Okta, Inc (NASDAQ: OKTA) Q4 2025 Earnings Call dated Mar. 03, 2025
Corporate Participants:
Dave Gennarelli — Senior Vice President of Investor Relations
Todd McKinnon — CEO, Chairperson of the Board and Co-Founder
Brett Tighe — Chief Financial Officer
Analysts:
John DiFucci — Analyst
Eric Heath — Analyst
Brad Zelnick — Analyst
Joseph Gallo — Analyst
Gabriela Borges — Analyst
Adam Borg — Analyst
Jonathan Ho — Analyst
Ittai Kidron — Analyst
Shrenik Kothari — Analyst
Gray Powell — Analyst
Saket Kalia — Analyst
Shaul Eyal — Analyst
Joshua Tilton — Analyst
Keith Bachman — Analyst
Roger Boyd — Analyst
Rudy Kessinger — Analyst
Kevin Niederpruem — Analyst
Peter Levine — Analyst
Matthew Hedberg — Analyst
Patrick Colville — Analyst
Mike Cikos — Analyst
Fatima Boolani — Analyst
Brian Essex — Analyst
Peter Weed — Analyst
Andrew Nowinski — Analyst
Presentation:
Dave Gennarelli — Senior Vice President of Investor Relations
Hi, everyone. Welcome to Okta’s 4th-Quarter and Full-Year fiscal 2025 Earnings Webcast. I’m Dave Generelli, 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 Ty, 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?
Todd McKinnon — CEO, Chairperson of the Board and Co-Founder
Thanks, Dave, and thanks everyone for joining us this afternoon.
We’re really pleased with our strong Q4 results and the finish to FY ’25, 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 FY ’26 and beyond. As you know, two of our top FY ’25 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 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 the 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 FY ’26. 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 password lists, enhanced 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 OF Zero platform, we announced off for Gen AI will begin early access this month.
We already have a wait-list of eager customers ranging from early start-ups to Fortune 100 organizations off for Gen AI is developed to help customers securely build and scale their Gen AI 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 of 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 and off-zero sellers.
Oktasellers will focus engagement on IT and security buyer needs, including all workforce identity products as well as Okta customer identity. Our zero 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 FY ’26 priorities, which build upon the great progress we made in FY ’25. 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 win 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. This focuses on further strengthening market presence through strategic investments in-product innovation, brand and marketing.
Seminal customer wins like the Global 2000 food and beverage retailer that purchased off Zero in 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 Kellher on his promotion to Chief Operating Officer. Eric has 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 Pace, who will be retiring this month.
As a co-founder of, 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 FY ’26 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.
Brett Tighe — Chief Financial Officer
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 FY ’25, 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 FY ’26. Underpinning our overall strength in Q4 was sales productivity that reached a multi-year high. Notably, off Zero 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 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 million. 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 4th-quarter, over 70% of deals were partner influenced. That includes 18 of our top-20 deals closed in Q4. We are 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 FY ’25, revenue from AWS Marketplace grew over 80%.
Now let’s turn to our business outlook for Q1 and FY ’26. 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 FY ’26 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 FY ’26, we expect total revenue growth of 10%, current RPO growth of 12%, non-GAAP operating margin of 25% and free-cash flow margin 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 FY ’26, we are raising our outlook across-the-board. We now expect total revenue growth of 9% to 10%, non-GAAP 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 and 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?
Questions and Answers:
Dave Gennarelli
All right. Thanks, Brett. I think our attendees are going to be moved over his palets now, and I’ll take the questions as the hands get raised 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 when we get to additional questions.
So with that, I’ll take the first question from John DiFucci at Guggenheim. John?
John DiFucci
Thanks guys. Thanks. I don’t normally say this, but nice, nice job guys. Listen, you’ve talked in the past and this — I think this is for Brett, but maybe Todd to about your prudence in giving guidance and you mentioned it again in your prepared remarks. But I just want to kind of gauge that a little bit because has that changed at all, especially your annual guidance, which was a pretty big uptick from the previous numbers, know, or has something changed in the business or even the macro backdrop. Todd, I think you were the first guy to say, hey, listen, this is a new normal out there. Is there any changes out there that gives you more confidence that you don’t have to be quite as prudent in giving guidance, I guess.
Todd McKinnon
So for Q4, John, thanks for the question and thanks for the compliment at the beginning. Q4 was a blow blow-up. We really, really had a great, great quarter. And when we talked three months ago on the call, I mentioned — we talked about guidance and the initial guidance we gave, and I said the year FY ’25, the earnings finish was pretty back-end loaded and the team really delivered. It was a blowout quarter and some of the stats, it was the first time ever we had over $1 billion of bookings in the quarter, record quarter for and the top — the top million dollar deal cohort grew 22% year-over-year. So the records and the big stats go on and on. So that informs — that’s part of the equation for the guidance for next year. You see the raise we did have the guidance.
But I think just zooming back a little bit in terms of macro and what’s going on. I think the macro is consistent. I think maybe the difference is that this idea that identity is this really important foundational layer, particularly for big companies and they can modernize the disparate systems they have and they can — if they invest in this layer, it’s going to really lead to better security outcomes. They’re going to get a handle on their various identity silos. They’re going to be able to do governance and privilege and customer identity with one vendor. It’s going to lead — it’s going to help them with AI and workloads.
People are trying to stick together platforms and write their own systems. And what they run smack into is, wait a minute, how am I going to give these agents access to all these systems I don’t even know what’s in these systems that I don’t even know the access permissions that are there and how to securely authenticate them. So that’s driving the business. But a great quarter. We’re very bullish. But we have — we’re — you know, Q1 is just halfway over and we’re making sure that we’re prudent in our guidance going-forward as well.
John DiFucci
So it sounds like things are pretty much the same. You guys are executing, things are coming together for Octa.
Todd McKinnon
Absolutely. We’re very excited.
Brett Tighe
Yeah, John, I can answer a little bit on the philosophy. I think if you remember last quarter, we talked about reducing the conservatism in the model that we’ve talked — that we’ve issued here. Same program. We’re going to continue to do that in for the balance of FY ’26. The only line-item in there is something we talked about earlier, which is further specializing the field. But yeah, that’s really that’s it. But before I get office, I should just say congratulations to the entire go-to-market team. They did a heck of a job in the quarter. I hope all of you guys appreciate that and see it in the numbers because we’re really pleased with how they executed and looking-forward to a strong FY ’26.
John DiFucci
We can see it. Thanks, guys.
Dave Gennarelli
Let’s go to Eric Heath at KeyBanc.
Eric Heath
Great. Thanks guys and really great quarter. Great to see. Two for me, Brett, just start with you quickly on a — on the CRPO guide for 1Q. It looks like it’s down a few points sequentially. So anything to call-out regarding that seasonality? And then, Todd, I wanted to ask you a little bit more on the specialized sales model for this year. Can you just elaborate a little bit more on the existing data points that you’re seeing or you’ve implemented already that’s given you confidence in that strategy? And just help us understand maybe the degree of change this entails?
Todd McKinnon
Thanks. That makes sense. Brett, maybe you go first on this.
