Financial Data and Key Metrics Changes - In Q3, the company reported strong performance driven by large customers and upsells, particularly with new products like Okta Identity Governance [6][14] - The company ended the quarter with nearly $2.5 billion in cash, cash equivalents, and short-term investments, indicating a strong balance sheet [17] - For Q4, the company expects total revenue growth of 10%, current RPO growth of 9%, non-GAAP operating margin of 25%, and free cash flow margin of approximately 31% [18] Business Line Data and Key Metrics Changes - New products such as Okta Identity Governance and Okta Privileged Access are contributing significantly to results, helping customers reduce complexity and improve security [7][14] - The company has seen a record number of customers and partners engaging with its new products, particularly in the AI security space [8][10] Market Data and Key Metrics Changes - The company has over 20,000 customers, positioning it well to become the identity layer for AI agents [9] - There is a growing interest in agentic security solutions, with over 100 current customers representing over $200 million in existing ARR [10] Company Strategy and Development Direction - The company is focusing on securing AI agents and non-human identities, which is seen as a critical growth opportunity [8][12] - The strategy includes expanding go-to-market specialization and increasing the number of quota-carrying sales representatives to meet demand [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming Q4, which is expected to be the largest quarter of the year, and highlighted the positive trends in sales productivity and customer interest in new products [14][18] - The company is confident in its strategy to capture emerging opportunities in the identity security space, particularly related to AI [14][35] Other Important Information - The company has been investing in innovation, with a focus on simplifying customer interactions through product suites [7] - The management team emphasized the importance of consolidating identity management solutions to enhance security and reduce complexity for customers [26][27] Q&A Session Summary Question: What convinces customers to consolidate their identity management with Okta? - Management indicated that technological changes, particularly related to AI, are driving customers to consolidate their identity management solutions with Okta [24][26] Question: Can AI capabilities be deployed by non-Okta customers? - Management confirmed that while many customers are interested in AI capabilities, they are primarily focused on existing Okta customers for deployment [30][33] Question: How does the company view the market for AI and identity security? - Management sees a significant market opportunity in securing AI agents, with a potential TAM larger than existing identity markets [34][35] Question: What is the outlook for next year? - Management refrained from providing specific guidance for FY27 but expressed confidence in the business momentum and upcoming Q4 performance [40][48] Question: How is the sales realignment affecting performance? - Management reported positive results from the sales realignment, with improved AE productivity and lower attrition rates [80][81]

Financial Data and Key Metrics Changes - In Q3 FY 2026, the company reported total revenue growth of 10% and raised its full-year revenue growth outlook to 11% [17][18] - The non-GAAP operating margin for Q4 is expected to be 25%, with a full-year margin of 26% [17][18] - Free cash flow margin is projected at approximately 31% for Q4 and around 29% for the full year [17][18] Business Line Data and Key Metrics Changes - The company experienced strength with large customers and upsells in its workforce segment, particularly with new products like Okta Identity Governance [6][7] - New products are contributing significantly to results, with a record number of customers engaging with Okta's offerings [7][9] Market Data and Key Metrics Changes - The company has over 20,000 customers, positioning it well to become the identity layer for AI agents [9][10] - There is a surge in interest for agentic security solutions, with over 100 current customers representing more than $200 million in existing ARR [10][11] Company Strategy and Development Direction - The company is focusing on securing AI agents and non-human identities, which is seen as a critical growth opportunity [8][12] - Okta is investing in innovation and expanding its product portfolio to simplify customer interactions and enhance security [7][14] - The strategy includes increasing the number of quota-carrying sales representatives to meet growing demand [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming Q4, which is expected to be the largest quarter of the year, and highlighted strong business momentum [44][46] - The company is confident in its strategy to capture emerging opportunities in the identity security space, particularly related to AI [14][35] Other Important Information - The company ended Q3 with nearly $2.5 billion in cash, cash equivalents, and short-term investments, indicating a strong balance