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DATE

Thursday, May 28, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer and Cofounder — Todd McKinnon
• Chief Financial Officer — Brett Tighe
• President and Chief Operating Officer — Eric Kelleher
• Vice President, Investor Relations — Dave Gennarelli

TAKEAWAYS

• Revenue growth -- Okta reported 12% revenue growth supported by increased net retention and large-enterprise engagement.
• Current RPO growth -- Current remaining performance obligations rose 12%, indicating expansion among existing customers.
• Net retention rate -- Net retention rate increased to 107%, showing improved customer expansion trends.
• Large customer contribution -- Large customers now account for 85% of annual contract value, up from 80%, reflecting greater focus on enterprise deals.
• New product bookings -- Approximately 25% of bookings came from the new product portfolio, up meaningfully from last year.
• Average AI deal size -- CFO Brett Tighe stated, "The average deal size for these AI specific deals is significantly larger than the average deal size for the rest of the company."
• AI product revenue impact -- Management repeatedly emphasized that Okta for AI Agents and Auth0 for AI Agents are not yet "materially contributing" to reported quarterly results.
• Bookings mix -- Management cited "multiple million dollar plus deals in Q1," and highlighted broad strength in bookings, AE (account executive) productivity, pipeline generation, and partner-sourced bookings.
• Partner strategy -- Approximately $241 million was deployed to repurchase over 3 million shares in Q1; $680 million remains on the $1 billion program.
• Balance sheet and liquidity -- Okta ended the quarter with $2.6 billion in cash, cash equivalents, and short-term investments.
• Convertible notes -- The remaining $350 million in convertible notes will be settled in cash next month.
• Q2 guidance -- Q2 revenue growth is expected at 9%; Q2 non-GAAP operating margin is guided to 26%; free cash flow margin is forecast at 20%-21%; current RPO growth projected at 11%.
• Full-year guidance -- Management expects fiscal 2027 revenue growth of 9%-10%, non-GAAP operating margin of 25%-26%, and free cash flow margin of 27%-28%.
• Professional services shift -- Fiscal 2027 revenue guidance includes a 1-point headwind from transitioning more professional services to partners, anticipated to lower revenue in this area beginning in Q2.
• Interest income impact -- Fiscal 2027 free cash flow margin guidance includes approximately a 1-point reduction related to reduced interest income from stock repurchases and settling convertible notes in cash.
• AI pipeline -- CEO McKinnon described the pipeline for AI agent products as record-setting, stating "the pipeline's bigger than anything we have ever seen."
• Strategic partnerships -- Management highlighted new or expanded integrations with ServiceNow, Google, Amazon Bedrock, OpenAI, and Anthropic, targeting AI agent governance and security.
• Product uplift -- The company experiences a 40% ACV uplift when new products are included in a deal.
• Pricing model -- AI agent solutions currently price as uplifts to named or active users, reflecting existing customer purchasing behavior; management acknowledged future evolution to agent-count-driven models.
• Sales productivity -- Stable sales force structure and reduced AE attrition contributed to higher productivity and effective go-to-market execution.

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RISKS

• Fiscal 2027 revenue and free cash flow margin guidance include about a 1-point negative impact each due to shifting professional services to partners and lower interest income from stock repurchases and convertible note settlement.
• CEO McKinnon emphasized AI agent product revenues are "not materially contributing" to the business, and guidance remains conservative due to early-stage adoption.

SUMMARY

Okta (OKTA +22.84%) started fiscal 2027 (ending Jan. 31, 2027) with improved growth in revenue, net retention, and enterprise focus, but explicitly communicated that its newest AI agent products remain immaterial to short-term reported results. Incremental upside is supported by a record AI product pipeline, expanded partner and technology integrations, and accelerating large-customer penetration. Management outlined a disciplined guidance approach, including anticipated headwinds from professional services shifts and lower interest income, while reiterating a robust balance sheet and ongoing share buybacks.

• CFO Tighe confirmed a "prudent approach" to forward guidance, noting specific negative headwinds baked into margin and revenue outlooks.
• Management stated that pull-through from AI and agentic products is raising Okta's overall strategic positioning, enhancing competitive wins and cross-sell momentum.
• The company is actively repurposing its services team for high-level architecture and consulting, while leveraging partners for scale in implementation.
• New products, including governance and privileged access, are gaining traction both as cross-sell and new-customer land opportunities, with several Fortune 1 customers consolidating onto Okta's platform.
• Deal sizes for AI agent solutions are already large, even though volumes remain early stage; management expects increased deal counts to drive future growth.
• Management described a multi-cloud, multi-platform identity and agent governance vision, with neutrality and deep integration as central differentiation points.
• CEO McKinnon stated, "over 90% of them have agents in production and only 22% of them are confident that they have them governed," highlighting a significant and quantifiable customer need.
• Customer conversations indicate that agentic AI adoption is underway, but formal security programs and governance rails are only now being established.

INDUSTRY GLOSSARY

• ACV (Annual Contract Value): The annualized value of recurring customer contracts, often used to assess deal size and customer segment contribution.
• RPO (Remaining Performance Obligations): Total contracted, yet-to-be-recognized revenue, providing visibility into future topline growth.
• Agentic AI / Agentic Identity: Refers to autonomous software agents in the enterprise that act on behalf of users or processes and require independent security, governance, and identity controls.
• GSI (Global Systems Integrator): Large consulting and implementation partners leveraged for scale, service delivery, and go-to-market expansion.
• Privileged access: Controls and mechanisms to govern and secure elevated system or application access within an enterprise, distinct from standard user access management.
• SIAM (System for Cross-domain Identity Management): Industry standard or conceptual framework for managing identities across multiple platforms or security domains.

