Okta, Inc. — Call Transcript 2025

Hi everyone, welcome to Okta's Second Quarter of Fiscal 2026 Earnings Webcast. I'm Dave Gennarelli, Senior Vice President of Investor Relations at Okta. Presenting in today's meeting will be Todd McKinnon, our Chief Executive Officer and Co-Founder, and Brett Tighe, our Chief Financial Officer. Eric Kelleher, our President and Chief Operating Officer, will join the Q&A portion of the meeting. At around the same time that the earnings press release hit the wire, we posted supplemental commentary to the IR website. Today's meeting will include forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our financial outlook and market positioning. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. 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 year-over-year comparison. I'd like to turn the meeting over to Todd McKinnon. Todd? Thanks, Dave, and thank you everyone for joining us this afternoon. We are pleased to report solid Q2 results with continued strength with large customers, Auth0, new products, the public sector, and cash flow. We are seeing encouraging signals from our newly specialized go-to-market teams, and we're excited to build on this progress as we enter the second half of the year. Brett will cover more of the Q2 financial highlights, and I'll cover product innovation, securing agentic AI, and preview some of the innovations we'll be highlighting at Okta next month. Now, let's get into our Q2 results. Consistent with the past four quarters, new products from Okta Identity Governance, Okta Privilege Access, and Okta Device Access to Identity Security Posture Management, Identity Threat Protection with Okta AI, and Fine Grain Authorization had another strong quarter of contribution. Okta's unified identity platform is delivering differentiated value to our customers. For example, a leading healthcare billing company chose Okta to rebuild and modernize its identity security practice from the ground up. They needed a single identity platform to unify workforce identity and scale with growth. Okta delivered OIG, OPA, ISPM, and ITP, supporting thousands of apps and integrations. By consolidating identity with Okta, this first-time buyer replaced a fragmented multi-vendor approach to implement a modern, scalable identity security practice in one decisive move. In a move that we believe will further accelerate Okta Privilege Access growth, I'm delighted to announce that we've signed a definitive agreement to acquire Axiom Security, a modern PAM vendor. The team at Axiom built complementary technology that helps organizations eliminate standing privileges and secure critical infrastructure, including key features for securing both human and non-human identities. Once we close the acquisition, which we anticipate will be later this quarter, we will support Axiom's customer base while we work to integrate their technology into Okta Privilege Access. Combined, we'll be able to deliver superior security and compliance outcomes like unified control and just-in-time access to a wider set of resources for our customers. Going forward, we believe every organization will need an identity security fabric, an architecture that enables them to fully secure every identity, including AI agents, every identity use case, and every resource across their business. The Okta platform helps organizations bring this identity security fabric to life. Take our approach to securing non-human identities, or NHIs. Okta's unified platform helps ensure they receive the same level of visibility, access control, governance, and remediation as human identities. This includes the ability to detect and discover NHIs wherever they exist, provision and register them properly, authorize and protect them with appropriate policies, and govern and monitor their behavior continuously. That's the power of an identity security fabric enabled with Okta's unparalleled breadth of modern identity security products. No other company can deliver that level of sophistication. With our Auth0 platform, we're enabling developers to build agents that are secure by design, an identity security fabric ready from day one. Auth0 for AI agents, formerly known as Auth for GenAI, delivers user authentication that works seamlessly with AI workflows, token vaults that securely manage credentials, async authorization that lets agents work autonomously while maintaining user control, and fine-grained authorization that permits AI agents to only access authorized data. We're in the middle of this exciting and rapidly changing environment, and with these two platforms, Okta is driving the industry to an architecture where identity is both more valuable and more secure. Securing AI is the next frontier, and our introduction of a new open standard called cross-app access is a key part of the solution. This is an important innovation that helps control what AI agents can access, allowing us to help make our customers and ISVs more secure and providing better end-user experience. In short, cross-app access allows for support of AI agents within the identity security fabric and the flexibility to safely connect to other technologies. Already, there is strong interest in cross-app access from partners and ISVs, including AWS, Boomi, Box, and Zoom. We had over 1,100 attendees at our identity summit on the topic earlier this month. At our Octane Conference next month, we will share how we are enabling every organization to build, deploy, and manage AI agents safely, securely, and at scale. In addition to the keynotes and product demos, we will be hosting a Q&A session for analysts and investors at the event, featuring myself, Brett, Eric Kelleher, our COO, and John Addison, our CRO. Come join us in Las Vegas or join us online for the AI Security Event of the Year. Finally, I know you're all interested in our views on the Palo Alto Networks CyberArk announcement. Okta has pioneered the modern identity market. As platform companies enter the market, it underscores two very important things: identity's central role in security and the importance of Okta's independence and neutrality. To this day, we remain the only modern, comprehensive, cloud-native solution built to secure every identity, from employees to customers to non-human machine identities to AI agents, without locking customers in. On the whole, we think the transaction further validates the importance of identity but won't meaningfully change the competitive landscape. That flexibility is why the world's largest organizations across the public and private sector trust Okta and why we're confident we're on the winning path. To wrap things up, we're pleased with our Q2 results, and we're excited about the future with our growing portfolio of modern identity solutions and how Okta secures AI. As more and more customers turn to an identity security fabric to simplify control and strengthen protection across their organizations, Okta is here to meet them with the most modern and comprehensive identity security platform in the market today. As always, I want to thank the entire Okta team for their tireless effort and also thank our loyal customers and partners who put their trust in us every day. I look forward to seeing all of you at Octane, and now here's Brett to cover the financial commentary and talk about how we're positioned for long-term profitable growth. Thanks, Todd, and thank you everyone for joining us today. My commentary will provide insights into our Q2 performance and then move into our outlook for Q3 and FY2026. Last quarter, we introduced some conservatism in our business outlook with regard to uncertainty in the macro and our federal vertical. I'm pleased to say that neither materialized, and we're removing them from our outlook for the remainder of the fiscal year. While we're only two quarters into our go-to-market realignment, we're encouraged by the signals we're seeing, including improved sales productivity and record pipeline generation. This success echoes the long-term performance of our already specialized teams in areas like the U.S. SMB market and public sector. The positive signals from Q2 give us great confidence that our increased specialization will drive long-term growth for both Okta and our customers. That's a nice segue into the strong Q2 performance we saw in our public sector business. While we did experience some contract restructuring with civilian agencies and delays in procurement processes, renewals across all of federal were strong, reflecting the mission-critical nature of our solutions. Okta continues to perform well with government organizations at all levels, highlighted this quarter by multiple new business and upsell deals with the U.S. Department of Defense and state agencies. Overall, five of our top 10 deals in Q2 were with the U.S. public sector, including our biggest deal of the quarter, which was secured with a U.S. Department of Defense agency. In that particular deal, the agency needed to replace its aging legacy logon system while ensuring compliance with federal mandates on cybersecurity and zero trust. Working closely with our partners, the agency will be modernizing with Okta Customer Identity as a central component of their new access system. It's worth noting that about a year ago, we made the strategic decision to reinvest in Okta Customer Identity, and those efforts have led to substantial growth in the product. In the first half of FY2026, OCI bookings have really accelerated and were a strong contributor to pipeline generation, driven by deals in both the public and private sectors. Turning to capital allocation, we ended the quarter with a strong balance sheet consisting of approximately $2.9 billion in cash, cash equivalents, and short-term investments. Next week, the 2025 convertible notes reach maturity, and we will settle the remaining principal amount of $510 million in cash. We regularly evaluate our capital structure and capital allocation priorities, which include investing in the business, tuck-in M&A, and opportunistic repurchasing of the 2026 notes, of which $350 million remains outstanding. Now, let's turn to our business outlook. For Q3 and FY2026, we continue to take a prudent approach to forward guidance that factors in our go-to-market specialization that was rolled out at the beginning of this fiscal year. For the third quarter of FY2026, we expect total revenue growth of 9%-10%, current RPO growth of 10%, non-GAAP operating margin of 22%, and free cash flow margin of approximately 21%. For the full year FY2026, we are raising our outlook and now expect total revenue growth of 10%-11%, non-GAAP operating margin of 25%-26%, and a free cash flow margin of approximately 28%. To wrap things up, we're pleased with the solid Q2 results. We've significantly increased our profitability and cash flow over the past couple of years and remain focused on accelerating growth. We're excited about the adoption of new products and the rapid pace of innovation, and we remain confident that Okta's independence and neutrality position us best to lead the identity industry. With that, I'll turn it back to Dave for Q&A. Dave? Thanks, Brett. I see that there's already quite a few hands raised, and I'll take them in order until the top of the hour. In the interest of time, please limit yourself to one question. With that, we'll get started with Brad Zelnick. Brad. Great, thank you so much. Video on. There we are. Congrats, guys, on a strong Q2. My question for you, Brett, great to see the NRR stabilize. I know in the past you talked about downsell pressures subsiding into the back half of this year, and I just wanted to understand what other indicators might you look at as inputs into your guidance and the macro caveat that you've now removed this quarter. Does that still hold that, as we proceed from here, we feel good that NRR should effectively have bottomed? Thank you. Hey, hey, Brad, before Brett jumps in, maybe I could just make a high-level comment. I think on the quarter, we're very pleased with the execution. I think it was solid execution. Looking forward, I think we're very excited about the strategy. Our strategy is to be the one-stop shop for identity. That's what customers want. They want fewer identity vendors. I work with one of the largest high-tech companies in the world, and they're replacing 50 identity vendors with Okta. Customers want to consolidate on a single identity partner, and they want to do it in a way that covers all of these different use cases. You'll hear different variants of this across the call. I think that's really what makes us so excited about the future and that our strategy is really working along with solid execution. Brad, you broke up for a second in the middle of your question. You were asking around NRR and how it's trending, but you also said something around macro. Can you just clarify what you're saying? I may be incorrectly, but I think of those concepts going hand in hand. In the past, you've talked about downsell pressure alleviating come the back half of this year. We now see NRR having stabilized. Wanted to appreciate what other inputs you look to when you remove the macro caveat in your guidance going forward, and if we can have confidence that, in fact, you know, 106% is a level from which we can now re-expand. Thank you. Absolutely. I've said for a couple of quarters now, actually a few quarters now, around the NRR effects of the macro being, you know, impacting that NRR. I'm saying the last few years, kind of the COVID cohorts, I would say not having as much of an effect after the first half of FY2026, and we still believe that to be the case. In terms of what we expect it to be for the balance of the fiscal year, we still think similar to what I said before, which was plus or minus a little bit from here, just depending on the mix of business, whether there's more new business or more upsell in the quarter. That's how we think about the NRR side. In terms of macro effect on the rest of the guidance in the earnings remarks today, we've removed that because we clearly didn't see anything that was that differentiating in Q2. It seemed a lot more of the same from what we've seen over the last several quarters, and that's what we think it's going to be for the balance of the fiscal year. Thanks for taking my question, and congrats again. No problem. Thanks, Brett. Next up is Matt Hedberg. Great, thanks for taking my question, guys. I'll offer my congrats as well. Really solid execution, including the new product success. It's great to see. Todd, I had a question for you. When we look at the AI native cohort, are there any interesting adoption trends that you're seeing there in terms of what products they're taking, how they're using the platform, any consolidation trends? Is there any thought of some of the early AI natives from a DIY perspective? Just sort of curious on how those folks are approaching your platform. It doesn't seem dramatically different than other cohorts in terms of adopting workforce solutions or Auth0. It looks pretty much the same, except they're growing very fast. I guess that's a difference, especially on the revenue metrics. It's growing very fast, and we think we're well positioned in that cohort. I think it's similar to every company. They're trying to figure out how they can be secure internally as they're growing very fast. I know from a workforce identity and identity security perspective for their internal operations, they're sitting on a lot of very valuable data, and definitely hackers want to attack them, like they want to attack every important company. They're really investing in identity security, and Okta helps them with that. In terms of building their products and how they're connecting with their customers, they want to obviously connect on the web and mobile channels, but also they want to, they're all building AI agents themselves. That's one of the customers, every enterprise is being really, they have to make these choices about how many AI agents they buy, who they buy them from, and all of these AI native companies are working hard to fill that void along with Salesforce and Workday and more of the established companies. What it means for customers that are on the enterprises that are trying to adopt these great new coding tools or these great new business automation processes or even the agent building platforms is they have to figure it all out in a way that has really high security implications. Everyone's heard this story of how big companies are doing simple AI chatbots, and then all of a sudden confidential information is leaked because the AI chatbot leaked the wrong thing. Big security implications, but at the same time they see big business value, and they're not really sure which platform to invest in. One of the things we're really focused on is trying to provide the right security for this agentic future, but also at the same time give them choice and flexibility as every new AI company is trying to give them an agent platform and a capability to build these things. As established vendors, it's pretty complex for these companies to figure out. We're trying to help them through it all, but it's an interesting time out there. I think it's a good time to be an identity company, and we're really excited about where this is all going. Great to hear. Thanks. Thanks. We'll go to Eric Kelleher. Thanks, Dave, and congrats, Todd and Brett. If I could ask one for Todd and one for Brett, I mean, Todd, you've always been very clear that identity should be its own independent standalone platform. Can you just elaborate a little bit more on the comments of why you think that's critical for identity to be independent? Brett, if I could just on a modeling question, great, very exciting deal with the U.S. Department of Defense, the expansion deal. How should we think about that as it relates to RPO and CRPO and think about it in the model going forward? Yeah, I think on the category of identity, back when, a long time ago when I started Okta, it was like, would it be important enough? You know, could you build a big company around identity? At the time it was like identity was a part of another platform and people didn't think it could be a big company. Over, you know, a decade and a half since, it's very clear it's super important now. Now this new question is like, should it be its own independent platform or should it be part of another platform? As you mentioned, we have a very strong worldview that it should be independent, neutral, and it's really two reasons. The first reason is that it's too fragmented and there's too many niche players and there's too many legacy platforms and it's too complicated for big companies. In that sense, it has to consolidate. It's too complicated. It's holding companies back. I mentioned this, one of the biggest technology companies in the world, we're helping upgrade all of their disparate identity platforms from SailPoint to CyberArk to HashiCorp to Ping to ForgeRock. They're consolidating them all in Okta. The reason they're doing this is because two reasons. It's cost. It's expensive and it's operationally challenging to keep all this stuff running. A lot of them are legacy platforms running in their own data centers or Amazon. The second reason is that it's preventing them from adopting the future. It's preventing them from rolling out more agentic workflows, et cetera. There's just the simple argument of cost and fragmentation. Now the second answer is like, which, and that could be true of any category. People want, in theory, fewer vendors and less operational cost for many categories: collaboration applications, security tools, etc. Why should your point of consolidation be identity? Our answer is simple. It's because you can, you know, like I mentioned before, you can save a lot of money, a lot of time, a lot of energy. Secondly, it's the one thing you can consolidate on and still preserve choice across everything else. If you are adopting Microsoft identity, you are making a decision that your first choice and your preferred vendor for everything else is going to be Microsoft, which could work for some companies, but it's not going to work for most companies, especially large companies. If you, that's the independence argument, and that's why we think when companies are, and you see in the results, right, as 13% CRPO growth and the success we're having across the board, what we're seeing is that customers are showing this preference too. They want to consolidate. They want to pick the right points of consolidation. In our case, we're having the most products, the most modern products, the breadth of capabilities, the reliability, the security, it's resonating with them. Eric, to answer your question, fairly simple, like many other public sector deals, the RPO value and the current RPO value are going to be the same because it's a one-year deal. That's just how it works with a lot of the public sector. Okay, next up, we're going to go to Brian Essex. Great, thanks. Did you say Eric Kelleher is on as well? Yes. Yeah. Yeah. All right, awesome. Maybe for. Hi, good to see you, Brian. Yeah, good to see you too. When we met intra-quarter, you gave us some great context of the evolution of the Salesforce, both a hundred farmer model and the decision to specialize. Could you maybe bring us up to date in terms of where that sales, where each of those kind of specializations or specialized sales forces have evolved to? How does that drive confidence and ability to execute through the remainder of the year, both from a productivity as well as plans for hiring going forward? Todd, great question. Thanks, Brian. We feel very confident in where we are today. We said last quarter when we got together that we were very much on track for the expected impact and productivity impact of all the changes we made to specialize on the Okta platform and the Auth0 platform. In Q2, our results were very strong as well. As you can see, it's a solid quarter, and they reflect increased productivity from a specialization standpoint. We remain optimistic and confident that this works. This isn't the first time we've specialized, and Brett talked about this in his opening comments. Our first real investment in specialization was for our public sector business, and you've heard us talk for many quarters now about strength in public sector and how that's been performing. Eighteen months ago, we implemented a 100 farmer specialization in the SMB space for North America, and we've seen that deliver. That group has had a very effective first half of this year. The change management and the change costs associated with that have really played out, and we're really pleased with the productivity for that group and the organization. Our specialization for platforms, now our third major wave of specialization, we feel good about as well. We saw productivity gains in Q2, which were in line with where we're hoping to get. One of the metrics in our commentary, we generated an all-time high for pipe in Q2. That's partly attributed to the fact that we now have people specializing in our buyers, in our buyer personas. We have people specializing in developer buyers and people specializing in IT and security buyers, and they're more effectively able to identify and qualify and prosecute leads and convert that into opportunity at the top of the funnel. We're very pleased with progress so far. All right, great Kelleher. Thank you so much. Hey, Brad, I would just add one thing to what Eric just said, which is around what he was saying around the pipeline by source. We saw a nice growth in the quarter for pipe being created by AEs themselves, right? That really is attributed to the fact, like what Eric was just saying, they know the products better. If you allow them to specialize, they're going to know it better, and you're going to see numbers like that. That's really a nice sign for us as an organization because it really, it's one of those positive feedback points that we feel like things are working and headed in the right direction. Right. You've been focused on channel productivity as well. Has that also improved sequentially? Are you getting kind of momentum there? Yes, absolutely. All 20 of the top 20 deals were touched by a partner. Also, from a pipe gen perspective, in terms of the source where it was coming from, the partners also had very nice growth in the quarter. You add all that up and you get record pipe gen and nice results like we just had. Good stuff. Congrats on the results. Thank you. Thanks, Brian. Next up is Josh Tilton. Thank you, guys. Since I have Todd, I'm going to try and ask a nerdy tech question, although I preface it with I'm not 100% sure I understand what I'm asking. I think investors are kind of trying to understand which piece of the identity puzzle is going to benefit the most from AI. It sounds like you're buying, you're making an acquisition because there's some PAM pieces that are going to help you secure AI. If you dig into cross-app access, it also looks like it's using tokens and protocols and stuff you use for SSO and MFA. What is your view of which piece of this puzzle is really best positioned to benefit from an AI future? More broadly, what is incremental to cross-app access that you're getting from this acquisition you just announced? Yeah, I imagine, Josh, imagine how confused the buyers are in the market, like when they're trying to buy all this stuff. That's why our, and it's true, right? They're all very excited about, as we all are, the technologists and business people and people that just observe the world of what it could be possible with AI. They're just inundated with this complexity of how you get the best products and what the right platform is, and should you use Microsoft or should you use Google and should you use OpenAI? Like, what's the right thing to build? What's the right thing to buy? Our perspective is quite simple. It's that you have many problems today in your enterprise that are clear and present, and you can get a lot of security benefit by addressing these problems. These are the problems that we talk about a lot. These are service accounts. These are machine identities. These are putting the right vaulting and governance workflows around all of these things. These are like the bread and butter of our identity platform across governance and privileged access and identity threat protection with Okta AI and the bread and butter of what we're talking about. These are clear and present things today. In addition to that, every company is going to make a huge investment in AI agents. What that's going to do first and foremost is it's going to make that problem I just described five times worse. Every agent wants to connect to 10 service accounts and is going to have its own tokens. We are in this environment where people are very receptive to what we're saying because it's fundamentally understood that this is a problem they have today, and it's getting worse. I've had the last week, I've had conversations with CIOs of massive companies that everyone's heard of that say, there's no way we're going to be able to do this AI stuff if we don't get our identity foundation in order. That's clear and present. Now, in addition to that, I think there are investments we are making and innovation we're building that is going to even take it a step further, which is actually modeling the identity of an agent and giving more power to the customer to manage and secure these things because it's a native thing inside of Okta, which is also very exciting. That's very early because the amount of companies that are actually playing with AI agents is 100%. The ones that are actually putting them in production at scale is very small. The timing is right here to solve this problem they all have today, the service accounts and token vaulting, et cetera, and then over time be the system of record for the AI agents themselves and give them choice and flexibility on if they want to use Salesforce or what they want to use Salesforce for, agents or ServiceNow agents or build their own agents and give them the fundamentals across all of that, which are security control and governance. Now, specific to your questions about Axiom, we're very excited about Axiom, but it's a little different. Axiom is, first of all, these folks on this team are super talented, and they are deep, deep privileged access management experts. One thing we're doing at Okta right now is we're on this mission to recruit across the entire company the best identity people in the world. Axiom falls in that bucket. We get some of the best PAM experts in the world to join our privileged access management team, which is great. They also have a technical capability around securing infrastructure connections to databases that is world-class and gives us an enhanced benefit there. Honestly, it's really about the team and having this great technology for sure, but it's these expert privileged access engineers and product people to join our PAM team, which is, you know, we're trying to build the world's best team across the board, and it's a great addition too. I know this is a long answer. I'll try to say one more thing. Cross-app access is an industry-wide