Okta, Inc.

Hi, everyone. Welcome to Okta's first quarter fiscal year 2025 earnings webcast. I'm Dave Gennarelli, Senior Vice President of Investor Relations at Okta. With me in today's meeting, we have Todd McKinnon, our Chief Executive Officer and co-founder, and Brett Tai, our Chief Financial Officer. At around the same time that the earnings press release hit the wire, we posted supplemental commentary to our IR website. This posted commentary contains a large portion of what would historically be the opening commentary, including customer commentary, product-related news, and a review of our financial results. This new format allows listeners to review that information before this call. Today's meeting will include forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding our financial outlook and market positioning. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. Board-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-K. In addition, during today's meeting, we will discuss non-GAAP financial measures. Though we may not state it explicitly during the meeting, all references to profitability are non-GAAP. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalents is 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'll quote a number of numeric or growth changes as we discuss our financial performance. And unless otherwise noted, each such reference represents a year over year comparison. And now I'd like to turn the meeting over to Todd McKinnon. Todd.

Thanks Dave, and thank you everyone for joining us this afternoon. Q1 was a solid start to FY25, highlighted by continued strength of large customers and the public sector, and record profitability and cash flow. The operating efficiency actions that we started almost two years ago have delivered outstanding leverage to our model. While it's difficult to quantify the impact on our business from the October security incident, our analysis continues to suggest minimal impact on our financial results. Today, I'll cover the progress we've made with the Okta Secure Identity Commitment and then review some of the highlights from our showcase event earlier this month. As a reminder, we launched the Okta Secure Identity Commitment earlier this year. This is our long-term plan to lead the industry in the fight against identity attacks. It's aimed at hardening our ancillary and corporate systems and further strengthening our products and services, as well as championing customer best practices that help enable our customers to be highly protected. We want our customers to benefit from our depth of experience, so we are further enhancing our customer policies to help ensure our products are deployed with Okta's best security practices. In only a few short months, we've made meaningful progress. Identity plays a critical role in the technology stack, so it's not surprising that identity-based attacks have become a top method for threat actors. Over 80% of data breaches in the industry involve some kind of compromised identity. Identity is security. As part of our vision to free everyone to safely use any technology, Okta is modernizing identity and effectively modernizing security. We are protecting our customers by blocking over 2 billion security attacks a month. And it's likely that number will only grow. During the week of the RSA conference, we hosted hundreds of customers at our hybrid showcase event. In addition to the keynotes, we hosted a large group of CISOs from various industries to discuss today's threat environment and how Okta helps protect them. It was an energetic forum and we walked away with even more confidence that we're on the right track of delivering industry-leading identity security solutions. Our products are the foundation of Okta. We already have the broadest array of identity products in the world. Building on that, our current rate and pace of innovation is really impressive. We've historically put a lot of focus on delivering secure products to our customers, and we are now on the journey to make Okta one of the most secure companies in the world from every aspect, from our internal technologies to people to processes. At Showcase, we featured the latest product innovations, starting with a new product, Identity Security Posture Management, stemming from our recent acquisition of Sparrow, This technology is a fantastic addition to our portfolio as it proactively identifies vulnerabilities and security gaps before they can be exploited. It works for both Okta and other identity providers like AWS and Azure AD, bringing a multi-layered defense strategy on top of the already strong security capabilities in the Workforce Identity Cloud. Earlier this month, we began rolling out identity security posture management to select customers in North America. We're also excited about the launch of identity threat protection with Okta AI, which includes powerful features like universal logout, which makes it possible to automatically log users out of all of their critical apps when there is a security issue. Think of this as identity threat detection and response for Okta. We expect identity threat protection to become generally available this summer. There are so many more new products, features, and enhancements that we spoke about at Showcase, so I encourage you to check out the summary in our posted commentary. We're really excited about all the great innovation that is taking place at Okta, which will help drive future growth. I also want to remind you of our three top priorities for FY25 because they are fundamental to our success. It shouldn't be surprising to anyone that security is our top priority, from our company culture to our security architecture to our products and services. The second is reigniting our growth, and this is where all the great product innovation will contribute. And the third top priority is scaling Okta in order to set us up for success to become a $5 billion and then $10 billion plus company. To wrap things up, we are pleased with the start to FY25. We're expanding on our robust and modern identity platform, and we have a strong pipeline of products and functionality powered by Okta.ai. Identity is security, and Okta is playing a critical role in helping companies protect themselves from identity-based attacks. As always, I want to thank the entire Okta team for their tireless efforts and our awesome customers and partners around the world 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.

Thanks, Todd, and thank you, everyone, for joining us today. Just a quick reminder that most of my typical commentary on the quarterly financials was published on Okta's Investor Relations website at the same time as the press release. I'll cover a few of the financial highlights, but we'll focus my commentary on broader topics before getting into our business outlook. our solid Q1 financial performance continues to suggest minimal impact on our financial results stemming from last year's security incident. Consistent with last quarter as we analyzed our key metrics, we couldn't attribute a quantifiable impact from the security incident on our Q1 results. And while not quantifiable, the event likely had some level of impact. We'll continue to monitor this as we move through the rest of FY25. The macro environment during Q1 was relatively consistent with what we experienced over the past few quarters. In short, it's stable but still challenging and most notably having an impact on our mix of new business versus upsells with existing customers. Moving on to some financial highlights. Over the past several quarters, we've put significant effort into positioning the company for profitable growth for years to come. The actions we've taken to drive efficiencies in our cost structure have yielded impressive results. Our Q1 financial performance was highlighted by record operating profitability as well as record free cash flow, resulting in a free cash flow margin of 35%. The cash flow performance is even more impressive when considering it includes a $22 million impact related to the headcount reduction action at the start of Q1. Another highlight in the quarter was Q1 subscription gross margin of 83.5%, which represents an increase of 420 basis points when compared to two years ago. The improvement reflects the cost-saving initiatives we've taken that have resulted in lower platform costs. We expect subscription gross margin to remain in the 83% range and flex down slightly for the rest of the fiscal year as we invest in the business across key areas such as security, public sector, and customer support. We were encouraged by Q1's strong top line metrics and pipeline growth. Public sector was a particular area of strength led by our largest ever public sector deal. In fact, five of our top six deals in Q1 were with public sector organizations. And despite the strong quarter for public sector deals, which are typically one-year deals, weighted average contract term length for contracts signed in the quarter increased year over year. We added 150 net new customers in the quarter. This primarily reflects the ongoing business trends of the current macro environment, resulting in increased weighting of upsell versus new business and continued strength with large enterprise customers. Once again, our fastest growing cohort was large customers with $1 million plus ACV. Now let's turn to our business outlook for Q2 and FY25. As always, we take a prudent approach to forward guidance. We are factoring in a stable but still challenging macro environment consistent with what we've experienced over the past few quarters. We also continue to incorporate some conservatism into our outlook as we continue to monitor potential impacts related to last year's security incident. Again, you can view the more granular guidance details in our press release or posted commentary. For the second quarter of FY25, we expect total revenue growth of 13 to 14%, current RPO growth of 10 to 11%, non-GAAP operating margin of 19 to 20%, and free cash flow margin of approximately 5%. Keep in mind that cash flow in Q1 was a record and that Q2 is seasonally the lowest quarter of the year. We are raising our outlook across the board for full year FY25. We now expect total revenue growth of 12%, non-GAAP operating margin of 19 to 20%, and a free cash flow margin of approximately 22%. To wrap things up, we remain confident that we've set the path of profitable growth for years to come. Our balance sheet is strong with a net cash position of approximately $1.2 billion. And we continue to focus on initiatives to drive the top line while driving operational efficiencies. With that, I'll turn it back to Dave for Q&A. Dave?