Full Conference Call Transcript

Todd McKinnon, our chief executive officer and cofounder and Brett Tighe, our chief financial officer. Eric Kelleher, our President and Chief Operating Officer will join the Q&A portion of the meeting. At around the same time the earnings press release hit the wire, we posted supplemental commentary to our IR website. Todd's meeting will include forward looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 2000. 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 ks. 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 financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP.

The reconciliation between GAAP and non GAAP financial measures and a discussion of the limitations of using non GAAP measures versus their closest GAAP equivalents are available in our earnings release. May also find 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 then unless otherwise noted, each such reference represents a year over year comparison. And now I would like to turn the meeting over to Todd McKinnon. Todd?

Todd McKinnon: Thanks, David, and thank you everyone for joining us this afternoon. We are pleased with a strong start to FY 2027. Consistent with recent quarters, our results were driven by strength with large enterprises, partner engagement, and contribution from our newer products. Underpinning this performance is the durability of our core business with the Okta and Auth0 platforms both contributing to steady momentum across our entire portfolio. That said, the number 1 topic of interest from customers to investors is Okta's AI strategy. So today, I will focus my remarks on how Okta is uniquely positioned to capture the AI opportunity. The future of technology is agentic. For Okta, this represents a tremendous opportunity and an even greater responsibility.

Every AI agent inside an enterprise is a new identity. Todd, AI agents are the fastest growing identity in the enterprise. but also the least governed. Okta helps bring agents under control by treating them as first class identities that can be managed and governed by their existing identity management system. We believe, over time, most large enterprises will have more identities than human ones. This shift broadens the attack surface because every agent comes with credentials, privileges, and the ability to act on a user's behalf.

In turn, this raises the strategic value of the identity layer because governing autonomous systems requires the kind of control, audit, continuous intent driven authorization, and real time enforcement only an identity platform can deliver. To help our customers confidently secure this shift, we are building on 3 unique advantages, each with powerful network effects. Distribution, product breadth, and neutrality. Todd, I will cover all 3 starting with distribution. Okta pioneered identity for the cloud era. Over the past 17 years, we have built the most modern, and comprehensive identity platform, which is now the identity system of record trusted by more than 20 thousand customers. In the agentic era, identity becomes even more foundational.

When a customer secures their agents with Okta, they are not taken on a new platform. They are extending the trusted foundation they already rely on with Okta. We have already seen how our customers benefit from this expansion in other parts of our business. Customers are finding value in unified identity system as Okta Identity Governance was once again the leading contributor among our new products. This distribution flywheel is evident in our results. Our new product portfolio represented approximately 25% of Q1 bookings, a meaningful increase from Q1 last year. We see a 40% ACV uplift when new products are included in a deal.

The same customers who trust Okta for workforce and customer identity are extending that trust into agent identity. Our second unique advantage is product breadth. We are the only vendor with solutions that address both sides of the agent security problem. Okta for AI agents, which became generally available last month, gives enterprises a single control plane to discover, govern, and manage agents across their organization. It is the first and best implementation of the blueprint for the secure Agentic enterprise, an industry framework for bringing agents under control by answering the 3 that have dominated my customer conversations over the past several months. Where are my agents? What can they connect to? And what can they do?

Enterprises need to maintain visibility and control over their sprawl of agents. Ensuring they have governed identities, consistent access policies, and ways to shut them down to secure every agent end to end. Okta provides customers with centralized visibility into agents with identity governance capabilities, including ownership assignment and life cycle management. While giving IT and security teams critical security controls to deactivate rogue agents. For developers building AI agents, Auth0 for AI agents provides the identity foundation to ship secure agents inside their products. Auth0 for AI agents secures agents APIs, and users effortlessly for B2B, B2C, and internal apps, all backed by the enterprise grade auth they already trust.

In tangible terms, pipe generation in Q1 was strong, driven in part by these 2 new products. The third unique advantage is neutrality, which is more important than ever. The AI landscape is evolving rapidly. Customers need an identity solution that frees them to choose whatever technology serves their business best. Without fear of vendor lock in. As the lead and independent neutral identity platform, Okta gives organizations the flexibility to do exactly that. In the same way enterprises run workloads across multiple clouds, they are deploying agents across various platforms like AI, Anthropic, Google, Microsoft, Salesforce, and a growing set of open source frameworks.

Managing and securing an autonomous workforce requires a neutral independent identity layer that others cannot provide. In practice, cloud providers, model providers, and agent platforms are partnering with Okta to securely manage agent identities as they continue to proliferate across the enterprise. Okta is the only modern identity platform purpose built to sit above the agent ecosystem. And it federates with whatever identity provider a customer runs. That means the opportunity for Okta for AI agents is not limited to our existing workforce customers. It extends to every enterprise with a multiplatform AI strategy. These 3 advantages are unique and mutually reinforcing.

The more organizations use Okta to secure their agents, the more identity signals flow into our platform, and the stronger our governance and detection becomes. And our neutrality allows us to secure current and future agent frameworks for customers, allowing Okta to capture more of the addressable market. Neutrality becomes even more important when it comes to technology partnerships and integrations, like the traditional cyber landscape, no single company can address the AgenTek security market alone. that is why we have partnered with AI leaders from ISVs to hyperscalers to frontier AI vendors and I would like to highlight a few of those partnerships today.

We have entered into a partnership with ServiceNow that integrates their AI control tower product with Okta for AI agents. Our partnership with Google brings centralized identity governance and access control to Google's agent gateway. Okta for AI agents now integrates with Amazon Bedrock Agent Core to provide customers with identity governance capabilities for their agents. We were a launch partner for OpenAI's release of GPT 5.5 trusted access for cyber.

