Okta, Inc.

Hi, everyone. Welcome to Okta's fourth quarter and full year fiscal 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 the IR website. In today's meeting, we will include forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding our financial outlook and market positioning. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. Forward-looking statements represent our management's beliefs and assumptions only as of the date made. Information on factors that could affect our financial results is included in our filings with the SEC from time to time, including the section titled Risk Factors in our previously filed Form 10-Q. In addition, during today's meeting, we will discuss non-GAAP financial measures. Though we may not state it explicitly during the meeting, all references to profitability are non-GAAP. These non-GAAP measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalents are available in our earnings release. You can also find more detailed information in our supplemental financial materials, which include trended financial statements and key metrics posted on our investor relations website. In today's meeting, we will quote a number of numeric or growth changes as we discuss our financial performance. And unless otherwise noted, each such reference represents a year-over-year comparison. And now I'd like to turn the meeting over to Todd McKinnon. Todd?

Thanks, Dave, and thanks everyone for joining us this afternoon. We're really pleased with our strong Q4 results and the finished FY25, which includes accelerating RPO and CRPO and record profitability and free cash flow. Demand for both workforce and customer identity products was strong, and our growing portfolio of new products is starting to make an impact. Brett will cover more of the Q4 highlights, and I'm going to cover why Okta is best positioned to capture more of the massive market opportunity in front of us as we go into FY26 and beyond. As you know, two of our top FY25 priorities were one, transform Okta to become one of the most secure companies in the world, and two, reignite growth through prioritizing our partner ecosystem, turning up the dial on product innovation, and increasing go-to-market specialization. These priorities and purposeful investments built momentum as we progressed through the year and really paid off in Q4. One year ago, we introduced the Okta Secure Identity Commitment. We've made incredible progress on this top priority and have become a trusted and leading voice for security best practices in discussions with customers and prospects. The work around security advancements will never be done, but it's a strong start. Later, Brett will cover some of the achievements with our partner ecosystem, and I'm going to dive deeper into product innovation and go-to-market specialization. Our relentless focus on product innovation has been resonating with our customers as over 20% of Q4 bookings were from new products, such as Okta Identity Governance, Privilege Access, Device Access, Fine Grain Authorization, Identity Security Posture Management, and Identity Threat Protection with Okta AI. Okta Identity Governance has been a huge success. What we hear repeatedly from customers is the amazing time to value with OIG. Customers are getting up and running just a few short months after signing. Since launching OIG just two years ago, we now have over 1,300 customers contributing over $100 million in annual contract value. That's great progress and the product is only getting better as we continue to add more functionality. In addition to OIG, we have another approximately $300 million of business with Okta Lifecycle Management and Okta Workflows. Combined, that's over $400 million in governance-related business, and we're just getting started. We know that customers that adopt more products have the highest retention rates, so we're excited about the trends here and the long-term contributions to the business. Product innovation continues to be a key investment area in FY26. To get security right, organizations need to get identity right. With the steady rise of cloud adoption, machine identities, and now AI agents, there has never been a more critical time to secure identity. Last week, we held our annual launch week event where we highlighted our latest innovations. Here are just a few. On the Okta platform, customer identity for US public sector is now even better. New features, including passwordless, enhance security and streamline the user experience while helping agencies meet strict compliance needs. We also announced workforce identity suites, which are new pricing packages designed to provide a simple and unified solution tailored to our customers' security needs. These suites will provide even faster time-to-value outcomes for our customers. On the Auth0 platform, we announced Auth4GenAI will begin early access this month. We already have a waitlist of eager customers ranging from early startups to Fortune 100 organizations. Auth4GenAI is developed to help customers securely build and scale their GenAI applications. This suite of features allows AI agents to securely call APIs on behalf of users while enforcing the right level of access to sensitive information. We held our annual sales kickoff meeting a couple weeks ago, and our go-to-market team is really excited about all the new product innovation. In part, our rapidly expanding portfolio of identity security solutions is what led us to the shift we're making in our go-to-market strategy to further specialize. Customers need us to meet them where they are, and to address this, we're expanding our specialization into Okta sellers and Auth0 sellers. Okta sellers will focus engagement on IT and security buyer needs, including all workforce identity products, as well as Okta customer identity. Auth0 sellers will focus on meeting the unique needs of developers, which include highly technical customer identity customizations and flexible deployment models. Success we've had with sales specialization in other parts of the business gives us confidence that this is our opportunity to better serve our customers via further focus and to better drive Okta's growth. And finally, I want to share our