field to get closer to the very specific granular needs of our CIO and CISO buyers and of our developer buyers. And we've been able to focus our R&D efforts on the Okta platform and the Auth0 platform on those personas.

Eric Kelleher: Hi, Jonathan. I'll take the first part of that question. I'll let Brett take the second part. The go-to-market specialization for us, as we've said throughout this call, we feel it's been very effective. And there's a few ways that that has played out for us. On the front end, the top of the funnel, we have specialized our demand gen teams for their brand generation work, their pipe generation work. And we are pleased with the pipe that we've been able to generate in the business. We also have had more focus on our distinct personas. So we've had an opportunity in our field to get closer to the very specific granular needs of our CIO and CISO buyers and of our developer buyers. And we've been able to focus our R&D efforts on the Okta platform and the Auth0 platform on those personas.

Speaker #5: On the front end, the top of the funnel, we have specialized our demand generation teams for their brand generation work and their pipeline generation work, and we are pleased with the pipeline that we've been able to generate in the business.

Speaker #5: We also have had more focus on our distinct personas. So, we've had an opportunity in our field to get closer to the very specific granular needs of our CIO and CISO buyers and of our developer buyers.

Speaker #5: And we've been able to focus our R&D efforts on the Okta platform and the Auth0 platform on those personas. And so we've seen.

Todd McKinnon: And so we've seen significant innovation improvements tying specifically, more specifically, to a discrete buying persona, which has allowed us to continue to capture market. Things like Okta Customer Identity, which we talked about last quarter, has really come back as part of our refocusing on the Okta platform for the enterprise buyers. So that specialization has been very helpful. One of the questions this group has raised in prior quarters is how the field organization was feeling about specialization, whether they felt this was a positive or something that was a concern to their ability to be successful. And as I mentioned earlier, we're seeing right now our sales attrition is near a multi-year low, and our sales tenure is near a multi-year high.

And so we've seen significant innovation improvements tying specifically, more specifically, to a discrete buying persona, which has allowed us to continue to capture market. Things like Okta Customer Identity, which we talked about last quarter, has really come back as part of our refocusing on the Okta platform for the enterprise buyers. So that specialization has been very helpful. One of the questions this group has raised in prior quarters is how the field organization was feeling about specialization, whether they felt this was a positive or something that was a concern to their ability to be successful. And as I mentioned earlier, we're seeing right now our sales attrition is near a multi-year low, and our sales tenure is near a multi-year high.

Speaker #1: persona , Discreet buying which has allowed us to continue to capture market . Things like Okta , customer identity , which we talked about last quarter , has really come back as part of our refocusing on the Okta platform for for the buyers .

Speaker #1: enterprise So that specialization has been very helpful . One of the questions this group has raised in prior quarters is how the how the field organization was feeling about specialization , whether they felt this was a positive , a positive , or something that was a concern that their ability to to be successful .

Speaker #1: as I And earlier , mentioned we're seeing right now our sales attrition is as near a multiyear low . And our sales tenure is near a multi-year high .

Speaker #1: So we're feeling very confident not only in the model's capability to produce financial results, but we're feeling very confident that our own field organization is very engaged and feels that they're being successful in this model, which is what we expected.

Todd McKinnon: So we're feeling very confident in not only in the model's capability to produce financial results, but we're feeling very confident that our own field organization is very engaged and feels that they're being successful in this model, which is what we expected. And we're pleased to see it playing out the way that we expected. Yeah. Okay. So I'll talk about it in our hour in a second, Jonathan. But one thing that Eric was saying made me think of around the specialization. One of the reasons why the new product introduction percentage has remained quite healthy as a percentage of total bookings, we've talked about it over the last three, four quarters, is because people are starting to really get into the details on the products, be able to sell it directly to a specific economic buyer. And it helps them just be more familiar with things.

So we're feeling very confident in not only in the model's capability to produce financial results, but we're feeling very confident that our own field organization is very engaged and feels that they're being successful in this model, which is what we expected. And we're pleased to see it playing out the way that we expected.

Speaker #1: Pleased to see it playing out the way we expected. Yeah.

Speaker #2: Okay . So I'll talk about in a second . Jonathan . But one thing that Eric was saying made me think of around the specialization , one of the reasons why the new product introduction percentage has remained quite healthy as a percentage of total bookings .

Brett Tighe: Yeah. Okay. So I'll talk about it in our hour in a second, Jonathan. But one thing that Eric was saying made me think of around the specialization. One of the reasons why the new product introduction percentage has remained quite healthy as a percentage of total bookings, we've talked about it over the last three, four quarters, is because people are starting to really get into the details on the products, be able to sell it directly to a specific economic buyer. And it helps them just be more familiar with things.

Speaker #2: You know , we've talked about it over the last three , four quarters is because people are really get starting to into the details on the products , be able to sell it directly to a specific buyer , and it helps them just be more familiar with any time you're in more familiar with something , you're probably going to be better at it .

Speaker #2: that's And so that's been the the theory behind why we And did this . it seems to be playing out in that regard .

Todd McKinnon: Anytime you're more familiar with something, you're probably going to be better at it. And so that's been the theory behind why we did this. And it seems to be playing out in that regard.

Anytime you're more familiar with something, you're probably going to be better at it. And so that's been the theory behind why we did this. And it seems to be playing out in that regard.

Speaker #2: And that's .

Speaker #1: A In

Speaker #1: out . great call

Speaker #2: terms of the Gnrh-r the the one thing I would say before we get into Gnrh-r is gross retention remains healthy . It's one of those things that we're quite proud of , and we expect to the continue over over the long run with that , given the value that we drive for our customers day in and day out , in terms of where the range is and where it could be , you know , 106 is right in the range .

Josh Tilton: That's a great call out.

Eric Kelleher: That's a great call out.

Todd McKinnon: In terms of the NRR, the one thing I would say before we get into NRR is gross retention remains healthy. It's one of those things that we're quite proud of. We expect to continue over the long run with that, given the value that we drive for our customers day in, day out. In terms of where the range is and where it could be, 106% is right in the range we've talked about. You've heard me talk about it every quarter for a while now. This is where the range we thought it was going to be. It's traveling in the range that we expect it to be. We probably think it tracks in this range, or we do think it tracks in this range for Q4.

Brett Tighe: In terms of the NRR, the one thing I would say before we get into NRR is gross retention remains healthy. It's one of those things that we're quite proud of. We expect to continue over the long run with that, given the value that we drive for our customers day in, day out. In terms of where the range is and where it could be, 106% is right in the range we've talked about. You've heard me talk about it every quarter for a while now. This is where the range we thought it was going to be. It's traveling in the range that we expect it to be. We probably think it tracks in this range, or we do think it tracks in this range for Q4.

Speaker #2: We've talked about it. You know, you've heard me talk about it every quarter for a while now. And this is the range we thought it was going to be.

Speaker #2: So it's traveling in the range that we expect it to be . We probably think it tracks in this range do , or we think it tracks in this range for Q4 , I don't have a great answer for you beyond that , Jonathan , because we are still early in our fiscal year planning , but obviously , if grow we want to faster , this is something we're going to focus on because it's on the back of that strong , gross retention .

Todd McKinnon: I don't have a great answer for you beyond that, Jonathan, because we are still early in our fiscal year planning. But obviously, if we want to grow faster, this is something we're going to focus on because it's on the back of that strong gross retention. How can we keep doing these upsells and doing more NPI and more Okta Securing AI to be able to help ourselves in that number over the long run? Obviously, there are dynamics that go in there. If we sell more new business, it's a little bit of a headwind in new NRR. And if we sell more upsells, it's a tailwind. So there's always a balance in that number that we should keep an eye on when we're looking at the overall total business.