And finally, we are collaborating with Anthropic in a number of ways from testing Anthropic's Claude 3 preview model as part of Project Lasswing, to a new integration between Okta Identity Security Posture Management with the Cloud Compliance API. it is still early days, but the AgenTek era is fundamentally transforming how we deliver success for our customers. By leveraging our unique advantages, great products, deep partnership, and industry expertise, we are well positioned to help customers thrive in this fast moving landscape. Which will unlock a new growth vector for Okta. Wrap things up, FY 27 is off to a strong start as we look to build on our momentum as we move through this year and beyond.

I want to thank the entire Okta team and our loyal customers and partners who put their trust in us every day. And now here's Brett to cover the financial commentary.

Brett Tighe: Thanks, Todd, and thank you everyone for joining us today. The investments we have made in product innovation, our go to market team, and partner network are yielding tangible results. We are pleased with the strong start to FY 2027 and are confident we are on the right path to accelerate the business. My commentary will provide insights into our Q1 performance and then move into our outlook for Q2 and FY 2027. I will start by highlighting the strength we saw in our go to market performance. As a reminder, at the beginning of Q1 last year, we further specialized the go to market team into Okta sellers addressing security and IT buyers, and Auth0 sellers, addressing developer buyers.

The teams are now fully settled into place, allowing us to start this fiscal year with far less change. The stability of the sales team coupled with strong execution led to positive go-to-market KPI and improvements. Including increased sales productivity, strong pipeline build, and low AE attrition. We are also seeing the investments we have made in our partner initiatives take root as partner source bookings experienced a meaningful increase. Moving on to our balance sheet and capital allocation. Including multiple million dollar plus deals in Q1. We had another strong quarter of cash flow in Q1 and ended the quarter with a very healthy balance sheet consisting of approximately $2.6 billion in cash, cash equivalents, and short term investments.

Next month, our convertible notes reach maturity, and we will settle the remaining amount of $350 million in cash. Over the course of Q1, we repurchased and retired just over 3 million shares, for a total cost of $241 million. $680 million remains under the $1 billion repurchase program that we launched in January. As we look to take advantage of what we believe to be an undervalued share price. We continue to regularly evaluate Okta's capital allocation priorities to ensure we are well positioned to deliver sustainable long term value to shareholders. Now let's turn to our business outlook. Our guidance philosophy is unchanged as we continue to take a prudent approach to forward guidance.

For the second quarter of FY27, we expect total revenue growth of 9%, current RPO growth of 11%, non GAAP operating margin of 26%, and free cash flow margin of 20% to 21%. For the full year FY27, we now expect total revenue growth of 9% to 10%, non GAAP operating margin of 25% to 26%, and a free cash flow margin of 27% to 28%. As I called out last quarter, the FY27 revenue guidance includes about a 1-point impact related to a strategic decision to shift more of our professional services business to our partners, specifically global systems integrators. This change will result in lower professional services revenue and is expected to start to materialize in Q2.

In addition, the FY 2027 free cash flow margin guidance includes about a 1-point impact related to lower interest income due to the combined impact from the stock repurchase program and our intent to settle the remainder of the 2026 notes in cash. To wrap things up, we are optimistic about the trends we are seeing in the business. We have been disciplined with our cost structure while investing for growth. Putting Okta in a great position to extend our leadership in identity security. We have demonstrated exceptional leverage in our model and are positioned to deliver profitable growth for years to come. With that, I will turn it back to David for Q&A. David?

Dave Gennarelli: Thanks, Brett. I see that there are already quite a few hands raised. I will take them in order until the top of the hour. And in the interest of time, please limit yourself to a question. So with that, we will take the first question from John DiFucci at Guggenheim.

Analyst (John DiFucci): Thanks. Thanks, David. Thanks, everybody. Jon, you guys. Really nice to see. I guess I am gonna stick. I was going to-- I have a couple, but I am going to have 1, David. And it is going to-- it is going to lead into what Todd was talking about with AI. it is not when I like to ask usually, but I think based on our work anyway, you guys have done a great job of gaining AI mindshare among the channel. Mike, the channel is talking about what a good job you are doing that and getting in front of customers. But we realize it is still early.

Can you talk about how this is materializing in the market How-- like, are customers actually at the at the point where they are actually securing agents yet, Are they just talking about it, or are there a lot of them that are not even really doing that, and you are trying to make sure you are in front of it? Thanks.

Todd McKinnon: Hey, John. The when let me say-- let me set the stage for you out there. I have spent the last 6 months I have-- I am on this goal to talk to in person face to face with our top 100 customers. About 75 customers in. And when you mix that with a bunch of other conversations, here's what is going on. Everyone is deploying agents in some way, shape, or form. But they are really just starting to think about and put in programs in place to lay out the rails of governed managed adoption.

So a concrete example is you will have a development team that is using Cloud Code, but it is connected to get the it is connected to GitHub and their Jira system with static tokens in the local developer box. So that company is using agents but they have really done it in a haphazard, non secure way. And what is happening now is they are figuring out those rails. They are figuring out how they are gonna have secure connections, have a system to monitor where all the agents are, have the ability to support it from multiple platforms.

And that is why you are seeing the record interest and the record pipeline for what we do with for AI agents and Auth0 for AI agents. Reality is of these products, they are-- it is still early. They are not materially contributing to the-- to the business in Q1. Fact, we are still being prudent in our guide. They are not even you know, they are they are a little bit in the guide, but not significant in the guide. But it is gonna be big. We are we are pouring a lot of R&D effort into this and focused on it. And the interest is super high unlike anything we have ever seen.