Thanks, Brett. I see there are quite a few hands raised already and I'll take them in order. And in the interest of time, please limit yourself to one question so that we can get to everyone. And then you're welcome to queue back up with additional questions. So with that, let's go to our first question from Gabriella Borges at Goldman.

Hey, good afternoon. Thanks for taking the question. For Todd and Brett, I'm hoping you can provide some qualitative commentary on sales productivity. There are factors outside of your control with the macro, but maybe talk about the factors that are within your control and specifically how you think about training and enablement around cross-sell and where you think NRR can go over the medium term with some of the new products that you've released. Thank you.

It's something we're really focused on. I've talked about it on previous calls. One of the leading indicators of productivity is tenure. And the level of tenure in the sales team has been ramping over the past few quarters. And it's at a comfortable level now for us. So we're happy with where it is. And we're waiting to see throughout the year for the ramp in productivity that will come from that. And I think in Q1, it was good, but it can't get better in previous quarters, mostly because just the sales for the year ramp through the subsequent quarters of the year. And also, we assume that the productivity would be higher through there. So Q1 is solid, but it's only a small part of the year. And we're really optimistic about the further increases in productivity through the rest of the quarters of the year. In terms of cross-sell, we had a very strong quarter in terms of cross-sell. We're happy with the way the team is positioning both clouds with starting with workforce and then moving to customer or even in the public sector deal we mentioned, there's actually a significant cross-sell the other way. It started with customer identity and then the big upsell was with workforce identity, which is a healthy thing to see in the business. So it is a key metric and I would say we're off to a solid start and we're really optimistic about what could happen the rest of the year in terms of acceleration.

Thank you.

Next up, we'll go to Fatima Bulani at Citi.

Hi, good afternoon. Thank you for taking my questions. Todd, just to piggyback off that last point. So the public sector performance has actually been very consistently strong over the arc of the last several quarters. So I was hoping if you could drill into this with a little bit more detail as it relates to, you know, what sort of catalysts are you tapping very effectively within the public sector? And, you know, frankly, the public sector strength is outside of the normal confines of what we typically see from a timing standpoint, typically back half of the year coinciding with the U.S. federal fiscal year end. But any specific details around what mandates you're tapping and why public sector has actually been so strong, consistently strong, whereas kind of other parts have been maybe a little bit more challenged? Thank you.

Yeah, I think there's a bunch of factors there. I'll try to call out some of them to hopefully be helpful for your understanding of the dynamics of the business. I would say the first one is that usually public sector deals are bigger and which means that the organizations we're selling to are bigger, which means the They haven't been impacted like some of the S&B parts of our business have in the macro environment the last few quarters. So I think, like we're seeing in the rest of the business, the biggest, fastest-growing cohort of customers is the million-dollar-plus customers. You see the 100K-plus customers growing faster than the overall customer count, 12% versus 6%. So we're seeing a migration up of the business, which we think is a good, healthy thing for long-term growth. So public sector within that is growing. They're bigger deals. They're bigger organizations. Now, once you double click into even that, you're seeing a lot of the first of all, the public sector business is has its state and local, its civilian federal and its Department of Defense federal in the U.S. There is the majority of our public sector businesses in the U.S. And so if we look at that, the big public sector, when we talked about this quarter, which we're very happy about, is actually a which is a relatively newer part of the public sector vertical for us, which is the Department of Defense. A big agency in the Department of Defense selected Okta to standardize across the board for access management, which is very exciting. And that's a result of many things. It's a result of persistent sales campaigns and proof points at smaller parts of the department and smaller parts of the federal government. But it's also a testament to better certification. So IL-4 certification and then also the ability to serve Some IL-5 workloads, which is very important. FedRAMP High are a couple of certifications we've gotten over the last year or so, which is really driving momentum. And then the last bucket there is kind of like it's the trends that are impacting every organization, which is they're making bigger investments in technology. They understand that identity can give them choice and flexibility and help them, which is particularly in the big public sector deal is a particular example of this. They can actually... consolidate around many, many identity providers. So we talk about consolidation broadly, but there's a lot of sprawl in these big organizations around multiple identity technologies. This Department of Defense agency had over 75 identity tools, which is Sounds crazy, but when you think about the size and scope of this deal, it's maybe not that crazy. So they're trying to do more with efficiency with their dollars. They're trying to consolidate around the right pain points. We think identity is one of those. And then they're also making sure that they're robust and defended against cyber attacks. And like every other part of the world, they understand that identity is a key to getting that posture right. And they're looking to shore up that part of their cyber defense with efficiency. with a solid identity platform. So those are some of the dynamics, hopefully that's helpful.

I would actually just, I would just add to that actually two things. One, if you remember a couple of years ago, we, one of our three strategic initiatives was around federal, right? And so that was, that was, you know, back in FY23, we spent a lot of time and a lot of focus and you can see the, the, the fruits of our labor, if you will, over the last couple of years and seeing the focus for us really pay off. And then the other one is one thing to keep in mind is we're still in the early innings of this opportunity. We look at the public sector as a massive opportunity and we still have a lot of room to run there.