sheet [17] - The company is evaluating its capital structure and considering investments in business growth, M&A, and opportunistic repurchases of outstanding notes [17] Q&A Session Summary Question: What convinces customers to consolidate their identity management with Okta? - Management noted that technological changes, particularly related to AI, are driving customers to consolidate their identity management systems with Okta [24][26] Question: Can AI capabilities be deployed by non-Okta customers? - Management confirmed that while many customers are interested in AI capabilities, the deployment can be applicable to any company, not just existing Okta customers [30][33] Question: How does the company view its guidance for the next fiscal year? - Management refrained from providing specific guidance for FY 2027, citing the need to assess Q4 performance first, but expressed confidence in business momentum and growth opportunities [40][48] Question: What is the status of the sales realignment efforts? - Management reported positive outcomes from the sales realignment, with improved sales productivity and lower attrition rates among account executives [80][81] Question: How is the company addressing the challenge of agentic commerce? - Management highlighted the importance of Auth0 for AI Agents in enabling businesses to build and manage agents effectively, addressing security and access challenges [59][62]

Financial Data and Key Metrics Changes - In Q3 FY26, the company reported total revenue growth of 10% and raised its full-year FY26 revenue growth outlook to 11% [16][17] - The non-GAAP operating margin for Q4 is expected to be 25%, with a full-year FY26 margin of 26% [16][17] - Free cash flow margin is projected at approximately 31% for Q4 and around 29% for the full year FY26 [16][17] Business Line Data and Key Metrics Changes - The company experienced strength with large customers and upsells in the Okta workforce, particularly with new products like Okta Identity Governance [4][5] - New products are contributing significantly to results, with a record number of customers attending the Octane conference to learn about Okta's AI security solutions [5][6] Market Data and Key Metrics Changes - The company has over 20,000 customers, positioning it well to become the identity layer for AI agents [8] - There has been a surge in interest for agentic security solutions, with over 100 current customers engaged, representing over $200 million in existing ARR [9][10] Company Strategy and Development Direction - The company is focusing on securing AI agents and managing non-human identities, which is seen as a significant growth opportunity [6][7] - Okta is investing in innovation and expanding its product portfolio to simplify customer interactions and improve security [5][12] - The strategy includes increasing the number of quota-carrying sales representatives to meet growing demand [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and momentum heading into the largest quarter of the year [12][17] - The emergence of AI technology is driving demand for Okta's solutions, as organizations seek to secure their AI agents [6][29] - Management noted that the government shutdown did not significantly impact Q3 results, and they remain optimistic about expanding presence in the public sector [13][14] Other Important Information - The company ended Q3 with nearly $2.5 billion in cash, cash equivalents, and short-term investments, indicating a strong balance sheet [16] - The company is evaluating its capital structure and considering investments in business growth, M&A, and opportunistic repurchases of outstanding notes [16] Q&A Session Summary Question: Can you discuss what convinces customers to consolidate their identity management with Okta? - Management indicated that technological changes, particularly related to AI, are driving customers to consolidate their identity management systems with Okta [19][22] Question: Can you provide insights on the interest in AI capabilities and potential revenue uplift? - Management noted that there is significant interest in AI capabilities, with many customers looking to integrate AI workflows into their operations, which could lead to increased spending [25][28] Question: How does the company view its sales realignment efforts and their impact on net retention? - Management expressed confidence in the effectiveness of sales realignment, noting improved sales productivity and low attrition rates, which should positively impact net retention [62][67] Question: Can you comment on the guidance for Q4 and FY27? - Management stated that Q4 is the largest quarter, and they are embedding conservatism in guidance due to its significance, with a clearer outlook expected after Q4 [40][70]

