Okta, Inc. — Call Transcript 2024

Hi everyone, welcome to Okta's third quarter of fiscal year 2025 earnings webcast. I'm David Gennarelli, Senior Vice President of Investor Relations at Okta. With me in today's meeting, we have Todd McKinnon, our Chief Executive Officer and Co-founder, and Brett Tighe, our Chief Financial Officer. Around the same time that the earnings press release hit the wire, we posted supplemental commentary to the IR website. This posted commentary contains a large portion of what would historically be the opening commentary, including customer commentary, product-related news, and a review of our financial results. This format allows listeners to review that information before this call. 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. 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 measures versus their closest GAAP equivalents are available in our earnings release. You can also find more detailed information in our supplemental financial materials, which include trended financial statements and key metrics posted on our Investor Relations website. 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. And now I'd like to turn the meeting over to Todd McKinnon. Todd. Thanks, Dave, and thank you everyone for joining us this afternoon. Our solid Q3 results were once again highlighted by strength with large customers and strong profitability and cash flow driven by continued spend efficiencies. While the macro environment remains consistent, we're encouraged by some positive data points in Q3. I'll touch on some of those and then get into other highlights from the quarter before turning over to Brett. I've mentioned previously that deepening our relationship with our partner ecosystem is one of our main priorities. We're already seeing good progress as all of our top 10 deals in the third quarter involve partners. These 10 deals were all over one million in annual contract value and in aggregate represented approximately 20 million in ACV. This underscores the value of investing in our partner ecosystem. The public sector also continues to be an area of strength. In fact, half of the top 10 deals that I just mentioned were in the U.S. federal vertical. We've made great progress with our presence in the public sector and believe we have a tremendous amount of runway ahead of us. Our largest customers remain an area of strength. The cohort of $1 million plus ACV customers continues to be our fastest growing cohort. In total, this cohort now represents approximately $1 billion in ACV. We were also pleased with the upsell and cross-sell activity in Q3. Specifically, we experienced strong growth of workforce customers buying more workforce products, as well as workforce customers buying customer identity. Okta's expanded product portfolio is allowing us to equip our customers with more industry-leading identity solutions to support them in their goal to operate more efficiently and securely. The threat environment has never been more hostile. Organizations are constantly under attack, and identity has become a primary attack vector. Okta's technology has become more important than ever in helping to prevent and mitigate these attacks. We're advancing our vision to free everyone to safely use any technology with the expansion of our unmatched portfolio of identity solutions through great product innovation. We're also accelerating our investments in the Okta Secure Identity Commitment, which is resonating with prospects and customers. We recently showcased that innovation at Oktane, our biggest customer and partner event of the year. The energy at the event was terrific as in-person attendance was up over 25% versus last year and represented hundreds of millions of dollars of pipeline. Attendees heard about the future of identity security and how Okta is responding to the evolving threat landscape. We highlighted more than 30 products, features, and capabilities across our Workforce Identity Cloud and Customer Identity Cloud that will deepen our customers' security and help them create exceptional customer experiences while enabling us to reignite our growth with a focused approach. It's also great to receive validation on our strategy and vision from third parties. Okta was recently recognized as a leader in the 2024 Gartner Magic Quadrant for Access Management for the eighth consecutive year. Okta achieves the highest and furthest overall position for its ability to execute and completeness of vision in this research. We have a lot of optimism about the direction of the business. One of the things we're excited about is go-to-market specialization. In Q1 this year, we introduced a layer of specialization in the go-to-market team with a hunter-farmer model for the Americas SMB market. As we plan for FY 2026, we are planning for further specialization in our global go-to-market strategy to better align with the distinct identity buying centers of IT security and developers. Doing so will allow us to meet evolving market demands, help reignite growth, and create a win-win scenario that benefits both our customers and Okta, ultimately driving better business outcomes. To wrap things up, we remain hyper-focused on our top priorities of security, growth, and scale. Identity is security, and we're taking the right steps to advance our position as a leader in the identity market while remaining focused on investing for growth and driving spend efficiencies and cash flow. 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 joining us today. We continue to build on the efficiency initiatives that we've been implementing over the past two years. Our Q3 financial performance was highlighted by continued strong cash flow and operating profitability, including GAAP profitability. I'll note that similar to the prior three quarters, as we have analyzed our key metrics, we could not attribute a quantifiable impact from the October 2023 security incident on our Q3 results, and while not quantifiable, the event likely had some level of impact. Our view on the macro environment is that it remains consistent with what we've experienced for the past few quarters. Organizations are scrutinizing budgets and rationalizing their software spend, resulting in lower assumptions for seats in our workforce identity business and MAUs in our customer identity business. These lower seat and MAU assumptions have put our net retention rate under pressure over the past few quarters, while gross retention has remained strong. Helping to partially offset the seat and MAU headwind is the success we've been having in selling more products to both our new and existing customers. Our relentless focus on innovation has been resonating with our customers as approximately 15% of Q3 bookings were from new products. Okta Identity Governance continues to represent approximately one-third of the contract value when sold in a workforce deal. In addition to OIG, we're also selling new products like Okta Privileged Access, Device Access, Fine Grained Authorization, Identity Threat Protection, and Identity Security Posture Management. Our data tells us that customers that adopt more products have the highest retention rates, so we're excited about the trends here and the long-term contributions to the business. Now let's turn to our business outlook for Q4 and FY 2025. As always, we take a prudent approach to forward guidance. We are factoring in a macro environment consistent with what we experienced in Q3. We are no longer incorporating additional conservatism into our outlook related to the potential impacts from last year's security incident. For the fourth quarter of FY 2025, we expect total revenue growth of 10% to 11%, current RPO growth of 9%, non-GAAP operating margin of 23%, and free cash flow margin of approximately 32%. We are raising our outlook across the board for the full year FY 2025. We now expect total revenue growth of 15%, non-GAAP operating margin of 22%, and a free cash flow margin of approximately 25%. While we are still in the early phases of financial planning, we would like to provide a preliminary view of FY 2026. We're providing this preliminary outlook ahead of closing our biggest quarter of the year. We will provide formal FY 2026 guidance on our next earnings call, which will factor in our actual Q4 performance. We remain focused on profitable growth and continue to prudently factor in a macro environment that is consistent with what we've experienced over the past few quarters. As such, we're expecting a non-GAAP operating margin of at least 22%. We're targeting a free cash flow margin of at least 24%. From a revenue perspective, we estimate total revenue to be $2.77 billion to $2.78 billion, representing growth of approximately 7%. We believe these numbers are achievable while maintaining an appropriate measure of conservatism. To wrap things up, we're pleased with the progress we've made to drive operational efficiencies. We've demonstrated exceptional leverage in our model over the past two years, and we remain focused on delivering profitable growth for years to come. With that, I'll turn it back to Dave for Q&A. Dave. Thanks, Brett. We have several hands raised up already. We'll take them in the order that they are in. And if you have follow-on questions, you can get back in the queue, so try to limit yourself to one question. That will kick it off with John DiFucci at Guggenheim. John. Thanks, Dave. My question, I think, has to do with something Brett just said. Brett, you said you're no longer incorporating additional conservatism in the guidance due to the incident from last October. And that makes sense, by the way, now. But your guidance for next year, I just want to sort of understand. It's the initial guidance for next year. What is, you know, should we think about it? Listen, I think you guys do a pretty good job when you guide, but at the same time, I'm just trying to think about it. Like last year, you had a lot going on. The two years before that, should we think about, should we go back to those years and kind of think about your approach that would be similar to those years? Just trying to get my head around it. Yeah, John, hey, before you jump in, Brett, I want to just set the context at a high level. The Q3 was a solid quarter. And as we go into Q4 and think about next year, Brett can talk about the specifics on guidance, but we are, I think, being pretty balanced between optimistic about the future and all this new product momentum and all this large customer momentum, but also want to make sure we have the right level of prudence in our guidance. So it's always a balancing act, but I don't want the guidance question to kind of overshadow the momentum we see in the business and the optimism we see there. Yeah, and Brett, or Todd, I apologize. I very rarely say this at the beginning, but it was a really solid quarter. It really was more than solid. It was really good, and your whole team should feel really good about it. It's one step. It's one step. We have a lot of work to do, but thanks for saying that. Yeah, in terms of your question, John, about the guidance, I would say, you know, if you look back, let's go back a year ago, right? And a year ago, we had the security incident. We were right on the heels of it. And we guided 10% at that point, right, from a revenue growth perspective for FY 2025. We now think FY 2025 is going to be 15%. You can figure out the delta, 15 - 10. I would not expect that level of delta in the future just because we're taking out the security incident, right? There was a pretty large unknown at that point and a pretty large unknown until really this quarter where we haven't seen any impact quantitatively from the security incident. So that's how I would think about it, John. Hopefully that's it. Okay, but when I go back to the two years before that, that you exceeded your original guidance by like over five percentage points. That's why I sort of, I get it, though, less than last year, though. Yeah. And I think the other thing is, like, if you go back a couple of years, we're a much smaller company growing at a faster clip. So I think just the natural maturation of the business. I wouldn't go back that far, as kind of. Yeah. The other thing about it too is that Q4, with slower growth in these years versus five years ago, Q4 matters a lot more. So giving this guidance at the end of, you know, on the Q3 call, we have more, Q4 matters more in terms of seeing where we'll be. So that's why the Q1 look is so illustrative. Okay. Thanks a lot, guys. Nice job. Great. Let's go to Eric Heath at KeyBanc Capital Markets. Thanks, Dave. And congrats on the quarter, Brett and Todd. Todd, we've been hearing from some of your GSI partners more about RFPs for consolidated identity platform offering. So I'm curious if that's something you guys are seeing or maybe measuring in your pipeline or Todd even coming up more in customer conversations because it does seem to be resonating in the field with some of your partners. I do know on the GSI topic, we have really, really made a lot of progress with GSIs in the last year. I'm really, really excited about this because identity, as the folks on this call know Okta really well, it is sometimes quite complex to do a comprehensive change out of identity. In fact, it's always complex, way more complex than other types of technology, especially in the cyber ecosystem. So that has positives and negatives. The negatives are sometimes it takes longer to get a deal done. Sometimes it takes longer to do upsells. That's the good news, or that's the bad news. The good news is that once you get a committed cohort of customers and a committed cohort of systems integrators to help a customer on that journey, it's very valuable to the customer and very valuable to the partner for a very long time. So, you know, the plus side is that we're going to be providing value in these relationships and everyone's going to be benefiting for years and years and years. We had a really solid win of one of the largest technology companies in North America in Q3 that was nearly a $5 million ARR deal. And for that company, it's just the first phase of a multi-phase deal to replace their identity across their whole company. This specific initiative in Q3 was driven by Zero Trust transformation. So even some of the biggest technology companies are relatively early in their Zero Trust journey. And we worked with one of the largest SIs to scope that deal and bring that deal over. Then even more exciting about it is the deals that are queued up to follow that as we get this initial deal deployed and some level of success and then move on to the subsequent phases. So that's an exciting scenario there. And that's true on a number of deals in the quarter. I mentioned in my prepared comments that of the top 10 deals in a quarter that was really strong for big deals, all of them had partner participation. So we're doing a good job building that ecosystem, working with the partners, building trust in those partners. And especially this is true of the global SIs. They're seeing not a lot of choices out there in terms of scaled identity players. And particularly when we talk about a scaled identity player that's independent, neutral, and doesn't wrap that customer into one stack, we're unmatched. So they're seeing that and they're seeing the landscape and our unique value there. And they're aligning themselves with us, which I think is going to benefit everyone. I think also the interesting part about the top 10 deals that Todd was just talking about, having all partners, the great part of it was it was multiple different types of partners. You've heard us talk about GSIs as being very important, but it was GSIs, it was ISVs, it was marketplaces, it was the traditional VARs. I mean, it was a mix of them all. So that's why we continue to want to invest in each one of these areas because we're seeing success like this in Q3. Great. Next up, let's go to Gray Powell at BTIG. All right. Great. Thank you very much. Before I ask my question, I just got to say I really appreciate the 10 minutes of prepared remarks. And in fact, Brett, I think your section was probably shorter than DiFucci's question. So again, congrats on keeping it tight. So do what we can, Gray. We do what we can. Thank you. So for my question, it's been a pretty choppy earnings season so far across our security coverage. And I guess it's just nice to see your numbers inflect higher. So is there any way you can kind of talk about what stood out most this quarter versus Q2, just like what changed the most? And then how do you feel about the sustainability of that performance and just the forward execution? It was pretty different than Q2 in terms of just our execution in the quarter, bringing deals across the line. Q2 was okay. Q3 was very solid, and I think that is maybe I think what is lining up to look like the reality is that the year is looking more back-end loaded than what we may have thought in the first quarter or the second quarter, which I think is not, you know, within the history of the company. It's fairly common for that to be the case, but I think this year it's turning out to be a little more than maybe we anticipated, which means Q4 is a big quarter, and you know, the pipeline is there, and it's up to us and the team to execute on that. We're really aligned and motivated and understand how important it is as a team that we need to do that. We're all set to make that a reality. There's a lot of stuff to build on. We've mentioned a couple of the examples already, the large deals, the new products. 15% of bookings in the quarter were from these new products, which, you know, we wish it was a higher percentage, but there's a lot of new products that are starting to blossom and have the potential to be significant contributors on their own. Governance now is a third of the value of deals it's included in, which is significant, or 30% of the value, less than a third. Okta Privileged Access is starting to get momentum. We had a nice win there for a U.S. Department of an Asian bank, which bought the whole suite, access management, Governance, and Privileged Access, which we think is going to be a common buying pattern. And the driver there, I mentioned the large technology company before, the driver in that example was Zero Trust. They're trying to go to a Zero Trust architecture, and identity is important. For this U.S. division of this Asian bank, it's all about compliance. So they needed to have regulatory compliance for the auditors around not only applications and financial applications, but servers, which Privileged Access gave them that access to. So we're seeing new products, big deals. We see good partner involvement. But you know, we still think we can grow faster. We talked about the guidance for next year and how we're thinking about that. But we continue, as we always have, think this is a massive opportunity. It's our second highest priority after security and our Secure Identity Commitment is growth and re-accelerating growth. So you know, we're pleased, but we're not satisfied. We have a lot of work to do. This team is fired up to make it happen. We're going to go out there and do it. All right. I'd add a couple of things, Gray, that actually may not have changed, but are positives for us in general. One is contract duration continues to be healthy for us. You can see that in the total RPO growth, right? That's now six points higher than current RPO growth. The other thing I would add is U.S. Federal into their fiscal year. We had a really solid close to that. So that was, you know, like you heard earlier, is a good portion of those top 10 deals. And I think that's just a continuation of our success in public sector. Think of public sector as actually one of our first forays into specialization, right? We've really focused on it. We've put a lot of effort on it. We've done a lot of stuff from an R&D perspective. And so that continues to also be successful for us in Q3 and is helping the results we see here today. Understood. Thank you. Okay. Next, we have Gabriella Borges at Goldman. Hey, good afternoon. Thanks for taking the question and congrats on a solid quarter. Todd and Brett, I wanted to pick up where you just left off on the 15% of bookings that are coming from emerging products. Remind us how that number compares to history. And Brett, you mentioned with the net retention rates, there are two dynamics impacting that. You've got the pressure on MAUs and seat count, and then you've got the tailwind from cross-sell. Talk to us a little bit about when you think emerging can offset the headwind in MAUs and seat count, and it's a long way of asking when you think net retention might drop. Thanks. On the new product mix, I don't know the exact numbers, but without going back and looking at the data, my sense, being pretty close to the sales process, especially on the new products, this is higher than it has been in the past. And it's, you know, kind of led by Governance, Identity Governance. And for second place, where it's like a pretty close competition between Privileged Access, Identity Threat Protection, which is for the most security-conscious customers, it's a really big addition to their suite. Identity Threat Protection, the way to think about it is it's kind of like the advanced version of adaptive multi-factor. And the big thing it does is it monitors security risks throughout the session. So multi-factor and adaptive multi-factor do phishing resistance right when you log in. Identity Threat Protection continuously monitors risk signals, change of IP addresses, CrowdStrike, SentinelOne, detecting any kind of issue and shutting down the session. So it's proactive monitoring. So that's a big contributor. And then we have on the customer identity side, we have fine-grained authorization that had a decent quarter. And we also have Highly Regulated Identity. So you're seeing all these kind of seeds that are starting to grow, which are frankly more exciting than the 15% because you see this 15% contributed by multiple seeds that are growing into potentially contributors. It's pretty exciting for the future. Yeah, Gabriella, I would actually just add the percentage is up year over year because basically last year it was just Governance. And Todd just listed out like six products that are doing really well right out of the gate. So it's pretty easy to see that the percentage is going up and to the right, which is really exciting for us for all the reasons that Todd has said just in his last answer and what he said earlier on the prepared remarks. In terms of the NRR and what are the effects on it, it's the same effects we've talked about in the past, right? License counts and MAUs are being scrutinized like we've talked about in the past. It's macro-oriented just in general. And then there's also cohorts in the past that are feeling pressure, you know, older customer cohorts that are feeling pressure from the COVID era. In terms of what we expect it to do for the next quarter, that's because that's the only forecast I have right now. I don't have it all the way through FY 2026. But for Q4, we think it ticks down a little bit in Q4 based on those factors. It's on top of healthy gross retention. But those factors remain the same in terms of what we've said in the past. And so that's what we're seeing for now. In terms of what we expect in FY 2026, let us get through Q4 first and then see how that actualizes. And we got to finalize our fiscal year 26 plan. We'll go from there and be able to give you a little bit more insight on what NRR will do throughout FY 2026. That all sounds good. Thanks for the call. Okay. Next up, we have Hamza Fodderwala at Morgan Stanley. All right. Good evening. Thank you for taking my question. Todd, I wanted to ask you about FTC recently launched an investigation or is reportedly looking to launch an investigation on Microsoft and how they're bundling some of their security services. I'm curious if you have any comment on that and maybe just what you tell customers about some of the risks around vendor lock-in. Thank you. Yeah, it's a really important question. I'm not close enough to know the legal arguments or the regulatory arguments, but they do bundle. And the pitch is, hey, buy it off from us and it'll be cheaper. And I think what I tell customers is, first of all, you're foreclosing your option to choose different things. And what's not always obvious to customers is how important identity is in that gatekeeper role. There's a reason strategically that, and it's Microsoft now, but I think every big technology company that's trying to sell multiple layers in a platform, whether that's collaboration or business applications or infrastructure, is going to be tempted to take because they all have to build identity. Everything needs a login for itself. They're going to be tempted to take that identity service and use that for general identity and general login because it has a very powerful lock-in effect. If you can get someone to use your identity, they're going to be more likely to use more things from you. So in that sense, it can be a loss leader. And our argument is, first of all, to tell people that. We say, hey, don't make the long-term choice that's going to lock you in and remove choice and flexibility. And we all know that when you remove choice and flexibility, it's not just that you pay more in the end. You actually get worse outcomes because you can't pick the right technology. And this is particularly important in the security world because, as we also all know, that security is adversarial. And the attackers are coming from many different directions. Eight out of ten times, these security breaches are caused by compromised identity. So if you are locked into one stack from a security tools perspective and from an identity perspective, you're not going to have as good of security outcomes. So this is the pitch I make to customers. And it's resonating. They understand. I mean, for some customers, it doesn't work. Some prospects, it doesn't work. They don't view technology that strategically, or they don't, it's just cut costs, you know, no matter what. And they go for the bundle. But more and more customers, you know, I mentioned one of the largest tech companies in North America, they realize that identity really matters. And having an independent, neutral identity platform really matters. You know, a dollar they spend with Okta is going to pay back five or tenfold in terms of the security outcomes they get and the flexibility and the ability to onboard different technology. So it's starting to resonate. You know, we're doing something, the team knows this, we're doing something that's never been done before. We're building a scaled-out identity platform across multiple use cases: customer and workforce and privilege and Governance. We're the only one that has this foundation to build from. We're independent, neutral. We're not trying to sell anything else. We think our identity suite works better together. But that's where it ends. We're not trying to sell other parts of the security stack. We're not trying to sell other applications. We leave that up to the customers to choose the best outcome for them. Okay. Let's go to Matthew Hedberg at RBC. Great. Thanks, Dave. Todd, I wanted to circle back on the Governance side of it. It was an interesting statistic you gave. And I guess, you know, when you look at the success you've had attaching Governance to workforce deals, can you talk about the competitive landscape? And are there key elements of success this year that you think could parlay to next year? Maybe it's increased partner influence, maybe it's some additional sales incentives to drive even further new product attached next year? Yeah. I think the dynamic is, in many of these Governance scenarios, there is no solution. I mean, I'm talking about the customer doesn't have a solution, particularly in areas that are not traditional on-premise ERP legacy technology. So a lot of times, if there is a Governance solution, it's implemented around that legacy on-prem, you know, just big SAP, for example, or big Oracle, for example. And we'll come in, and they'll use us for an app that's not that. It's maybe their SaaS applications, and they do Governance for that. And they realize that these SaaS applications are becoming more important for compliance and more important for just general security and making sure the access is controlled from a security perspective. And we do a really good job of that. It's pretty rare for someone to take Okta Governance and replace a deployed in-production legacy Governance solution around an on-premise application. I think that will continue to be rare just because it works. You know, it's like checking all the compliance boxes. It's probably not worth changing. And there is an opportunity to just do the use cases around that. One thing that is interesting, and I've learned in the Governance market in the last few years, is there's a lot of churn. And so it's probably not a market where you have to have 25 years of features to win because there's a lot of churn in the market. I remember, this is going back a long time now, but when I was working at Salesforce, when I first got to Salesforce and I looked at the product capabilities, it was incredibly simple, especially compared to Siebel. It probably had, you know, 1/10 of the features. But it just ran the table because no one used all those features in Siebel. And I think the Governance market is like that. There's a lot of shelfware. A lot of this stuff is not implemented. And our product, which is very strongly integrated to access management, our access management, it's very quick to implement. People get tremendous value out of it fast. It's well integrated to many SaaS applications. And more and more, it's integrated to even on-prem applications as we innovate there. And it's fast time to value. I think that, in this case, is the winning formula when we're seeing it play out in the market. Thanks, Todd. Okay. Next up, we'll go to Joshua Tilton at Wolfe. Thank you, Dave. Brett, maybe one for you. The ongoing seat and MAU pressures that you guys are seeing this year, how does that, if at all, change your visibility into next year? And how are you kind of accounting for that in the guide that you gave today? Yeah, that's all accounted for in the guide today. It's a good question, Josh. In terms of the, you know, there's two different factors that we're talking about, right? There's the macro just overall. Companies are just not buying as many licenses. They're scrutinizing licenses. And when I say licenses, I mean licenses or MAUs. It just depends on which side of the business. And then there's the older customer cohorts. That older customer cohort, we think materially is done by the end of the first half of fiscal year 2026. But so that's all, by the way, that's all captured in the guide. So hopefully that helps there, Josh. Great. Next up, we have Jonathan Ho at William Blair. Good afternoon and congrats on the strong quarter. Just wondering if you could give us some additional detail on the go-to-market specialization opportunity that you referenced and maybe help us understand why you see the need to do this now or what's maybe the impetus driving that? Yeah. I've talked to a lot of people and working with Okta and go-to-market models the last five or six years. There's basically two spectrums of go-to-market. There's one end of the, or sorry, two ends of the same spectrum. One end of the spectrum is everything's general. And every rep sells everything. There's no overlays. There's no specialists. Just general rep model. And on the other end of the spectrum is everything's specialized. Every product has its own rep. And there's just total specialization. And the trade-offs are roughly, you know, you get more probably productivity and sales performance out of the completely specialized model, but you also get a lot more costs. So the exercise is how do you, as the organization grows and the product portfolio grows and the market evolves and the competitive dynamic evolves, how do you put your organization in the right spot on that spectrum to maximize growth and profitability? And so the simple answer to your question is we think that there's an opportunity for more growth here than we're seeing now. It's a part of the initiative to accelerate growth as we want to do more specialization. And I think there's some potential for, at least in the short term, some increased costs, but we think it's going to be far outweighed by the increase in growth. And by the way, we're very committed and very focused on profitability as well. But I think we have enough room in the business based on all our efficiency work and some of the effectiveness investments we've made where we can make the specialization investment and still run at the profitability levels we've outlined and are comfortable with and still accelerating growth. So that's high level. More specifically, I think it's important to understand kind of more specifically what we're saying here. So what this means is that we're going to have, instead of sales reps at Okta selling every product, they're going to be more specialized to product. Specifically, there's going to be dedicated Auth0 reps and then dedicated Okta reps. And the Okta reps are going to be that we need them because the product is getting quite broad. It's very, very challenging to sell Governance and Privileged Access and access management and customer identity and, and, and, and. And they're going to be specialized to sell the suite of access management, Privileged Access, Governance, ITP, that suite. And then the Auth0 reps are going to be focused on Auth0. So it's developers. It's making sure that every self-service customer that starts to upgrade gets upgraded into the full enterprise deployment because a lot of these small companies turn out to be some of our biggest customers. You all know about our presence in the AI world and how we have very significant customers there that started off as self-service trials. So products are getting more capable. It's very tough for one salesperson to cover them all. We see a growth opportunity, and we're going to make sure we take it. Yeah. I would just add to that. If you think about it, Jonathan, it's really about productivity. If we just boil it down to a simple metric, it's AE productivity. And we've seen nice gains this year in AE productivity. We think we can make those gains go even further by making this change in a portion of the organization, which goes back to Todd's point, is we've built all these efficiencies into the organization so you can balance with trying to go for more growth while also being healthily profitable as we are and expect to be in FY 2025 and FY 2026. Great. Thank