effort. It's actually three years old. We've been working on this for three years, and it came out of Mike from Atlassian and Eric from Zoom and many other SaaS leaders wanted a way to standardize how, when they sold their products into companies, how those products were then hooked up to everything else in the company. Zoom wants to connect to your calendar, wants to connect to a note-taking. Atlassian wants to connect to all of your other software development tools. We invented this protocol and this concept and have published this open standard to solve a very important problem. How do you give your IT teams and your security teams visibility into all these application connections that happen between apps? That's a problem that's existed for a long time, and guess what's happening with AI? AI is supercharging this problem. Now, every agent, guess what it wants to do? It wants to connect to 15 applications, and guess what you need? You need an open protocol for all of those applications that are letting those agents connect, publish, and share that information with the security team, so they can have visibility and control and audit that. That is why cross-app access is so important. It lets the ecosystem form around this system of how agents can share their connection information in an open and transparent way. Actually, very helpful. I appreciate the long response. Thank you. Yeah, thanks. Thanks for the question, Josh. Hey, let's go to Greg Moskowitz. All right, terrific. Thank you, guys. Congratulations on a really good quarter. Brett, I'm wondering if there was any change in upsell or cross-sell rates among SMB customers or enterprise customers, and then realized that it's still early days, but what are you seeing so far regarding demand for your new suites? Thank you. Yeah, I'll let Eric talk about the suite side of the house, but from an overall upsell/cross-sell perspective, it was fairly similar to what we've seen in the last few quarters. You've heard us talk about for several quarters now the pipeline being more weighted toward upsell and cross-sell as opposed to new business. That continues to be the case. You see these bigger customers getting bigger as a result of that, right? That's why you see the greater than $100K having a nice add. You see the greater than $1 million, almost 500. We're at 495, up 15% year-over-year. That upsell/cross-sell continues to work, especially as you've heard Todd talk about, we keep adding all these new products into the mix, depending on which side of the business you're on, and ultimately helping us across the board there. Yeah, on the suites part of that question, and thanks, Greg, for the question. We're pleased with what we're seeing with suites. We introduced suites for the Okta platform a few months ago, and it was in response to demand from customers who have bought into Okta's vision of the secure identity fabric. These are companies that, as Todd mentioned earlier, are looking for an identity partner that they can work with to help them solve all of their identity use cases, whether that's threat protection or security posture management, access management, governance, privileged access. That is the secure identity fabric vision that Okta is bringing to customers. What we found is our customers want easier ways to engage with us to get the secure identity fabric for themselves. The suites are really designed to do that. They bundle pieces of the Okta portfolio to help customers address the use cases that are most compelling for them right now, but also give them room for where they're going to grow on their roadmap as they go forward. We're pleased with what we've seen. We're a few months in, so we're not breaking out numbers for suites for that packaging specifically, but we're seeing the impact we expected. I think it's a, I'll just add real quick, just to give the group some really detailed color about what's going on. We have a sales team now that's focused totally on selling the Okta products, and the opportunity there is big simply because we have to make sure the customer understands the breadth of what we have. It's much broader than it was just a couple of years ago. Just a couple of days ago, I was on a call with a big federal agency, and it's been a customer of Okta forever, but they really think of Okta as multi-factor authentication and just login. They had no idea we have a governance solution, we have identity threat protection, we have all these other products that can help them be secure across the board and consolidate vendors, etc. Their eyes just lit up, and the size of that deal potential just, you know, probably tripled or more. It's really about getting this message out there that this is possible. We have the best solution, the most comprehensive solution, the most modern solution. There is a better way, and that's why these things like suites or specialization dovetail right into that strategy that's working. It's also a tie back to the conversation we've been having for a few quarters now around specialization. One of the reasons specialization to us was the winning strategy is we've seen so much innovation on the product side of the business for both the Okta platform and the Auth0 platform. To Todd's point, our sales reps were having difficulty really articulating and evangelizing the full benefits of the entire portfolio, the entire secure identity fabric to our customers. Specializing gives them more opportunity to get deeper. Whether it's Identity Threat Protection with Okta AI or Identity Security Posture Management, Okta Identity Governance, Okta Privileged Access, fine-grained authorization, highly regulated identity, all the products that have been coming out for both of these platforms and now Auth0 for agentic AI. These are specialists that are better able to get into the specifics of these technologies for the specific use cases our customers are talking to us. That's bringing us help. The suites are helping with that from a design and purchase standpoint. Great. Thank you, guys. Next up, we have John DiFucci. Thanks, Dave, and thanks, everybody. There's a lot of good information coming out tonight, especially things like cross-app access, and it just demonstrates your leadership position in the whole identity space, especially when you're able to contribute that to the whole ecosystem. My question is for Brett, and it's a little more tactical, I think, because otherwise I know I'm going to get, we're all going to get this question all day tomorrow. Brett, you said that the sort of, I forget your exact words, but excess conservatism around the U.S. Fed, which was strong, and macro were no longer implied in your guide. I just want to make sure I understand what that means. Does it mean that we potentially won't see the same amount of beats going forward? You sort of alluded to that in the past. Along the same lines, how long do you think the go-to-market changes that happened in fiscal 1Q will present a potential headwind to your business momentum? That's still in the guide, right? Absolutely. Yes, we did remove that layer of prudence for macro going forward. The primary reason is it didn't come to fruition like we thought it was going to the last time we spoke, probably about 90 days ago, John. To answer your second part of your question, yes, the go-to-market specialization is still baked in there. Although we're seeing positive signs and positive feedback from the field, we're still a couple of quarters in. As you remember, when we first started talking to all of you about this, it takes time for these things to come to fruition and really hit their full stride. We talked about U.S. public sector. We've talked about U.S. SMB. It's taken a little, it takes some time. You have to be methodical in your approach. Yes, to your point, John, we are trying to shoot for closer to the pin than we have historically. We started trying to do that about three, four quarters ago. I will admit that I was probably a bit a little wrong on the macro side, and we delivered a really nice beat this quarter. If you look 90 days ago, the world was a little different. I will take that charge. Ultimately, we are trying to get a little closer to the pin than we have historically. That's really helpful. Thank you, Brett. Next up, we have Shreenath Atkari. Great, thanks for taking my question. Congrats on the great quarter. Just on the cross-app access securing AI agent workflows, I know it's still early days to settle on any kind of pricing or monetization model to capitalize on this opportunity. If you can help expand on how you are viewing the monetization path for this, is it going to be embedded in the existing tiers? You highlighted the initial traction from your good, better, best suite or something you see evolving to standalone. Just curious, what are the earlier signs or feedback from like Zoom or AWS or all these customers trying to standard out in terms of downstream enterprise security spending and plans on this one? Thanks. Yeah, I would think of it this way. It's a really good question. This is how I, when we've talked about it and modeled it out, this is how we think about it. First of all, the cross-app access is an open industry standard. If we were able to talk last year around Octane, we talked about this, another new standard we've put out there and are working with all the identity companies on and a bunch of technology companies, it's called IPSI. These are two open standards we're pushing out there with the ecosystem. The effect of both of these things for Okta is going to be basically identity providers are going to be more valuable tools to their customers. They're going to have better control, better fine-grained control into resources, better policies, more value. The whole identity market gets more valuable and bigger. That's the way to think about these open standards. Now specifically on how Okta is going to monetize these two layers I've talked about. I talked about the clear and present issue today, which is service accounts, non-human identities. We monetize that through Okta Privilege Access and Identity Security Posture Management. Identity Security Posture Management detects the non-human identities and the risks in a proactive way that's comprehensive across all platforms. Okta Privilege Access and Okta Identity Governance can vault the credentials and rotate the credentials and have the right governance workflows. Axiom, of course, is going to add capability to Okta Privilege Access to have better support and more extensive support for database connections. That's the monetization of the clear and present thing today. That's affecting the results today. We talked about new products contribute healthily to the bookings, and that's true today. Now, on top of that, in a world of AI agents, our belief is strong that you are going to manage AI agents with your identity system. That's how we're going to monetize that. When you put a bunch of AI agents inside Okta, that's going to be more valuable from an identity security perspective, and we're going to be able to have, we're going to be able to charge for that with our customers. They're kind of separate things in two layers, but that's how we see the world unfolding. It all is kind of predicated on a vibrant, healthy, growing AI agent ecosystem, which I think is, there's a lot of different thoughts on how that exactly plays out, but who's the vendor going to be? Who's the platform? SaaS vendors versus, you know, custom development, whatever. I think whatever happens, you're going to need to manage this stuff. That's why we're inserting ourselves on that dimension, and that's why we're very excited about where this is all going. Super helpful, Todd. Thanks a lot. Next, let's go to Adam Borg. Awesome. Thanks for taking the question. Maybe for Eric on the go-to-market changes, you did talk about this a few minutes ago in your answer to Brian, but where are we today with sales productivity relative to historical levels? What do you guys need to see in order to put more gas in the sales new hiring process, either in the back half of the year or ultimately as we head into fiscal 2027? Thanks. Yeah, you bet. We talked about at the end of last year, based upon our first two rounds of specialization in public sector and Hunter Farmer, I think it was in our Q4 results, we talked about how we would hit a multi-year high for sales productivity. We were leaning into the specialization work and reorienting our sales capacity and our supporting teams in pre-sales and post-sales and also our marketing generation teams. As I mentioned earlier, we generated a record amount of pipeline for us in Q2. Specialization is definitely helping at the top of the funnel. We're pleased with that. I think from a sales productivity standpoint, we saw gains in Q2 as well. We are very much on track with what we expected out of this model. Our guidance for the second half reflects that as well. We're confident in the strategy of specializing on our buyers and our platforms. Awesome. Thanks again. One thing I'll add there is that our year is, like a lot of enterprise companies, back-end loaded. In terms of that confidence and putting the investment level, cranking the investment in terms of go-to-market and growth acceleration, et cetera, et cetera, a strong Q3, a strong Q4 is worth more than a strong Q1 and a strong Q2. That's just the nature of the numbers and how they play out. As we go through the rest of the year, we're looking to build on this strength and get super confident exiting this year and going into next year. Thanks again. Here's the question, Adam. Sorry, next up. Thanks, Dave. Thanks everyone for the time here. I just wanted to cycle back on some of the different dimensions here for public sector. I know that you guys spoke about, hey, there was some restructuring standpoint for some of these civilian contracts. First, is it fair to assume then the Q2 played out better than what you initially anticipated? Secondly, with the removal of some of that conservatism we had previously introduced to the guide, are we now just operating in a more normalized buying environment, or are you guys just executing better than planned? Any detail on the public sector front from that standpoint would be beneficial. Thank you. I was just going to say like three months ago, there was a lot of uncertainty in the public sector. You had massive government layoffs, and you had a lot of people talking about a lot of dramatic changes. I think in the quarter, what we saw is that there were some contracts that were paused or restructured, but what we also saw is that the overwhelming balance of the business was super positive. The impact on some of those government spending efforts, you know, did not materialize in a negative way. I think that is just a different, we have gotten through some of that uncertainty, and it has settled down a little bit. What we are seeing is that the technology we provide is pretty critical and pretty strategic. By the way, the government, particularly the federal government, has a huge need for it. They have legacy systems. Identity in the federal government often means some massive outsourced operation run by a big contractor. This concept of a modern purpose-built identity security platform is just amazing for them. I think the fundamentals are winning out there in terms of, in some of the short-term uncertainty, I think was a little, we, you know, we overestimated that. Yeah. You see that in some of the structures of the deal, Mike. I talked earlier about, and Todd just said, some of the contract restructuring. What that would look like is, in some cases, oh, we do not have as many users as we used to, because I think we all know that there have been a few layoffs in the government. At the same time, there is an upsell that goes along with it for new products that they are not previously using. We end up in a good place. It just, maybe we do not get as much of an upsell because ultimately there are less users on the other side because there are less employees in the federal government now. That is what we mean by contract restructuring. It is actually not a bad thing. It is actually them being more ingrained with Okta. We look at that as a positive, as usually more products are on, the higher the renewal rates and the higher upsell rates we get over time. Thank you, guys. Hey, let's go to Andy Nowinski. Okay, great. Thank you so much for taking the question and a nice quarter as well. You know, Todd, I know Auth0 has been doing exceptionally well, and you have a great pipeline on Auth0 given all the new AI products coming out. I wanted to ask a question maybe about your workforce ACV. We continue to hear how customers want to consolidate identity vendors and how they want workforce products like IGA and PAM and SSO all on a single platform, which you guys have. My question is, why hasn't that sort of thirst for a complete platform had more of a positive impact on your workforce ACV growth, which has been decelerating over the last 12 months? Just wondering how you're thinking about sort of your bread and butter workforce ACV going forward. I think we're going to do better there. I think the market is big. I think the opportunity is substantial, and I think we're doing a better job of explaining to customers what we have and getting the message out and getting real proof points with customers live at scale. By the way, that's one of the real strengths of our product suite, particularly in the identity governance space. Our average customer is live with multiple resources in 30 days. That's unheard of for a SailPoint implementation. It's legacy software. It's pretty heavyweight to deploy. It's hard to get successful with. As those stories get out there of proof points of customers getting live with multiple applications and bringing stuff into the management, bringing resources into the management framework, it starts to resonate. I think that's one of the reasons why we specialize in Salesforce to be more effective there. It's one of the reasons why we're investing heavily in the R&D for these new products to make sure they're fully featured, particularly up market. That's why we're excited about the Axiom Security acquisition and many other efforts. Like I said before, we're building the best team in identity. If anyone is world-class and wants to work on identity, they should come work for us. Another. Go ahead, Eric. Another thing I would add to that is coming back to the overall vision of the secure identity fabric we've talked about and how to consolidate use cases on a platform. Todd talked about one account he's working with, one of the world's largest technology companies, and consolidating 50 different identity systems onto Okta. From the CIOs and CISOs that I'm talking to at the accounts that I work with, what I'm really hearing is that having such a disparate framework isn't just expensive. It also adds complexity, which adds fragility, which creates security holes. Part of the value in our customer's mind of consolidating use cases with the trusted identity provider is they can have confidence in how they administer the product, how they administer the platform, and knowing that they can have secure identity across all of these use cases. That's an added value and something that we've seen more and more from our customers as we've seen the wave in industry ride from cloud enablement and how identity is necessary to help people move to the cloud into this phase of security and how we help companies secure identity. Now as we look forward to agentic AI, again, it's going to be even more important for our customers to make sure that they've got a partner that they can work with. Thank you. Okay, next up, we'll go to Jonathan Rookaver. Yeah, thanks, David. I think, Todd, this is probably for you. I'm curious if you would agree with the view that has been articulated by other industry participants that PAM capabilities can be delivered to all employees at a cost comparable to IAM. I think when you look at the growing need for cloud-native just-in-time ephemeral credentials to support agentic and machine identities, maybe help us understand, does Axiom potentially fit into that thesis that yes, PAM can be deployed more broadly and cost-effectively both across human and non-human identities? What's your strategy along those lines? Yeah, every identity type, employees, partners, customers, every resource, so database, cloud infrastructure, servers, Kubernetes containers, every resource in machines in the environment, and then every use case. Privileged access workflows, identity governance, attestation reporting, like the core access management workflows around creating accounts and removing accounts. That's what we're building. It's comprehensive, it's complete. I do agree. I do think that you want every employee to have a really locked-down secure identity experience. That's why we have the world's leading authenticator, phishing-resistant authenticator called FastPass, which is employed by, you know, quite a significant number of our customers and has been over the last five years. It's why it's so important to have these different pieces together. I think that's very important. One of the things that's also very important is I talk to customers. I was talking with a Chief Security Officer of a big beverage company just two weeks ago, and their whole thing was, you know, they want to make sure that their identity provider works with all of their security tools. It's in divisions and companies they bought. They have SentinelOne, they have CrowdStrike, they have legacy technology for endpoint, they have Wiz, they have Zscaler, they have Palo Alto Networks. His plea to me was, he said, "Todd, I need to consolidate something. I can't consolidate all my security stuff. It's too disparate. I can consolidate identity, but you have to make sure it connects to all this stuff. Make sure it connects to Zscaler, make sure it connects to Palo Alto Networks, make sure it connects to Microsoft's network security." I said, "That's what we do. We connect you to everything." I think that's the winning formula. Helpful. Thank you. Next up is Rob Owens. Rob. Thanks, Dave, and good afternoon, everybody. Actually, it was exactly what I was going to ask. I'll shift to a more Brett-focused RPO, CRPO question, I guess. Brett, if I look at the last couple of years, just in the RPO acceleration that you guys have seen, number one. Number two, you've talked about constant duration as well. Over that same time, you know, CRPO has been trending down. It's finding a bottom here. At what point do we see a better marriage, I guess, between prior RPO growth and forward CRPO growth? Maybe you can weave into that just what you're seeing from a retention rate perspective in terms of GRR. Thanks. You're talking about last year we saw RPO outpace CRPO, right? Is that what you're talking about? Yeah, it's been for a couple of years. You've seen that acceleration in RPO, and if it's constant duration, it feels like that should come through on the CRPO. You know, that's not in your guide. I think a lot of us had looked for maybe some of those headwinds to abate here in the second half that have been holding down NRR, potentially providing a lift to CRPO, especially as you're talking about your success with cross-selling and upselling. Yeah, absolutely. When I've said the constant duration, I meant the duration of the amount to incur in RPO, you know, because you don't have a 12-month value incur in RPO at all times. That's just how it works. In terms of duration of contracts that we're signing, if you remember in FY2025, we went back to incenting the field on contract duration as part of their compensation plan. The prior couple of years, we hadn't done that. You saw RPO go up in a big way because contract duration went up in a big way, right? If you look at this year, contract duration is still in their comp plan, right? It's still a component that we pay them on, and you're seeing more of a normalization. We see contract duration actually in the first half slightly ticking up, but it's not going to have the effect like it did last year because it's coming off of a different base, if you will, Rob. Hopefully that answers your question around current RPO and total RPO and the dynamics in between those. It's a simple sales comp model. That's all it really is. Any broader comments on GRR? Yeah, we tend to continue to have that be a strong number for us. It's always been, it's been healthy. It's been one of those things, it's a hallmark of this company that for years it's been, it's been healthy and it continues to be so, at least through the first half of FY2026. We're looking forward to some solid results as we finish out the fiscal year. All right, thank you. No problem. Thanks, Rob. We're coming up on the hour, but let's try to get questions in from Anik and Gabriella. Anik Bauman, go ahead. Hey guys, I'm on for Joe Gallo here. Brett, any verticals beyond federal, because we've talked about that a lot, or geos of strength or weakness to call out in 2Q? Todd, can you just talk us through the key to unlocking the international market? Seems like an incredible opportunity relative to what you've built in the U.S. today. Yeah, I would say larger customers. Enterprise in general had a really nice quarter. We're feeling solid about that. That's been actually pretty consistent for a while now. We've talked about bigger customers getting bigger, and that's why we see enterprise doing well. I'll let Eric comment a little bit on that because I know it's near and dear to his heart on that topic. Yeah, we continue to see strength in upmarket in large customers. I would agree with that focus. We talked about updated stats on our customers above $100,000 and customers above $1 million in ACV spend continue to be growing at high rates. That reflects what we see as the industry trend of the importance of people investing in security. We look now at cyber events worldwide, and over 80% of them start with some form of compromised identity. Our customers, CIOs and CISOs, are coming to us to help them build the partnership they need across our expanded product portfolio. We continue to see great success there. On the international question, we have a big opportunity in international. Our strategy there is really to invest in our top 10 countries and make sure we fully do everything we need to make those successful and get those to grow to their potential versus spreading ourselves too thinly. We are going to continue to really prioritize our top 10 countries ruthlessly and invest to make those successful because we do think the opportunity is quite substantial. Makes sense. Thanks, guys. Okay, last question from Gabriella Borges. Hey, thank you for Todd and for Eric. I want to explore this idea of security and identity in the convergence effort. Give us a little bit of an update on where you're seeing progress with the go-to-market, specifically with security bias in the enterprise. The reason I'm asking now is, Todd, you mentioned not expecting to see a change in the competitive landscape because of Palo Alto. Palo Alto is really good at driving some of these strategic conversations at the top of the house with CISOs. Maybe just an update on how you're progressing. Please push back against that. I think it's a question of the capabilities of the products you're offering. I think where a security vendor is going to struggle is the breadth of identity types, first of all, and the breadth of use cases they can support across those identity types. What we still see, it's very influenced by security, but it's still more than a security conversation. A lot of the identity management products, particularly governance, operationally help the companies in terms of being more efficient and passing compliance audits, etc. I was talking to the Chief Information Officer of a global auto company just a couple of days ago, and she was talking about, I was talking to her about cyber, and she goes, yeah, of course, identity is a cyber thing, but it's really about, we want visibility into what people are using so we know how much we spend on all these things. We want to make sure we automate these workflows that are slowing people down. Although the security voice is very important, I think it's still not purely a security sell, which I think is a little bit different for some of these security companies. I think ultimately, Gabriella, it kind of comes down to having the products, and you have to have a broad range of identity types and use cases and resources to really serve this concept that these customers want. Thank you for the thought. Okay, apologies for not getting to all the questions today. It is the top of the hour, but before you go, I just want to let you know that in addition to hosting onsite and virtual bus tours this quarter, we'll be attending the City TMT Conference on September 3 in New York, the Goldman Sachs Conference on September 9 in San Francisco, the Piper Conference in Nashville on September 10, and the JPMorgan Software Conference on October 8 in Napa. We hope to see you at one of those events. Thank you. Thanks, everyone. Bye, everyone.