I don't have a great answer for you beyond that, Jonathan, because we are still early in our fiscal year planning. But obviously, if we want to grow faster, this is something we're going to focus on because it's on the back of that strong gross retention. How can we keep doing these upsells and doing more NPI and more Okta Securing AI to be able to help ourselves in that number over the long run? Obviously, there are dynamics that go in there. If we sell more new business, it's a little bit of a headwind in new NRR. And if we sell more upsells, it's a tailwind. So there's always a balance in that number that we should keep an eye on when we're looking at the overall total business.

Speaker #2: How keep can we doing these upsells and NPI and more doing more active security security , AI to be able to help ourselves in that number over the long run .

Speaker #2: Obviously , there are dynamics that go in there , like if we sell more new business , it's , you know , a little bit of a head to end a new gnrh-r .

Speaker #2: And if we sell more upsells, it's a tailwind. So there's always a balance in that number that we should keep an eye on when we're looking at the overall total business.

Speaker #1: Great .

Speaker #2: Thank you . John . Next we'll go to Bellman at Jefferies .

Josh Tilton: Great. Thank you.

Jonathan Ho: Great. Thank you.

Speaker #3: Hi guys . I'm on for Joe for taking today . Thanks our question . Brett . You've been very candid in the level of prudence and guidance the last couple of quarters , but you've also seen larger beats historically in four .

Todd McKinnon: No problem, Jonathan. Next, we'll go to Anik Baumann at Jefferies.

Brett Tighe: No problem, Jonathan.

Dave Gennarelli: Next, we'll go to Anik Baumann at Jefferies.

Brett Tighe: Hi, guys. I'm on for Joe Gallo today. Thanks for taking our question. Brett, you've been very candid in the level of prudence and guidance the last couple of quarters. But you've also seen larger beats historically in Q4 over the past couple of years. So can you comment on the puts and takes to guide in Q4? You've talked about conservatism there, but just the puts and takes to it. And then also, is the guidance framework still in line with what we've seen historically?

[Analyst] (Jefferies): Hi, guys. I'm on for Joe Gallo today. Thanks for taking our question. Brett, you've been very candid in the level of prudence and guidance the last couple of quarters. But you've also seen larger beats historically in Q4 over the past couple of years. So can you comment on the puts and takes to guide in Q4? You've talked about conservatism there, but just the puts and takes to it. And then also, is the guidance framework still in line with what we've seen historically?

Speaker #3: over the Q past couple of years . So can you comment on the puts and takes to guide in four ? Q you've talked about conservatism .

Speaker #3: There, but just the puts and takes to it. And then also is the guidance framework line with still in what we've seen historically?

Speaker #2: Yeah , I mean , just in general , just to answer your second question , first , we're still trying to get closer to the Pin .

Speaker #2: Nice beat this quarter on Now. We had a current RPO because the team just flat out did a really nice job.

Todd McKinnon: Yeah. I mean, just in general, just to answer your second question first, we're still trying to get closer to the pin. Now, we had a nice beat this quarter on current RPO because the team just flat out outperformed. They did a really nice job. And so I'm happy to be wrong in that situation. But we want to get closer to the pin. That's been our stated goal now for several quarters. And if you look at Q4, we've removed any specific line items. Right now, it's just down to market conditions and our own internal expectations. So it's real simple. And we're looking forward to executing in Q4 as best we can because you've heard us talk about it. It is our seasonally largest quarter. And we want to finish a strong FY26 with a bang. Great. Next up, we'll go to Shrenik Kothari at Baird.

Brett Tighe: Yeah. I mean, just in general, just to answer your second question first, we're still trying to get closer to the pin. Now, we had a nice beat this quarter on current RPO because the team just flat out outperformed. They did a really nice job. And so I'm happy to be wrong in that situation. But we want to get closer to the pin. That's been our stated goal now for several quarters. And if you look at Q4, we've removed any specific line items. Right now, it's just down to market conditions and our own internal expectations. So it's real simple. And we're looking forward to executing in Q4 as best we can because you've heard us talk about it. It is our seasonally largest quarter. And we want to finish a strong FY26 with a bang.

Speaker #2: outperformed . And so you know I'm happy . Happy to be wrong in that situation . But you know we want to get closer to the pin .

Speaker #2: That's that's been our stated goal . Now for been our for several quarters . And if you look at Q4 , we've removed any specific line items right now , it's just down to market conditions and our own internal expectations .

Speaker #2: So it's real simple , and we're looking forward to executing in Q4 as best we can , because about it . talk It is our seasonally largest quarter , and we want to finish .

Speaker #2: A strong FY26 with a bang.

Speaker #4: Next up, we'll go to Q3 at Baird.

Dave Gennarelli: Great. Next up, we'll go to Shrenik Kothari at Baird.

Speaker #5: Yeah , taking my thanks for question . I think there was a question on consolidation and then a lot on agent . Try to the two like combine I believe as you guys head into 26 kind of planning cycles .

Shrenik Kothari: Yeah. Thanks for taking my question. I think there was a question on consolidation and then a lot on agent. Try to combine the two. I believe as you guys head into 2026, kind of planning cycles. And I think, Todd, you did mention there's a desire for a single control plane to manage a GenAI tech as well. Are you seeing signs that firms are also thinking about consolidating AI, ID governance around a vendor? And just based on whatever you saw so far in terms of those 100-plus engaged customers, can you walk us through the typical conversion timeline from interest towards the ACV and bookings era? Thanks.

Speaker #5: And I think , Todd , mention there's a desire for a single control plane to manage a tech as well . Are you seeing signs that bars are also thinking about consolidating , consolidating AI and governance around a vendor and saw far in terms of those 100 plus so engaged customers , can you walk us through like the typical conversion timeline from interest towards the ACV booking or things ?

Speaker #4: Yeah .

Speaker #1: right , You're the the two trends are very related . This thinking about agentic future for the these customers . And then thinking about what that means for their identity stacks in the short term , we're working with one of the largest fortune .

Todd McKinnon: Yeah. You're right. The two trends are very related. Thinking about the agentic future for these customers and then thinking about what that means for their identity stacks in the short term. We're working with one of the largest Fortune 50 customers of ours on a wholesale replacement of Ping Identity, SailPoint, CyberArc, and several other identity vendors across their whole stack to standardize on Okta products. And the driver there is two things. It's cost. They wanted to have less cost in their environment. And they wanted to have better functioning integrated products. That's part of the driver. But the bigger driver was actually something very simple, which is this company has 5,500 applications. And all these years with these legacy vendors, they only had 1,500 of them hooked up to their central identity system.

Speaker #1: It's a Fortune 50 customer of ours on a wholesale replacement of Ping Identity, SailPoint, CyberArk, and several other identity vendors across their whole stack to standardize on Okta products and the driver.

Speaker #1: There is two things . It's it's cost . They wanted to less have cost in their environment , and they wanted to have more better integrated functioning , products .

Speaker #1: That's part of the driver . But the bigger driver was actually something very simple , which is this company has 5500 applications and only all these years with these legacy vendors , they only had 1500 of them hooked up to their central identity system .

Speaker #1: So they're thinking about a future where they want to give their agents and their agent infrastructure access to every application that they have.

Todd McKinnon: They're thinking about an agentic future where they want to give their agents and their agent infrastructure access to every application that they have. They only had a paved path for 1,500 of them because they only were able to get that many on their identity platform with the old technology. When they think about standardizing, they think about moving all 5,500 applications to Okta. Then that cuts costs. It makes the system work better because governance is integrated to access management, is integrated to privilege. But more importantly for them, I think it enables this agentic future where they can give access in a controlled, governed, managed way to all these agents doing all these workflows that's behind a standard IDP. They're all kind of interrelated.

They're thinking about an agentic future where they want to give their agents and their agent infrastructure access to every application that they have. They only had a paved path for 1,500 of them because they only were able to get that many on their identity platform with the old technology. When they think about standardizing, they think about moving all 5,500 applications to Okta. Then that cuts costs. It makes the system work better because governance is integrated to access management, is integrated to privilege. But more importantly for them, I think it enables this agentic future where they can give access in a controlled, governed, managed way to all these agents doing all these workflows that's behind a standard IDP. They're all kind of interrelated.