Brett Tighe
Yeah. It’s a real short answer there. The seasonality of our fiscal years are fairly back-end loaded, just like Todd spoke about. So Q1 just has that lowering of expectation, if you will, in terms of the growth. So it’s obviously very early in the year and Q1 is, like I said, seasonally our lowest quarter typically.
Todd McKinnon
Specialization has been the trend. Specialization has been the trend for a little bit over a year now. At the beginning of FY ’25, we specialized the corporate team in terms of hunter farmers. And we learned a lot from that. We learned that the transition into that model took a couple of quarters, a little bit slow out-of-the gate, but then paid-off in the second-half in a strong way. And so when we think about further specialization, it makes sense for a lot of reasons. And the biggest reason is that the products are a lot more detailed in a lot more submarkets. If you’re an today, you’re selling really an integrated workforce suite that creates an identity fabric for our customers across many categories, access management, identity governance, but these are all — traditionally, we’re all separate companies, privileged access management, identity security posture management, identity protection with Octai. And so these are all different subcategories that we have a very unique position we’re in.
We’re trying to bring those together into one platform and go to a big customer like we closed a big deal in Q4, it was a — really it was a big upsell on a deal we talked about in Q3, which was a global technology company, Fortune 500 company and they really went all-in with this end-to-end workforce identity suite. All of our products retiring, 10 legacy application for just a massive — it’s one of those big deals that put that over $1 billion of TCV on the board in Q4. I’m not saying this one deal was $1 billion in TCV, but I’m saying that these kind of deals led to that kind of number as they added up in the quarter. And so — and then when you go on the zero side, you’re talking about selling a platform to developers, people building technology, it’s quite broad. It’s got the core authentication and things like that, but it also has an identity fine-grain authorization, which is like how do you actually get sub-domains of permissions inside your applications or highly regulated identity, which is advanced capabilities to do step-up authentication and so forth.
And so you’re — and now with we have on the zero side, we have off-rogen AI, it’s like how do you actually stitch this together if you’re building applications and make it all secure and make sure that agents don’t get hacked and make sure the agents have the right authentication, et-cetera, etc. So that’s a lot to understand as a seller. And so we’re on this arc of specialization, which is going to really lead to long-term growth because these products have become so powerful and these awesome people in our go-to-market team, the most talented people in the industry, they can really drill in and understand what these products do.
And when we look at like success metrics, we talk to customers and we talk to prospects and we ask them, how are these leading to the great outcomes for you? How are you in the sales process of understanding these things because identity is complicated. And if our seller can go in there and really understand the details of what these products are doing, it further differentiates us. We’re already differentiated because you know we’re basically competing against a large monolithic platform that kind of says, hey, put everything in our stack and we’ll do it all for you, maybe except no one really has everything in one stack, so it doesn’t really work or you’re talking to point identity vendors, which don’t have the whole platform we have. They don’t have customer identity and they don’t have privilege in governance and identity carried posture management and threat protection.
And so if we come to a seller that knows the details of these products and can really speak the customer’s language, that just further differentiates us and leads to better-run rates. So that’s the metric we’re watching as we transition into this and it’s off to a good start. People are pumped about it. We saw the success in a little — what we did last year with Hunter and it’s really we’re excited about this year and working hard to even go faster and grow more and do even better than Q4. Q4 was great, but we have big ambitions here. We’re trying to do a lot more and the team is fired up to do that.
Eric Heath
Yeah. Thanks, Todd.
Dave Gennarelli
Let’s go to Brad at Deutsche Bank.
Brad Zelnick
Great. Thanks so much and congrats on the blowout Q4. I don’t know if this is better for Todd or for Brett. But if I reflect over the last couple of years, Okta, like many other companies in the software industry, we were talking about seat-based headwinds. And if I think back to the comments that you made at Octane, you talked about an expectation that would continue — you expected that, that would persist through the first-half of next year.
And I’m just wondering as we think about the puts and takes of the business, where your head is now and are — is what we’re just seeing here in these results and the guidance that you’re providing us tremendous success in governance and OPA that’s more than offsetting that or do you have a change in what your expectation is. And I think Brett, you had said, if the macro were better that maybe we would see improvement sooner than the midpoint of next year.
Todd McKinnon
Thanks. Yeah, maybe I’ll start and then Brett, you can join in. But on the seat-based headwinds, I think the macro condition we’ve seen has been fair — it’s been consistent for a while now. I would say a couple of years. And we think it’s going to be the same going-forward. I think the big difference, as you mentioned, is that in contracts we signed in, Call-IT, first-quarter of 2022 and then in calendar ’21 before, it was the zero interest-rate era and people were buying a little bit — they just bought a lot and they over forecasted what they’re going to need. And if you needed 1,000 things, you bought 1,500.
And now the world is different in the last two years. Now if you need 1,000, you buy 700 and then you wait to see when you go 701, then you buy that last seat. So it’s a very different world. But as those things — our average contract length is 2.5 years. So as those contracts come up for renewal, they don’t get renewal — they don’t get renewed at 1,500. They get renewed at a right-sized level. So you’re seeing that headwind abate. It doesn’t mean the macro is changing, it just means that our contracts are rolling-off from that I think unsustainable period before.
Brett Tighe
Yeah. I would just add, Brad, to that question, which is you had two options, buying more products or the headwinds abating, it’s buying more products. We saw that in the new product percentage we gave you guys. So those headwinds are still there. Just the team executed really well. And new business, upsell, upsell or renewal. I mean they just — they had a heck of a quarter and that’s why I congratulate them at the beginning of the quarter — at the beginning of this call. It’s a really excellent execution from the sales team.
Brad Zelnick
They all deserve it. Thank you.
Todd McKinnon
Well, that’s a lot of money, Brad. They all made a lot of money. So that’s a little bit of a thank you.
Dave Gennarelli
Next up is Joe Gallo with Jefferies.
Joseph Gallo
Hey guys, thanks for the question. It was awesome to see the $1 million cohort represent over $1 billion of total ACV. Todd, can you just talk about how much opportunity remains with those largest customers? How are the net revenue retention rates there? And is that where we should expect the bulk of growth this year to come from? Or should the mid-market rebound a little bit? Thanks.
Todd McKinnon
Yeah. So I think it’s a real insightful question. So I think that the maybe not so secret, secret is that even with our success, we are really just scratching the surface. If you look at IT spend, if you look at the — just that’s kind of quantitatively, you can look at total IT spend and kind of try to extrapolate what that would mean for us. But I think the more powerful thing is just talk to customers and get to know them and work with them through this journey. I told the story of that Fortune 500 tech company last quarter, we did a big deal with them in Q3. And now this quarter, we did another deal that’s even bigger and that first deal seems huge, but when you compare it to what they’re saving and the value they can get from it and what they can take-out of their environment in terms of reducing complexity and streamlining effectiveness. So their security operations are more effective. They kind of have one view of all their identities across privilege and governance and access management. It’s very powerful and they haven’t even done the customer identity deal yet. That might be bigger than the whole thing.