Great. Let's go to Brad Zelnick at Deutsche Bank.

Great. Thanks so much for taking the question and congrats on a good result, especially relative to some crazy stuff happening in software. Brett, my question is for you. I'm just trying to reconcile the 2Q CRPO guide for further deceleration with what otherwise looks strong when I look at Q2 revenue and the full year revenue guide. What dynamics should we consider? Do some of those public sector deals maybe not fully make their way into CRPO or are there any other factors that we should keep in mind when when thinking about your CRPO guide for Q2. Thanks.

Yeah, no other factors specific to the public sector. I mean, obviously, they're in the current RPO numbers of Q1 with 15% year-over-year growth, which we feel were solid results. But ultimately, when you look at the guidance, not just for Q2 current RPO, but also any of the guidance that we gave here today, we're factoring into two main things, right? macroeconomic headwinds are still out there. It's really affecting us in two different ways. One is on new logo acquisition. The other one is on the upsell side of the house around seed upsells, monthly active user upsells on the customer identity side. There's still a headwind out there to growth that both the net retention number and the current RPO number and any guidance that we really give here. And then the second main factor is the security incident. Although we didn't We saw really only minimal impact to our financials in Q1 and in Q4, like you remember from 90 days ago. We're still being thoughtful about that and just baking all that into the guidance that we've given you guys here today.

Great. Thanks for the color.

Next, we have Eric Keith at KeyBank.

Hey, thanks for taking the question here. I guess I wanted to drill in on some of the PAM commentary from the prepared remarks. A couple of nice customer wins in the G2K. that I thought was quite interesting. So could you elaborate more on those customer wins? Just firstly, were they displacements and if they were on-prem or cloud workloads? And then third, just sort of relates to the telecom customer specifically, you mentioned it needed to meet federal compliance requirements. So is PAM already FedRAMP certified at this point? Because that seems pretty impressive to me if it is.

The early way. So Pam is we're very happy with the progress there. It is it is early in terms of its life cycle, only having been available starting in in Q4 of last year. So it's encouraging early traction there. I think that the. kind of like what we expected is playing out in terms of it's not necessarily replacing other technologies or other privileged access management technologies. It's more because of the product is easy to use and it's really purpose built for modern cloud environments. You're spinning up a bunch of virtual hosts, you're using containers, modern DevOps type environment. It's really good at those kinds of environments. And in many places where we go into those environments, environments don't have a privileged solution and we fit really nicely in there. And that's what we're seeing in some of the early traction. The other very maybe also it's good to see our thesis confirmed is that it's often bought as part of the whole suite. So they'll buy governance and PAM and add that to our access management tools on the workforce side. And that's, you know, our whole theory has been that those three things should be more integrated, should come from the same vendor, and we're building the identity suite for workforce in the sense that those three things work really well together. We're seeing that play out in some of the early wins And we're seeing, you know, when we sell a governance, it's of the total after governance is installed or sold, governance can be a third of the entire ARR after governance gets installed there. And we're seeing a similar – it's early, but we're seeing a similar uplift for PAM as well. So all these signs are very encouraging. The product is not yet FedRAMP certified, so that will come later. to answer your specific question there. But it's exciting, some early proof and validation points for our approach in that market.

Thanks, Todd.

Let's go to Adam Tindall at Raymond James.

Okay, thanks, Dave. Todd, I just want to first acknowledge the impressive profitability here. On the flip side, if I looked at Brett's guidance, it looks like Okta is likely tracking to a single-digit growth business within the next couple quarters. I noticed in your prepared remarks you used the term reignite growth. So I just wondered if you can maybe just double click on the top opportunities that you see to re-accelerate growth from here, which areas would those be? And then secondly, from a capital allocation perspective, Brett noted that you have 1.2 billion of net cash. Is there something that you might consider more transformational that would help accelerate that timeline to reignite growth? Thanks.

The reigniting growth is one of our top three priorities. Of course, the first is securing Okta and making sure our products do the same things for all of our customers. And with our secure identity commitment, that's our number one priority. Second is reigniting growth. So it's very important to us. And I think there's three important things I'll call out there in terms of how we're thinking about driving up that growth rate and doing everything we can to meet and then exceed our guidance we've put forward. That first one is we want to make sure that we have trained, enabled, tenured, productive salespeople. And as I mentioned previously for a couple of questions ago, we think we're off to a solid start on that dimension. The second one is new product innovation. We're just starting to hit the ramping phase in terms of the next few quarters of material impact of our governance product. PAM is... a few quarters behind that, but it has the potential to get there. They're being built and sold and positioned as a suite, which I think we're seeing really early signs of compelling value there. We have a customer identity business that's by far the leader in the industry that has a ton of innovation coming in that part of the business as well with highly regulated identities and all the other announcements we've made there. And so the products are a really important part of what we're doing. And then the third thing is just, broadly speaking, how we fit into the partner ecosystem. And particularly in a large enterprise, working more effectively and being strategic partners with the global SIs and having them fit us into there or build practices around us so we can fit seamlessly into what they're trying to do strategically with their businesses and all the way up and down the partner channel. We've made a bunch of changes there over the last year. And hopefully as you all talk to the folks in the partner community, you're seeing positive feedback about what we're doing and how we can work with the partner community effectively and to serve everyone's mutual interest. So those are some of the highlights. It is very important. We think we have a very big long-term market opportunity and we're not here to be a slow growth company. We're here to be accelerating growth and reaching that market opportunity over the long term.

And then I'd add one or two things to that, Adam. One is around Hunter Farmer model. I know you guys heard about that from us 90 days ago, a couple of months ago or three months ago. You know, we obviously want to accelerate logo acquisition and obviously penetrate the customer base. I mean, we've got 19,100 plus customers and you heard us talk in prior calls about governance customers of only, you know, it's measured in the hundreds. So there's a lot of opportunity inside the customer base. I'm just using governance as an example, but you could apply what I just said to everything Todd just said in terms of additional products. And hopefully everyone had a chance to look through all the exciting product announcements that we made at Showcase or listed it out in the posted commentary. And then in terms of your question around capital allocation and capital structure right now, you know, we're going to continue to do what we've done in the past, right? Be opportunistic with the debt and leave the balance of the money there for, you know, operating the business and looking at tech tuck-ins, you know, things to accelerate the roadmap, like you saw with Spira, which then turned into Posture Management, which is an exciting product that just came out a few weeks ago. It is only available to some customers in North America, so it's still very early, but it's just another example of us, you know, taking, small tuck-ins and, frankly, accelerating some new exciting features for our customers.

