Okta Q1 2026 Earnings Report

Okta EPS Results

• Actual EPS: $0.86
• Consensus EPS: $0.77
• Beat/Miss: Beat by +$0.09
• One Year Ago EPS: $0.65

Okta Revenue Results

• Actual Revenue: $688.00 million
• Expected Revenue: $680.14 million
• Beat/Miss: Beat by +$7.86 million
• YoY Revenue Growth: +11.50%

Okta Announcement Details

• Quarter: Q1 2026
• Date: 5/27/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, May 27, 2025
• Conference Call Time: 5:00PM ET

Okta (NASDAQ:OKTA) operates as an identity partner in the United States and internationally. The company offers Okta's suite of products and services used to manage and secure identities, such as Single Sign-On that enables users to access applications in the cloud or on-premises from various devices; Adaptive Multi-Factor Authentication provides a layer of security for cloud, mobile, web applications, and data; API Access Management enables organizations to secure APIs; Access Gateway enables organizations to extend Workforce Identity Cloud; and Okta Device Access enables end users to securely log in to devices with Okta credentials. It also provides Universal Directory, a cloud-based system of record to store and secure user, application, and device profiles for an organization; Lifecycle Management enables IT organizations or developers to manage a user's identity throughout its lifecycle; Okta Identity Governance provides identity access management and identity governance solutions; Advanced Server Access offers access management to secure cloud infrastructure; Okta Privileged Access enables organizations to reduce risk with unified access and governance management for on-premises and cloud resources; and Okta Workforce Identity Workflows. In addition, the company offers Universal Login, which allows customers to provide login experience across different applications and devices; and Attack Protection, a suite of security capabilities that protects customers from different types of malicious traffic. Further, it provides Adaptive Multi-Factor Authentication, Passwordless, Machine to Machine, Private Cloud, Organizations, Actions and Extensibility, and Enterprise Connections. The company sells its products directly to customers through sales force and channel partners. The company was formerly known as Saasure, Inc. Okta, Inc. was incorporated in 2009 and is headquartered in San Francisco, California.

Okta Q1 2026 Earnings Call Transcript

Key Takeaways

• Okta delivered a solid start to FY 26 with record non-GAAP operating profitability, exceptional free cash flow, and continued strength among large enterprise customers.
• New product momentum remained strong as offerings like Okta Identity Governance, Privileged Access, Device Access and Identity Threat Protection with AI drove significant adoption and helped workflow executions surge nearly 400% year-over-three-years.
• The newly specialized go-to-market model for Okta and Auth0 sellers showed early success, with Auth0 delivering another strong quarter, US SMB “hunter-farmer” teams performing well, and pipeline building into Q2.
• For Q2 Okta expects about 10% total revenue growth (and 10–11% current RPO growth), with FY 26 revenue growth of 9–10%, non-GAAP operating margin around 25–26%, and free cash flow margins of 19–27%, incorporating prudent assumptions around macro uncertainty.
• While public sector deals accounted for four of the top 10 Q1 wins, Okta noted potential near-term variability in its federal business, yet remains confident in long-term opportunity supported by FedRAMP High and IL-4 certifications.

Presentation

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

Everyone. Welcome to Okta's first quarter of fiscal twenty twenty six 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 Tye, our Chief Financial Officer. Eric Kelleher, our President and Chief Operating Officer, will join the Q and A portion of the meeting.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

At around the same time that the earnings press release hit the wire, we posted supplemental commentary to our IR website. Today's meeting will include forward looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our financial outlook and market positioning. Forward looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward looking statements. 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 ks. 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.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

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 growth changes as we discuss our financial performance. And unless otherwise noted, each such reference represents a year over year comparison. And now I'd like to turn the meeting over to Todd McKinnon. Todd?

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

Thanks, Dave, and thank you, everyone, for joining us this afternoon. We had a solid start to FY twenty six highlighted by continued strength with large customers, Auth0, new product contribution, strong cash flow, and record profitability. Brett will cover more of the q one financial highlights, and I'm going to cover product innovation, our recent showcase event, and the latest with the Okta Secure Identity Commitment. New products such as Okta Identity Governance, Okta Privilege Access, Okta Device Access, Fine Grain Authorization, Identity Security Posture Management, and Identity Threat Protection with Okta AI had another quarter of strong contribution. Our combined governance portfolio of Okta Identity Governance, lifecycle management, and workflows has grown substantially over the past few years.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

With strong adoption of our governance products, Okta is becoming even more valuable and integrated into our customers' IT infrastructure and security posture. This is evidenced by the massive growth we've experienced in workflow executions, which have increased nearly 400% over the past three years to nearly 40,000,000,000 in March alone. OIG has been a tremendous success to date. We are hearing from partners and industry analysts that OIG is now ready to hit mainstream adoption, especially with recently delivered key capabilities like separation of duties and on prem connector. These new capabilities helped with great customer wins in q one, like the Global two thousand insurance company noted in our posted commentary.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

As cyber threats evolve, identity remains the first line of defense. That's why innovation at Okta never stops. In early April, we hosted a showcase, which is our biggest event outside of Okta to highlight product innovation. Our newest advancements help organizations protect their employees, customers, and AI systems. The key themes that showcase this year were one, how Okta is protecting nonhuman identities or NHIs, and two, how Auth0 is helping developers build secure AI agents.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

NHIs have been around for a long time. What's new is how the recent boom in AI agents has resulted in exponential growth in NHIs. NHIs include service accounts, shared accounts, machines, and tokens. NHIs often operate outside traditional identity governance frameworks and can leave organizations vulnerable to security risks. In fact, last year, only 15% of organizations said they are confident in their ability to secure NHIs.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

Okta addresses this problem with identity security posture management and Okta Privilege Access. By combining these two products, customers can discover, secure, and manage NHIs with an end to end secure identity fabric to secure both human identities and NHIs across a single system. This integrated approach protects nonfederated and privileged identities, ensuring AI driven automation and machine to machine interactions remain governed under zero trust policies while continuously monitoring NHI risks and vulnerabilities across the enterprise. On the developer side, customers have another compelling reason to adopt Auth0. Auth for GenAI addresses the problem of AI agents creating unsecured NHIs by enabling developers to integrate secure identity into their Gen AI applications.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

This helps ensure that AI agents have built in authentication, fine grain authorization, async workflows, and secure API access. Auth for GenAI secures AI agents at every step without slowing them down, providing developers with the trusted tools and flexibility they need. The product has had a successful developer preview, and we expect the GA launch this summer. To get all the details of the announcements coming out of Showcase, we encourage you to review the comprehensive summary available on the Investor Relations website. We also continue to elevate the industry with the Okta Secure Identity Commitment, which is our work to lead the fight against identity based cyber attacks.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

In support of this commitment, we're now highlighting the great security work already being done by Okta's threat intelligence team and making their insights more actionable. With thousands of customers across a multitude of diverse industries, Okta is uniquely able to analyze threat activity. I encourage you to check out a blog post we shared that highlighted Okta Threat Intelligence's in-depth research on how adversaries are conducting IT contracting scams using AI and our recommendations to help mitigate these threats. To wrap things up, we're pleased with the start of the fiscal year and we're excited about the future with our growing portfolio of modern identity solutions. More and more, customers are looking to consolidate their disparate and ineffective identity systems and Okta is there to meet them with the most comprehensive and unified identity security platform in the market today.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

As always, I wanna 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. Now here's Brett to cover the financial commentary and talk about how we're positioned for long term profitable growth.