And I think it is because we have focused on it. We have a good story and good thought leadership, as you mentioned, with the channel. I think the another big reason is that it is ours to win because they are used to looking to us for trusted infrastructure that they use to connect their employees and their customers all these resources. So it is very natural to say, who can really manage these connections and give me these governed rails for all these secure connections, where my agents are, what they are doing, what can they do, it is a natural fit for us.

I think as they build out this infrastructure, we are in this really great position to have this be a super meaningful part of the business and TAM over the next, you know, several quarters and several years and that is why we are working so hard to take advantage of it.

Analyst (John DiFucci): Todd, that all makes sense. If you could just and this is same topic. When do you think this will start to happen in mass?

Todd McKinnon: And like I said, you are out ahead of it. Well, 1 thing that is already happening is that we are already starting to get pull through in the sense that these AgenTek AI conversations are raising the strategic importance in many of our customers' eyes of what Okta is. Beyond just workforce access management to this really These guys could be this broad platform across governance, privileged, posture management, identity security, identity infrastructure. And that is having an impact. If you that is in the numbers now. Mike, if you look at our 12% revenue growth, we look at net retention inflecting up to 107.

You know, a cRPO of 12%. that is being driven by Okta being put in a more strategic light because of this thought leadership in AI. And that is and we are that is gonna continue throughout the year as well.

Analyst (John DiFucci): Brett. Thanks a lot, Todd.

Dave Gennarelli: Thanks, John. Next up, let's go to Brian Essex at JPMorgan.

Analyst (Brian Essex): Brett. Thanks, David, and thanks for take thank you for taking the question. I wanted to follow-up on John's question a little bit. So, Todd, would love to know from a macro and spending perspective, I mean, you heard beginning of the year, there was a little bit of caution around IT security budgets. And then we started hearing about security getting access to budgets outside typical budgets, whether it is, like, marketing budgets and so forth. And now we are starting to hear about, like, panic or incident response. Spend now that Methos has come out, Lasswing, which you mentioned. I think CIOs a little bit fearful of how the threat environment might accelerate.

So could you-- could you tie that back into what you are seeing for demand and access to IT budgets? Are you getting that incremental spend Is the panic around the threat environment a headwind to your sales cycles, or are you benefiting from it? We would love to just get you know, what you are hearing from customers.

Todd McKinnon: So when we talk to customers, they are they are cyber professionals, and they are entrusted with keeping their organization secure. So any kind of intelligence they can get, any kind of, like, edge or information, whether that is something on the dark web or that is some new model, they are they are all over it. And that there is ton of energy around getting access to Methos and Lasswing and OpenAI's new model. So they are very interested in that. So that being said, I think the world and the population is extrapolated that from thinking that they are panicking and changing their priorities. And that is not true.

I think what it is doing is it is everyone is reinforcing the fundamentals. They know what they have to do. there is been zero days forever. Now there is gonna be more, and we can debate how many more. But they have known what they have to do, have to have a good zero trust environment. They have to have solid identity. They have to make sure they have a patching process. They have to make sure they have visibility. So it is it is I think what I am seeing is that boards and CEOs are saying, know this Agentic thing is real. We gotta put the guardrails in place for that.

And we know that security is real, we are gonna spend money on that. And it is the reality of it Brian, is that it is the fundamentals. it is identity. 80% of breaches are go through identity. And, you know, you know you have to patch your systems. You know you have to have a good multilayered defense and zero trust so you can defend from multiple ways. And so that is I think that is why we are so well positioned to be that key identity platform in an unmatched array of products that no 1 has. No 1 has governance PAM, identity infrastructure, identity security, agentic story.

So that is why we are really excited about what is going on.

Analyst (Brian Essex): that is helpful. But are you seeing that materialize in, like, accelerated sales cycles, or is this more of a conversation?

Todd McKinnon: So I think this return to the fundamentals and knowing you have to fix your fundamentals is helping the identity market and the identity security market. I do not think it is necessarily showing up in agentic identity yet. that is still early. Yeah. But it is accelerating the importance of investing in your identity infrastructure and in your identity security.

Analyst (Brian Essex): A lot of sense. Thank you.

Dave Gennarelli: Brett.

Operator: Let's go to Todd Weller at Stevens.

Analyst (Todd Weller): Thanks. Todd, question for you on AgenTek. You laser into kind of the runtime authorization and policy enforcement area, Could you kind of provide some details on Okta's role in that layer? And then how you interplay with some of these embedded capabilities we are seeing in the hyperscaler and agentic AI platforms.

Todd McKinnon: Yeah. And so sometimes it is it is all moving so fast, and everyone's got their release and their announcement, and everyone kind of says the future of AgenTic is centered around what they traditionally have done. Right? So it is little bit hard to pull apart. Here's here's what Okta does. And it is very much, a key part of what is needed. And that is you know, we connect resources to we connect traditionally as people to resources, whether that the apps you need to do your job, whether that was the apps your customers wanted browse on your website or mobile app. And now it is very similar with agents.

We tell you who your agents are. there is a directory of agents. We can scan multiple platforms and multiple systems and give you that source of truth of where your agents are. And we can help you set a policy on what they can connect to. Agents can read this from Teams, and they can read this from Slack, and they can read this information from Snowflake, and they can read this from GitHub. So it is it is like single sign on or access management. Now the protocols are different, so it is a new product capability, and the way agents are built are different than some of these other apps are built.