Hey, let's go to Hamza Fatawalla at Morgan Stanley.

Yeah, thank you for taking my question, and I'll echo my congrats on the results in a tough environment. Todd, yeah, just going back to your comment, you know, you talked about accelerating growth, you know, $5 billion, $10 billion revenue company. So just from a hiring perspective, when you think about sort of the slower headcount that you've had over the last couple of years, are you seeing signals in the demand environment or in your opportunity to maybe pick that up a bit? And how should we kind of think about that growth margin equation going forward? Yeah.

I think in the enterprise segment, we do. We see signals there. I think in SMB, it's still more of a wait and see. I think we'll have to see some more quarters of, you know, stability or improving dynamics there before we'll be more comfortable ramping that up. Brett mentioned one of the changes we made, which is doing this hunter-farmer approach in the SMB segment, which we're very optimistic about. It's going to take a few quarters to have the impact we think it can have, but... As that settles out and as some of the economic choppiness maybe stabilizes further or picks up a little bit, we'd be more confident adding headcount there. I think the enterprise, public sector, strategic, international segments, that's where we've seen a lot of the growth. That's where customers have the biggest need in terms of lots of complexity, lots of technical choice really matters, like not being locked into one platform is really valuable. They have a lot of risk, a lot of cyber risk, a lot of risk of not getting the technology adopted and driving their business forward. So I think that's a real long-term place to invest in. We're looking at making sure we do that in a measured way. We want to balance growth and profitability, but we're not going to leave opportunity on the field where we see we can take it.

Thank you.

Let's go to Madeline Brooks at B of A.

Thanks for taking the question. I guess I just want to go back to the guide and pick it a little bit. So it feels like the second half guide is very conservative. If I just look at one quarter results and also assuming that the second quarter comes in line, the model shows a pretty significant slowdown from one half to second half. So can you just go a little bit deeper into the specifics of the conservatism For example, if I think about churn, it takes roughly three to four quarters to turn off of identity platforms. So is that an increased risk that you're looking at for the back half compared to say, signing new businesses?

Yeah, I think it's a little bit of mix of both new business and on the renewal side of being prudent about both the things I talked about earlier around macroeconomic uncertainty and also the security incident, right? I mean, we've talked about it before with maybe the impact associated with the security incident, like you said, about renewals may take a little bit longer. So we're just baking those items in to make sure that we're just being prudent at this point. And based on what we see in the business and, you know, from a pipeline perspective, the mix, new business versus upsell, all that good stuff, we're just taking that all into account into the guidance here today.

And maybe just pushing a little bit further, and this is going to sound very cliche, so apologies in advance, but if you can't wait them 50-50, what keeps you up more at night? Is it potential turn or is it difficulty signing new customers? for the backup of the year and that conservatism.

I would say signing new customers. I would agree with that 100%. Yes, you just tested, we're aligned.

Perfect. Love to see that.

Well, I think the other thing also, Madeline, is, you know, gross retention has remained very stable for years. And so it's been one of those very stable metrics. And so that's something we don't tend to worry about. That's why we focus and talk to you guys about reigniting growth. We talk about Hunter Farmer. We talk about partners. We talk about all these things about new logo acquisition and penetrating the base further because that's our main focus and concern.

Great. Thanks so much.

No problem.

Next up, we have Patrick Colville at Scotiabank.

Hey, guys, thank you so much for taking my question. I mean, for me, the story of Okta over the last 12 months has been some, you know, incredible kind of product innovation with governance, PAM, and, you know, the new modules you called out on this call, you know, identity security, posture management, and the identity threat protection. I guess, how are they going to flow through the financial model in terms of kind of net retention? And, you know, and qualitatively to see RPO, I mean, because this is major launches. So when we get able to see that in numbers.

I think it really depends on the maturity of the product. I think, you know, obviously governance is a lot further along, right? And we've talked about hundreds of customers. We still have thousands of customers to go, clearly based on the math, just total customers minus those hundreds of customers. So that would be the first one that you'd start to see in CRPO and also into net retention, but the other ones will trail behind them. I wouldn't expect for these newer things that are coming out like posture management, or threat protection. I wouldn't expect it in FY25 at all. I probably wouldn't even think it would impact it in FY26 because we're talking about a $2.5 billion business at this point. It takes a lot of money in any of these products to make a material difference to the overall numbers. So we're setting these up for the long-term, not just to harness it for a couple quarters here or there. So it's really the long-term play that you should expect.

Yeah, how we're thinking about this internally is that I think it will mirror the order of broad enablement. So we're broadly enabling people in the following order. Governance is first, followed by a combination of posture management and identity threat protection, followed by privilege access. So we think that identity threat protection with Okta AI and identity security posture management, that bundle could pretty quickly have as much of an impact as governance. And then we think the next sequential enablement and the next order of impact will probably be privilege access. So that's how we're thinking about it internally. And I think that maps out to what you'll see in terms of the flowing through in the financials over time.

Great. Thank you so much.

Let's go to Joe Gallo at Jefferies.

Hey, guys, thanks for the question. Nice job in a really tough environment. I wanted to follow up on some of the things you said earlier, Todd. You noted large deal strength. And while large deals are growing, your customer ads over $100K was down meaningfully year over year. So can you just talk through the gross retention rate of that business? And then is there just anything notable to call out between enterprise spend versus S&B or mid-market spend? Thanks.

Your first question, you said, is it gross retention or growth retention?

What did you say? So for large deals, 100K and larger, your ads were down year over year. So I was just asking on the gross retention. Yeah, gross retention. Yeah.

Yeah, the, I think the, um, if you look at the, the logo numbers there, there's no, um, it's the softness is in the ads. It's not in the elevated turn rates. Um, so the net as a result of fewer ads, not a, not a result of, um, higher. higher logo churn. So that's, as Brett mentioned, and that matches up with the dollar gross retention, which has been stable and healthy for many years. I do think that just there's a lot of opportunity in, we talk about these 100K deals and that number being up 12%. There's a lot of room to expand even in those, especially when you layer on the breadth of the product portfolio now. You know, the customer identity add to the workforce suite, the workforce to customer, and then even within the workforce suite, you're getting a lot of capabilities to upsell governance, workflows, identity threat protection, identity security posture management, privilege access, and it's a lot of potential there. So it's one of the reasons why we've seen success in that part of the business, and we're also focused on it for the future to make sure we capture the opportunity there as well.