Speaker 3: Hi everyone, welcome to Okta's Second Quarter of Fiscal 2026 Earnings Webcast. I'm Dave Gennarelli, Senior Vice President of Investor Relations at Okta. Presenting in today's meeting will be Todd McKinnon, our Chief Executive Officer and Co-Founder, and Brett Tighe, our Chief Financial Officer. Eric Kelleher, our President and Chief Operating Officer, will join the Q&A portion of the meeting. At around the same time that the earnings press release hit the wire, we posted supplemental commentary to the IR website. Today's meeting will include forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our financial outlook and market positioning. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. Hi everyone, welcome to Okta's Second Quarter of Fiscal 2026 Earnings Webcast. hi everyone welcome to okta's second quarter of fiscal 2026 earnings webcast I'm Dave Gennarelli, Senior Vice President of Investor Relations at Okta. i'm dave gennarelli senior vice president of investor relations at okta Presenting in today's meeting will be Todd McKinnon, our Chief Executive Officer and Co-Founder, and Brett Tighe, our Chief Financial Officer. presenting in today's meeting will be todd mckinnon our chief executive officer and co-founder and brett tighe our chief financial officer Eric Kelleher, our President and Chief Operating Officer, will join the Q&A portion of the meeting. eric kelleher our president and chief operating officer will join the q&a portion of the meeting At around the same time that the earnings press release hit the wire, we posted supplemental commentary to the IR website. at around the same time that the earnings press release hit the wire we posted supplemental commentary to the ir website Today's meeting will include forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our financial outlook and market positioning. 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 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. 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. 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 year-over-year comparison. I'd like to turn the meeting over to Todd McKinnon. Todd? 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 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 year-over-year comparison I'd like to turn the meeting over to Todd McKinnon. i'd like to turn the meeting over to todd mckinnon Todd? todd

Speaker 13: Thanks, Dave, and thank you everyone for joining us this afternoon. We are pleased to report solid Q2 results with continued strength with large customers, Auth0, new products, the public sector, and cash flow. We are seeing encouraging signals from our newly specialized go-to-market teams, and we're excited to build on this progress as we enter the second half of the year. Brett will cover more of the Q2 financial highlights, and I'll cover product innovation, securing agentic AI, and preview some of the innovations we'll be highlighting at Okta next month. Now, let's get into our Q2 results. Consistent with the past four quarters, new products from Okta Identity Governance, Okta Privilege Access, and Okta Device Access to Identity Security Posture Management, Identity Threat Protection with Okta AI, and Fine Grain Authorization had another strong quarter of contribution. Okta's unified identity platform is delivering differentiated value to our customers. Thanks, Dave, and thank you everyone for joining us this afternoon. thanks dave and thank you everyone for joining us this afternoon We are pleased to report solid Q2 results with continued strength with large customers, Auth0, new products, the public sector, and cash flow. we are pleased to report solid q2 results with continued strength with large customers auth0 new products the public sector and cash flow We are seeing encouraging signals from our newly specialized go-to-market teams, and we're excited to build on this progress as we enter the second half of the year. we are seeing encouraging signals from our newly specialized go-to-market teams and we're excited to build on this progress as we enter the second half of the year Brett will cover more of the Q2 financial highlights, and I'll cover product innovation, securing agentic AI, and preview some of the innovations we'll be highlighting at Okta next month. brett will cover more of the q2 financial highlights and i'll cover product innovation securing agentic ai and preview some of the innovations we'll be highlighting at okta next month Now, let's get into our Q2 results. now let's get into our q2 results Consistent with the past four quarters, new products from Okta Identity Governance, Okta Privilege Access, and Okta Device Access to Identity Security Posture Management, Identity Threat Protection with Okta AI, and Fine Grain Authorization had another strong quarter of contribution. consistent with the past four quarters new products from okta identity governance okta privilege access and okta device access to identity security posture management identity threat protection with okta ai and fine grain authorization had another strong quarter of contribution Okta's unified identity platform is delivering differentiated value to our customers. okta's unified identity platform is delivering differentiated value to our customers For example, a leading healthcare billing company chose Okta to rebuild and modernize its identity security practice from the ground up. They needed a single identity platform to unify workforce identity and scale with growth. Okta delivered OIG, OPA, ISPM, and ITP, supporting thousands of apps and integrations. By consolidating identity with Okta, this first-time buyer replaced a fragmented multi-vendor approach to implement a modern, scalable identity security practice in one decisive move. In a move that we believe will further accelerate Okta Privilege Access growth, I'm delighted to announce that we've signed a definitive agreement to acquire Axiom Security, a modern PAM vendor. The team at Axiom built complementary technology that helps organizations eliminate standing privileges and secure critical infrastructure, including key features for securing both human and non-human identities. For example, a leading healthcare billing company chose Okta to rebuild and modernize its identity security practice from the ground up. for example a leading healthcare billing company chose okta to rebuild and modernize its identity security practice from the ground up They needed a single identity platform to unify workforce identity and scale with growth. they needed a single identity platform to unify workforce identity and scale with growth Okta delivered OIG, OPA, ISPM, and ITP, supporting thousands of apps and integrations. okta delivered oig opa ispm and itp supporting thousands of apps and integrations By consolidating identity with Okta, this first-time buyer replaced a fragmented multi-vendor approach to implement a modern, scalable identity security practice in one decisive move. by consolidating identity with okta this first-time buyer replaced a fragmented multi-vendor approach to implement a modern scalable identity security practice in one decisive move In a move that we believe will further accelerate Okta Privilege Access growth, I'm delighted to announce that we've signed a definitive agreement to acquire Axiom Security, a modern PAM vendor. in a move that we believe will further accelerate okta privilege access growth i'm delighted to announce that we've signed a definitive agreement to acquire axiom security a modern pam vendor The team at Axiom built complementary technology that helps organizations eliminate standing privileges and secure critical infrastructure, including key features for securing both human and non-human identities. the team at axiom built complementary technology that helps organizations eliminate standing privileges and secure critical infrastructure including key features for securing both human and non-human identities Once we close the acquisition, which we anticipate will be later this quarter, we will support Axiom's customer base while we work to integrate their technology into Okta Privilege Access. Combined, we'll be able to deliver superior security and compliance outcomes like unified control and just-in-time access to a wider set of resources for our customers. Going forward, we believe every organization will need an identity security fabric, an architecture that enables them to fully secure every identity, including AI agents, every identity use case, and every resource across their business. The Okta platform helps organizations bring this identity security fabric to life. Take our approach to securing non-human identities, or NHIs. Okta's unified platform helps ensure they receive the same level of visibility, access control, governance, and remediation as human identities. Once we close the acquisition, which we anticipate will be later this quarter, we will support Axiom's customer base while we work to integrate their technology into Okta Privilege Access. once we close the acquisition which we anticipate will be later this quarter we will support axiom's customer base while we work to integrate their technology into okta privilege access Combined, we'll be able to deliver superior security and compliance outcomes like unified control and just-in-time access to a wider set of resources for our customers. combined we'll be able to deliver superior security and compliance outcomes like unified control and just-in-time access to a wider set of resources for our customers Going forward, we believe every organization will need an identity security fabric, an architecture that enables them to fully secure every identity, including AI agents, every identity use case, and every resource across their business. going forward we believe every organization will need an identity security fabric an architecture that enables them to fully secure every identity including ai agents every identity use case and every resource across their business The Okta platform helps organizations bring this identity security fabric to life. the okta platform helps organizations bring this identity security fabric to life Take our approach to securing non-human identities, or NHIs. take our approach to securing non-human identities or nhis Okta's unified platform helps ensure they receive the same level of visibility, access control, governance, and remediation as human identities. okta's unified platform helps ensure they receive the same level of visibility access control governance and remediation as human identities This includes the ability to detect and discover NHIs wherever they exist, provision and register them properly, authorize and protect them with appropriate policies, and govern and monitor their behavior continuously. That's the power of an identity security fabric enabled with Okta's unparalleled breadth of modern identity security products. No other company can deliver that level of sophistication. With our Auth0 platform, we're enabling developers to build agents that are secure by design, an identity security fabric ready from day one. Auth0 for AI agents, formerly known as Auth for GenAI, delivers user authentication that works seamlessly with AI workflows, token vaults that securely manage credentials, async authorization that lets agents work autonomously while maintaining user control, and fine-grained authorization that permits AI agents to only access authorized data. This includes the ability to detect and discover NHIs wherever they exist, provision and register them properly, authorize and protect them with appropriate policies, and govern and monitor their behavior continuously. this includes the ability to detect and discover nhis wherever they exist provision and register them properly authorize and protect them with appropriate policies and govern and monitor their behavior continuously That's the power of an identity security fabric enabled with Okta's unparalleled breadth of modern identity security products. that's the power of an identity security fabric enabled with okta's unparalleled breadth of modern identity security products No other company can deliver that level of sophistication. no other company can deliver that level of sophistication With our Auth0 platform, we're enabling developers to build agents that are secure by design, an identity security fabric ready from day one. with our auth0 platform we're enabling developers to build agents that are secure by design an identity security fabric ready from day one Auth0 for AI agents, formerly known as Auth for GenAI, delivers user authentication that works seamlessly with AI workflows, token vaults that securely manage credentials, async authorization that lets agents work autonomously while maintaining user control, and fine-grained authorization that permits AI agents to only access authorized data. auth0 for ai agents formerly known as auth for genai delivers user authentication that works seamlessly with ai workflows token vaults that securely manage credentials async authorization that lets agents work autonomously while maintaining user control and fine-grained authorization that permits ai agents to only access authorized data We're in the middle of this exciting and rapidly changing environment, and with these two platforms, Okta is driving the industry to an architecture where identity is both more valuable and more secure. Securing AI is the next frontier, and our introduction of a new open standard called cross-app access is a key part of the solution. This is an important innovation that helps control what AI agents can access, allowing us to help make our customers and ISVs more secure and providing better end-user experience. In short, cross-app access allows for support of AI agents within the identity security fabric and the flexibility to safely connect to other technologies. Already, there is strong interest in cross-app access from partners and ISVs, including AWS, Boomi, Box, and Zoom. We had over 1,100 attendees at our identity summit on the topic earlier this month. We're in the middle of this exciting and rapidly changing environment, and with these two platforms, Okta is driving the industry to an architecture where identity is both more valuable and more secure. we're in the middle of this exciting and rapidly changing environment and with these two platforms okta is driving the industry to an architecture where identity is both more valuable and more secure Securing AI is the next frontier, and our introduction of a new open standard called cross-app access is a key part of the solution. securing ai is the next frontier and our introduction of a new open standard called cross-app access is a key part of the solution This is an important innovation that helps control what AI agents can access, allowing us to help make our customers and ISVs more secure and providing better end-user experience. this is an important innovation that helps control what ai agents can access allowing us to help make our customers and isvs more secure and providing better end-user experience In short, cross-app access allows for support of AI agents within the identity security fabric and the flexibility to safely connect to other technologies. in short cross-app access allows for support of ai agents within the identity security fabric and the flexibility to safely connect to other technologies Already, there is strong interest in cross-app access from partners and ISVs, including AWS, Boomi, Box, and Zoom. already there is strong interest in cross-app access from partners and isvs including aws boomi box and zoom We had over 1,100 attendees at our identity summit on the topic earlier this month. we had over 1,100 attendees at our identity summit on the topic earlier this month At our Octane Conference next month, we will share how we are enabling every organization to build, deploy, and manage AI agents safely, securely, and at scale. In addition to the keynotes and product demos, we will be hosting a Q&A session for analysts and investors at the event, featuring myself, Brett, Eric Kelleher, our COO, and John Addison, our CRO. Come join us in Las Vegas or join us online for the AI Security Event of the Year. Finally, I know you're all interested in our views on the Palo Alto Networks CyberArk announcement. Okta has pioneered the modern identity market. As platform companies enter the market, it underscores two very important things: identity's central role in security and the importance of Okta's independence and neutrality. At our Octane Conference next month, we will share how we are enabling every organization to build, deploy, and manage AI agents safely, securely, and at scale. at our octane conference next month we will share how we are enabling every organization to build deploy and manage ai agents safely securely and at scale In addition to the keynotes and product demos, we will be hosting a Q&A session for analysts and investors at the event, featuring myself, Brett, Eric Kelleher, our COO, and John Addison, our CRO. in addition to the keynotes and product demos we will be hosting a q&a session for analysts and investors at the event featuring myself brett eric kelleher our coo and john addison our cro Come join us in Las Vegas or join us online for the AI Security Event of the Year. come join us in las vegas or join us online for the ai security event of the year Finally, I know you're all interested in our views on the Palo Alto Networks CyberArk announcement. finally i know you're all interested in our views on the palo alto networks cyberark announcement Okta has pioneered the modern identity market. okta has pioneered the modern identity market As platform companies enter the market, it underscores two very important things: identity's central role in security and the importance of Okta's independence and neutrality. as platform companies enter the market it underscores two very important things identity's central role in security and the importance of okta's independence and neutrality To this day, we remain the only modern, comprehensive, cloud-native solution built to secure every identity, from employees to customers to non-human machine identities to AI agents, without locking customers in. On the whole, we think the transaction further validates the importance of identity but won't meaningfully change the competitive landscape. That flexibility is why the world's largest organizations across the public and private sector trust Okta and why we're confident we're on the winning path. To wrap things up, we're pleased with our Q2 results, and we're excited about the future with our growing portfolio of modern identity solutions and how Okta secures AI. As more and more customers turn to an identity security fabric to simplify control and strengthen protection across their organizations, Okta is here to meet them with the most modern and comprehensive identity security platform in the market today. To this day, we remain the only modern, comprehensive, cloud-native solution built to secure every identity, from employees to customers to non-human machine identities to AI agents, without locking customers in. to this day we remain the only modern comprehensive cloud-native solution built to secure every identity from employees to customers to non-human machine identities to ai agents without locking customers in On the whole, we think the transaction further validates the importance of identity but won't meaningfully change the competitive landscape. on the whole we think the transaction further validates the importance of identity but won't meaningfully change the competitive landscape That flexibility is why the world's largest organizations across the public and private sector trust Okta and why we're confident we're on the winning path. that flexibility is why the world's largest organizations across the public and private sector trust okta and why we're confident we're on the winning path To wrap things up, we're pleased with our Q2 results, and we're excited about the future with our growing portfolio of modern identity solutions and how Okta secures AI. to wrap things up we're pleased with our q2 results and we're excited about the future with our growing portfolio of modern identity solutions and how okta secures ai As more and more customers turn to an identity security fabric to simplify control and strengthen protection across their organizations, Okta is here to meet them with the most modern and comprehensive identity security platform in the market today. as more and more customers turn to an identity security fabric to simplify control and strengthen protection across their organizations okta is here to meet them with the most modern and comprehensive identity security platform in the market today As always, I want to thank the entire Okta team for their tireless effort and also thank our loyal customers and partners who put their trust in us every day. I look forward to seeing all of you at Octane, and now here's Brett to cover the financial commentary and talk about how we're positioned for long-term profitable growth. As always, I want to thank the entire Okta team for their tireless effort and also thank our loyal customers and partners who put their trust in us every day. as always i want to thank the entire okta team for their tireless effort and also thank our loyal customers and partners who put their trust in us every day I look forward to seeing a ll of you at Octane, and now here's Brett to cover the financial commentary and talk about how we're positioned for long-term profitable growth. i look forward to seeing a ll of you at octane and now here's brett to cover the financial commentary and talk about how we're positioned for long-term profitable growth

Speaker 18: Thanks, Todd, and thank you everyone for joining us today. My commentary will provide insights into our Q2 performance and then move into our outlook for Q3 and FY2026. Last quarter, we introduced some conservatism in our business outlook with regard to uncertainty in the macro and our federal vertical. I'm pleased to say that neither materialized, and we're removing them from our outlook for the remainder of the fiscal year. Thanks, Todd, and thank you everyone for joining us today. thanks todd and thank you everyone for joining us today My commentary will provide insights into our Q2 performance and then move into our outlook for Q3 and FY2026. my commentary will provide insights into our q2 performance and then move into our outlook for q3 and fy2026 Last quarter, we introduced some conservatism in our business outlook with regard to uncertainty in the macro and our federal vertical. last quarter we introduced some conservatism in our business outlook with regard to uncertainty in the macro and our federal vertical I'm pleased to say that neither materialized, and we're removing them from our outlook for the remainder of the fiscal year. i'm pleased to say that neither materialized and we're removing them from our outlook for the remainder of the fiscal year While we're only two quarters into our go-to-market realignment, we're encouraged by the signals we're seeing, including improved sales productivity and record pipeline generation. This success echoes the long-term performance of our already specialized teams in areas like the U.S. SMB market and public sector. The positive signals from Q2 give us great confidence that our increased specialization will drive long-term growth for both Okta and our customers. That's a nice segue into the strong Q2 performance we saw in our public sector business. While we did experience some contract restructuring with civilian agencies and delays in procurement processes, renewals across all of federal were strong, reflecting the mission-critical nature of our solutions. Okta continues to perform well with government organizations at all levels, highlighted this quarter by multiple new business and upsell deals with the U.S. Department of Defense and state agencies. While we're only two quarters into our go-to-market realignment, we're encouraged by the signals we're seeing, including improved sales productivity and record pipeline generation. while we're only two quarters into our go-to-market realignment we're encouraged by the signals we're seeing including improved sales productivity and record pipeline generation This success echoes the long-term performance of our already specialized teams in areas like the U.S. this success echoes the long-term performance of our already specialized teams in areas like the u.s SMB market and public sector. smb market and public sector The positive signals from Q2 give us great confidence that our increased specialization will drive long-term growth for both Okta and our customers. the positive signals from q2 give us great confidence that our increased specialization will drive long-term growth for both okta and our customers That's a nice segue into the strong Q2 performance we saw in our public sector business. that's a nice segue into the strong q2 performance we saw in our public sector business While we did experience some contract restructuring with civilian agencies and delays in procurement processes, renewals across all of federal were strong, reflecting the mission-critical nature of our solutions. while we did experience some contract restructuring with civilian agencies and delays in procurement processes renewals across all of federal were strong reflecting the mission-critical nature of our solutions Okta continues to perform well with government organizations at all levels, highlighted this quarter by multiple new business and upsell deals with the U.S. okta continues to perform well with government organizations at all levels highlighted this quarter by multiple new business and upsell deals with the u.s Department of Defense and state agencies. department of defense and state agencies Overall, five of our top 10 deals in Q2 were with the U.S. public sector, including our biggest deal of the quarter, which was secured with a U.S. Department of Defense agency. In that particular deal, the agency needed to replace its aging legacy logon system while ensuring compliance with federal mandates on cybersecurity and zero trust. Working closely with our partners, the agency will be modernizing with Okta Customer Identity as a central component of their new access system. It's worth noting that about a year ago, we made the strategic decision to reinvest in Okta Customer Identity, and those efforts have led to substantial growth in the product. In the first half of FY2026, OCI bookings have really accelerated and were a strong contributor to pipeline generation, driven by deals in both the public and private sectors. Overall, five of our top 10 deals in Q2 were with the U.S. public sector, including our biggest deal of the quarter, which was secured with a U.S. overall five of our top 10 deals in q2 were with the u.s public sector including our biggest deal of the quarter which was secured with a u.s Department of Defense agency. department of defense agency In that particular deal, the agency needed to replace its aging legacy logon system while ensuring compliance with federal mandates on cybersecurity and zero trust. in that particular deal the agency needed to replace its aging legacy logon system while ensuring compliance with federal mandates on cybersecurity and zero trust Working closely with our partners, the agency will be modernizing with Okta Customer Identity as a central component of their new access system. working closely with our partners the agency will be modernizing with okta customer identity as a central component of their new access system It's worth noting that about a year ago, we made the strategic decision to reinvest in Okta Customer Identity, and those efforts have led to substantial growth in the product. it's worth noting that about a year ago we made the strategic decision to reinvest in okta customer identity and those efforts have led to substantial growth in the product In the first half of FY2026, OCI bookings have really accelerated and were a strong contributor to pipeline generation, driven by deals in both the public and private sectors. in the first half of fy2026 oci bookings have really accelerated and were a strong contributor to pipeline generation driven by deals in both the public and private sectors Turning to capital allocation, we ended the quarter with a strong balance sheet consisting of approximately $2.9 billion in cash, cash equivalents, and short-term investments. Next week, the 2025 convertible notes reach maturity, and we will settle the remaining principal amount of $510 million in cash. We regularly evaluate our capital structure and capital allocation priorities, which include investing in the business, tuck-in M&A, and opportunistic repurchasing of the 2026 notes, of which $350 million remains outstanding. Now, let's turn to our business outlook. For Q3 and FY2026, we continue to take a prudent approach to forward guidance that factors in our go-to-market specialization that was rolled out at the beginning of this fiscal year. For the third quarter of FY2026, we expect total revenue growth of 9%-10%, current RPO growth of 10%, non-GAAP operating margin of 22%, and free cash flow margin of approximately 21%. Turning to capital allocation, we ended the quarter with a strong balance sheet consisting of approximately $2.9 billion in cash, cash equivalents, and short-term investments. turning to capital allocation we ended the quarter with a strong balance sheet consisting of approximately $2.9 billion in cash cash equivalents and short-term investments Next week, the 2025 convertible notes reach maturity, and we will settle the remaining principal amount of $510 million in cash. next week the 2025 convertible notes reach maturity and we will settle the remaining principal amount of $510 million in cash We regularly evaluate our capital structure and capital allocation priorities, which include investing in the business, tuck-in M&A, and opportunistic repurchasing of the 2026 notes, of which $350 million remains outstanding. we regularly evaluate our capital structure and capital allocation priorities which include investing in the business tuck-in m&a and opportunistic repurchasing of the 2026 notes of which $350 million remains outstanding Now, let's turn to our business outlook. now let's turn to our business outlook For Q3 and FY2026, we continue to take a prudent approach to forward guidance that factors in our go-to-market specialization that was rolled out at the beginning of this fiscal year. for q3 and fy2026 we continue to take a prudent approach to forward guidance that factors in our go-to-market specialization that was rolled out at the beginning of this fiscal year For the third quarter of FY2026, we expect total revenue growth of 9%- 10%, current RPO growth of 10%, non-GAAP operating margin of 22%, and free cash flow margin of approximately 21%. for the third quarter of fy2026 we expect total revenue growth of 9%- 10% current rpo growth of 10% non-gaap operating margin of 22% and free cash flow margin of approximately 21% For the full year FY2026, we are raising our outlook and now expect total revenue growth of 10%-11%, non-GAAP operating margin of 25%-26%, and a free cash flow margin of approximately 28%. To wrap things up, we're pleased with the solid Q2 results. We've significantly increased our profitability and cash flow over the past couple of years and remain focused on accelerating growth. We're excited about the adoption of new products and the rapid pace of innovation, and we remain confident that Okta's independence and neutrality position us best to lead the identity industry. With that, I'll turn it back to Dave for Q&A. Dave? For the full year FY2026, we are raising our outlook and now expect total revenue growth of 10%- 11%, non-GAAP operating margin of 25%- 26%, and a free cash flow margin of approximately 28%. for the full year fy2026 we are raising our outlook and now expect total revenue growth of 10%- 11% non-gaap operating margin of 25%- 26% and a free cash flow margin of approximately 28% To wrap things up, we're pleased with the solid Q2 results. to wrap things up we're pleased with the solid q2 results We've significantly increased our profitability and cash flow over the past couple of years and remain focused on accelerating growth. we've significantly increased our profitability and cash flow over the past couple of years and remain focused on accelerating growth We're excited about the adoption of new products and the rapid pace of innovation, and we remain confident that Okta's independence and neutrality position us best to lead the identity industry. we're excited about the adoption of new products and the rapid pace of innovation and we remain confident that okta's independence and neutrality position us best to lead the identity industry 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 3: Thanks, Brett. I see that there's already quite a few hands raised, and I'll take them in order until the top of the hour. In the interest of time, please limit yourself to one question. With that, we'll get started with Brad Zelnick. Brad. Thanks, Brett. thanks brett I see that there's already quite a few hands raised, and I'll take them in order until the top of the hour. i see that there's already quite a few hands raised and i'll take them in order until the top of the hour In the interest of time, please limit yourself to one question. in the interest of time please limit yourself to one question With that, we'll get started with Brad Zelnick. with that we'll get started with brad zelnick Brad. brad

