Okta(OKTA)2024-12-04 01:52Financial Data and Key Metrics - Q3 results highlighted strong profitability and cash flow driven by continued spend efficiencies [7] - Total revenue growth for Q4 FY25 is expected to be 10% to 11%, with current RPO growth of 9%, non-GAAP operating margin of 23%, and free cash flow margin of approximately 32% [19] - Full-year FY25 outlook raised to total revenue growth of 15%, non-GAAP operating margin of 22%, and free cash flow margin of approximately 25% [19] - Preliminary FY26 outlook estimates total revenue of 2.78 billion, representing growth of approximately 7%, with a non-GAAP operating margin of at least 22% and free cash flow margin of at least 24% [20][21] Business Line Performance - The cohort of 1 billion in ACV [9][11] - Upsell and cross-sell activity was strong in Q3, with workforce customers buying more workforce products and customer identity products [11] - Approximately 15% of Q3 bookings came from new products, including Okta Identity Governance, Privileged Access, Device Access, Fine Grain Authorization, Identity Threat Protection, and Identity Security Posture Management [18] Market Performance - The public sector remains a strong area, with half of the top 10 deals in Q3 coming from the U.S. Federal vertical [9][10] - The company made significant progress in the public sector, with a 20 million in ACV [8][10] - Okta is advancing its vision of providing secure identity solutions through product innovation, including the expansion of its Okta Secure Identity Commitment [12] - The company was recognized as a leader in the 2024 Gartner Magic Quadrant for Access Management for the eighth consecutive year [13] - Go-to-market specialization is a key focus, with plans to further specialize the global go-to-market strategy to align with IT security and developer buying centers [14][15] Management Commentary on Operating Environment and Future Outlook - The macro environment remains consistent, with organizations scrutinizing budgets and rationalizing software spend, leading to lower assumptions for seats and MAUs [17] - The company is optimistic about the direction of the business, with a focus on security, growth, and scale [15] - The threat environment is increasingly hostile, with identity becoming a primary attack vector, making Okta's technology more important than ever [12] Other Important Information - The company showcased over 30 products, features, and capabilities at its Octane event, with in-person attendance up over 25% compared to last year [12] - The company is investing in AI-driven products like Identity Threat Protection, which uses AI to monitor security risks throughout a session [51] Q&A Session Summary Question: Guidance and Conservatism - The company is no longer incorporating additional conservatism in its guidance related to the October 2023 security incident, with FY25 revenue growth now expected to be 15%, up from the initial 10% guidance [23][27] - The company expects a more balanced approach to guidance in the future, with growth slowing as the company matures [29] Question: Partner Ecosystem and Large Deals - The company is seeing strong progress with its partner ecosystem, with all top 10 deals in Q3 involving partners, including GSIs, ISVs, marketplaces, and traditional VARs [37][38] - A significant 1 billion, with growth driven by customer experience improvements and security needs [86] - The company is focusing on developer-facing markets to accelerate growth in this segment [88] Question: International Business - The international business has faced tougher macroeconomic conditions, particularly in Europe, but the company sees significant growth opportunities and is investing in partnerships to drive growth [162][164] Question: Emerging Products and Pricing - The company is exploring simplified pricing models for its emerging products, with a focus on good, better, best pricing tiers [158] - Products like Privileged Access and Identity Threat Protection are expected to provide significant pricing uplifts, similar to Okta Identity Governance [155]