So it’s like one anecdote, but I think there’s hundreds and hundreds and hundreds of these companies out there that are just starting to get on this bandwagon. So the potential for the potential is massive. That being said, also Octa’s bread-and-butter growing up was kind of this mid-enterprise or lower — lower enterprise success. And with all our investments in the partner ecosystem and the hunter and farmer specialization and the — we crossed the $1 billion threshold with Amazon. This was like the $0.5 billion thresholds.
And through the marketplace, $1 billion of TCV, which is — a lot of that’s in the enterprise, but some of it — a big part of that too is in the mid-market. So — and then on the low-end, our self-service business, we’re on the zero side, we’re doing more-and-more there that never even touches a salesperson. And by the way, once that gets to a certain point, it can be upsold in an enterprise plan. So we have this strategy where we’re going from top Global 2000 with these large platform deals. We mentioned the top-25 deals or $320 million of bookings in the quarter, all the way down to the bottom with the self-service plans. And yes, it’s robust strength across-the-board.
Joseph Gallo
Welcome to hear. Nice job, guys.
Dave Gennarelli
Thanks, Joe. Next up is Gabriela Borges at Goldman.
Gabriela Borges
Hi, good afternoon. Thank you. Todd, I wanted to follow-up on your comments on and some of the nuances to the go-to-market this year. Maybe just remind us, I know you’ve experimented with go-to-market in the past. What have been your learnings from the prior iterations of go-to-market and just crystallize for us, what’s different with how you’re approaching the go-to-market this year versus some of the other ways of selling that you’ve — that you’ve experimented with in the past?
Todd McKinnon
Yeah. Yeah, it’s real simple. We — when we bought the company, it was two separate sales teams and then we combined it into one generalist sales team. So everyone sold both products and we did that in 2021 at the end of 2021, so right at the beginning of 2022, because we wanted coverage. We wanted to get the product out there. The product was on fire, it was growing super-fast. We wanted to get it to as many people as possible, as fast as possible. And what we learned over the last two years is that works, especially in Q4, it worked well, record quarter ever for. But we also learned is that this is complicated stuff and the product over the last two years has expanded and got more powerful with fine-grade authorization and highly regulated identity and other capabilities inside of Ozzero, just features and enhancements and how people use it in the SDKs. And the same things happen on the side.
So it really got to a point where we were seeing that people that were tended to focus on one area were more productive. We saw conversations with certain buyers around product officers or technical buyers versus IT and security, they were more kind of differentiated conversations. And so when we look out the next five years as we go from where we are now, $2.6 billion of revenue last year, reaccelerating growth, building this massive company we’re trying to build over-time, we think the right way to do it is to have specialized sellers, specialized marketers, specialized demand-generation to speak to those value props to those buyers. We’re going to serve multiple buyers over-time. We’re going to serve every buyer in the C-suite ultimately. Identity touches everything and this is a good step-in the right direction.
Brett Tighe
I would also add, one of the things that we’ve done in terms of taking the field and putting them either on Octa or is putting them in places that they’re comfortable, right, where they have the skill, they’ve got the specialism already. And so that’s why we’re excited about this because we look at the results like you just saw in Q4, record Austero bookings. Let’s put a lot of those people on the Austero side of the house and see how well they can do with all these great new products that are coming up.
Gabriela Borges
Thank you.
Dave Gennarelli
Next up, we have Adam Borg from Stifel.
Adam Borg
Awesome. And thanks so much for taking the question. Todd and Brett, so obviously, like you said, really strong quarter here, look to be broad-based, but is there any geography or vertical that stood out? And maybe as you think about kind of the setup into fiscal ’26 versus ’25, at least qualitatively, Brett, can you talk about the size of the pipeline, the quality of pipeline during this year relative to last? Thanks so much.
Todd McKinnon
I think the strongest geography was North-America. And like you said, strength across-the-board. But in terms of like being exceeding expectations and really blowing out their plan, North-America was top of the list there. And that I think long-term a big growth opportunity for us as we’ve talked about a lot is international. It’s still hovering right around 20-ish percent of our total revenue. And over-time that needs to be higher as we drive broad-based expansion around the globe problem is North-America won’t slow-down. So we got to figure out how to do both at the same time.
Brett Tighe
Yeah, I would say EMEA also had a really good quarter. Public sector had a really good quarter. I mean, Adam, it was a really strong quarter across-the-board. I don’t think we could find an area of weakness, frankly. I mean, new business upsell, upsell, renewal, cross-sell, everything really went well. The team executed really quite well. Proud of the effort.
Adam Borg
Great. And maybe just comment just on the quality of the pipeline and during this year versus last size. Anything you could comment there?
Brett Tighe
Yeah, we’re comfortable with the pipeline based on the guidance we gave you guys today. So we’re comfortable with where we’re at. Excited about executing in FY ’26.
Adam Borg
Nice work. Thanks again.
Dave Gennarelli
Okay. Next up, Jonathan, Ho at William Blair.
Jonathan Ho
Let me congratulations as well on what appears to be a good inflection in the business. Can you help us understand the opportunity for AI and maybe how AI can play a role in the increasing number of identities out there and particularly how Okta potentially benefits from that? Thank you.
Todd McKinnon
Yeah. Jonathan, the — I’ll focus in on the — AI is a pretty big topic. And I know there’s a lot of people out there in the world trying to give everyone broad-based lessons about it. So I’ll spare you that and I’ll focus on the Agentic part of AI and that’s probably the most — in the medium-term, that’s probably the most applicable to our business. And I think the way to think about it is an important challenge of identity and security for a long-time has been machines or another way to call them the service accounts. So you have all these systems and you have all these networks and you have all this infrastructure and there’s people that log into it and we have ways to manage that and have biometric authentication and we have single sign-on systems.
And then there’s machines that log into that stuff. And if you look at a server, maybe probably 99.9% of the connections to that server are probably other machines. And so this challenge of machine identity has been with us for a long-time. There’s been different strategies on how to manage it and different approaches, different protocols. We’ve gone through different waves in the industry. We had firewall base where we try to lock everything. We had no lateral movement, data center technologies where you try to control machine account access that inside the data center and the fabric of the network. We’ve had PKI, which 20 years ago, 15 years ago was the way we’re going to give every machine a public certificate and we’re going to manage that all-in our certificate authority. That kind of never really took off except in some narrow cases.
And now where we are today with this, the revolution is real and the power of AI and the power of these language models, the interaction — the interaction modalities that you can have with these systems, these machines doing things on your behalf and the — and what they can do and how they can infer next actions, et-cetera, et-cetera, you all know it’s really real, but the way to think about it from an octa perspective, it is like machine identity on steroids, turbocharged to like two orders of magnitude higher. So that’s like really exciting for us because what do we do? A good part of our business is actually logging in machines right now. Opzero has the machine-to-machine tokens where people if they build some kind of web app that services other machines, they can use for the login for that. Okta has similar capabilities and now you have not only that basic authentication challenge, but you have the — all of these applications as you get two orders of magnitude more things logging in, you have to really worry about the — worry about the fine-grain authorization into your services.