So it is a new set of capabilities, but at a high level, it is the same thing. And then you mentioned this last part, which is really key. Which is, like, once you can get into these systems, what can the agent do? What types of data can they see? Is it read only? Is it read write? How does it work? And so we can lay that authorization. Actually, we can surround the agents with an authorization layer that will control what the agents can do without having to go into these large enterprises that we are working with. The FedExes, the Dells, the, you know, the biggest companies in the world, they have thousands of applications.

And it is not realistic to go require the customer to rewire all these applications to set up their agents. So we can surround the agents with an authorization layer that does that in a very scalable way. So it is detecting agents, controlling how they could connect to things, and then what they can do in there. And there is a few fundamental truths, right, that are that are gonna that are gonna play out, I think. 1 is that they are gonna get agenda capabilities from many, many companies. They are gonna have different platforms. They are gonna have hyperscaler platforms. They are gonna have foundation model platforms. They are gonna have open source platforms.

They are also gonna get agenda capabilities from apps. Salesforce is gonna have their Workday's is gonna have their ServiceNow's and on and on. Everything is gonna be a genetic have agenda capabilities. But we know there is they are gonna have to have a directory of these a roster of these things, a policy layer, they are gonna have to make sure they can connect to things. And so we are seeing our customers it is a kind of a no regrets move to pick this independent and neutral identity layer that can solve those fundamental problems without locking them in to, hey. You gotta be all agent core.

You gotta be all Agent 365 or it is agent force. They want flexibility and choice across multiple things.

Analyst (Todd Weller): Thank you.

Dave Gennarelli: K. Let's go to Eric Heath at KeyBanc.

Analyst (Eric Heath): Thanks, David. Congrats, everyone. Todd, just to stick with the theme, I wanted to ask about the pricing strategy for AI agents and understand everything's early. So just curious to get your perspective on the market is in terms of figuring out how we are gonna price these things. And then just any update you might be able to share on the uplift you are seeing from AI agent deals at this point. Thanks.

Todd McKinnon: 1 of our advantages is the is the have 20 thousand customers. And the way I have organized the team to attack this opportunity is all around focusing our strategy in our product road map directly informed by active customer conversations. We have an AI takeoff team that is out there having hundreds and hundreds of conversations with our customer base. Figuring out what they are actually going to do with these agents today, what are their challenges today and tomorrow.

So it is very informed by what the customers actually are doing planning to do. it is not I tell the team, in this area, there is so much hype and so much noise. there is a big risk of science experiments, building things that maybe are not super useful that sounded like a great idea. So our approach is very pragmatic. And focused on the real requirements. And so the way we have done pricing for our products is in line with how our products have been priced in past. They are priced on an uplift to a named user or it is an uplift to a monthly active user.

You might say, hey, Todd, but AgenTex, you know, agent agents this new thing, and why are you pricing them on a active user or a or a named user price? And that is for 2 reasons. 1 reason is that is the way customers want to consume it now. And 2, the majority of concrete use cases in the world right now agents, it is on behalf of a user. it is an agent working on behalf of a software developer. it is an agent working on behalf of a support rep. it is an agent working on behalf of someone in accounting.

So it is very natural how they want to buy it, how they are actually being used. So it is an uplift on a named user, and it is uplift on an active user. We fully understand that is going to evolve, and there will be more autonomous agents that have to be priced not by a user base or not an extension of a user. They have to be the unit has to be the number of agents. it is a little bit tricky because it is very hard to define the number of agents because some person might say, oh, I have 1 thousand agents, but it is really kind of 1 thousand copies of the same agent.

1 thousand instances of the same agent. In other cases, it might be literally 1 instance of an agent acting for many, many different use cases. The industry is kind of figuring that out, and we will figure that over time how to monetize and price that now. But right now, it is we are pricing for market share and reducing friction and then how customers want to buy and that is we think that is the winning strategy.

Operator: The other thing, Eric, I would just add around your question around Uplift and how that is going.

Brett Tighe: The average deal size for these AI specific deals is significantly larger than the average deal size for the rest of the company. So we are seeing a good uplift. Look. We are still early, that is it has the potential to change, but the early signs are these deals are quite sizable, and that is 1 of the reasons why we are optimistic about the opportunity in the long run.

Todd McKinnon: Yeah. And we are just in a different it is a different strategic conversation with customers where you are talking about we are gonna be the backbone for your agent to control plane, and we are gonna also do your customer identity and your person your employee identity versus hey, you know, we want some tactical multifactor authentication thing to pass an audit, and it is maybe done lower level in IT. it is a whole different type of conversation we are in, and that is really driving a lot of this a lot of this positive momentum in the business.

Analyst (Eric Heath): Appreciate that. Thanks, Todd, Brett.

Dave Gennarelli: K. Next, we will go to Adam Tindle at Raymond James.

Analyst (Adam Tindle): Alright. Thanks. Todd, you mentioned a building pipeline on AI.

Todd McKinnon: I wonder if you might help with the size of this. maybe relative to other products in the past. Or maybe a different way to ask that to Brett would be pipeline is-- the pipeline's bigger than anything we have ever seen.

Analyst (Adam Tindle): Yep. No. Very clear.

Todd McKinnon: it is like we do not get paid for pipeline. Very clear. Very clear. So it is it is not a pipeline problem. it is, you know, it is can we execute on turning this pipeline into real dollars. And the reality is if you look at like, if you it was not the AI agent products were not materially did not materially contribute to Q1. it is not there is a little bit of the guidance, but, you know, it is heavily discounted being pretty prudent there. But we are optimistic. I mean, you know, we vote with our dollars, and we are investing a lot of R&D in these products.