you. Next up, we have Joe Gallo at Jefferies. Hey, guys. Thanks for the question. Can you just talk through customer identity, its performance this quarter, and how you're thinking about that market growth rate, and then just given all the conversations around specialization, how should we think about the maturity of the channel and its ability to sell that product? Yeah. Customer Identity had a solid quarter. I think we're very excited. It's over a billion-dollar business now. So we have the workforce business, which is well over a billion, obviously, and then the Customer Identity business, which is over a billion as well. I think that the drivers in that market are somewhat security, but they're a little bit different on the workforce side. It's less driven by security and many times just driven by customer experience. There's a large European online retailer that signed up for Customer Identity in Q3. And you think, oh, it must have been some security or something driving the purchase, but it was just convenience. Their web experience and mobile app had multiple logins and multiple IDs, and they were trying to consolidate that. So it's an important part of our business. It's growing strong. And as I just mentioned, we think we can grow it even faster with more focus on this developer persona, which, you know, we've seen in the past that it's very, the opportunities are huge when the developer use cases start, bottoms up, something new is built, starts to grow, comes into the self-service funnel, upgrades the enterprise, can be quite significant. And we want to make sure that we take advantage of that opportunity. Thank you. Let's go to Mike Cikos at Needham. Great. Thanks, Dave. And thanks for taking the questions, guys. Just wanted to tap into the specialization comment too. Can you either point to public sector where you guys have arguably driven some of the specialization or Americas SMB? I'm sure you guys have your own internal data points you're watching, but what would you point us to to help us get greater confidence that this specialization is the right approach? Because obviously, that's informing your decision, but it'd be helpful to get it for us outsiders here. Thank you. Yeah. There's a bunch of data points. You mentioned a couple of them. The Hunter-Farmer in Americas SMB, there's positive data points out of that. I would say that that's a relatively small part of the business. I think the public sector and the focus there and really speaking the same language as that buyer is a bigger data set and sample size, longer-term sample size that we're confident on. And then part of it too is just watching the sales cycles and sitting through the conversations and seeing the potential on this developer-facing market and seeing how much additional growth we just instinctually think we can see by focus and by dedicated resources on that. And then thinking about, you know, what's the, like I said before, there's always a trade-off, right? The trade-off is transition costs. Like, what is the cost to make the changes required to get to that model? And then what is the, you know, how is the ramp in growth going to, you know, measure against the increased costs of sales coverage? And we think that in this case, based on all our modeling and all our past experience, that the growth benefits are going to outweigh the costs. All right. Next up, we have Madeline Brooks at Bank of America. Good. Perfect. So, you know, I think overall, we can all agree that this is a really strong quarter for you guys. So I think then when I take a step back and look at the market, I really want to kind of hone in on this 7% guide for next year. And if I just kind of extrapolate what new bookings was for this quarter, we can kind of get to an assumption that maybe the core workforce and CIAM markets are growing roughly 5%. So I first want to clarify that 7%. Does that include any upside from new bookings or new bookings from new, sorry, from new products, or are new products already baked into that guide? And then just one follow-up question after that. Yeah. All the products we have today are already baked in there, if that's what you're asking. I think the one that's the most material by far is Governance. Like we've talked about before, we are hopeful that some of those products that we've been describing here today continue to ramp like they have been the last quarter or two and become more material. But frankly, the biggest new product in there would be Governance. Hopefully, that helps there, Madeline. Yeah. And then so for my follow-up, I guess, if I look at the identity market, both workforce and CIAM, both growing faster than that 5%, I mean, kind of if we analyze performance here, is there anything that Okta can do better to try and just reinvigorate the growth in those core markets where the market is growing faster and that 5% growth rate would suggest just some share loss there? And that's the question. Thank you. Yeah. It's an important question we think about a lot because, as I said, our number two priority is growth. And I'll refer to the number one priority, which is security. And I think not having any security issues is going to be a big deal. And we've invested aggressively, both in terms of money and in terms of just execution on making sure we have really performed well on our Secure Identity Commitment, which has four pillars. And we can talk about all four, but a big part of it is hardening our own corporate infrastructure. And we're, like I said, we've invested a ton. We've made a ton of progress there. And as I talk to leading tech companies and CISOs and other CEOs, our posture, our internal security posture has made a ton of progress. And I think when we talk about the accomplishments of this quarter, I think one of the most things I'm proud of this year at Okta is our improvement there. We still have more work to do. It's an never-ending investment level to make sure we are one of the most secure companies in the world, but that's something we're very committed to and making sure we continue to execute on. I think one of the, you know, I'll get back to your question about the growth rates and the market growth, but I think what we're seeing now is that that work, that internal work is really starting to translate out into prospect and customer momentum because they're seeing a company that's kind of been through the fire and used and learned a lot and is sharing that with the market now and helping the whole industry defend against identity-based attacks. Our own products are very relevant from, I mentioned ITP earlier, not to mention Privileged Access and Governance. We use those as we lock down our own infrastructure and customers can learn from that. And so that's, I think, you know, having a strong security performance in terms of breaches and issues. That's one part of it that can help us, you know, gain share in the market and beat these estimates we've put out there potentially. That's one thing. Second thing is that I think if we do all that and continue to execute well and we have, you know, our, we talked about specialization and talked about some things we're doing to accelerate growth in the go-to-market side. And if we don't grow faster than the market, I would say that the market forecasts turned out to be wrong. Because if we do all those things, we're not going to lose share. We're not going to grow slower than the market. And we're going to be just fine. Because if you just talk to customers and you think about, if you ask them about their problems and how relevant identity is and if they have solved all their identity challenges, there's still a lot of work to do out there and there's still a lot of problems to solve and still a lot of value to be delivered to customers, and we're going to make sure we're there to deliver that for them. Great. Next up, we have Shrenik Kothari at Baird. Yeah. Great. Thanks for taking my question and congrats on the solid execution. So the federal vertical you guys mentioned remains, of course, a key growth driver. Half of your top 10 deals were in the sector, which aligns with your end. Of course, your certifications and partnerships in the DC-based team that's translating to competitive advantage. My question is, how are you viewing the structural shifts, like perhaps in terms of budgets and reallocations that you foresee post-elections starting next year? How do you plan to navigate these? Again, it's still hypothetical, but just any potential disruptions that you might be foreseeing and tied to administration changes. Yeah. I think one of the wins we mentioned the top 10 deals and five of them were in the U.S. federal vertical. One of them was a very exciting win at the DOD. We mentioned a few quarters ago, we had our first big DOD win. We followed that up with another significant one this quarter, which is really a good positive sign of things to come in addition to results for the quarter. We also closed a deal, a significant deal in the top 10 at the largest healthcare provider for the federal government. So there's a lot of momentum there. I think it's identity and security and modernizing some of the identity and the focus that the federal government has had on cyber is kind of apolitical, as much as anything can be apolitical. But it is really, you know, everyone wants to be more secure and everyone knows that nation-states have an interest in attacking the federal government and identity can help defend against that. And they have to modernize this stuff. A lot of the stuff they're running is quite old, quite legacy. And I think one of the reasons we're seeing a lot of momentum is that it's like the two-part formula of focus on cyber and in many cases a long-overdue initiative to modernize some of the tech. And we're benefiting from both of those in the federal vertical. Great. Next up, we have Rudy Kessinger at DA Davidson. Hey, Greg. Thanks for taking my question. I want to go back to John's first question on the call, Brett, just about removing this additional conservatism in the guidance for the breach. I guess if we look at some of the, you know, the magnitude and beat some figures last couple of quarters, CRPOs in particular, you've been beating three to four points every quarter. I guess, can you quantify like where you had, was there one to two points of conservatism for the breach under CRPO guide the last few quarters? Or just how should we think about, you know, that Q4 CRPO guide in particular going forward, the level of conservatism in it versus past quarters? Yeah. I would say the level of conservatism is both current RPO and the revenue, just so we're on the same page, as well as op margin. It's all kind of all flows together, right? And when I say op margin, I mean both op margin and free cash flow. I don't have an exact quantification for you, Rudy, but like I said earlier, I just don't. It's not going to be 10% to 15% like we did that example I gave earlier, which was 10% at this time of the year. Now it's 15% for revenue growth and FY 2025. I just don't. I don't imagine us seeing that given what we can see today. And keep in mind, this is also just the natural maturation of the company. We're just getting bigger. Growth is slowing down a little bit. So it's also, you know, security incident, but also just the sheer size of our company at this point. Yeah. Let's go to Saket Kalia at Barclays. Okay. Great. Hey, guys. Thanks for taking my question here. Good to be on the call. Brett, maybe for you, can we just talk a little bit about new logo business in the quarter? I mean, I think we were all prepared for what was going to happen to net revenue retention, but it seems like the new logo part of the business stabilized this quarter. Can you just talk about what drove that and whether that trend is something that can continue going into next year? Yeah. I mean, frankly, we'd like the new logo numbers to be higher. I mean, we was 150 quarter over quarter. You know, one of the things that we've been obviously working on is the hunter-farmer model to try to improve that. That's one piece of the formula, right? Hunter-Farmer is both new logos and also upsells as well. But yeah, we think we can do better than where we are. And frankly, the good news is, look at how solid results we can produce when really mainly selling cross-sells, right? If you look at the current RPO growth of 13%, total RPO growth of 19%, you know, there's a lot of opportunity inside the customer base at this point. I mean, Todd talked about earlier with 15% of the bookings coming from these newer products, but ultimately that's just scratching the surface. We have a ton of opportunity inside the customer base. But to be clear, we want to be able to grow the logo count faster than this. Like I said, the good news is we've done a lot with the larger customers and also large and million-dollar ACV, the million-dollar cohort. So we've definitely helped ourselves. But we look forward to producing frankly better than this. Very helpful. Thanks. Problem. Next up, we have Patrick Colville at Scotiabank. All right. Thank you so much for taking my question. I guess, Brett and Todd, I mean, if I look back at this year, 2024, to me, the standout success has been Okta's rapidly improving profitability. This time last year, you set the initial guide for margins in fiscal 25 at 17%. You know, in the press release, it's now up to 22%. So I guess a five-point beat. How should we think about Okta's ability to outperform your initial guide of 22% next year? And then also just, I guess, give us some color on how you're thinking about hiring because it looks like hiring's kind of picked up the last couple of quarters. All right. Thank you. Yeah. From a profitability perspective, you know, one of the things that we've talked about a little bit on this call is we really want to lean more into growth. If you think about the Rule of 40, right, it's the lens we manage the company through for years now. We want to lean more into the growth side of the equation. And so I wouldn't necessarily expect, you know, a bunch of upside. I mean, we've definitely set the guidance where we think it's achievable, but we do want to invest into the opportunity because we do see it out there. You've heard Todd's comments throughout this entire call of optimism of how we can go and get more of the market. And so we don't want to sit here and say, "Hey, the profitability is going to be way higher than what we've already guided you," because we want to go after that huge market opportunity. And we're making obviously all these changes and these investments. Think about security Todd talked about earlier. The product innovation coming off the line has been really good. And we think we can expect more of that. You know, the specialization topics we've talked about today, investing more in partners, these are all growth drivers. We really want to get after growth. And we're comfortable with the guidance we've given you here today, both top and bottom line. Thank you so much. No problem. Next up is Rob Owens at Piper. Great. Thanks, Dave. And good afternoon. Todd, I want to build on some of the comments that you made earlier and appreciate kind of the overview of where we are in terms of identity. And I think Brett said we should be doing better from a new customer perspective. And frankly, I would agree. So where is the market just in terms of being dynamic around customers wanting to switch at this point? You know, we continue to hear identity's broken. It's the reason that most of these breaches occur in the first place. So why isn't that more dynamic? And you've put this hunter-farmer model in, you know, nine months ago. And I realize these things take time, but I would expect that 150 kind of quarter-over-quarter number to start to improve here. So where's the governing factor in that, especially relative to, I think, your broader comments of where identity is right now? Thanks. Yeah. Yeah. I think the customer account number is a little bit, it shows more about the SMB market because that obviously is the logos are, you know, more logos down there versus if you look at the customer account growing in the 100K+, it's, you know, it's up 8% versus a smaller number below 100K. So that's one quantitative thing. But I think one interesting thing about your question is just I was at a dinner last week. I was in Australia traveling, visiting a bunch of customers and prospects down there. And I was at a dinner of a bunch of partners, a bunch of systems integrators of ours, and talking to them about how things are going. And I was asking them about identity compared to other parts of cyber and what's the dynamic. They said also the same thing, which is these are people in the trenches doing these deals with customers, rolling out products. When they look around and they see what's the easiest to change, it's other things are easier to change sometimes. It's easier to put something on the endpoint. It's easier to change out your firewall. Identity is harder to change. The upside of changing it is quite important, especially when you consider eight out of ten breaches are caused by identity. I think in some cases it's going to be slower, but we just have to be patient because we have by far the best products. We're in this very unique position where in terms of scale and modern technology and product suite and independence and neutrality, there's no one else out there. And so we got to just keep executing, keep working hard, keep innovating, keep meeting customers where they are. And we'll be just fine with the plans and the strategies and the efficiencies we're demonstrating. Next we'll go to Peter Levine at Evercore. Thanks, Russell. Forget me again. Yeah. Let me tell you, we're going to talk about AI, but we are starting to see somewhat of an explosion of like non-identities, non-employee identities, like machine identities, bots. Can you talk to us about what you're seeing across your customers in terms of A, like the usage around AI and those identities that are coming onto their network? And then B, from your perspective, like how do you monetize that, right? If there's more identities to protect non-employee identities, like what are your plans over the next, call it 12 to 18 months in terms of monetizing some of the, you know, the adoption or the initial adoption of AI? Yeah. It's, I would say, there's four things. And two of them you've probably heard me talk about and two of them you probably haven't. The first two are the most obvious thing is there's a whole new generation of apps and SaaS apps and innovations that people need to log into. And we're the identity layer from a customer identity perspective and some of the biggest in the world and a lot of smaller ones that, you know, you haven't heard of yet, but you will hear of. And which is why, by the way, the developer focus is so important because that whole new generation of tech is being built. Second thing is that we have Okta AI, which, you know, we talked a lot about a couple of years ago and we continue to work on that. It's really starting to help these new products like Identity Threat Protection with Okta AI. The model inside of Identity Threat Protection and how that works is AI is a big part of the product functionality. So those two you've probably heard me talk about before. Some really interesting new areas are we have something we talked about at Okta called Auth for GenAI, which is basically an authentication platform for agents. Everyone's very excited about agents as they should be. I mean, we used to call them bots, right? You know, four or five years ago they were called bots. Now they're called agents. Like what's the big deal? How different is it? Well, you can interact with them in natural languages and they can do a lot more with these models. So now it's like bots are real in real time. But the problem is all of these bots and all of these platforms to build bots, they have the equivalent of the monitor sticky notes with passwords on them. They have the equivalent of that inside the bot. So there's no protocol for single sign-on for bots. They have like stored passwords in the bot. And if that bot gets hacked, guess what? You signed up for that bot and it has access to your calendar. It has access to your travel booking. It has access to your company email and your company data. That's gone because the hacker is going to get all those passwords out of there. So Auth for GenAI automates that and makes sure you can have a secure protocol to build a bot around. And so that's a really interesting area. It's very new. We just announced it. And all these agent frameworks and so forth are new. But I think it goes back to this idea where there's a lot of profound innovation and new applications and services in the AI revolution, but a lot of it is just a magnification of the same problems, whether it's more apps we need to secure, better customer experiences, more integrated we need to build, not having passwords on our monitors, having single sign-on in the case of people and in the case of bots. We're relevant in all those things. And it's, you know, it's pretty exciting to watch it happen and see, you know, frankly, it's a lot of potential right now in terms of our business, but the potential is large. Can you just share the monetization? How do you plan on charging for that? And if you are, are you charging today? But just really let's bring that up. There's different, like obviously, yeah, monetization. There's obviously like Identity Threat Protection is a product. So we sell that. It's an upsell. Auth for GenAI, it's basically like a, think about it as per machine authentication. So every time we have this feature called Machine-to-Machine, which does a similar thing today, and you pay basically by the monthly active machine. Thank you. Yeah. Yeah. We're at the top of the hour, but we're going to try to take a few more here. Let's go to Trevor at JMP. Great. Thanks, Dave. Thanks for taking the question. Todd, maybe for you just a clarification and then a question. You made some comments earlier around the context of OIG, and it sounded like maybe for the Privileged Access product too around just the competitive landscape and that you weren't necessarily running into maybe what I would have expected as sort of the standard set of competitors or suspects there. So curious if that's because you're just not necessarily going after those displacements as aggressively kind of in the field because, you know, we know your kind of products have been kind of, you've said yourself kind of 1.0 and not looking to necessarily do that? And if that's the case, kind of as you move into next year and beyond, and that's going to be a stimulant for growth, what do you have to, or will you just start kind of flipping the switch and going after them more aggressively vis-à-vis competitors, or does there need to be a? I don't think we don't have to replace SailPoint on-prem for SAP to have a large business, so maybe it's just a little bit of the details there, but I don't think that for us to win, we have to, you know, take out SailPoint on-premise. It's just not practical. People, when they get a system installed and integrated and they spend three years, these things are hard to get installed and integrated, and when they spend three years doing it, they're not going to take it out. It's just, it's like, you know, I would, if you just want to invest in SailPoint as a long-term, it's not going to be a big growth story, but it's going to be a good business for a long time just because they have a good installed base and we're not going to take that out. But it's also not a very big company. And we think that the market for Governance, as more and more of it moves to cloud and there's better products like ours that are easier to use and more integrated, I think the market's, you know, eventually five or 10 times bigger than what it is now. We're going to have a big share of that. So that's kind of what I'm trying to say. I think it's a little bit nuanced. It'd be easier to think about it if it was like, you know, Okta takes out all SailPoint's business, but it's just not realistic. And by the way, we don't have to. We can cover these new use cases, which are going to be, which by the way, is kind of the story of Okta. Like when we started Okta, people said, you should, you can't start an access management company in the cloud. There's not enough in the cloud. You have to, you know, do on-prem and you have to like take maybe some software and host it. And we said, no, we're going to build a modern thing that's pre-integrated and very flexible and fast to get value from. And that's where the world's headed and that's where we're going to be. So we've taken the same tack with both privilege and Governance. And I think if you think about the competitive landscape and the strategy of it, what's the right position to be in? Would you rather be starting from Governance and starting from privilege on-premise and going out to try to build a full suite, or would you start from our almost 20,000 customers and building some of these new capabilities around that? I would argue we're in a better position, but I'm sure those other vendors probably have their own opinions and we'll see who wins. Next we have Brian Essex at J.P. Morgan. Hi, good afternoon. Thanks for taking the question. Yeah, I want to dig into the new products. It's great to see the traction there. 15% of the bookings is a great result. I want to see if we could peel back another layer. What percentage came from new versus existing? And how do you think about expanding into, you know, expanding with new products into existing customers versus larger lands with new products and new logos? Where's the bigger opportunity? And, you know, how do we think about the momentum there? Yeah, I think I don't know the exact numbers, but I would, based on my work with the field and working in deals, I would estimate that it was a majority of it was upsells. But there were some significant new logos. I mentioned a large technology company that had a nearly $5 million deal. That was all a new customer. And that was multiple products in the suite. So there are some, especially in the larger deals, there's bigger companies. And I think what, and it's kind of like a good example of a lot of things we've been talking about, which is larger companies have their budgets set, they have their initiatives, they have their projects. Even if they're maybe longer term, they're executing on them, they're more likely to do a strategic thing like identity that might have a longer term payback than a quicker, maybe another initiative that might be quicker payback or not take as much work to get it going. And they're also, they're also the suite we're offering where you can get access and Governance and privilege from a single vendor is appealing because they realize that they can, they probably have, you know, a bunch of different little vendors doing niche things and they can have more cost savings of consolidating. And then the other thing too is that they understand the value of neutrality and they understand the value of technology and how not being locked in can be a big advantage. So I think that's why you're seeing the business naturally gravitate toward bigger companies. You know, the million dollar plus cohort now for Okta is $1 billion of revenue, which is, you know, great. I also think we have a ton of opportunity there because a lot of these deals are, you know, I mentioned the big technology company. It's like, it's a $5 million deal and it's really like a third of their estate. We have a lot of opportunity just in that account. It's exciting. So it sounds still like more of a, you know, farmer versus hunter opportunity, but hunter getting some traction. Yeah, I think that's probably right. Yeah. Yeah, I would agree with that. Brian, I would say that, yeah, the math does suggest it's more upsell than new business. But I think what's interesting is as the products mature, then you're going to be able to land more new customers with them. So it's basically what we've done in every other product category that we've entered. So we started out with something that's, you know, I want to say basic, but like, you know. Someone called it 1.0 earlier. There you go. Okay. That's good. And then it got better over time and then you started landing with it. We've done it with multiple products now. We're going to continue to do that with these newer products and we're excited about it going forward. Great. That makes sense. Thank you. Yeah. Let's go to Junaid Sidhu at Truist. Great. Thank you for taking my question. You mentioned the Governance solution representing around a third of the contract value when sold in a workforce deal. How should we think about pricing uplift with some of your newer solutions like Privileged Access and threat protection and others? I think on Privileged Access, we're – it's earlier. We don't have as many customers. Governance has close to a thousand customers. So we have much more data on that. But Privileged Access looks like it's going to be in the same zone in terms of it could be a, you know, if there's no Governance or privilege in a deal and you add privilege, it could be a third of, you know, 30% of the value. And then Identity Threat Protection is probably the furthest along after that. And it's a similar type of uplift to Adaptive Multi-Factor Authentication. So it's a, you know, significant type uplift on the deal. Great. Next we'll go to Adam Borg at Stifel. Awesome. Thanks for fitting me in. Maybe for Todd, just on the emerging product front, you know, it's great to see the green shoots and the upcoming specialization that we talked about on the call. As we think about fiscal 2026, how do we think about the packaging and pricing side? Any changes there given these newer solutions to coincide with the new specializations that you're talking about? Thanks so much. We have a bunch of things we're modeling out and experiments we're doing. I think the main idea is our pricing right now is pretty à la carte. And we're looking at more kind of additions or simplified pricing. We're seeing good patterns of how people buy, good, better, best. And we're looking at some ideas on how to make that easier for customers to consume, not so much pick every option and every specific product one by one. Great. Thanks so much. Yeah. Okay. We'll go to Fatima Boolani at Citi. Oh, thank you so much for taking the questions. Todd, I wanted to ask you about the international business. Look, the North America business has gotten a lot of TLC with respect to some of the changes you've made from a go-to-market perspective, i.e. the hunter-farmer bifurcation that you talked about earlier in the year. But if you can kind of give us a sense and a juxtaposition of why the international business has slowed down. I think I have some ideas. But if you can sort of comment on what you're seeing in terms of business and demand dynamics. And then Brett, anything you can share on, you know, some of the metrics that we see across the business, are they better or worse from an operational perspective when just looking at the international lens? Thank you. It's an important part of our business that I'm spending personal time internationally. I mentioned I was in Australia and Asia just last week. I think I'm very happy with the teams there. We've had a new leader in Europe now for coming up on, this will be the third quarter, I believe, and Europe, I think, has a little bit of a tougher economic situation than North America. So some of that, you know, the macro is, as you mentioned before, the macro has been consistent, but I would say over the last three or four quarters, macro Europe has been consistently tougher than North America, and so, and then, but in terms of like the opportunity and the push for security and the way the solutions resonate, it's pretty universal. So I think maybe in terms of like team performance and product portfolio and capabilities and focus, I think we have a significant growth opportunity international and we're set up to execute on it over the next few quarters. Yeah, I would just add that's an area that we're really also focused on from a partner perspective. Right? You've heard about the MSPs, we've heard about GSIs, all these different, and even the traditional VARs. I mean, there's a lot of opportunity in international that we need to tap into through those partnership channels. In terms of the metrics, if they look any different, they're not wildly different enough to talk about other than what Todd just said, which is from a macro perspective, it does seem to be a little bit more challenging. But that's as much as I've got. Thank you. Okay. We'll round this out with the last question from Peter Weed at Bernstein. Hey, thank you so much. I appreciate you going over time and actually all the questions you've taken. You know, I think one of the exciting things that you've highlighted is you kind of see the light at the end of the tunnel for kind of the peak of the, you know, the backlog and, you know, people downgrading and these types of things kind of in mid-year 2026. Obviously, that's not like a cliff where it like just like turns off all at once, but rather kind of will be a gradual thing over time. You know, as we're kind of thinking about our own models, I mean, is this something where we should think about that kind of occurs over 12 to 18 months where that kind of slowly degrades? And, you know, obviously what we shouldn't be taking as the basis, you know, the greater than 120% NRR that was out there before is, you know, maybe where it could get back to. But, you know, is the degree of headwind that ends up going away, is that 300 bps to 500 bps of headwind over that kind of 12 to 18 months? Like, help us dimensionalize some of that so that we kind of think about the timing and where that should have impact. Yeah, I would say that's a good point about it's not a cliff. It just gets lessened, so thank you for saying that, Peter, so hopefully everybody heard that, but in terms of the NRR expectations throughout FY 2026, let us get through Q4, biggest quarter of the year for us, and then let us finish our financial plan, and then I'll be able to tell you more about NRR for FY 2026 because we'll just have a whole lot more information than we do right now. So. We're excited for it. Thank you. Thank you. Great. Well, thanks everybody for sticking with us for the call. Before you go, I just want to let you know that in addition to hosting several onsite and virtual bus tours through December and January, we'll be attending the Scotiabank Global Tech Conference in San Francisco on December 10th. So we hope to see you at one of those events. Thank you. Bye everyone. Thanks everyone.