Speaker #1: They only had a paved path for 1,500 of them because they were only able to get their identity platform with the old technology.

Speaker #1: So when they think about standardizing , they think about moving all 5500 applications to Okta and then that cuts costs . It makes the system work better because governance is integrated to access .

Speaker #1: Management is integrated to privilege, but more importantly for them, I think it enables this agentic future where they can give access and control.

Speaker #1: Governance is managed in a way that coordinates all these agents handling various workflows. That's the foundation of the standard IDP. They are all interconnected, but I believe they all point north for Okta, which is a very good position to be in.

Todd McKinnon: But I think they all point north for Okta, which is a very good position to be in. Next up, we'll go to Brad Zelnick at Deutsche Bank.

But I think they all point north for Okta, which is a very good position to be in.

Speaker #4: Next up, we'll go to Zelnick at Brad Deutsche Bank.

Speaker #6: Great . Thanks a lot , Dave , and nice to see everybody . Guys , in Q3 . I think you've added more headcount this quarter than you have in three years , which I take as an expression of confidence , especially knowing how devout followers you guys are about rule of 40 .

Dave Gennarelli: Next up, we'll go to Brad Zelnick at Deutsche Bank.

Brad Zelnick: Great. Thanks a lot, David. Nice to see everybody. Guys, in Q3, I think you've added more headcount this quarter than you have in three years, which I take as an expression of confidence, especially knowing how devout followers you guys are about Rule of 40. And that's in addition to a lot of other constructive commentary tonight. But just to follow on DiFucci's question, and Josh Tilton's question as well, if I take, Brett, your comments on CRPO coverage ratios, quick back of the envelope gets me to like 9.5% revenue growth for next year. And I just want to make sure that I heard you correctly and I'm interpreting that right.

Speaker #6: And that's in addition to a lot of other constructive commentary tonight . But but follow on to Fucci's just to question , and Josh Tilton's question as well , if I take Brett , your comments on Crpo coverage ratios , quick back of the envelope gets me to like 9.5% revenue growth for next year , and I just want to make sure that I heard you correctly .

Speaker #6: And I'm interpreting that right.

Speaker #2: Yeah , the simple math is just current RPO , right . And you take the coverage ratio and the coverage ratio just to make sure everyone is clear on what that is .

Speaker #2: Let's say we can let's calculate the FY 26 coverage ratio together . I'll usually take Q4 , FY 25 current RPO and you divide it by next year .

Todd McKinnon: The simple math is just Current RPO, right? And you take the Coverage Ratio and the Coverage Ratio. Just to make sure everyone is clear on what that is. Let's calculate the FY26 Coverage Ratio together. All you do is you take Q4 FY25 Current RPO and you divide it by next year.

Brett Tighe: The simple math is just Current RPO, right? And you take the Coverage Ratio and the Coverage Ratio. Just to make sure everyone is clear on what that is. Let's calculate the FY26 Coverage Ratio together. All you do is you take Q4 FY25 Current RPO and you divide it by next year.

Speaker #6: We can use the guide or the actual.

Speaker #2: No . I'm saying for for for the coverage ratio that you're going to apply to current RPO . Right . Because it's current RPO guidance times the coverage ratio , plus professional services .

Brad Zelnick: By working as the guide or the actual?

Todd McKinnon: No, I'm saying for the coverage ratio that you're going to apply to current RPO, right? Because it's current RPO guidance times the coverage ratio plus professional services.

Brett Tighe: No, I'm saying for the coverage ratio that you're going to apply to current RPO, right? Because it's current RPO guidance times the coverage ratio plus professional services.

Speaker #2: Yep . Okay . So you've got two for current RPO guidance . We just gave it to you . Right . $2.45 billion .

Speaker #2: Yeah, the coverage ratio is the most important factor in the math that you don't. We don't have an exact number for it, but I can give you a rough approximation.

Brad Zelnick: Yep.

Todd McKinnon: Okay. So you've got Q4 current RPO guidance. We just gave it to you, right? $2.45 billion.

Brett Tighe: Okay. So you've got Q4 current RPO guidance. We just gave it to you, right? $2.45 billion.

Brad Zelnick: Yep.

Todd McKinnon: The coverage ratio is the most important factor in the math that we don't have an exact number for. I'm trying to give you a rough approximation. If you wanted to use, you don't have to use FY26, but it's the closest in years. It makes sense or somewhere in that zip code. The FY26 version, all it is, is Q4 FY25 current RPO, which was $2.25 billion. You divide that by FY26 subscription revenue, and that's going to get you a number. We haven't given you a guide for subscription revenue, but you can figure it out, Brad.

Brad Zelnick: Yep.

Brett Tighe: The coverage ratio is the most important factor in the math that we don't have an exact number for. I'm trying to give you a rough approximation. If you wanted to use, you don't have to use FY26, but it's the closest in years. It makes sense or somewhere in that zip code. The FY26 version, all it is, is Q4 FY25 current RPO, which was $2.25 billion. You divide that by FY26 subscription revenue, and that's going to get you a number. We haven't given you a guide for subscription revenue, but you can figure it out, Brad.

Speaker #2: And if you want to use it, you don't have to use FY26, but it's the closest in years, so it makes sense or somewhere in that zip code.

Speaker #2: So FY 26 version , all it is , is Q4 . FY 25 current RPO , which was $2.25 billion , and you divide that by 26 subscription FY revenue .

Speaker #2: And that's going to get you a number. We haven't given you a guide for subscription revenue, but you can figure it out.

Speaker #2: Brad, it's pretty easy. That number is probably about 79% or thereabouts.

Speaker #6: Understood .

Brad Zelnick: I got it.

Speaker #2: And then you just put that in the formula. And then professional services, I think you guys can come up with a rough estimate, and then that's all you do.

Todd McKinnon: It's pretty easy. That number is probably about 79% or thereabouts.

Brett Tighe: It's pretty easy. That number is probably about 79% or thereabouts.

Speaker #2: So for FY26, 2.45 divided by 0.79, plus whatever you're going to put in for professional services. I'm giving you advice to use FY26 as a rough—I'm not saying that's what your approximation is.

Brad Zelnick: Understood.

Todd McKinnon: You just put that in the formula. Professional services, I think you guys can come up with a rough estimate. That's all you do. Q4 FY2026, 2.45 divided by 0.79 plus whatever you're going to put in for professional services. I'm giving you advice to use FY2026 as a rough approximation. I'm not saying that's what you have to use. It just seems logical given it's the closest year to what we're about to do in FY2027. That's all.

Brad Zelnick: Understood.

Brett Tighe: You just put that in the formula. Professional services, I think you guys can come up with a rough estimate. That's all you do. Q4 FY2026, 2.45 divided by 0.79 plus whatever you're going to put in for professional services. I'm giving you advice to use FY2026 as a rough approximation. I'm not saying that's what you have to use. It just seems logical given it's the closest year to what we're about to do in FY2027. That's all.

Speaker #2: It just seems I'm logical, given it's the closest year to what we're about to do in FY 27. That's all.

Speaker #6: Totally get it . And I appreciate you making it very clear . Maybe just on the other part of my question , when I see you guys hire like this , it really to me makes a statement and I want to make sure I'm interpreting that signal the right way .

Brad Zelnick: Totally get it. I appreciate you making it very clear. Maybe just on the other part of my question, when I see you guys hire like this, it really, to me, makes a statement. I want to make sure I'm interpreting that signal the right way. Am I to assume that the bulk or strong mix of those headcount ads are go-to-market? Is there anything else to know about the composition of all those heads that you've added in Q3?

Speaker #6: Am I to assume that that , you know , the bulk or strong mix of those headcount ads are go to market ? Is there anything else to know about the composition of of all those heads that you've added in Q3 ?