[Brett Tighe, CFO at Okta]

Thanks, Todd, and thank you, everyone, for joining us today. We posted solid Q1 results with another quarter of exceptional cash flow and record operating profitability and profit margin. My commentary will provide insights to our Q1 financial performance and then move into our outlook for Q2 and FY 'twenty six. We entered the first quarter with the previously realignment of our go to market team, which further specialized our sales force into Okta sellers and Auth0 sellers. While it's still too early to judge the overall success of this realignment, we're encouraged by some of the early signals in the Q1 results.

[Brett Tighe, CFO at Okta]

In particular, off zero performed quite well, following a record Q4. We were also pleased to see pipeline strengthening throughout March and April. We remain confident that increased go to market specialization will yield long term benefits for Okta and our customers. Adding to our confidence is the recent performance we're seeing in the parts of our business that had already been specialized. At the beginning of last year, we moved the team focused on the USSMB market to a hunter farmer model.

[Brett Tighe, CFO at Okta]

That team performed well in q one and underscores how specialization can drive improvements over time. Another area that has been specialized for some time is The US public sector vertical, which has been an area of strength over the last few years. The strength has been a direct result of Okta's strategic commitment and investments in The US public sector. Our public sector team had a strong Q1 as two of our top three and four of our top 10 deals were in the public sector, including the federal deal we called out in our posted commentary. Clearly, there is a lot going on in The US federal vertical, and we are monitoring the developing situation closely.

[Brett Tighe, CFO at Okta]

While we anticipate some near term uncertainty in our federal business, we remain highly confident in the long term public sector opportunity. That's because Okta delivers the efficiency and security benefits benefits that government agencies require, and our FedRAMP High and IL-four certifications distinguish Okta from the field. Now let's turn to our business outlook for Q2 and FY 'twenty six. We continue to take a prudent approach to forward guidance that factors in our go to market specialization that was rolled out in Q1 of FY 'twenty six. Additionally, we're now factoring in potential risks related to the uncertain economic environment for the remainder of FY twenty six.

[Brett Tighe, CFO at Okta]

For the second quarter of FY twenty six, we expect total revenue growth of 10%, current RPO growth of 10% to 11%, non GAAP operating margin of 26%, and free cash flow margin of approximately 19%. For the full year FY 'twenty six, we expect total revenue growth of 9% to 10%, non GAAP operating margin of 25%, and a free cash flow margin of approximately 27%. To wrap things up, we remain focused on reigniting growth and driving spend efficiencies and cash flow. We've demonstrated exceptional leverage in our model and remain positioned to deliver profitable growth for years to come. We're excited about the adoption of new products, the rapid pace of innovation, and are confident that Okta is positioned to lead the identity industry.

[Brett Tighe, CFO at Okta]

With that, I'll turn it back to Dave for q and a. Dave?

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

Thanks, Fred. I see there are quite a few hands raised already, and I'll take them in order until the top of the hour. In the interest of time, please limit yourself to one question. And with that, we'll go to the first question from Brad Zelnick followed by Eric Heath.

[Brad Zelnick, Managing Director at Deutsche Bank]

Great. Thanks so much for taking the question. Nice to see everybody. And q one is is the beginning of the year, so always interesting dynamics. Maybe just to kick it off, you've layered in this additional conservatism into your guide.

[Brad Zelnick, Managing Director at Deutsche Bank]

What is it that you saw in the quarter? Now you have two layers of conservatism for the specialized go to market, adding in what were what what your thoughts are on the macro. Can you talk more about what the the combination of those two factors, how much they impacted q one, and how to think about them going forward? Thanks.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

Yeah. I'll I'll start. Nice to nice to see you, Brad. I think the q one, we're very happy with q one. We're really on track for the year, and we made a lot of great progress in the in the quarter.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

Think there's the qualitative metrics we we we talked about, and we've talked about so far on the call. But then there's just the the conversations we're having with customers about how important what we we do is to them and how much they're investing in everything from the traditional things we've helped them with, cloud transformation, of course, security. But now with what's going on with all these AI projects and moving from POCs to production and how we can help with that and how we can help them build off for Gen AI applications. And so it's all very, very exciting. I think we can talk about the guidance and the forward look forward look and some of our thoughts there.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

But it's kind of the the base and the foundation is a company that's really on track for the year and very optimistic about the future.

[Brett Tighe, CFO at Okta]

Yeah. Brad, I can just add there on the guidance. In terms of you're asking, did we see the macro in q one versus how are we thinking about in the future, I think, one of your questions. In terms of the macro side of things, you know, we did not see any impact in in the in q one relative to what the macro we were seeing for the prior quarters. You know, we've heard you've heard us talk a lot about that over the last couple of years.

[Brett Tighe, CFO at Okta]

But incrementally different than what it has been, we have not seen that. What we are putting in is thinking about it going forward just because we there's just a feeling in the environment, if you will, Brad. I don't have a lot of quants to to, like, back up what I'm saying. It's more based on customer conversations, reading the news, you know, talking to the sales teams. It's just it's out there, and we're just, the the tone has feels like it's changed.

[Brett Tighe, CFO at Okta]

We're not saying it's absolutely certain, but what we're saying is that we're we're putting it into the guidance. But to be very clear, as we talked about a couple quarters ago, and I've said every quarter since, which is the guidance guidance philosophy has changed. We do not have as much conservatism in there. Regardless that we did add a new factor in there, it doesn't mean that we've all of sudden gone back to the old model. There is still less conservatism in there.

[Brett Tighe, CFO at Okta]

Now we're at like I said, we're adding in a little bit for macro, but the go to market specialization factor is the same as what it was at the beginning of q one because you heard what Todd just talked about is, you know, we we feel like it's you know, we're on track, we're headed in the right direction, and and we feel good with where we are right now.

[Brad Zelnick, Managing Director at Deutsche Bank]

K. Thank you.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

No problem. Next up is Eric Heath followed by Jonathan Ho.

[Eric Heath, Vice President - Equity Research Analyst at KeyBanc Capital Markets]

Thanks, Dave. Just to maybe follow on that line of questioning. I mean, CRPO subseasonally, subseasonal growth in one q here a little bit, and we heard some other security peers talk about April being a very challenging month in particular, maybe getting better in May. So is there anything that might have been a little bit soft in the quarter? I saw international decelerate a little bit more than US.

[Eric Heath, Vice President - Equity Research Analyst at KeyBanc Capital Markets]

So just anything that might have been on the margin a little bit softer than you might expect to

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

be? We had a there was no softness in April. We it was very predictable. We and this is coming off the q four where we had a real blowout q four, and we ran the table. And even despite that, we had solid performance in q one, including through April.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

So we didn't see that at all. I heard some of those calls and have heard that chatter as well about the industry seeing some softness in April. We didn't see that. So, yeah, when you look at the numbers, it was a solid start to the year. I think our when Brett talks about the conservatism and us factoring in uncertainty in the macro going forward, it's it's definitely a going forward thing.