Speaker 10: Hi everyone, welcome to Okta's third quarter of fiscal year 2025 earnings webcast. I'm David Gennarelli, Senior Vice President of Investor Relations at Okta. With me in today's meeting, we have Todd McKinnon, our Chief Executive Officer and Co-founder, and Brett Tighe, our Chief Financial Officer. Around the same time that the earnings press release hit the wire, we posted supplemental commentary to the IR website. This posted commentary contains a large portion of what would historically be the opening commentary, including customer commentary, product-related news, and a review of our financial results. This format allows listeners to review that information before this call. 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. Hi everyone, welcome to Okta's third quarter of fiscal year 2025 earnings webcast. hi everyone welcome to okta's third quarter of fiscal year 2025 earnings webcast I'm David Gennarelli, Senior Vice President of Investor Relations at Okta. i'm david gennarelli senior vice president of investor relations at okta With me in today's meeting, we have Todd McKinnon, our Chief Executive Officer and Co-founder, and Brett Tighe, our Chief Financial Officer. with me in today's meeting we have todd mckinnon our chief executive officer and co-founder and brett tighe our chief financial officer Around the same time that the earnings press release hit the wire, we posted supplemental commentary to the IR website. around the same time that the earnings press release hit the wire we posted supplemental commentary to the ir website This posted commentary contains a large portion of what would historically be the opening commentary, including customer commentary, product-related news, and a review of our financial results. this posted commentary contains a large portion of what would historically be the opening commentary including customer commentary product-related news and a review of our financial results This format allows listeners to review that information before this call. this format allows listeners to review that information before this call 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. 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. 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. 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. 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 Forward-looking statements represent our management's beliefs and assumptions only as of the date made. 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. 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. 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. 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. 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 measures versus their closest GAAP equivalents are available in our earnings release. You can also find more detailed information in our supplemental financial materials, which include trended financial statements and key metrics posted on our Investor Relations website. 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. And now I'd like to turn the meeting over to Todd McKinnon. Todd. A reconciliation between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalents are available in our earnings release. a reconciliation between gaap and non-gaap financial measures and a discussion of the limitations of using non-gaap measures versus their closest gaap equivalents are available in our earnings release You can also find more detailed information in our supplemental financial materials, which include trended financial statements and key metrics posted on our Investor Relations website. you can also find more detailed information in our supplemental financial materials which include trended financial statements and key metrics posted on our investor relations website 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. 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 And now I'd like to turn the meeting over to Todd McKinnon. and now i'd like to turn the meeting over to todd mckinnon Todd. todd

Speaker 23: Thanks, Dave, and thank you everyone for joining us this afternoon. Our solid Q3 results were once again highlighted by strength with large customers and strong profitability and cash flow driven by continued spend efficiencies. While the macro environment remains consistent, we're encouraged by some positive data points in Q3. I'll touch on some of those and then get into other highlights from the quarter before turning over to Brett. I've mentioned previously that deepening our relationship with our partner ecosystem is one of our main priorities. We're already seeing good progress as all of our top 10 deals in the third quarter involve partners. These 10 deals were all over one million in annual contract value and in aggregate represented approximately 20 million in ACV. This underscores the value of investing in our partner ecosystem. The public sector also continues to be an area of strength. Thanks, Dave, and thank you everyone for joining us this afternoon. thanks dave and thank you everyone for joining us this afternoon Our solid Q3 results were once again highlighted by strength with large customers and strong profitability and cash flow driven by continued spend efficiencies. our solid q3 results were once again highlighted by strength with large customers and strong profitability and cash flow driven by continued spend efficiencies While the macro environment remains consistent, we're encouraged by some positive data points in Q3. while the macro environment remains consistent we're encouraged by some positive data points in q3 I'll touch on some of those and then get into other highlights from the quarter before turning over to Brett. i'll touch on some of those and then get into other highlights from the quarter before turning over to brett I've mentioned previously that deepening our relationship with our partner ecosystem is one of our main priorities. i've mentioned previously that deepening our relationship with our partner ecosystem is one of our main priorities We're already seeing good progress as all of our top 10 deals in the third quarter involve partners. we're already seeing good progress as all of our top 10 deals in the third quarter involve partners These 10 deals were all over one million in annual contract value and in aggregate represented approximately 20 million in ACV. these 10 deals were all over one million in annual contract value and in aggregate represented approximately 20 million in acv This underscores the value of investing in our partner ecosystem. this underscores the value of investing in our partner ecosystem The public sector also continues to be an area of strength. the public sector also continues to be an area of strength In fact, half of the top 10 deals that I just mentioned were in the U.S. federal vertical. We've made great progress with our presence in the public sector and believe we have a tremendous amount of runway ahead of us. Our largest customers remain an area of strength. The cohort of $1 million plus ACV customers continues to be our fastest growing cohort. In total, this cohort now represents approximately $1 billion in ACV. We were also pleased with the upsell and cross-sell activity in Q3. Specifically, we experienced strong growth of workforce customers buying more workforce products, as well as workforce customers buying customer identity. Okta's expanded product portfolio is allowing us to equip our customers with more industry-leading identity solutions to support them in their goal to operate more efficiently and securely. The threat environment has never been more hostile. In fact, half of the top 10 deals that I just mentioned were in the U.S. federal vertical. in fact half of the top 10 deals that i just mentioned were in the u.s federal vertical We've made great progress with our presence in the public sector and believe we have a tremendous amount of runway ahead of us. we've made great progress with our presence in the public sector and believe we have a tremendous amount of runway ahead of us Our largest customers remain an area of strength. our largest customers remain an area of strength The cohort of $1 million plus ACV customers continues to be our fastest growing cohort. the cohort of $1 million plus acv customers continues to be our fastest growing cohort In total, this cohort now represents approximately $1 billion in ACV. in total this cohort now represents approximately $1 billion in acv We were also pleased with the upsell and cross-sell activity in Q3. we were also pleased with the upsell and cross-sell activity in q3 Specifically, we experienced strong growth of workforce customers buying more workforce products, as well as workforce customers buying customer identity. specifically we experienced strong growth of workforce customers buying more workforce products as well as workforce customers buying customer identity Okta's expanded product portfolio is allowing us to equip our customers with more industry-leading identity solutions to support them in their goal to operate more efficiently and securely. okta's expanded product portfolio is allowing us to equip our customers with more industry-leading identity solutions to support them in their goal to operate more efficiently and securely The threat environment has never been more hostile. the threat environment has never been more hostile Organizations are constantly under attack, and identity has become a primary attack vector. Okta's technology has become more important than ever in helping to prevent and mitigate these attacks. We're advancing our vision to free everyone to safely use any technology with the expansion of our unmatched portfolio of identity solutions through great product innovation. We're also accelerating our investments in the Okta Secure Identity Commitment, which is resonating with prospects and customers. We recently showcased that innovation at Oktane, our biggest customer and partner event of the year. The energy at the event was terrific as in-person attendance was up over 25% versus last year and represented hundreds of millions of dollars of pipeline. Attendees heard about the future of identity security and how Okta is responding to the evolving threat landscape. Organizations are constantly under attack, and identity has become a primary attack vector. organizations are constantly under attack and identity has become a primary attack vector Okta's technology has become more important than ever in helping to prevent and mitigate these attacks. okta's technology has become more important than ever in helping to prevent and mitigate these attacks We're advancing our vision to free everyone to safely use any technology with the expansion of our unmatched portfolio of identity solutions through great product innovation. we're advancing our vision to free everyone to safely use any technology with the expansion of our unmatched portfolio of identity solutions through great product innovation We're also accelerating our investments in the Okta Secure Identity Commitment, which is resonating with prospects and customers. we're also accelerating our investments in the okta secure identity commitment which is resonating with prospects and customers We recently showcased that innovation at Oktane, our biggest customer and partner event of the year. we recently showcased that innovation at oktane our biggest customer and partner event of the year The energy at the event was terrific as in-person attendance was up over 25% versus last year and represented hundreds of millions of dollars of pipeline. the energy at the event was terrific as in-person attendance was up over 25% versus last year and represented hundreds of millions of dollars of pipeline Attendees heard about the future of identity security and how Okta is responding to the evolving threat landscape. attendees heard about the future of identity security and how okta is responding to the evolving threat landscape We highlighted more than 30 products, features, and capabilities across our Workforce Identity Cloud and Customer Identity Cloud that will deepen our customers' security and help them create exceptional customer experiences while enabling us to reignite our growth with a focused approach. It's also great to receive validation on our strategy and vision from third parties. Okta was recently recognized as a leader in the 2024 Gartner Magic Quadrant for Access Management for the eighth consecutive year. Okta achieves the highest and furthest overall position for its ability to execute and completeness of vision in this research. We have a lot of optimism about the direction of the business. One of the things we're excited about is go-to-market specialization. In Q1 this year, we introduced a layer of specialization in the go-to-market team with a hunter-farmer model for the Americas SMB market. We highlighted more than 30 products, features, and capabilities across our Workforce Identity Cloud and Customer Identity Cloud that will deepen our customers' security and help them create exceptional customer experiences while enabling us to reignite our growth with a focused approach. we highlighted more than 30 products features and capabilities across our workforce identity cloud and customer identity cloud that will deepen our customers' security and help them create exceptional customer experiences while enabling us to reignite our growth with a focused approach It's also great to receive validation on our strategy and vision from third parties. it's also great to receive validation on our strategy and vision from third parties Okta was recently recognized as a leader in the 2024 Gartner Magic Quadrant for Access Management for the eighth consecutive year. okta was recently recognized as a leader in the 2024 gartner magic quadrant for access management for the eighth consecutive year Okta achieves the highest and furthest overall position for its ability to execute and completeness of vision in this research. okta achieves the highest and furthest overall position for its ability to execute and completeness of vision in this research We have a lot of optimism about the direction of the business. we have a lot of optimism about the direction of the business One of the things we're excited about is go-to-market specialization. one of the things we're excited about is go-to-market specialization In Q1 this year, we introduced a layer of specialization in the go-to-market team with a hunter-farmer model for the Americas SMB market. in q1 this year we introduced a layer of specialization in the go-to-market team with a hunter-farmer model for the americas smb market As we plan for FY 2026, we are planning for further specialization in our global go-to-market strategy to better align with the distinct identity buying centers of IT security and developers. Doing so will allow us to meet evolving market demands, help reignite growth, and create a win-win scenario that benefits both our customers and Okta, ultimately driving better business outcomes. To wrap things up, we remain hyper-focused on our top priorities of security, growth, and scale. Identity is security, and we're taking the right steps to advance our position as a leader in the identity market while remaining focused on investing for growth and driving spend efficiencies and cash flow. Now here's Brett to cover the financial commentary and talk about how we're positioned for long-term profitable growth. As we plan for FY 2026, we are planning for further specialization in our global go-to-market strategy to better align with the distinct identity buying centers of IT security and developers. as we plan for fy 2026 we are planning for further specialization in our global go-to-market strategy to better align with the distinct identity buying centers of it security and developers Doing so will allow us to meet evolving market demands, help reignite growth, and create a win-win scenario that benefits both our customers and Okta, ultimately driving better business outcomes. doing so will allow us to meet evolving market demands help reignite growth and create a win-win scenario that benefits both our customers and okta ultimately driving better business outcomes To wrap things up, we remain hyper-focused on our top priorities of security, growth, and scale. to wrap things up we remain hyper-focused on our top priorities of security growth and scale Identity is security, and we're taking the right steps to advance our position as a leader in the identity market while remaining focused on investing for growth and driving spend efficiencies and cash flow. identity is security and we're taking the right steps to advance our position as a leader in the identity market while remaining focused on investing for growth and driving spend efficiencies and cash flow Now here's Brett to cover the financial commentary and talk about how we're positioned for long-term profitable growth. now here's brett to cover the financial commentary and talk about how we're positioned for long-term profitable growth

Speaker 6: Thanks, Todd, and thank you everyone for joining us today. Thanks, Todd, and thank you everyone for joining us today. thanks todd and thank you everyone for joining us today We continue to build on the efficiency initiatives that we've been implementing over the past two years. Our Q3 financial performance was highlighted by continued strong cash flow and operating profitability, including GAAP profitability. I'll note that similar to the prior three quarters, as we have analyzed our key metrics, we could not attribute a quantifiable impact from the October 2023 security incident on our Q3 results, and while not quantifiable, the event likely had some level of impact. Our view on the macro environment is that it remains consistent with what we've experienced for the past few quarters. Organizations are scrutinizing budgets and rationalizing their software spend, resulting in lower assumptions for seats in our workforce identity business and MAUs in our customer identity business. We continue to build on the efficiency initiatives that we've been implementing over the past two years. we continue to build on the efficiency initiatives that we've been implementing over the past two years Our Q3 financial performance was highlighted by continued strong cash flow and operating profitability, including GAAP profitability. our q3 financial performance was highlighted by continued strong cash flow and operating profitability including gaap profitability I'll note that similar to the prior three quarters, as we have analyzed our key metrics, we could not attribute a quantifiable impact from the October 2023 security incident on our Q3 results, and while not quantifiable, the event likely had some level of impact. i'll note that similar to the prior three quarters as we have analyzed our key metrics we could not attribute a quantifiable impact from the october 2023 security incident on our q3 results and while not quantifiable the event likely had some level of impact Our view on the macro environment is that it remains consistent with what we've experienced for the past few quarters. our view on the macro environment is that it remains consistent with what we've experienced for the past few quarters Organizations are scrutinizing budgets and rationalizing their software spend, resulting in lower assumptions for seats in our workforce identity business and MAUs in our customer identity business. organizations are scrutinizing budgets and rationalizing their software spend resulting in lower assumptions for seats in our workforce identity business and maus in our customer identity business These lower seat and MAU assumptions have put our net retention rate under pressure over the past few quarters, while gross retention has remained strong. Helping to partially offset the seat and MAU headwind is the success we've been having in selling more products to both our new and existing customers. Our relentless focus on innovation has been resonating with our customers as approximately 15% of Q3 bookings were from new products. Okta Identity Governance continues to represent approximately one-third of the contract value when sold in a workforce deal. In addition to OIG, we're also selling new products like Okta Privileged Access, Device Access, Fine Grained Authorization, Identity Threat Protection, and Identity Security Posture Management. Our data tells us that customers that adopt more products have the highest retention rates, so we're excited about the trends here and the long-term contributions to the business. These lower seat and MAU assumptions have put our net retention rate under pressure over the past few quarters, while gross retention has remained strong. these lower seat and mau assumptions have put our net retention rate under pressure over the past few quarters while gross retention has remained strong Helping to partially offset the seat and MAU headwind is the success we've been having in selling more products to both our new and existing customers. helping to partially offset the seat and mau headwind is the success we've been having in selling more products to both our new and existing customers Our relentless focus on innovation has been resonating with our customers as approximately 15% of Q3 bookings were from new products. our relentless focus on innovation has been resonating with our customers as approximately 15% of q3 bookings were from new products Okta Identity Governance continues to represent approximately one-third of the contract value when sold in a workforce deal. okta identity governance continues to represent approximately one-third of the contract value when sold in a workforce deal In addition to OIG, we're also selling new products like Okta Privileged Access, Device Access, Fine Grained Authorization, Identity Threat Protection, and Identity Security Posture Management. in addition to oig we're also selling new products like okta privileged access device access fine grained authorization identity threat protection and identity security posture management Our data tells us that customers that adopt more products have the highest retention rates, so we're excited about the trends here and the long-term contributions to the business. our data tells us that customers that adopt more products have the highest retention rates so we're excited about the trends here and the long-term contributions to the business Now let's turn to our business outlook for Q4 and FY 2025. As always, we take a prudent approach to forward guidance. We are factoring in a macro environment consistent with what we experienced in Q3. We are no longer incorporating additional conservatism into our outlook related to the potential impacts from last year's security incident. For the fourth quarter of FY 2025, we expect total revenue growth of 10% to 11%, current RPO growth of 9%, non-GAAP operating margin of 23%, and free cash flow margin of approximately 32%. We are raising our outlook across the board for the full year FY 2025. We now expect total revenue growth of 15%, non-GAAP operating margin of 22%, and a free cash flow margin of approximately 25%. While we are still in the early phases of financial planning, we would like to provide a preliminary view of FY 2026. Now let's turn to our business outlook for Q4 and FY 2025. now let's turn to our business outlook for q4 and fy 2025 As always, we take a prudent approach to forward guidance. as always we take a prudent approach to forward guidance We are factoring in a macro environment consistent with what we experienced in Q3. we are factoring in a macro environment consistent with what we experienced in q3 We are no longer incorporating additional conservatism into our outlook related to the potential impacts from last year's security incident. we are no longer incorporating additional conservatism into our outlook related to the potential impacts from last year's security incident For the fourth quarter of FY 20 25, we expect total revenue growth of 10% to 11%, current RPO growth of 9%, non-GAAP operating margin of 23%, and free cash flow margin of approximately 32%. for the fourth quarter of fy 20 25 we expect total revenue growth of 10% to 11% current rpo growth of 9% non-gaap operating margin of 23% and free cash flow margin of approximately 32% We are raising our outlook across the board for the full year FY 20 25. we are raising our outlook across the board for the full year fy 20 25 We now expect total revenue growth of 15%, non-GAAP operating margin of 22%, and a free cash flow margin of approximately 25%. 25 we now expect total revenue growth of 15% non-gaap operating margin of 22% and a free cash flow margin of approximately 25% While we are still in the early phases of financial planning, we would like to provide a preliminary view of FY 20 26. while we are still in the early phases of financial planning we would like to provide a preliminary view of fy 20 26 We're providing this preliminary outlook ahead of closing our biggest quarter of the year. We will provide formal FY 2026 guidance on our next earnings call, which will factor in our actual Q4 performance. We remain focused on profitable growth and continue to prudently factor in a macro environment that is consistent with what we've experienced over the past few quarters. As such, we're expecting a non-GAAP operating margin of at least 22%. We're targeting a free cash flow margin of at least 24%. From a revenue perspective, we estimate total revenue to be $2.77 billion to $2.78 billion, representing growth of approximately 7%. We believe these numbers are achievable while maintaining an appropriate measure of conservatism. To wrap things up, we're pleased with the progress we've made to drive operational efficiencies. We're providing this preliminary outlook ahead of closing our biggest quarter of the year. we're providing this preliminary outlook ahead of closing our biggest quarter of the year We will provide formal FY 20 26 guidance on our next earnings call, which will factor in our actual Q4 performance. we will provide formal fy 20 26 guidance on our next earnings call which will factor in our actual q4 performance We remain focused on profitable growth and continue to prudently factor in a macro environment that is consistent with what we've experienced over the past few quarters. we remain focused on profitable growth and continue to prudently factor in a macro environment that is consistent with what we've experienced over the past few quarters As such, we're expecting a non-GAAP operating margin of at least 22%. as such we're expecting a non-gaap operating margin of at least 22% We're targeting a free cash flow margin of at least 24%. we're targeting a free cash flow margin of at least 24% From a revenue perspective, we estimate total revenue to be $2.77 billion to $2.78 billion, representing growth of approximately 7%. from a revenue perspective we estimate total revenue to be $2.77 billion to $2.78 billion representing growth of approximately 7% We believe these numbers are achievable while maintaining an appropriate measure of conservatism. we believe these numbers are achievable while maintaining an appropriate measure of conservatism To wrap things up, we're pleased with the progress we've made to drive operational efficiencies. to wrap things up we're pleased with the progress we've made to drive operational efficiencies We've demonstrated exceptional leverage in our model over the past two years, and we remain focused on delivering profitable growth for years to come. With that, I'll turn it back to Dave for Q&A. Dave. We've demonstrated exceptional leverage in our model over the past two years, and we remain focused on delivering profitable growth for years to come. we've demonstrated exceptional leverage in our model over the past two years and we remain focused on delivering profitable growth for years to come With that, I'll turn it back to Dave for Q&A. with that i'll turn it back to dave for q&a Dave. dave

Speaker 10: Thanks, Brett. We have several hands raised up already. We'll take them in the order that they are in. And if you have follow-on questions, you can get back in the queue, so try to limit yourself to one question. That will kick it off with John DiFucci at Guggenheim. John. Thanks, Brett. thanks brett We have several hands raised up already. we have several hands raised up already We'll take them in the order that they are in. we'll take them in the order that they are in And if you have follow-on questions, you can get back in the queue, so try to limit yourself to one question. and if you have follow-on questions you can get back in the queue so try to limit yourself to one question That will kick it off with John DiFucci at Guggenheim. that will kick it off with john difucci at guggenheim John. john

Speaker 14: Thanks, Dave. My question, I think, has to do with something Brett just said. Brett, you said you're no longer incorporating additional conservatism in the guidance due to the incident from last October. And that makes sense, by the way, now. But your guidance for next year, I just want to sort of understand. It's the initial guidance for next year. What is, you know, should we think about it? Listen, I think you guys do a pretty good job when you guide, but at the same time, I'm just trying to think about it. Like last year, you had a lot going on. The two years before that, should we think about, should we go back to those years and kind of think about your approach that would be similar to those years? Just trying to get my head around it. Thanks, Dave. thanks dave My question, I think, has to do with something Brett just said. my question i think has to do with something brett just said Brett, you said you're no longer incorporating additional conservatism in the guidance due to the incident from last October. brett you said you're no longer incorporating additional conservatism in the guidance due to the incident from last october And that makes sense, by the way, now. and that makes sense by the way now But your guidance for next year, I just want to sort of understand. but your guidance for next year i just want to sort of understand It's the initial guidance for next year. it's the initial guidance for next year What is, you know, should we think about it? what is you know should we think about it Listen, I think you guys do a pretty good job when you guide, but at the same time, I'm just trying to think about it. listen i think you guys do a pretty good job when you guide but at the same time i'm just trying to think about it Like last year, you had a lot going on. like last year you had a lot going on The two years before that, should we think about, should we go back to those years and kind of think about your approach that would be similar to those years? the two years before that should we think about should we go back to those years and kind of think about your approach that would be similar to those years Just trying to get my head around it. just trying to get my head around it

Speaker 23: Yeah, John, hey, before you jump in, Brett, I want to just set the context at a high level. The Q3 was a solid quarter. And as we go into Q4 and think about next year, Brett can talk about the specifics on guidance, but we are, I think, being pretty balanced between optimistic about the future and all this new product momentum and all this large customer momentum, but also want to make sure we have the right level of prudence in our guidance. So it's always a balancing act, but I don't want the guidance question to kind of overshadow the momentum we see in the business and the optimism we see there. Yeah, John, hey, before you jump in, Brett, I want to just set the context at a high level. yeah john hey before you jump in brett i want to just set the context at a high level The Q3 was a solid quarter. the q3 was a solid quarter And as we go into Q4 and think about next year, Brett can talk about the specifics on guidance, but we are, I think, being pretty balanced between optimistic about the future and all this new product momentum and all this large customer momentum, but also want to make sure we have the right level of prudence in our guidance. and as we go into q4 and think about next year brett can talk about the specifics on guidance but we are i think being pretty balanced between optimistic about the future and all this new product momentum and all this large customer momentum but also want to make sure we have the right level of prudence in our guidance So it's always a balancing act, but I don't want the guidance question to kind of overshadow the momentum we see in the business and the optimism we see there. so it's always a balancing act but i don't want the guidance question to kind of overshadow the momentum we see in the business and the optimism we see there

Speaker 14: Yeah, and Brett, or Todd, I apologize. I very rarely say this at the beginning, but it was a really solid quarter. It really was more than solid. It was really good, and your whole team should feel really good about it. Yeah, and Brett, or Todd, I apologize. yeah and brett or todd i apologize I very rarely say this at the beginning, but it was a really solid quarter. i very rarely say this at the beginning but it was a really solid quarter It really was more than solid. it really was more than solid It was really good, and your whole team should feel really good about it. it was really good and your whole team should feel really good about it

Speaker 23: It's one step. It's one step. We have a lot of work to do, but thanks for saying that. It's one step. it's one step It's one step. it's one step We have a lot of work to do, but thanks for saying that. we have a lot of work to do but thanks for saying that