Speaker #2: Yeah , it's a mix of both . Both go to market because what we what we've talked about already today and then also continuing to add into some of the lower cost regions to be able to bulk up the capacity in places like R&D or other areas that can help us be able to build product faster or in Ghana , be able to to be able to be become more efficient and be able to come get through things faster .

Todd McKinnon: Yeah. It's a mix of both go-to-market because what we've talked about already today, and then also continuing to add into some of the lower-cost regions to be able to bulk up the capacity in places like R&D or other areas that can help us be able to build product faster, or in G&A be able to become more efficient and be able to get through things faster. It's really a variety of areas for us. It's really go-to-market, and then lower-cost regions are really the two places that we're adding in. You're on mute there, Brad.

Brett Tighe: Yeah. It's a mix of both go-to-market because what we've talked about already today, and then also continuing to add into some of the lower-cost regions to be able to bulk up the capacity in places like R&D or other areas that can help us be able to build product faster, or in G&A be able to become more efficient and be able to get through things faster. It's really a variety of areas for us. It's really go-to-market, and then lower-cost regions are really the two places that we're adding in. You're on mute there, Brad.

Speaker #2: So it's really a variety of areas for us , but it's really go to market and then lower cost regions are really the two places that we're that we're adding in .

Speaker #2: You're on mute there, Brad.

Speaker #6: Thanks very much .

Speaker #2: No problem .

Speaker #1: My first ever algebra lesson on an earnings call. Thank you, Brett.

Brad Zelnick: Thanks very much.

Speaker #2: Brad wanted to dive in, so I felt like it was necessary.

Todd McKinnon: No problem.

Brett Tighe: No problem.

Eric Kelleher: My first-ever algebra lesson on an earnings call. Thank you, Brad.

My first-ever algebra lesson on an earnings call. Thank you, Brad.

Speaker #4: All right. Next up, Eun Kim we have at Loop Capital.

Speaker #7: All right . Thanks , David . Hey , Todd . So , so for some of the early adopters of AI agents that you're working with , are these agents from software vendors like Salesforce and ServiceNow , or are they custom developed AI agents and is your approach to securing AI agents different for these two types of agents ?

Todd McKinnon: Brad wanted to dive in, so I felt like it was necessary.

Eric Kelleher: All right. Next up, we have Yun Kim at Loop Capital.

Dave Gennarelli: All right. Next up, we have Yun Kim at Loop Capital.

Brad Zelnick: All right. Thanks, David. Hey, Todd. For some of the early adopters of AI agents that you're working with, are these agents from software vendors like Salesforce and ServiceNow, or are they custom-developed AI agents? Is your approach to securing AI agents different for these two types of agents, given that us, Xero, for AI agents is really targeted at developers?

Yun Kim: All right. Thanks, David. Hey, Todd. For some of the early adopters of AI agents that you're working with, are these agents from software vendors like Salesforce and ServiceNow, or are they custom-developed AI agents? Is your approach to securing AI agents different for these two types of agents, given that us, Xero, for AI agents is really targeted at developers?

Speaker #7: Given that R0 AI for agents is really targeted at developers.

Speaker #4: It's .

Speaker #1: A really good question . And it's every customer we talk to . It's they're worried about all of the above . I would say that the actual , most concrete implementations are agents .

Todd McKinnon: It's a really good question. Every customer we talk to, they're worried about all of the above. I would say that the actual most concrete implementations are agents they've built themselves. I think that the deployment from some of the packaged application vendors you talked about are maybe a little bit more behind in terms of deployments. The companies that are building their own, that's their first and foremost concern. Everyone's concerned because they know it's going to be a multi-platform world. There's so much value to be delivered, so many frameworks, so much innovation, so many models. They understand that it's going to be a multi-platform world, which is why our message is really resonating, which is like, hey, if you get identity security and agentic security is absolutely critical, you can't just give agents access to everything.

Speaker #1: They've built themselves. I think that the deployment from some of the packaged application vendors you talked about are maybe a little, a little bit more behind in terms of deployments.

Speaker #1: But the the ones , the companies that are building their own , that's their first and foremost concern . But everyone's concerned about they know it's going to be a multi-platform world in this .

Speaker #1: There's so much value to be delivered . There's so many frameworks , there's so much innovation , there's so many models . They understand that it's going to be a multi-platform world , which is why our message is really resonating , which is like , hey , if you get identity , security and agentic security is absolutely critical .

Speaker #1: You can't just give agents access to everything . You have to govern and control and monitor the access . Now , if you choose to do that in one security platform or one cloud platform , everyone understands that you're going to be it's going to be strong .

Todd McKinnon: You have to govern, control, and monitor the access. Now, if you choose to do that in one security platform or one cloud platform, everyone understands that it's going to be strong lock-in. You're going to be stuck with those models, those frameworks, and have gravity in that environment. People are leery of that because they know that it's a fast-moving environment. It'd be kind of like when I talk to customers, it'd be kind of like you had to choose one streaming platform, just one, and you couldn't switch. What would you choose, right? You'd be careful because all the good stuff is on the other one. If you choose Netflix, you'd want to go over to Prime. If you choose Prime, you'd want to go over to Paramount. They don't want to choose one platform. They want flexibility.

You have to govern, control, and monitor the access. Now, if you choose to do that in one security platform or one cloud platform, everyone understands that it's going to be strong lock-in. You're going to be stuck with those models, those frameworks, and have gravity in that environment. People are leery of that because they know that it's a fast-moving environment. It'd be kind of like when I talk to customers, it'd be kind of like you had to choose one streaming platform, just one, and you couldn't switch. What would you choose, right? You'd be careful because all the good stuff is on the other one. If you choose Netflix, you'd want to go over to Prime. If you choose Prime, you'd want to go over to Paramount. They don't want to choose one platform. They want flexibility.

Speaker #1: Lock in and you're going to be stuck with those models , those frameworks and have gravity in that environment . And people are leery of that because they know that it's a fast moving environment and they , you know , it'd be kind of like when I talk to customers , it'd be kind of like you had to choose one streaming platform .

Speaker #1: You just one , and you couldn't switch . you choose ? Right ? You'd be careful because all the good stuff is on the other one .

Speaker #1: If you choose Netflix , you'd want to go over to Prime . If you choose Prime , you'd want to go over to Paramount , and they don't want to choose one platform .

Speaker #1: They want flexibility . They want to be able to use different platforms and pick the best content off of different platform . So that's really resonating with customers , which is what's driving this interest , which is why we're working so hard to capitalize on it .

Todd McKinnon: They want to be able to use different platforms and pick the best content off a different platform. That’s really resonating with customers, which is what’s driving this interest, which is why we’re working so hard to capitalize on it.

They want to be able to use different platforms and pick the best content off a different platform. That’s really resonating with customers, which is what’s driving this interest, which is why we’re working so hard to capitalize on it.

Speaker #7: Okay , great . Thank you .

Speaker #4: To Mike: Next, we'll go to Cikos at Needham.

Speaker #8: Great . Thanks for taking the question here , guys . I just wanted to come back to the the net retention comment and understood on you guys are in that zip code around the 106 .

Brad Zelnick: Okay. Great. Thank you.

Yun Kim: Okay. Great. Thank you.

Todd McKinnon: Next, we'll go to Mike Cikos at Needham.

Dave Gennarelli: Next, we'll go to Mike Cikos at Needham.

Michael Cikos: Great. Thanks for taking the question here, guys. I just wanted to come back to the net retention comment and understood you guys are in that zip code around the 106. I think historically, the company has not incentivized or split up the team between hunters or farmers and allowed sales reps to choose how they want to retire quota. Can you just provide an update for where we are in thinking about the sales capacity you're hiring? Are we thinking about setting up a specific team focused on new logo acquisition or first orders, or is it still, I guess, let the reps choose? Are we putting in place any sweeteners of any kind? I just wanted to get an update on that front.

Speaker #8: But I think, historically, the company is not incentivized or split up the team between hunters or farmers and allowed sales reps to choose how they want to retire.