Speaker 15: Great, thank you so much. Video on. There we are. Congrats, guys, on a strong Q2. My question for you, Brett, great to see the NRR stabilize. I know in the past you talked about downsell pressures subsiding into the back half of this year, and I just wanted to understand what other indicators might you look at as inputs into your guidance and the macro caveat that you've now removed this quarter. Does that still hold that, as we proceed from here, we feel good that NRR should effectively have bottomed? Thank you. Great, thank you so much. great thank you so much Video on. video on There we are. there we are Congrats, guys, on a strong Q2. congrats guys on a strong q2 My question for you, Brett, great to see the NRR stabilize. my question for you brett great to see the nrr stabilize I know in the past you talked about downsell pressures subsiding into the back half of this year, and I just wanted to understand what other indicators might you look at as inputs into your guidance and the macro caveat that you've now removed this quarter. i know in the past you talked about downsell pressures subsiding into the back half of this year and i just wanted to understand what other indicators might you look at as inputs into your guidance and the macro caveat that you've now removed this quarter Does that still hold that, as we proceed from here, we feel good that NRR should effectively have bottomed? does that still hold that as we proceed from here we feel good that nrr should effectively have bottomed Thank you. thank you

Speaker 13: Hey, hey, Brad, before Brett jumps in, maybe I could just make a high-level comment. I think on the quarter, we're very pleased with the execution. I think it was solid execution. Looking forward, I think we're very excited about the strategy. Our strategy is to be the one-stop shop for identity. That's what customers want. They want fewer identity vendors. I work with one of the largest high-tech companies in the world, and they're replacing 50 identity vendors with Okta. Customers want to consolidate on a single identity partner, and they want to do it in a way that covers all of these different use cases. You'll hear different variants of this across the call. I think that's really what makes us so excited about the future and that our strategy is really working along with solid execution. Hey, hey, Brad, before Brett jumps in, maybe I could just make a high-level comment. hey hey brad before brett jumps in maybe i could just make a high-level comment I think on the quarter, we're very pleased with the execution. i think on the quarter we're very pleased with the execution I think it was solid execution. i think it was solid execution Looking forward, I think we're very excited about the strategy. looking forward i think we're very excited about the strategy Our strategy is to be the one-stop shop for identity. our strategy is to be the one-stop shop for identity That's what customers want. that's what customers want They want fewer identity vendors. they want fewer identity vendors I work with one of the largest high-tech companies in the world, and they're replacing 50 identity vendors with Okta. i work with one of the largest high-tech companies in the world and they're replacing 50 identity vendors with okta Customers want to consolidate on a single identity partner, and they want to do it in a way that covers all of these different use cases. customers want to consolidate on a single identity partner and they want to do it in a way that covers all of these different use cases You'll hear different variants of this across the call. you'll hear different variants of this across the call I think that's really what makes us so excited about the future and that our strategy is really working along with solid execution. i think that's really what makes us so excited about the future and that our strategy is really working along with solid execution

Speaker 18: Brad, you broke up for a second in the middle of your question. You were asking around NRR and how it's trending, but you also said something around macro. Can you just clarify what you're saying? Brad, you broke up for a second in the middle of your question. brad you broke up for a second in the middle of your question You were asking around NRR and how it's trending, but you also said something around macro. you were asking around nrr and how it's trending but you also said something around macro Can you just clarify what you're saying? can you just clarify what you're saying

Speaker 15: I may be incorrectly, but I think of those concepts going hand in hand. In the past, you've talked about downsell pressure alleviating come the back half of this year. We now see NRR having stabilized. Wanted to appreciate what other inputs you look to when you remove the macro caveat in your guidance going forward, and if we can have confidence that, in fact, you know, 106% is a level from which we can now re-expand. Thank you. I may be incorrectly, but I think of those concepts going hand in hand. i may be incorrectly but i think of those concepts going hand in hand In the past, you've talked about downsell pressure alleviating come the back half of this year. in the past you've talked about downsell pressure alleviating come the back half of this year We now see NRR having stabilized. we now see nrr having stabilized Wanted to appreciate what other inputs you look to when you remove the macro caveat in your guidance going forward, and if we can have confidence that, in fact, you know, 106% is a level from which we can now re-expand. wanted to appreciate what other inputs you look to when you remove the macro caveat in your guidance going forward and if we can have confidence that in fact you know 106% is a level from which we can now re-expand Thank you. thank you

Speaker 18: Absolutely. I've said for a couple of quarters now, actually a few quarters now, around the NRR effects of the macro being, you know, impacting that NRR. I'm saying the last few years, kind of the COVID cohorts, I would say not having as much of an effect after the first half of FY2026, and we still believe that to be the case. In terms of what we expect it to be for the balance of the fiscal year, we still think similar to what I said before, which was plus or minus a little bit from here, just depending on the mix of business, whether there's more new business or more upsell in the quarter. That's how we think about the NRR side. Absolutely. absolutely I've said for a couple of quarters now, actually a few quarters now, around the NRR effects of the macro being, you know, impacting that NRR. i've said for a couple of quarters now actually a few quarters now around the nrr effects of the macro being you know impacting that nrr I'm saying the last few years, kind of the COVID cohorts, I would say not having as much of an effect after the first half of FY2026, and we still believe that to be the case. i'm saying the last few years kind of the covid cohorts i would say not having as much of an effect after the first half of fy2026 and we still believe that to be the case In terms of what we expect it to be for the balance of the fiscal year, we still think similar to what I said before, which was plus or minus a little bit from here, just depending on the mix of business, whether there's more new business or more upsell in the quarter. in terms of what we expect it to be for the balance of the fiscal year we still think similar to what i said before which was plus or minus a little bit from here just depending on the mix of business whether there's more new business or more upsell in the quarter That's how we think about the NRR side. that's how we think about the nrr side In terms of macro effect on the rest of the guidance in the earnings remarks today, we've removed that because we clearly didn't see anything that was that differentiating in Q2. It seemed a lot more of the same from what we've seen over the last several quarters, and that's what we think it's going to be for the balance of the fiscal year. In terms of macro effect on the rest of the guidance in the earnings remarks today, we've removed that because we clearly didn't see anything that was that differentiating in Q2. in terms of macro effect on the rest of the guidance in the earnings remarks today we've removed that because we clearly didn't see anything that was that differentiating in q2 It seemed a lot more of the same from what we've seen over the last several quarters, and that's what we think it's going to be for the balance of the fiscal year. it seemed a lot more of the same from what we've seen over the last several quarters and that's what we think it's going to be for the balance of the fiscal year

Speaker 15: Thanks for taking my question, and congrats again. Thanks for taking my question, and congrats again. thanks for taking my question and congrats again

Speaker 18: No problem. No problem. no problem

Speaker 15: Thanks, Brett. Thanks, Brett. thanks brett

Speaker 3: Next up is Matt Hedberg. Next up is Matt Hedberg. next up is matt hedberg Great, thanks for taking my question, guys. I'll offer my congrats as well. Really solid execution, including the new product success. It's great to see. Todd, I had a question for you. When we look at the AI native cohort, are there any interesting adoption trends that you're seeing there in terms of what products they're taking, how they're using the platform, any consolidation trends? Is there any thought of some of the early AI natives from a DIY perspective? Just sort of curious on how those folks are approaching your platform. Great, thanks for taking my question, guys. great thanks for taking my question guys I'll offer my congrats as well. i'll offer my congrats as well Really solid execution, including the new product success. really solid execution including the new product success It's great to see. it's great to see Todd, I had a question for you. todd i had a question for you When we look at the AI native cohort, are there any interesting adoption trends that you're seeing there in terms of what products they're taking, how they're using the platform, any consolidation trends? when we look at the ai native cohort are there any interesting adoption trends that you're seeing there in terms of what products they're taking how they're using the platform any consolidation trends Is there any thought of some of the early AI natives from a DIY perspective? is there any thought of some of the early ai natives from a diy perspective Just sort of curious on how those folks are approaching your platform. just sort of curious on how those folks are approaching your platform

Speaker 13: It doesn't seem dramatically different than other cohorts in terms of adopting workforce solutions or Auth0. It looks pretty much the same, except they're growing very fast. I guess that's a difference, especially on the revenue metrics. It's growing very fast, and we think we're well positioned in that cohort. I think it's similar to every company. They're trying to figure out how they can be secure internally as they're growing very fast. I know from a workforce identity and identity security perspective for their internal operations, they're sitting on a lot of very valuable data, and definitely hackers want to attack them, like they want to attack every important company. They're really investing in identity security, and Okta helps them with that. It doesn't seem dramatically different than other cohorts in terms of adopting workforce solutions or Auth0. it doesn't seem dramatically different than other cohorts in terms of adopting workforce solutions or auth0 It looks pretty much the same, except they're growing very fast. it looks pretty much the same except they're growing very fast I guess that's a difference, especially on the revenue metrics. i guess that's a difference especially on the revenue metrics It's growing very fast, and we think we're well positioned in that cohort. it's growing very fast and we think we're well positioned in that cohort I think it's similar to every company. i think it's similar to every company They're trying to figure out how they can be secure internally as they're growing very fast. they're trying to figure out how they can be secure internally as they're growing very fast I know from a workforce identity and identity security perspective for their internal operations, they're sitting on a lot of very valuable data, and definitely hackers want to attack them, like they want to attack every important company. i know from a workforce identity and identity security perspective for their internal operations they're sitting on a lot of very valuable data and definitely hackers want to attack them like they want to attack every important company They're really investing in identity security, and Okta helps them with that. they're really investing in identity security and okta helps them with that In terms of building their products and how they're connecting with their customers, they want to obviously connect on the web and mobile channels, but also they want to, they're all building AI agents themselves. That's one of the customers, every enterprise is being really, they have to make these choices about how many AI agents they buy, who they buy them from, and all of these AI native companies are working hard to fill that void along with Salesforce and Workday and more of the established companies. What it means for customers that are on the enterprises that are trying to adopt these great new coding tools or these great new business automation processes or even the agent building platforms is they have to figure it all out in a way that has really high security implications. In terms of building their products and how they're connecting with their customers, they want to obviously connect on the web and mobile channels, but also they want to, they're all building AI agents themselves. in terms of building their products and how they're connecting with their customers they want to obviously connect on the web and mobile channels but also they want to they're all building ai agents themselves That's one of the customers, every enterprise is being really, they have to make these choices about how many AI agents they buy, who they buy them from, and all of these AI native companies are working hard to fill that void along with Salesforce and Workday and more of the established companies. that's one of the customers every enterprise is being really they have to make these choices about how many ai agents they buy who they buy them from and all of these ai native companies are working hard to fill that void along with salesforce and workday and more of the established companies What it means for customers that are on the enterprises that are trying to adopt these great new coding tools or these great new business automation processes or even the agent building platforms is they have to figure it all out in a way that has really high security implications. what it means for customers that are on the enterprises that are trying to adopt these great new coding tools or these great new business automation processes or even the agent building platforms is they have to figure it all out in a way that has really high security implications Everyone's heard this story of how big companies are doing simple AI chatbots, and then all of a sudden confidential information is leaked because the AI chatbot leaked the wrong thing. Big security implications, but at the same time they see big business value, and they're not really sure which platform to invest in. One of the things we're really focused on is trying to provide the right security for this agentic future, but also at the same time give them choice and flexibility as every new AI company is trying to give them an agent platform and a capability to build these things. As established vendors, it's pretty complex for these companies to figure out. We're trying to help them through it all, but it's an interesting time out there. I think it's a good time to be an identity company, and we're really excited about where this is all going. Everyone's heard this story of how big companies are doing simple AI chatbots, and then all of a sudden confidential information is leaked because the AI chatbot leaked the wrong thing. everyone's heard this story of how big companies are doing simple ai chatbots and then all of a sudden confidential information is leaked because the ai chatbot leaked the wrong thing Big security implications, but at the same time they see big business value, and they're not really sure which platform to invest in. big security implications but at the same time they see big business value and they're not really sure which platform to invest in One of the things we're really focused on is trying to provide the right security for this agentic future, but also at the same time give them choice and flexibility as every new AI company is trying to give them an agent platform and a capability to build these things. one of the things we're really focused on is trying to provide the right security for this agentic future but also at the same time give them choice and flexibility as every new ai company is trying to give them an agent platform and a capability to build these things As established vendors, it's pretty complex for these companies to figure out. as established vendors it's pretty complex for these companies to figure out We're trying to help them through it all, but it's an interesting time out there. we're trying to help them through it all but it's an interesting time out there I think it's a good time to be an identity company, and we're really excited about where this is all going. i think it's a good time to be an identity company and we're really excited about where this is all going Great to hear. Thanks. Great to hear. great to hear Thanks. thanks Thanks. Thanks. thanks

Speaker 3: We'll go to Eric Kelleher. We'll go to Eric Kelleher. we'll go to eric kelleher Thanks, Dave, and congrats, Todd and Brett. If I could ask one for Todd and one for Brett, I mean, Todd, you've always been very clear that identity should be its own independent standalone platform. Can you just elaborate a little bit more on the comments of why you think that's critical for identity to be independent? Brett, if I could just on a modeling question, great, very exciting deal with the U.S. Department of Defense, the expansion deal. How should we think about that as it relates to RPO and CRPO and think about it in the model going forward? Thanks, Dave, and congrats, Todd and Brett. thanks dave and congrats todd and brett If I could ask one for Todd and one for Brett, I mean, Todd, you've always been very clear that identity should be its own independent standalone platform. if i could ask one for todd and one for brett i mean todd you've always been very clear that identity should be its own independent standalone platform Can you just elaborate a little bit more on the comments of why you think that's critical for identity to be independent? can you just elaborate a little bit more on the comments of why you think that's critical for identity to be independent Brett, if I could just on a modeling question, great, very exciting deal with the U.S. Department of Defense, the expansion deal. brett if i could just on a modeling question great very exciting deal with the u.s. department of defense the expansion deal How should we think about that as it relates to RPO and CRPO and think about it in the model going forward? how should we think about that as it relates to rpo and crpo and think about it in the model going forward