[Eric Heath, Vice President - Equity Research Analyst at KeyBanc Capital Markets]

Understood. Thanks.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

K. We'll go to Jonathan Ho followed by Shrinda Khothari.

[Jonathan Ho, Research Analyst at William Blair]

Great. Good afternoon. When we look at the go to market specialization, where are we in that process? And can you maybe share with us what some of your most impactful learnings have been and, you know, maybe, you know, the progress that's been seen on that business side? Thank you.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

Thanks, Jonathan. Yeah. We're off to a solid start. As you know, in our business in q one, there's normally a lot of territory replanning and reassignment and so forth. And as I've mentioned before, this year with our switch with our shift to specialization for sellers for the Auth0 platform and the Okta platform, we had incrementally more change to that normal motion as we do every year.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

And so with that comes the cost of change to some degree, but q one was a solid start. We saw a very strong performance on the Auth0 side, which you would expect with more specialization. And we've seen strong pipeline build throughout the quarter as well. And even if you look at the last first few weeks of Q2, those trends continue. So we're optimistic, but if you look at the overall year, it's a relatively small part of the year.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

So we have to keep executing well. And the the strength in new products on the Okta side is the growth there is actually very encouraging as well. We mentioned the success of the governance business and privilege access and device device access and identity threat protection. There's quite a portfolio of identity security tools there, and that sales team on the Okta side is really digging into that and able to, I think, have broader conversations with customers and help really convey how we can help everything from nonhuman identities and AI workloads all the way to you know, a lot of companies still the basics of passwordless phishing resistant authentication for people is still something they're invested in so we can help them across that broad spectrum.

[Eric Kelleher, President & Chief Operating Officer at Okta]

And, Jonathan

[Eric Kelleher, President & Chief Operating Officer at Okta]

Jonathan, you asked also some lessons learned through this. I think a couple things to add to Todd's commentary. One is we've learned specialization works. As Brett talked about in his opening comments, this is really our third wave of go to market specialization, our first being PubSec from several years back. And you've heard us talk in recent quarters about, the success we've had in in public sector overall with that team.

[Eric Kelleher, President & Chief Operating Officer at Okta]

It's been a very high performing team for us. Last year, we rolled out Hunter Pharma for our US commercial business as well. We've we've talked about how, pleased we were with how we closed out the year with with the results of that change. And the third thing we've learned is, and now we're doing the Octane on serial platform specialization. The so we know it works.

[Eric Kelleher, President & Chief Operating Officer at Okta]

We're confident it works. We also have learned that it takes time. And, to to Todd's commentary a moment ago, we are just finishing up our first quarter. We had February is the time when we recarp territories and reassign. We can now speed up enablement because we're able to focus our our reps on individual buyers and focus them on individual platforms.

[Eric Kelleher, President & Chief Operating Officer at Okta]

And so we've executed well in the quarter. We're we're on track as as Brett and Todd had mentioned, and we've got three quarters ahead of us. So we're we're not we're not sitting idle. We've got a lot more work to do, but we're very confident in the strategy we're on.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

Thanks, Eric. Next up, we'll go to Shrinath Kothari followed by Andy Nowinski.

[Shrenik Kothari, Senior Research Analyst at Robert W. Baird & Co]

Great. Thanks for taking my question. So just given your, previous commentary around, the seat headwinds, abating, which implies easier second half comps, just how should we interpret the embedded kind of seat expansion and recovery curve going into second half? And just what is this kind of guidance conservatively assuming on that front? Are there any kind of embedded assumptions around kind of new business recovery potentially being offset because of any macro concerns you have, which is you're not seeing it yet, but anything that you're embedding there?

[Brett Tighe, CFO at Okta]

Yeah. Absolutely. So, Shrenk, just, you know, refresher for everybody on the call because I know you know this, which is, yeah, we talked about, about NRR having those headwinds. You talked about seed up sells, renewal during the mid mid midterm, mid contract. Right?

[Brett Tighe, CFO at Okta]

That being facing a little bit of headwind, we think that still lasts through the through the first half of f y twenty six. Now look. If the the economy does turn one direction or other, maybe maybe it goes a little, you know, goes a little faster one way or the other. Right? I mean, it definitely a potential for for it to impact.

[Brett Tighe, CFO at Okta]

I think what you're really kind of asking about is really NRR and how that's going to trend. You know, right now, we think it's gonna travel in this range plus or minus a little bit from here. But like I said, if the the macro does turn negative for us, there is a potential that does that does hit that as well. So, we don't have a specific number in our guidance for you, but it is it is embedded in there. So if that answers your question.

[Shrenik Kothari, Senior Research Analyst at Robert W. Baird & Co]

Yeah. I've got it. Thanks, Brian.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

No problem. And next up, Andy Nowinski followed by Matt Hedberg.

[Andrew Nowinski, Analyst at Wells Fargo]

Okay. Great. Thank you very much for taking the question. You know, getting a lot of questions on CRPOs. I I just you you know, your CRPO guidance for Q2 suggests a sequential decline for the second consecutive quarter, which has never happened before.

[Andrew Nowinski, Analyst at Wells Fargo]

And I know you're factoring in some uncertainty for the macro, but given some of the historical results we've seen Okta has grown your CRPO sequentially in Q1 and Q2 when the macro has been much, much worse with whether it's COVID or massive inflation. It seems like the macro is certainly better than those periods and yet you're looking for this sort of sequential decline again for the second consecutive quarter. So I'm wondering, is there anything you can just give us? Was there any sort of pull forward that happened in Q4 or was there any other factors that might make this period look a little bit different from what we've seen over the last three to four years?

[Brett Tighe, CFO at Okta]

Yeah. I would say that probably the one thing relative to the periods you just mentioned, we were growing at a faster clip than that than we are today, right, based on the guidance. But the one thing I would also caution everyone against or at least maybe give you some advice around how to model CRPO. You know, you've heard me talk about current RPO coverage ratio, right, on the annual in an annual term. Right?

[Brett Tighe, CFO at Okta]

You've heard me talk about it last quarter, the quarter before that. Well, if you bite size chunk that down into quarters, what you'll notice is that you'll see a trend that reveals reveals itself. So when we gave you the guidance for subscription revenue last quarter, you probably would have seen this decline or at least somewhere in this range of 2,200,000,000.0, in terms of a current RPO expectation. And when I to be very specific, what's the math that I'm doing? Because I know you guys are gonna ask these questions.

[Brett Tighe, CFO at Okta]

Look at current RPO, and then look at the subscription revenue in the very next quarter. Divide the subscription revenue divided by the or divided by the the total current the current RPO number, and you'll see what I'm talking about. And you'll see if you applied f y twenty four seasonality, you apply f y twenty five seasonality, this is roughly the number we you that should have been kicked out. Actually, probably would have kicked out a little bit lower number than the 2,205,000,000 that we've given you here today. So, it's just a it's it's fundamentally what current RPO does.

[Brett Tighe, CFO at Okta]

Right? We know it's highly correlated between one quarter or between subscription revenue and and the total value, so you just really need to take those factors into account when you're thinking about how to model current RPO.

[Andrew Nowinski, Analyst at Wells Fargo]

Okay. Thank you.

[Brett Tighe, CFO at Okta]

No problem.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

Let's go to Matt Hedberg followed by Brian Essex.

[Matthew Hedberg, Software Analyst at RBC Capital Markets]

Thanks, Dave. Thanks for the question, guys. I wanted to double click back on the go to market, the specialization. It sounds like you guys are happy with the results there. And Todd, you mentioned OIG a number of times on the call.