So if you’re in an enterprise and you’re building a system that is going to be an API that the agents talk to, by the way, that is an under — that is a misunderstood thing or not a well-understood thing. If you want to get Agentic AI in your enterprise, yeah, one solution is you can do everything in Salesforce, you can do everything in ServiceNow, but that’s pretty impractical for most organizations. So what they’re doing is they’re building an AI wrapper around a bunch of stuff. And now once they get that — sorry, an API wrapper around a bunch of stuff. And once they get that API, they need a system like Fine Green authorization from to make sure that it’s easy to express the rules on who and what agents and what rules and what’s group can access which parts of this information inside that API.
So you want to see Jonathan can access these records, but John can access these other records and Gabrielle can access these others, you can do that with FGA. And then when you put these APIs in front of all your systems, you have a nice fine-grade authorization model. So now when you start building your agents that talk to these APIs, those agents are only seeing what they can see because you don’t want to open the whole world to those agents because if that thing goes awry or that thing gets hacked, then all of your data is exposed versus exactly what the agency. So it’s least privileged, it’s very important.
Now on the agent side, the equivalent of a lot of these deployments have like passwords hard-coded in the agent. So that agent gets compromised, it’s the equivalent of your monitor having a bunch of sticky notes on it with your passwords before single sign-on. So off for Gen AI gives you a protocol and a way to do that securely. So you can store these tokens and have these tokens that are secured. And then if that agent needs to pop out and get some approval from the user, AI supports that. So you can get a step-up — step-up biometric authentication from the user to say, hey, I want to check Jonathan’s fingerprint to make sure before I book this trip or I spend this money, it’s really Jonathan. So those three parts are what off Gen AI is, and we’re super, super-excited about it. We have a waitlist over 200 plus Fortune 100s and startups are on that thing. They want this product and it’s going into early access this month. So we’re really watching it closely to see how it can do.
Jonathan Ho
Thank you.
Dave Gennarelli
All right. Next up is Ittai Kidron at Oppenheimer.
Ittai Kidron
Hey guys, again, congrats on a great quarter. Couple from me. Brett, on the CRPO, you gave — you gave guidance for the first-quarter, but not for the fiscal year to a previous question, you said you’re — this is beginning of the year, so you’re a little bit conservative on the CRPO. So I guess we should assume it only accelerates from here till the end-of-the fiscal year in growth. Help me get some color on that. And then for you, Todd, you didn’t talk about PAM and the progress that you’ve had with that and how much that’s contributing to your business. Maybe you can share some data points on progress there. Thank you.
Brett Tighe
Sure. Hey, Tye. I’ll just take as a quick one. We only guide one at a time — 1/4 at a time, we’ve never done a year out. So let us get through Q1 and then we’ll give you a guide for Q2 and go from there.
Ittai Kidron
Sounds good.
Todd McKinnon
Yeah, PAM is doing great. I mentioned the new products, the total new products were 20% of the bookings in the quarter, which is great. The standout there, I think in terms of size and maturity is Identity governance. I mentioned that over 1,300 customers, $100 million of just OIG bookings when you add-in the other life-cycle and workflow, which is really what you would include if you kind of looked at all the parts of governance of our business, over $400 million in bookings, which is great. PAM is not at that scale yet, but it’s off to a really good start in the quarter. We signed a deal with a really brand-name financial services company for Goldbage 1,000 Company that bought those existing Okta customer upgraded in the quarter to not only the access management product they have before, but they added Identity security posture management, identity protection with Octa AI and Octoprivilege Access. So they added those three products and it increased the ARR on that account north of 30%.
So that was a pretty significant upsell. And the stories like this are on and on. I think that product, Octaprivilege Access is, I think it’s getting really good and really mature and we’re adding more capabilities. We’ve got a great engineering team moving quickly. It’s really a modern product. It’s integrated great with SaaS applications. It’s kind of a rethinking of how the privileged access management market is. And I think in the next few years as we have these conversations more, I think what you’re going to hear more-and-more is it’s just not it’s like just part of the whole suite and you buy it as part of — because you want it with your access management. And I think a lot of the vendors in our space agree with this, like they see the vision that this is all going to be one thing.
You’re not going to be buying separate governance and separate PAM and separate posture management, you’re going to buy an identity platform and we’re in a great position to deliver that. If you look around, if you want an independent neutral identity company, there’s no one else has the pieces we have. No one has the privilege and access management, no one’s at near our scale. No one has the pure SaaS heritage and can do these integrations and doesn’t have to manage a complex combination of customers that are kind of somewhat upgrading to their SaaS solution, but not really and the big customers don’t want to do it and they’re kind of managing multiple things.
We don’t have those problems. And so this market is ours to take and we have a lead. The scale we’re operating at is, you have to combine like two or three of the other companies in independent identity to get close to the scale we have. And we can bring that all to bear with our leading customers and our great engineering team to keep innovating and we’re going to see results like we just saw. And I think, Jonathan, you used the word before on the previous question about inflection. I really think this is an inflection and I’m really excited. We have work to do to back it up and keep going, but I’m really excited about what the future brings for Okta.
Ittai Kidron
Stuff. Thank you.
Brett Tighe
Just one point to clarify Tai. When you were saying $100 million and $400 million, that’s annualized contract value. So that’s the total book of business, okay? Not bookings. You said bookings. So I just want to make sure we’re all on the same page.
Ittai Kidron
All right.
Brett Tighe
No, it’s okay. So I’ll make sure we got the facts straight. They’re huge businesses. They’re massive and really proud of where they’ve gotten to, but we got a lot of opportunity as we move forward.
Ittai Kidron
Sounds good. Thank you.
Dave Gennarelli
Let’s go over there.
Shrenik Kothari
Yeah, awesome. Thanks for taking my question. Congrats on great execution. Just a couple of quick couple from me. So you’re capitalizing on cross-selling, which is great and what stood out, Brad, you’re mentioning the strong public sector performance, especially integrating the customer identity in the public sector. So as your federal momentum keeps building, right, just curious, in the face of the near-term federal uncertainties, how are you seeing the near-term, medium-term, long-term outlook for not just your opportunity set, but also the execution dynamics, any specific initiatives that’s helping you navigating these challenging federal dynamic right now? And I had a quick follow-up.
Todd McKinnon
Public sector for us is — includes federal, of course, US federal, of course, US commercial, federal and DoD, but also includes all of the state and local. And so it’s a big important vertical for us. So the momentum across the entire vertical is very strong as we mentioned, but let’s not lose sight of the of the state governments and the big deals outside of federal that we closed last year and in Q4 in particular. So now focusing on the US federal specifically, I think there’s a lot, obviously a lot going on there with the new administration and thinking about the government structure and efficiency and so forth, which is all super important. But big-picture, the — I think the number of licenses that we’ve sold into the federal government so-far, it’s a good start, but it’s relatively low, especially compared to the money they’re spending and the complexity and the risk they have with their legacy identity systems.