Summary of Okta 2025 Investor Day Company Overview - **Company**: Okta (NasdaqGS:OKTA) - **Event**: 2025 Investor Day held on September 25, 2025 Key Industry Insights - **Focus on AI and Identity Security**: The discussion emphasized the growing importance of AI agents in automating work and enhancing productivity across various industries. The core message is that identity security is crucial for managing these AI agents effectively [5][6][13] - **Emergence of Identity Security Fabric**: Okta is defining a new category called "identity security fabric," which integrates governance, privileged access management, identity security posture management, and access management into a cohesive solution [6][7][34] Core Announcements - **Innovations in Identity Security**: Okta introduced three key innovations: 1. **Identity Security Fabric**: A comprehensive solution that combines various identity security functions, addressing customer needs for a unified platform [6][7] 2. **Standardization Efforts**: Progress on open standards like IPSY and cross-app access to enhance control and visibility in technology environments [9][10][18] 3. **Auth0 Platform Enhancements**: Developers can build applications that comply with new standards, facilitating the creation of agentic systems [10][11] Market Dynamics - **Customer Demand for AI Agent Security**: There is significant interest from major companies in securing AI agents, with over 90% of surveyed companies deploying agents, yet only 10% feeling confident in their governance [22][23] - **Growth Potential**: The transition to identity security fabric is expected to drive growth, with initial customer interest focusing on foundational identity security before expanding to AI agent capabilities [14][32] Competitive Landscape - **Emerging Competition**: The entry of larger platform vendors like CrowdStrike and Palo Alto Networks into the identity space is noted, with Okta positioning itself as a specialized identity provider amidst this competition [67][69] - **Partnership Strategy**: Okta aims to collaborate with technology vendors to ensure its identity security solutions are integrated across various platforms, enhancing its relevance in the agentic AI rollout [58][65] Financial Considerations - **Monetization of New Offerings**: Okta plans to monetize its new identity security capabilities, with pricing models evolving to accommodate the unique nature of AI agents [54][55][71] - **Investment in R&D**: Okta's substantial R&D investment is highlighted as a key factor in its ability to innovate and improve its product offerings continuously [87] Customer Engagement - **Specialized Go-to-Market Strategy**: Okta has adopted a more specialized approach to its go-to-market strategy, focusing on tier-one markets and larger customers, which are expected to drive significant growth [73][75] - **Consolidation of Identity Tools**: Many customers are looking to consolidate their identity tools into a single platform, which Okta is well-positioned to provide [76][78] Conclusion - **Future Outlook**: Okta is optimistic about its growth trajectory, driven by the increasing demand for integrated identity security solutions and the ongoing evolution of AI technologies. The company is focused on bridging the gap between identity security and data governance, ensuring that its offerings remain relevant and valuable in a rapidly changing market [25][28][62]

Financial Data and Key Metrics Changes - The company reported solid Q2 results with total revenue growth of 10% to 11% for FY '26, an increase from previous guidance of 9% to 10% [18] - Non-GAAP operating margin is expected to be between 25% to 26% for FY '26, up from previous estimates [18] - Free cash flow margin is projected to be approximately 28% for FY '26, indicating improved profitability and cash flow [18] Business Line Data and Key Metrics Changes - The public sector business showed strong performance with multiple new business and upsell deals, including significant contracts with the DOD [15][16] - New products from Okta Identity Governance, Okta Privilege Access, and others contributed positively to revenue, highlighting the success of the unified identity platform [5][12] - The company experienced a record pipeline generation, reflecting improved sales productivity from specialized go-to-market teams [13][18] Market Data and Key Metrics Changes - Five of the top ten deals in Q2 were with the US public sector, indicating strong demand in this market [16] - The company noted that the macroeconomic uncertainties previously affecting guidance did not materialize, allowing for a more optimistic outlook [13][18] Company Strategy and Development Direction - The company is focused on building an identity security fabric that secures all identities, including AI agents, emphasizing the importance of independence and neutrality in the identity market [7][11] - The acquisition of Acxiom Security is expected to enhance Okta's Privilege Access capabilities and support the integration of new technologies [6][73] - The company aims to consolidate identity solutions for customers, reducing vendor complexity and operational costs [42][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and execution, noting that the go-to-market realignment is showing positive signals [13][19] - The company is optimistic about the adoption of new products and the rapid pace of innovation, positioning itself to lead the identity industry [19] - Management highlighted the importance of addressing current identity security challenges as organizations