Core Viewpoint - Investors are concerned that AI advancements may diminish the demand for traditional software applications, potentially disrupting the software industry [1] Group 1 - The rise of AI technology is perceived as a threat to conventional software solutions, leading to fears of reduced market size for traditional applications [1]

Revenue and Income - Total revenue for the three months ended October 31, 2025, was $742 million, a 11.6% increase from $665 million in the same period of 2024[14] - Subscription revenue reached $724 million for the three months ended October 31, 2025, up from $651 million in the same period of 2024, representing a 11.2% growth[14] - Net income for the three months ended October 31, 2025, was $43 million, compared to $16 million in the same period of 2024, marking a 168.8% increase[16] - Total revenue for the nine months ended October 31, 2025, reached $2,158 million, up by $230 million or 12% compared to $1,928 million in the same period of 2024[132] - The company reported a comprehensive income of $46 million for the three months ended October 31, 2025, compared to $20 million in the same period of 2024[16] Profitability and Expenses - Gross profit for the three months ended October 31, 2025, was $572 million, up from $508 million in the same period of 2024, reflecting a 12.6% increase[14] - Operating income for the three months ended October 31, 2025, was $23 million, compared to an operating loss of $16 million in the same period of 2024[14] - The gross margin for subscription services improved to 80% for the three months ended October 31, 2025, compared to 78% in the same period of 2024[136] - The cost of subscription revenue for the three months ended October 31, 2025, was $147 million, an increase of $7 million or 6% from $140 million in the same period of 2024[136] - Research and development expenses for the three months ended October 31, 2025, were $160 million, slightly up from $158 million in the same period of 2024[128] - Sales and marketing expenses for the three months ended October 31, 2025, were $271 million, reflecting a 6% increase from $256 million in 2024[149] - General and administrative expenses for the three months ended October 31, 2025, increased to $118 million, an 8% increase from $110 million in 2024[153] Assets and Liabilities - Total current assets as of October 31, 2025, were $3,201 million, a decrease from $3,416 million as of January 31, 2025[11] - Total liabilities decreased to $2,336 million as of October 31, 2025, down from $3,032 million as of January 31, 2025[11] - Cash and cash equivalents increased to $645 million as of October 31, 2025, from $409 million as of January 31, 2025[11] - Total stockholders' equity as of October 31, 2025, was $6,893 million, an increase from $6,405 million as of January 31, 2025[11] - The company reported a total of $1,818 million in short-term investments as of October 31, 2025, down from $2,114 million as of January 31, 2025[45] Stock and Equity - The company issued 1,205 shares of common stock during the three months ended July 31, 2024, raising an additional $9 million in paid-in capital[22] - The company’s total stockholders' equity increased to $6,265 million as of October 31, 2024, from $5,888 million as of January 31, 2024[22] - Unrecognized stock-based compensation expense related to outstanding equity awards was $689 million as of October 31, 2025[77] Taxation - The Company recorded a provision for income taxes of $7 million on pretax income of $50 million for the three months ended October 31, 2025, resulting in an effective tax rate of approximately 14.0%[79] - For the three months ended October 31, 2024, the company recorded a provision for income taxes of $9 million on a pretax income of $25 million, resulting in an effective tax rate of approximately 40.4%[84] - For the nine months ended October 31, 2024, the company recorded a provision for income taxes of $10 million on a pretax income of $15 million, resulting in an effective tax rate of approximately 69.6%[84] Customer Metrics - The dollar-based net retention rate was 106% as of October 31, 2025, indicating strong customer retention and expansion[133] - The number of customers with annual contract value (ACV) above $100,000 increased to 5,030 as of October 31, 2025, up from 4,705 in 2024[171] - Dollar-based net retention rate for the trailing 12 months ended October 31, 2025, was 106%, down from 108% in the previous year[171] Strategic Investments and Acquisitions - On September 4, 2025, the company acquired Axiom Security Ltd for $54 million, which is expected to enhance its privileged access management capabilities[92] - The acquisition of Axiom included $16 million for developed technology intangible assets and $40 million of goodwill, primarily attributed to the assembled workforce[93] - As of October 31, 2025, the balance of strategic investments was $32 million, up from $30 million as of January 31, 2025[51] Market Conditions and Risks - The company experienced cybersecurity incidents that adversely impacted its reputation and financial results, with potential future performance implications[106] - Current economic conditions, including market fluctuations and inflation, have the potential to adversely affect the company's business operations and financial results[107] - A hypothetical 10% change in foreign currency exchange rates would not have had a material impact on the company's financial statements during the nine months ended October 31, 2025[205] Cash Flow and Financing Activities - During the nine months ended October 31, 2025, cash provided by operating activities was $626 million, an increase of $162 million compared to the same period in 2024[193] - Cash used in financing activities increased to $622 million during the nine months ended October 31, 2025, primarily due to increased payments upon maturity and repurchase of convertible senior notes[198] - The company repurchased $42 million principal amount of the 2025 Notes for $40 million in cash during fiscal 2025, resulting in an aggregate gain on early extinguishment of debt of $19 million[188]

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

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

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

Core Viewpoint - Okta's stock experienced a decline despite reporting third-quarter earnings and revenue that exceeded consensus estimates, driven by significant deals with large customers, while the guidance for the January-ending quarter was also above expectations [1] Financial Performance - For the quarter ending October 31, Okta reported earnings of 82 cents per share on an adjusted basis, reflecting a 22% increase compared to the previous year [1]

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Core Insights - Okta Inc reported a strong performance for Q3 fiscal 2026, exceeding both revenue and earnings expectations [1][2] Financial Performance - Q3 revenue reached $742 million, surpassing analyst estimates of $730.36 million [2] - Adjusted earnings for the third quarter were 82 cents per share, exceeding expectations of 76 cents per share [2] - Total revenue increased by 12% year-over-year, with subscription revenue rising by 11% [3] - Remaining performance obligations at the end of the quarter totaled $4.29 billion, reflecting a 17% year-over-year increase [3] - Net cash provided by operations was $218 million, up from $159 million in the same quarter last year [3] - Free cash flow for Q3 was $211 million, an increase from $154 million year-over-year [3] Cash Position and Outlook - Okta ended the quarter with approximately $2.46 billion in cash, cash equivalents, and short-term investments [4] - The company expects Q4 revenue to be between $748 million and $750 million, compared to estimates of $737.92 million [4] - Projected Q4 adjusted earnings are between 84 to 85 cents per share, aligning with estimates of 84 cents per share [4] - Full-year revenue guidance has been raised to between $2.906 billion and $2.908 billion, compared to previous estimates of approximately $2.89 billion [5] - Full-year earnings guidance is now expected to be between $3.43 and $3.44 per share, up from estimates of $3.37 per share [5] Market Reaction - Following the earnings report, Okta shares fell by 4.31% in after-hours trading, priced at $78.34 [6]

Cybersecurity company Okta forecast fourth-quarter revenue above Wall Street estimates on Tuesday, betting on growing demand for its identity and access management solutions. ...

Exhibit 99.1 Okta Announces Third Quarter Fiscal Year 2026 Financial Results SAN FRANCISCO – December 2, 2025 – Okta, Inc. (Nasdaq: OKTA), the leading independent identity partner, today announced financial results for its third quarter ended October 31, 2025. "We delivered another quarter of solid results highlighted by continued strength with large customers, adoption of new products like Okta Identity Governance, and strong cash flow," said Todd McKinnon, Chief Executive Officer and co- founder of Okta. ...