The federal government has a lot of legacy identity systems. The agencies we’ve been successful in is because we’ve been able to consolidate and replace and really help modernize those applications. And I think that when you talk about efficiency and effective government, this is — we’re like perfect for that. You don’t have to manage servers, you don’t have to — the implementations are much easier. The time to value is much higher. The amount of people it takes to run our services and run our systems at a customer is far, far, far less than the legacy identity technologies, what they have to upgrade and maintain it. And it’s — and it’s not because the — it’s not — it’s because the legacy technology that surrounds these identity systems is it’s hard to integrate to.
But as those things get modernized and the federal government goes for more efficiency, we’re going to have a big opportunity to help them do that. And I think, yeah, I mean, there’s probably a little bit of uncertainty right now, especially in the first part of the year as things get sorted-out. But I’m very confident that we’re going to be a big — we’re going to be very successful in the federal government and helping them modernize, be more secure. No one wants a federal government that’s not secure. I think that’s probably the only nonpartisan thing in Washington these days. And we can help them be more secure, and that’s why we’re so excited about that opportunity.
Dave Gennarelli
Let’s go to great Paul at BTIG.
Gray Powell
All right, great. Thank you very much for taking the question. And congratulations on the good results. So I thought the $100 million ACV stat on OIG was — it’s a good number, really helpful. You called out the $300 million on life-cycle management workflows. So I’m curious if those — if those customers were to upgrade to OIG, can you give us a ballpark sense as to what the uplift would be? And then just how should we think about the growth of your governance products on a combined basis over the — over the next year versus the rest of the business?
Todd McKinnon
Yeah. I think the way to think about it is, let we’ve talked about this consistently now for a while that when they upgrade to OIG, it can be a 30% to 40 plus percent increase in the ACV for that customer. So if you have nothing and you buy OIG, lifecycle and workflows, it can be north of 40%. If you have workflows or life cycles, maybe it’s just in the 30% range. But I think when you look at the book of business and workforce identity, the opportunity is to upgrade all of those customers to include OIG. So that’s how big it is. It’s quite significant, quite a lot of run-rate — a run room above the $100 million directly for OIG in the 400 million total you just talked about.
Brett Tighe
And you think about one of the reasons why we are further specializing the field to your question about maybe going-forward, Greg, is to be able to get-in there and deeper into accounts and be able to do more of these upsells that Todd was just talking about, right? Whether you started the basic package and move all the way up or you already got a little bit of the more advanced capabilities, the idea here is to allow our reps to go in and be able to sell some of these more advanced capabilities because that’s really a big opportunity for our customers to solve as many use cases as possible.
Gray Powell
Understood. Okay. Thank you.
Dave Gennarelli
Let’s go to Sake at Barclays.
Saket Kalia
Hey, great. Hey. Hey guys, thanks for taking my question here and echo my congrats to the team. Todd, maybe for you. I was wondering if you could dig into the workforce identity suites that you talked about at launch week. And maybe the question is, what are some of the suites that we’re introducing and how do you make that pricing packaging enticing to a customer that wants to continue to consolidate identity?
Todd McKinnon
The main part about it is it’s simpler that — and that’s what’s enticing. It helps customers understand simply what they need to buy to be successful. We — and the history of this is we monetize innovation over the years by keeping the — we basically sold customers the plat — the capabilities at the time. And then as we added more capabilities, whether it’s multi-factor, lifecycle management. We added those as new SKUs or new products. And so and that was great because they would add more over-time. But what you look at now is just if you buy those things all a cart, there’s a lot of them. It’s universal directory, single sign-on, advanced single sign-on, multi-factor events, it’s a little bit complicated to buy. And so we took a comprehensive look at it.
We said what are the outcomes customers want to have, whether they want to just get started, the workforce starter suite and then there’s the professional suite and then there’s the enterprise suite. It’s basically good, better, best, meaning that the — if you want a full identity fabric to cover all of your use cases from privilege to governance to threat protection to posture management, that’s the enterprise. And then if you want to do that, but without some of the more advanced capability, more advanced modules I talked about, you do the enterprise and then the starter is just the basic. So it’s just simplicity and clarifying the — and a little bit making the buying process simpler for our customers.
Saket Kalia
Makes sense. Thank you.
Dave Gennarelli
And next up, we have Yal at TD Cowen.
Shaul Eyal
Thank you. Good afternoon, Jen. Congrats on the quarter-end outlook. Thanks for the color on OIG. Can you maybe outline for us, maybe in broad strokes that the profile of OIG customers are these new logos existing customers? Are they more hind enterprise or SMB driven? Are they mostly displacements or greenfield? Any color would be greatly appreciated. Thank you.
Todd McKinnon
Absolutely. So I think the — it’s — the majority of — the vast majority of OIG customers are upsells. They have access management and they add OIG. It’s not 100%, but it’s close to 100%. There are a couple of cases of new lands with OIG. But in both of those cases, the customers went with the full access management suite pretty quickly after. So yeah, you can almost think of it as my main point of the answer, which is, I think we’re moving to this world where this is a suite. And I talked about the suites in the previous answer. And the way customers are thinking about it is, I think this idea that you’re going to get governance from one vendor and privilege from another and threat protection from another is really antiquated and we’re moving to this world where there’s one identity platform that can cover all these use cases and try to increase your security outcomes by having it all stitched together and take-out point products, that’s where we’re going.
And so I think when we think about innovating on the product, the product has to be, of course, more — it has to be better than the competitors. It has to be better than Sale point, it has to be better than Savian, it has to be better than the other small — there’s a bunch of little startups out there doing stuff here, better than all those, but then it really has to be great, integrating with the rest of our capability. So you need to be able to have governance workflows on the credentials you vault in your — in the PAM product. It has to have governance workflows consistently across business applications and servers and any kind of resource you want to control through Okta. Your identity security posture management has to have universal visibility and tell you alerts about human identities that might be compromised or not set-up correctly across any system and any identity provider, but also has to give you notifications and updated constantly about non-human identities in a modern way that then you can then put those in a modern protocol and both those credentials with our Privilege access product. So that’s the idea. I said before and we saw that trend continue. I’ve been — I didn’t think that — I didn’t think that people were ever going to take-out a governance system they had installed. I thought this was like a bunch of customers didn’t have one and that would be the opportunity here. I’ve been surprised by the amount of takeouts, still not massive.
There’s a lot of greenfield out of here and we’re having a lot of success there. But there are more takeouts than you would think, especially if you include the companies that didn’t really get that implemented with — that’s the secret about some of these governance things is that they were software. So they were sold a big license and they never got it implemented. And that was kind of like the vendor was off doing something else now. But in the SaaS world, you really have to make them successful and that’s how we built our product to make sure that they can be successful. You see — we see it in the data like we should release some of this data next report maybe that the time to value and the — how much usage our customers get-out of our governance product very quickly is best-in the industry.
Brett Tighe
Yeah, I would just add there are in addition to what Todd was just saying that there are side-by-side implementations because that was part of your question. And we’re really excited about those for a lot of reasons because we can — what Todd was just talking about, demonstrate value to the customer and earn the right for future flows or future opportunities or the right to take-out that other one. And if you remember what made us big in the beginning was we did that with access management. That was our play. We never went in whole hog and took everything out. It was go demonstrate value to the customer and earn the right for the next thing. And so we’re running a very similar play with governance and just the suite strategy that we’re running now, which is obviously showing some traction with these numbers we just produced.