Yeah, Joe, just to add to that, another dynamic that has happened now two quarters in a row is the vast majority of the ACV that was added in the quarter actually came from customers that are greater than 100K already. So it's not like you'd see an ad into that cohort because they're already in the cohort. And so we saw that in Q4, if you remember I said that last quarter. It happened again. So when Todd's talking about the strength in large businesses, it really is in the cohort that's already in there. You also see the million-dollar cohort continue to be the fastest-growing cohort amongst all the cohorts. So it's really that upper end that we tend to be doing well right now. And we believe that's directly related back to what we've been talking about with macro, These bigger businesses have, one, bigger balance sheets, but also what Todd's talking about, they have more complexity to solve, and that's really where we shine from a product set perspective.

Makes a ton of sense and good to hear. Thank you.

And next we go to Rudy Kessinger at DAA Davidson.

Hey, great. Thanks for taking my questions, guys. I guess kind of trying to triangulate on some of the other questions here, the CRPO growth deceleration, the implied growth deceleration, this high single-digit range in the second half, and the caution around the new customers. I guess when you look at your top-of-funnel sales activity and pipeline generation just over the last 90 days versus the prior quarter or maybe before the breach, I know you're saying no quantifiable impact to the Q1 numbers from the breach, but how has that breach impacted, I guess, your top of funnel sales activity and pipeline generation?

Yeah, I mean, from a pipeline perspective in Q1, the create that we had created pipeline in the quarter was healthy and we were happy with it. So that's one of the reasons why we're saying here that we're struggling to find quantifiable evidence that there has been an impact related to the security incident. Now, granted, there's always the potential that there are deals we're not seeing, but we never really see it in the numbers and the way we track things. So, you know, we're limited by what we can see.

Next, let's go to Gray Powell at BTIG.

Okay, great. Thanks for taking the question. So, yeah, it was good to see the net retention rate stabilize this quarter. I just want to make sure that I'm sort of thinking about the components of your growth profile correctly between the installed base and new customers. So maybe just like what does the recurring revenue look like on the new customers that you've signed up the last six to 12 months? And how does that compare to the install base? Like are you signing up? Are the new customers that are coming on board, are they bigger customers, same, smaller? And then just how should we think about that going forward?

we haven't seen a significant departure from the past. I mean, they might be slightly bigger just because enterprise is doing a little bit better, but I mean, it's because there's a, such a deep customer set and such a large, uh, amount of ACV. It's hard to sway the metrics with one or two quarters. Uh, it, it just, you know, law of large numbers. Um, and I thought if you would add anything else to that, but that's, that's how I've been seeing the math, at least from our perspective.

I think, um, I don't have the quantitative analysis that would answer this question directly, but I can tell you some of my experiences and conversations. I think that we still have an opportunity to do a better job having the first deal have a broader set of our products. often in the conversations where i was just in a big deal review for a for a q2 deal this morning where it was still um for you know budget reasons and other reasons that the land set of products was still pretty traditional single sign single sign on advanced multi-factor a little bit lcm and i think one thing we can improve on is getting making that broader which would which would you know mean that theoretically there would be less upsell potential but it would also mean that the customer starts with a broader set of our products up front and it would be more expansive and more strategic and so it's an area to improve but um that's those are some thoughts there that might be helpful okay that's perfect thank you very much okay next up john dafucci at guggenheim thanks thanks guys um

First, I want to thank Brad for asking the CRPO question, so I don't have to ask Brad that question this time. But listen, I think one of you mentioned the S&B portion of your customer base and the risk associated with that portion of the market as it pertains to the macro backdrop. But can you comment on the mid market, like sort of between the enterprise and the SMB and any changes in demand for that portion of the market and how the identity platform message or the triumphant of like AccessPAM and IGA is resonating there? I know it's early, but it seems to me that there's just a whole lot of white space to cross sell into that type of customer.

Yeah, I think it's something we're really focused on, and it's kind of back to my previous answer. I think it's still the platform, the governance, access and privilege and posture management, still early. I think a lot of that segment still thinks about it in the traditional categories, and they're trying to solve the access management problem. They're trying to solve the multi-factor authentication problem. and the industry is evolving and we're helping push it that way we can make sure we know everyone knows that they can solve all these problems at once and there's a better way to do it it's simpler and it will increase their security posture the good news is that i think there's a lot of i think more than a couple years ago there's a lot more awareness of the security challenge and the security risks there um which you know i think is every every breach and every month and every quarter the entire world gets more aware of it, but particularly in that segment is something I've noticed as well.

Is my assessment, Todd, of that market accurate? Like, I think of PAM and IGA as traditionally large enterprise markets or products, but it seems to me like, I mean, you're there too, but your sweet spot, I know you're in the large enterprise, but you compete also in the sort of mid-level, smaller enterprise. Yeah. And that just seems like they don't have those products.

Yeah, it's very true. And if you go back 10 years ago, there was no real mid-market access management product either. It was Active Directory if you had Windows clients and Windows servers and Windows printers, and Active Directory was your identity management system. And Okta changed that. Okta was the first real mid-market identity product and access management product. And so now you're seeing the same thing happen in the other markets with privilege and governance where SailPoint has been more large enterprise, CyberArk the same thing. And we're really the first really viable mid-market solution for that things. for that set of capabilities. And then at the same time, like in a lot of these markets, the disruptor is moving up. So now these large enterprises are, you know, this is, we're talking about a, it's just, it's, if you step back and we're so, at Okta, we're so hard on ourselves and so hard driving, we want to, you know, have success in everything. But if you take a step back, you got to realize that, I mean, a major department of defense agency just standardized on Okta. And this is like, this is, we've changed the world. I mean, we've brought cloud access management to this part of the government and this really screwed customer that has high standards and really checks things over. And we're going to do the same thing for governance in the enterprise as we did. And we're going to do it for the governance and privilege in the mid market and customer identity. It's a, it's pretty exciting progress.

Thanks. The numbers this quarter speak for themselves. So thanks.

Great. Let's go to Andy Nowinski at Wells Fargo.

Great. Thank you. Thanks, Dave. So it seems like identity security, you know, is the cornerstone of zero trust and meaning that you can't have zero trust without having a strong identity solution in place. You know, and none of the SASE providers out there have identity security. You know, and then we see Okta winning, as you just mentioned, the DOD deal, which They're currently deploying SASE as part of that Thunderdome contract. So I'm wondering, are you seeing Okta getting pulled into more deals as part of Zero Trust or SASE projects? And then more specifically on the DOD deal, do you think that could be a beachhead win for Okta in the federal market, which could lead to other agencies following their lead and consolidating Okta?