increasingly adopt AI technologies [70][71] Other Important Information - The company ended the quarter with approximately $2.9 billion in cash and short-term investments, indicating a strong balance sheet [17] - The upcoming Oktane Conference will showcase innovations and provide insights into the company's future direction [10] Q&A Session Summary Question: What indicators are used for guidance and NRR stabilization? - Management noted that NRR has stabilized and emphasized the importance of sales productivity and pipeline generation as indicators for future guidance [20][24][26] Question: What trends are seen in AI native customer adoption? - Management indicated that AI native customers are growing rapidly and are focused on securing their internal operations, similar to other customer cohorts [32][34] Question: Why is identity critical as an independent platform? - Management explained that identity must be independent to reduce fragmentation and operational complexity, allowing companies to consolidate vendors effectively [42][46] Question: How is the sales force productivity evolving? - Management reported increased productivity from specialized sales teams and noted record pipeline generation, reflecting the success of their go-to-market strategy [56][60] Question: What is the monetization strategy for cross-app access? - Management stated that cross-app access will enhance the value of identity providers and will be monetized through existing products while addressing current identity security challenges [102][104]

Core Insights - Okta (OKTA) shares have declined 27.2% in the past three months, underperforming the Zacks Computer and Technology sector's return of 15.4% and the Zacks Security industry's fall of 8.5% [1][7] - The decline is attributed to slowing federal business, challenging macroeconomic conditions, and stiff competition in the Identity and Access management domain [1][10] Financial Performance - For fiscal 2026, Okta expects revenues between $2.85 billion and $2.86 billion, indicating 9-10% growth from fiscal 2025 [10] - Non-GAAP earnings are projected between $3.23 and $3.28 per share, suggesting 16.7% growth year-over-year [11] - Second-quarter fiscal 2026 revenues are anticipated to be between $710 million and $712 million, reflecting 10% year-over-year growth [12] Market Position - Okta shares are currently trading below the 50-day and 200-day moving averages, indicating a bearish trend [5] - The company's Value Score is D, indicating that Okta shares are overvalued compared to peers like Cisco [9] Product and Innovation - Okta is expanding its AI-driven identity tools and partnerships, which are expected to drive long-term growth [7][13] - The launch of the Cross App Access protocol aims to enhance security for AI agents, reflecting Okta's commitment to protecting customers deploying AI [14] Partnerships and Liquidity - Okta has a rich partner base, including major companies like Amazon Web Services, Microsoft, and Palo Alto Networks, with over 7,000 integrations [16] - The company ended Q1 FY26 with $2.73 billion in cash, indicating strong liquidity, and raised free cash flow margin guidance to roughly 27% [18] Customer Growth - Okta exited Q1 FY26 with approximately 20,000 customers, with a notable increase in customers with over $100,000 in Annual Contract Value [19]

Core Insights - Okta shares closed at $95.63, approximately 25% below the 52-week high of $127.57, with a year-to-date appreciation of 21.3%, outperforming the Zacks Computer and Technology sector and the Zacks Security industry [1][9] - The company has a strong liquidity position with $2.73 billion in cash and investments, and a free cash flow margin guidance raised to roughly 27% for fiscal 2026 [7][9] - Okta's innovative product portfolio and extensive partner base are driving customer growth and revenue, with over 20,000 customers and a significant increase in high-value contracts [15][16] Performance Comparison - Okta has outperformed peers such as CyberArk, Cisco, and Microsoft year to date, with respective share price appreciations of 12.9%, 15.9%, and 20% [2] - In terms of valuation, Okta is trading at a forward Price/Cash Flow of 22.51X, which is higher than the broader sector's 22.03X but lower than CyberArk's 73.58X and Microsoft’s 28.88X [8][10] Product and Market Position - The company is benefiting from strong demand for its new products, including Identity Governance and AI-powered capabilities, which enhance security and user experience [3][9] - Okta's new protocol, Cross App Access, aims to secure AI agents and improve security compliance, reflecting the company's commitment to protecting customers deploying AI [14] Financial Guidance - For fiscal 2026, Okta expects revenues between $2.85 billion and $2.86 billion, indicating a growth of 9-10% from fiscal 2025, with non-GAAP earnings guidance raised to $3.23-$3.28 per share [17][18] - The second-quarter fiscal 2026 revenue guidance is between $710 million and $712 million, suggesting a 10% year-over-year growth [19][20] Conclusion - Despite facing macroeconomic challenges and a competitive landscape, Okta's innovative portfolio and expanding customer base position it favorably for growth, supported by a Zacks Rank 2 (Buy) and a Growth Score of A [21]