[Matthew Hedberg, Software Analyst at RBC Capital Markets]

I'm curious, in this Q1, have you experimented with some additional bundles to kind of drive cross sell? I mean, we're hearing about more of that in our checks. Just kind of curious on how you kind of thought about that for Q1 and how that might benefit the remainder of the year.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

Yeah. We have what we call suite based pricing for the Okta platform now, and we introduced that q one is the first quarter of that. And, again, we're seeing positive results there with people wanting to buy multiple products in basically good, better, best configurations. The best configuration has all the products, and the first the initial good suite has, you know, just some of the basic products. So we're seeing that motion.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

It's made good progress in q one, but we still think it has a lot to run because we're positioned well in terms of the market here. We're the only independent Neutroliniti platform that has this broad away a broad array of products across governance, privilege, threat protection, device access, access management. So we're very excited about that bundle opportunity. And, also, when I talk to customers, they want customers are picking the strategic points of consolidation. So they're looking at their landscape and saying, it's we can't consolidate everything, but we wanna consolidate at the right points.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

And our pitch to them, which is resonating, which is you should consolidate around identity and make sure it's independent neutral, but you can take costs out of the business, you can get multiple capabilities from one vendor, and you're not going to forego choice. You're not going to be locked into a certain ecosystem, a certain cloud environment, a certain collaboration environment, even a certain set of security tools. You get choice around the identity, but you still get those benefits of consolidation, and that's the the our suite space pricing. That's that was the motivation behind that.

[Brett Tighe, CFO at Okta]

Yeah. And I would just add a good data for that it was working. Actually, in q format, the biggest deal we did was this workforce suites deal.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

K. Next, we'll go to Brian Essex followed by Gabriela Borges.

[Brian Essex, Executive Director at JP Morgan]

Hi. Good afternoon. Thanks for taking the question. I guess, Todd, for you, on the developer side, curious to see if you're beginning to see demand for, you know, OAuth for MCP authentication, and how should we think about the way that Okta may be levered to agentic demand there?

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

Yeah. It's super exciting. I mean, it's almost you hear it all the time, all the super exciting developments in AI. And we have our auth version capability, which you can think about it as, a lot of very strategic additions to the auth Auth0 platform that are very purpose built for someone building AI agents and agentic workflows. That's auth for GenAI, and that's in developer preview now.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

And that's gonna go generally available, very shortly here. And we're excited about that. It's basically gonna mean there's more reasons to to buy Auth0 and more reasons to buy more of Auth0 in terms of, monthly active users there. Now the MCP is a big deal, as you all know. And the way I think about it is it's basically a a way to to it's it's almost like a new Internet.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

It's a new way to communicate with tools and technology in a way that these LLMs and these these emerging set of browsers and user agents on the AI Internet can use all these resources, and that's very exciting. People don't people forget that if you look at the internals of of the the web, HTTP, the the way the the the tag for a browser is actually called a user agent, and it uses HTTP to connect to web resources. Well, MCP could be a new kind of Internet where the the clients are actually AI agents, not user agents, and they can talk to these MCP servers. So it's very exciting from a a shifting of the industry and a shifting of the capabilities of what these kinds of software systems could do, but it's also very early. We're talking about a a protocol that was announced, I think, six weeks ago.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

And everyone's running around adding MCP servers to their capabilities, and developers are are experimenting with what this means. We're very excited about the ability to works work with the standards bodies and the community to add the actual OAuth to the MCP, so authentication and OAuth protocol to the MCP protocol and handshake there. That's a very exciting ex example. But the main takeaway for the group here is that it's very exciting. This layer of software is a huge opportunity, and but it's also very early, and we're working hard to play a big part of that and help the industry and help our customers take advantage of all of all these capabilities.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

And customers are excited about it too. It's not just vendors. It's it's everyone I talk to. From Washington to Europe to New York, everyone's very excited about what what what can happen here and how important identity is in this model, and we're gonna work hard to make sure we're a big part of that.

[Brian Essex, Executive Director at JP Morgan]

Any indications on pricing? Is it a volume, like, you know, per agent based pricing model?

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

Yeah. So the specifically off for GenAI is is a usage based pricing model. So it's the number of requests to Auth0. So it's monetized in a similar way to the way Auth0 is now. The way MCP will be monetized and how if if we add product capabilities to extend what an authentication handshake is to an MCP server, that's we haven't built that yet, and we haven't released that yet.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

So that'll be TBD there. We'll be talking about that more later this year. But Auth4Gen AI is monetized in the in the normal off zero pricing model.

[Brian Essex, Executive Director at JP Morgan]

Awesome. Thank you.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

Next question from Gabriela Borges followed by Saket Kalia.

[Gabriela Borges, Analyst at Goldman Sachs]

Hey. Good afternoon. Thank you. For Eric and Brett, I'm wondering if there is a way to think about to what extent some of the cross sell can impact the growth algorithm going forward. So I guess, did you see a negative impact in 1Q and productivity from the real market changes?

[Gabriela Borges, Analyst at Goldman Sachs]

And then going forward, how do you think about when we could start to see real market changes positively contribute to the growth algorithm in in particular? And are are we at the point where we can think about this through productivity lens? So how do you think about productivity lens in terms of benchmarking and where productivity Thank you.

[Brett Tighe, CFO at Okta]

Yeah. I'll take a take a crack at it, then Eric can can fill in where I where I leave something out. So from an overall q one perspective, one of the reasons why we're saying we're on track, not just looking at all the quantitative numbers, but also if you look at the amount of change in the field for q one, there was from, from further specializing the field, From a number of reps, there's more reps being specialized than there was last q one. And if you look at a lot of the stats, some of the stats you just mentioned, they're as good or better than they were last q one. So that is a really good sign because if you changed more in q one than you did last quarter and the numbers are fairly similar, that's a really good sign.

[Brett Tighe, CFO at Okta]

In terms of your question around additive or having upsell be additive to NRR in the in as a result of specialization, that's one of the reasons we're doing specialization. Because we know that the product portfolios are so deep that it's hard for someone to be a generalist across the entire portfolio that we wanna give them the opportunity to focus and be able to spend more time on a specific product, which then should, in the long run, make them better at selling that product, which then in the long run should be a better upside to NRR. You know, these changes that we're making are not about just q one or q two. They're about setting us up to execute in whatever macro economy presents itself. So, there's a lot of reasons to do specialization, and it's just more signs of how we're feeling confident and excited about the future given the changes that we've made here today or made in q one.

[Eric Kelleher, President & Chief Operating Officer at Okta]

And I I would agree with Brett's comments. What I would add to that is it's also a win for our customers because our customers now have the opportunity to work with go to market teams that are really focused on the platform that's relevant to those customers. So to your question about cross sell and upsell, we're we are we are confident that with focus on the platform, our individual sellers and our presales teams and our technical account managers will be able to go deeper on the specific capabilities and learn more about them faster. And that's particularly important as we've, in recent years, increased our pace of product innovation. So just on the Okta platform in recent quarters, you've heard us talk about an identity threat protection with with Okta AI, identity security posture management, Okta identity governance, Okta privileged access.

[Eric Kelleher, President & Chief Operating Officer at Okta]

We have a whole host of new capabilities that we're bringing to market, and our sellers need to stay abreast of these changes so that they can help our customers stay abreast of these changes and understand what new value that we can provide for them. And then we have a very parallel opportunity on the Osteo side. Todd just talked about AuthorGen AI and how we just announced that at our showcase event last month. So we believe specialization is going to help us move faster. It will help us stay focused.

[Eric Kelleher, President & Chief Operating Officer at Okta]

It will accelerate our enablement for these teams. And, ultimately, it will help us provide a better experience for our customers, then get more value with us faster as well.