Shaul Eyal
Thank you.
Dave Gennarelli
And next up, let’s go to Josh Tilton at Wolfe Research.
Joshua Tilton
Hey guys, thanks for sneaking me in here. And I will also echo my congrats on an awesome quarter. I think maybe a high-level one for me. Naturally, I think we kind of gravitate to the workforce side of the business as having this clear agentic AI opportunity. But listen, you guys speak, it’s pretty clear that you guys have opportunities across both Workforce and. I guess my question is, Todd, for you, like which side of the business are you more excited about from an agentic AI perspective and maybe which side do you think will see a monetization opportunity sooner and why? And you can’t tell me you can’t pick between your favorite kids.
Todd McKinnon
You always have a favorite, Josh. You also have a favorite. I think the — I think the customer identity side is more exciting. I think it’s a little bit of a — my answer is a little bit of a — I’m kind of like having both ways because a lot of the — when you talk about developers building AI, they’re doing it inside of enterprises. So like the pattern I was talking about earlier there, there’s these teams and these companies that have been tasked with, you know, we hear about this agent thing, make it work. And the first thing they have to do is, I’ve had many conversations with customers where they’ve been in these discussions that we did a POC and now we’re worried about doing it broadly, but the task was basically hook everything up to our existing — hook these agents up to all of our existing systems.
And before we could do that inside of enterprise, we had a good — we had to get a good identity foundation in front of all these things. And so it’s kind of like similar to you’re building something, you’re a developer, you’re exposing APIs, you’re doing fine-grade authorization, you’re taking another — you’re using another platform or you’re building your own AI platform and you’re having to talk to those systems and those APIs to do things on users’ behalf. So you’re a developer, but it’s kind of like a workforce use-case. But I think people building these systems and getting the benefit from that is really exciting.
Dave Gennarelli
Okay. Next up, we have Keith Bachmann at BMO.
Keith Bachman
Hi, thank you very much. I just also want to congratulate you specifically on the cash-flow. It looked really impressive in the guide likewise.
Todd McKinnon
We were rule of 54 in Q4.
Keith Bachman
That’s impressive.
Brett Tighe
And I just want to say thank you, Keith, for noticing. We went through a bunch of questions to get to that 42%.
Keith Bachman
Yeah, yeah. Todd was mentioning the sales force got well paid. I assume that Brett, you’re going to look for some of that as well based on the cash-flow. But moving on to the question, the net retention rate was 107% this quarter. And I know it’s sort of a lagging indicator. But as we march through the year, how are you just thinking about it directionally in terms of what’s the puts and takes and particularly some of the things that you were talking about as it relates to governance and some of the upsell opportunities, it would seem to me that we’re hearing that you’re gaining more you know, more traction, so to speak in governance, if that would be a source of upside tension as we progress through the year and you anniversary some of the headwinds. But just to talk a little bit about the net retention rate.
Brett Tighe
Yeah. Thanks, Keith, for that question. So as you know, we did expect it to go down into this range.
Keith Bachman
Yes.
Brett Tighe
On the back of healthy gross retention. And from here for the balance of FY ’26, what our model suggest is roughly in this range, maybe plus or minus a point in either direction really depends on new business versus upsell mix. And so that’s where we’re seeing it for the balance of FY ’26.
Keith Bachman
Okay. All right. Thank you very much.
Dave Gennarelli
Let’s go to Roger Boyd at UBS.
Roger Boyd
Awesome. I’ll echo my congrats as well. Brett, just a quick one. You mentioned, I think record sales productivity in the quarter. Just wondering how you’re thinking about go-to-market capacity into fiscal ’26, and to what extent do you see an opportunity to invest behind some of that strength, especially as you think about kind of the sales specialization from here? Thanks.
Brett Tighe
Yeah. We feel-good about the capacity where it is today. And we feel we’re in a really good spot. We want to make sure we find that right balance between having enough capacity to grow as fast as possible, but also having a bunch of very productive reps. We don’t want to get too much in one direction or the other. We want to make sure the porridge is just right. So we feel-good with where we are right now.
Dave Gennarelli
Okay, let’s move on to Rudy at D.A. Davidson.
Rudy Kessinger
Hey, great. Thanks for taking my questions, guys. On the sales productivity, could you just talk about it relative to, I guess where you guys were at integration? Like where you guys running now? And what level of productivity gains are you baking into the fiscal ’26 guide? And then again, my congrats on very, very strong quarter here, the CRPO growth acceleration, et-cetera. Just the strength you saw in the quarter. I know Q1 is a smaller quarter, only a month into it, but have you seen that momentum continue thus far in Q1? Or just what are you seeing quarter-to-date?
Brett Tighe
Yeah. In terms of productivity, it was really good. I can’t give you a compare back to those timeframes, but it was really good. We talked about multiyear high. I’m really pleased with how things came out. In terms of your question on-Q1, look, I mean, like we talked about earlier, Q1 is usually are seasonally lowest and the reason why is we’re getting accounts in the right places, territories in the right places. We have our sales kick-off. So, February doesn’t typically offer too much for us in terms of information. And so we obviously got a long ways to go for the quarter and are excited about the quarter.
Rudy Kessinger
People are very excited at the kickoff.
Brett Tighe
Yeah. That’s a good point.
Rudy Kessinger
I guess that’s not nothing.
Dave Gennarelli
Okay. I know we have a lot more hands raised. We’re at the top of the hour, but let’s try to take a few more here. I will go to Kevin per for room at and from.
Kevin Niederpruem
David, that was pretty good for your first time. Tough last name. Thank you. Thank you for taking my question. I guess I have two quick questions for you. The first one is, in this quarter, were there any large one-off deals that led to the outperformance or did the environment really inflect? And then I guess my second question is looking into the future, are these trends that you saw in 1Q, are they sustainable or what should we expect so that the Street can kind of reset their models going-forward?
Brett Tighe
Yeah. I mean, I’ll take the first part of Todd, you can add-in how you see, which is we had a lot of big deals. There wasn’t any one single deal that was outsized relative to the rest, but we had a lot of big deals. That’s why we gave you the stat of top-25 deals over $320 million in total contract value. So it was — it goes back to really the — all the work we put in throughout FY ’25, whether it be new product introduction, which we’ve talked about, enhancing partners, further specializing the field, doubling down on security, these are all things that helped us build toward this Q4 that was so successful.
Todd McKinnon
Yeah. Just from a company like a culture and a leadership perspective, we are here to build a large growing important company. So we expect more-and-more quarters like this. I think this was a blowout. So it’s tough to repeat this exactly, but this is the expectation we have. We’re not here to build a slow-growing company. We’re here to build a company that’s changing the industry and going to really solve this problem of identity security and help companies achieve their objectives and free them to use any technology. So that’s what we’re — that’s what we’re obsessed with doing and that’s what we show-up every day working hard on trying to do.
Kevin Niederpruem
Great. Thanks.
Dave Gennarelli
We go to Peter Levine.