Yeah, as exciting as this deal is, it's not the entire DoD deal. It's one agency in the DoD, so it's a significant deal for us. It's a seven-figure ARR deal, but it's not the entire DoD. That would be like a mega deal. But it does have the potential to do what you're saying, which is in the defense community and then the broader federal government and then the trickle down to state and local. And, you know, the reason we're so one of the reasons we're excited about it is because it could have that really set that precedent and drive the market forward there, which is exciting. The interesting it is it is the comments about zero trust are interesting. You have to have a good identity story. And I think what what I've seen is that many times people, when they say zero trust, they mean Their approach is like they do something on the endpoint, they do something on the network, and they do something in identity. And many times, initially, they'll take a good enough identity approach. They'll use legacy identity. Maybe they'll use Microsoft identity. And what they learn is that the benefits of the strong network and strong endpoint are aren't really realized without the identity because the threats are moving toward identity. Eight out of 10 data breaches involve some kind of compromised identity. So as customers get the basics in point and network in place, the threat actors have already moved on and they're going after the accounts and this good enough identity or this legacy identity is just not enough. I think you're seeing customers start to realize that more and more. And unfortunately, some of the Some of the breaches out there are making that very apparent. So we have a lot of opportunity, a lot of work to do to help the industry be better defended and better get to a complete zero-trust solution, which is what we're very focused on. Thanks, Todd.

Next up, Josh Tilton at Wolf Research.

Hey, guys. Thanks for squeezing me in here. Maybe just a two-parter for me. I guess the first one is – You guys keep talking a relative strength and growth from your million plus cohort. And I'm just trying to understand, is the faster growth that you're seeing upmarket a function of these customers actually improving their spending behavior? Or is it just more of a relative game and the smaller customers are being impacted more by the macro dynamics that you guys are calling out?

Yeah, I mean, from a growth perspective, and when we talk about the fastest growing cohort, we look at both ACV percentage growth and also customer logo count in that cohort. So it doesn't really have a compare versus the other smaller customers. It's just a compare against itself. So we continue to make inroads into that, into those larger enterprise and strategic customers we talked about. And Todd just talked about one of them earlier. They are already a seven figure customer, became a larger segment, seven figure customer. And, you know, yes, it doesn't count for the customer account, but accounts for the ACV, the annualized contract value. So we look at it both ways to be able to make sure we're not coming away with the wrong conclusion of how we're doing in that specific segment.

Yeah, I was going to, I was thinking about your question. I was going to say kind of the cop-out answer, which is both. I think you are seeing definite changes in behavior. You're seeing people thinking about standardizing overly complex, brittle, non-integrated identity deployments. I mentioned the example of a customer that has 70 identity tools and they wanted to get that down. You're seeing a better, I think, a faster acceleration of the ability or the desire for a large enterprise to want to use a cloud identity security piece of infrastructure like Okta. That's, you know, a lot of times these big enterprises, they have hundreds and hundreds, teams of hundreds and hundreds of people that have owned the legacy identity stack. And sometimes that's those folks are reticent to change. And so you're starting to see more of that behavior change. And then but also I think it is true that in our business where people I think our business mix is more toward mid enterprise than people expect. So I think as we grow and mature in the large enterprise and have continued a portion of our business there, we're going to surprise some people in terms of the the the the impact that segment will have on our overall numbers and our overall growth rate and market presence and all of the financial metrics that will follow that.

That makes sense. And maybe just a super quick follow up. You know, a lot of my peers congratulating you on a good print and a tough take. There's been a lot of underwhelming results in software, like even in security. I know you mentioned that the macro was consistent with what you've seen in previous quarters. But what I want to try and understand is like, how did the macro compare to what your expectations were? heading into the print? Did things kind of play out the way you were expecting? Was it better? Was it worse? And maybe given the conservatism in the back half that you've been called out on a few times this quarter, like, help us explain, you know, what's baked in there from a macro perspective, and maybe just help us understand, you talk to this conservatism in there from the breach impact, but you keep telling us that, you know, it's not quantifiable today. So like, how does the magnitude of what's baked into the guidance related to the breach compare to what is an unquantifiable amount

Yeah, let me try to take a shot at that. So in terms of that Q1, I think we had really high hopes that the macro was going to be different, and it ended up being the same. So, I mean, I think, yeah, that's how I would answer that. If you just look at all the inputs coming into the quarter, there's a chance that it could really be a different environment in terms of macro, and it kind of ended up being inconsistent. So I think in terms of your question about guidance and how we're thinking about the future and what's baked in and what's not, I think we've talked about macro, and I think we're going to have to see a quarter where we get excited about the macro being different, and it is different. That would give us more comfort that it's going to be different going forward. And then the security incident, I think it's just time. I think we've really done a lot of great work. making Okta more secure, having conversations with customers, helping them understand how our products and what we're doing as a company can help them be more secure and learn from us. And the conversations are positive and the conversations are reassuring that we're doing the right thing and it's resonating, et cetera, et cetera. But I just think maybe more time in terms of putting the security issue in the rear view mirror is going to give us more confidence in terms of taking that factor out of the guidance.

Yeah, I would just add, Josh, thank you for that seven-part question as well. You beat Eric on his three-parter. The only thing I would add is, you know, look, one of the things just from like a, you know, we don't see all the deals, Todd and I, but one of the things we get exposed to is some of the larger deals and Is is really, you know, you're still seeing budgetary thought out there by a lot of customers. I get still on top of a lot of people's minds and they're really rationalizing software spend. I mean, we're doing the same thing to our vendors. So, you know, we were hoping to not see that. Right. That's probably the biggest thing. If you're just there's no want that we can point. I mean, there is a little bit. We do track that to some extent, but like you just hear about it from our sales team of just. you know, there's still people out there being very, they're scrutinizing their spend a lot still. So love to see that to stop happening. And then I think, you know, Todd talked about the security incident and, you know, the potential impacts. Like we've done a lot, like Todd was saying, but I also would say there's more for us to do, right? We've got the secure identity commitment out there. We've made a lot of progress, but there's still a lot of investment, a lot of things that we need to do. And I think we've done a lot of great work. I'm really proud of the team. You know, we should all thank the team. They've done an amazing job, but we still need a lot of work to do there. And so we need to make sure that we're being thoughtful about that in the guidance as we move forward. Like Todd's saying, time will help, but we're going to just be thoughtful at this point, given we're only a couple quarters out.