[Brett Tighe, CFO at Okta]

Yeah. I think I would, Eric, maybe think something, which is focus works. Just like what Eric said earlier, focus works. A good example of that in the hunter farmer regions that that Eric talked about earlier, we had a really nice new business, Hunter, new business quarter. Q one, we had a really nice new business quarter.

[Brett Tighe, CFO at Okta]

The majority of the top 10 deals in q one were new business. So we've got, like, we've we we feel like the focus is is really making a is going to make a difference. It's making a difference in areas that have been been specialized already, but we think it's going to make a difference in the long run. So that's why you you you hear the positivity coming out of us.

[Gabriela Borges, Analyst at Goldman Sachs]

Thank you.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

Yeah. Another key positive trend is, rep tenure and rep attrition. We're very pleased with the way that's trending, which is something we've talked about, over the years as a as a real health indicator. And so I think when you look at why we're saying that we're on track and we're optimistic about the quarters ahead, that's a key data point as well.

[Gabriela Borges, Analyst at Goldman Sachs]

Thanks, Max. Thank you.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

Next question from Saket followed by Gray Powell.

[Saket Kalia, Managing Director at Barclays Capital]

Okay. Great. Hey, guys. Thanks for taking my question here. Todd, maybe for you just on on that last line, of questioning.

[Saket Kalia, Managing Director at Barclays Capital]

Can can you just talk a little bit about the new logo pipeline for the rest of the year, particularly in the workforce business? And and maybe, relatedly, how you feel competitively there as you offer more of a platform.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

I feel very optimistic and positive about both of those points competitively and new logos. And that's because we talk a lot about, you know, this idea of a platform sell and how much revenue we're gonna drive from new products like governance, which is over 400,000,000 now, Privilege Access, which is ramping nicely, Identity security posture management, which has awesome capabilities. So we talk about it as, like, this collective thing, and we talk about the suites and pricing. But, also, all these new products are a great point way to land new customers. The amount of interest and the conversations we're having around identity security posture management is incredible.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

This product is qualitatively different than anything we've ever had. It actually scans a customer's environments and proactively alerts them about all these identity security posture issues, including NHIs, including these nonhuman identities, which is something almost no company has a good handle on. And that, in a lot of cases, can be an entry point to a whole new customer. Of course, we can then be a bigger part of their identity security fabric over time with more of the products, but these new products aren't just upsells to existing customers. They're a way to land new customers.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

So the the product offering it's it's unmatched. I mean, no one in the industry has both independence and neutrality, the robust, scalable, reliable, cloud based architecture we have, plus the breadth of products. Go down the list. No one has it. No one has access management, governance, privilege access management, posture management, device access, threat protection, on and on and on.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

Plus none of them are integrated like we are. 8,000 integrations and all the work we've done there leading the industry in this in this march toward independent neutral identity. It's unmatched. So there's a lot to be optimistic about, and I think you've seen the numbers the last couple quarters really back that up. Now it's up to us to make sure that translates into very strong success over the rest of the year and beyond.

[Saket Kalia, Managing Director at Barclays Capital]

Super helpful. Thanks.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

Yeah. Let's go to Gray Powell followed by Mike Sikas.

[Gray Powell, Managing Director at BTIG]

Okay. Great. Thanks for thanks for taking the question. May maybe just a follow-up one on guidance, if it's okay. So I'm just looking at the numbers.

[Gray Powell, Managing Director at BTIG]

Full year revenue guidance calls for 9% to 10% growth. You you grew closer to 12% in q one. You you beat numbers by a little bit in q one, which is good. Just how should we think about the exit rate in q four? And I I know you don't wanna get too granular, but it does something in the 8% range seem about right?

[Gray Powell, Managing Director at BTIG]

And then and then what factors or products have the best chances of just just driving upside as as the rest of the year plays out?

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

Well, I can start with some high level thoughts. And then in terms of, like, exit run rates and so forth, I'm sure Brett will have some thoughts there. But I think the the biggest opportunity for us is large enterprise. You you've seen this over the last few quarters. This past quarter, q one, the that the number of customers, million dollars ARR and higher grew 20%.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

And we still are have tons of room to to grow inside the Global two thousand and really the the top 5,000 biggest company companies and organizations in the world is a tremendous opportunity for us. A lot of those organizations are invested a lot in on premise technology and a lot in on premise identity with big identity teams that they spend a lot of money on, a lot of cost there. And those companies are with all the change around cloud migration, which has been going on for years and years and years and the focus on security. And now with all of them trying to take advantage of the AI revolution, there's another catalyst for them to change and upgrade their identity system. And our pitch is basically use this independent neutral identity fabric.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

We have all these products. We have all this capability. Do it with us. And the opportunity there is tremendous. It's, you know, it's it's a combination of of catalysts for change in that segment that's driving the momentum.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

It's also the products are much better. I mentioned the breadth of products. I mentioned the maturity and the scalability and the security of the reliability and, you know, the proven success when you look at our roster of customers and large organizations from large government agencies and health care and financial services and the success some of these big companies are having with Okta, not only in each individual product, but buying a breadth of products from us, it speaks for itself.

[Brett Tighe, CFO at Okta]

In terms of the guidance, let let us get through a few more quarters before I start answering questions about f y twenty seven. We got a long ways to go. You know, like we've talked about, q one is our smallest or seasonally smallest quarter of the year. So we're not gonna take too many takeaways away from q one. Like we've talked about, we're on track.

[Brett Tighe, CFO at Okta]

We feel good with where we are, but we have to go execute, well in q two, q '3, and q four before we start talking about, you know, really sizes of of what we're gonna talk about in '27.

[Gray Powell, Managing Director at BTIG]

Alright. Fair enough. Thanks, Brett. Thanks, Todd.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

And next up, let's go to Mike followed by Rob Owens.

[Michael Cikos, Senior Analyst at Needham & Company]

Great. Thanks, guys. Question for Brett. I know we're the we're talking about this incremental conservatism we're baking in just based on the the tone of conversations, etcetera. Can you just further qualify that?

[Michael Cikos, Senior Analyst at Needham & Company]

Is it more tied to new logos or NRR? Is it across the business? Is it pub sec? Like, how did you guys think about that that incremental prudence we're talking to?

[Brett Tighe, CFO at Okta]

Yeah. Yeah. All of the above, Mike. And I you know, there is definitely some you know, if you think about the macro umbrella, there is definitely some prudence around, the federal vertical. Right?

[Brett Tighe, CFO at Okta]

Although it's not a huge part of our business, you guys all know it it does renew itself every year because of the one year contract mandates that the US federal government has. So that would be a kind of like a subset of the total macro, but in general, it's it's across the board. You know, if you've heard us talk about, over the last couple years about the headwinds that we faced in terms of NRR, I don't think that those headwinds would be any different than what we've, what we would expect to see if the macro did turn negative, as we go through go through the full fiscal year.

[Michael Cikos, Senior Analyst at Needham & Company]

Got it. Thanks.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

Yeah. And one one thing too as I hear the conversation here and think about it, the you can look at what we're doing. Like, we're not changing our investment level. We're still investing in this opportunity, and we're not the the forward looking macro is, I would say, cautionary, and, you know, we're being a little bit prudent. But if you just look at the numbers, they're good.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

Q one was very solid. If you look at the pipelines going into q two, they're building, and we're very pleased with them. So it's a little bit of a call on how you wanna be prudent in your guidance, but we're not changing how we're investing and how we're executing and how we're staffing to take advantage of this opportunity. So that's something that's probably relevant for everyone to think about too.