And if you just look at what is needed in the world and thousands and thousands of customer conversations, the need is there. And customers are gonna lay down these rails. They are gonna lay down these rails of secure security and identity for their agents, and we are there to, you know, convert that pipeline when you know, as soon as we get the opportunity.

Analyst (Adam Tindle): I see it in Brett's guidance is about a 100 basis points above where he would normally guide q 2 on the past couple of years. So I can see some of that the other part of my question I wanted to ask was the difference between AI for agents in Auth0 versus Okta, the 2 different platforms. Maybe just help us to appreciate you know, the technology aspect of their of that. Is there, like, a big difference in size of pipeline between the 2? Is 1 materializing faster than the other? They are both healthy.

The Okta pipeline is bigger, and I think that is because it is a little bit of a I think I think the companies that are figuring out how to manage and internal agents are further along than people building agents in their products. And into their websites. And I but I think that they are both gonna be big opportunities over Thank you. Congrats.

Dave Gennarelli: Alright. Let's go to Joshua Tilton at Wolfe Research.

Analyst (Josh Tilton): Hey, guys. Thanks for, sneaking me in. Maybe I will call it a 2-parter so David does not kill me. But the first 1 is just really strong short term bookings. I think some of the strongest we have seen in a while. How durable is that growth? And then just maybe my second part, completely unrelated to anything we talked about so far in the call, but it kind of stood out to me in the prepared remarks. Large customers represent 85% of ACV now. Think you guys used to call out 80% of ACV. Maybe just help us understand, like, you know, what is driving that mix shift there.

Todd McKinnon: Yeah. I mean, I can I can take the mix shift? Todd, if you wanna take the first 1.

Eric Kelleher: Yeah. For sure. what is you want me to talk about short term bookings?

Analyst (Josh Tilton): Or Yeah. Yeah.

Brett Tighe: Absolutely. Yeah.

Eric Kelleher: I can get a new 2 as well?

Todd McKinnon: Yeah. I mean, I think that the performance in the business that we think is very, very durable. We do not you know? Mike, if you look at the it is particularly the AI landscape. I was having dinner with a bunch of CEOs of companies, different sizes, and everyone's super worried about their spend in their products and their revenue in their products. Being not durable because it is token spend, and the they worry about products being used. And then someone's gonna look at the spend and stop spending the token spend, and we do not have that. This is critical infrastructure.

This is these are whether it is just core identity, I infrastructure for people or for customers, it is like good news and bad news. The bad news about identity is it is pretty hard to put in place, and it is pretty hard to change. So it takes longer than some of these other categories. The good news is that once it gets in, it is sticky. You are not gonna take it as long as you kind of keep innovating at a reasonable level, you keep good customer relationships, gonna have a very profitable long term relationship.

So, yeah, we are very confident that in these trends of the business that are durable and sustainable and in a lot of ways with what is gonna happen in this AI wave of just getting started.

Eric Kelleher: 1 of the things I will I will add to the durability comment as well is in our results for the quarter, we reported that our new products inventory overall accounted for 25% of our bookings. So while we are not yet seeing an uplift specifically from our AI products given that they are newer to market, that is continued growth and trend in the diversification of our product portfolio, and Todd talked about that today in his opening comments. Customers are continuing to look for us to solve the breadth of use cases they have across all their technologies and all their stack.

And knowing that Okta is going to continue to be the new identity provider growing from access management through governance, and we continue to have a great quarter for our governance portfolio and into privilege access, we had some great wins in the quarter for privileged access as well. All of that is continuing, from a durable momentum base And then as Todd indicated, the newer the additional products now entering the mix with octa for AI agents and Auth0 for AI agents provide further upside to that. So we are very optimistic on the durability of the results we saw For Q1.

Analyst (Josh Tilton): Yeah.

Brett Tighe: Okay. So I will answer a little bit of the first and the second question, actually. So, Joshua, I would say, in general, if you looked at Q1, the strength across the quarter was fairly broad based. As for Q1, you know, usually Q1, as you guys all know, is seasonally our lowest quarter of the year. But if you look at a lot of the metrics in Q1, they were quite healthy, whether it is the pipe gen, whether it is the bookings number, whether it is the AE attrition, AE productivity.

You know, across the board, it looks pretty good for Q1, which we are really pleased with, which is why you hear all the optimism in our conversation today and the prepared remarks, and you see it in the numbers, frankly. Frankly. So I think it is it is very exciting from that perspective. In terms of the 80% to 85%, it is something simply we have been working on very hard. Over the last few years. We have talked to you a lot, a lot about large customers. Right? Talked about the investments we have made into those large customers and getting more large customers.

And so it is really the result of the hard work that we have been doing over the last few years. Can see it in the 100K, which is when you are you are-- greater than 100 k. You can also see it in the greater than $1 million customers. So, obviously, that was growing quite nicely in quarter as well. So I think it is just the result of our hard work, you look at our strategic initiatives this year, FY 2027, large customers is on the top of the board as well. Right?

AI and large companies are really the 2 of the main 4 on the board that we have we have talked with you guys about in the past. So it is mean, it is not hugely surprising numbers or what they are because of all the hard work we have been doing over the last couple of years. So hopefully that helps, Joshua.

Analyst (Josh Tilton): You are helpful, guys. Congrats again.

Todd McKinnon: And I will just you know, hearing that commentary, 1 thing I will throw out there is that the large enterprise opportunity is still we are still relatively early. We have done really well in the mid enterprise, and know, we have a lot of opportunities still in the Global 2000. So it is it is paying off, but we still have a lot of upside there as well.