Speaker #8: Quota . Can you just provide an update for for where we are and thinking about the sales capacity you're hiring ? Are we thinking about setting up a specific team focused on new logo acquisition or first orders , or is it still , I guess let the let the reps choose ?

Speaker #8: Are we putting in place any sweeteners of any kind? I just wanted to get an update on that front. Yeah, thanks.

Speaker #2: Thanks , Mike . The we have in fact started looking at and and carving territories for new logo acquisition . We announced a year ago that we were bringing Hunter farmer assignment into at that time , our US commercial business .

Dave Gennarelli: Yeah. Thanks, Mike. We have, in fact, started looking at and carving territories for new logo acquisition. We announced a year ago that we were bringing a hunter-farmer assignment into, at that time, our US commercial business. We talked last quarter, then six quarters into that change, how that was progressing. We're very pleased with the productivity of how that's been carved off. That was in the US commercial business. We have not extended that into our enterprise business yet. We're seeing rather the focus of platform specialization on the buyer is allowing our reps to balance both new logo acquisition and getting deep within their existing accounts. That's always something that we look at. As we look for opportunities to expand new logo acquisition, thinking about adding hunter capacity as part of our planning process every year.

Eric Kelleher: Yeah. Thanks, Mike. We have, in fact, started looking at and carving territories for new logo acquisition. We announced a year ago that we were bringing a hunter-farmer assignment into, at that time, our US commercial business. We talked last quarter, then six quarters into that change, how that was progressing. We're very pleased with the productivity of how that's been carved off. That was in the US commercial business. We have not extended that into our enterprise business yet. We're seeing rather the focus of platform specialization on the buyer is allowing our reps to balance both new logo acquisition and getting deep within their existing accounts. That's always something that we look at. As we look for opportunities to expand new logo acquisition, thinking about adding hunter capacity as part of our planning process every year.

Speaker #2: And we talked last quarter. Then, six quarters into that change, how that was progressing. And we're very pleased with the productivity of how that's been carved off.

Speaker #2: That was in the U.S. commercial business. We have not extended that into our enterprise business yet. We're seeing that the focus on platform specialization for the buyer is allowing our reps to balance both new logo acquisition and getting deep within their existing accounts.

Speaker #2: But that's always something that we look at, and as we look for opportunities to expand, new logo acquisition, thinking about adding Hunter capacity as part of our planning process every year.

Speaker #8: Excellent. I'll keep it to one. Thank you.

Speaker #1: Yeah , I think of the a lot growth and a lot of the focus and planning is on larger deals . You saw the cohort of million dollar deals this past in Q3 grew 17% .

Michael Cikos: Excellent. I'll keep it to one. Thank you.

Todd McKinnon: Yeah. I think a lot of the growth and a lot of the focus in planning is on larger deals. You saw the cohort of million-dollar deals in Q3 grew 17%. Very excited about that. In general, a lot of our growth and focus is going to be on larger deals. Sometimes with our products now, that can be in a segment of smaller customers. Most of the time, it's in a larger enterprise or strategic account patch. Just in general, that's where the business is going, that's where the growth is, and that's where we're investing.

Speaker #1: Very excited about that. And, in general, a lot of our growth and focus is going to be on larger deals, sometimes with our products.

Speaker #1: Now that can be in a segment of smaller customers, but most of the time it's in a larger enterprise or strategic account patch.

Speaker #1: And so, just in general, that's where the business is going. That's where the growth is, and that's where we're investing.

Speaker #4: It's go to Tomer Zilberman at BofA.

Speaker #9: Hey guys . Yeah I think you've previously spoken about the opportunity to price Agentic as an extension of a per seat license . But you know , we've been hearing in the some market concern about seat count reductions that customers .

Eric Kelleher: Let's go to Tomer Zilberman at B of A.

Dave Gennarelli: Let's go to Tomer Zilberman at B of A.

Tomer Zilberman: Hey, guys. Yeah. I think you've previously spoken about the opportunity to price agentic as an extension of a per-seat license. We've been hearing in the market some concern around seat count reductions at customers. One, as you think about your opportunity next year and you're doing your planning, are you seeing any concern around that with your customers? Two, how do you think about the offset of any potential reduction of headcount versus the opportunity to upsell agentic?

Speaker #9: As about your opportunity next year and you're doing your planning, are you seeing any concerns around that with your customers? And two, how do you think about the offset of any potential reduction of headcount versus the opportunity to upsell?

Speaker #9: Agentic .

Speaker #1: The Agentic priced products are similarly to our current products . products are priced Our current per user . The Agentic products are priced per agent , so that can sometimes be a one to many relationship .

Todd McKinnon: The agentic products are priced similarly to our current products. Our current products are priced per user. The agentic products are priced per agent. Sometimes that can be a one-to-many relationship. You might have a few agents for a person. Sometimes they might be agents on their own. I think we're set up in a way that gives us flexibility as these things evolve in terms of how companies want to deploy agents to augment headcount, how they want to deploy agents at the front-end of processes before it ever gets to a person. This is one of the advantages we have with all these customers and all this interest. We can figure this out quickly, and we can iterate on this quickly. That's how we've gotten to this pricing model because this is a new thing.

Speaker #1: You might have a few agents for a person. Sometimes they might be agents on their own. So I think we're set up in a way that gives us a lot of flexibility as these things evolve.

Speaker #1: In terms of how companies want to deploy agents to augment headcount, what they want to do, and how they want to deploy agents at the front end of processes before it ever gets to a person.

Speaker #1: And this is one of the advantages we have with all these customers and all this interest. We can figure this out quickly, and we can iterate on this quickly.

Speaker #1: that's how we've gotten to this And pricing model , because this is a this is a new thing . You know , it's exciting because a lot of the traditional vendors , you know , it's like .

Todd McKinnon: It's exciting because a lot of the traditional vendors, it's like being locked in or owning a certain market. It's not owned yet. We have the opportunity to win this massive new market. We're well-positioned with the customers, with the products, and with what people expect us to do. We're going to go out, define it, and win it. It's going to be really exciting to do that.

It's exciting because a lot of the traditional vendors, it's like being locked in or owning a certain market. It's not owned yet. We have the opportunity to win this massive new market. We're well-positioned with the customers, with the products, and with what people expect us to do. We're going to go out, define it, and win it. It's going to be really exciting to do that.

Speaker #1: Being locked in or being owning a certain market , it's not it's not owned yet . We have the opportunity to win this massive new , massive market .

Speaker #1: And it's we're well positioned with the customers and with the products and with what people expect us to do , and we're going to go out and define it and win it .

Speaker #1: And it's going to be really exciting to do that.

Speaker #2: And the other comment I'd add to Tomer is that we feel very well diversified from a use case and product perspective.

Speaker #2: So to the immediate question , we are not like everyone . We're looking at what changes will happen in the global global workforce at companies as they they lean more on on AI and technology to run their businesses .

Dave Gennarelli: The other comment I'd add to that, Tomer, is we feel very well-diversified from a use case and product perspective. To the immediate question, we are not like everyone. We're looking at what changes will happen in the global workforce at companies as they lean more on AI and technology to run their businesses. We're not yet feeling a material headwind from, you mentioned, seat reductions in the business. Were we to see that, we're confident in our customer identity business offsetting that. We're confident in our agentic identity business offsetting that. In the aggregate, we view this shift in the industry as net upside for Okta.

Eric Kelleher: The other comment I'd add to that, Tomer, is we feel very well-diversified from a use case and product perspective. To the immediate question, we are not like everyone. We're looking at what changes will happen in the global workforce at companies as they lean more on AI and technology to run their businesses. We're not yet feeling a material headwind from, you mentioned, seat reductions in the business. Were we to see that, we're confident in our customer identity business offsetting that. We're confident in our agentic identity business offsetting that. In the aggregate, we view this shift in the industry as net upside for Okta.