[Brett Tighe, CFO at Okta]

Yeah. I would also add that one of the reasons to do the specialization or further specialize is to execute as well as possible in any macro environment. Right? It's going to allow us to execute better, than if we hadn't

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

done it.

[Michael Cikos, Senior Analyst at Needham & Company]

Understood. Thank you.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

Next question from Rob Owens followed by Shaul Yal.

[Rob Owens, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Great. Thanks, Dave, and thank you guys for taking my questions. Since the Fuji hasn't gone yet, I guess I will focus on CRPO a little bit here.

[Brett Tighe, CFO at Okta]

I know. We've only got, like, five questions on CRPO already.

[Rob Owens, Managing Director & Senior Research Analyst at Piper Sandler Companies]

I know. But I'm sure John will will drill in because you guys come off a record quarter last quarter. I think you've called it a blowout a couple times, and it increases by a hundred and 86,000,000. But I look at subscription revenue up 3,000,000 quarter over quarter. I know it's not a a a perfect metric, and there's a lot of puts and takes, but the 3,000,000 sequential increase in subscription revenue is the lowest that I have in your model since back when you guys went public.

[Rob Owens, Managing Director & Senior Research Analyst at Piper Sandler Companies]

And so just help me understand a little bit what some of those puts and takes are and why that number just doesn't look a little bit more robust here in the first quarter given that a blowout should lend to maybe a little bit more subscription revenue this quarter? Thanks.

[Brett Tighe, CFO at Okta]

Yes. That's a good question, Rob. So first and foremost, every year has had a higher growth rate, so that higher growth rate masks the eighty nine days versus ninety two days. And remember, last year, it was a leap year, so there were ninety days in q one. So that's a tougher compare.

[Brett Tighe, CFO at Okta]

The, the other factor is if you remember what I've said for the last two quarters, our guidance philosophy has less conservatism in it, so the beat's not going to be as large. And so you see that come to fruition here. You even see it in the annual guidance that we've given here today, which is we've held flat despite a beat. There would have been a different mechanic that would have happened in prior years because we had more conservatism in the model. So those are the two main reasons, Rob. Hopefully, that's helpful.

[Rob Owens, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Alright. Thank you.

[Brad Zelnick, Managing Director at Deutsche Bank]

No problem.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

K. Next question from Shaul and followed up by Young Kim.

[Shaul Eyal, Managing Director - Equity Research at TD Cowen]

Thank you, guys. Hi. Good afternoon. Maybe to continue and and beat a dead horse on that macro front, you did call out a strong March and a strong April, kind of deviating, you know, for some other companies who called out a little bit of a pause, just a little bit of a pause during April. With May coming to an end in in a handful of days, and I understand the linearity within the quarter, between the months of the quarter, how would you characterize the first month of the quarter?

[Shaul Eyal, Managing Director - Equity Research at TD Cowen]

Did it build? Did it continue building on the strength you've seen, during March and April?

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

Yeah. It's a good question. I all I think the conversations and the feelings got more negative in terms of, like, what we're thinking about going forward, but the numbers didn't. If you just look at pipeline and performance, the numbers stayed consistent with what we saw in q q one. So a little bit of a, I would say, converse and then part of that too is I'm sure, you know, we're like everyone else on the call.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

We hear what other companies say too. We hear hear other companies say that, oh, you know, the business was a little soft in March and April. And we hear that, and we talk to customers, and customers probably hear that too. So it's possible that this could be a little bit of an echo echo chamber, and we shouldn't all be this concerned. But I think it it warrants, you know, being a little prudent here while at the same time, we're still investing and still executing aggressively, and it's really not showing up in the numbers at this point.

[Brett Tighe, CFO at Okta]

Yeah. And keep in mind, guys, like, what Charles was saying, we are a back end loaded quarter. You know, first months are not normally, very indicative one way or the other. We we need to, you know, get into June and July, and then we'll have a better sense of how things are going. So, clearly, we can cover that on the next earnings call.

[Shaul Eyal, Managing Director - Equity Research at TD Cowen]

Thank you.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

Next question from Yeon Kim followed by Greg Moskowitz.

[Yun Kim, Managing Director at Loop Capital Markets LLC]

Alright. Thank you. So sounds like the customer identity side of the business, performed well. Was that more broad based, or was it driven by few large deals? Because I believe, one of your high profile cloud native customers experienced a viral event this past quarter.

[Yun Kim, Managing Director at Loop Capital Markets LLC]

How would an event like that, translate into a new potentially new large renewal, and what is a typical time frame associated with such a a large renewal?

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

The customer identity business is is is going well. Specifically on Auth0, the Auth0 had a strong q one. And the you know, like a lot of the business, it was it was one of the most successful customer cohorts is the large customer cohort, and that was no different for Auth0 and q one. It'll be interesting to see as we move forward how the Gen AI space and Auth4Gen AI plays out. I think that space is

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

There are big companies building things that could be taking advantage of AuthVirgin.ai, it's also a lot of smaller companies too. Every small company, startups trying to innovate around AI agents. And I know a lot of the interest in the developer preview around Oth Virgin AI has been from small companies. So I think well, in q one, think OthSerial had a strong big deal quarter. I

[Todd McKinnon, CEO and Co-Founder at Okta]

think we're optimistic for the rest of the year to beat that success to be quite broad based.

[Brett Tighe, CFO at Okta]

Yeah. I would just add to that. The biggest deal in the quarter was actually an zero deal from a specialized team. So we feel pretty good about especially feel good about because you heard Todd talk about it earlier, which is they had a really good q four. So to back it up with another nice q one really shows the fruits of our labor, if you will, over the last couple years, you know, where we've really been focusing a lot on AZero and selling into that buyer and making progress here.

[Brett Tighe, CFO at Okta]

So it was big deals, but there was also a lot a lot of other deals as well. So we we feel good about where we're trending there, and look forward to to how the team will will execute for the balance of the fiscal year.

[Yun Kim, Managing Director at Loop Capital Markets LLC]

Okay. Great. Thank you.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

And next, we'll go to Greg Moskowitz followed by Itay Kidron.

[Gregg Moskowitz, Managing Director, Enterprise software at Mizuho Financial Group, Inc.]

Okay. Thank you. Maybe a follow-up on AI for Todd. So adoption of AgenTik, starting to take off at least among bleeding edge enterprises, but a lot of investors still struggle with, you know, when will the rubber hit meet the road for identity security to be implemented to protect these agents? Now if I look at Okta, as you said earlier, you know, obviously, auth for Gen AI only in developer preview will be out fairly shortly.

[Gregg Moskowitz, Managing Director, Enterprise software at Mizuho Financial Group, Inc.]

But from a customer adoption standpoint, how do you see all this playing out for Okta from here?