Makes sense. Thanks, guys.

No problem. Okay, let's go to Rob Owens and his one-part question.

One part, and I'll keep it easy here. You guys for a while had talked about channel transition that you've been seeing away from the traditional reseller channel. Just looking for an update relative to what you're seeing on that front. Thanks.

Yeah, the transition or the maturation, I would say, of our partner program is ongoing. It's having good success. In general, there's two things that have happened. One is that we... And this is going back a year or so. So this isn't a new thing. This is an ongoing evolution. We really focused on... fewer partners and poured more resources into fewer partners. And it's expected more from them in terms of the activities they were doing that were sourcing deals and maturing deals and closing deals and renewing deals instead of just having a super broad program that just was more focused around fulfilling orders and processing paper, which makes sense because identity is complex. And the more we can get an ecosystem enabled and help customers understand the technologies and how they can implement it, et cetera, et cetera. And then at the same time, really emphasizing on working with the largest SIs in the world to help some of these big strategic customers make these decisions around identity and hopefully have Okta products and technology included in some of those decisions. Yeah, and it's going really well. But I think particularly in the largest enterprises, the fruits are just starting to really, really bear out for us. And we're optimistic about how that can really move the needle in the next couple of years. Thanks.

Great. Let's go to Alex Henderson at Needham.

Great. Can you hear me?

Not unclear.

Perfect. So first off, congratulations on tonight's quarter and thanks so much for the conservative guidance. And I will say we've gotten a lot of very positive feedback from the channel about your steps of the channel, particularly with the bars.

That's good to hear.

What I have been hearing, though, is that there is a shift in the marketplace among the C-suite from fear about the economy to, gee, I need to focus on how I'm going to implement AI. And in that context, there's uncertainty around the mechanics of what they need to do to secure AI within their organizations. And I guess my question to you is we're hearing the pipelines at the bar channels, particularly in security, are extremely robust into the back half of the year. But the uncertainty around AI decision is keeping people from implementing it. So how robust is the pipeline that you're looking at? And are you, in fact, hearing that from your C-suite customers when you talk to them?

Yeah, what I've heard is. Everyone is figuring out how they can deploy this new wave of technology to their products and services and business and how they can use it for security and how they can use it for innovation. But they're not at the stage where it's broadly impacting other plans. It's more of like a planning exercise at this point. I think that might change in the future. And my bet is that they're going to be building new apps. They're going to be deploying more technology from vendors that are building apps with AI built in, which is going to, all of that's going to lead to more identity. They're going to have to log people into their new apps they build. They're going to have to secure the privileged accounts that are running the infrastructure behind the new apps. They're going to have to make sure that people in their workforce can get to the apps that are the latest and greatest AI driven experiences for support or for other parts of the business. So I think that identity is one of these foundational things that's going to be required with whether it's the AI wave, which is going to be really real and impactful, or whether it's whatever comes after that.

So not impacting spending today, but might impact it, help it in the future.

Yeah, yeah, that's how I see it.

Okay, thank you so much.

Next up, Peter Levine at Evercore.

Great, thanks, guys, for squeezing in here. Maybe just two for you, Brett. One, any call you can share just in terms of customer SIAM versus workforce this quarter? I know you don't give it every quarter, but just directionally how that's looking, assumptions for the year. Then second is net retention at 111. I mean, are you assuming this is the trough that we shouldn't see this tick any lower and that throughout the year as these tenured reps ramp? Like, we'll see that accelerate, but just curious if that 111 is in your assumption that... based on your guide?

Yeah, so I'll answer them backwards. So I'll take the net retention one first. In terms of net retention, You know, right now we're at 111 flat with last quarter, 111, based on our model right now and based on our assumptions around new business versus upsell mix based on the pipeline that we see and the pipe create, we think we can fluctuate. We'll fluctuate plus or minus a couple of points from here. If you remember last quarter, I said basically the same thing. It's really down to new business mix versus upsell mix. So if we get a little bit more new business, maybe a little bit of a headwind in that retention, if we get a little more upsell, a little bit of a tailwind to the net retention rate. So in terms of your question around SIAM versus workforce, we had a solid Q1. One quarter won't make the difference in how the mix of the business changes. So we'll update you guys likely next quarter on how the trends are going there in terms of the total. Last quarter, for everybody's memory, we were 60% workforce, growing 17% year over year, and 40% customer identity. growing 21% year over year.

Yeah, and that's error. Yeah. All right, next up, Jonathan Ho at William Blair.

Hey, guys. Thank you for squeezing me in as well. Just with your identity security commitment, I know there was some talk about pausing the product development as part of that process. Can you talk a little bit about the impact on your products from the identity commitment and maybe what some of that feedback has been from your customers? Thank you.

In the fourth quarter of last year, we had a 90-day pause on everything that was in security. And the impact for customers was very interesting. So the product teams... did product work during that pause. And the product work was all focused on very simple priority, which is attackers know that Okta products are the standard in all these customers. So they're assuming that these products will be there. And if the setups aren't secure by default, they're going to exploit that. So the product teams were tasked with going and making them secure by default. So customers receiving after that 90 days, the features they've received, whether it's MFA required, whether it's a step up, a strong authentication required for sensitive actions, whether that's using our governance product to govern the requesting and the granting of elevated roles inside of Okta, all this stuff was product benefit that the customers received. So it wasn't the same kind of product benefit. It wasn't like a, a new capability in their product, it was making the product they already owned have a better security posture. So that was a very positive thing that they received. It did delay some of the announcements, like it did delay identity threat protection for about a quarter, but now that's released in early access. So the delays were... part of the reality, but I think some of the innovation has already been shipped and you'll see that start to really ramp up now that the product teams aren't at that 100% focus. They still have a different mindset now. They're still building all this secure by default and these capabilities and this value into the products, but they're able to go back to some of the regularly scheduled roadmap items at this point.

Thank you.

Okay, let's see how many more we can cover in the next five minutes until about 10 after. So let's go to Matt Hedberg at RBC.

Great. Quick one for me, Todd. Thanks for all the color here. Congrats on the pending GA of identity threat protection. I guess, you know, for those new modules and I guess Okta AI in general, how are you thinking about just pricing and monetization, just sort of longer term? I mean, how do we think about that impacting deal sizes over the long term?