Speaker #2: We're not yet feeling a material headwind from the seat reductions in the business, but if we were to see that, we're confident in our identity and offsetting business.

Speaker #2: that we're confident in our identity business , offsetting that . So in the aggregate we view this this in the shift industry as net upside for Okta and everything you've heard us talk about in our product strategy today and our focus of innovation and the conversations we're having with customer is embracing the the , the extended opportunity to help them solve an emerging , very acute , urgent customer need for securing Agentic identity .

Dave Gennarelli: Everything you've heard us talk about in our product strategy today, our focus of innovation, and the conversations we're having with the customer is embracing the extended opportunity to help them solve an emerging, very acute, urgent customer need for securing agentic identity. We see that as upside to the overall business, not as just replacing the existing business.

Everything you've heard us talk about in our product strategy today, our focus of innovation, and the conversations we're having with the customer is embracing the extended opportunity to help them solve an emerging, very acute, urgent customer need for securing agentic identity. We see that as upside to the overall business, not as just replacing the existing business.

Speaker #2: But we see that as upside to the overall business, not just as replacing the existing business.

Speaker #9: Got it. Thank you.

Speaker #4: Next, we'll go to Joe Vendrick at Scotia.

Speaker #10: Yeah, you got Joe Vendrick on for Patrick Colvill here. Todd, you mentioned a surge in inbound interest for managing agents.

Brad Zelnick: Got it. Thank you.

Tomer Zilberman: Got it. Thank you.

Eric Kelleher: Next, we'll go to Joe Vruwink at Scotiabank.

Dave Gennarelli: Next, we'll go to Joe Vruwink at Scotiabank.

Joe Vruwink: Yeah. You got Joe Vruwink on for Patrick Colville here. Todd, you mentioned a surge in inbound interest for managing agents. Can you talk about what's getting more traction? Is it the Auth0 solution or the workforce side? What do you think represents the larger opportunity and why?

Speaker #10: So can you talk about what's getting more traction ? Is it the off zero solution or the workforce side . And then what do you think represents the the larger opportunity and why ?

Speaker #1: I think it's they're both getting about the same amount of traction . I think the it's a different . I little bit think a lot of the interest in the AI agents , it's more online , you know , people find out , you know , developers , right ?

Todd McKinnon: I think they're both getting about the same amount of traction. I think it's a little bit different. I think a lot of the interest in the Auth0 for AI agents, it's more online. People find out, developers, right? They find out about it on the website. They do self-service, upgrade to enterprise. It's a little bit of a different motion. The Okta for AI agents, which is for IT and security, it's very much have an enterprise architecture with a CISO or security-influenced buyer or an IT-influenced buyer. They're both getting interest. It's pretty early on both of them. We resist the urge to draw too many patterns on the couple of months it's really been out there in the market.

Speaker #1: So, they find out about it on the website. They do a self-service upgrade to Enterprise. It's a little bit of a different motion.

Speaker #1: The Okta for agents , AI which is for it and security , it's very much , you know , have a , you know , enterprise architecture with a with a CISO or security influence buyer or it influence buyer both getting interest , but .

Speaker #1: it's pretty early on . Both of So they're them . It's we resist the urge to draw too many patterns the , you know , the couple months .

Speaker #1: It's only really been out there in the market, and we're really proud of ourselves for being able to iterate quickly and adjust as we define this market. We want to ensure that we not only deliver something incredibly valuable for customers, but also something that'll take advantage of both of these personas.

Todd McKinnon: We're really priding ourselves on being able to iterate quickly and adjust as we define this market and make sure we not only deliver something incredibly valuable for customers, but something that'll take advantage of both of these personas, which is IT and security on one side, and then developers on the other.

We're really priding ourselves on being able to iterate quickly and adjust as we define this market and make sure we not only deliver something incredibly valuable for customers, but something that'll take advantage of both of these personas, which is IT and security on one side, and then developers on the other.

Speaker #1: Which is it? And security on one side, and then developers on the other.

Speaker #10: you Thank .

Speaker #4: Got about four minutes left . Left . Let's try to get the last three questions . Next up we have Rudy at Dako .

Joe Vruwink: Thank you.

Eric Kelleher: Got about four minutes left. Let's try to get to the last three questions. Next up, we have Rudy at D.A. Davidson.

Dave Gennarelli: Got about four minutes left. Let's try to get to the last three questions. Next up, we have Rudy at D.A. Davidson.

Speaker #11: Hey , great . Thanks for taking my questions , guys . Brett , I want to go back to the comment in the script on sales productivity .

Speaker #11: said you are continuing to see improvements . There . Is that , you know , was it improved quarter over quarter ? Was it improved year over year ?

Rudy Kessinger: Hey, great. Thanks for taking my questions, guys. Brett, I want to go back to a comment in the script on sales productivity. You said you are continuing to see improvements there. Was it improved quarter over quarter? Was it improved year over year? I'm curious on that. Secondly, on the sales hiring front, certainly we've seen that. Your sales job openings are up over 100% year over year the last couple of months in our data. What is the level of sales capacity additions you're planning to add? I'm not sure what time frame you want to use, last quarter through Q1, or just what's the level of sales capacity addition you're looking to add as you think about the FY27 plan? Thank you.

Speaker #11: I'm curious on that . And then secondly , on the hiring sales front , certainly we've seen that your sales job are up openings over 100% year over year .

Speaker #11: In the last couple of months, and our -- what is the level of sales capacity additions you're planning to add? You know, I'm not sure what time frame you want to use.

Speaker #11: Quarter last through Q1 or, you know, just what's the level of sales capacity additions you're looking to add as you think about the FY27 plan?

Speaker #11: Thank you .

Speaker #12: Yeah , absolutely . And I'll let Eric step in a little bit here too . On productivity . But to answer your question , it is up quarter over quarter and is up year over year .

Todd McKinnon: Yeah, absolutely. I'll let Eric step in a little bit here too on productivity. To answer your question, it is up quarter over quarter, and it is up year over year. See all of the above, Rudy, which is a good sign for us. Also, at the same time, like I said, we added capacity in Q3, and we started to add capacity in Q2. In terms of the exact numbers of how much we're going to add, we're going to be methodical about that. We want to make sure that we are maintaining high productivity and not overdoing it in terms of adding in capacity because, as Eric told you a second ago or, whatever, 20 minutes ago, our AE attrition is quite good right now. Our tenure is quite good. We don't want to disrupt that.

Brett Tighe: Yeah, absolutely. I'll let Eric step in a little bit here too on productivity. To answer your question, it is up quarter over quarter, and it is up year over year. See all of the above, Rudy, which is a good sign for us. Also, at the same time, like I said, we added capacity in Q3, and we started to add capacity in Q2. In terms of the exact numbers of how much we're going to add, we're going to be methodical about that. We want to make sure that we are maintaining high productivity and not overdoing it in terms of adding in capacity because, as Eric told you a second ago or, whatever, 20 minutes ago, our AE attrition is quite good right now. Our tenure is quite good. We don't want to disrupt that.

Speaker #12: And so it's see all of the above, Rudy, which is a good sign for us. And also, at the same time, like I said, we had a capacity in Q3, and we started to add capacity in Q2.

Speaker #12: In terms of the exact numbers of how much we're going to going to be add , we're methodical that . about We want to make sure that we are maintaining high productivity and not overdoing it in terms of adding in capacity , because , as Eric told you a second ago or whatever , 20 minutes ago , you know , our attrition is quite good right now .

Speaker #12: Our tenure is quite good . We don't want to disrupt that . And so we want to be methodical in our approach to add the capacity into the system , make sure it works , and then move on , evaluate the success , and then step on to the next level of of what we what we think is possible .

Todd McKinnon: We want to be methodical in our approach to add the capacity into the system, make sure it works, and then move on, evaluate the success, and then step on to the next level of what we think is possible because we do have a great field right now. We are very confident in them. Great. Actually, I should have said this at the beginning of the call, great job by the sales team and all the go-to-market teams in Q3. We look forward to having them execute in Q4. I think that pretty much covers it, Rudy. I don't know if Eric, you'd have anything else to add.