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

You hit the nail on the head. I think where the industry is is we're starting to go from POCs to production, and it's just starting. And I think you're right. The only the most advanced forward leaning enterprises are actually doing production AI right now and use cases at scale where they're seeing tangible business benefit at scale and production. Now when you look at AgenTic workflows and these AgenTic systems, they they're amazing, but what they really do as well is they magnify this existing problem that's been around for a long time with nonhuman identities.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

There's been nonhuman identities in companies and tokens, check tokens used to access systems and APIs and service accounts forever. And it's been a problem that not a lot of companies have done a great job addressing. And so that's why we've been really focused on that layer. It's not AI specific, but it's it's exacerbated by AI. So when you look at our identity security posture management, its ability to detect these in HI, and you look at our privileged solution and our general access management solution, which allows companies to secure those nonhuman identities, it it it's very relevant for a company even if they're just POC ing these agents, and they're in a proof of concept.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

They're not really in production. It just puts us shines a light on this problem as they think about moving to production. So that's a very important aspect of of of this dynamic in the market. Now we do think as more of these projects move into production, it's really, really gonna force this issue even more. And so I think we're gonna see further acceleration as more and more companies move into production.

[Gregg Moskowitz, Managing Director, Enterprise software at Mizuho Financial Group, Inc.]

Thank you.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

And next, we'll go to Itay followed by Adam Tindle.

[Ittai Kidron, MD & Senior Analyst - Analytics, Data, Security & Infrastructure Software at Oppenheimer & Co. Inc.]

Thanks, Dave. Couple of questions for you, Brett. As you look at the mix of contribution this quarter between seats, new products, cross sale, can you tell me how, how how it came out relative to your plan and what areas you think you did a little bit better and what areas perhaps not as good? And, also, I think last quarter, you gave some details on new products as percent of bookings. Can you refresh our minds?

[Ittai Kidron, MD & Senior Analyst - Analytics, Data, Security & Infrastructure Software at Oppenheimer & Co. Inc.]

Where do we stand right here right now? How the momentum and trajectory is looking there?

[Brett Tighe, CFO at Okta]

Yeah. For new product, we'll start we'll answer them backwards. So NPI new products, which include a lot of the products we've been talking about a lot on this call, had another nice quarter. In terms of the mix of new business versus upsell versus cross sell, we had a nice new business quarter, one of the better ones we've had in a a few quarters, which is good. But to be clear, the pipeline is still more tilted toward upsell than it historically has been.

[Brett Tighe, CFO at Okta]

And when I say upsell, mean upsell and cross sell. We had a nice we do we did a nice job on cross sell, and we actually did nicely as well on the on the CDEP sales as well. So, all in all, this is why we're saying we feel like we're on track. We had a nice quarter, and, the team executed very well to to to be able to hit the marks.

[Ittai Kidron, MD & Senior Analyst - Analytics, Data, Security & Infrastructure Software at Oppenheimer & Co. Inc.]

Can you put a percentage of the new products as bookings as you did it for this?

[Brett Tighe, CFO at Okta]

It's in the ZIP code as the last few.

[Ittai Kidron, MD & Senior Analyst - Analytics, Data, Security & Infrastructure Software at Oppenheimer & Co. Inc.]

Okay. Thank you.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

And next, we'll go to Adam Tindle followed by Rudy Kessinger.

[Adam Tindle, Managing Director at Raymond James Financial]

Okay. Thanks, Dave. Brett, the CRPO color from earlier was helpful. I just wanted to build on that coverage ratio that you talked about. If I hold that metric to typical seasonality, obviously, CRPO is going to decline again sequentially in Q2.

[Adam Tindle, Managing Director at Raymond James Financial]

But I think it actually starts to grow sequentially in Q3 and Q4 if I did the math correctly. And I hate to beat a dead horse, but the context here is we obviously had that as a key metric. CRPO was down this quarter. Your guidance implies it's down next quarter and there's a fear that this is just going be a sequential decline persisting where new bookings are in perpetual decline. But, I think that metric that you're talking about on coverage ratio is refuting that.

[Adam Tindle, Managing Director at Raymond James Financial]

So if you could maybe just touch on the color of the shape of CRPO for the year, because I think q two might actually actually be the bottom if I'm getting this right.

[Brett Tighe, CFO at Okta]

Yeah. In terms of dollars, that's that's probably roughly correct. I haven't done the exact math off off the guides, but it is, you know, in the ZIP code likely. But let us get through q two and q three and or q two and give you an update there, but I think that's I think that's probably alright, based on what you're saying.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

Okay. Next question going to Rudy followed by John DiFucci.

[Rudy Kessinger, Managing Director - Senior Equity Research Analyst at D.A. Davidson]

Great. Thanks, guys. So your CRPO growth has been 13% to 15% year over year the last five quarters. If we look at your subscription revenue growth versus your PO growth on a one to two quarter lag, it's been very tight the last couple years. And so why shouldn't subscription revenue growth be in that 13 to 15% range the next couple quarters?

[Brett Tighe, CFO at Okta]

Because we're telling you it's not? No. I'm just joking. But, ultimately, if you don't look I I just think it's a it's a fool's errand to get into the growth conversation. I've told you guys, I don't know how many times at this point, look at the coverage ratios.

[Brett Tighe, CFO at Okta]

That is like I don't know what the correlation is, but the r squared's gotta be, like, point nine or point nine five. So, like, we gotta stop looking at percentages and look at the actual dollars because that's the mechanics of how the math work through the financials. So use the dollars forecast like I've told you, either the annual or the current quarter one that Adam was just bringing up, and I would just highly recommend going down that path. There's there's only one way to do it. I don't think we need to, like, innovate on how to do revenue accounting.

[Brett Tighe, CFO at Okta]

You know, we'll we'll let's stick with how it is or how I've described it. Good time for

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

a question from John DiFucci followed by Josh Tilton.

[John DiFucci, Senior Managing Director at Guggenheim Partners]

Thanks, Dave. I'm not gonna hit that. You know what I think of that. But, anyway, Brett, you you've previously talked about the c and and MAU upsell headwinds mid contractor, yeah, at time of renewal for some of your older customer cohorts. It sounds like you're doing well with new products.

[John DiFucci, Senior Managing Director at Guggenheim Partners]

It it really does, and and we hear that too in the field. So is that headwind still why NRR declined for the fourth consecutive quarter? And do you still expect to see that alleviate sometime in the near future, or is the macro backdrop giving you signs that this may persist? It it sounds like it might be the latter.

[Brett Tighe, CFO at Okta]

Yes. We do expect it to travel in this range. And, yes, your answer to your first question was also a yes. But, yeah, if the macro does deteriorate deteriorate significantly, it will have a headwind on NRR just by default. It'll make it harder to do new business as well.

[Brett Tighe, CFO at Okta]

It's not like it's gonna just be relegated to to one side of the business. So, yeah, I I think that's, yeah, that's the best answer I got for you, John.

[John DiFucci, Senior Managing Director at Guggenheim Partners]

Okay. But but so far, because it's come down last four quarters, it it should, like,

[Brett Tighe, CFO at Okta]

bottom here? Or Well, if well, we talked about if you remember what I talked about last quarter, looking at the full fiscal year based on our expectations and being methodical with our approach about go to market specialization, we said it was gonna go plus or minus a little bit. Right? We still think it's plus or minus a little bit from here. I don't have an exact number for you, John, but it's, you know, a little travel in a channel here, unless there is something big that happens, like a macro adjustment out there.

[Brett Tighe, CFO at Okta]

Okay. Then then we'll we'll obviously update you then, and we'll tell you how it's going as a result of that.

[John DiFucci, Senior Managing Director at Guggenheim Partners]

Thank you.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

Yeah. We have about four minutes left. We'll go to Josh Tilton followed by Keith Bachman.