Yeah, I think that Okta.ai will be monetized through two ways. One will be new products like identity threat protection with Okta.ai. And the other way it'll be, it'll just make products better. For example, the identity security posture management It has a new capability that's going to be added to that product that's just going to make it smarter about how it detects service accounts. That identity security posture management scans a customer's entire SaaS estate and says, here are all the things you should look at. You should take this account needs MFA. This other account probably has overly permissive permissions. The challenge there is how does the customer know which of those accounts are service accounts so they can't have human biometrics? And we used some AI capability to add that to the scan. So that's an example of just the product gets better versus identity threat protection is like it's a whole new product enabled by that. So you'll see that consistent across all of our products, those two patterns.

Thanks, Todd.

Yeah, let's go to Roger Boyd at UBS.

Great, thanks for taking the questions. I wanted to come back to net retention and upsell in particular. Some others in the software space are clearly seeing the impact from seat count reductions or less seat count expansions getting worse in the first quarter as they renew some multi-year deals. It seems like the message from Okta is that net retention is starting to stabilize. So I'm wondering if you have a specific view on the seat count headwind. Is that stable, getting better, et cetera?

It's definitely a headwind to growth. Just forget net retention. It's a headwind to growth. It's also a headwind to net retention. We don't see it getting worse, but it's still not nearly what it was a few years ago. you know, it's, yeah, we'd love to see it get better. I mean, it's definitely holding back the growth. Yeah.

What we'll see, what we'll see is we'll see a customer will add a couple of new products, but the seat count will go down. So the dollar value of the deal will stay the same or maybe go up a little bit. And two years ago it would have gone up 25% because they would add a new products and the seat count would have gone up too. So that's how you get some of those dynamics in the business. Yeah.

And to be clear, it's not just seats like employees. It's also monthly active users on the customer identity side. It's happening in both environments. So it's really macro driven. Thanks. We need Bernstein.

Thank you. You emphasize that kind of the growth acceleration is a key priority this year, which is amazing. Obviously, we'll have to see that. But at the same time that you're emphasizing that there's a trade-off between kind of upsell and new customer growth, which kind of at least to me implies that you're bottlenecked at sales capacity. Like how do you see kind of unhooking that trade-off so each of them can be growing on their own and you can make kind of strategic investments to really get both flying?

I think there's one of the reasons why we're doing the hunter farmer model in the SMB segment is to unlock that bottleneck. So what we found is that sales productivity and sales resources was going to the upsells because we were having more products to sell. There was, you know, the economy was changing. So on the margin, it was easier to sell to existing customers. So we have that structural shift. in the S&B particularly, because that's been the hardest, most impact economically, to unblock that bottleneck. I think enterprise is a different story. I think, as I mentioned a few questions back, we are adding capacity there. We have a big opportunity there to run. So I don't feel like we have to make that tradeoff in that segment.

Let's do Adam Borg at Stiefel.

Awesome. Thanks for squeezing me in. Maybe for Todd, a few minutes ago you talked about the opportunity with service accounts. So maybe just more broadly on the non-human identity side, just how do you think about non-human identity? Obviously, one of your competitors is getting deeper into the machine identity space. Thanks so much.

I think it's interesting. I think there's a lot lumped in there. everything from, you know, some of these companies were, 10 years ago, they were PKI companies. And the industry identity got popular, and then everyone wanted to be an identity company, so now they're a machine identity company. I tend to look at the problem through the lens of customer challenges and how they think about the problems. And customers think about things very pragmatically. They have all these accounts. They want visibility in all of them. They want to have them not be vulnerable to phishing. So for human accounts, they want phishing resistance factors like MFA or biometric MFA. For machine accounts, they want session binding and they want vaulting of the tokens, et cetera, et cetera. And that's what we're trying to solve, whether it's through the identity security posture management whether that's other enhancements to the portfolio that'll solve that customer problem. So that's, I think in that sense, it is a real opportunity. It is a real need for customers and that's what we're focused on. Super helpful. Thanks. Yeah.

Okay. Let's do one final one with Brian and Etai, Taz and Joel. My apologies. We'll we'll catch you in the after call. Brian, go ahead.

Sorry, got on mute. Thanks for taking that question. Maybe, Todd, I want to go way back to the acquisition of Auth0. And I think they had a couple of thousand enterprise customers. What's the overlap between SIAM and workforce at this point? And given the overall trends in the market to consolidate onto platforms, and limitations for logo expansion, what opportunity do you have to, I guess, cross sell between Siam and Workforce and what might the barriers be that you're seeing or the friction be in that market?

Thanks. Yeah, I think there's a ton of opportunity. I think the biggest dynamic in that market is that the customer identity market is, it's really a couple of different markets. One market is the market that the company is not a tech company. They're non-technology, so that means the CIO probably owns the customer-facing website and the app a customer may have versus a tech company where the customer identity is owned by the product, head of product or the CTO. So to consolidate, we do really well when the CIO is the buyer of customer identity because the buyer of workforce identity and the buyer of customer identity is the same thing. I think it's less consolidation when the buyer is VP of product or head of marketing. So that's why Auth0 was so compelling because that platform gave us a chance to reach that buyer and really appeal to multiple buyers within the enterprise. The downside of that is that on the margin, sometimes it's harder to make that sale. But when you do make it, you're in a much more strategic position at the customer because you're serving multiple departments and multiple C-level executives in that organization.

So any sense of what incremental overlap works? that you can take advantage of at this point, or are you pretty much saturated there? No, no, no, no.

I think there's, I mean, all this talk, this call about the potential upsells and the expansion on the workforce side, the biggest expansion opportunity we have is selling customer identity to the workforce customer base. If you just look at the Venn diagrams, that's the most greenfield there. And within that, I think it's easier when it's a company that the CIO, our traditional buyer, also owns the customer identity. It's more challenging when they don't. But when they don't own it, it's probably coming through an engineering team or an app dev team, and we have the best developer platform customer identity solution out there. So that gives us a leg up, even if the buyer may be different.

Super helpful. Thank you.

Yeah, sure. Happy to help. Great. Thanks, everybody, for staying late. Before you go, I just want to let you know that in addition to hosting several on-site and virtual bus tours this quarter, we'll be attending the NASDAQ Investor Conference in London on June 11th, and we hope to see you at one of those events. Thanks, everyone.