Okta(US:OKTA)2025-12-02 23:00Financial 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]