We want to be methodical in our approach to add the capacity into the system, make sure it works, and then move on, evaluate the success, and then step on to the next level of what we think is possible because we do have a great field right now. We are very confident in them. Great. Actually, I should have said this at the beginning of the call, great job by the sales team and all the go-to-market teams in Q3. We look forward to having them execute in Q4. I think that pretty much covers it, Rudy. I don't know if Eric, you'd have anything else to add.

Speaker #12: Because we do have a great field right now , we are very confident in . Great , actually should have said at the beginning of the call , great job by the sales team and all the go to market teams in Q3 , and we look forward to having them execute in Q4 .

Speaker #12: So . So yeah , I think that's that's that pretty much covers it . don't know if Rudy , I Eric you'd have else to add .

Speaker #2: You hit the key points . I would say in addition to productivity being up , it's implied with your comments , Bret , but attrition is down .

Dave Gennarelli: You hit the key points. I would say, in addition to productivity being up, it's implied with your comments, Brett, but attrition is down. From a field engagement standpoint, we feel quite positive with our team's ability to be successful, and their belief that they can be successful. As we add capacity, we want to make sure we add it in a metered fashion to ensure that we're confident our field continues to have the opportunity to be very successful with Okta. That is an important part of our philosophy because we don't want to see a return to where attrition starts to creep back up. We want to keep our tenured reps because they're much more productive.

Eric Kelleher: You hit the key points. I would say, in addition to productivity being up, it's implied with your comments, Brett, but attrition is down. From a field engagement standpoint, we feel quite positive with our team's ability to be successful, and their belief that they can be successful. As we add capacity, we want to make sure we add it in a metered fashion to ensure that we're confident our field continues to have the opportunity to be very successful with Okta. That is an important part of our philosophy because we don't want to see a return to where attrition starts to creep back up. We want to keep our tenured reps because they're much more productive.

Speaker #2: And so, from a field engagement standpoint, we feel quite positive about our team's ability to be successful and their belief that they can be successful.

Speaker #2: As we add capacity, we want to make sure we do it in a metered fashion to ensure that we're confident our field continues to have the opportunity to be very successful with Okta.

Speaker #2: So that is an important part of our philosophy, because we don't want to see a return to where attrition starts to creep back up.

Speaker #2: We want to keep our tenured reps because they're much more productive.

Speaker #11: Super helpful, guys. Thanks, and congrats on the quarter.

Speaker #1: Rudy Thanks , .

Speaker #4: Next, we'll go to Taz at Roth. Taz, you there? Now let's quickly go to Gabriella at Goldman.

Rudy Kessinger: Super helpful, guys. Thanks, and congrats in the quarter.

Eric Kelleher: Thanks, Rudy. Next, we'll go to Taz at Roth. Taz, you there? Not. Let's quickly go to Gabriela at Goldman.

Dave Gennarelli: Thanks, Rudy. Next, we'll go to Taz at Roth. Taz, you there? Not. Let's quickly go to Gabriela at Goldman.

Speaker #2: I'm here. You guys.

Speaker #2: Can

Speaker #4: Oh, hear, here we go. Me?

Speaker #1: Let's go to Gabriella. Then we can go finish off with Taz.

Speaker #13: Todd I wanted to ask on this topic of agents that are bespoke versus from the packaged software vendors . As and when we start adoption from the to see packaged software vendors , how do you think about the identity functionality that may be embedded in the application ?

Dave Gennarelli: I'm here. Can you guys hear me?

Taz Koujalgi: I'm here. Can you guys hear me?

Eric Kelleher: Oh, here we go.

Dave Gennarelli: Oh, here we go.

Todd McKinnon: Let's go to Gabriela, and then we can go finish off with Taz.

Let's go to Gabriela, and then we can go finish off with Taz.

Gabriela Borges: Todd, I wanted to ask on this topic of agents that are bespoke versus from the packaged software vendors. As and when we start to see adoption from the packaged software vendors, how do you think about the identity functionality that may be embedded in the application? This is in the context of ServiceNow announcing their plans to acquire Veza this morning. Thanks.

Speaker #13: And this is in the context of ServiceNow announcing their plans to acquire, as of this morning. Thanks.

Speaker #1: Yeah. One of the interesting things about being the clear leader in identity security is we kind of have a right of first refusal on all the acquisitions.

Todd McKinnon: Yeah. One of the interesting things about being the clear leader in identity security is we kind of have a right of first refusal on all the acquisitions. We looked at Veza. It's interesting. It's a pretty narrow use case in terms of identity management. The big picture idea is what's going to be like the system of record for access. To do that, you really have to have an IDP sitting in the middle of the transaction to really get the governance and control. I think you're going to see what's played out a lot of times over the last 10 years, Gabriela, is every platform company is going to try to take their own identity from their own platform and make it generalizable. Sometimes they'll buy something, sometimes they'll try to build it themselves.

Speaker #1: So we looked at visa . It's it's interesting . It's it's a pretty narrow use of identity management and the big picture idea is what's going to be like the system of record for access .

Speaker #1: And to do that, you really have to have an IDP in the middle of the transaction to really get the governance and control. So I think you're going to see what plays out.

Speaker #1: A lot of times over the last ten years, Gabriella has mentioned that every platform company is going to try to take their own identity from their own platform and make it generalizable.

Speaker #1: Sometimes they'll buy sometimes something , they'll try to build it themselves . But it's it's really hard to cover all the use cases and cover all the integrations to all the different systems and environments .

Todd McKinnon: It's really hard to cover all the use cases and cover all the integrations to all the different systems and environments if you're not totally focused on it. I think you'll continue to see that benefit us for a long time.

Speaker #1: If you're not totally focused on it, I think you'll continue to see that benefit us for a long time.

It's really hard to cover all the use cases and cover all the integrations to all the different systems and environments if you're not totally focused on it. I think you'll continue to see that benefit us for a long time.

Speaker #13: Thanks very much .

Speaker #4: Okay. We'll take the last question from Taz at Roth.

Speaker #14: Thanks for squeezing me in . Hey guys . Two questions . First one for you . You mentioned that customer example with a large AI deal .

Gabriela Borges: Thanks very much.

Eric Kelleher: Okay. We'll take the last question from Taz at Roth.

Dave Gennarelli: Okay. We'll take the last question from Taz at Roth.

Speaker #14: And my question is, can you talk about the, you know, you spoke about the one-to-many relationship between humans and agents.

Todd McKinnon: Thanks, guys. Thanks for squeezing me in. Hey, guys, two questions. Todd, first one for you. You mentioned that customer example with the large AI deal. My question is, can you talk about the you spoke about one-to-many relationship between humans and agents. Can you talk about what that was in that scenario? Maybe kind of bake off a competitive landscape. Who were the other players involved in that deal for AI security? Yeah. I think it's pretty simple. I think a lot of companies think about agents as software engineering is a great example. As a software engineer, you're going to have 10 of these agents working for you all the time. They're going to be reviewing code, doing security reviews, checking code in, and running tests.

Taz Koujalgi: Thanks, guys. Thanks for squeezing me in. Hey, guys, two questions. Todd, first one for you. You mentioned that customer example with the large AI deal. My question is, can you talk about the you spoke about one-to-many relationship between humans and agents. Can you talk about what that was in that scenario? Maybe kind of bake off a competitive landscape. Who were the other players involved in that deal for AI security?

Speaker #14: Can you talk about that was in what that in that scenario and maybe kind of bake off a competitive landscape , like who are the other other players involved in that in that deal for AI security ?

Speaker #1: Yeah, I think it's pretty simple. I think a lot of companies think about agents as, like, software engineering is a great example.