FY26 priorities, which build upon the great progress we made in FY25. The first priority is elevate the industry with the Okta Secure Identity Commitment. This initiative underscores our dedication to be the trusted leader in combating identity-based threats. I can't tell you how much this resonates with our customers and prospects who now seek Okta's advice and guidance on hardening their IT security environments. Next is when IT and security with Okta. Identity has become fragmented and customers are increasingly interested in unified platforms that deliver integrated security outcomes before, during, and after authentication. Identity investments have become more strategic with the security buyer front and center. Okta's market leading and expanding product portfolio makes us uniquely positioned to capitalize on this opportunity. And the third priority is win developers with Auth0. This focuses on further strengthening Auth0's market presence through strategic investments in product innovation, brand, and marketing. Seminal customer wins, like the global 2,000 food and beverage retailer that purchased Auth0 and Q4 to replace their aging homegrown system, gives us increased confidence in our ability to capture more of this huge market opportunity. Before wrapping up, I want to congratulate Eric Kelleher on his promotion to Chief Operating Officer. Eric's been part of our leadership team since 2016, and will be focused on reigniting growth, championing the Okta secure identity commitment, and building on Okta's reputation as the world's identity company. I also want to thank and congratulate Eugenio Pace, who will be retiring this month. As a co-founder of Auth0, he helped build an incredible platform, and his contributions to Okta over the past four years cannot be overstated. He will be missed. To wrap things up, we're excited about the momentum we've built going into FY26 and are taking the right steps to advance our position as the leader in the identity market. More and more, customers are looking to consolidate their disparate and ineffective identity systems, and Okta is there to meet them with the most comprehensive identity security platform in the market today. I want to thank the entire Okta team for their tireless effort and also thank our loyal customers and partners who put their trust in us every day. 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. Like Todd, I'm pleased with the top line results, which stem from the hard work and investments we've made transforming the business around security, partners, go-to-market changes, and product innovation. I'm especially proud of the incredible progress we've made building on the efficiency initiatives we started over two years ago. This is best illustrated by the approximately nine points of operating margin growth and six points of free cash flow margin growth we achieved for FY25, all while making the right investments for future growth. We're proud to once again finish the fiscal year above the rule of 40, which we've achieved every year since going public in 2017. My commentary will provide insights to our Q4 financial performance and then move on to our outlook for Q1 and FY26. underpinning our overall strength in Q4 with sales productivity that reached a multi-year high. Notably, Auth0 had its best bookings quarter in history, which is another testament to the hard work that the team has put in all year. We also experienced particular strength cross-selling workforce into existing SIAM customers and cross-selling new workforce products to existing workforce customers. The strong Q4 results were highlighted by RPO that increased 25% and crossed the $4 billion mark. Driving acceleration in RPO growth was the increase in weighted average term length for Q4 deals, which reached a multi-year high. We achieved record bookings in Q4, which crossed $1 billion in total contract value for the first time. Large deals and large customers continue to be the driving force behind our success. A great illustration of our success with large customers is that the total contract value of our top 25 deals in Q4 was over $320 million. Additionally, we added 25 customers in Q4 with $1 million plus ACV in the quarter. Our total base of $1 million plus ACV customers grew 22% to 470. The $1 million plus cohort represents over $1 billion in total ACV. Our focus on deepening our relationship with our partner ecosystem as part of our growth initiatives is really paying off. In the fourth quarter, over 70% of deals were partner-influenced. That includes 18 of our top 20 deals closed in Q4. We were recently honored to be named Partner of the Year by AWS Marketplace. Our partnership with AWS Marketplace has been a tremendous success. The best demonstration of that success is that in Q4, we surpassed over $1 billion in aggregate total contract value since the partnership was announced just four years ago. In FY25, revenue from AWS Marketplace grew over 80%. Now let's turn to our business outlook for Q1 and FY26. The headcount reduction action we took last month was part of our ongoing assessment to optimize our cost structure. The action is intended to reallocate dollars and resources toward priorities to drive growth and was factored into the preliminary FY26 guidance we provided last quarter. We're taking a prudent approach to forward guidance that factors in our previously announced go-to-market specialization. For the first quarter of FY26, we expect total revenue growth of 10%, current RPO growth of 12%, non-GAAP operating margin of 25%, and free cash flow margin of 10%. of approximately 25%, inclusive of the expected cash impact of approximately $11 million related to the headcount reduction expected to be paid out in the first quarter. For the full year FY26, we are raising our outlook across the board. We now expect total revenue growth of 9% to 10%, non-gap operating margin of 25%, and a free cash flow margin of approximately 26%. To wrap things up, we remain focused on reigniting growth and driving spend efficiencies in cash flow. We've demonstrated exceptional leverage in our model and are positioned to deliver profitable growth for years to come. With that, I'll turn it back to Dave for Q&A. Dave?