Speaker 6: Yeah, in terms of your question, John, about the guidance, I would say, you know, if you look back, let's go back a year ago, right? And a year ago, we had the security incident. We were right on the heels of it. And we guided 10% at that point, right, from a revenue growth perspective for FY 2025. We now think FY 2025 is going to be 15%. You can figure out the delta, 15 - 10. I would not expect that level of delta in the future just because we're taking out the security incident, right? There was a pretty large unknown at that point and a pretty large unknown until really this quarter where we haven't seen any impact quantitatively from the security incident. So that's how I would think about it, John. Hopefully that's it. Yeah, in terms of your question, John, about the guidance, I would say, you know, if you look back, let's go back a year ago, right? yeah in terms of your question john about the guidance i would say you know if you look back let's go back a year ago right And a year ago, we had the security incident. and a year ago we had the security incident We were right on the heels of it. we were right on the heels of it And we guided 10% at that point, right, from a revenue growth perspective for FY 20 25. and we guided 10% at that point right from a revenue growth perspective for fy 20 25 We now think FY 20 25 is going to be 15%. 25 we now think fy 20 25 is going to be 15% You can figure out the delta, 15 - 10. you can figure out the delta 15 - 10 I would not expect that level of delta in the future just because we're taking out the security incident, right? i would not expect that level of delta in the future just because we're taking out the security incident right There was a pretty large unknown at that point and a pretty large unknown until really this quarter where we haven't seen any impact quantitatively from the security incident. there was a pretty large unknown at that point and a pretty large unknown until really this quarter where we haven't seen any impact quantitatively from the security incident So that's how I would think about it, John. so that's how i would think about it john Hopefully that's it. hopefully that's it

Speaker 14: Okay, but when I go back to the two years before that, that you exceeded your original guidance by like over five percentage points. That's why I sort of, I get it, though, less than last year, though. Okay, but when I go back to the two years before that, that you exceeded your original guidance by like over five percentage points. okay but when i go back to the two years before that that you exceeded your original guidance by like over five percentage points That's why I sort of, I get it, though, less than last year, though. that's why i sort of i get it though less than last year though

Speaker 6: Yeah. And I think the other thing is, like, if you go back a couple of years, we're a much smaller company growing at a faster clip. So I think just the natural maturation of the business. I wouldn't go back that far, as kind of. Yeah. yeah And I think the other thing is, like, if you go back a couple of years, we're a much smaller company growing at a faster clip. and i think the other thing is like if you go back a couple of years we're a much smaller company growing at a faster clip So I think just the natural maturation of the business. so i think just the natural maturation of the business I wouldn't go back that far, as kind of. i wouldn't go back that far as kind of

Speaker 23: Yeah. The other thing about it too is that Q4, with slower growth in these years versus five years ago, Q4 matters a lot more. So giving this guidance at the end of, you know, on the Q3 call, we have more, Q4 matters more in terms of seeing where we'll be. So that's why the Q1 look is so illustrative. Yeah. yeah The other thing about it too is that Q4, with slower growth in these years versus five years ago, Q4 matters a lot more. the other thing about it too is that q4 with slower growth in these years versus five years ago q4 matters a lot more So giving this guidance at the end of, you know, on the Q3 call, we have more, Q4 matters more in terms of seeing where we'll be. so giving this guidance at the end of you know on the q3 call we have more q4 matters more in terms of seeing where we'll be So that's why the Q1 look is so illustrative. so that's why the q1 look is so illustrative

Speaker 14: Okay. Thanks a lot, guys. Nice job. Okay. okay Thanks a lot, guys. thanks a lot guys Nice job. nice job

Speaker 10: Great. Let's go to Eric Heath at KeyBanc Capital Markets. Great. great Let's go to Eric Heath at KeyBanc Capital Markets. let's go to eric heath at keybanc capital markets

Speaker 19: Thanks, Dave. And congrats on the quarter, Brett and Todd. Todd, we've been hearing from some of your GSI partners more about RFPs for consolidated identity platform offering. So I'm curious if that's something you guys are seeing or maybe measuring in your pipeline or Todd even coming up more in customer conversations because it does seem to be resonating in the field with some of your partners. Thanks, Dave. thanks dave And congrats on the quarter, Brett and Todd. and congrats on the quarter brett and todd Todd, we've been hearing from some of your GSI partners more about RFPs for consolidated identity platform offering. todd we've been hearing from some of your gsi partners more about rfps for consolidated identity platform offering So I'm curious if that's something you guys are seeing or maybe measuring in your pipeline or Todd even coming up more in customer conversations because it does seem to be resonating in the field with some of your partners. so i'm curious if that's something you guys are seeing or maybe measuring in your pipeline or todd even coming up more in customer conversations because it does seem to be resonating in the field with some of your partners

Speaker 23: I do know on the GSI topic, we have really, really made a lot of progress with GSIs in the last year. I'm really, really excited about this because identity, as the folks on this call know Okta really well, it is sometimes quite complex to do a comprehensive change out of identity. In fact, it's always complex, way more complex than other types of technology, especially in the cyber ecosystem. So that has positives and negatives. The negatives are sometimes it takes longer to get a deal done. Sometimes it takes longer to do upsells. That's the good news, or that's the bad news. The good news is that once you get a committed cohort of customers and a committed cohort of systems integrators to help a customer on that journey, it's very valuable to the customer and very valuable to the partner for a very long time. I do know on the GSI topic, we have really, really made a lot of progress with GSIs in the last year. i do know on the gsi topic we have really really made a lot of progress with gsis in the last year I'm really, really excited about this because identity, as the folks on this call know Okta really well, it is sometimes quite complex to do a comprehensive change out of identity. i'm really really excited about this because identity as the folks on this call know okta really well it is sometimes quite complex to do a comprehensive change out of identity In fact, it's always complex, way more complex than other types of technology, especially in the cyber ecosystem. in fact it's always complex way more complex than other types of technology especially in the cyber ecosystem So that has positives and negatives. so that has positives and negatives The negatives are sometimes it takes longer to get a deal done. the negatives are sometimes it takes longer to get a deal done Sometimes it takes longer to do upsells. sometimes it takes longer to do upsells That's the good news, or that's the bad news. that's the good news or that's the bad news The good news is that once you get a committed cohort of customers and a committed cohort of systems integrators to help a customer on that journey, it's very valuable to the customer and very valuable to the partner for a very long time. the good news is that once you get a committed cohort of customers and a committed cohort of systems integrators to help a customer on that journey it's very valuable to the customer and very valuable to the partner for a very long time So, you know, the plus side is that we're going to be providing value in these relationships and everyone's going to be benefiting for years and years and years. We had a really solid win of one of the largest technology companies in North America in Q3 that was nearly a $5 million ARR deal. And for that company, it's just the first phase of a multi-phase deal to replace their identity across their whole company. This specific initiative in Q3 was driven by Zero Trust transformation. So even some of the biggest technology companies are relatively early in their Zero Trust journey. And we worked with one of the largest SIs to scope that deal and bring that deal over. So, you know, the plus side is that we're going to be providing value in these relationships and everyone's going to be benefiting for years and years and years. so you know the plus side is that we're going to be providing value in these relationships and everyone's going to be benefiting for years and years and years We had a really solid win of one of the largest technology companies in North America in Q3 that was nearly a $5 million ARR deal. we had a really solid win of one of the largest technology companies in north america in q3 that was nearly a $5 million arr deal And for that company, it's just the first phase of a multi-phase deal to replace their identity across their whole company. and for that company it's just the first phase of a multi-phase deal to replace their identity across their whole company This specific initiative in Q3 was driven by Zero Trust transformation. this specific initiative in q3 was driven by zero trust transformation So even some of the biggest technology companies are relatively early in their Zero Trust journey. so even some of the biggest technology companies are relatively early in their zero trust journey And we worked with one of the largest SIs to scope that deal and bring that deal over. and we worked with one of the largest sis to scope that deal and bring that deal over Then even more exciting about it is the deals that are queued up to follow that as we get this initial deal deployed and some level of success and then move on to the subsequent phases. So that's an exciting scenario there. And that's true on a number of deals in the quarter. I mentioned in my prepared comments that of the top 10 deals in a quarter that was really strong for big deals, all of them had partner participation. So we're doing a good job building that ecosystem, working with the partners, building trust in those partners. And especially this is true of the global SIs. They're seeing not a lot of choices out there in terms of scaled identity players. And particularly when we talk about a scaled identity player that's independent, neutral, and doesn't wrap that customer into one stack, we're unmatched. Then even more exciting about it is the deals that are queued up to follow that as we get this initial deal deployed and some level of success and then move on to the subsequent phases. then even more exciting about it is the deals that are queued up to follow that as we get this initial deal deployed and some level of success and then move on to the subsequent phases So that's an exciting scenario there. so that's an exciting scenario there And that's true on a number of deals in the quarter. and that's true on a number of deals in the quarter I mentioned in my prepared comments that of the top 10 deals in a quarter that was really strong for big deals, all of them had partner participation. i mentioned in my prepared comments that of the top 10 deals in a quarter that was really strong for big deals all of them had partner participation So we're doing a good job building that ecosystem, working with the partners, building trust in those partners. so we're doing a good job building that ecosystem working with the partners building trust in those partners And especially this is true of the global SIs. and especially this is true of the global sis They're seeing not a lot of choices out there in terms of scaled identity players. they're seeing not a lot of choices out there in terms of scaled identity players And particularly when we talk about a scaled identity player that's independent, neutral, and doesn't wrap that customer into one stack, we're unmatched. and particularly when we talk about a scaled identity player that's independent neutral and doesn't wrap that customer into one stack we're unmatched So they're seeing that and they're seeing the landscape and our unique value there. And they're aligning themselves with us, which I think is going to benefit everyone. So they're seeing that and they're seeing the landscape and our unique value there. so they're seeing that and they're seeing the landscape and our unique value there And they're aligning themselves with us, which I think is going to benefit everyone. and they're aligning themselves with us which i think is going to benefit everyone

Speaker 6: I think also the interesting part about the top 10 deals that Todd was just talking about, having all partners, the great part of it was it was multiple different types of partners. You've heard us talk about GSIs as being very important, but it was GSIs, it was ISVs, it was marketplaces, it was the traditional VARs. I mean, it was a mix of them all. So that's why we continue to want to invest in each one of these areas because we're seeing success like this in Q3. I think also the interesting part about the top 10 deals that Todd was just talking about, having all partners, the great part of it was it was multiple different types of partners. i think also the interesting part about the top 10 deals that todd was just talking about having all partners the great part of it was it was multiple different types of partners You've heard us talk about GSIs as being very important, but it was GSIs, it was ISVs, it was marketplaces, it was the traditional VARs. you've heard us talk about gsis as being very important but it was gsis it was isvs it was marketplaces it was the traditional vars I mean, it was a mix of them all. i mean it was a mix of them all So that's why we continue to want to invest in each one of these areas because we're seeing success like this in Q3. so that's why we continue to want to invest in each one of these areas because we're seeing success like this in q3

Speaker 10: Great. Next up, let's go to Gray Powell at BTIG. Great. great Next up, let's go to Gray Powell at BTIG. next up let's go to gray powell at btig

Speaker 25: All right. Great. Thank you very much. Before I ask my question, I just got to say I really appreciate the 10 minutes of prepared remarks. And in fact, Brett, I think your section was probably shorter than DiFucci's question. So again, congrats on keeping it tight. All right. all right Great. great Thank you very much. thank you very much Before I ask my question, I just got to say I really appreciate the 10 minutes of prepared remarks. before i ask my question i just got to say i really appreciate the 10 minutes of prepared remarks And in fact, Brett, I think your section was probably shorter than DiFucci's question. and in fact brett i think your section was probably shorter than difucci's question So again, congrats on keeping it tight. so again congrats on keeping it tight

Speaker 6: So do what we can, Gray. We do what we can. So do what we can, Gray. so do what we can gray We do what we can. we do what we can

Speaker 25: Thank you. So for my question, it's been a pretty choppy earnings season so far across our security coverage. And I guess it's just nice to see your numbers inflect higher. So is there any way you can kind of talk about what stood out most this quarter versus Q2, just like what changed the most? And then how do you feel about the sustainability of that performance and just the forward execution? Thank you. thank you So for my question, it's been a pretty choppy earnings season so far across our security coverage. so for my question it's been a pretty choppy earnings season so far across our security coverage And I guess it's just nice to see your numbers inflect higher. and i guess it's just nice to see your numbers inflect higher So is there any way you can kind of talk about what stood out most this quarter versus Q2, just like what changed the most? so is there any way you can kind of talk about what stood out most this quarter versus q2 just like what changed the most And then how do you feel about the sustainability of that performance and just the forward execution? and then how do you feel about the sustainability of that performance and just the forward execution

Speaker 6: It was pretty different than Q2 in terms of just our execution in the quarter, bringing deals across the line. Q2 was okay. Q3 was very solid, and I think that is maybe I think what is lining up to look like the reality is that the year is looking more back-end loaded than what we may have thought in the first quarter or the second quarter, which I think is not, you know, within the history of the company. It's fairly common for that to be the case, but I think this year it's turning out to be a little more than maybe we anticipated, which means Q4 is a big quarter, and you know, the pipeline is there, and it's up to us and the team to execute on that. It was pretty different than Q2 in terms of just our execution in the quarter, bringing deals across the line. it was pretty different than q2 in terms of just our execution in the quarter bringing deals across the line Q2 was okay. q2 was okay Q3 was very solid, and I think that is maybe I think what is lining up to look like the reality is that the year is looking more back-end loaded than what we may have thought in the first quarter or the second quarter, which I think is not, you know, within the history of the company. q3 was very solid and i think that is maybe i think what is lining up to look like the reality is that the year is looking more back-end loaded than what we may have thought in the first quarter or the second quarter which i think is not you know within the history of the company It's fairly common for that to be the case, but I think this year it's turning out to be a little more than maybe we anticipated, which means Q4 is a big quarter, and you know, the pipeline is there, and it's up to us and the team to execute on that. it's fairly common for that to be the case but i think this year it's turning out to be a little more than maybe we anticipated which means q4 is a big quarter and you know the pipeline is there and it's up to us and the team to execute on that We're really aligned and motivated and understand how important it is as a team that we need to do that. We're all set to make that a reality. There's a lot of stuff to build on. We've mentioned a couple of the examples already, the large deals, the new products. 15% of bookings in the quarter were from these new products, which, you know, we wish it was a higher percentage, but there's a lot of new products that are starting to blossom and have the potential to be significant contributors on their own. Governance now is a third of the value of deals it's included in, which is significant, or 30% of the value, less than a third. Okta Privileged Access is starting to get momentum. We had a nice win there for a U.S. We're really aligned and motivated and understand how important it is as a team that we need to do that. we're really aligned and motivated and understand how important it is as a team that we need to do that We're all set to make that a reality. we're all set to make that a reality There's a lot of stuff to build on. there's a lot of stuff to build on We've mentioned a couple of the examples already, the large deals, the new products. 15% of bookings in the quarter were from these new products, which, you know, we wish it was a higher percentage, but there's a lot of new products that are starting to blossom and have the potential to be significant contributors on their own. we've mentioned a couple of the examples already the large deals the new products 15% of bookings in the quarter were from these new products which you know we wish it was a higher percentage but there's a lot of new products that are starting to blossom and have the potential to be significant contributors on their own Governance now is a third of the value of deals it's included in, which is significant, or 30% of the value, less than a third. governance now is a third of the value of deals it's included in which is significant or 30% of the value less than a third Okta Privileged Access is starting to get momentum. okta privileged access is starting to get momentum We had a nice win there for a U.S. we had a nice win there for a u.s Department of an Asian bank, which bought the whole suite, access management, Governance, and Privileged Access, which we think is going to be a common buying pattern. And the driver there, I mentioned the large technology company before, the driver in that example was Zero Trust. They're trying to go to a Zero Trust architecture, and identity is important. For this U.S. division of this Asian bank, it's all about compliance. So they needed to have regulatory compliance for the auditors around not only applications and financial applications, but servers, which Privileged Access gave them that access to. So we're seeing new products, big deals. We see good partner involvement. But you know, we still think we can grow faster. We talked about the guidance for next year and how we're thinking about that. But we continue, as we always have, think this is a massive opportunity. Department of an Asian bank, which bought the whole suite, access management, Governance, and Privileged Access , which we think is going to be a common buying pattern. department of an asian bank which bought the whole suite access management governance and privileged access which we think is going to be a common buying pattern And the driver there, I mentioned the large technology company before, the driver in that example was Zero Trust. and the driver there i mentioned the large technology company before the driver in that example was zero trust They're trying to go to a Zero Trust architecture, and identity is important. they're trying to go to a zero trust architecture and identity is important For this U.S. division of this Asian bank, it's all about compliance. for this u.s division of this asian bank it's all about compliance So they needed to have regulatory compliance for the auditors around not only applications and financial applications, but servers, which Privileged Access gave them that access to. so they needed to have regulatory compliance for the auditors around not only applications and financial applications but servers which privileged access gave them that access to So we're seeing new products, big deals. so we're seeing new products big deals We see good partner involvement. we see good partner involvement But you know, we still think we can grow faster. but you know we still think we can grow faster We talked about the guidance for next year and how we're thinking about that. we talked about the guidance for next year and how we're thinking about that But we continue, as we always have, think this is a massive opportunity. but we continue as we always have think this is a massive opportunity It's our second highest priority after security and our Secure Identity Commitment is growth and re-accelerating growth. So you know, we're pleased, but we're not satisfied. We have a lot of work to do. This team is fired up to make it happen. We're going to go out there and do it. It's our second highest priority after security and our Secure Identity Commitment is growth and re-accelerating growth. it's our second highest priority after security and our secure identity commitment is growth and re-accelerating growth So you know, we're pleased, but we're not satisfied. so you know we're pleased but we're not satisfied We have a lot of work to do. we have a lot of work to do This team is fired up to make it happen. this team is fired up to make it happen We're going to go out there and do it. we're going to go out there and do it

Speaker 23: All right. I'd add a couple of things, Gray, that actually may not have changed, but are positives for us in general. One is contract duration continues to be healthy for us. You can see that in the total RPO growth, right? That's now six points higher than current RPO growth. The other thing I would add is U.S. Federal into their fiscal year. We had a really solid close to that. So that was, you know, like you heard earlier, is a good portion of those top 10 deals. And I think that's just a continuation of our success in public sector. Think of public sector as actually one of our first forays into specialization, right? We've really focused on it. We've put a lot of effort on it. We've done a lot of stuff from an R&D perspective. All right. all right I'd add a couple of things, Gray, that actually may not have changed, but are positives for us in general. i'd add a couple of things gray that actually may not have changed but are positives for us in general One is contract duration continues to be healthy for us. one is contract duration continues to be healthy for us You can see that in the total RPO growth, right? you can see that in the total rpo growth right That's now six points higher than current RPO growth. that's now six points higher than current rpo growth The other thing I would add is U.S. the other thing i would add is u.s Federal into their fiscal year. federal into their fiscal year We had a really solid close to that. we had a really solid close to that So that was, you know, like you heard earlier, is a good portion of those top 10 deals. so that was you know like you heard earlier is a good portion of those top 10 deals And I think that's just a continuation of our success in public sector. and i think that's just a continuation of our success in public sector Think of public sector as actually one of our first forays into specialization, right? think of public sector as actually one of our first forays into specialization right We've really focused on it. we've really focused on it We've put a lot of effort on it. we've put a lot of effort on it We've done a lot of stuff from an R&D perspective. we've done a lot of stuff from an r&d perspective And so that continues to also be successful for us in Q3 and is helping the results we see here today. And so that continues to also be successful for us in Q3 and is helping the results we see here today. and so that continues to also be successful for us in q3 and is helping the results we see here today

Speaker 25: Understood. Thank you. Understood. understood Thank you. thank you

Speaker 10: Okay. Next, we have Gabriella Borges at Goldman. Okay. okay Next, we have Gabriella Borges at Goldman. next we have gabriella borges at goldman

Speaker 20: Hey, good afternoon. Thanks for taking the question and congrats on a solid quarter. Todd and Brett, I wanted to pick up where you just left off on the 15% of bookings that are coming from emerging products. Remind us how that number compares to history. And Brett, you mentioned with the net retention rates, there are two dynamics impacting that. You've got the pressure on MAUs and seat count, and then you've got the tailwind from cross-sell. Talk to us a little bit about when you think emerging can offset the headwind in MAUs and seat count, and it's a long way of asking when you think net retention might drop. Thanks. Hey, good afternoon. hey good afternoon Thanks for taking the question and congrats on a solid quarter. thanks for taking the question and congrats on a solid quarter Todd and Brett, I wanted to pick up where you just left off on the 15% of bookings that are coming from emerging products. todd and brett i wanted to pick up where you just left off on the 15% of bookings that are coming from emerging products Remind us how that number compares to history. remind us how that number compares to history And Brett, you mentioned with the net retention rates, there are two dynamics impacting that. and brett you mentioned with the net retention rates there are two dynamics impacting that You've got the pressure on MAUs and seat count, and then you've got the tailwind from cross-sell. you've got the pressure on maus and seat count and then you've got the tailwind from cross-sell Talk to us a little bit about when you think emerging can offset the headwind in MAUs and seat count, and it's a long way of asking when you think net retention might drop. talk to us a little bit about when you think emerging can offset the headwind in maus and seat count and it's a long way of asking when you think net retention might drop Thanks. thanks

Speaker 6: On the new product mix, I don't know the exact numbers, but without going back and looking at the data, my sense, being pretty close to the sales process, especially on the new products, this is higher than it has been in the past. And it's, you know, kind of led by Governance, Identity Governance. And for second place, where it's like a pretty close competition between Privileged Access, Identity Threat Protection, which is for the most security-conscious customers, it's a really big addition to their suite. Identity Threat Protection, the way to think about it is it's kind of like the advanced version of adaptive multi-factor. And the big thing it does is it monitors security risks throughout the session. So multi-factor and adaptive multi-factor do phishing resistance right when you log in. On the new product mix, I don't know the exact numbers, but without going back and looking at the data, my sense, being pretty close to the sales process, especially on the new products, this is higher than it has been in the past. on the new product mix i don't know the exact numbers but without going back and looking at the data my sense being pretty close to the sales process especially on the new products this is higher than it has been in the past And it's, you know, kind of led by Governance, Identity Governance. and it's you know kind of led by governance identity governance And for second place, where it's like a pretty close competition between Privileged Access, Identity Threat Protection, which is for the most security-conscious customers, it's a really big addition to their suite. and for second place where it's like a pretty close competition between privileged access identity threat protection which is for the most security-conscious customers it's a really big addition to their suite Identity Threat Protection, the way to think about it is it's kind of like the advanced version of adaptive multi-factor. identity threat protection the way to think about it is it's kind of like the advanced version of adaptive multi-factor And the big thing it does is it monitors security risks throughout the session. and the big thing it does is it monitors security risks throughout the session So multi-factor and adaptive multi-factor do phishing resistance right when you log in. so multi-factor and adaptive multi-factor do phishing resistance right when you log in Identity Threat Protection continuously monitors risk signals, change of IP addresses, CrowdStrike, SentinelOne, detecting any kind of issue and shutting down the session. So it's proactive monitoring. So that's a big contributor. And then we have on the customer identity side, we have fine-grained authorization that had a decent quarter. And we also have Highly Regulated Identity. So you're seeing all these kind of seeds that are starting to grow, which are frankly more exciting than the 15% because you see this 15% contributed by multiple seeds that are growing into potentially contributors. It's pretty exciting for the future. Identity Threat Protection continuously monitors risk signals, change of IP addresses, CrowdStrike, SentinelOne, detecting any kind of issue and shutting down the session. identity threat protection continuously monitors risk signals change of ip addresses crowdstrike sentinelone detecting any kind of issue and shutting down the session So it's proactive monitoring. so it's proactive monitoring So that's a big contributor. so that's a big contributor And then we have on the customer identity side, we have fine-grained authorization that had a decent quarter. and then we have on the customer identity side we have fine-grained authorization that had a decent quarter And we also have Highly Regulated Identity . and we also have highly regulated identity So you're seeing all these kind of seeds that are starting to grow, which are frankly more exciting than the 15% because you see this 15% contributed by multiple seeds that are growing into potentially contributors. so you're seeing all these kind of seeds that are starting to grow which are frankly more exciting than the 15% because you see this 15% contributed by multiple seeds that are growing into potentially contributors It's pretty exciting for the future. it's pretty exciting for the future