Speaker 13: Yeah, I think on the category of identity, back when, a long time ago when I started Okta, it was like, would it be important enough? You know, could you build a big company around identity? At the time it was like identity was a part of another platform and people didn't think it could be a big company. Over, you know, a decade and a half since, it's very clear it's super important now. Now this new question is like, should it be its own independent platform or should it be part of another platform? As you mentioned, we have a very strong worldview that it should be independent, neutral, and it's really two reasons. The first reason is that it's too fragmented and there's too many niche players and there's too many legacy platforms and it's too complicated for big companies. In that sense, it has to consolidate. Yeah, I think on the category of identity, back when, a long time ago when I started Okta, it was like, would it be important enough? yeah i think on the category of identity back when a long time ago when i started okta it was like would it be important enough You know, could you build a big company around identity? you know could you build a big company around identity At the time it was like identity was a part of another platform and people didn't think it could be a big company. at the time it was like identity was a part of another platform and people didn't think it could be a big company Over, you know, a decade and a half since, it's very clear it's super important now. over you know a decade and a half since it's very clear it's super important now Now this new question is like, should it be its own independent platform or should it be part of another platform? now this new question is like should it be its own independent platform or should it be part of another platform As you mentioned, we have a very strong worldview that it should be independent, neutral, and it's really two reasons. as you mentioned we have a very strong worldview that it should be independent neutral and it's really two reasons The first reason is that it's too fragmented and there's too many niche players and there's too many legacy platforms and it's too complicated for big companies. the first reason is that it's too fragmented and there's too many niche players and there's too many legacy platforms and it's too complicated for big companies In that sense, it has to consolidate. in that sense it has to consolidate It's too complicated. It's holding companies back. I mentioned this, one of the biggest technology companies in the world, we're helping upgrade all of their disparate identity platforms from SailPoint to CyberArk to HashiCorp to Ping to ForgeRock. They're consolidating them all in Okta. The reason they're doing this is because two reasons. It's cost. It's expensive and it's operationally challenging to keep all this stuff running. A lot of them are legacy platforms running in their own data centers or Amazon. The second reason is that it's preventing them from adopting the future. It's preventing them from rolling out more agentic workflows, et cetera. There's just the simple argument of cost and fragmentation. Now the second answer is like, which, and that could be true of any category. People want, in theory, fewer vendors and less operational cost for many categories: collaboration applications, security tools, etc. It's too complicated. it's too complicated It's holding companies back. it's holding companies back I mentioned this, one of the biggest technology companies in the world, we're helping upgrade all of their disparate identity platforms from SailPoint to CyberArk to HashiCorp to Ping to ForgeRock. i mentioned this one of the biggest technology companies in the world we're helping upgrade all of their disparate identity platforms from sailpoint to cyberark to hashicorp to ping to forgerock They're consolidating them all in Okta. they're consolidating them all in okta The reason they're doing this is because two reasons. the reason they're doing this is because two reasons It's cost. it's cost It's expensive and it's operationally challenging to keep all this stuff running. it's expensive and it's operationally challenging to keep all this stuff running A lot of them are legacy platforms running in their own data centers or Amazon. The second reason is that it's preventing them from adopting the future. a lot of them are legacy platforms running in their own data centers or amazon. the second reason is that it's preventing them from adopting the future It's preventing them from rolling out more agentic workflows, et cetera. it's preventing them from rolling out more agentic workflows et cetera There's just the simple argument of cost and fragmentation. there's just the simple argument of cost and fragmentation Now the second answer is like, which, and that could be true of any category. now the second answer is like which and that could be true of any category People want, in theory, fewer vendors and less operational cost for many categories: collaboration applications, security tools, etc . people want in theory fewer vendors and less operational cost for many categories collaboration applications security tools, etc Why should your point of consolidation be identity? Our answer is simple. It's because you can, you know, like I mentioned before, you can save a lot of money, a lot of time, a lot of energy. Secondly, it's the one thing you can consolidate on and still preserve choice across everything else. If you are adopting Microsoft identity, you are making a decision that your first choice and your preferred vendor for everything else is going to be Microsoft, which could work for some companies, but it's not going to work for most companies, especially large companies. If you, that's the independence argument, and that's why we think when companies are, and you see in the results, right, as 13% CRPO growth and the success we're having across the board, what we're seeing is that customers are showing this preference too. They want to consolidate. Why should your point of consolidation be identity? why should your point of consolidation be identity Our answer is simple. our answer is simple It's because you can, you know, like I mentioned before, you can save a lot of money, a lot of time, a lot of energy. it's because you can you know like i mentioned before you can save a lot of money a lot of time a lot of energy Secondly, it's the one thing you can consolidate on and still preserve choice across everything else. secondly it's the one thing you can consolidate on and still preserve choice across everything else If you are adopting Microsoft identity, you are making a decision that your first choice and your preferred vendor for everything else is going to be Microsoft, which could work for some companies, but it's not going to work for most companies, especially large companies. if you are adopting microsoft identity you are making a decision that your first choice and your preferred vendor for everything else is going to be microsoft which could work for some companies but it's not going to work for most companies especially large companies If you, that's the independence argument, and that's why we think when companies are, and you see in the results, right, as 13% CRPO growth and the success we're having across the board, what we're seeing is that customers are showing this preference too. if you that's the independence argument and that's why we think when companies are and you see in the results right as 13% crpo growth and the success we're having across the board what we're seeing is that customers are showing this preference too They want to consolidate. they want to consolidate They want to pick the right points of consolidation. In our case, we're having the most products, the most modern products, the breadth of capabilities, the reliability, the security, it's resonating with them. They want to pick the right points of consolidation. they want to pick the right points of consolidation In our case, we're having the most products, the most modern products, the breadth of capabilities, the reliability, the security, it's resonating with them. in our case we're having the most products the most modern products the breadth of capabilities the reliability the security it's resonating with them

Speaker 18: Eric, to answer your question, fairly simple, like many other public sector deals, the RPO value and the current RPO value are going to be the same because it's a one-year deal. That's just how it works with a lot of the public sector. Eric, to answer your question, fairly simple, like many other public sector deals, the RPO value and the current RPO value are going to be the same because it's a one-year deal. eric to answer your question fairly simple like many other public sector deals the rpo value and the current rpo value are going to be the same because it's a one-year deal That's just how it works with a lot of the public sector. that's just how it works with a lot of the public sector

Speaker 3: Okay, next up, we're going to go to Brian Essex. Okay, next up, we're going to go to Brian Essex. okay next up we're going to go to brian essex

Speaker 11: Great, thanks. Did you say Eric Kelleher is on as well? Great, thanks. great thanks Did you say Eric Kelleher is on as well? did you say eric kelleher is on as well

Speaker 13: Yes. Yes. yes

Speaker 3: Yeah. Yeah. Yeah. yeah Yeah. yeah

Speaker 11: All right, awesome. Maybe for. All right, awesome. all right awesome Maybe for. maybe for

Speaker 12: Hi, good to see you, Brian. Hi, good to see you, Brian. hi good to see you brian

Speaker 11: Yeah, good to see you too. When we met intra-quarter, you gave us some great context of the evolution of the Salesforce, both a hundred farmer model and the decision to specialize. Could you maybe bring us up to date in terms of where that sales, where each of those kind of specializations or specialized sales forces have evolved to? How does that drive confidence and ability to execute through the remainder of the year, both from a productivity as well as plans for hiring going forward? Yeah, good to see you too. yeah good to see you too When we met intra-quarter, you gave us some great context of the evolution of the Salesforce, both a hundred farmer model and the decision to specialize. when we met intra-quarter you gave us some great context of the evolution of the salesforce both a hundred farmer model and the decision to specialize Could you maybe bring us up to date in terms of where that sales, where each of those kind of specializations or specialized sales forces have evolved to? could you maybe bring us up to date in terms of where that sales where each of those kind of specializations or specialized sales forces have evolved to How does that drive confidence and ability to execute through the remainder of the year, both from a productivity as well as plans for hiring going forward? how does that drive confidence and ability to execute through the remainder of the year both from a productivity as well as plans for hiring going forward

Speaker 12: Todd, great question. Thanks, Brian. We feel very confident in where we are today. We said last quarter when we got together that we were very much on track for the expected impact and productivity impact of all the changes we made to specialize on the Okta platform and the Auth0 platform. In Q2, our results were very strong as well. As you can see, it's a solid quarter, and they reflect increased productivity from a specialization standpoint. We remain optimistic and confident that this works. This isn't the first time we've specialized, and Brett talked about this in his opening comments. Our first real investment in specialization was for our public sector business, and you've heard us talk for many quarters now about strength in public sector and how that's been performing. Todd, great question. todd great question Thanks, Brian. thanks brian We feel very confident in where we are today. we feel very confident in where we are today We said last quarter when we got together that we were very much on track for the expected impact and productivity impact of all the changes we made to specialize on the Okta platform and the Auth0 platform. we said last quarter when we got together that we were very much on track for the expected impact and productivity impact of all the changes we made to specialize on the okta platform and the auth0 platform In Q2, our results were very strong as well. in q2 our results were very strong as well As you can see, it's a solid quarter, and they reflect increased productivity from a specialization standpoint. as you can see it's a solid quarter and they reflect increased productivity from a specialization standpoint We remain optimistic and confident that this works. we remain optimistic and confident that this works This isn't the first time we've specialized, and Brett talked about this in his opening comments. this isn't the first time we've specialized and brett talked about this in his opening comments Our first real investment in specialization was for our public sector business, and you've heard us talk for many quarters now about strength in public sector and how that's been performing. our first real investment in specialization was for our public sector business and you've heard us talk for many quarters now about strength in public sector and how that's been performing Eighteen months ago, we implemented a 100 farmer specialization in the SMB space for North America, and we've seen that deliver. That group has had a very effective first half of this year. The change management and the change costs associated with that have really played out, and we're really pleased with the productivity for that group and the organization. Our specialization for platforms, now our third major wave of specialization, we feel good about as well. We saw productivity gains in Q2, which were in line with where we're hoping to get. One of the metrics in our commentary, we generated an all-time high for pipe in Q2. That's partly attributed to the fact that we now have people specializing in our buyers, in our buyer personas. Eighteen months ago, we implemented a 100 farmer specialization in the SMB space for North America, and we've seen that deliver. eighteen months ago we implemented a 100 farmer specialization in the smb space for north america and we've seen that deliver That group has had a very effective first half of this year. that group has had a very effective first half of this year The change management and the change costs associated with that have really played out, and we're really pleased with the productivity for that group and the organization. the change management and the change costs associated with that have really played out and we're really pleased with the productivity for that group and the organization Our specialization for platforms, now our third major wave of specialization, we feel good about as well. our specialization for platforms now our third major wave of specialization we feel good about as well We saw productivity gains in Q2, which were in line with where we're hoping to get. we saw productivity gains in q2 which were in line with where we're hoping to get One of the metrics in our commentary, we generated an all-time high for pipe in Q2. one of the metrics in our commentary we generated an all-time high for pipe in q2 That's partly attributed to the fact that we now have people specializing in our buyers, in our buyer personas. that's partly attributed to the fact that we now have people specializing in our buyers in our buyer personas We have people specializing in developer buyers and people specializing in IT and security buyers, and they're more effectively able to identify and qualify and prosecute leads and convert that into opportunity at the top of the funnel. We're very pleased with progress so far. We have people specializing in developer buyers and people specializing in IT and security buyers, and they're more effectively able to identify and qualify and prosecute leads and convert that into opportunity at the top of the funnel. we have people specializing in developer buyers and people specializing in it and security buyers and they're more effectively able to identify and qualify and prosecute leads and convert that into opportunity at the top of the funnel We're very pleased with progress so far. we're very pleased with progress so far

Speaker 11: All right, great Kelleher. Thank you so much. All right, great Kelleher . all right great kelleher Thank you so much. thank you so much

Speaker 13: Hey, Brad, I would just add one thing to what Eric just said, which is around what he was saying around the pipeline by source. We saw a nice growth in the quarter for pipe being created by AEs themselves, right? That really is attributed to the fact, like what Eric was just saying, they know the products better. If you allow them to specialize, they're going to know it better, and you're going to see numbers like that. That's really a nice sign for us as an organization because it really, it's one of those positive feedback points that we feel like things are working and headed in the right direction. Hey, Brad, I would just add one thing to what Eric just said, which is around what he was saying around the pipeline by source. hey brad i would just add one thing to what eric just said which is around what he was saying around the pipeline by source We saw a nice growth in the quarter for pipe being created by AEs themselves, right? we saw a nice growth in the quarter for pipe being created by aes themselves right That really is attributed to the fact, like what Eric was just saying, they know the products better. that really is attributed to the fact like what eric was just saying they know the products better If you allow them to specialize, they're going to know it better, and you're going to see numbers like that. if you allow them to specialize they're going to know it better and you're going to see numbers like that That's really a nice sign for us as an organization because it really, it's one of those positive feedback points that we feel like things are working and headed in the right direction. that's really a nice sign for us as an organization because it really it's one of those positive feedback points that we feel like things are working and headed in the right direction

Speaker 11: Right. You've been focused on channel productivity as well. Has that also improved sequentially? Are you getting kind of momentum there? Right. right You've been focused on channel productivity as well. you've been focused on channel productivity as well Has that also improved sequentially? has that also improved sequentially Are you getting kind of momentum there? are you getting kind of momentum there

Speaker 13: Yes, absolutely. All 20 of the top 20 deals were touched by a partner. Also, from a pipe gen perspective, in terms of the source where it was coming from, the partners also had very nice growth in the quarter. You add all that up and you get record pipe gen and nice results like we just had. Yes, absolutely. yes absolutely All 20 of the top 20 deals were touched by a partner. all 20 of the top 20 deals were touched by a partner Also, from a pipe gen perspective, in terms of the source where it was coming from, the partners also had very nice growth in the quarter. also from a pipe gen perspective in terms of the source where it was coming from the partners also had very nice growth in the quarter You add all that up and you get record pipe gen and nice results like we just had. you add all that up and you get record pipe gen and nice results like we just had

Speaker 11: Good stuff. Congrats on the results. Thank you. Good stuff. good stuff Congrats on the results. congrats on the results Thank you. thank you

Speaker 3: Thanks, Brian. Next up is Josh Tilton. Thanks, Brian. thanks brian Next up is Josh Tilton. next up is josh tilton Thank you, guys. Since I have Todd, I'm going to try and ask a nerdy tech question, although I preface it with I'm not 100% sure I understand what I'm asking. I think investors are kind of trying to understand which piece of the identity puzzle is going to benefit the most from AI. It sounds like you're buying, you're making an acquisition because there's some PAM pieces that are going to help you secure AI. If you dig into cross-app access, it also looks like it's using tokens and protocols and stuff you use for SSO and MFA. What is your view of which piece of this puzzle is really best positioned to benefit from an AI future? More broadly, what is incremental to cross-app access that you're getting from this acquisition you just announced? Thank you, guys. thank you guys Since I have Todd, I'm going to try and ask a nerdy tech question, although I preface it with I'm not 100% sure I understand what I'm asking. since i have todd i'm going to try and ask a nerdy tech question although i preface it with i'm not 100% sure i understand what i'm asking I think investors are kind of trying to understand which piece of the identity puzzle is going to benefit the most from AI. i think investors are kind of trying to understand which piece of the identity puzzle is going to benefit the most from ai It sounds like you're buying, you're making an acquisition because there's some PAM pieces that are going to help you secure AI. it sounds like you're buying you're making an acquisition because there's some pam pieces that are going to help you secure ai If you dig into cross-app access, it also looks like it's using tokens and protocols and stuff you use for SSO and MFA. if you dig into cross-app access it also looks like it's using tokens and protocols and stuff you use for sso and mfa What is your view of which piece of this puzzle is really best positioned to benefit from an AI future? what is your view of which piece of this puzzle is really best positioned to benefit from an ai future More broadly, what is incremental to cross-app access that you're getting from this acquisition you just announced? more broadly what is incremental to cross-app access that you're getting from this acquisition you just announced

Speaker 13: Yeah, I imagine, Josh, imagine how confused the buyers are in the market, like when they're trying to buy all this stuff. That's why our, and it's true, right? They're all very excited about, as we all are, the technologists and business people and people that just observe the world of what it could be possible with AI. They're just inundated with this complexity of how you get the best products and what the right platform is, and should you use Microsoft or should you use Google and should you use OpenAI? Like, what's the right thing to build? What's the right thing to buy? Our perspective is quite simple. It's that you have many problems today in your enterprise that are clear and present, and you can get a lot of security benefit by addressing these problems. These are the problems that we talk about a lot. Yeah, I imagine, Josh, imagine how confused the buyers are in the market, like when they're trying to buy all this stuff. yeah i imagine josh imagine how confused the buyers are in the market like when they're trying to buy all this stuff That's why our, and it's true, right? that's why our and it's true right They're all very excited about, as we all are, the technologists and business people and people that just observe the world of what it could be possible with AI. they're all very excited about as we all are the technologists and business people and people that just observe the world of what it could be possible with ai They're just inundated with this complexity of how you get the best products and what the right platform is, and should you use Microsoft or should you use Google and should you use OpenAI? they're just inundated with this complexity of how you get the best products and what the right platform is and should you use microsoft or should you use google and should you use openai Like, what's the right thing to build? like what's the right thing to build What's the right thing to buy? what's the right thing to buy Our perspective is quite simple. our perspective is quite simple It's that you have many problems today in your enterprise that are clear and present, and you can get a lot of security benefit by addressing these problems. it's that you have many problems today in your enterprise that are clear and present and you can get a lot of security benefit by addressing these problems These are the problems that we talk about a lot. these are the problems that we talk about a lot These are service accounts. These are machine identities. These are putting the right vaulting and governance workflows around all of these things. These are like the bread and butter of our identity platform across governance and privileged access and identity threat protection with Okta AI and the bread and butter of what we're talking about. These are clear and present things today. In addition to that, every company is going to make a huge investment in AI agents. What that's going to do first and foremost is it's going to make that problem I just described five times worse. Every agent wants to connect to 10 service accounts and is going to have its own tokens. We are in this environment where people are very receptive to what we're saying because it's fundamentally understood that this is a problem they have today, and it's getting worse. These are service accounts. these are service accounts These are machine identities. these are machine identities These are putting the right vaulting and governance workflows around all of these things. these are putting the right vaulting and governance workflows around all of these things These are like the bread and butter of our identity platform across governance and privileged access and identity threat protection with Okta AI and the bread and butter of what we're talking about. these are like the bread and butter of our identity platform across governance and privileged access and identity threat protection with okta ai and the bread and butter of what we're talking about These are clear and present things today. these are clear and present things today In addition to that, every company is going to make a huge investment in AI agents. in addition to that every company is going to make a huge investment in ai agents What that's going to do first and foremost is it's going to make that problem I just described five times worse. what that's going to do first and foremost is it's going to make that problem i just described five times worse Every agent wants to connect to 10 service accounts and is going to have its own tokens. every agent wants to connect to 10 service accounts and is going to have its own tokens We are in this environment where people are very receptive to what we're saying because it's fundamentally understood that this is a problem they have today, and it's getting worse. we are in this environment where people are very receptive to what we're saying because it's fundamentally understood that this is a problem they have today and it's getting worse I've had the last week, I've had conversations with CIOs of massive companies that everyone's heard of that say, there's no way we're going to be able to do this AI stuff if we don't get our identity foundation in order. That's clear and present. Now, in addition to that, I think there are investments we are making and innovation we're building that is going to even take it a step further, which is actually modeling the identity of an agent and giving more power to the customer to manage and secure these things because it's a native thing inside of Okta, which is also very exciting. That's very early because the amount of companies that are actually playing with AI agents is 100%. The ones that are actually putting them in production at scale is very small. I've had the last week, I've had conversations with CIOs of massive companies that everyone's heard of that say, there's no way we're going to be able to do this AI stuff if we don't get our identity foundation in order. i've had the last week i've had conversations with cios of massive companies that everyone's heard of that say there's no way we're going to be able to do this ai stuff if we don't get our identity foundation in order That's clear and present. that's clear and present Now, in addition to that, I think there are investments we are making and innovation we're building that is going to even take it a step further, which is actually modeling the identity of an agent and giving more power to the customer to manage and secure these things because it's a native thing inside of Okta, which is also very exciting. now in addition to that i think there are investments we are making and innovation we're building that is going to even take it a step further which is actually modeling the identity of an agent and giving more power to the customer to manage and secure these things because it's a native thing inside of okta which is also very exciting That's very early because the amount of companies that are actually playing with AI agents is 100%. that's very early because the amount of companies that are actually playing with ai agents is 100% The ones that are actually putting them in production at scale is very small. the ones that are actually putting them in production at scale is very small The timing is right here to solve this problem they all have today, the service accounts and token vaulting, et cetera, and then over time be the system of record for the AI agents themselves and give them choice and flexibility on if they want to use Salesforce or what they want to use Salesforce for, agents or ServiceNow agents or build their own agents and give them the fundamentals across all of that, which are security control and governance. Now, specific to your questions about Axiom, we're very excited about Axiom, but it's a little different. Axiom is, first of all, these folks on this team are super talented, and they are deep, deep privileged access management experts. One thing we're doing at Okta right now is we're on this mission to recruit across the entire company the best identity people in the world. Axiom falls in that bucket. The timing is right here to solve this problem they all have today, the service accounts and token vaulting, et cetera, and then over time be the system of record for the AI agents themselves and give them choice and flexibility on if they want to use Salesforce or what they want to use Salesforce for, agents or ServiceNow agents or build their own agents and give them the fundamentals across all of that, which are security control and governance. the timing is right here to solve this problem they all have today the service accounts and token vaulting et cetera and then over time be the system of record for the ai agents themselves and give them choice and flexibility on if they want to use salesforce or what they want to use salesforce for agents or servicenow agents or build their own agents and give them the fundamentals across all of that which are security control and governance Now, specific to your questions about Axiom, we're very excited about Axiom, but it's a little different. now specific to your questions about axiom we're very excited about axiom but it's a little different Axiom is, first of all, these folks on this team are super talented, and they are deep, deep privileged access management experts. axiom is first of all these folks on this team are super talented and they are deep deep privileged access management experts One thing we're doing at Okta right now is we're on this mission to recruit across the entire company the best identity people in the world. one thing we're doing at okta right now is we're on this mission to recruit across the entire company the best identity people in the world Axiom falls in that bucket. axiom falls in that bucket We get some of the best PAM experts in the world to join our privileged access management team, which is great. They also have a technical capability around securing infrastructure connections to databases that is world-class and gives us an enhanced benefit there. Honestly, it's really about the team and having this great technology for sure, but it's these expert privileged access engineers and product people to join our PAM team, which is, you know, we're trying to build the world's best team across the board, and it's a great addition too. I know this is a long answer. I'll try to say one more thing. Cross-app access is an industry-wide effort. It's actually three years old. We get some of the best PAM experts in the world to join our privileged access management team, which is great. we get some of the best pam experts in the world to join our privileged access management team which is great They also have a technical capability around securing infrastructure connections to databases that is world-class and gives us an enhanced benefit there. they also have a technical capability around securing infrastructure connections to databases that is world-class and gives us an enhanced benefit there Honestly, it's really about the team and having this great technology for sure, but it's these expert privileged access engineers and product people to join our PAM team, which is, you know, we're trying to build the world's best team across the board, and it's a great addition too. honestly it's really about the team and having this great technology for sure but it's these expert privileged access engineers and product people to join our pam team which is you know we're trying to build the world's best team across the board and it's a great addition too I know this is a long answer. i know this is a long answer I'll try to say one more thing. i'll try to say one more thing Cross-app access is an industry-wide effort. cross-app access is an industry-wide effort It's actually three years old. it's actually three years old We've been working on this for three years, and it came out of Mike from Atlassian and Eric from Zoom and many other SaaS leaders wanted a way to standardize how, when they sold their products into companies, how those products were then hooked up to everything else in the company. Zoom wants to connect to your calendar, wants to connect to a note-taking. Atlassian wants to connect to all of your other software development tools. We invented this protocol and this concept and have published this open standard to solve a very important problem. How do you give your IT teams and your security teams visibility into all these application connections that happen between apps? That's a problem that's existed for a long time, and guess what's happening with AI? AI is supercharging this problem. Now, every agent, guess what it wants to do? We've been working on this for three years, and it came out of Mike from Atlassian and Eric from Zoom and many other SaaS leaders wanted a way to standardize how, when they sold their products into companies, how those products were then hooked up to everything else in the company. we've been working on this for three years and it came out of mike from atlassian and eric from zoom and many other saas leaders wanted a way to standardize how when they sold their products into companies how those products were then hooked up to everything else in the company Zoom wants to connect to your calendar, wants to connect to a note-taking. zoom wants to connect to your calendar wants to connect to a note-taking Atlassian wants to connect to all of your other software development tools. atlassian wants to connect to all of your other software development tools We invented this protocol and this concept and have published this open standard to solve a very important problem. we invented this protocol and this concept and have published this open standard to solve a very important problem How do you give your IT teams and your security teams visibility into all these application connections that happen between apps? how do you give your it teams and your security teams visibility into all these application connections that happen between apps That's a problem that's existed for a long time, and guess what's happening with AI? that's a problem that's existed for a long time and guess what's happening with ai AI is supercharging this problem. ai is supercharging this problem Now, every agent, guess what it wants to do? now every agent guess what it wants to do It wants to connect to 15 applications, and guess what you need? You need an open protocol for all of those applications that are letting those agents connect, publish, and share that information with the security team, so they can have visibility and control and audit that. That is why cross-app access is so important. It lets the ecosystem form around this system of how agents can share their connection information in an open and transparent way. It wants to connect to 15 applications, and guess what you need? it wants to connect to 15 applications and guess what you need You need an open protocol for all of those applications that are letting those agents connect, publish, and share that information with the security team, so they can have visibility and control and audit that. you need an open protocol for all of those applications that are letting those agents connect publish and share that information with the security team so they can have visibility and control and audit that That is why cross-app access is so important. that is why cross-app access is so important It lets the ecosystem form around this system of how agents can share their connection information in an open and transparent way. it lets the ecosystem form around this system of how agents can share their connection information in an open and transparent way Actually, very helpful. I appreciate the long response. Thank you. Actually, very helpful. actually very helpful I appreciate the long response. i appreciate the long response Thank you. thank you Yeah, thanks. Thanks for the question, Josh. Yeah, thanks. yeah thanks Thanks for the question, Josh. thanks for the question josh