Investment Rating - The report maintains a Buy rating for Okta, indicating confidence in the company's potential for growth stabilization and execution on its go-to-market strategy [3][17]. Core Insights - Okta's 1QFY revenue was 1% above expectations, with a cRPO (current Remaining Performance Obligations) 2% above and EBIT margin approximately 200 basis points above [1]. - The company is experiencing a sequential decline in subscription revenue growth and cRPO, which has raised concerns about future performance [1][15]. - Despite these challenges, Okta is well-positioned to benefit from the increasing adoption of AI technologies among its customers, with initiatives like Auth for GenAI expected to enhance its offerings [3][15]. Financial Performance - For FY26, revenue guidance remains unchanged at $2,859 million, with EBIT margin guidance also maintained [1][17]. - The company reported a net revenue retention (NRR) rate of 106%, slightly down from 107% in the previous quarter, and is expected to remain within the 106-108% range for the remainder of FY26 [1][15]. - cRPO bookings grew 9% year-over-year, but this represents a 23% quarter-over-quarter decline, indicating volatility in forward subscription revenue [15]. Valuation Metrics - The adjusted 12-month price target for Okta is set at $137, based on a valuation of 25 times EV/uFCF [17]. - Key financial metrics include projected revenue growth rates of 15.3% for FY25, 9.5% for FY26, and 10.5% for FY27 [9]. - The report highlights a free cash flow yield of 4.9% for FY25, decreasing to 3.4% by FY26 [9]. Market Context - Okta's market capitalization is approximately $22.9 billion, with an enterprise value of $20.5 billion [4]. - The company is positioned within the Americas Emerging Software sector, ranking 3rd in M&A activity [4].

Financial Data and Key Metrics Changes - The company reported solid Q1 results with exceptional cash flow and record operating profitability and profit margin [16] - For Q2 FY '26, total revenue growth is expected to be 10%, with current RPO growth of 10% to 11%, and a non-GAAP operating margin of 26% [20] - For the full year FY '26, total revenue growth is projected at 9% to 10%, with a non-GAAP operating margin of 25% and a free cash flow margin of approximately 27% [20] Business Line Data and Key Metrics Changes - The governance portfolio, including Okta Identity Governance, lifecycle management, and workflows, has seen substantial growth, with workflow executions increasing nearly 400% over the past three years [8] - The Auth0 platform performed well, contributing positively to the overall results, particularly following a record Q4 [16][17] Market Data and Key Metrics Changes - The US public sector vertical has shown strength, with significant deals contributing to Q1 results, including federal contracts [18] - International markets experienced a deceleration compared to the US, but specific details on the impact were not disclosed [34] Company Strategy and Development Direction - The company is focused on product innovation, with new offerings such as Okta Identity Governance and Auth for GenAI, aimed at addressing evolving cyber threats and enhancing security [7][12] - Okta is positioning itself as a leader in identity security, emphasizing the importance of consolidating disparate identity systems for customers [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong customer conversations and the importance of identity solutions in the context of AI projects [26][30] - There is a cautious approach to guidance due to potential macroeconomic uncertainties, although no immediate impacts were observed in Q1 [28][30] Other Important Information - The company is committed to maintaining its investment levels despite a cautious macro outlook, indicating confidence in long-term growth opportunities [110] - The introduction of suite-based pricing for the Okta platform has shown positive results, with customers interested in purchasing multiple products [62] Q&A Session Summary Question: What factors influenced the additional conservatism in guidance? - Management noted that while Q1 results were strong, there is a cautious tone in the environment, prompting a conservative approach in guidance [28][30] Question: Was there any softness in April? - Management confirmed that there was no softness in April, and performance remained solid throughout the quarter [35] Question: How is the go-to-market specialization progressing? - Management reported a solid start to the specialization process, with strong performance in the Auth0 side and pipeline building [41][42] Question: What is the outlook for new logo pipeline in the workforce business? - Management expressed optimism about the new logo pipeline, highlighting the potential of new products to attract new customers [91][92] Question: How should investors interpret the guidance for CRPO? - Management explained that the guidance reflects a cautious approach due to macroeconomic factors, but emphasized that the underlying business remains strong [55][107]