Speaker 23: Yeah, Gabriella, I would actually just add the percentage is up year over year because basically last year it was just Governance. And Todd just listed out like six products that are doing really well right out of the gate. So it's pretty easy to see that the percentage is going up and to the right, which is really exciting for us for all the reasons that Todd has said just in his last answer and what he said earlier on the prepared remarks. In terms of the NRR and what are the effects on it, it's the same effects we've talked about in the past, right? License counts and MAUs are being scrutinized like we've talked about in the past. It's macro-oriented just in general. Yeah, Gabriella, I would actually just add the percentage is up year over year because basically last year it was just Governance. yeah gabriella i would actually just add the percentage is up year over year because basically last year it was just governance And Todd just listed out like six products that are doing really well right out of the gate. and todd just listed out like six products that are doing really well right out of the gate So it's pretty easy to see that the percentage is going up and to the right, which is really exciting for us for all the reasons that Todd has said just in his last answer and what he said earlier on the prepared remarks. so it's pretty easy to see that the percentage is going up and to the right which is really exciting for us for all the reasons that todd has said just in his last answer and what he said earlier on the prepared remarks In terms of the NRR and what are the effects on it, it's the same effects we've talked about in the past, right? in terms of the nrr and what are the effects on it it's the same effects we've talked about in the past right License counts and MAUs are being scrutinized like we've talked about in the past. license counts and maus are being scrutinized like we've talked about in the past It's macro-oriented just in general. it's macro-oriented just in general And then there's also cohorts in the past that are feeling pressure, you know, older customer cohorts that are feeling pressure from the COVID era. In terms of what we expect it to do for the next quarter, that's because that's the only forecast I have right now. I don't have it all the way through FY 2026. But for Q4, we think it ticks down a little bit in Q4 based on those factors. It's on top of healthy gross retention. But those factors remain the same in terms of what we've said in the past. And so that's what we're seeing for now. In terms of what we expect in FY 2026, let us get through Q4 first and then see how that actualizes. And we got to finalize our fiscal year 26 plan. And then there's also cohorts in the past that are feeling pressure, you know, older customer cohorts that are feeling pressure from the COVID era. and then there's also cohorts in the past that are feeling pressure you know older customer cohorts that are feeling pressure from the covid era In terms of what we expect it to do for the next quarter, that's because that's the only forecast I have right now. in terms of what we expect it to do for the next quarter that's because that's the only forecast i have right now I don't have it all the way through FY 20 26. i don't have it all the way through fy 20 26 But for Q4, we think it ticks down a little bit in Q4 based on those factors. 26 but for q4 we think it ticks down a little bit in q4 based on those factors It's on top of healthy gross retention. it's on top of healthy gross retention But those factors remain the same in terms of what we've said in the past. but those factors remain the same in terms of what we've said in the past And so that's what we're seeing for now. and so that's what we're seeing for now In terms of what we expect in FY 20 26, let us get through Q4 first and then see how that actualizes. in terms of what we expect in fy 20 26 let us get through q4 first and then see how that actualizes And we got to finalize our fiscal year 26 plan. and we got to finalize our fiscal year 26 plan We'll go from there and be able to give you a little bit more insight on what NRR will do throughout FY 2026. We'll go from there and be able to give you a little bit more insight on what NRR will do throughout FY 20 26. we'll go from there and be able to give you a little bit more insight on what nrr will do throughout fy 20 26

Speaker 20: That all sounds good. Thanks for the call. That all sounds good. that all sounds good Thanks for the call. thanks for the call

Speaker 10: Okay. Next up, we have Hamza Fodderwala at Morgan Stanley. Okay. okay Next up, we have Hamza Fodderwala at Morgan Stanley. next up we have hamza fodderwala at morgan stanley

Speaker 9: All right. Good evening. Thank you for taking my question. Todd, I wanted to ask you about FTC recently launched an investigation or is reportedly looking to launch an investigation on Microsoft and how they're bundling some of their security services. I'm curious if you have any comment on that and maybe just what you tell customers about some of the risks around vendor lock-in. Thank you. All right. all right Good evening. good evening Thank you for taking my question. thank you for taking my question Todd, I wanted to ask you about FTC recently launched an investigation or is reportedly looking to launch an investigation on Microsoft and how they're bundling some of their security services. todd i wanted to ask you about ftc recently launched an investigation or is reportedly looking to launch an investigation on microsoft and how they're bundling some of their security services I'm curious if you have any comment on that and maybe just what you tell customers about some of the risks around vendor lock-in. i'm curious if you have any comment on that and maybe just what you tell customers about some of the risks around vendor lock-in Thank you. thank you

Speaker 23: Yeah, it's a really important question. I'm not close enough to know the legal arguments or the regulatory arguments, but they do bundle. And the pitch is, hey, buy it off from us and it'll be cheaper. And I think what I tell customers is, first of all, you're foreclosing your option to choose different things. And what's not always obvious to customers is how important identity is in that gatekeeper role. There's a reason strategically that, and it's Microsoft now, but I think every big technology company that's trying to sell multiple layers in a platform, whether that's collaboration or business applications or infrastructure, is going to be tempted to take because they all have to build identity. Everything needs a login for itself. Yeah, it's a really important question. yeah it's a really important question I'm not close enough to know the legal arguments or the regulatory arguments, but they do bundle. i'm not close enough to know the legal arguments or the regulatory arguments but they do bundle And the pitch is, hey, buy it off from us and it'll be cheaper. and the pitch is hey buy it off from us and it'll be cheaper And I think what I tell customers is, first of all, you're foreclosing your option to choose different things. and i think what i tell customers is first of all you're foreclosing your option to choose different things And what's not always obvious to customers is how important identity is in that gatekeeper role. and what's not always obvious to customers is how important identity is in that gatekeeper role There's a reason strategically that, and it's Microsoft now, but I think every big technology company that's trying to sell multiple layers in a platform, whether that's collaboration or business applications or infrastructure, is going to be tempted to take because they all have to build identity. there's a reason strategically that and it's microsoft now but i think every big technology company that's trying to sell multiple layers in a platform whether that's collaboration or business applications or infrastructure is going to be tempted to take because they all have to build identity Everything needs a login for itself. everything needs a login for itself They're going to be tempted to take that identity service and use that for general identity and general login because it has a very powerful lock-in effect. If you can get someone to use your identity, they're going to be more likely to use more things from you. So in that sense, it can be a loss leader. And our argument is, first of all, to tell people that. We say, hey, don't make the long-term choice that's going to lock you in and remove choice and flexibility. And we all know that when you remove choice and flexibility, it's not just that you pay more in the end. You actually get worse outcomes because you can't pick the right technology. And this is particularly important in the security world because, as we also all know, that security is adversarial. And the attackers are coming from many different directions. They're going to be tempted to take that identity service and use that for general identity and general login because it has a very powerful lock-in effect. they're going to be tempted to take that identity service and use that for general identity and general login because it has a very powerful lock-in effect If you can get someone to use your identity, they're going to be more likely to use more things from you. if you can get someone to use your identity they're going to be more likely to use more things from you So in that sense, it can be a loss leader. so in that sense it can be a loss leader And our argument is, first of all, to tell people that. and our argument is first of all to tell people that We say, hey, don't make the long-term choice that's going to lock you in and remove choice and flexibility. we say hey don't make the long-term choice that's going to lock you in and remove choice and flexibility And we all know that when you remove choice and flexibility, it's not just that you pay more in the end. and we all know that when you remove choice and flexibility it's not just that you pay more in the end You actually get worse outcomes because you can't pick the right technology. you actually get worse outcomes because you can't pick the right technology And this is particularly important in the security world because, as we also all know, that security is adversarial. and this is particularly important in the security world because as we also all know that security is adversarial And the attackers are coming from many different directions. and the attackers are coming from many different directions Eight out of ten times, these security breaches are caused by compromised identity. So if you are locked into one stack from a security tools perspective and from an identity perspective, you're not going to have as good of security outcomes. So this is the pitch I make to customers. And it's resonating. They understand. I mean, for some customers, it doesn't work. Some prospects, it doesn't work. They don't view technology that strategically, or they don't, it's just cut costs, you know, no matter what. And they go for the bundle. But more and more customers, you know, I mentioned one of the largest tech companies in North America, they realize that identity really matters. And having an independent, neutral identity platform really matters. Eight out of ten times, these security breaches are caused by compromised identity. eight out of ten times these security breaches are caused by compromised identity So if you are locked into one stack from a security tools perspective and from an identity perspective, you're not going to have as good of security outcomes. so if you are locked into one stack from a security tools perspective and from an identity perspective you're not going to have as good of security outcomes So this is the pitch I make to customers. so this is the pitch i make to customers And it's resonating. and it's resonating They understand. they understand I mean, for some customers, it doesn't work. i mean for some customers it doesn't work Some prospects, it doesn't work. some prospects it doesn't work They don't view technology that strategically, or they don't, it's just cut costs, you know, no matter what. they don't view technology that strategically or they don't it's just cut costs you know no matter what And they go for the bundle. and they go for the bundle But more and more customers, you know, I mentioned one of the largest tech companies in North America, they realize that identity really matters. but more and more customers you know i mentioned one of the largest tech companies in north america they realize that identity really matters And having an independent, neutral identity platform really matters. and having an independent neutral identity platform really matters You know, a dollar they spend with Okta is going to pay back five or tenfold in terms of the security outcomes they get and the flexibility and the ability to onboard different technology. So it's starting to resonate. You know, we're doing something, the team knows this, we're doing something that's never been done before. We're building a scaled-out identity platform across multiple use cases: customer and workforce and privilege and Governance. We're the only one that has this foundation to build from. We're independent, neutral. We're not trying to sell anything else. We think our identity suite works better together. But that's where it ends. We're not trying to sell other parts of the security stack. We're not trying to sell other applications. We leave that up to the customers to choose the best outcome for them. You know, a dollar they spend with Okta is going to pay back five or tenfold in terms of the security outcomes they get and the flexibility and the ability to onboard different technology. you know a dollar they spend with okta is going to pay back five or tenfold in terms of the security outcomes they get and the flexibility and the ability to onboard different technology So it's starting to resonate. so it's starting to resonate You know, we're doing something, the team knows this, we're doing something that's never been done before. you know we're doing something the team knows this we're doing something that's never been done before We're building a scaled-out identity platform across multiple use cases: customer and workforce and privilege and Governance. we're building a scaled-out identity platform across multiple use cases customer and workforce and privilege and governance We're the only one that has this foundation to build from. we're the only one that has this foundation to build from We're independent, neutral. we're independent neutral We're not trying to sell anything else. we're not trying to sell anything else We think our identity suite works better together. we think our identity suite works better together But that's where it ends. but that's where it ends We're not trying to sell other parts of the security stack. we're not trying to sell other parts of the security stack We're not trying to sell other applications. we're not trying to sell other applications We leave that up to the customers to choose the best outcome for them. we leave that up to the customers to choose the best outcome for them

Speaker 10: Okay. Let's go to Matthew Hedberg at RBC. Okay. okay Let's go to Matthew Hedberg at RBC. let's go to matthew hedberg at rbc

Speaker 1: Great. Thanks, Dave. Todd, I wanted to circle back on the Governance side of it. It was an interesting statistic you gave. And I guess, you know, when you look at the success you've had attaching Governance to workforce deals, can you talk about the competitive landscape? And are there key elements of success this year that you think could parlay to next year? Maybe it's increased partner influence, maybe it's some additional sales incentives to drive even further new product attached next year? Great. great Thanks, Dave. thanks dave Todd, I wanted to circle back on the Governance side of it. todd i wanted to circle back on the governance side of it It was an interesting statistic you gave. it was an interesting statistic you gave And I guess, you know, when you look at the success you've had attaching Governance to workforce deals, can you talk about the competitive landscape? and i guess you know when you look at the success you've had attaching governance to workforce deals can you talk about the competitive landscape And are there key elements of success this year that you think could parlay to next year? and are there key elements of success this year that you think could parlay to next year Maybe it's increased partner influence, maybe it's some additional sales incentives to drive even further new product attached next year? maybe it's increased partner influence maybe it's some additional sales incentives to drive even further new product attached next year

Speaker 23: Yeah. I think the dynamic is, in many of these Governance scenarios, there is no solution. I mean, I'm talking about the customer doesn't have a solution, particularly in areas that are not traditional on-premise ERP legacy technology. So a lot of times, if there is a Governance solution, it's implemented around that legacy on-prem, you know, just big SAP, for example, or big Oracle, for example. And we'll come in, and they'll use us for an app that's not that. It's maybe their SaaS applications, and they do Governance for that. And they realize that these SaaS applications are becoming more important for compliance and more important for just general security and making sure the access is controlled from a security perspective. And we do a really good job of that. Yeah. yeah I think the dynamic is, in many of these Governance scenarios, there is no solution. i think the dynamic is in many of these governance scenarios there is no solution I mean, I'm talking about the customer doesn't have a solution, particularly in areas that are not traditional on-premise ERP legacy technology. i mean i'm talking about the customer doesn't have a solution particularly in areas that are not traditional on-premise erp legacy technology So a lot of times, if there is a Governance solution, it's implemented around that legacy on-prem, you know, just big SAP, for example, or big Oracle, for example. so a lot of times if there is a governance solution it's implemented around that legacy on-prem you know just big sap for example or big oracle for example And we'll come in, and they'll use us for an app that's not that. and we'll come in and they'll use us for an app that's not that It's maybe their SaaS applications, and they do Governance for that. it's maybe their saas applications and they do governance for that And they realize that these SaaS applications are becoming more important for compliance and more important for just general security and making sure the access is controlled from a security perspective. and they realize that these saas applications are becoming more important for compliance and more important for just general security and making sure the access is controlled from a security perspective And we do a really good job of that. and we do a really good job of that It's pretty rare for someone to take Okta Governance and replace a deployed in-production legacy Governance solution around an on-premise application. I think that will continue to be rare just because it works. You know, it's like checking all the compliance boxes. It's probably not worth changing. And there is an opportunity to just do the use cases around that. One thing that is interesting, and I've learned in the Governance market in the last few years, is there's a lot of churn. And so it's probably not a market where you have to have 25 years of features to win because there's a lot of churn in the market. It's pretty rare for someone to take Okta Governance and replace a deployed in-production legacy Governance solution around an on-premise application. it's pretty rare for someone to take okta governance and replace a deployed in-production legacy governance solution around an on-premise application I think that will continue to be rare just because it works. i think that will continue to be rare just because it works You know, it's like checking all the compliance boxes. you know it's like checking all the compliance boxes It's probably not worth changing. it's probably not worth changing And there is an opportunity to just do the use cases around that. and there is an opportunity to just do the use cases around that One thing that is interesting, and I've learned in the Governance market in the last few years, is there's a lot of churn. one thing that is interesting and i've learned in the governance market in the last few years is there's a lot of churn And so it's probably not a market where you have to have 25 years of features to win because there's a lot of churn in the market. and so it's probably not a market where you have to have 25 years of features to win because there's a lot of churn in the market I remember, this is going back a long time now, but when I was working at Salesforce, when I first got to Salesforce and I looked at the product capabilities, it was incredibly simple, especially compared to Siebel. It probably had, you know, 1/10 of the features. But it just ran the table because no one used all those features in Siebel. And I think the Governance market is like that. There's a lot of shelfware. A lot of this stuff is not implemented. And our product, which is very strongly integrated to access management, our access management, it's very quick to implement. People get tremendous value out of it fast. It's well integrated to many SaaS applications. And more and more, it's integrated to even on-prem applications as we innovate there. And it's fast time to value. I remember, this is going back a long time now, but when I was working at Salesforce, when I first got to Salesforce and I looked at the product capabilities, it was incredibly simple, especially compared to Siebel. i remember this is going back a long time now but when i was working at salesforce when i first got to salesforce and i looked at the product capabilities it was incredibly simple especially compared to siebel It probably had, you know, 1/10 of the features. it probably had you know 1/10 of the features But it just ran the table because no one used all those features in Siebel. but it just ran the table because no one used all those features in siebel And I think the Governance market is like that. and i think the governance market is like that There's a lot of shelfware. there's a lot of shelfware A lot of this stuff is not implemented. a lot of this stuff is not implemented And our product, which is very strongly integrated to access management, our access management, it's very quick to implement. and our product which is very strongly integrated to access management our access management it's very quick to implement People get tremendous value out of it fast. people get tremendous value out of it fast It's well integrated to many SaaS applications. it's well integrated to many saas applications And more and more, it's integrated to even on-prem applications as we innovate there. and more and more it's integrated to even on-prem applications as we innovate there And it's fast time to value. and it's fast time to value I think that, in this case, is the winning formula when we're seeing it play out in the market. I think that, in this case, is the winning formula when we're seeing it play out in the market. i think that in this case is the winning formula when we're seeing it play out in the market

Speaker 1: Thanks, Todd. Thanks, Todd. thanks todd

Speaker 10: Okay. Next up, we'll go to Joshua Tilton at Wolfe. Okay. okay Next up, we'll go to Joshua Tilton at Wolfe. next up we'll go to joshua tilton at wolfe

Speaker 22: Thank you, Dave. Brett, maybe one for you. The ongoing seat and MAU pressures that you guys are seeing this year, how does that, if at all, change your visibility into next year? And how are you kind of accounting for that in the guide that you gave today? Thank you, Dave. thank you dave Brett, maybe one for you. brett maybe one for you The ongoing seat and MAU pressures that you guys are seeing this year, how does that, if at all, change your visibility into next year? the ongoing seat and mau pressures that you guys are seeing this year how does that if at all change your visibility into next year And how are you kind of accounting for that in the guide that you gave today? and how are you kind of accounting for that in the guide that you gave today

Speaker 6: Yeah, that's all accounted for in the guide today. It's a good question, Josh. In terms of the, you know, there's two different factors that we're talking about, right? There's the macro just overall. Companies are just not buying as many licenses. They're scrutinizing licenses. And when I say licenses, I mean licenses or MAUs. It just depends on which side of the business. And then there's the older customer cohorts. That older customer cohort, we think materially is done by the end of the first half of fiscal year 2026. But so that's all, by the way, that's all captured in the guide. So hopefully that helps there, Josh. Yeah, that's all accounted for in the guide today. yeah that's all accounted for in the guide today It's a good question, Josh. it's a good question josh In terms of the, you know, there's two different factors that we're talking about, right? in terms of the you know there's two different factors that we're talking about right There's the macro just overall. there's the macro just overall Companies are just not buying as many licenses. companies are just not buying as many licenses They're scrutinizing licenses. they're scrutinizing licenses And when I say licenses, I mean licenses or MAUs. and when i say licenses i mean licenses or maus It just depends on which side of the business. it just depends on which side of the business And then there's the older customer cohorts. and then there's the older customer cohorts That older customer cohort, we think materially is done by the end of the first half of fiscal year 2026. that older customer cohort we think materially is done by the end of the first half of fiscal year 2026 But so that's all, by the way, that's all captured in the guide. but so that's all by the way that's all captured in the guide So hopefully that helps there, Josh. so hopefully that helps there josh

Speaker 10: Great. Next up, we have Jonathan Ho at William Blair. Great. great Next up, we have Jonathan Ho at William Blair. next up we have jonathan ho at william blair

Speaker 18: Good afternoon and congrats on the strong quarter. Just wondering if you could give us some additional detail on the go-to-market specialization opportunity that you referenced and maybe help us understand why you see the need to do this now or what's maybe the impetus driving that? Good afternoon and congrats on the strong quarter. good afternoon and congrats on the strong quarter Just wondering if you could give us some additional detail on the go-to-market specialization opportunity that you referenced and maybe help us understand why you see the need to do this now or what's maybe the impetus driving that? just wondering if you could give us some additional detail on the go-to-market specialization opportunity that you referenced and maybe help us understand why you see the need to do this now or what's maybe the impetus driving that

Speaker 23: Yeah. I've talked to a lot of people and working with Okta and go-to-market models the last five or six years. There's basically two spectrums of go-to-market. There's one end of the, or sorry, two ends of the same spectrum. One end of the spectrum is everything's general. And every rep sells everything. There's no overlays. There's no specialists. Just general rep model. And on the other end of the spectrum is everything's specialized. Every product has its own rep. And there's just total specialization. And the trade-offs are roughly, you know, you get more probably productivity and sales performance out of the completely specialized model, but you also get a lot more costs. Yeah. yeah I've talked to a lot of people and working with Okta and go-to-market models the last five or six years. i've talked to a lot of people and working with okta and go-to-market models the last five or six years There's basically two spectrums of go-to-market. there's basically two spectrums of go-to-market There's one end of the, or sorry, two ends of the same spectrum. there's one end of the or sorry two ends of the same spectrum One end of the spectrum is everything's general. one end of the spectrum is everything's general And every rep sells everything. and every rep sells everything There's no overlays. there's no overlays There's no specialists. there's no specialists Just general rep model. just general rep model And on the other end of the spectrum is everything's specialized. and on the other end of the spectrum is everything's specialized Every product has its own rep. every product has its own rep And there's just total specialization. and there's just total specialization And the trade-offs are roughly, you know, you get more probably productivity and sales performance out of the completely specialized model, but you also get a lot more costs. and the trade-offs are roughly you know you get more probably productivity and sales performance out of the completely specialized model but you also get a lot more costs So the exercise is how do you, as the organization grows and the product portfolio grows and the market evolves and the competitive dynamic evolves, how do you put your organization in the right spot on that spectrum to maximize growth and profitability? And so the simple answer to your question is we think that there's an opportunity for more growth here than we're seeing now. It's a part of the initiative to accelerate growth as we want to do more specialization. And I think there's some potential for, at least in the short term, some increased costs, but we think it's going to be far outweighed by the increase in growth. And by the way, we're very committed and very focused on profitability as well. So the exercise is how do you, as the organization grows and the product portfolio grows and the market evolves and the competitive dynamic evolves, how do you put your organization in the right spot on that spectrum to maximize growth and profitability? so the exercise is how do you as the organization grows and the product portfolio grows and the market evolves and the competitive dynamic evolves how do you put your organization in the right spot on that spectrum to maximize growth and profitability And so the simple answer to your question is we think that there's an opportunity for more growth here than we're seeing now. and so the simple answer to your question is we think that there's an opportunity for more growth here than we're seeing now It's a part of the initiative to accelerate growth as we want to do more specialization. it's a part of the initiative to accelerate growth as we want to do more specialization And I think there's some potential for, at least in the short term, some increased costs, but we think it's going to be far outweighed by the increase in growth. and i think there's some potential for at least in the short term some increased costs but we think it's going to be far outweighed by the increase in growth And by the way, we're very committed and very focused on profitability as well. and by the way we're very committed and very focused on profitability as well But I think we have enough room in the business based on all our efficiency work and some of the effectiveness investments we've made where we can make the specialization investment and still run at the profitability levels we've outlined and are comfortable with and still accelerating growth. So that's high level. More specifically, I think it's important to understand kind of more specifically what we're saying here. So what this means is that we're going to have, instead of sales reps at Okta selling every product, they're going to be more specialized to product. Specifically, there's going to be dedicated Auth0 reps and then dedicated Okta reps. And the Okta reps are going to be that we need them because the product is getting quite broad. It's very, very challenging to sell Governance and Privileged Access and access management and customer identity and, and, and, and. But I think we have enough room in the business based on all our efficiency work and some of the effectiveness investments we've made where we can make the specialization investment and still run at the profitability levels we've outlined and are comfortable with and still accelerating growth. but i think we have enough room in the business based on all our efficiency work and some of the effectiveness investments we've made where we can make the specialization investment and still run at the profitability levels we've outlined and are comfortable with and still accelerating growth So that's high level. so that's high level More specifically, I think it's important to understand kind of more specifically what we're saying here. more specifically i think it's important to understand kind of more specifically what we're saying here So what this means is that we're going to have, instead of sales reps at Okta selling every product, they're going to be more specialized to product. so what this means is that we're going to have instead of sales reps at okta selling every product they're going to be more specialized to product Specifically, there's going to be dedicated Auth0 reps and then dedicated Okta reps. specifically there's going to be dedicated auth0 reps and then dedicated okta reps And the Okta reps are going to be that we need them because the product is getting quite broad. and the okta reps are going to be that we need them because the product is getting quite broad It's very, very challenging to sell Governance and Privileged Access and access management and customer identity and, and, and, and. it's very very challenging to sell governance and privileged access and access management and customer identity and and and and And they're going to be specialized to sell the suite of access management, Privileged Access, Governance, ITP, that suite. And then the Auth0 reps are going to be focused on Auth0. So it's developers. It's making sure that every self-service customer that starts to upgrade gets upgraded into the full enterprise deployment because a lot of these small companies turn out to be some of our biggest customers. You all know about our presence in the AI world and how we have very significant customers there that started off as self-service trials. So products are getting more capable. It's very tough for one salesperson to cover them all. We see a growth opportunity, and we're going to make sure we take it. And they're going to be specialized to sell the suite of access management, Privileged Access , Governance, ITP, that suite. and they're going to be specialized to sell the suite of access management privileged access governance itp that suite And then the Auth0 reps are going to be focused on Auth0. and then the auth0 reps are going to be focused on auth0 So it's developers. so it's developers It's making sure that every self-service customer that starts to upgrade gets upgraded into the full enterprise deployment because a lot of these small companies turn out to be some of our biggest customers. it's making sure that every self-service customer that starts to upgrade gets upgraded into the full enterprise deployment because a lot of these small companies turn out to be some of our biggest customers You all know about our presence in the AI world and how we have very significant customers there that started off as self-service trials. you all know about our presence in the ai world and how we have very significant customers there that started off as self-service trials So products are getting more capable. so products are getting more capable It's very tough for one salesperson to cover them all. it's very tough for one salesperson to cover them all We see a growth opportunity, and we're going to make sure we take it. we see a growth opportunity and we're going to make sure we take it

Speaker 6: Yeah. I would just add to that. If you think about it, Jonathan, it's really about productivity. If we just boil it down to a simple metric, it's AE productivity. And we've seen nice gains this year in AE productivity. We think we can make those gains go even further by making this change in a portion of the organization, which goes back to Todd's point, is we've built all these efficiencies into the organization so you can balance with trying to go for more growth while also being healthily profitable as we are and expect to be in FY 2025 and FY 2026. Yeah. yeah I would just add to that. i would just add to that If you think about it, Jonathan, it's really about productivity. if you think about it jonathan it's really about productivity If we just boil it down to a simple metric, it's AE productivity. if we just boil it down to a simple metric it's ae productivity And we've seen nice gains this year in AE productivity. and we've seen nice gains this year in ae productivity We think we can make those gains go even further by making this change in a portion of the organization, which goes back to Todd's point, is we've built all these efficiencies into the organization so you can balance with trying to go for more growth while also being healthily profitable as we are and expect to be in FY 20 25 and FY 20 26. we think we can make those gains go even further by making this change in a portion of the organization which goes back to todd's point is we've built all these efficiencies into the organization so you can balance with trying to go for more growth while also being healthily profitable as we are and expect to be in fy 20 25 and fy 20 26