Eric Kelleher: In addition to all that, we also have not talked yet about the fact that we had a great quarter in pub sec in our federal and state public sector business as well. So across the board, we are very bullish.

Dave Gennarelli: Okay. We will take the next question from Roger Boyd at UBS. Thanks, David.

Analyst (Roger Boyd): Todd, in your premier prepared remarks, you talked about Okta's ability to sit above the agentic ecosystem and that for AI agents is not necessarily limited to your existing workforce customers. I guess, are you seeing your thought leadership and the conversations you are having with customers around agentic identity starting to influence broader identity deals or create bigger competitive wins down the road?

Todd McKinnon: Yeah. I think we are definitely seeing that. We are seeing that the products we have offered for AI agents and this blueprint, this vision we have the industry and AI agents is raising the strategic level of conversations, which is pulling in other products and helping us displace legacy faster and sell more of our existing products and our newer products into new customers and the base. Than we would be otherwise. I say that because the to make it clear that this the AI agent products are still the it is still immaterial, the contribution. With Okta for AI agents going GA in April. They had a good quarter, but it is still small base.

So the pull through is real already, though.

Analyst (Roger Boyd): Brett. Thank you.

Dave Gennarelli: It will go to Peter Levine at Evercore. Brett.

Analyst (Peter Levine): Thank you, guys. Maybe for you, Eric, just to kinda piggyback the prior question. You have been talking about, you know, I think, Todd, you are prepared remarks 25% of bookings. So maybe just talk about IGA, Pam. You know, like, are these competitive displacements versus greenfield opportunities? Just curious to see know, how much of your IGA product today is are you seeing customers attach as a stand alone similar to the privileged access product? I know that is not as mature, but you are really seeing a lot of traction with IGA. So just what you are seeing from a competitive displacement versus greenfield. And are you getting net new customer coming in, you know, buying these products?

Eric Kelleher: We are. Thanks for the question. The reason that I am I am gonna add that comment to the prior is I did not want the breadth and success and continued momentum with governance and privileged access and the rest of our portfolio to get drowned out with all the conversation we have about our AI products. We are very excited about our AI products. But governance continues to be a strength for us. We talked over the past couple of quarters about how governance has evolved from being primarily a cross sell add on product to also now being a land product.

And we are seeing sizable lands starting with governance at some companies that are displacing systems that they have had in place. So we are very excited about the enterprise readiness and robustness of our governance product in the real world deployments. We have some very large customers, including Fortune 1 customers who are consolidating all of their identity use cases onto Okta, including governance and including privileged access. And we are very excited for where we get to. As you mentioned here, a comment about privileged access is further behind governance on that maturity curve. it is it came to market a little bit later. We are continuing to invest heavily in it.

We did an acquisition back in Q3 of Aembit to add capabilities to that. We are we are continuing to invest in that breadth of portfolio, kind of rounding out the identity security fabric. In addition to all the momentum that we are seeing with our great success in the AI product. So we expect that new product portfolio contribution to continue in the future quarters and not be limited to the conversation we are having about AI.

Dave Gennarelli: Brett. Next up, we will go to Shrenik Khathari at Patrick.

Analyst (Shrenik Kothari): Yeah. Thanks for taking my question. So, among the enterprise partnerships that you announced, and given your strength, the ServiceNow AI control tower sounds really interesting, especially because we have heard ServiceNow has started becoming a workflow governance layer for enterprise AI already beginning to monetize it. So can you walk through, the partnership dynamic How is that progressing, or how do you envision the Okta reaching the end customers and budgets earlier in this AI governance process.

As you said, it is it is a there is a lot of players out there Just as a quick follow-up, also tying to earlier comments, are these strategic partnerships also way because mentioned identity is being pulled into broader identity of workflow transformation programs instead of now stand alone. Is that something which is showing up in these kind of partnerships?

Todd McKinnon: Yep. ServiceNow is, as you mentioned, super interesting. They are the product is they want to be the control tower for all AI agents. And what-- what they were really interested with Okta was this kill switch capability. When agents go awry and agents are not following the policy, how do you shut them down? And that can mean a lot of different things. That can mean actually stopping the running of the agent. That can mean quarantining the agent at a network level. there is many different strategies. 1 thing we do really well and that they wanted from us is the ability to sever the connections.

The access tokens, the actual logical connection at the authorization layer to the end resources, and we are really good at that. that is kind of the core of our product. What can these things connect to? What can they do? And people you know, they are everyone's trying to figure out who is gonna be the winner. going to be the losers, and how is the competitive dynamic gonna play out. I think there is gonna be way more working together than people think. We are really excited about our conversations with Amazon and their agent core service now. Agent force from Salesforce, And the message from customers is clear.

They want this identity layer and this connectivity layer to be independent to give them more flexibility. And I think the industry is coalescing around that, and we are we are leading the way there.

Eric Kelleher: And what I would add to that, Shrenik, is this is something Okta does really well. Like, we talk a lot about the importance of neutrality and our philosophy that we wanna meet our customers where they are with the technologies that they are deploying within their companies. We want to make sure that we provide the identity control plane across all of their use cases and all of their vendors and all of their stacks.

And so you will see just our highlights from this quarter, we are really engaging with and partnering with all the major platform players that are active in this space right now. that is 1, because our customers require it, and it is important for neutrality. And it is 2, it is something Okta's been really good at throughout our history. We are an integration company. We have over 8 thousand integrations for our core products through the Okta integration network available today.

And so for us, expanding those integrations with the active providers who are gaining traction right now in this in this time is something that is very natural to us and something we expect to continue as these tools are evolving. And as you all know, the landscape is been very dynamic with different vendors leapfrogging each other. We expect to be partnering with all of them going forward as well.

