Okta, Inc.

Hi, everyone. Welcome to Okta's second quarter of fiscal 2026 earnings webcast. I'm Dave Gennarelli, Senior Vice President of Investor Relations at Okta. Presenting in today's meeting will be Todd McKinnon, our Chief Executive Officer and Co-Founder, and Brett Tai, our Chief Financial Officer. Eric Kelleher, our President and Chief Operating Officer, will join the Q&A portion of the meeting. At around the same time that the earnings press release hit the wire, we posted supplemental commentary to the IR website. Today's meeting will include forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding our financial outlook and market positioning. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual risk or implied by the forward-looking statements. Forward-looking statements represents 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 10Q. In addition, during today's meeting, we will discuss non-GAAP financials 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. The 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 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 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. We are pleased with Auth0, new products, the public sector, and cash flow. We are seeing encouraging signals from our newly specialized go-to-market teams, and we're excited to build on this progress as we enter the second half of the year. Brett will cover more of the Q2 financial highlights, and I'll cover product innovation, securing agentic AI, and preview some of the innovations we'll be highlighting at Okta. Consistent with the past four quarters, new products from Okta Identity Governance, Okta Privilege Access, and Okta Device Access to Identity Security Posture Management, Identity Threat Protection with Okta AI, and Fine Grain Authorization had another strong quarter of contribution. Okta's unified identity platform is delivering differentiated VAT and modernize its identity security practice from the ground up. They needed a single identity platform to unify workforce identity and scale with growth. Okta delivered OIG, OPA, ISPM, and ITP, supporting thousands of apps and integrations. By consolidating identity with Okta, this first-time buyer replaced mobile identity security practice in one decisive move. In a move that we believe will further accelerate Okta Privilege Access growth, I'm delighted to announce that we've signed a definitive agreement to acquire Axiom Security, a modern PAM vendor. The team at Axiom built complementary technology that helps organizations eliminate standing privileges and secure critical infrastructure, including key features for securing both human and non-human identities. Once we close the acquisition, which we anticipate will be later this quarter, we will support Axiom's customer base while we work to integrate their technology into Okta Privilege Access. Combined, we'll be able to deliver superior security and compliance outcomes like unified control and just-in-time access to a wider set of resources for our customers. Going forward, we believe every organization will need an identity security fabric, an architecture that enables them to fully secure every identity, including AI agents, every identity use case, and every resource across their business. The Okta platform helps organizations bring this identity security fabric to life. Take our approach to securing non-human identities, or NHIs. Okta's unified platform helps ensure they receive the same level of visibility, access control, governance, and remediation as human identities. This includes the ability to detect and discover NHIs wherever they exist, provision and register them properly, authorize and protect them with appropriate policies, and govern and monitor their behavior continuously. That's the power of an identity security fabric enabled with Okta's unparalleled breadth of modern identity security products. No other company can deliver that level of sophistication. With our Auth0 platform, we're enabling developers to build agents that are secure by design and identity security fabric ready from day one. Auth0 for AI agents, formerly known as Auth for GenAI, delivers user authentication that works seamlessly with AI workflows, token vaults that securely manage credentials, async authorization that lets agents work autonomously while maintaining user control, and fine-grain authorization that permits AI agents to only access authorized data. We're in the middle of this exciting and rapidly changing environment and with these two platforms Okta is driving the industry to an architecture where identity is both more valuable and more secure. Securing AI is the next frontier, and our introduction of a new open standard called cross-app access is a key part of the solution. This is an important innovation that helps control what AI agents can access, allowing us to help make our customers and ISVs more secure. and providing better end-user experience. In short, cross-app access allows for support of AI agents within the identity security fabric and the flexibility to safely connect to other technologies. Already, there is strong interest in cross-app access from partners and ISVs, including AWS, Boomi, Box, Writer, and Zoom. And we had over 1,100 attendees at our Identity Summit on the topic earlier this month. At our Octane conference next month, we will share how we are enabling every organization to