Speaker 18: Great. Thank you. Great. great Thank you. thank you

Speaker 10: Next up, we have Joe Gallo at Jefferies. Next up, we have Joe Gallo at Jefferies. next up we have joe gallo at jefferies

Speaker 12: Hey, guys. Thanks for the question. Can you just talk through customer identity, its performance this quarter, and how you're thinking about that market growth rate, and then just given all the conversations around specialization, how should we think about the maturity of the channel and its ability to sell that product? Hey, guys. hey guys Thanks for the question. thanks for the question Can you just talk through customer identity, its performance this quarter, and how you're thinking about that market growth rate, and then just given all the conversations around specialization, how should we think about the maturity of the channel and its ability to sell that product? can you just talk through customer identity its performance this quarter and how you're thinking about that market growth rate and then just given all the conversations around specialization how should we think about the maturity of the channel and its ability to sell that product

Speaker 23: Yeah. Customer Identity had a solid quarter. I think we're very excited. It's over a billion-dollar business now. So we have the workforce business, which is well over a billion, obviously, and then the Customer Identity business, which is over a billion as well. I think that the drivers in that market are somewhat security, but they're a little bit different on the workforce side. It's less driven by security and many times just driven by customer experience. There's a large European online retailer that signed up for Customer Identity in Q3. And you think, oh, it must have been some security or something driving the purchase, but it was just convenience. Their web experience and mobile app had multiple logins and multiple IDs, and they were trying to consolidate that. So it's an important part of our business. It's growing strong. Yeah. yeah Customer Identity had a solid quarter. customer identity had a solid quarter I think we're very excited. i think we're very excited It's over a billion-dollar business now. it's over a billion-dollar business now So we have the workforce business, which is well over a billion, obviously, and then the Customer Identity business, which is over a billion as well. so we have the workforce business which is well over a billion obviously and then the customer identity business which is over a billion as well I think that the drivers in that market are somewhat security, but they're a little bit different on the workforce side. i think that the drivers in that market are somewhat security but they're a little bit different on the workforce side It's less driven by security and many times just driven by customer experience. it's less driven by security and many times just driven by customer experience There's a large European online retailer that signed up for Customer Identity in Q3. there's a large european online retailer that signed up for customer identity in q3 And you think, oh, it must have been some security or something driving the purchase, but it was just convenience. and you think oh it must have been some security or something driving the purchase but it was just convenience Their web experience and mobile app had multiple logins and multiple IDs, and they were trying to consolidate that. their web experience and mobile app had multiple logins and multiple ids and they were trying to consolidate that So it's an important part of our business. so it's an important part of our business It's growing strong. it's growing strong And as I just mentioned, we think we can grow it even faster with more focus on this developer persona, which, you know, we've seen in the past that it's very, the opportunities are huge when the developer use cases start, bottoms up, something new is built, starts to grow, comes into the self-service funnel, upgrades the enterprise, can be quite significant. And we want to make sure that we take advantage of that opportunity. And as I just mentioned, we think we can grow it even faster with more focus on this developer persona, which, you know, we've seen in the past that it's very, the opportunities are huge when the developer use cases start, bottoms up, something new is built, starts to grow, comes into the self-service funnel, upgrades the enterprise, can be quite significant. and as i just mentioned we think we can grow it even faster with more focus on this developer persona which you know we've seen in the past that it's very the opportunities are huge when the developer use cases start bottoms up something new is built starts to grow comes into the self-service funnel upgrades the enterprise can be quite significant And we want to make sure that we take advantage of that opportunity. and we want to make sure that we take advantage of that opportunity

Speaker 12: Thank you. Thank you. thank you

Speaker 10: Let's go to Mike Cikos at Needham. Let's go to Mike Cikos at Needham . let's go to mike cikos at needham

Speaker 3: Great. Thanks, Dave. And thanks for taking the questions, guys. Just wanted to tap into the specialization comment too. Can you either point to public sector where you guys have arguably driven some of the specialization or Americas SMB? I'm sure you guys have your own internal data points you're watching, but what would you point us to to help us get greater confidence that this specialization is the right approach? Because obviously, that's informing your decision, but it'd be helpful to get it for us outsiders here. Thank you. Great. great Thanks, Dave. thanks dave And thanks for taking the questions, guys. and thanks for taking the questions guys Just wanted to tap into the specialization comment too. just wanted to tap into the specialization comment too Can you either point to public sector where you guys have arguably driven some of the specialization or Americas SMB? can you either point to public sector where you guys have arguably driven some of the specialization or americas smb I'm sure you guys have your own internal data points you're watching, but what would you point us to to help us get greater confidence that this specialization is the right approach? i'm sure you guys have your own internal data points you're watching but what would you point us to to help us get greater confidence that this specialization is the right approach Because obviously, that's informing your decision, but it'd be helpful to get it for us outsiders here. because obviously that's informing your decision but it'd be helpful to get it for us outsiders here Thank you. thank you

Speaker 23: Yeah. There's a bunch of data points. You mentioned a couple of them. The Hunter-Farmer in Americas SMB, there's positive data points out of that. I would say that that's a relatively small part of the business. I think the public sector and the focus there and really speaking the same language as that buyer is a bigger data set and sample size, longer-term sample size that we're confident on. And then part of it too is just watching the sales cycles and sitting through the conversations and seeing the potential on this developer-facing market and seeing how much additional growth we just instinctually think we can see by focus and by dedicated resources on that. And then thinking about, you know, what's the, like I said before, there's always a trade-off, right? The trade-off is transition costs. Yeah. yeah There's a bunch of data points. there's a bunch of data points You mentioned a couple of them. you mentioned a couple of them The Hunter-Farmer in Americas SMB, there's positive data points out of that. the hunter-farmer in americas smb there's positive data points out of that I would say that that's a relatively small part of the business. i would say that that's a relatively small part of the business I think the public sector and the focus there and really speaking the same language as that buyer is a bigger data set and sample size, longer-term sample size that we're confident on. i think the public sector and the focus there and really speaking the same language as that buyer is a bigger data set and sample size longer-term sample size that we're confident on And then part of it too is just watching the sales cycles and sitting through the conversations and seeing the potential on this developer-facing market and seeing how much additional growth we just instinctually think we can see by focus and by dedicated resources on that. and then part of it too is just watching the sales cycles and sitting through the conversations and seeing the potential on this developer-facing market and seeing how much additional growth we just instinctually think we can see by focus and by dedicated resources on that And then thinking about, you know, what's the, like I said before, there's always a trade-off, right? and then thinking about you know what's the like i said before there's always a trade-off right The trade-off is transition costs. the trade-off is transition costs Like, what is the cost to make the changes required to get to that model? And then what is the, you know, how is the ramp in growth going to, you know, measure against the increased costs of sales coverage? And we think that in this case, based on all our modeling and all our past experience, that the growth benefits are going to outweigh the costs. Like, what is the cost to make the changes required to get to that model? like what is the cost to make the changes required to get to that model And then what is the, you know, how is the ramp in growth going to, you know, measure against the increased costs of sales coverage? and then what is the you know how is the ramp in growth going to you know measure against the increased costs of sales coverage And we think that in this case, based on all our modeling and all our past experience, that the growth benefits are going to outweigh the costs. and we think that in this case based on all our modeling and all our past experience that the growth benefits are going to outweigh the costs

Speaker 10: All right. Next up, we have Madeline Brooks at Bank of America. All right. all right Next up, we have Madeline Brooks at Bank of America . next up we have madeline brooks at bank of america

Speaker 13: Good. Perfect. So, you know, I think overall, we can all agree that this is a really strong quarter for you guys. So I think then when I take a step back and look at the market, I really want to kind of hone in on this 7% guide for next year. And if I just kind of extrapolate what new bookings was for this quarter, we can kind of get to an assumption that maybe the core workforce and CIAM markets are growing roughly 5%. So I first want to clarify that 7%. Does that include any upside from new bookings or new bookings from new, sorry, from new products, or are new products already baked into that guide? And then just one follow-up question after that. Good. good Perfect. perfect So, you know, I think overall, we can all agree that this is a really strong quarter for you guys. so you know i think overall we can all agree that this is a really strong quarter for you guys So I think then when I take a step back and look at the market, I really want to kind of hone in on this 7% guide for next year. so i think then when i take a step back and look at the market i really want to kind of hone in on this 7% guide for next year And if I just kind of extrapolate what new bookings was for this quarter, we can kind of get to an assumption that maybe the core workforce and CIAM markets are growing roughly 5%. and if i just kind of extrapolate what new bookings was for this quarter we can kind of get to an assumption that maybe the core workforce and ciam markets are growing roughly 5% So I first want to clarify that 7%. so i first want to clarify that 7% Does that include any upside from new bookings or new bookings from new, sorry, from new products, or are new products already baked into that guide? does that include any upside from new bookings or new bookings from new sorry from new products or are new products already baked into that guide And then just one follow-up question after that. and then just one follow-up question after that

Speaker 6: Yeah. All the products we have today are already baked in there, if that's what you're asking. I think the one that's the most material by far is Governance. Like we've talked about before, we are hopeful that some of those products that we've been describing here today continue to ramp like they have been the last quarter or two and become more material. But frankly, the biggest new product in there would be Governance. Hopefully, that helps there, Madeline. Yeah. yeah All the products we have today are already baked in there, if that's what you're asking. all the products we have today are already baked in there if that's what you're asking I think the one that's the most material by far is Governance. i think the one that's the most material by far is governance Like we've talked about before, we are hopeful that some of those products that we've been describing here today continue to ramp like they have been the last quarter or two and become more material. like we've talked about before we are hopeful that some of those products that we've been describing here today continue to ramp like they have been the last quarter or two and become more material But frankly, the biggest new product in there would be Governance. but frankly the biggest new product in there would be governance Hopefully, that helps there, Madeline. hopefully that helps there madeline

Speaker 13: Yeah. And then so for my follow-up, I guess, if I look at the identity market, both workforce and CIAM, both growing faster than that 5%, I mean, kind of if we analyze performance here, is there anything that Okta can do better to try and just reinvigorate the growth in those core markets where the market is growing faster and that 5% growth rate would suggest just some share loss there? And that's the question. Thank you. Yeah. yeah And then so for my follow-up, I guess, if I look at the identity market, both workforce and CIAM, both growing faster than that 5%, I mean, kind of if we analyze performance here, is there anything that Okta can do better to try and just reinvigorate the growth in those core markets where the market is growing faster and that 5% growth rate would suggest just some share loss there? and then so for my follow-up i guess if i look at the identity market both workforce and ciam both growing faster than that 5% i mean kind of if we analyze performance here is there anything that okta can do better to try and just reinvigorate the growth in those core markets where the market is growing faster and that 5% growth rate would suggest just some share loss there And that's the question. and that's the question Thank you. thank you

Speaker 23: Yeah. It's an important question we think about a lot because, as I said, our number two priority is growth. And I'll refer to the number one priority, which is security. And I think not having any security issues is going to be a big deal. And we've invested aggressively, both in terms of money and in terms of just execution on making sure we have really performed well on our Secure Identity Commitment, which has four pillars. And we can talk about all four, but a big part of it is hardening our own corporate infrastructure. And we're, like I said, we've invested a ton. We've made a ton of progress there. And as I talk to leading tech companies and CISOs and other CEOs, our posture, our internal security posture has made a ton of progress. Yeah. yeah It's an important question we think about a lot because, as I said, our number two priority is growth. it's an important question we think about a lot because as i said our number two priority is growth And I'll refer to the number one priority, which is security. and i'll refer to the number one priority which is security And I think not having any security issues is going to be a big deal. and i think not having any security issues is going to be a big deal And we've invested aggressively, both in terms of money and in terms of just execution on making sure we have really performed well on our Secure Identity Commitment , which has four pillars. and we've invested aggressively both in terms of money and in terms of just execution on making sure we have really performed well on our secure identity commitment which has four pillars And we can talk about all four, but a big part of it is hardening our own corporate infrastructure. and we can talk about all four but a big part of it is hardening our own corporate infrastructure And we're, like I said, we've invested a ton. and we're like i said we've invested a ton We've made a ton of progress there. we've made a ton of progress there And as I talk to leading tech companies and CISOs and other CEOs, our posture, our internal security posture has made a ton of progress. and as i talk to leading tech companies and cisos and other ceos our posture our internal security posture has made a ton of progress And I think when we talk about the accomplishments of this quarter, I think one of the most things I'm proud of this year at Okta is our improvement there. We still have more work to do. It's an never-ending investment level to make sure we are one of the most secure companies in the world, but that's something we're very committed to and making sure we continue to execute on. And I think when we talk about the accomplishments of this quarter, I think one of the most things I'm proud of this year at Okta is our improvement there. and i think when we talk about the accomplishments of this quarter i think one of the most things i'm proud of this year at okta is our improvement there We still have more work to do. we still have more work to do It's an never-ending investment level to make sure we are one of the most secure companies in the world, but that's something we're very committed to and making sure we continue to execute on. it's an never-ending investment level to make sure we are one of the most secure companies in the world but that's something we're very committed to and making sure we continue to execute on I think one of the, you know, I'll get back to your question about the growth rates and the market growth, but I think what we're seeing now is that that work, that internal work is really starting to translate out into prospect and customer momentum because they're seeing a company that's kind of been through the fire and used and learned a lot and is sharing that with the market now and helping the whole industry defend against identity-based attacks. Our own products are very relevant from, I mentioned ITP earlier, not to mention Privileged Access and Governance. We use those as we lock down our own infrastructure and customers can learn from that. I think one of the, you know, I'll get back to your question about the growth rates and the market growth, but I think what we're seeing now is that that work, that internal work is really starting to translate out into prospect and customer momentum because they're seeing a company that's kind of been through the fire and used and learned a lot and is sharing that with the market now and helping the whole industry defend against identity-based attacks. i think one of the you know i'll get back to your question about the growth rates and the market growth but i think what we're seeing now is that that work that internal work is really starting to translate out into prospect and customer momentum because they're seeing a company that's kind of been through the fire and used and learned a lot and is sharing that with the market now and helping the whole industry defend against identity-based attacks Our own products are very relevant from, I mentioned ITP earlier, not to mention Privileged Access and Governance. our own products are very relevant from i mentioned itp earlier not to mention privileged access and governance We use those as we lock down our own infrastructure and customers can learn from that. we use those as we lock down our own infrastructure and customers can learn from that And so that's, I think, you know, having a strong security performance in terms of breaches and issues. That's one part of it that can help us, you know, gain share in the market and beat these estimates we've put out there potentially. That's one thing. Second thing is that I think if we do all that and continue to execute well and we have, you know, our, we talked about specialization and talked about some things we're doing to accelerate growth in the go-to-market side. And if we don't grow faster than the market, I would say that the market forecasts turned out to be wrong. Because if we do all those things, we're not going to lose share. We're not going to grow slower than the market. And we're going to be just fine. And so that's, I think, you know, having a strong security performance in terms of breaches and issues. and so that's i think you know having a strong security performance in terms of breaches and issues That's one part of it that can help us, you know, gain share in the market and beat these estimates we've put out there potentially. that's one part of it that can help us you know gain share in the market and beat these estimates we've put out there potentially That's one thing. that's one thing Second thing is that I think if we do all that and continue to execute well and we have, you know, our, we talked about specialization and talked about some things we're doing to accelerate growth in the go-to-market side. second thing is that i think if we do all that and continue to execute well and we have you know our we talked about specialization and talked about some things we're doing to accelerate growth in the go-to-market side And if we don't grow faster than the market, I would say that the market forecasts turned out to be wrong. and if we don't grow faster than the market i would say that the market forecasts turned out to be wrong Because if we do all those things, we're not going to lose share. because if we do all those things we're not going to lose share We're not going to grow slower than the market. we're not going to grow slower than the market And we're going to be just fine. and we're going to be just fine Because if you just talk to customers and you think about, if you ask them about their problems and how relevant identity is and if they have solved all their identity challenges, there's still a lot of work to do out there and there's still a lot of problems to solve and still a lot of value to be delivered to customers, and we're going to make sure we're there to deliver that for them. Because if you just talk to customers and you think about, if you ask them about their problems and how relevant identity is and if they have solved all their identity challenges, there's still a lot of work to do out there and there's still a lot of problems to solve and still a lot of value to be delivered to customers, and we're going to make sure we're there to deliver that for them. because if you just talk to customers and you think about if you ask them about their problems and how relevant identity is and if they have solved all their identity challenges there's still a lot of work to do out there and there's still a lot of problems to solve and still a lot of value to be delivered to customers and we're going to make sure we're there to deliver that for them

Speaker 10: Great. Next up, we have Shrenik Kothari at Baird. Great. great Next up, we have Shrenik Kothari at Baird. next up we have shrenik kothari at baird

Speaker 16: Yeah. Great. Thanks for taking my question and congrats on the solid execution. So the federal vertical you guys mentioned remains, of course, a key growth driver. Half of your top 10 deals were in the sector, which aligns with your end. Of course, your certifications and partnerships in the DC-based team that's translating to competitive advantage. My question is, how are you viewing the structural shifts, like perhaps in terms of budgets and reallocations that you foresee post-elections starting next year? How do you plan to navigate these? Again, it's still hypothetical, but just any potential disruptions that you might be foreseeing and tied to administration changes. Yeah. yeah Great. great Thanks for taking my question and congrats on the solid execution. thanks for taking my question and congrats on the solid execution So the federal vertical you guys mentioned remains, of course, a key growth driver. so the federal vertical you guys mentioned remains of course a key growth driver Half of your top 10 deals were in the sector, which aligns with your end. half of your top 10 deals were in the sector which aligns with your end Of course, your certifications and partnerships in the DC-based team that's translating to competitive advantage. of course your certifications and partnerships in the dc-based team that's translating to competitive advantage My question is, how are you viewing the structural shifts, like perhaps in terms of budgets and reallocations that you foresee post-elections starting next year? my question is how are you viewing the structural shifts like perhaps in terms of budgets and reallocations that you foresee post-elections starting next year How do you plan to navigate these? how do you plan to navigate these Again, it's still hypothetical, but just any potential disruptions that you might be foreseeing and tied to administration changes. again it's still hypothetical but just any potential disruptions that you might be foreseeing and tied to administration changes

Speaker 23: Yeah. I think one of the wins we mentioned the top 10 deals and five of them were in the U.S. federal vertical. One of them was a very exciting win at the DOD. We mentioned a few quarters ago, we had our first big DOD win. We followed that up with another significant one this quarter, which is really a good positive sign of things to come in addition to results for the quarter. We also closed a deal, a significant deal in the top 10 at the largest healthcare provider for the federal government. So there's a lot of momentum there. I think it's identity and security and modernizing some of the identity and the focus that the federal government has had on cyber is kind of apolitical, as much as anything can be apolitical. Yeah. yeah I think one of the wins we mentioned the top 10 deals and five of them were in the U.S. federal vertical. i think one of the wins we mentioned the top 10 deals and five of them were in the u.s federal vertical One of them was a very exciting win at the DOD. one of them was a very exciting win at the dod We mentioned a few quarters ago, we had our first big DOD win. we mentioned a few quarters ago we had our first big dod win We followed that up with another significant one this quarter, which is really a good positive sign of things to come in addition to results for the quarter. we followed that up with another significant one this quarter which is really a good positive sign of things to come in addition to results for the quarter We also closed a deal, a significant deal in the top 10 at the largest healthcare provider for the federal government. we also closed a deal a significant deal in the top 10 at the largest healthcare provider for the federal government So there's a lot of momentum there. so there's a lot of momentum there I think it's identity and security and modernizing some of the identity and the focus that the federal government has had on cyber is kind of apolitical, as much as anything can be apolitical. i think it's identity and security and modernizing some of the identity and the focus that the federal government has had on cyber is kind of apolitical as much as anything can be apolitical But it is really, you know, everyone wants to be more secure and everyone knows that nation-states have an interest in attacking the federal government and identity can help defend against that. And they have to modernize this stuff. A lot of the stuff they're running is quite old, quite legacy. And I think one of the reasons we're seeing a lot of momentum is that it's like the two-part formula of focus on cyber and in many cases a long-overdue initiative to modernize some of the tech. And we're benefiting from both of those in the federal vertical. But it is really, you know, everyone wants to be more secure and everyone knows that nation-states have an interest in attacking the federal government and identity can help defend against that. but it is really you know everyone wants to be more secure and everyone knows that nation-states have an interest in attacking the federal government and identity can help defend against that And they have to modernize this stuff. and they have to modernize this stuff A lot of the stuff they're running is quite old, quite legacy. a lot of the stuff they're running is quite old quite legacy And I think one of the reasons we're seeing a lot of momentum is that it's like the two-part formula of focus on cyber and in many cases a long-overdue initiative to modernize some of the tech. and i think one of the reasons we're seeing a lot of momentum is that it's like the two-part formula of focus on cyber and in many cases a long-overdue initiative to modernize some of the tech And we're benefiting from both of those in the federal vertical. and we're benefiting from both of those in the federal vertical

Speaker 10: Great. Next up, we have Rudy Kessinger at DA Davidson. Great. great Next up, we have Rudy Kessinger at DA Davidson. next up we have rudy kessinger at da davidson

Speaker 17: Hey, Greg. Thanks for taking my question. I want to go back to John's first question on the call, Brett, just about removing this additional conservatism in the guidance for the breach. I guess if we look at some of the, you know, the magnitude and beat some figures last couple of quarters, CRPOs in particular, you've been beating three to four points every quarter. I guess, can you quantify like where you had, was there one to two points of conservatism for the breach under CRPO guide the last few quarters? Or just how should we think about, you know, that Q4 CRPO guide in particular going forward, the level of conservatism in it versus past quarters? Hey, Greg. hey greg Thanks for taking my question. thanks for taking my question I want to go back to John's first question on the call, Brett, just about removing this additional conservatism in the guidance for the breach. i want to go back to john's first question on the call brett just about removing this additional conservatism in the guidance for the breach I guess if we look at some of the, you know, the magnitude and beat some figures last couple of quarters, CRPOs in particular, you've been beating three to four points every quarter. i guess if we look at some of the you know the magnitude and beat some figures last couple of quarters crpos in particular you've been beating three to four points every quarter I guess, can you quantify like where you had, was there one to two points of conservatism for the breach under CRPO guide the last few quarters? i guess can you quantify like where you had was there one to two points of conservatism for the breach under crpo guide the last few quarters Or just how should we think about, you know, that Q4 CRPO guide in particular going forward, the level of conservatism in it versus past quarters? or just how should we think about you know that q4 crpo guide in particular going forward the level of conservatism in it versus past quarters

Speaker 6: Yeah. I would say the level of conservatism is both current RPO and the revenue, just so we're on the same page, as well as op margin. It's all kind of all flows together, right? And when I say op margin, I mean both op margin and free cash flow. I don't have an exact quantification for you, Rudy, but like I said earlier, I just don't. It's not going to be 10% to 15% like we did that example I gave earlier, which was 10% at this time of the year. Now it's 15% for revenue growth and FY 2025. I just don't. I don't imagine us seeing that given what we can see today. And keep in mind, this is also just the natural maturation of the company. We're just getting bigger. Growth is slowing down a little bit. Yeah. yeah I would say the level of conservatism is both current RPO and the revenue, just so we're on the same page, as well as op margin. i would say the level of conservatism is both current rpo and the revenue just so we're on the same page as well as op margin It's all kind of all flows together, right? it's all kind of all flows together right And when I say op margin, I mean both op margin and free cash flow. and when i say op margin i mean both op margin and free cash flow I don't have an exact quantification for you, Rudy, but like I said earlier, I just don't. i don't have an exact quantification for you rudy but like i said earlier i just don't It's not going to be 10% to 15% like we did that example I gave earlier, which was 10% at this time of the year. it's not going to be 10% to 15% like we did that example i gave earlier which was 10% at this time of the year Now it's 15% for revenue growth and FY 20 25. now it's 15% for revenue growth and fy 20 25 I just don't. 25 i just don't I don't imagine us seeing that given what we can see today. i don't imagine us seeing that given what we can see today And keep in mind, this is also just the natural maturation of the company. and keep in mind this is also just the natural maturation of the company We're just getting bigger. we're just getting bigger Growth is slowing down a little bit. growth is slowing down a little bit So it's also, you know, security incident, but also just the sheer size of our company at this point. So it's also, you know, security incident, but also just the sheer size of our company at this point. so it's also you know security incident but also just the sheer size of our company at this point

Speaker 10: Yeah. Let's go to Saket Kalia at Barclays. Yeah. yeah Let's go to Saket Kalia at Barclays. let's go to saket kalia at barclays