Peter Levine
Thanks guys. Hi, maybe just one. What are you seeing in terms of like the ratio of like non-human AI agents to employees? And I ask, I guess I want to understand like the pricing model and perhaps when you’re talking to your customers, what are they willing to pay for? It’s one to five or one to 40, just curious to know-how you price that and when do you think it will become maybe accretive to your top-line?
Todd McKinnon
Yeah. One of the things that — the things that we don’t have today is the industry doesn’t have a way to like identify an agent. I don’t mean in the tent in the sense of like authenticating or validating agent, I mean to actually universal vernacular for how to record an agent, how to track it and how to — how to account for it. And so I think that’s something you’ll see coming. You’ll see — you’ll see there’ll be actually a type of account, an Okta that’s an agent account. You’ll see companies starting to — when they buy software, they say, hey, I buy these many people in this many Agentic licenses. And that’s not quite there yet.
Of course, platforms that are coming out with agent versions have this to some degree, but there isn’t a common cross-company, cross enterprise definition of an agent, which is an interesting opportunity for us actually. We do know in the business today, there’s a significant amount of — there’s significantly more machine-to-machine interactions, forget about agents. There’s a lot of API calls and a lot of tokens and a lot of API access management that’s done on the zero platform and the platform. And like I said, I think that’s the machine part of that with agents could increase by two orders of magnitude if the potential is that high.
Peter Levine
Thank you, guys.
Dave Gennarelli
Go to Matt Hedberg at RBC.
Matthew Hedberg
Great. Thanks, Dave for the question. You know, Todd, like I think a lot of us are just sitting back here kind of seeing all the opportunities that you guys have here. And the questions that I’m getting from my inbox is like there’s a lot that we can think about in terms of fiscal ’26 and beyond. And again, it’s kind of getting back to the question of picking your favorite child. But between like all of the catalyst that you’ve got going here, we’re sitting here 12 months from now.
Todd McKinnon
Large enterprise.
Matthew Hedberg
Large enterprise success. Okay. Got it.
Todd McKinnon
Yeah. Yeah, sorry, I mean you cut you off, but I think the answer is so clear in my mind. Well, as I work on these big transformative deals with these customers, it’s just different than it was a year-ago and two years ago. You can see the products are there, you can see the buyers are ready, you can see the partners. I work on these big deals with these global systems integrators and they’re turning their whole practices to security and to modern identity. They’re done with the whole — they’re done with the whole — we’re going to install software to manage your identity, that’s out. They need a cloud solution and we’re the only game in-town, unless you want to — unless you want to go with Microsoft and just kind of wrap your entire company up in one company, which none of these large enterprises can do.
I mentioned this global technology company, they have an E5 license. So Microsoft has licensed to them every identity product they have didn’t matter — didn’t matter because they’re not going to wind their whole future around Microsoft. They have — they have three infrastructure clouds. They have these companies, the complexity and the expanse of what their identity challenges are as far beyond what one company that’s not focused on it could do and we’re the only game in-town. We’re cloud version. We have all the parts of the Sweden. So yeah, when we’re talking in a year, if I’m off to something and not large enterprise, then you can call me on it.
Matthew Hedberg
Got it. Thanks a lot.
Brett Tighe
I would just add to that, Matt, in the sense of like think about what we told you probably four or five quarters ago. There are four things we’re going to work on. Security, new products, partners, further specializing. We’re going to keep working on all those things because that’s what — that’s what will drive what Todd just talked about. So it worked in Q4. We believe those are the right vectors of growth for us. We will continue to do those things to be able to capture the opportunity as fast as possible.
Matthew Hedberg
Thanks, guys.
Dave Gennarelli
Let’s go to Patrick Covilla, let’s Scotiabank.
Patrick Colville
Yeah. Chase, Dave, and thank you for taking my question here. So I guess, let me just sneak two quickies in. I mean, if I look-back at this quarter and last, the CRPO beats have got significantly larger. And you said this was a blowout quarter, but I guess, how should we think about the guidance philosophy, Brett, for CRPO beats heading into 2025?
And then Todd, I guess just-for-you, most of your prepared remarks were actually about the workforce business, but the disclosure you guys give around kind of ACV growth, it looked like actually customer identity was the real strength in 4Q with ACV growing 16%. So I guess just talk to us about like why do you sound so pumped in the prepared remarks about workforce when it seems like the customer business is actually what’s really kind of the rocket ship right now?
Brett Tighe
I’ll take the first which is around the guidance philosophy. Like we talked about last-time, last quarter, we talked about reducing the level of conservatism in the model. Now we had a blow quarter. I only do so much and we’re going to close as much business as we possibly can. If it blows up guidance philosophy in this situation, I’m happy to have that problem. But you can see the guidance philosophy in action in the sense that we had a very large quarter and you see the revenue growth going up by a very significant amount, going from 7% to 10%, a raise of $80 million and we’re giving it to you right there. So in other words, whatever that upside, that big upside you just saw, you’re seeing it reflected in our guidance immediately. So that is going to be our — our strategy going-forward and our philosophy going-forward and I’ll let Todd talk about the growth rates.
Todd McKinnon
Yeah, I think both and Okta had really strong quarters. The quarter was the biggest ever. So I don’t — my remarks maybe weren’t accurate in the sense that I want to reflect the strength in both in both of those respective businesses that I worked very closely. I’ve mentioned a few times on the call this Fortune 500 tech company was a big workforce deal. I also worked on a name-brand global food and beverage company that bought to be the front door login for their — their entire mobile app, which has huge volume. So there’s success on both sides. And I think you know, it’s — it gives us a diversity in the business that is really powerful, really gives us that seat of the table to help customers with these strategic problems, it gives us credibility, gives us scale. I mean, when we talk about the cash-flow and the Rule of 54 and the over $700 million of cash generated last year, it’s — it’s because of the scale. I mean, we spent 16 years building this business that has amazingly loyal, happy customers. So it gives us the opportunity to provide — do all the work we’ve done in security and do all the product innovation at the same time, generating a lot of cash. So it’s a good position to be in-going forward.
Dave Gennarelli
Okay. Try to get through five questions here over the next seven minutes. So we’ll go to Mike, Cico.
Mike Cikos
Great. Thanks for taking the questions, guys, and congrats on the quarter from our end as well. Two-parted here, but first on the OIG. I just wanted to make sure we’re all going to be running our numbers now on the $100 million in ACV versus the 1,300 customer count. If we’re, Call-IT about 75,000 per customer, does that — is that a fair assessment of what customers are paying you currently for OIG or is that skewed by any of your power customers like the big power users?
Todd McKinnon
Not in the second. That’s a good average. That’s a good average. Yeah. I mean, obviously, there’s, there’s some big ones and some small ones, but it’s good average.
Mike Cikos
And then the second piece is the AWS debt that we got today, solid growth. If I’m running the numbers on my side, is that now north of 10% of Okta’s ACV? Have we breached that threshold yet?
Brett Tighe
It’s — it’s a growing percentage. It is definitely, as you saw the 80% revenue growth in FY ’25. I mean it’s definitely getting big now, which is one of the reasons why we’re so excited about it, why we’re one of the partners of the year — we were the partner of the year. And so yeah, we’re excited about that opportunity as part of the four that we’ve talked about, right? It’s under the partnership umbrella that we talked about throughout this call.