build, deploy, and manage AI agents safely, securely, and at scale. In addition to the keynotes and product demos, we will be hosting a Q&A session for analysts and investors at the event, featuring myself, Brett, Eric Kelleher, our COO, and John Addison, our CRO. Come join us in Las Vegas or join us online for the AI security event of the year. And finally, I know you're all interested in our views on the Palo Alto CyberArk announcement. Okta has pioneered the modern identity market. As platform companies enter the market, it underscores two very important things, identity's central role in security and the importance of Okta's independence and neutrality. To this day, we remain the only modern, comprehensive, cloud-native solution built to secure every identity, from employees to customers to non-human machine identities to AI agents, without locking customers in. So on the whole, we think the transaction further validates the importance of identity, but won't meaningfully change the competitive landscape. That flexibility is why the world's largest organizations across the public and private sector trust Okta. and why we're confident we're on the winning path. To wrap things up, we're pleased with our Q2 results, and we're excited about the future with our growing portfolio of modern identity solutions and how Okta secures AI. As more and more customers turn to an identity security fabric to simplify control and strengthen protection across their organizations, Okta is here to meet them with the most modern and comprehensive identity security platform in the market today. As always, 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. I look forward to seeing all of you at Octane. And 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. My commentary will provide insights into our Q2 performance and then move into our outlook for Q3 and FY26. Last quarter, we introduced some conservatism in our business outlook with regard to uncertainty in the macro and our federal vertical. I'm pleased to say that neither materialized and we're removing them from our outlook for the remainder of the fiscal year. While we're only two quarters into our go-to-market realignment, we're encouraged by the signals we're seeing, including improved sales productivity and record pipeline generation. This success echoes the long-term performance of our already specialized teams in areas like the US SMB market and public sector. The positive signals from Q2 give us great confidence that our increased specialization will drive long-term growth for both Okta and our customers. That's a nice segue into the strong Q2 performance we saw in our public sector business. While we did experience some contract restructuring with civilian agencies and delays in procurement processes, renewals across all of federal were strong, reflecting the mission-critical nature of our solutions. Okta continues to perform well with government organizations at all levels, highlighted this quarter by multiple new business and up-sale deals with DoD and state agencies. Overall, five of our top ten deals in Q2 were with the U.S. public sector, including our biggest deal of the quarter, which was secured with a DoD agency. In that particular deal, the agency needed to replace its aging legacy logon system while ensuring compliance with federal mandates on cybersecurity and zero trust. Working closely with our partners, the agency will be modernizing with Okta customer identity as a central component of their new access system. It's worth noting that about a year ago, we made the strategic decision to reinvest in Okta customer identity, and those efforts have led to substantial growth in the product. In the first half of FY26, OCI Bookings has really accelerated and was a strong contributor to pipeline generation, driven by deals in both the public and private sectors. Turning to capital allocation. We ended the quarter with a strong balance sheet consisting of approximately $2.9 billion in cash, cash equivalents, and short-term investments. Next week, the 2025 convertible notes reach maturity and we will settle the remaining principal amount of $510 million in cash. We regularly evaluate our capital structure and capital allocation priorities, which includes investing in the business, tuck-in M&A, and opportunistic repurchasing of the 2026 notes, of which $350 million remains outstanding. Now let's turn to our business outlook. For Q3 and FY26, we continue to take a prudent approach to forward guidance that factors in our go-to-market specialization that was rolled out at the beginning of this fiscal year. For the third quarter of FY26, we expect total revenue growth of 9% to 10%, current RPO growth of 10%, non-GAAP operating margin of 22%, and free cash flow margin of approximately 21%. For the full year FY26, we are raising our outlook and now expect total revenue growth of 10% to 11%, non-GAAP operating margin of 25% to 26%, and a free cash flow margin of approximately 28%. To wrap things up, we're pleased with the solid Q2 results. We've significantly increased our profitability and cash flow over the past couple of years and remain focused on accelerating growth. We're excited about the adoption of new products and the rapid pace of innovation, and we remain confident that Okta's independence and neutrality positions us best to lead the identity industry. With that, I'll turn it back to Dave for Q&A. Dave?