Speaker 8: Okay. Great. Hey, guys. Thanks for taking my question here. Good to be on the call. Brett, maybe for you, can we just talk a little bit about new logo business in the quarter? I mean, I think we were all prepared for what was going to happen to net revenue retention, but it seems like the new logo part of the business stabilized this quarter. Can you just talk about what drove that and whether that trend is something that can continue going into next year? Okay. okay Great. great Hey, guys. hey guys Thanks for taking my question here. thanks for taking my question here Good to be on the call. good to be on the call Brett, maybe for you, can we just talk a little bit about new logo business in the quarter? brett maybe for you can we just talk a little bit about new logo business in the quarter I mean, I think we were all prepared for what was going to happen to net revenue retention, but it seems like the new logo part of the business stabilized this quarter. i mean i think we were all prepared for what was going to happen to net revenue retention but it seems like the new logo part of the business stabilized this quarter Can you just talk about what drove that and whether that trend is something that can continue going into next year? can you just talk about what drove that and whether that trend is something that can continue going into next year

Speaker 6: Yeah. I mean, frankly, we'd like the new logo numbers to be higher. I mean, we was 150 quarter over quarter. You know, one of the things that we've been obviously working on is the hunter-farmer model to try to improve that. That's one piece of the formula, right? Hunter-Farmer is both new logos and also upsells as well. But yeah, we think we can do better than where we are. And frankly, the good news is, look at how solid results we can produce when really mainly selling cross-sells, right? If you look at the current RPO growth of 13%, total RPO growth of 19%, you know, there's a lot of opportunity inside the customer base at this point. I mean, Todd talked about earlier with 15% of the bookings coming from these newer products, but ultimately that's just scratching the surface. Yeah. yeah I mean, frankly, we'd like the new logo numbers to be higher. i mean frankly we'd like the new logo numbers to be higher I mean, we was 150 quarter over quarter. i mean we was 150 quarter over quarter You know, one of the things that we've been obviously working on is the hunter-farmer model to try to improve that. you know one of the things that we've been obviously working on is the hunter-farmer model to try to improve that That's one piece of the formula, right? that's one piece of the formula right Hunter-Farmer is both new logos and also upsells as well. hunter-farmer is both new logos and also upsells as well But yeah, we think we can do better than where we are. but yeah we think we can do better than where we are And frankly, the good news is, look at how solid results we can produce when really mainly selling cross-sells, right? and frankly the good news is look at how solid results we can produce when really mainly selling cross-sells right If you look at the current RPO growth of 13%, total RPO growth of 19%, you know, there's a lot of opportunity inside the customer base at this point. if you look at the current rpo growth of 13% total rpo growth of 19% you know there's a lot of opportunity inside the customer base at this point I mean, Todd talked about earlier with 15% of the bookings coming from these newer products, but ultimately that's just scratching the surface. i mean todd talked about earlier with 15% of the bookings coming from these newer products but ultimately that's just scratching the surface We have a ton of opportunity inside the customer base. But to be clear, we want to be able to grow the logo count faster than this. Like I said, the good news is we've done a lot with the larger customers and also large and million-dollar ACV, the million-dollar cohort. So we've definitely helped ourselves. But we look forward to producing frankly better than this. We have a ton of opportunity inside the customer base. we have a ton of opportunity inside the customer base But to be clear, we want to be able to grow the logo count faster than this. but to be clear we want to be able to grow the logo count faster than this Like I said, the good news is we've done a lot with the larger customers and also large and million-dollar ACV, the million-dollar cohort. like i said the good news is we've done a lot with the larger customers and also large and million-dollar acv the million-dollar cohort So we've definitely helped ourselves. so we've definitely helped ourselves But we look forward to producing frankly better than this. but we look forward to producing frankly better than this

Speaker 8: Very helpful. Thanks. Very helpful. very helpful Thanks. thanks

Speaker 6: Problem. Problem. problem

Speaker 10: Next up, we have Patrick Colville at Scotiabank. Next up, we have Patrick Colville at Scotiabank. next up we have patrick colville at scotiabank

Speaker 4: All right. Thank you so much for taking my question. I guess, Brett and Todd, I mean, if I look back at this year, 2024, to me, the standout success has been Okta's rapidly improving profitability. This time last year, you set the initial guide for margins in fiscal 25 at 17%. You know, in the press release, it's now up to 22%. So I guess a five-point beat. How should we think about Okta's ability to outperform your initial guide of 22% next year? And then also just, I guess, give us some color on how you're thinking about hiring because it looks like hiring's kind of picked up the last couple of quarters. All right. Thank you. All right. all right Thank you so much for taking my question. thank you so much for taking my question I guess, Brett and Todd, I mean, if I look back at this year, 2024, to me, the standout success has been Okta's rapidly improving profitability. i guess brett and todd i mean if i look back at this year 2024 to me the standout success has been okta's rapidly improving profitability This time last year, you set the initial guide for margins in fiscal 25 at 17%. this time last year you set the initial guide for margins in fiscal 25 at 17% You know, in the press release, it's now up to 22%. you know in the press release it's now up to 22% So I guess a five-point beat. so i guess a five-point beat How should we think about Okta's ability to outperform your initial guide of 22% next year? how should we think about okta's ability to outperform your initial guide of 22% next year And then also just, I guess, give us some color on how you're thinking about hiring because it looks like hiring's kind of picked up the last couple of quarters. and then also just i guess give us some color on how you're thinking about hiring because it looks like hiring's kind of picked up the last couple of quarters All right. all right Thank you. thank you

Speaker 6: Yeah. From a profitability perspective, you know, one of the things that we've talked about a little bit on this call is we really want to lean more into growth. If you think about the Rule of 40, right, it's the lens we manage the company through for years now. We want to lean more into the growth side of the equation. And so I wouldn't necessarily expect, you know, a bunch of upside. I mean, we've definitely set the guidance where we think it's achievable, but we do want to invest into the opportunity because we do see it out there. You've heard Todd's comments throughout this entire call of optimism of how we can go and get more of the market. Yeah. yeah From a profitability perspective, you know, one of the things that we've talked about a little bit on this call is we really want to lean more into growth. from a profitability perspective you know one of the things that we've talked about a little bit on this call is we really want to lean more into growth If you think about the Rule of 40, right, it's the lens we manage the company through for years now. if you think about the rule of 40 right it's the lens we manage the company through for years now We want to lean more into the growth side of the equation. we want to lean more into the growth side of the equation And so I wouldn't necessarily expect, you know, a bunch of upside. and so i wouldn't necessarily expect you know a bunch of upside I mean, we've definitely set the guidance where we think it's achievable, but we do want to invest into the opportunity because we do see it out there. i mean we've definitely set the guidance where we think it's achievable but we do want to invest into the opportunity because we do see it out there You've heard Todd's comments throughout this entire call of optimism of how we can go and get more of the market. you've heard todd's comments throughout this entire call of optimism of how we can go and get more of the market And so we don't want to sit here and say, "Hey, the profitability is going to be way higher than what we've already guided you," because we want to go after that huge market opportunity. And we're making obviously all these changes and these investments. Think about security Todd talked about earlier. The product innovation coming off the line has been really good. And we think we can expect more of that. You know, the specialization topics we've talked about today, investing more in partners, these are all growth drivers. We really want to get after growth. And we're comfortable with the guidance we've given you here today, both top and bottom line. And so we don't want to sit here and say, "Hey, the profitability is going to be way higher than what we've already guided you," because we want to go after that huge market opportunity. and so we don't want to sit here and say "hey the profitability is going to be way higher than what we've already guided you," because we want to go after that huge market opportunity And we're making obviously all these changes and these investments. and we're making obviously all these changes and these investments Think about security Todd talked about earlier. think about security todd talked about earlier The product innovation coming off the line has been really good. the product innovation coming off the line has been really good And we think we can expect more of that. and we think we can expect more of that You know, the specialization topics we've talked about today, investing more in partners, these are all growth drivers. you know the specialization topics we've talked about today investing more in partners these are all growth drivers We really want to get after growth. we really want to get after growth And we're comfortable with the guidance we've given you here today, both top and bottom line. and we're comfortable with the guidance we've given you here today both top and bottom line

Speaker 4: Thank you so much. Thank you so much. thank you so much

Speaker 6: No problem. No problem. no problem

Speaker 10: Next up is Rob Owens at Piper. Next up is Rob Owens at Piper. next up is rob owens at piper

Speaker 5: Great. Thanks, Dave. And good afternoon. Todd, I want to build on some of the comments that you made earlier and appreciate kind of the overview of where we are in terms of identity. And I think Brett said we should be doing better from a new customer perspective. And frankly, I would agree. So where is the market just in terms of being dynamic around customers wanting to switch at this point? You know, we continue to hear identity's broken. It's the reason that most of these breaches occur in the first place. So why isn't that more dynamic? And you've put this hunter-farmer model in, you know, nine months ago. And I realize these things take time, but I would expect that 150 kind of quarter-over-quarter number to start to improve here. Great. great Thanks, Dave. thanks dave And good afternoon. and good afternoon Todd, I want to build on some of the comments that you made earlier and appreciate kind of the overview of where we are in terms of identity. todd i want to build on some of the comments that you made earlier and appreciate kind of the overview of where we are in terms of identity And I think Brett said we should be doing better from a new customer perspective. and i think brett said we should be doing better from a new customer perspective And frankly, I would agree. and frankly i would agree So where is the market just in terms of being dynamic around customers wanting to switch at this point? so where is the market just in terms of being dynamic around customers wanting to switch at this point You know, we continue to hear identity's broken. you know we continue to hear identity's broken It's the reason that most of these breaches occur in the first place. it's the reason that most of these breaches occur in the first place So why isn't that more dynamic? so why isn't that more dynamic And you've put this hunter-farmer model in, you know, nine months ago. and you've put this hunter-farmer model in you know nine months ago And I realize these things take time, but I would expect that 150 kind of quarter-over-quarter number to start to improve here. and i realize these things take time but i would expect that 150 kind of quarter-over-quarter number to start to improve here So where's the governing factor in that, especially relative to, I think, your broader comments of where identity is right now? Thanks. So where's the governing factor in that, especially relative to, I think, your broader comments of where identity is right now? so where's the governing factor in that especially relative to i think your broader comments of where identity is right now Thanks. thanks

Speaker 23: Yeah. Yeah. I think the customer account number is a little bit, it shows more about the SMB market because that obviously is the logos are, you know, more logos down there versus if you look at the customer account growing in the 100K+, it's, you know, it's up 8% versus a smaller number below 100K. So that's one quantitative thing. But I think one interesting thing about your question is just I was at a dinner last week. I was in Australia traveling, visiting a bunch of customers and prospects down there. And I was at a dinner of a bunch of partners, a bunch of systems integrators of ours, and talking to them about how things are going. And I was asking them about identity compared to other parts of cyber and what's the dynamic. Yeah. yeah Yeah. yeah I think the customer account number is a little bit, it shows more about the SMB market because that obviously is the logos are, you know, more logos down there versus if you look at the customer account growing in the 100K+ , it's, you know, it's up 8% versus a smaller number below 100K. i think the customer account number is a little bit it shows more about the smb market because that obviously is the logos are you know more logos down there versus if you look at the customer account growing in the 100k+ it's you know it's up 8% versus a smaller number below 100k So that's one quantitative thing. so that's one quantitative thing But I think one interesting thing about your question is just I was at a dinner last week. but i think one interesting thing about your question is just i was at a dinner last week I was in Australia traveling, visiting a bunch of customers and prospects down there. i was in australia traveling visiting a bunch of customers and prospects down there And I was at a dinner of a bunch of partners, a bunch of systems integrators of ours, and talking to them about how things are going. and i was at a dinner of a bunch of partners a bunch of systems integrators of ours and talking to them about how things are going And I was asking them about identity compared to other parts of cyber and what's the dynamic. and i was asking them about identity compared to other parts of cyber and what's the dynamic They said also the same thing, which is these are people in the trenches doing these deals with customers, rolling out products. When they look around and they see what's the easiest to change, it's other things are easier to change sometimes. It's easier to put something on the endpoint. It's easier to change out your firewall. Identity is harder to change. The upside of changing it is quite important, especially when you consider eight out of ten breaches are caused by identity. I think in some cases it's going to be slower, but we just have to be patient because we have by far the best products. We're in this very unique position where in terms of scale and modern technology and product suite and independence and neutrality, there's no one else out there. They said also the same thing, which is these are people in the trenches doing these deals with customers, rolling out products. they said also the same thing which is these are people in the trenches doing these deals with customers rolling out products When they look around and they see what's the easiest to change, it's other things are easier to change sometimes. when they look around and they see what's the easiest to change it's other things are easier to change sometimes It's easier to put something on the endpoint. it's easier to put something on the endpoint It's easier to change out your firewall. it's easier to change out your firewall Identity is harder to change. identity is harder to change The upside of changing it is quite important, especially when you consider eight out of ten breaches are caused by identity. the upside of changing it is quite important especially when you consider eight out of ten breaches are caused by identity I think in some cases it's going to be slower, but we just have to be patient because we have by far the best products. i think in some cases it's going to be slower but we just have to be patient because we have by far the best products We're in this very unique position where in terms of scale and modern technology and product suite and independence and neutrality, there's no one else out there. we're in this very unique position where in terms of scale and modern technology and product suite and independence and neutrality there's no one else out there And so we got to just keep executing, keep working hard, keep innovating, keep meeting customers where they are. And we'll be just fine with the plans and the strategies and the efficiencies we're demonstrating. And so we got to just keep executing, keep working hard, keep innovating, keep meeting customers where they are. and so we got to just keep executing keep working hard keep innovating keep meeting customers where they are And we'll be just fine with the plans and the strategies and the efficiencies we're demonstrating. and we'll be just fine with the plans and the strategies and the efficiencies we're demonstrating

Speaker 10: Next we'll go to Peter Levine at Evercore. Next we'll go to Peter Levine at Evercore. next we'll go to peter levine at evercore

Speaker 15: Thanks, Russell. Forget me again. Yeah. Let me tell you, we're going to talk about AI, but we are starting to see somewhat of an explosion of like non-identities, non-employee identities, like machine identities, bots. Can you talk to us about what you're seeing across your customers in terms of A, like the usage around AI and those identities that are coming onto their network? And then B, from your perspective, like how do you monetize that, right? If there's more identities to protect non-employee identities, like what are your plans over the next, call it 12 to 18 months in terms of monetizing some of the, you know, the adoption or the initial adoption of AI? Thanks, Russell. thanks russell Forget me again. forget me again Yeah. yeah Let me tell you, we're going to talk about AI, but we are starting to see somewhat of an explosion of like non-identities, non-employee identities, like machine identities, bots. let me tell you we're going to talk about ai but we are starting to see somewhat of an explosion of like non-identities non-employee identities like machine identities bots Can you talk to us about what you're seeing across your customers in terms of A, like the usage around AI and those identities that are coming onto their network? can you talk to us about what you're seeing across your customers in terms of a like the usage around ai and those identities that are coming onto their network And then B, from your perspective, like how do you monetize that, right? and then b from your perspective like how do you monetize that right If there's more identities to protect non-employee identities, like what are your plans over the next, call it 12 to 18 months in terms of monetizing some of the, you know, the adoption or the initial adoption of AI? if there's more identities to protect non-employee identities like what are your plans over the next call it 12 to 18 months in terms of monetizing some of the you know the adoption or the initial adoption of ai

Speaker 23: Yeah. It's, I would say, there's four things. And two of them you've probably heard me talk about and two of them you probably haven't. The first two are the most obvious thing is there's a whole new generation of apps and SaaS apps and innovations that people need to log into. And we're the identity layer from a customer identity perspective and some of the biggest in the world and a lot of smaller ones that, you know, you haven't heard of yet, but you will hear of. And which is why, by the way, the developer focus is so important because that whole new generation of tech is being built. Second thing is that we have Okta AI, which, you know, we talked a lot about a couple of years ago and we continue to work on that. Yeah. yeah It's, I would say, there's four things. it's i would say there's four things And two of them you've probably heard me talk about and two of them you probably haven't. and two of them you've probably heard me talk about and two of them you probably haven't The first two are the most obvious thing is there's a whole new generation of apps and SaaS apps and innovations that people need to log into. the first two are the most obvious thing is there's a whole new generation of apps and saas apps and innovations that people need to log into And we're the identity layer from a customer identity perspective and some of the biggest in the world and a lot of smaller ones that, you know, you haven't heard of yet, but you will hear of. and we're the identity layer from a customer identity perspective and some of the biggest in the world and a lot of smaller ones that you know you haven't heard of yet but you will hear of And which is why, by the way, the developer focus is so important because that whole new generation of tech is being built. and which is why by the way the developer focus is so important because that whole new generation of tech is being built Second thing is that we have Okta AI, which, you know, we talked a lot about a couple of years ago and we continue to work on that. second thing is that we have okta ai which you know we talked a lot about a couple of years ago and we continue to work on that It's really starting to help these new products like Identity Threat Protection with Okta AI. The model inside of Identity Threat Protection and how that works is AI is a big part of the product functionality. So those two you've probably heard me talk about before. Some really interesting new areas are we have something we talked about at Okta called Auth for GenAI, which is basically an authentication platform for agents. Everyone's very excited about agents as they should be. I mean, we used to call them bots, right? You know, four or five years ago they were called bots. Now they're called agents. Like what's the big deal? How different is it? Well, you can interact with them in natural languages and they can do a lot more with these models. So now it's like bots are real in real time. It's really starting to help these new products like Identity Threat Protection with Okta AI. it's really starting to help these new products like identity threat protection with okta ai The model inside of Identity Threat Protection and how that works is AI is a big part of the product functionality. the model inside of identity threat protection and how that works is ai is a big part of the product functionality So those two you've probably heard me talk about before. so those two you've probably heard me talk about before Some really interesting new areas are we have something we talked about at Okta called Auth for GenAI, which is basically an authentication platform for agents. some really interesting new areas are we have something we talked about at okta called auth for genai which is basically an authentication platform for agents Everyone's very excited about agents as they should be. everyone's very excited about agents as they should be I mean, we used to call them bots, right? i mean we used to call them bots right You know, four or five years ago they were called bots. you know four or five years ago they were called bots Now they're called agents. now they're called agents Like what's the big deal? like what's the big deal How different is it? how different is it Well, you can interact with them in natural languages and they can do a lot more with these models. well you can interact with them in natural languages and they can do a lot more with these models So now it's like bots are real in real time. so now it's like bots are real in real time But the problem is all of these bots and all of these platforms to build bots, they have the equivalent of the monitor sticky notes with passwords on them. They have the equivalent of that inside the bot. So there's no protocol for single sign-on for bots. They have like stored passwords in the bot. And if that bot gets hacked, guess what? You signed up for that bot and it has access to your calendar. It has access to your travel booking. It has access to your company email and your company data. That's gone because the hacker is going to get all those passwords out of there. So Auth for GenAI automates that and makes sure you can have a secure protocol to build a bot around. And so that's a really interesting area. It's very new. We just announced it. But the problem is all of these bots and all of these platforms to build bots, they have the equivalent of the monitor sticky notes with passwords on them. but the problem is all of these bots and all of these platforms to build bots they have the equivalent of the monitor sticky notes with passwords on them They have the equivalent of that inside the bot. they have the equivalent of that inside the bot So there's no protocol for single sign-on for bots. so there's no protocol for single sign-on for bots They have like stored passwords in the bot. they have like stored passwords in the bot And if that bot gets hacked, guess what? and if that bot gets hacked guess what You signed up for that bot and it has access to your calendar. you signed up for that bot and it has access to your calendar It has access to your travel booking. it has access to your travel booking It has access to your company email and your company data. it has access to your company email and your company data That's gone because the hacker is going to get all those passwords out of there. that's gone because the hacker is going to get all those passwords out of there So Auth for GenAI automates that and makes sure you can have a secure protocol to build a bot around. so auth for genai automates that and makes sure you can have a secure protocol to build a bot around And so that's a really interesting area. and so that's a really interesting area It's very new. it's very new We just announced it. we just announced it And all these agent frameworks and so forth are new. But I think it goes back to this idea where there's a lot of profound innovation and new applications and services in the AI revolution, but a lot of it is just a magnification of the same problems, whether it's more apps we need to secure, better customer experiences, more integrated we need to build, not having passwords on our monitors, having single sign-on in the case of people and in the case of bots. We're relevant in all those things. And it's, you know, it's pretty exciting to watch it happen and see, you know, frankly, it's a lot of potential right now in terms of our business, but the potential is large. And all these agent frameworks and so forth are new. and all these agent frameworks and so forth are new But I think it goes back to this idea where there's a lot of profound innovation and new applications and services in the AI revolution, but a lot of it is just a magnification of the same problems, whether it's more apps we need to secure, better customer experiences, more integrated we need to build, not having passwords on our monitors, having single sign-on in the case of people and in the case of bots. but i think it goes back to this idea where there's a lot of profound innovation and new applications and services in the ai revolution but a lot of it is just a magnification of the same problems whether it's more apps we need to secure better customer experiences more integrated we need to build not having passwords on our monitors having single sign-on in the case of people and in the case of bots We're relevant in all those things. we're relevant in all those things And it's, you know, it's pretty exciting to watch it happen and see, you know, frankly, it's a lot of potential right now in terms of our business, but the potential is large. and it's you know it's pretty exciting to watch it happen and see you know frankly it's a lot of potential right now in terms of our business but the potential is large

Speaker 15: Can you just share the monetization? How do you plan on charging for that? And if you are, are you charging today? But just really let's bring that up. Can you just share the monetization? can you just share the monetization How do you plan on charging for that? how do you plan on charging for that And if you are, are you charging today? and if you are are you charging today But just really let's bring that up. but just really let's bring that up

Speaker 23: There's different, like obviously, yeah, monetization. There's obviously like Identity Threat Protection is a product. So we sell that. It's an upsell. Auth for GenAI, it's basically like a, think about it as per machine authentication. So every time we have this feature called Machine-to-Machine, which does a similar thing today, and you pay basically by the monthly active machine. There's different, like obviously, yeah, monetization. there's different like obviously yeah monetization There's obviously like Identity Threat Protection is a product. there's obviously like identity threat protection is a product So we sell that. so we sell that It's an upsell. it's an upsell Auth for GenAI, it's basically like a, think about it as per machine authentication. auth for genai it's basically like a think about it as per machine authentication So every time we have this feature called Machine-to-Machine , which does a similar thing today, and you pay basically by the monthly active machine. so every time we have this feature called machine-to-machine which does a similar thing today and you pay basically by the monthly active machine

Speaker 15: Thank you. Thank you. thank you

Speaker 23: Yeah. Yeah. yeah

Speaker 10: Yeah. We're at the top of the hour, but we're going to try to take a few more here. Let's go to Trevor at JMP. Yeah. yeah We're at the top of the hour, but we're going to try to take a few more here. we're at the top of the hour but we're going to try to take a few more here Let's go to Trevor at JMP. let's go to trevor at jmp

Speaker 18: Great. Thanks, Dave. Thanks for taking the question. Todd, maybe for you just a clarification and then a question. You made some comments earlier around the context of OIG, and it sounded like maybe for the Privileged Access product too around just the competitive landscape and that you weren't necessarily running into maybe what I would have expected as sort of the standard set of competitors or suspects there. So curious if that's because you're just not necessarily going after those displacements as aggressively kind of in the field because, you know, we know your kind of products have been kind of, you've said yourself kind of 1.0 and not looking to necessarily do that? Great. great Thanks, Dave. thanks dave Thanks for taking the question. thanks for taking the question Todd, maybe for you just a clarification and then a question. todd maybe for you just a clarification and then a question You made some comments earlier around the context of OIG, and it sounded like maybe for the Privileged Access product too around just the competitive landscape and that you weren't necessarily running into maybe what I would have expected as sort of the standard set of competitors or suspects there. you made some comments earlier around the context of oig and it sounded like maybe for the privileged access product too around just the competitive landscape and that you weren't necessarily running into maybe what i would have expected as sort of the standard set of competitors or suspects there So curious if that's because you're just not necessarily going after those displacements as aggressively kind of in the field because, you know, we know your kind of products have been kind of, you've said yourself kind of 1.0 and not looking to necessarily do that? so curious if that's because you're just not necessarily going after those displacements as aggressively kind of in the field because you know we know your kind of products have been kind of you've said yourself kind of 1.0 and not looking to necessarily do that And if that's the case, kind of as you move into next year and beyond, and that's going to be a stimulant for growth, what do you have to, or will you just start kind of flipping the switch and going after them more aggressively vis-à-vis competitors, or does there need to be a? And if that's the case, kind of as you move into next year and beyond, and that's going to be a stimulant for growth, what do you have to, or will you just start kind of flipping the switch and going after them more aggressively vis-à-vis competitors, or does there need to be a? and if that's the case kind of as you move into next year and beyond and that's going to be a stimulant for growth what do you have to or will you just start kind of flipping the switch and going after them more aggressively vis-à-vis competitors or does there need to be a