Todd McKinnon: Yeah. I think it's pretty simple. I think a lot of companies think about agents as software engineering is a great example. As a software engineer, you're going to have 10 of these agents working for you all the time. They're going to be reviewing code, doing security reviews, checking code in, and running tests.

Speaker #1: Is a software engineer . You're going to have ten of these for you all agents working the time . reviewing be They're going to code .

Speaker #1: going to be They're doing security reviews . They're going to checking code be in . They're going to be running tests . And that all those agents are going to be working on your behalf in some cases and have their own identity and others .

Speaker #1: And it's just having the flexibility to support all those different use cases, in addition to agents that will just run on their own.

Todd McKinnon: All those agents are going to be working on your behalf in some cases and have their own identity in others. It's just having the flexibility to support all those different use cases in addition to agents that would just run on their own. Your customer support agents or your agents sitting on your website accepting commerce are going to be on their own. They're going to need access control, but they're not bound to a user until maybe it gets lower down in the workflow. All those types of.

All those agents are going to be working on your behalf in some cases and have their own identity in others. It's just having the flexibility to support all those different use cases in addition to agents that would just run on their own. Your customer support agents or your agents sitting on your website accepting commerce are going to be on their own. They're going to need access control, but they're not bound to a user until maybe it gets lower down in the workflow. All those types of.

Speaker #1: Your customer support agents or your agents sitting on your website accepting commerce are going to be on their own. They're going to need access control, but they're not bound to a user until maybe it lower gets down in the workflow.

Speaker #1: So all those

Speaker #14: What is the relationship like in the examples that we've seen so far?

Speaker #14: is it like 1 to 10 , 1 to 20 . And if you compare the human . What's that have with the entities that you have versus the agents that you secure , is that number , is there a ballpark number that you have seen so far in the companies that you've sold to ?

Eric Kelleher: What's that relationship been like in the example that we've seen so far? Is it like 1 to 10, 1 to 20? If you compare the human agents that you have, the human entities that you have versus the agents that you secure, is that number, is it a ballpark number that you have seen so far in the companies that you've sold to?

Taz Koujalgi: What's that relationship been like in the example that we've seen so far? Is it like 1 to 10, 1 to 20? If you compare the human agents that you have, the human entities that you have versus the agents that you secure, is that number, is it a ballpark number that you have seen so far in the companies that you've sold to?

Speaker #1: I think it's like 5 to 10 per person.

Speaker #14: Brad: Just one for you. Even as growth has slowed down in the last few years, margins have gone up quite a bit.

Todd McKinnon: I think it's like five to 10 per person.

Speaker #14: And if you look at your margins plus revenue growth, you've always been above that rule of 40. Should we expect that to continue going forward in fiscal 2027?

Eric Kelleher: Cool. Got it. Brett, just one for you. Even as growth has slowed down in the last few years, margins have gone up quite a bit. If you look at your margins plus revenue growth, you've always been above that rule of 40. Should we expect that to continue going forward in fiscal 2027? Do you expect that rule of 40 to sustain? I know you didn't give us the revenue guide. You gave us some ballpark guide. Combining that with what to expect for free cash flow, multiple margin next year, should we expect that rule of 40 to sustain going forward?

Taz Koujalgi: Cool. Got it. Brett, just one for you. Even as growth has slowed down in the last few years, margins have gone up quite a bit. If you look at your margins plus revenue growth, you've always been above that rule of 40. Should we expect that to continue going forward in fiscal 2027? Do you expect that rule of 40 to sustain? I know you didn't give us the revenue guide. You gave us some ballpark guide. Combining that with what to expect for free cash flow, multiple margin next year, should we expect that rule of 40 to sustain going forward?

Speaker #14: Do you expect that the Rule of 40 will sustain? I know you didn't give us a revenue guide; you gave us some ballpark guidance, but combining that with what to expect for free cash flow and multiples next year, should we expect that the Rule of 40 will sustain going forward?

Speaker #12: Yeah , I mean , from an overall perspective , we we are going to continue to employ the rule of 40 framework when we when we manage the business , something we've been quite consistent with , I guess is probably the right way to put it .

Todd McKinnon: Yeah. I mean, from an overall perspective, we are going to continue to employ the rule of 40 framework when we manage the business, something we've been quite consistent with, I guess, is probably the right way to put it. As you said, we have had a tremendous amount of margin increase over the last three years. Thank you for saying that, Taz. I really appreciate it. When we look at the overall formula, I'm not going to be able to comment on what we're going to do next year for FY27. Let's get through the plan and let's get through Q4 and see how everything goes. I'll give you an update then. Ultimately, when you think about it, we want to lean into the growth side of the equation more. You've heard us talk about that.

Brett Tighe: Yeah. I mean, from an overall perspective, we are going to continue to employ the rule of 40 framework when we manage the business, something we've been quite consistent with, I guess, is probably the right way to put it. As you said, we have had a tremendous amount of margin increase over the last three years. Thank you for saying that, Taz. I really appreciate it. When we look at the overall formula, I'm not going to be able to comment on what we're going to do next year for FY27. Let's get through the plan and let's get through Q4 and see how everything goes. I'll give you an update then. Ultimately, when you think about it, we want to lean into the growth side of the equation more. You've heard us talk about that.

Speaker #12: And as you said, we have had a tremendous amount of margin increase over the last three years. Thank you for saying that; I really appreciate it.

Speaker #12: But when we look at the overall formula, and I'm not—I’m not going to be able to comment on what we're going to do next year for FY27.

Speaker #12: Let's get through the plan and let's get through Q4 and see everything goes . how And then I'll give you an update . Then .

Speaker #12: But ultimately , when you think about it , we want to lean into the the growth side of the equation more . You you've heard us talk about that .

Speaker #12: That's been our accelerate goal is to some time . for quite You can hear the optimism from the call today about about that desire and confidence .

Todd McKinnon: That's been our goal, to accelerate growth for quite some time. You can hear the optimism from the call today about that desire and confidence. We're still going to manage through that rule of 40, but we really want to lean more into that growth acceleration side of the house. Once we have our finalized plans for FY 2027, I'll be able to give you some more succinct detail at the next earnings call.

That's been our goal, to accelerate growth for quite some time. You can hear the optimism from the call today about that desire and confidence. We're still going to manage through that rule of 40, but we really want to lean more into that growth acceleration side of the house. Once we have our finalized plans for FY 2027, I'll be able to give you some more succinct detail at the next earnings call.

Speaker #12: And so we're still going to manage through that rule of 40 . And we're but we really want to lean more into that that growth acceleration side of the side of the side of the house .

Speaker #12: And once we have our finalized plans for FY, we'll be able to give you 27 some more succinct detail at the next earnings call.

Speaker #14: Thank you .

Speaker #12: Thanks ,

Speaker #4: Well thanks

Speaker #4: everybody . But before you guys . go , I just want to let you know that Okta will be hosting several on site and virtual bus tours in December and January .

Eric Kelleher: Very helpful. Thank you.

Taz Koujalgi: Very helpful. Thank you.

Todd McKinnon: Thanks, guys.

Eric Kelleher: Well, thanks, everybody. Before you go, just want to let you know that Okta will be hosting several on-site and virtual bus tours in December and January. We'll also be attending the virtual Needham Growth Conference on 8 January 2024. We hope to see you at one of those events. Thanks.

Dave Gennarelli: Well, thanks, everybody. Before you go, just want to let you know that Okta will be hosting several on-site and virtual bus tours in December and January. We'll also be attending the virtual Needham Growth Conference on 8 January 2024. We hope to see you at one of those events. Thanks.

Speaker #4: And will also be attending the virtual Needham Growth Conference on January 8th. So we hope to see you at one of those events.

Speaker #4: Thanks .

Speaker #2: Thanks , everyone .

Todd McKinnon: Thanks, everyone.

Eric Kelleher: Thanks, everyone.

Eric Kelleher: Everyone.

Todd McKinnon: Everyone.

Q3 2026 Okta Inc Earnings Call

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