Speaker 3: Hey, let's go to Greg Moskowitz. Hey, let's go to Greg Moskowitz. hey let's go to greg moskowitz

Speaker 16: All right, terrific. Thank you, guys. Congratulations on a really good quarter. Brett, I'm wondering if there was any change in upsell or cross-sell rates among SMB customers or enterprise customers, and then realized that it's still early days, but what are you seeing so far regarding demand for your new suites? Thank you. All right, terrific. all right terrific Thank you, guys. thank you guys Congratulations on a really good quarter. congratulations on a really good quarter Brett, I'm wondering if there was any change in upsell or cross-sell rates among SMB customers or enterprise customers, and then realized that it's still early days, but what are you seeing so far regarding demand for your new suites? brett i'm wondering if there was any change in upsell or cross-sell rates among smb customers or enterprise customers and then realized that it's still early days but what are you seeing so far regarding demand for your new suites Thank you. thank you

Speaker 13: Yeah, I'll let Eric talk about the suite side of the house, but from an overall upsell/cross-sell perspective, it was fairly similar to what we've seen in the last few quarters. You've heard us talk about for several quarters now the pipeline being more weighted toward upsell and cross-sell as opposed to new business. That continues to be the case. You see these bigger customers getting bigger as a result of that, right? That's why you see the greater than $100K having a nice add. You see the greater than $1 million, almost 500. We're at 495, up 15% year-over-year. That upsell/cross-sell continues to work, especially as you've heard Todd talk about, we keep adding all these new products into the mix, depending on which side of the business you're on, and ultimately helping us across the board there. Yeah, I'll let Eric talk about the suite side of the house, but from an overall upsell/cross-sell perspective, it was fairly similar to what we've seen in the last few quarters. yeah i'll let eric talk about the suite side of the house but from an overall upsell/cross-sell perspective it was fairly similar to what we've seen in the last few quarters You've heard us talk about for several quarters now the pipeline being more weighted toward upsell and cross-sell as opposed to new business. you've heard us talk about for several quarters now the pipeline being more weighted toward upsell and cross-sell as opposed to new business That continues to be the case. that continues to be the case You see these bigger customers getting bigger as a result of that, right? you see these bigger customers getting bigger as a result of that right That's why you see the greater than $100K having a nice add. that's why you see the greater than $100k having a nice add You see the greater than $1 million, almost 500. you see the greater than $1 million almost 500 We're at 495, up 15% year- over- year. we're at 495 up 15% year- over- year That upsell/cross-sell continues to work, especially as you've heard Todd talk about, we keep adding all these new products into the mix, depending on which side of the business you're on, and ultimately helping us across the board there. that upsell/cross-sell continues to work especially as you've heard todd talk about we keep adding all these new products into the mix depending on which side of the business you're on and ultimately helping us across the board there

Speaker 12: Yeah, on the suites part of that question, and thanks, Greg, for the question. We're pleased with what we're seeing with suites. We introduced suites for the Okta platform a few months ago, and it was in response to demand from customers who have bought into Okta's vision of the secure identity fabric. These are companies that, as Todd mentioned earlier, are looking for an identity partner that they can work with to help them solve all of their identity use cases, whether that's threat protection or security posture management, access management, governance, privileged access. That is the secure identity fabric vision that Okta is bringing to customers. What we found is our customers want easier ways to engage with us to get the secure identity fabric for themselves. The suites are really designed to do that. Yeah, on the suites part of that question, and thanks, Greg, for the question. yeah on the suites part of that question and thanks greg for the question We're pleased with what we're seeing with suites. we're pleased with what we're seeing with suites We introduced suites for the Okta platform a few months ago, and it was in response to demand from customers who have bought into Okta's vision of the secure identity fabric. we introduced suites for the okta platform a few months ago and it was in response to demand from customers who have bought into okta's vision of the secure identity fabric These are companies that, as Todd mentioned earlier, are looking for an identity partner that they can work with to help them solve all of their identity use cases, whether that's threat protection or security posture management, access management, governance, privileged access. these are companies that as todd mentioned earlier are looking for an identity partner that they can work with to help them solve all of their identity use cases whether that's threat protection or security posture management access management governance privileged access That is the secure identity fabric vision that Okta is bringing to customers. that is the secure identity fabric vision that okta is bringing to customers What we found is our customers want easier ways to engage with us to get the secure identity fabric for themselves. what we found is our customers want easier ways to engage with us to get the secure identity fabric for themselves The suites are really designed to do that. the suites are really designed to do that They bundle pieces of the Okta portfolio to help customers address the use cases that are most compelling for them right now, but also give them room for where they're going to grow on their roadmap as they go forward. We're pleased with what we've seen. We're a few months in, so we're not breaking out numbers for suites for that packaging specifically, but we're seeing the impact we expected. They bundle pieces of the Okta portfolio to help customers address the use cases that are most compelling for them right now, but also give them room for where they're going to grow on their roadmap as they go forward. they bundle pieces of the okta portfolio to help customers address the use cases that are most compelling for them right now but also give them room for where they're going to grow on their roadmap as they go forward We're pleased with what we've seen. we're pleased with what we've seen We're a few months in, so we're not breaking out numbers for suites for that packaging specifically, but we're seeing the impact we expected. we're a few months in so we're not breaking out numbers for suites for that packaging specifically but we're seeing the impact we expected

Speaker 13: I think it's a, I'll just add real quick, just to give the group some really detailed color about what's going on. We have a sales team now that's focused totally on selling the Okta products, and the opportunity there is big simply because we have to make sure the customer understands the breadth of what we have. It's much broader than it was just a couple of years ago. Just a couple of days ago, I was on a call with a big federal agency, and it's been a customer of Okta forever, but they really think of Okta as multi-factor authentication and just login. They had no idea we have a governance solution, we have identity threat protection, we have all these other products that can help them be secure across the board and consolidate vendors, etc. I think it's a, I'll just add real quick, just to give the group some really detailed color about what's going on. i think it's a i'll just add real quick just to give the group some really detailed color about what's going on We have a sales team now that's focused totally on selling the Okta products, and the opportunity there is big simply because we have to make sure the customer understands the breadth of what we have. we have a sales team now that's focused totally on selling the okta products and the opportunity there is big simply because we have to make sure the customer understands the breadth of what we have It's much broader than it was just a couple of years ago. it's much broader than it was just a couple of years ago Just a couple of days ago, I was on a call with a big federal agency, and it's been a customer of Okta forever, but they really think of Okta as multi-factor authentication and just login. just a couple of days ago i was on a call with a big federal agency and it's been a customer of okta forever but they really think of okta as multi-factor authentication and just login They had no idea we have a governance solution, we have identity threat protection, we have all these other products that can help them be secure across the board and consolidate vendors, etc. they had no idea we have a governance solution we have identity threat protection we have all these other products that can help them be secure across the board and consolidate vendors etc Their eyes just lit up, and the size of that deal potential just, you know, probably tripled or more. It's really about getting this message out there that this is possible. We have the best solution, the most comprehensive solution, the most modern solution. There is a better way, and that's why these things like suites or specialization dovetail right into that strategy that's working. Their eyes just lit up, and the size of that deal potential just, you know, probably tripled or more. their eyes just lit up and the size of that deal potential just you know probably tripled or more It's really about getting this message out there that this is possible. it's really about getting this message out there that this is possible We have the best solution, the most comprehensive solution, the most modern solution. we have the best solution the most comprehensive solution the most modern solution There is a better way, and that's why these things like suites or specialization dovetail right into that strategy that's working. there is a better way and that's why these things like suites or specialization dovetail right into that strategy that's working

Speaker 12: It's also a tie back to the conversation we've been having for a few quarters now around specialization. One of the reasons specialization to us was the winning strategy is we've seen so much innovation on the product side of the business for both the Okta platform and the Auth0 platform. To Todd's point, our sales reps were having difficulty really articulating and evangelizing the full benefits of the entire portfolio, the entire secure identity fabric to our customers. Specializing gives them more opportunity to get deeper. Whether it's Identity Threat Protection with Okta AI or Identity Security Posture Management, Okta Identity Governance, Okta Privileged Access, fine-grained authorization, highly regulated identity, all the products that have been coming out for both of these platforms and now Auth0 for agentic AI. It's also a tie back to the conversation we've been having for a few quarters now around specialization. it's also a tie back to the conversation we've been having for a few quarters now around specialization One of the reasons specialization to us was the winning strategy is we've seen so much innovation on the product side of the business for both the Okta platform and the Auth0 platform. one of the reasons specialization to us was the winning strategy is we've seen so much innovation on the product side of the business for both the okta platform and the auth0 platform To Todd's point, our sales reps were having difficulty really articulating and evangelizing the full benefits of the entire portfolio, the entire secure identity fabric to our customers. to todd's point our sales reps were having difficulty really articulating and evangelizing the full benefits of the entire portfolio the entire secure identity fabric to our customers Specializing gives them more opportunity to get deeper. specializing gives them more opportunity to get deeper Whether it's Identity Threat Protection with Okta AI or Identity Security Posture Management, Okta Identity Governance, Okta Privileged Access, fine-grained authorization, highly regulated identity, all the products that have been coming out for both of these platforms and now Auth0 for agentic AI. whether it's identity threat protection with okta ai or identity security posture management okta identity governance okta privileged access fine-grained authorization highly regulated identity all the products that have been coming out for both of these platforms and now auth0 for agentic ai These are specialists that are better able to get into the specifics of these technologies for the specific use cases our customers are talking to us. That's bringing us help. The suites are helping with that from a design and purchase standpoint. These are specialists that are better able to get into the specifics of these technologies for the specific use cases our customers are talking to us. these are specialists that are better able to get into the specifics of these technologies for the specific use cases our customers are talking to us That's bringing us help. that's bringing us help The suites are helping with that from a design and purchase standpoint. the suites are helping with that from a design and purchase standpoint

Speaker 16: Great. Thank you, guys. Great. great Thank you, guys. thank you guys

Speaker 3: Next up, we have John DiFucci. Next up, we have John DiFucci. next up we have john difucci

Speaker 6: Thanks, Dave, and thanks, everybody. There's a lot of good information coming out tonight, especially things like cross-app access, and it just demonstrates your leadership position in the whole identity space, especially when you're able to contribute that to the whole ecosystem. My question is for Brett, and it's a little more tactical, I think, because otherwise I know I'm going to get, we're all going to get this question all day tomorrow. Brett, you said that the sort of, I forget your exact words, but excess conservatism around the U.S. Fed, which was strong, and macro were no longer implied in your guide. I just want to make sure I understand what that means. Does it mean that we potentially won't see the same amount of beats going forward? You sort of alluded to that in the past. Thanks, Dave, and thanks, everybody. thanks dave and thanks everybody There's a lot of good information coming out tonight, especially things like cross-app access, and it just demonstrates your leadership position in the whole identity space, especially when you're able to contribute that to the whole ecosystem. there's a lot of good information coming out tonight especially things like cross-app access and it just demonstrates your leadership position in the whole identity space especially when you're able to contribute that to the whole ecosystem My question is for Brett, and it's a little more tactical, I think, because otherwise I know I'm going to get, we're all going to get this question all day tomorrow. my question is for brett and it's a little more tactical i think because otherwise i know i'm going to get we're all going to get this question all day tomorrow Brett, you said that the sort of, I forget your exact words, but excess conservatism around the U.S. brett you said that the sort of i forget your exact words but excess conservatism around the u.s Fed, which was strong, and macro were no longer implied in your guide. fed which was strong and macro were no longer implied in your guide I just want to make sure I understand what that means. i just want to make sure i understand what that means Does it mean that we potentially won't see the same amount of beats going forward? does it mean that we potentially won't see the same amount of beats going forward You sort of alluded to that in the past. you sort of alluded to that in the past Along the same lines, how long do you think the go-to-market changes that happened in fiscal 1Q will present a potential headwind to your business momentum? That's still in the guide, right? Along the same lines, how long do you think the go-to-market changes that happened in fiscal 1Q will present a potential headwind to your business momentum? along the same lines how long do you think the go-to-market changes that happened in fiscal 1q will present a potential headwind to your business momentum That's still in the guide, right? that's still in the guide right

Speaker 18: Absolutely. Yes, we did remove that layer of prudence for macro going forward. The primary reason is it didn't come to fruition like we thought it was going to the last time we spoke, probably about 90 days ago, John. To answer your second part of your question, yes, the go-to-market specialization is still baked in there. Although we're seeing positive signs and positive feedback from the field, we're still a couple of quarters in. As you remember, when we first started talking to all of you about this, it takes time for these things to come to fruition and really hit their full stride. We talked about U.S. public sector. We've talked about U.S. SMB. It's taken a little, it takes some time. You have to be methodical in your approach. Absolutely. absolutely Yes, we did remove that layer of prudence for macro going forward. yes we did remove that layer of prudence for macro going forward The primary reason is it didn't come to fruition like we thought it was going to the last time we spoke, probably about 90 days ago, John. the primary reason is it didn't come to fruition like we thought it was going to the last time we spoke probably about 90 days ago john To answer your second part of your question, yes, the go-to-market specialization is still baked in there. to answer your second part of your question yes the go-to-market specialization is still baked in there Although we're seeing positive signs and positive feedback from the field, we're still a couple of quarters in. although we're seeing positive signs and positive feedback from the field we're still a couple of quarters in As you remember, when we first started talking to all of you about this, it takes time for these things to come to fruition and really hit their full stride. as you remember when we first started talking to all of you about this it takes time for these things to come to fruition and really hit their full stride We talked about U.S. public sector. we talked about u.s public sector We've talked about U.S. we've talked about u.s SMB. smb It's taken a little, it takes some time. it's taken a little it takes some time You have to be methodical in your approach. you have to be methodical in your approach Yes, to your point, John, we are trying to shoot for closer to the pin than we have historically. We started trying to do that about three, four quarters ago. I will admit that I was probably a bit a little wrong on the macro side, and we delivered a really nice beat this quarter. If you look 90 days ago, the world was a little different. I will take that charge. Ultimately, we are trying to get a little closer to the pin than we have historically. Yes, to your point, John, we are trying to shoot for closer to the pin than we have historically. yes to your point john we are trying to shoot for closer to the pin than we have historically We started trying to do that about three, four quarters ago. we started trying to do that about three four quarters ago I will admit that I was probably a bit a little wrong on the macro side, and we delivered a really nice beat this quarter. i will admit that i was probably a bit a little wrong on the macro side and we delivered a really nice beat this quarter If you look 90 days ago, the world was a little different. if you look 90 days ago the world was a little different I will take that charge. i will take that charge Ultimately, we are trying to get a little closer to the pin than we have historically. ultimately we are trying to get a little closer to the pin than we have historically

Speaker 6: That's really helpful. Thank you, Brett. That's really helpful. that's really helpful Thank you, Brett. thank you brett

Speaker 3: Next up, we have Shreenath Atkari. Next up, we have Shreenath Atkari. next up we have shreenath atkari Great, thanks for taking my question. Congrats on the great quarter. Just on the cross-app access securing AI agent workflows, I know it's still early days to settle on any kind of pricing or monetization model to capitalize on this opportunity. If you can help expand on how you are viewing the monetization path for this, is it going to be embedded in the existing tiers? You highlighted the initial traction from your good, better, best suite or something you see evolving to standalone. Just curious, what are the earlier signs or feedback from like Zoom or AWS or all these customers trying to standard out in terms of downstream enterprise security spending and plans on this one? Thanks. Great, thanks for taking my question. great thanks for taking my question Congrats on the great quarter. congrats on the great quarter Just on the cross-app access securing AI agent workflows, I know it's still early days to settle on any kind of pricing or monetization model to capitalize on this opportunity. just on the cross-app access securing ai agent workflows i know it's still early days to settle on any kind of pricing or monetization model to capitalize on this opportunity If you can help expand on how you are viewing the monetization path for this, is it going to be embedded in the existing tiers? if you can help expand on how you are viewing the monetization path for this is it going to be embedded in the existing tiers You highlighted the initial traction from your good, better, best suite or something you see evolving to standalone. you highlighted the initial traction from your good better best suite or something you see evolving to standalone Just curious, what are the earlier signs or feedback from like Zoom or AWS or all these customers trying to standard out in terms of downstream enterprise security spending and plans on this one? just curious what are the earlier signs or feedback from like zoom or aws or all these customers trying to standard out in terms of downstream enterprise security spending and plans on this one Thanks. thanks