Speaker 23: I don't think we don't have to replace SailPoint on-prem for SAP to have a large business, so maybe it's just a little bit of the details there, but I don't think that for us to win, we have to, you know, take out SailPoint on-premise. It's just not practical. People, when they get a system installed and integrated and they spend three years, these things are hard to get installed and integrated, and when they spend three years doing it, they're not going to take it out. It's just, it's like, you know, I would, if you just want to invest in SailPoint as a long-term, it's not going to be a big growth story, but it's going to be a good business for a long time just because they have a good installed base and we're not going to take that out. I don't think we don't have to replace SailPoint on-prem for SAP to have a large business, so maybe it's just a little bit of the details there, but I don't think that for us to win, we have to, you know, take out SailPoint on-premise. i don't think we don't have to replace sailpoint on-prem for sap to have a large business so maybe it's just a little bit of the details there but i don't think that for us to win we have to you know take out sailpoint on-premise It's just not practical. it's just not practical People, when they get a system installed and integrated and they spend three years, these things are hard to get installed and integrated, and when they spend three years doing it, they're not going to take it out. people when they get a system installed and integrated and they spend three years these things are hard to get installed and integrated and when they spend three years doing it they're not going to take it out It's just, it's like, you know, I would, if you just want to invest in SailPoint as a long-term, it's not going to be a big growth story, but it's going to be a good business for a long time just because they have a good installed base and we're not going to take that out. it's just it's like you know i would if you just want to invest in sailpoint as a long-term it's not going to be a big growth story but it's going to be a good business for a long time just because they have a good installed base and we're not going to take that out But it's also not a very big company. And we think that the market for Governance, as more and more of it moves to cloud and there's better products like ours that are easier to use and more integrated, I think the market's, you know, eventually five or 10 times bigger than what it is now. We're going to have a big share of that. So that's kind of what I'm trying to say. I think it's a little bit nuanced. It'd be easier to think about it if it was like, you know, Okta takes out all SailPoint's business, but it's just not realistic. And by the way, we don't have to. We can cover these new use cases, which are going to be, which by the way, is kind of the story of Okta. But it's also not a very big company. but it's also not a very big company And we think that the market for Governance, as more and more of it moves to cloud and there's better products like ours that are easier to use and more integrated, I think the market's, you know, eventually five or 10 times bigger than what it is now. and we think that the market for governance as more and more of it moves to cloud and there's better products like ours that are easier to use and more integrated i think the market's you know eventually five or 10 times bigger than what it is now We're going to have a big share of that. we're going to have a big share of that So that's kind of what I'm trying to say. so that's kind of what i'm trying to say I think it's a little bit nuanced. i think it's a little bit nuanced It'd be easier to think about it if it was like, you know, Okta takes out all SailPoint's business, but it's just not realistic. it'd be easier to think about it if it was like you know okta takes out all sailpoint's business but it's just not realistic And by the way, we don't have to. and by the way we don't have to We can cover these new use cases, which are going to be, which by the way, is kind of the story of Okta. we can cover these new use cases which are going to be which by the way is kind of the story of okta Like when we started Okta, people said, you should, you can't start an access management company in the cloud. There's not enough in the cloud. You have to, you know, do on-prem and you have to like take maybe some software and host it. And we said, no, we're going to build a modern thing that's pre-integrated and very flexible and fast to get value from. And that's where the world's headed and that's where we're going to be. So we've taken the same tack with both privilege and Governance. And I think if you think about the competitive landscape and the strategy of it, what's the right position to be in? Like when we started Okta, people said, you should, you can't start an access management company in the cloud. like when we started okta people said you should you can't start an access management company in the cloud There's not enough in the cloud. there's not enough in the cloud You have to, you know, do on-prem and you have to like take maybe some software and host it. you have to you know do on-prem and you have to like take maybe some software and host it And we said, no, we're going to build a modern thing that's pre-integrated and very flexible and fast to get value from. and we said no we're going to build a modern thing that's pre-integrated and very flexible and fast to get value from And that's where the world's headed and that's where we're going to be. and that's where the world's headed and that's where we're going to be So we've taken the same tack with both privilege and Governance. so we've taken the same tack with both privilege and governance And I think if you think about the competitive landscape and the strategy of it, what's the right position to be in? and i think if you think about the competitive landscape and the strategy of it what's the right position to be in Would you rather be starting from Governance and starting from privilege on-premise and going out to try to build a full suite, or would you start from our almost 20,000 customers and building some of these new capabilities around that? I would argue we're in a better position, but I'm sure those other vendors probably have their own opinions and we'll see who wins. Would you rather be starting from Governance and starting from privilege on-premise and going out to try to build a full suite, or would you start from our almost 20,000 customers and building some of these new capabilities around that? would you rather be starting from governance and starting from privilege on-premise and going out to try to build a full suite or would you start from our almost 20,000 customers and building some of these new capabilities around that I would argue we're in a better position, but I'm sure those other vendors probably have their own opinions and we'll see who wins. i would argue we're in a better position but i'm sure those other vendors probably have their own opinions and we'll see who wins

Speaker 10: Next we have Brian Essex at J.P. Morgan. Next we have Brian Essex at J.P. Morgan. next we have brian essex at j.p. morgan

Speaker 11: Hi, good afternoon. Thanks for taking the question. Yeah, I want to dig into the new products. It's great to see the traction there. 15% of the bookings is a great result. I want to see if we could peel back another layer. What percentage came from new versus existing? And how do you think about expanding into, you know, expanding with new products into existing customers versus larger lands with new products and new logos? Where's the bigger opportunity? And, you know, how do we think about the momentum there? Hi, good afternoon. hi good afternoon Thanks for taking the question. thanks for taking the question Yeah, I want to dig into the new products. yeah i want to dig into the new products It's great to see the traction there. 15% of the bookings is a great result. it's great to see the traction there 15% of the bookings is a great result I want to see if we could peel back another layer. i want to see if we could peel back another layer What percentage came from new versus existing? what percentage came from new versus existing And how do you think about expanding into, you know, expanding with new products into existing customers versus larger lands with new products and new logos? and how do you think about expanding into you know expanding with new products into existing customers versus larger lands with new products and new logos Where's the bigger opportunity? where's the bigger opportunity And, you know, how do we think about the momentum there? and you know how do we think about the momentum there

Speaker 23: Yeah, I think I don't know the exact numbers, but I would, based on my work with the field and working in deals, I would estimate that it was a majority of it was upsells. But there were some significant new logos. I mentioned a large technology company that had a nearly $5 million deal. That was all a new customer. And that was multiple products in the suite. So there are some, especially in the larger deals, there's bigger companies. And I think what, and it's kind of like a good example of a lot of things we've been talking about, which is larger companies have their budgets set, they have their initiatives, they have their projects. Yeah, I think I don't know the exact numbers, but I would, based on my work with the field and working in deals, I would estimate that it was a majority of it was upsells. yeah i think i don't know the exact numbers but i would based on my work with the field and working in deals i would estimate that it was a majority of it was upsells But there were some significant new logos. but there were some significant new logos I mentioned a large technology company that had a nearly $5 million deal. i mentioned a large technology company that had a nearly $5 million deal That was all a new customer. that was all a new customer And that was multiple products in the suite. and that was multiple products in the suite So there are some, especially in the larger deals, there's bigger companies. so there are some especially in the larger deals there's bigger companies And I think what, and it's kind of like a good example of a lot of things we've been talking about, which is larger companies have their budgets set, they have their initiatives, they have their projects. and i think what and it's kind of like a good example of a lot of things we've been talking about which is larger companies have their budgets set they have their initiatives they have their projects Even if they're maybe longer term, they're executing on them, they're more likely to do a strategic thing like identity that might have a longer term payback than a quicker, maybe another initiative that might be quicker payback or not take as much work to get it going. And they're also, they're also the suite we're offering where you can get access and Governance and privilege from a single vendor is appealing because they realize that they can, they probably have, you know, a bunch of different little vendors doing niche things and they can have more cost savings of consolidating. And then the other thing too is that they understand the value of neutrality and they understand the value of technology and how not being locked in can be a big advantage. So I think that's why you're seeing the business naturally gravitate toward bigger companies. Even if they're maybe longer term, they're executing on them, they're more likely to do a strategic thing like identity that might have a longer term payback than a quicker, maybe another initiative that might be quicker payback or not take as much work to get it going. even if they're maybe longer term they're executing on them they're more likely to do a strategic thing like identity that might have a longer term payback than a quicker maybe another initiative that might be quicker payback or not take as much work to get it going And they're also, they're also the suite we're offering where you can get access and Governance and privilege from a single vendor is appealing because they realize that they can, they probably have, you know, a bunch of different little vendors doing niche things and they can have more cost savings of consolidating. and they're also they're also the suite we're offering where you can get access and governance and privilege from a single vendor is appealing because they realize that they can they probably have you know a bunch of different little vendors doing niche things and they can have more cost savings of consolidating And then the other thing too is that they understand the value of neutrality and they understand the value of technology and how not being locked in can be a big advantage. and then the other thing too is that they understand the value of neutrality and they understand the value of technology and how not being locked in can be a big advantage So I think that's why you're seeing the business naturally gravitate toward bigger companies. so i think that's why you're seeing the business naturally gravitate toward bigger companies You know, the million dollar plus cohort now for Okta is $1 billion of revenue, which is, you know, great. I also think we have a ton of opportunity there because a lot of these deals are, you know, I mentioned the big technology company. It's like, it's a $5 million deal and it's really like a third of their estate. We have a lot of opportunity just in that account. It's exciting. You know, the million dollar plus cohort now for Okta is $1 billion of revenue, which is, you know, great. you know the million dollar plus cohort now for okta is $1 billion of revenue which is you know great I also think we have a ton of opportunity there because a lot of these deals are, you know, I mentioned the big technology company. i also think we have a ton of opportunity there because a lot of these deals are you know i mentioned the big technology company It's like, it's a $5 million deal and it's really like a third of their estate. it's like it's a $5 million deal and it's really like a third of their estate We have a lot of opportunity just in that account. we have a lot of opportunity just in that account It's exciting. it's exciting

Speaker 11: So it sounds still like more of a, you know, farmer versus hunter opportunity, but hunter getting some traction. So it sounds still like more of a, you know, farmer versus hunter opportunity, but hunter getting some traction. so it sounds still like more of a you know farmer versus hunter opportunity but hunter getting some traction

Speaker 23: Yeah, I think that's probably right. Yeah. Yeah, I would agree with that. Brian, I would say that, yeah, the math does suggest it's more upsell than new business. But I think what's interesting is as the products mature, then you're going to be able to land more new customers with them. So it's basically what we've done in every other product category that we've entered. So we started out with something that's, you know, I want to say basic, but like, you know. Yeah, I think that's probably right. yeah i think that's probably right Yeah. yeah Yeah, I would agree with that. yeah i would agree with that Brian, I would say that, yeah, the math does suggest it's more upsell than new business. brian i would say that yeah the math does suggest it's more upsell than new business But I think what's interesting is as the products mature, then you're going to be able to land more new customers with them. but i think what's interesting is as the products mature then you're going to be able to land more new customers with them So it's basically what we've done in every other product category that we've entered. so it's basically what we've done in every other product category that we've entered So we started out with something that's, you know, I want to say basic, but like, you know. so we started out with something that's you know i want to say basic but like you know

Speaker 11: Someone called it 1.0 earlier. Someone called it 1.0 earlier. someone called it 1.0 earlier

Speaker 23: There you go. Okay. That's good. And then it got better over time and then you started landing with it. We've done it with multiple products now. We're going to continue to do that with these newer products and we're excited about it going forward. There you go. there you go Okay. okay That's good. that's good And then it got better over time and then you started landing with it. and then it got better over time and then you started landing with it We've done it with multiple products now. we've done it with multiple products now We're going to continue to do that with these newer products and we're excited about it going forward. we're going to continue to do that with these newer products and we're excited about it going forward

Speaker 11: Great. That makes sense. Thank you. Great. great That makes sense. that makes sense Thank you. thank you

Speaker 10: Yeah. Let's go to Junaid Sidhu at Truist. Yeah. yeah Let's go to Junaid Sidhu at Truist. let's go to junaid sidhu at truist

Speaker 24: Great. Thank you for taking my question. You mentioned the Governance solution representing around a third of the contract value when sold in a workforce deal. How should we think about pricing uplift with some of your newer solutions like Privileged Access and threat protection and others? Great. great Thank you for taking my question. thank you for taking my question You mentioned the Governance solution representing around a third of the contract value when sold in a workforce deal. you mentioned the governance solution representing around a third of the contract value when sold in a workforce deal How should we think about pricing uplift with some of your newer solutions like Privileged Access and threat protection and others? how should we think about pricing uplift with some of your newer solutions like privileged access and threat protection and others

Speaker 23: I think on Privileged Access, we're – it's earlier. We don't have as many customers. Governance has close to a thousand customers. So we have much more data on that. But Privileged Access looks like it's going to be in the same zone in terms of it could be a, you know, if there's no Governance or privilege in a deal and you add privilege, it could be a third of, you know, 30% of the value. And then Identity Threat Protection is probably the furthest along after that. And it's a similar type of uplift to Adaptive Multi-Factor Authentication. So it's a, you know, significant type uplift on the deal. I think on Privileged Access, we're – it's earlier. i think on privileged access we're – it's earlier We don't have as many customers. we don't have as many customers Governance has close to a thousand customers. governance has close to a thousand customers So we have much more data on that. so we have much more data on that But Privileged Access looks like it's going to be in the same zone in terms of it could be a, you know, if there's no Governance or privilege in a deal and you add privilege, it could be a third of, you know, 30% of the value. but privileged access looks like it's going to be in the same zone in terms of it could be a you know if there's no governance or privilege in a deal and you add privilege it could be a third of you know 30% of the value And then Identity Threat Protection is probably the furthest along after that. and then identity threat protection is probably the furthest along after that And it's a similar type of uplift to Adaptive Multi-Factor Authentication. and it's a similar type of uplift to adaptive multi-factor authentication So it's a, you know, significant type uplift on the deal. so it's a you know significant type uplift on the deal

Speaker 10: Great. Next we'll go to Adam Borg at Stifel. Great. great Next we'll go to Adam Borg at Stifel. next we'll go to adam borg at stifel

Speaker 2: Awesome. Thanks for fitting me in. Maybe for Todd, just on the emerging product front, you know, it's great to see the green shoots and the upcoming specialization that we talked about on the call. As we think about fiscal 2026, how do we think about the packaging and pricing side? Any changes there given these newer solutions to coincide with the new specializations that you're talking about? Thanks so much. Awesome. awesome Thanks for fitting me in. thanks for fitting me in Maybe for Todd, just on the emerging product front, you know, it's great to see the green shoots and the upcoming specialization that we talked about on the call. maybe for todd just on the emerging product front you know it's great to see the green shoots and the upcoming specialization that we talked about on the call As we think about fiscal 2026, how do we think about the packaging and pricing side? as we think about fiscal 2026 how do we think about the packaging and pricing side Any changes there given these newer solutions to coincide with the new specializations that you're talking about? any changes there given these newer solutions to coincide with the new specializations that you're talking about Thanks so much. thanks so much

Speaker 23: We have a bunch of things we're modeling out and experiments we're doing. I think the main idea is our pricing right now is pretty à la carte. And we're looking at more kind of additions or simplified pricing. We're seeing good patterns of how people buy, good, better, best. And we're looking at some ideas on how to make that easier for customers to consume, not so much pick every option and every specific product one by one. We have a bunch of things we're modeling out and experiments we're doing. we have a bunch of things we're modeling out and experiments we're doing I think the main idea is our pricing right now is pretty à la carte. i think the main idea is our pricing right now is pretty à la carte And we're looking at more kind of additions or simplified pricing. and we're looking at more kind of additions or simplified pricing We're seeing good patterns of how people buy, good, better, best. we're seeing good patterns of how people buy good better best And we're looking at some ideas on how to make that easier for customers to consume, not so much pick every option and every specific product one by one. and we're looking at some ideas on how to make that easier for customers to consume not so much pick every option and every specific product one by one

Speaker 2: Great. Thanks so much. Great. great Thanks so much. thanks so much

Speaker 10: Yeah. Yeah. yeah Okay. We'll go to Fatima Boolani at Citi. Okay. okay We'll go to Fatima Boolani at Citi. we'll go to fatima boolani at citi

Speaker 7: Oh, thank you so much for taking the questions. Todd, I wanted to ask you about the international business. Look, the North America business has gotten a lot of TLC with respect to some of the changes you've made from a go-to-market perspective, i.e. the hunter-farmer bifurcation that you talked about earlier in the year. But if you can kind of give us a sense and a juxtaposition of why the international business has slowed down. I think I have some ideas. But if you can sort of comment on what you're seeing in terms of business and demand dynamics. And then Brett, anything you can share on, you know, some of the metrics that we see across the business, are they better or worse from an operational perspective when just looking at the international lens? Thank you. Oh, thank you so much for taking the questions. oh thank you so much for taking the questions Todd, I wanted to ask you about the international business. todd i wanted to ask you about the international business Look, the North America business has gotten a lot of TLC with respect to some of the changes you've made from a go-to-market perspective, i.e. the hunter-farmer bifurcation that you talked about earlier in the year. look the north america business has gotten a lot of tlc with respect to some of the changes you've made from a go-to-market perspective i.e the hunter-farmer bifurcation that you talked about earlier in the year But if you can kind of give us a sense and a juxtaposition of why the international business has slowed down. but if you can kind of give us a sense and a juxtaposition of why the international business has slowed down I think I have some ideas. i think i have some ideas But if you can sort of comment on what you're seeing in terms of business and demand dynamics. but if you can sort of comment on what you're seeing in terms of business and demand dynamics And then Brett, anything you can share on, you know, some of the metrics that we see across the business, are they better or worse from an operational perspective when just looking at the international lens? and then brett anything you can share on you know some of the metrics that we see across the business are they better or worse from an operational perspective when just looking at the international lens Thank you. thank you

Speaker 23: It's an important part of our business that I'm spending personal time internationally. I mentioned I was in Australia and Asia just last week. I think I'm very happy with the teams there. We've had a new leader in Europe now for coming up on, this will be the third quarter, I believe, and Europe, I think, has a little bit of a tougher economic situation than North America. So some of that, you know, the macro is, as you mentioned before, the macro has been consistent, but I would say over the last three or four quarters, macro Europe has been consistently tougher than North America, and so, and then, but in terms of like the opportunity and the push for security and the way the solutions resonate, it's pretty universal. It's an important part of our business that I'm spending personal time internationally. it's an important part of our business that i'm spending personal time internationally I mentioned I was in Australia and Asia just last week. i mentioned i was in australia and asia just last week I think I'm very happy with the teams there. i think i'm very happy with the teams there We've had a new leader in Europe now for coming up on, this will be the third quarter, I believe, and Europe, I think, has a little bit of a tougher economic situation than North America. we've had a new leader in europe now for coming up on this will be the third quarter i believe and europe i think has a little bit of a tougher economic situation than north america So some of that, you know, the macro is, as you mentioned before, the macro has been consistent, but I would say over the last three or four quarters, macro Europe has been consistently tougher than North America, and so, and then, but in terms of like the opportunity and the push for security and the way the solutions resonate, it's pretty universal. so some of that you know the macro is as you mentioned before the macro has been consistent but i would say over the last three or four quarters macro europe has been consistently tougher than north america and so and then but in terms of like the opportunity and the push for security and the way the solutions resonate it's pretty universal So I think maybe in terms of like team performance and product portfolio and capabilities and focus, I think we have a significant growth opportunity international and we're set up to execute on it over the next few quarters. So I think maybe in terms of like team performance and product portfolio and capabilities and focus, I think we have a significant growth opportunity international and we're set up to execute on it over the next few quarters. so i think maybe in terms of like team performance and product portfolio and capabilities and focus i think we have a significant growth opportunity international and we're set up to execute on it over the next few quarters

Speaker 6: Yeah, I would just add that's an area that we're really also focused on from a partner perspective. Right? You've heard about the MSPs, we've heard about GSIs, all these different, and even the traditional VARs. I mean, there's a lot of opportunity in international that we need to tap into through those partnership channels. In terms of the metrics, if they look any different, they're not wildly different enough to talk about other than what Todd just said, which is from a macro perspective, it does seem to be a little bit more challenging. But that's as much as I've got. Yeah, I would just add that's an area that we're really also focused on from a partner perspective. yeah i would just add that's an area that we're really also focused on from a partner perspective Right? right You've heard about the MSPs, we've heard about GSIs, all these different, and even the traditional VARs. you've heard about the msps we've heard about gsis all these different and even the traditional vars I mean, there's a lot of opportunity in international that we need to tap into through those partnership channels. i mean there's a lot of opportunity in international that we need to tap into through those partnership channels In terms of the metrics, if they look any different, they're not wildly different enough to talk about other than what Todd just said, which is from a macro perspective, it does seem to be a little bit more challenging. in terms of the metrics if they look any different they're not wildly different enough to talk about other than what todd just said which is from a macro perspective it does seem to be a little bit more challenging But that's as much as I've got. but that's as much as i've got

Speaker 7: Thank you. Thank you. thank you

Speaker 10: Okay. We'll round this out with the last question from Peter Weed at Bernstein. Okay. okay We'll round this out with the last question from Peter Weed at Bernstein. we'll round this out with the last question from peter weed at bernstein

Speaker 21: Hey, thank you so much. I appreciate you going over time and actually all the questions you've taken. You know, I think one of the exciting things that you've highlighted is you kind of see the light at the end of the tunnel for kind of the peak of the, you know, the backlog and, you know, people downgrading and these types of things kind of in mid-year 2026. Obviously, that's not like a cliff where it like just like turns off all at once, but rather kind of will be a gradual thing over time. You know, as we're kind of thinking about our own models, I mean, is this something where we should think about that kind of occurs over 12 to 18 months where that kind of slowly degrades? Hey, thank you so much. hey thank you so much I appreciate you going over time and actually all the questions you've taken. i appreciate you going over time and actually all the questions you've taken You know, I think one of the exciting things that you've highlighted is you kind of see the light at the end of the tunnel for kind of the peak of the, you know, the backlog and, you know, people downgrading and these types of things kind of in mid-year 2026. you know i think one of the exciting things that you've highlighted is you kind of see the light at the end of the tunnel for kind of the peak of the you know the backlog and you know people downgrading and these types of things kind of in mid-year 2026 Obviously, that's not like a cliff where it like just like turns off all at once, but rather kind of will be a gradual thing over time. obviously that's not like a cliff where it like just like turns off all at once but rather kind of will be a gradual thing over time You know, as we're kind of thinking about our own models, I mean, is this something where we should think about that kind of occurs over 12 to 18 months where that kind of slowly degrades? you know as we're kind of thinking about our own models i mean is this something where we should think about that kind of occurs over 12 to 18 months where that kind of slowly degrades And, you know, obviously what we shouldn't be taking as the basis, you know, the greater than 120% NRR that was out there before is, you know, maybe where it could get back to. But, you know, is the degree of headwind that ends up going away, is that 300 bps to 500 bps of headwind over that kind of 12 to 18 months? Like, help us dimensionalize some of that so that we kind of think about the timing and where that should have impact. And, you know, obviously what we shouldn't be taking as the basis, you know, the greater than 120% NRR that was out there before is, you know, maybe where it could get back to. and you know obviously what we shouldn't be taking as the basis you know the greater than 120% nrr that was out there before is you know maybe where it could get back to But, you know, is the degree of headwind that ends up going away, is that 300 bps to 500 bp s of headwind over that kind of 12 to 18 months? but you know is the degree of headwind that ends up going away is that 300 bps to 500 bp s of headwind over that kind of 12 to 18 months Like, help us dimensionalize some of that so that we kind of think about the timing and where that should have impact. like help us dimensionalize some of that so that we kind of think about the timing and where that should have impact

Speaker 23: Yeah, I would say that's a good point about it's not a cliff. It just gets lessened, so thank you for saying that, Peter, so hopefully everybody heard that, but in terms of the NRR expectations throughout FY 2026, let us get through Q4, biggest quarter of the year for us, and then let us finish our financial plan, and then I'll be able to tell you more about NRR for FY 2026 because we'll just have a whole lot more information than we do right now. So. Yeah, I would say that's a good point about it's not a cliff. yeah i would say that's a good point about it's not a cliff It just gets lessened, so thank you for saying that, Peter, so hopefully everybody heard that, but in terms of the NRR expectations throughout FY 20 26, let us get through Q4, biggest quarter of the year for us, and then let us finish our financial plan, and then I'll be able to tell you more about NRR for FY 20 26 because we'll just have a whole lot more information than we do right now. it just gets lessened so thank you for saying that peter so hopefully everybody heard that but in terms of the nrr expectations throughout fy 20 26 let us get through q4 biggest quarter of the year for us and then let us finish our financial plan and then i'll be able to tell you more about nrr for fy 20 26 because we'll just have a whole lot more information than we do right now So. so

Speaker 21: We're excited for it. Thank you. We're excited for it. we're excited for it Thank you. thank you

Speaker 23: Thank you. Thank you. thank you

Speaker 10: Great. Well, thanks everybody for sticking with us for the call. Before you go, I just want to let you know that in addition to hosting several onsite and virtual bus tours through December and January, we'll be attending the Scotiabank Global Tech Conference in San Francisco on December 10th. So we hope to see you at one of those events. Thank you. Great. great Well, thanks everybody for sticking with us for the call. well thanks everybody for sticking with us for the call Before you go, I just want to let you know that in addition to hosting several onsite and virtual bus tours through December and January, we'll be attending the Scotiabank Global Tech Conference in San Francisco on December 10th. before you go i just want to let you know that in addition to hosting several onsite and virtual bus tours through december and january we'll be attending the scotiabank global tech conference in san francisco on december 10th So we hope to see you at one of those events. so we hope to see you at one of those events Thank you. thank you

Speaker 23: Bye everyone. Bye everyone. bye everyone

Speaker 6: Thanks everyone. Thanks everyone. thanks everyone