Mike Cikos
Excellent. Thank you, guys.
Dave Gennarelli
Yeah, let’s go to at Citi.
Fatima Boolani
Thank you very much for squeezing me in. Todd, I wanted to go back to something you mentioned with regards to launch week, where there was a dedicated product now for the US public sector. So you gave us a lot of good reasons to appreciate why you won’t — you won’t be sort of victimized by the Doge efforts and mandates and that’s pretty compelling.
Todd McKinnon
The efficiency has no victim efficiencies.
Fatima Boolani
And so just with regards to the opportunity for the customer identity-centric solutions. Do you largely see that as a greenfield opportunity? I mean, certainly, we’re big consumers and myself. I’m a big consumer of government services. So what does that opportunity look like today between DIY and/or other kind of commercial competitors and why continue to double down on investments?
Todd McKinnon
Yeah. It’s a — I mean it’s — it’s a huge market and it’s — we’ve seen success in the business. We did the ACV growth rates. We released ACV growth rates. It’s — the ACV growth is faster than the workforce business at 16% I believe was the ACV stat we released. And I think it’s — I think if you go back the last three years, you’ve done great work following for a few years now. And I think what you’re seeing now is almost kind of a resurgence of the workforce business in our own minds and our own psychologies. For a long-time, we thought that this customer opportunity is so big, so massive, let’s focus on that and maybe let’s not focus as much on the workforce business. I think what you’re seeing is us realizing that, that business is big as well. And with the with the security initiatives and how identity is really the center of security these days and how you have to have identity in-place to get good security outcomes.
I think you see us talking about that more, but that doesn’t bely the fact that whether it’s governments or whether it’s tech companies, SaaS companies, whether it’s companies in other industries, this infrastructure and how they authenticate users and you know where the — another big deal in Q4 was, by far the leader in authenticating the chatbots. So we basically have all of the leading chatbots out there, even from — even from some customers that some big companies that might have competing technologies with us on the workforce side. We’re the authentication now for all their chatbots. So the opportunity on that side is big and important and we’re trying to capture both of them.
Dave Gennarelli
Okay, let’s go to Brian Essex at JPMorgan,
Brian Essex
Hi, good afternoon. Thanks for taking the question. Great to see the Monster acceleration on RPO and good acceleration on CRPO as well. I think, Brett, last quarter, on our call-back, you noted that part of the reason for this kind of like disparity in the growth rate between the two is that you shifted or you, I guess enhanced incentive to sell longer duration contracts. So obviously, if it’s not broke, don’t fix it. But maybe for Todd, can you help us understand what some of the conversations with enterprises are like there with regard to those longer-term contracts? What are their incentives? And how much visibility does this give you kind of in CRPO acceleration, for example, as those longer duration contracts amortize into the current category.
Todd McKinnon
Yeah. The conversations are — I think it’s a sign of the displacements, like how many products they’re displacing. They realize that if they’re going to bet on a vendor that’s going to replace 10, 15, literally 25 30 products. It’s crazy how many identity products these big companies have. In many cases, it’s the same product in multiple divisions or it’s the same infrastructure customized different ways. So when you have that kind of conversation, Brian, they’re much more apt to sign-up for a longer-term just because they think about it, they have a big GSI and they’re thinking about replacing and they have a multi-year time-frame and they’re — it’s like the mindset upfront is like this is a strategic platform versus another thing that might be more tactical and hey, we’ll come into a year and we’ll see what it’s like. And I think that’s the biggest thing I’d call-out there.
Brian Essex
Got it. That’s helpful. Thank you.
Dave Gennarelli
Hey, Peter Weed at Bernstein.
Peter Weed
Hey, thanks so much and congrats on the continued progress. You know, I’m obviously really excited like many people around maybe the expansive opportunity that kind of agentic identity provides. And I think today in the market, it’s probably modestly adopted as an opportunity. Yeah, I think you’re already seeing really great traction. When you kind of look-forward at the pipeline of customer demand for this and where this could get to, you know-how material could the scale of this be relative to the number of workers that you cover or these types of things when we start to think about possible here?
Todd McKinnon
I think it’s — it could be massive. And I think we can potentially — we have more work to do and talk — we’ve got to give you folks more details about our plans there and we’ll do that, but we have our showcase event coming up in April, we’ll talk more about this. But we can monetize it on quote-unquote both sides, meaning people building the agents and people using the agents. The agents have to log-in and they have to log into something. So I think it’s potential to monetize it on both sides. But whatever we do here, I think it’s going to be like everything we do. It’s going to be pre-integrated, it’s going to be across all different kinds of technology. It’s not going to be tied-up to one cloud or one app or one collaboration tool or one chatbot, it’s going to be very neutral and independent. I think that’s what customers want.
Peter Weed
Thank you.
Dave Gennarelli
And we’ll wrap things up with Andy Newinsky at Wells Fargo.
Andrew Nowinski
Great. Thank you for squeezing me in. Todd, I think your comments on the importance of a platform is like an itch that customers have had for many years, but could never scratch. So it makes sense that you’re seeing customers gravitate toward this platform. But when we look at the new components of that platform, OIG and PAM, it does seem like those are maybe more large customer tools. I’m just wondering if you think you know the OIG and PAM solutions are applicable to your entire installed-base? Are they more targeted at those larger customers? And same thing on the platform sale. Is that more of a large customer solution? That’s deployment?
Todd McKinnon
I think that’s the — I think that’s — the reason — I don’t think that impression is right. And I think the reason why people have that misimpression is that the PAM and PAM market and governance market, the products were so hard to install and configure ~and put on-premise that that’s why large companies used them. I think now that we’ve made it so easy and integrated and accessible, I think that’s why you’re going to see this greenfield opportunity really blossom. And it’s very similar like Brett was saying earlier, this is how we did access management. When we started Octa, it was like, oh, we’ll just make it really easy for smaller companies that are adopting a bunch of SaaS apps and they want to hook it up to Active Directory on-prem, make it super easy. And then you work really hard for five years and seven years and 10 years and pretty soon, it’s like you really find yourself somewhere. And I think we’re going to see the same thing here where we’re going to work hard on this. We’ve been at it for really 3.5 years now, consistently working on it, staying applied, not get distracted, the team is cranking, customers driving success and you’re going to see the same thing blossom here on this Unified platform over the next few years.
Andrew Nowinski
Thanks.
Dave Gennarelli
Excellent. Thanks for everybody’s patience and appreciate you going along with us here. Before we go, I just want to let investors know that in addition to hosting on-site virtual bus stores, we’ll be attending the Morgan Stanley Conference in San Francisco this Wednesday, KeyBanc Tech Conference in San Francisco this Wednesday as well, the Susquehanna Virtual Conference on Thursday, March 6, the Evercore Cybersecurity Summit in New York City on April 1st in the Wells Fargo Software Symposium in Menlo Park here in California on April 10. So we hope to see you at one of those events and we’ll talk to you then. Thank you.
Todd McKinnon
Thanks.
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