Speaker 13: Yeah, I would think of it this way. It's a really good question. This is how I, when we've talked about it and modeled it out, this is how we think about it. First of all, the cross-app access is an open industry standard. If we were able to talk last year around Octane, we talked about this, another new standard we've put out there and are working with all the identity companies on and a bunch of technology companies, it's called IPSI. These are two open standards we're pushing out there with the ecosystem. The effect of both of these things for Okta is going to be basically identity providers are going to be more valuable tools to their customers. They're going to have better control, better fine-grained control into resources, better policies, more value. The whole identity market gets more valuable and bigger. Yeah, I would think of it this way. yeah i would think of it this way It's a really good question. it's a really good question This is how I, when we've talked about it and modeled it out, this is how we think about it. this is how i when we've talked about it and modeled it out this is how we think about it First of all, the cross-app access is an open industry standard. first of all the cross-app access is an open industry standard If we were able to talk last year around Octane, we talked about this, another new standard we've put out there and are working with all the identity companies on and a bunch of technology companies, it's called IPSI. if we were able to talk last year around octane we talked about this another new standard we've put out there and are working with all the identity companies on and a bunch of technology companies it's called ipsi These are two open standards we're pushing out there with the ecosystem. these are two open standards we're pushing out there with the ecosystem The effect of both of these things for Okta is going to be basically identity providers are going to be more valuable tools to their customers. the effect of both of these things for okta is going to be basically identity providers are going to be more valuable tools to their customers They're going to have better control, better fine-grained control into resources, better policies, more value. they're going to have better control better fine-grained control into resources better policies more value The whole identity market gets more valuable and bigger. the whole identity market gets more valuable and bigger That's the way to think about these open standards. Now specifically on how Okta is going to monetize these two layers I've talked about. I talked about the clear and present issue today, which is service accounts, non-human identities. We monetize that through Okta Privilege Access and Identity Security Posture Management. Identity Security Posture Management detects the non-human identities and the risks in a proactive way that's comprehensive across all platforms. Okta Privilege Access and Okta Identity Governance can vault the credentials and rotate the credentials and have the right governance workflows. Axiom, of course, is going to add capability to Okta Privilege Access to have better support and more extensive support for database connections. That's the monetization of the clear and present thing today. That's affecting the results today. We talked about new products contribute healthily to the bookings, and that's true today. That's the way to think about these open standards. that's the way to think about these open standards Now specifically on how Okta is going to monetize these two layers I've talked about. now specifically on how okta is going to monetize these two layers i've talked about I talked about the clear and present issue today, which is service accounts, non-human identities. i talked about the clear and present issue today which is service accounts non-human identities We monetize that through Okta Privilege Access and Identity Security Posture Management. we monetize that through okta privilege access and identity security posture management Identity Security Posture Management detects the non-human identities and the risks in a proactive way that's comprehensive across all platforms. identity security posture management detects the non-human identities and the risks in a proactive way that's comprehensive across all platforms Okta Privilege Access and Okta Identity Governance can vault the credentials and rotate the credentials and have the right governance workflows. okta privilege access and okta identity governance can vault the credentials and rotate the credentials and have the right governance workflows Axiom, of course, is going to add capability to Okta Privilege Access to have better support and more extensive support for database connections. axiom of course is going to add capability to okta privilege access to have better support and more extensive support for database connections That's the monetization of the clear and present thing today. that's the monetization of the clear and present thing today That's affecting the results today. that's affecting the results today We talked about new products contribute healthily to the bookings, and that's true today. we talked about new products contribute healthily to the bookings and that's true today Now, on top of that, in a world of AI agents, our belief is strong that you are going to manage AI agents with your identity system. That's how we're going to monetize that. When you put a bunch of AI agents inside Okta, that's going to be more valuable from an identity security perspective, and we're going to be able to have, we're going to be able to charge for that with our customers. They're kind of separate things in two layers, but that's how we see the world unfolding. It all is kind of predicated on a vibrant, healthy, growing AI agent ecosystem, which I think is, there's a lot of different thoughts on how that exactly plays out, but who's the vendor going to be? Who's the platform? SaaS vendors versus, you know, custom development, whatever. Now, on top of that, in a world of AI agents, our belief is strong that you are going to manage AI agents with your identity system. now on top of that in a world of ai agents our belief is strong that you are going to manage ai agents with your identity system That's how we're going to monetize that. that's how we're going to monetize that When you put a bunch of AI agents inside Okta, that's going to be more valuable from an identity security perspective, and we're going to be able to have, we're going to be able to charge for that with our customers. when you put a bunch of ai agents inside okta that's going to be more valuable from an identity security perspective and we're going to be able to have we're going to be able to charge for that with our customers They're kind of separate things in two layers, but that's how we see the world unfolding. they're kind of separate things in two layers but that's how we see the world unfolding It all is kind of predicated on a vibrant, healthy, growing AI agent ecosystem, which I think is, there's a lot of different thoughts on how that exactly plays out, but who's the vendor going to be? it all is kind of predicated on a vibrant healthy growing ai agent ecosystem which i think is there's a lot of different thoughts on how that exactly plays out but who's the vendor going to be Who's the platform? who's the platform SaaS vendors versus, you know, custom development, whatever. saas vendors versus you know custom development whatever I think whatever happens, you're going to need to manage this stuff. That's why we're inserting ourselves on that dimension, and that's why we're very excited about where this is all going. I think whatever happens, you're going to need to manage this stuff. i think whatever happens you're going to need to manage this stuff That's why we're inserting ourselves on that dimension, and that's why we're very excited about where this is all going. that's why we're inserting ourselves on that dimension and that's why we're very excited about where this is all going Super helpful, Todd. Thanks a lot. Super helpful, Todd. super helpful todd Thanks a lot. thanks a lot

Speaker 3: Next, let's go to Adam Borg. Next, let's go to Adam Borg. next let's go to adam borg

Speaker 5: Awesome. Thanks for taking the question. Maybe for Eric on the go-to-market changes, you did talk about this a few minutes ago in your answer to Brian, but where are we today with sales productivity relative to historical levels? What do you guys need to see in order to put more gas in the sales new hiring process, either in the back half of the year or ultimately as we head into fiscal 2027? Thanks. Awesome. awesome Thanks for taking the question. thanks for taking the question Maybe for Eric on the go-to-market changes, you did talk about this a few minutes ago in your answer to Brian, but where are we today with sales productivity relative to historical levels? maybe for eric on the go-to-market changes you did talk about this a few minutes ago in your answer to brian but where are we today with sales productivity relative to historical levels What do you guys need to see in order to put more gas in the sales new hiring process, either in the back half of the year or ultimately as we head into fiscal 2027? what do you guys need to see in order to put more gas in the sales new hiring process either in the back half of the year or ultimately as we head into fiscal 2027 Thanks. thanks

Speaker 12: Yeah, you bet. We talked about at the end of last year, based upon our first two rounds of specialization in public sector and Hunter Farmer, I think it was in our Q4 results, we talked about how we would hit a multi-year high for sales productivity. We were leaning into the specialization work and reorienting our sales capacity and our supporting teams in pre-sales and post-sales and also our marketing generation teams. As I mentioned earlier, we generated a record amount of pipeline for us in Q2. Specialization is definitely helping at the top of the funnel. We're pleased with that. I think from a sales productivity standpoint, we saw gains in Q2 as well. We are very much on track with what we expected out of this model. Our guidance for the second half reflects that as well. We're confident in the strategy of specializing on our buyers and our platforms. Yeah, you bet. yeah you bet We talked about at the end of last year, based upon our first two rounds of specialization in public sector and Hunter Farmer, I think it was in our Q4 results, we talked about how we would hit a multi-year high for sales productivity. we talked about at the end of last year based upon our first two rounds of specialization in public sector and hunter farmer i think it was in our q4 results we talked about how we would hit a multi-year high for sales productivity We were leaning into the specialization work and reorienting our sales capacity and our supporting teams in pre-sales and post-sales and also our marketing generation teams. we were leaning into the specialization work and reorienting our sales capacity and our supporting teams in pre-sales and post-sales and also our marketing generation teams As I mentioned earlier, we generated a record amount of pipeline for us in Q2. as i mentioned earlier we generated a record amount of pipeline for us in q2 Specialization is definitely helping at the top of the funnel. specialization is definitely helping at the top of the funnel We're pleased with that. we're pleased with that I think from a sales productivity standpoint, we saw gains in Q2 as well. i think from a sales productivity standpoint we saw gains in q2 as well We are very much on track with what we expected out of this model. we are very much on track with what we expected out of this model Our guidance for the second half reflects that as well. our guidance for the second half reflects that as well We're confident in the strategy of specializing on our buyers and our platforms. we're confident in the strategy of specializing on our buyers and our platforms

Speaker 5: Awesome. Thanks again. Awesome. awesome Thanks again. thanks again

Speaker 13: One thing I'll add there is that our year is, like a lot of enterprise companies, back-end loaded. In terms of that confidence and putting the investment level, cranking the investment in terms of go-to-market and growth acceleration, et cetera, et cetera, a strong Q3, a strong Q4 is worth more than a strong Q1 and a strong Q2. That's just the nature of the numbers and how they play out. As we go through the rest of the year, we're looking to build on this strength and get super confident exiting this year and going into next year. One thing I'll add there is that our year is, like a lot of enterprise companies, back-end loaded. one thing i'll add there is that our year is like a lot of enterprise companies back-end loaded In terms of that confidence and putting the investment level, cranking the investment in terms of go-to-market and growth acceleration, et cetera, et cetera, a strong Q3, a strong Q4 is worth more than a strong Q1 and a strong Q2. in terms of that confidence and putting the investment level cranking the investment in terms of go-to-market and growth acceleration et cetera et cetera a strong q3 a strong q4 is worth more than a strong q1 and a strong q2 That's just the nature of the numbers and how they play out. that's just the nature of the numbers and how they play out As we go through the rest of the year, we're looking to build on this strength and get super confident exiting this year and going into next year. as we go through the rest of the year we're looking to build on this strength and get super confident exiting this year and going into next year

Speaker 5: Thanks again. Thanks again. thanks again

Speaker 13: Here's the question, Adam. Here's the question, Adam. here's the question adam

Speaker 3: Sorry, next up. Sorry, next up. sorry next up

Speaker 11: Thanks, Dave. Thanks everyone for the time here. I just wanted to cycle back on some of the different dimensions here for public sector. I know that you guys spoke about, hey, there was some restructuring standpoint for some of these civilian contracts. First, is it fair to assume then the Q2 played out better than what you initially anticipated? Secondly, with the removal of some of that conservatism we had previously introduced to the guide, are we now just operating in a more normalized buying environment, or are you guys just executing better than planned? Any detail on the public sector front from that standpoint would be beneficial. Thank you. Thanks, Dave. thanks dave Thanks everyone for the time here. thanks everyone for the time here I just wanted to cycle back on some of the different dimensions here for public sector. i just wanted to cycle back on some of the different dimensions here for public sector I know that you guys spoke about, hey, there was some restructuring standpoint for some of these civilian contracts. i know that you guys spoke about hey there was some restructuring standpoint for some of these civilian contracts First, is it fair to assume then the Q2 played out better than what you initially anticipated? first is it fair to assume then the q2 played out better than what you initially anticipated Secondly, with the removal of some of that conservatism we had previously introduced to the guide, are we now just operating in a more normalized buying environment, or are you guys just executing better than planned? secondly with the removal of some of that conservatism we had previously introduced to the guide are we now just operating in a more normalized buying environment or are you guys just executing better than planned Any detail on the public sector front from that standpoint would be beneficial. any detail on the public sector front from that standpoint would be beneficial Thank you. thank you

Speaker 12: I was just going to say like three months ago, there was a lot of uncertainty in the public sector. You had massive government layoffs, and you had a lot of people talking about a lot of dramatic changes. I think in the quarter, what we saw is that there were some contracts that were paused or restructured, but what we also saw is that the overwhelming balance of the business was super positive. The impact on some of those government spending efforts, you know, did not materialize in a negative way. I think that is just a different, we have gotten through some of that uncertainty, and it has settled down a little bit. What we are seeing is that the technology we provide is pretty critical and pretty strategic. By the way, the government, particularly the federal government, has a huge need for it. They have legacy systems. I was just going to say like three months ago, there was a lot of uncertainty in the public sector. i was just going to say like three months ago there was a lot of uncertainty in the public sector You had massive government layoffs, and you had a lot of people talking about a lot of dramatic changes. you had massive government layoffs and you had a lot of people talking about a lot of dramatic changes I think in the quarter, what we saw is that there were some contracts that were paused or restructured, but what we also saw is that the overwhelming balance of the business was super positive. i think in the quarter what we saw is that there were some contracts that were paused or restructured but what we also saw is that the overwhelming balance of the business was super positive The impact on some of those government spending efforts, you know, did not materialize in a negative way. the impact on some of those government spending efforts you know, did not materialize in a negative way I think that is just a different, we have gotten through some of that uncertainty, and it has settled down a little bit. i think that is just a different, we have gotten through some of that uncertainty and it has settled down a little bit What we are seeing is that the technology we provide is pretty critical and pretty strategic. what we are seeing is that the technology we provide is pretty critical and pretty strategic By the way, the government, particularly the federal government, has a huge need for it. by the way the government particularly the federal government has a huge need for it They have legacy systems. they have legacy systems Identity in the federal government often means some massive outsourced operation run by a big contractor. This concept of a modern purpose-built identity security platform is just amazing for them. I think the fundamentals are winning out there in terms of, in some of the short-term uncertainty, I think was a little, we, you know, we overestimated that. Yeah. You see that in some of the structures of the deal, Mike. I talked earlier about, and Todd just said, some of the contract restructuring. What that would look like is, in some cases, oh, we do not have as many users as we used to, because I think we all know that there have been a few layoffs in the government. At the same time, there is an upsell that goes along with it for new products that they are not previously using. We end up in a good place. Identity in the federal government often means some massive outsourced operation run by a big contractor. identity in the federal government often means some massive outsourced operation run by a big contractor This concept of a modern purpose-built identity security platform is just amazing for them. this concept of a modern purpose-built identity security platform is just amazing for them I think the fundamentals are winning out there in terms of, in some of the short-term uncertainty, I think was a little, we, you know, we overestimated that. i think the fundamentals are winning out there in terms of in some of the short-term uncertainty i think was a little we you know we overestimated that Yeah. yeah You see that in some of the structures of the deal, Mike. you see that in some of the structures of the deal mike I talked earlier about, and Todd just said, some of the contract restructuring. i talked earlier about and todd just said some of the contract restructuring What that would look like is, in some cases, oh, we do not have as many users as we used to, because I think we all know that there have been a few layoffs in the government. what that would look like is in some cases oh we do not have as many users as we used to because i think we all know that there have been a few layoffs in the government At the same time, there is an upsell that goes along with it for new products that they are not previously using. at the same time there is an upsell that goes along with it for new products that they are not previously using We end up in a good place. we end up in a good place It just, maybe we do not get as much of an upsell because ultimately there are less users on the other side because there are less employees in the federal government now. That is what we mean by contract restructuring. It is actually not a bad thing. It is actually them being more ingrained with Okta. We look at that as a positive, as usually more products are on, the higher the renewal rates and the higher upsell rates we get over time. It just, maybe we do not get as much of an upsell because ultimately there are less users on the other side because there are less employees in the federal government now. it just maybe we do not get as much of an upsell because ultimately there are less users on the other side because there are less employees in the federal government now That is what we mean by contract restructuring. It is actually not a bad thing. It is actually them being more ingrained with Okta. that is what we mean by contract restructuring. it is actually not a bad thing. it is actually them being more ingrained with okta We look at that as a positive, as usually more products are on, the higher the renewal rates and the higher upsell rates we get over time. we look at that as a positive as usually more products are on the higher the renewal rates and the higher upsell rates we get over time

Speaker 11: Thank you, guys. Thank you, guys. thank you guys

Speaker 3: Hey, let's go to Andy Nowinski. Hey, let's go to Andy Nowinski. hey let's go to andy nowinski

Speaker 1: Okay, great. Thank you so much for taking the question and a nice quarter as well. You know, Todd, I know Auth0 has been doing exceptionally well, and you have a great pipeline on Auth0 given all the new AI products coming out. I wanted to ask a question maybe about your workforce ACV. We continue to hear how customers want to consolidate identity vendors and how they want workforce products like IGA and PAM and SSO all on a single platform, which you guys have. My question is, why hasn't that sort of thirst for a complete platform had more of a positive impact on your workforce ACV growth, which has been decelerating over the last 12 months? Just wondering how you're thinking about sort of your bread and butter workforce ACV going forward. Okay, great. okay great Thank you so much for taking the question and a nice quarter as well. thank you so much for taking the question and a nice quarter as well You know, Todd, I know Auth0 has been doing exceptionally well, and you have a great pipeline on Auth0 given all the new AI products coming out. you know todd i know auth0 has been doing exceptionally well and you have a great pipeline on auth0 given all the new ai products coming out I wanted to ask a question maybe about your workforce ACV. i wanted to ask a question maybe about your workforce acv We continue to hear how customers want to consolidate identity vendors and how they want workforce products like IGA and PAM and SSO all on a single platform, which you guys have. we continue to hear how customers want to consolidate identity vendors and how they want workforce products like iga and pam and sso all on a single platform which you guys have My question is, why hasn't that sort of thirst for a complete platform had more of a positive impact on your workforce ACV growth, which has been decelerating over the last 12 months? my question is why hasn't that sort of thirst for a complete platform had more of a positive impact on your workforce acv growth which has been decelerating over the last 12 months Just wondering how you're thinking about sort of your bread and butter workforce ACV going forward. just wondering how you're thinking about sort of your bread and butter workforce acv going forward

Speaker 12: I think we're going to do better there. I think the market is big. I think the opportunity is substantial, and I think we're doing a better job of explaining to customers what we have and getting the message out and getting real proof points with customers live at scale. By the way, that's one of the real strengths of our product suite, particularly in the identity governance space. Our average customer is live with multiple resources in 30 days. That's unheard of for a SailPoint implementation. It's legacy software. It's pretty heavyweight to deploy. It's hard to get successful with. As those stories get out there of proof points of customers getting live with multiple applications and bringing stuff into the management, bringing resources into the management framework, it starts to resonate. I think that's one of the reasons why we specialize in Salesforce to be more effective there. I think we're going to do better there. i think we're going to do better there I think the market is big. i think the market is big I think the opportunity is substantial, and I think we're doing a better job of explaining to customers what we have and getting the message out and getting real proof points with customers live at scale. i think the opportunity is substantial and i think we're doing a better job of explaining to customers what we have and getting the message out and getting real proof points with customers live at scale By the way, that's one of the real strengths of our product suite, particularly in the identity governance space. by the way that's one of the real strengths of our product suite particularly in the identity governance space Our average customer is live with multiple resources in 30 days. our average customer is live with multiple resources in 30 days That's unheard of for a SailPoint implementation. that's unheard of for a sailpoint implementation It's legacy software. it's legacy software It's pretty heavyweight to deploy. it's pretty heavyweight to deploy It's hard to get successful with. it's hard to get successful with As those stories get out there of proof points of customers getting live with multiple applications and bringing stuff into the management, bringing resources into the management framework, it starts to resonate. as those stories get out there of proof points of customers getting live with multiple applications and bringing stuff into the management bringing resources into the management framework it starts to resonate I think that's one of the reasons why we specialize in Salesforce to be more effective there. i think that's one of the reasons why we specialize in salesforce to be more effective there It's one of the reasons why we're investing heavily in the R&D for these new products to make sure they're fully featured, particularly up market. That's why we're excited about the Axiom Security acquisition and many other efforts. Like I said before, we're building the best team in identity. If anyone is world-class and wants to work on identity, they should come work for us. It's one of the reasons why we're investing heavily in the R&D for these new products to make sure they're fully featured, particularly up market. it's one of the reasons why we're investing heavily in the r&d for these new products to make sure they're fully featured particularly up market That's why we're excited about the Axiom Security acquisition and many other efforts. that's why we're excited about the axiom security acquisition and many other efforts Like I said before, we're building the best team in identity. like i said before we're building the best team in identity If anyone is world-class and wants to work on identity, they should come work for us. if anyone is world-class and wants to work on identity they should come work for us

Speaker 1: Another. Go ahead, Eric. Another. another Go ahead, Eric. go ahead eric

Speaker 12: Another thing I would add to that is coming back to the overall vision of the secure identity fabric we've talked about and how to consolidate use cases on a platform. Todd talked about one account he's working with, one of the world's largest technology companies, and consolidating 50 different identity systems onto Okta. From the CIOs and CISOs that I'm talking to at the accounts that I work with, what I'm really hearing is that having such a disparate framework isn't just expensive. It also adds complexity, which adds fragility, which creates security holes. Part of the value in our customer's mind of consolidating use cases with the trusted identity provider is they can have confidence in how they administer the product, how they administer the platform, and knowing that they can have secure identity across all of these use cases. Another thing I would add to that is coming back to the overall vision of the secure identity fabric we've talked about and how to consolidate use cases on a platform. another thing i would add to that is coming back to the overall vision of the secure identity fabric we've talked about and how to consolidate use cases on a platform Todd talked about one account he's working with, one of the world's largest technology companies, and consolidating 50 different identity systems onto Okta. todd talked about one account he's working with one of the world's largest technology companies and consolidating 50 different identity systems onto okta From the CIOs and CISOs that I'm talking to at the accounts that I work with, what I'm really hearing is that having such a disparate framework isn't just expensive. from the cios and cisos that i'm talking to at the accounts that i work with what i'm really hearing is that having such a disparate framework isn't just expensive It also adds complexity, which adds fragility, which creates security holes. it also adds complexity which adds fragility which creates security holes Part of the value in our customer's mind of consolidating use cases with the trusted identity provider is they can have confidence in how they administer the product, how they administer the platform, and knowing that they can have secure identity across all of these use cases. part of the value in our customer's mind of consolidating use cases with the trusted identity provider is they can have confidence in how they administer the product how they administer the platform and knowing that they can have secure identity across all of these use cases That's an added value and something that we've seen more and more from our customers as we've seen the wave in industry ride from cloud enablement and how identity is necessary to help people move to the cloud into this phase of security and how we help companies secure identity. Now as we look forward to agentic AI, again, it's going to be even more important for our customers to make sure that they've got a partner that they can work with. That's an added value and something that we've seen more and more from our customers as we've seen the wave in industry ride from cloud enablement and how identity is necessary to help people move to the cloud into this phase of security and how we help companies secure identity. that's an added value and something that we've seen more and more from our customers as we've seen the wave in industry ride from cloud enablement and how identity is necessary to help people move to the cloud into this phase of security and how we help companies secure identity Now as we look forward to agentic AI, again, it's going to be even more important for our customers to make sure that they've got a partner that they can work with. now as we look forward to agentic ai again it's going to be even more important for our customers to make sure that they've got a partner that they can work with