[Joshua Tilton, Director at Wolfe Research LLC]

Thank you, guys. Todd, maybe one for you. When you first started talking about the customer identity opportunity, I think to us, it kinda made a lot of sense why your customers would choose to buy this stuff instead of building it out of the box. That was, I guess, more for the traditional SaaS world. So what I'm trying to understand is there seems to be a lot of newfound excitement on the customer identity side as we head into this agentic world.

[Joshua Tilton, Director at Wolfe Research LLC]

Is there anything about a future of agent based apps that is gonna make it even more of a no brainer to go with buying this out of the box from you guys on the customer identity side instead of trying to develop it themselves compared to maybe the old school SaaS world?

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

I think it's I think in general, the trend is toward more buy, less build. And I think AI probably is I'm not sure it's a huge accelerant of that. I think it's probably on trend just because I think it's mostly, like, the solutions are getting better. If you go ten years ago, there wasn't really good customer identity solutions that were, you know, easy to use, reliable, scalable. And now with Auth0, had an amazing developer experience and were easy to start using and then upsell over time, and that continues.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

And I think I think the the moving to the world of AI and agents and embedding customer identity inside of those apps, I don't I don't know if it's materially materially different, but it's on a trend line that's, you know, toward buying these solutions versus building, which is one of the reasons why we're so bullish on this business.

[Joshua Tilton, Director at Wolfe Research LLC]

Thank you.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

Yeah. We'll go to Keith Bachman and take the final question from Raja Boyd.

[Keith Bachman, Senior Research Analyst at BMO Capital Markets]

Hi. Thank you very much. Good evening. Good afternoon. Todd, I wanted to direct this back to you and to follow-up on, as you say, the nonhuman side of the business.

[Keith Bachman, Senior Research Analyst at BMO Capital Markets]

And and the broader question is, why do you think Okta will win in that environment? And I think a lot of investors assume it is gonna be a big market. Pricing may be different. But but why does Okta win versus you know, when we were at RSA talking to CyberArk or SailPoint or Saviant, whoever it is, all think that they're in a position to win, particularly since our take, it sounds like governance will be part of identity with agents more so than, say, just access. But but maybe just kinda run through if the market develops as investors think it will, why does Okta win in the in the agent world or nonhumans?

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

Well, I think today it's because we're the only one with a a complete solution. And we have this breadth of products that can help solve this problem from detection to to vaulting to governance workflows, and I'm I'm talking specifically about about NHIs.

[Keith Bachman, Senior Research Analyst at BMO Capital Markets]

Yep.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

And I think but that's I mean, that that's only kinda entry to the race. Now we have to execute well, and we have to keep innovating. And this whole by the way, this whole agentic revolution and and agents working on your behalf, I think that's a whole other set of capabilities and products that we're thinking about and building, and we haven't released and announced them yet. But there's a whole layer on top of what we talk about service accounts and tokens and API access that's actually tracking the agent and knowing what that means and knowing what security posture you want and what what governance life cycles, etcetera, etcetera. So I think we have a lead in this market today, and I think we have a trusted brand that gives us a right to play and a right to help define this market, but we have to execute.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

It's gonna be a big opportunity. I fully agree with that. But we have to keep executing and keep innovating and keep delivering to our customers in the way we have for many years to earn to earn that win long term.

[Keith Bachman, Senior Research Analyst at BMO Capital Markets]

Alright. Many thanks.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

Thank you. Thanks, Keith. And we'll take our final question from Raja Boyd.

[Roger Boyd, Executive Director at UBS Group]

Awesome. Thanks, Dave, for for squeezing me in. Maybe just come back to to the outlook on I know prudence is the name of the game here, but when you think about the adjustment you're making around The US public sector, does any part of that look more material than just prudent? And I I know it's not a huge vertical when you called out some key one key wins there, but are are conversations with federal customers sounding any different than what you're hearing with the private sector? Thanks.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

I think fed I think federal I think in general customer conversations and people in the market, you know, it's about uncertainty and tariffs and not sure not not knowing what that means for the overall economy. Federal is different. You also have this government efficiency, and federal agencies are looking to rationalize or justify efficiency. And the I guess the glass half empty view on this is that there's conversations where they're making sure they justify investments and act efficiently. The glass half full description of this or what we're seeing is that Okta is very justifiable, and we can do things that are more capable and cheaper to run and more efficient than the alternatives, especially some of the legacy solutions out there that are costing these government agencies real money.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

And we can make a huge difference there, and that's why you're seeing our success there. We mentioned the public sector, four out of the top 10 deals in the quarter, two out of the three. You know, I was in Washington DC in the quarter talking to the Department of Defense and many other really important strategic customers and partners of Okta, and we can really help in this business. So it is I think with the efficiency work there, there is another layer of there is another layer of concern and conversations beyond the general economic uncertainty conversations. But I think over the test of time, I'm very confident that we're gonna continue to see huge success there like we have in q one.

[Todd McKinnon, CEO, Chairperson of the Board and Co-Founder at Okta]

And, you know, hopefully, in q two and q three and q four, we'll keep the ball rolling to a high degree, and we'll you'll you'll see super strong success and growth there like we've seen in the past couple of years.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

Cool. Thanks, Todd. Great. Thanks, guys. Apologize, that we didn't get to all the questions.

[Dave Gennarelli, Senior Vice President, Investor Relations at Okta]

I just wanna let you know before we go that, in addition to hosting several on-site and virtual bus tours this quarter, we'll be attending the Baird Tech Conference in New York on June 3, the FBN Virtual Conference on June 4, and the BMO Virtual Conference on June 10. And we hope to see you at one of those events. Thank you.

Participants

Executives

• Dave Gennarelli, Senior Vice President, Investor Relations
• Todd McKinnon, CEO, Chairperson of the Board and Co-Founder
• Brett Tighe, CFO
• Todd McKinnon, CEO and Co-Founder

Analysts

• Brad Zelnick, Managing Director at Deutsche Bank
• Eric Heath, Vice President - Equity Research Analyst at KeyBanc Capital Markets
• Jonathan Ho, Research Analyst at William Blair
• Eric Kelleher, President & Chief Operating Officer at Okta
• Shrenik Kothari, Senior Research Analyst at Robert W. Baird & Co
• Andrew Nowinski, Analyst at Wells Fargo
• Matthew Hedberg, Software Analyst at RBC Capital Markets
• Brian Essex, Executive Director at JP Morgan
• Gabriela Borges, Analyst at Goldman Sachs
• Saket Kalia, Managing Director at Barclays Capital
• Gray Powell, Managing Director at BTIG
• Michael Cikos, Senior Analyst at Needham & Company
• Rob Owens, Managing Director & Senior Research Analyst at Piper Sandler Companies
• Shaul Eyal, Managing Director - Equity Research at TD Cowen
• Yun Kim, Managing Director at Loop Capital Markets LLC
• Gregg Moskowitz, Managing Director, Enterprise software at Mizuho Financial Group, Inc.
• Ittai Kidron, MD & Senior Analyst - Analytics, Data, Security & Infrastructure Software at Oppenheimer & Co. Inc.
• Adam Tindle, Managing Director at Raymond James Financial
• Rudy Kessinger, Managing Director - Senior Equity Research Analyst at D.A. Davidson
• John DiFucci, Senior Managing Director at Guggenheim Partners
• Joshua Tilton, Director at Wolfe Research LLC
• Keith Bachman, Senior Research Analyst at BMO Capital Markets
• Roger Boyd, Executive Director at UBS Group