Speaker 1: Thank you. Thank you. thank you

Speaker 3: Okay, next up, we'll go to Jonathan Rookaver. Okay, next up, we'll go to Jonathan Rookaver. okay next up we'll go to jonathan rookaver Yeah, thanks, David. I think, Todd, this is probably for you. I'm curious if you would agree with the view that has been articulated by other industry participants that PAM capabilities can be delivered to all employees at a cost comparable to IAM. I think when you look at the growing need for cloud-native just-in-time ephemeral credentials to support agentic and machine identities, maybe help us understand, does Axiom potentially fit into that thesis that yes, PAM can be deployed more broadly and cost-effectively both across human and non-human identities? What's your strategy along those lines? Yeah, thanks, David. yeah thanks david I think, Todd, this is probably for you. i think todd this is probably for you I'm curious if you would agree with the view that has been articulated by other industry participants that PAM capabilities can be delivered to all employees at a cost comparable to IAM. i'm curious if you would agree with the view that has been articulated by other industry participants that pam capabilities can be delivered to all employees at a cost comparable to iam I think when you look at the growing need for cloud-native just-in-time ephemeral credentials to support agentic and machine identities, maybe help us understand, does Axiom potentially fit into that thesis that yes, PAM can be deployed more broadly and cost-effectively both across human and non-human identities? i think when you look at the growing need for cloud-native just-in-time ephemeral credentials to support agentic and machine identities maybe help us understand does axiom potentially fit into that thesis that yes pam can be deployed more broadly and cost-effectively both across human and non-human identities What's your strategy along those lines? what's your strategy along those lines

Speaker 13: Yeah, every identity type, employees, partners, customers, every resource, so database, cloud infrastructure, servers, Kubernetes containers, every resource in machines in the environment, and then every use case. Privileged access workflows, identity governance, attestation reporting, like the core access management workflows around creating accounts and removing accounts. That's what we're building. It's comprehensive, it's complete. I do agree. I do think that you want every employee to have a really locked-down secure identity experience. That's why we have the world's leading authenticator, phishing-resistant authenticator called FastPass, which is employed by, you know, quite a significant number of our customers and has been over the last five years. It's why it's so important to have these different pieces together. I think that's very important. One of the things that's also very important is I talk to customers. Yeah, every identity type, employees, partners, customers, every resource, so database, cloud infrastructure, servers, Kubernetes containers, every resource in machines in the environment, and then every use case. yeah every identity type employees partners customers every resource so database cloud infrastructure servers kubernetes containers every resource in machines in the environment and then every use case Privileged access workflows, identity governance, attestation reporting, like the core access management workflows around creating accounts and removing accounts. privileged access workflows identity governance attestation reporting like the core access management workflows around creating accounts and removing accounts That's what we're building. that's what we're building It's comprehensive, it's complete. it's comprehensive it's complete I do agree. i do agree I do think that you want every employee to have a really locked-down secure identity experience. i do think that you want every employee to have a really locked-down secure identity experience That's why we have the world's leading authenticator, phishing-resistant authenticator called FastPass, which is employed by, you know, quite a significant number of our customers and has been over the last five years. that's why we have the world's leading authenticator phishing-resistant authenticator called fastpass which is employed by you know quite a significant number of our customers and has been over the last five years It's why it's so important to have these different pieces together. it's why it's so important to have these different pieces together I think that's very important. i think that's very important One of the things that's also very important is I talk to customers. one of the things that's also very important is i talk to customers I was talking with a Chief Security Officer of a big beverage company just two weeks ago, and their whole thing was, you know, they want to make sure that their identity provider works with all of their security tools. It's in divisions and companies they bought. They have SentinelOne, they have CrowdStrike, they have legacy technology for endpoint, they have Wiz, they have Zscaler, they have Palo Alto Networks. His plea to me was, he said, "Todd, I need to consolidate something. I can't consolidate all my security stuff. It's too disparate. I can consolidate identity, but you have to make sure it connects to all this stuff. Make sure it connects to Zscaler, make sure it connects to Palo Alto Networks, make sure it connects to Microsoft's network security." I said, "That's what we do. We connect you to everything." I think that's the winning formula. I was talking with a Chief Security Officer of a big beverage company just two weeks ago, and their whole thing was, you know, they want to make sure that their identity provider works with all of their security tools. i was talking with a chief security officer of a big beverage company just two weeks ago and their whole thing was you know they want to make sure that their identity provider works with all of their security tools It's in divisions and companies they bought. it's in divisions and companies they bought They have SentinelOne, they have CrowdStrike, they have legacy technology for endpoint, they have Wiz, they have Zscaler, they have Palo Alto Networks. they have sentinelone they have crowdstrike they have legacy technology for endpoint they have wiz they have zscaler they have palo alto networks His plea to me was, he said, "Todd, I need to consolidate something. his plea to me was he said "todd i need to consolidate something I can't consolidate all my security stuff. i can't consolidate all my security stuff It's too disparate. it's too disparate I can consolidate identity, but you have to make sure it connects to all this stuff. i can consolidate identity but you have to make sure it connects to all this stuff Make sure it connects to Zscaler, make sure it connects to Palo Alto Networks, make sure it connects to Microsoft's network security." I said, "That's what we do. make sure it connects to zscaler make sure it connects to palo alto networks make sure it connects to microsoft's network security." i said "that's what we do We connect you to everything." I think that's the winning formula. we connect you to everything." i think that's the winning formula Helpful. Thank you. Helpful. helpful Thank you. thank you

Speaker 3: Next up is Rob Owens. Rob. Next up is Rob Owens. next up is rob owens Rob. rob

Speaker 10: Thanks, Dave, and good afternoon, everybody. Actually, it was exactly what I was going to ask. I'll shift to a more Brett-focused RPO, CRPO question, I guess. Brett, if I look at the last couple of years, just in the RPO acceleration that you guys have seen, number one. Number two, you've talked about constant duration as well. Over that same time, you know, CRPO has been trending down. It's finding a bottom here. At what point do we see a better marriage, I guess, between prior RPO growth and forward CRPO growth? Maybe you can weave into that just what you're seeing from a retention rate perspective in terms of GRR. Thanks. Thanks, Dave, and good afternoon, everybody. thanks dave and good afternoon everybody Actually, it was exactly what I was going to ask. actually it was exactly what i was going to ask I'll shift to a more Brett-focused RPO, CRPO question, I guess. i'll shift to a more brett-focused rpo crpo question i guess Brett, if I look at the last couple of years, just in the RPO acceleration that you guys have seen, number one. brett if i look at the last couple of years just in the rpo acceleration that you guys have seen number one Number two, you've talked about constant duration as well. number two you've talked about constant duration as well Over that same time, you know, CRPO has been trending down. over that same time you know crpo has been trending down It's finding a bottom here. it's finding a bottom here At what point do we see a better marriage, I guess, between prior RPO growth and forward CRPO growth? at what point do we see a better marriage i guess between prior rpo growth and forward crpo growth Maybe you can weave into that just what you're seeing from a retention rate perspective in terms of GRR. maybe you can weave into that just what you're seeing from a retention rate perspective in terms of grr Thanks. thanks

Speaker 18: You're talking about last year we saw RPO outpace CRPO, right? Is that what you're talking about? You're talking about last year we saw RPO outpace CRPO, right? you're talking about last year we saw rpo outpace crpo right Is that what you're talking about? is that what you're talking about

Speaker 10: Yeah, it's been for a couple of years. You've seen that acceleration in RPO, and if it's constant duration, it feels like that should come through on the CRPO. You know, that's not in your guide. I think a lot of us had looked for maybe some of those headwinds to abate here in the second half that have been holding down NRR, potentially providing a lift to CRPO, especially as you're talking about your success with cross-selling and upselling. Yeah, it's been for a couple of years. yeah it's been for a couple of years You've seen that acceleration in RPO, and if it's constant duration, it feels like that should come through on the CRPO. you've seen that acceleration in rpo and if it's constant duration it feels like that should come through on the crpo You know, that's not in your guide. you know that's not in your guide I think a lot of us had looked for maybe some of those headwinds to abate here in the second half that have been holding down NRR, potentially providing a lift to CRPO, especially as you're talking about your success with cross-selling and upselling. i think a lot of us had looked for maybe some of those headwinds to abate here in the second half that have been holding down nrr potentially providing a lift to crpo especially as you're talking about your success with cross-selling and upselling

Speaker 18: Yeah, absolutely. When I've said the constant duration, I meant the duration of the amount to incur in RPO, you know, because you don't have a 12-month value incur in RPO at all times. That's just how it works. In terms of duration of contracts that we're signing, if you remember in FY2025, we went back to incenting the field on contract duration as part of their compensation plan. The prior couple of years, we hadn't done that. You saw RPO go up in a big way because contract duration went up in a big way, right? If you look at this year, contract duration is still in their comp plan, right? It's still a component that we pay them on, and you're seeing more of a normalization. Yeah, absolutely. yeah absolutely When I've said the constant duration, I meant the duration of the amount to incur in RPO, you know, because you don't have a 12-month value incur in RPO at all times. when i've said the constant duration i meant the duration of the amount to incur in rpo you know because you don't have a 12-month value incur in rpo at all times That's just how it works. that's just how it works In terms of duration of contracts that we're signing, if you remember in FY2025, we went back to incenting the field on contract duration as part of their compensation plan. in terms of duration of contracts that we're signing if you remember in fy2025 we went back to incenting the field on contract duration as part of their compensation plan The prior couple of years, we hadn't done that. the prior couple of years we hadn't done that You saw RPO go up in a big way because contract duration went up in a big way, right? you saw rpo go up in a big way because contract duration went up in a big way right If you look at this year, contract duration is still in their comp plan, right? if you look at this year contract duration is still in their comp plan right It's still a component that we pay them on, and you're seeing more of a normalization. it's still a component that we pay them on and you're seeing more of a normalization We see contract duration actually in the first half slightly ticking up, but it's not going to have the effect like it did last year because it's coming off of a different base, if you will, Rob. Hopefully that answers your question around current RPO and total RPO and the dynamics in between those. It's a simple sales comp model. That's all it really is. We see contract duration actually in the first half slightly ticking up, but it's not going to have the effect like it did last year because it's coming off of a different base, if you will, Rob. we see contract duration actually in the first half slightly ticking up but it's not going to have the effect like it did last year because it's coming off of a different base if you will rob Hopefully that answers your question around current RPO and total RPO and the dynamics in between those. hopefully that answers your question around current rpo and total rpo and the dynamics in between those It's a simple sales comp model. it's a simple sales comp model That's all it really is. that's all it really is

Speaker 10: Any broader comments on GRR? Any broader comments on GRR? any broader comments on grr

Speaker 18: Yeah, we tend to continue to have that be a strong number for us. It's always been, it's been healthy. It's been one of those things, it's a hallmark of this company that for years it's been, it's been healthy and it continues to be so, at least through the first half of FY2026. We're looking forward to some solid results as we finish out the fiscal year. Yeah, we tend to continue to have that be a strong number for us. yeah we tend to continue to have that be a strong number for us It's always been, it's been healthy. it's always been it's been healthy It's been one of those things, it's a hallmark of this company that for years it's been, it's been healthy and it continues to be so, at least through the first half of FY2026. it's been one of those things it's a hallmark of this company that for years it's been it's been healthy and it continues to be so at least through the first half of fy2026 We're looking forward to some solid results as we finish out the fiscal year. we're looking forward to some solid results as we finish out the fiscal year

Speaker 10: All right, thank you. All right, thank you. all right thank you

Speaker 18: No problem. No problem. no problem

Speaker 13: Thanks, Rob. Thanks, Rob. thanks rob

Speaker 3: We're coming up on the hour, but let's try to get questions in from Anik and Gabriella. Anik Bauman, go ahead. We're coming up on the hour, but let's try to get questions in from Anik and Gabriella. we're coming up on the hour but let's try to get questions in from anik and gabriella Anik Bauman, go ahead. anik bauman go ahead Hey guys, I'm on for Joe Gallo here. Brett, any verticals beyond federal, because we've talked about that a lot, or geos of strength or weakness to call out in 2Q? Todd, can you just talk us through the key to unlocking the international market? Seems like an incredible opportunity relative to what you've built in the U.S. today. Hey guys, I'm on for Joe Gallo here. hey guys i'm on for joe gallo here Brett, any verticals beyond federal, because we've talked about that a lot, or geos of strength or weakness to call out in 2Q? brett any verticals beyond federal because we've talked about that a lot or geos of strength or weakness to call out in 2q Todd, can you just talk us through the key to unlocking the international market? todd can you just talk us through the key to unlocking the international market Seems like an incredible opportunity relative to what you've built in the U.S. today. seems like an incredible opportunity relative to what you've built in the u.s today

Speaker 13: Yeah, I would say larger customers. Enterprise in general had a really nice quarter. We're feeling solid about that. That's been actually pretty consistent for a while now. We've talked about bigger customers getting bigger, and that's why we see enterprise doing well. I'll let Eric comment a little bit on that because I know it's near and dear to his heart on that topic. Yeah, I would say larger customers. yeah i would say larger customers Enterprise in general had a really nice quarter. enterprise in general had a really nice quarter We're feeling solid about that. we're feeling solid about that That's been actually pretty consistent for a while now. that's been actually pretty consistent for a while now We've talked about bigger customers getting bigger, and that's why we see enterprise doing well. we've talked about bigger customers getting bigger and that's why we see enterprise doing well I'll let Eric comment a little bit on that because I know it's near and dear to his heart on that topic. i'll let eric comment a little bit on that because i know it's near and dear to his heart on that topic

Speaker 12: Yeah, we continue to see strength in upmarket in large customers. I would agree with that focus. We talked about updated stats on our customers above $100,000 and customers above $1 million in ACV spend continue to be growing at high rates. That reflects what we see as the industry trend of the importance of people investing in security. We look now at cyber events worldwide, and over 80% of them start with some form of compromised identity. Our customers, CIOs and CISOs, are coming to us to help them build the partnership they need across our expanded product portfolio. We continue to see great success there. Yeah, we continue to see strength in upmarket in large customers. yeah we continue to see strength in upmarket in large customers I would agree with that focus. i would agree with that focus We talked about updated stats on our customers above $100,000 and customers above $1 million in ACV spend continue to be growing at high rates. we talked about updated stats on our customers above $100,000 and customers above $1 million in acv spend continue to be growing at high rates That reflects what we see as the industry trend of the importance of people investing in security. that reflects what we see as the industry trend of the importance of people investing in security We look now at cyber events worldwide, and over 80% of them start with some form of compromised identity. we look now at cyber events worldwide and over 80% of them start with some form of compromised identity Our customers, CIOs and CISOs, are coming to us to help them build the partnership they need across our expanded product portfolio. our customers cios and cisos are coming to us to help them build the partnership they need across our expanded product portfolio We continue to see great success there. we continue to see great success there

Speaker 13: On the international question, we have a big opportunity in international. Our strategy there is really to invest in our top 10 countries and make sure we fully do everything we need to make those successful and get those to grow to their potential versus spreading ourselves too thinly. We are going to continue to really prioritize our top 10 countries ruthlessly and invest to make those successful because we do think the opportunity is quite substantial. On the international question, we have a big opportunity in international. on the international question we have a big opportunity in international Our strategy there is really to invest in our top 10 countries and make sure we fully do everything we need to make those successful and get those to grow to their potential versus spreading ourselves too thinly. our strategy there is really to invest in our top 10 countries and make sure we fully do everything we need to make those successful and get those to grow to their potential versus spreading ourselves too thinly We are going to continue to really prioritize our top 10 countries ruthlessly and invest to make those successful because we do think the opportunity is quite substantial. we are going to continue to really prioritize our top 10 countries ruthlessly and invest to make those successful because we do think the opportunity is quite substantial Makes sense. Thanks, guys. Makes sense. makes sense Thanks, guys. thanks guys

Speaker 3: Okay, last question from Gabriella Borges. Okay, last question from Gabriella Borges. okay last question from gabriella borges Hey, thank you for Todd and for Eric. I want to explore this idea of security and identity in the convergence effort. Give us a little bit of an update on where you're seeing progress with the go-to-market, specifically with security bias in the enterprise. The reason I'm asking now is, Todd, you mentioned not expecting to see a change in the competitive landscape because of Palo Alto. Palo Alto is really good at driving some of these strategic conversations at the top of the house with CISOs. Maybe just an update on how you're progressing. Please push back against that. Hey, thank you for Todd and for Eric. hey thank you for todd and for eric I want to explore this idea of security and identity in the convergence effort. i want to explore this idea of security and identity in the convergence effort Give us a little bit of an update on where you're seeing progress with the go-to-market, specifically with security bias in the enterprise. give us a little bit of an update on where you're seeing progress with the go-to-market specifically with security bias in the enterprise The reason I'm asking now is, Todd, you mentioned not expecting to see a change in the competitive landscape because of Palo Alto. the reason i'm asking now is todd you mentioned not expecting to see a change in the competitive landscape because of palo alto Palo Alto is really good at driving some of these strategic conversations at the top of the house with CISOs. palo alto is really good at driving some of these strategic conversations at the top of the house with cisos Maybe just an update on how you're progressing. maybe just an update on how you're progressing Please push back against that. please push back against that

Speaker 13: I think it's a question of the capabilities of the products you're offering. I think where a security vendor is going to struggle is the breadth of identity types, first of all, and the breadth of use cases they can support across those identity types. What we still see, it's very influenced by security, but it's still more than a security conversation. A lot of the identity management products, particularly governance, operationally help the companies in terms of being more efficient and passing compliance audits, etc. I think it's a question of the capabilities of the products you're offering. i think it's a question of the capabilities of the products you're offering I think where a security vendor is going to struggle is the breadth of identity types, first of all, and the breadth of use cases they can support across those identity types. i think where a security vendor is going to struggle is the breadth of identity types first of all and the breadth of use cases they can support across those identity types What we still see, it's very influenced by security, but it's still more than a security conversation. what we still see it's very influenced by security but it's still more than a security conversation A lot of the identity management products, particularly governance, operationally help the companies in terms of being more efficient and passing compliance audits, etc. a lot of the identity management products particularly governance operationally help the companies in terms of being more efficient and passing compliance audits etc I was talking to the Chief Information Officer of a global auto company just a couple of days ago, and she was talking about, I was talking to her about cyber, and she goes, yeah, of course, identity is a cyber thing, but it's really about, we want visibility into what people are using so we know how much we spend on all these things. We want to make sure we automate these workflows that are slowing people down. Although the security voice is very important, I think it's still not purely a security sell, which I think is a little bit different for some of these security companies. I think ultimately, Gabriella, it kind of comes down to having the products, and you have to have a broad range of identity types and use cases and resources to really serve this concept that these customers want. I was talking to the Chief Information Officer of a global auto company just a couple of days ago, and she was talking about, I was talking to her about cyber, and she goes, yeah, of course, identity is a cyber thing, but it's really about, we want visibility into what people are using so we know how much we spend on all these things. i was talking to the chief information officer of a global auto company just a couple of days ago and she was talking about i was talking to her about cyber and she goes yeah of course identity is a cyber thing but it's really about we want visibility into what people are using so we know how much we spend on all these things We want to make sure we automate these workflows that are slowing people down. we want to make sure we automate these workflows that are slowing people down Although the security voice is very important, I think it's still not purely a security sell, which I think is a little bit different for some of these security companies. although the security voice is very important i think it's still not purely a security sell which i think is a little bit different for some of these security companies I think ultimately, Gabriella, it kind of comes down to having the products, and you have to have a broad range of identity types and use cases and resources to really serve this concept that these customers want. i think ultimately gabriella it kind of comes down to having the products and you have to have a broad range of identity types and use cases and resources to really serve this concept that these customers want Thank you for the thought. Thank you for the thought. thank you for the thought

Speaker 3: Okay, apologies for not getting to all the questions today. It is the top of the hour, but before you go, I just want to let you know that in addition to hosting onsite and virtual bus tours this quarter, we'll be attending the City TMT Conference on September 3 in New York, the Goldman Sachs Conference on September 9 in San Francisco, the Piper Conference in Nashville on September 10, and the JPMorgan Software Conference on October 8 in Napa. We hope to see you at one of those events. Thank you. Okay, apologies for not getting to all the questions today. okay apologies for not getting to all the questions today It is the top of the hour, but before you go, I just want to let you know that in addition to hosting onsite and virtual bus tours this quarter, we'll be attending the City TMT Conference on September 3 in New York, the Goldman Sachs Conference on September 9 in San Francisco, the Piper Conference in Nashville on September 10, and the JPMorgan Software Conference on October 8 in Napa. it is the top of the hour but before you go i just want to let you know that in addition to hosting onsite and virtual bus tours this quarter we'll be attending the city tmt conference on september 3 in new york the goldman sachs conference on september 9 in san francisco the piper conference in nashville on september 10 and the jpmorgan software conference on october 8 in napa We hope to see you at one of those events. we hope to see you at one of those events Thank you. thank you

Speaker 12: Thanks, everyone. Thanks, everyone. thanks everyone

Speaker 3: Bye, everyone. Bye, everyone. bye everyone