Analyst (Shrenik Kothari): Awesome. Super helpful. Thanks.

Dave Gennarelli: Okay. We will go to Yoon Kim at Loop Capital.

Analyst (Yoon Kim): Alright. Brett. Thank you. On Brett's earlier commentary that average deal size when AI products are included is much larger than regular non-AI deal? I am assuming that the actual AI deal itself is small and is still very early. So is the larger deal size mainly driven by customers adopting Okta as a platform as they adopt an AI security solution. So in that way, is your AI agent in a way driving the customers to adopt Okta more broadly? And is there, like, a specific go to market or a push to do this when a prospect is showing interest in your AI agent product.

Brett Tighe: To be very clear, and I will let Todd Eric comment on the second part of it, but the AI product itself, what I am talking about when I say the average deal size, that I am only talking about the AI line on the-- on the deal. Not talking about the broader deal. And so it is it is a very sizable deal just for the AI products themselves.

And so then you heard Todd talk about earlier about how we are getting this concept of pull through, like, which is what you are exactly what you are mentioning, which is AI is part of it in some of these deals, but also it is forcing, customers to modernize their tech stack to be able to look at identity and really examine it and make sure it is working for them then that helps the other side of the-- the platform as well. So just wanna make sure that was clear.

And, Todd, you can add anything I might have missed, but that is the that is the general idea of it is the just the line item itself is a pretty large line item at this point. Granted, we are still early on. Potential for it to change, but right now, it is it looks pretty good.

Todd McKinnon: Yeah. In the early days of you know, it is early days for Okta for AI agents and AZero for AI agents, but the as we scale it up, as we kind of convert this record pipeline, it is about doing more deals. it is not actually about doing bigger deals. The deals are big. Which is a little bit different actually than other new products. And even governance 4 or 5 years ago was their initial deals were small, then they got big, then we did more of them. So this 1 is they are already big. We can do more of them.

Analyst (Yoon Kim): Okay. Brett. Looking forward to the progress. Thanks.

Eric Kelleher: 1 just 1 additional comment on this. It ties back to a couple of the questions we had from earlier in the session. Of questions around budget durability for customers. This is 1 of the reasons that the deals are big. And 1 of the reasons we have had we have had great momentum and success with the hundreds of enterprises we are engaging with. And 1 of the reasons our pipeline, feel very, very strong about our pipeline. As Todd mentioned, we have not seen a pipeline like this for new products ever. And all of that is because of some of the statistics we shared in the opening video. Which is customers have a problem today.

They have a problem today where over 90% of them have agents in production and only 22% of them are confident that they have them governed. That is a real problem. it is a measurable quantifiable exposure a customer has right now within their companies, and they need to invest to fix it. And we are working very hard at Okta to meet them at that need to make sure that we have got the products that are going to help them address that exposure. And we are we are very bullish about being able to continue that as we help more and more of our customers secure their-- become what we call the Secure Agentic Enterprise.

Dave Gennarelli: Brett. Next up, we are gonna go to Junaid Siddiqui at Truist. Brett.

Analyst (Junaid Siddiqui): Thanks, David. Todd, the role of the model providers is hotly debated within cybersecurity. Even though it is early days. But to what extent is your participation in initiatives like Project Lasswing and Trusted Access for Cyber translated into measurable improvements in win rates or competitive positioning? And more broadly, how do you see their role evolving in the broader cybersecurity landscape?

Todd McKinnon: it is a really good question. I do not think it is these partnerships have moved the needle yet in real customer conversations. I think we have such a interesting vision and our blueprint is so helpful for customers. that is what is driving it. I do think we need to partner with everyone, including the model providers because they are gonna be providing platforms and agentic scaffolding and infrastructure, and we are gonna fit well with that. And we are gonna make sure that we can take that from a model provider, from an app company, or from a infrastructure cloud and make sure it can help the customer answer these questions. Where are my agents?

What can they connect to? And what can they what can they do when they do connect? And I think in terms of the model providers, how they are gonna play in the broader cyber ecosystem, it is going to take a village. I think we have seen that we have seen that in cyber forever. I think consolidation in cyber never seems to work. It all seems to get to a certain point and then new threats emerge, and the companies that are trying to consolidate cyber have such a hard time integrating amongst themselves. It kind of fractures apart. Think that will continue.

I think cyber and the agentic world is gonna take a village, and we are gonna have to make sure it is integrated together and make sure we have layered defenses and that is why I think it is really healthy to be coming into this conversation with this open mindset of hey. We have our lane. We are gonna try to provide the best identity front foundation in the world and then connect around that in a standard way that helps customers get great outcomes.

Analyst (Junaid Siddiqui): Brett. Thank you.

Dave Gennarelli: Alright. Let's go to Fatima Bilani at Citi. Fatima, you are on. If not, we are gonna go to Gray Powell at BTIG.

Analyst (Gray Powell): All right. Thanks for taking the questions, and, yeah, congratulations on the results. it is good to see. So may maybe just sticking with the AI topic. At RSA this year, the messaging from just different identity vendors on agentic security, I mean, I have to admit, it all sounds pretty similar. Everyone's talking about some form of agent discovery, guardrails, identity governance. And a lot of the CISOs that we speak to were just well, they are confused. So I understand you have strong relationships. I guess my question is, like, how does Okta cut through the noise in the market? Differentiate yourself, you know, get to the people that are actually in charge of making decisions?

Todd McKinnon: The what first reason that is why we wrote this blueprint, Gray. We are trying to people want a blueprint. In fact, it was based on a customer conversation I had. He this guy, he was a great customer of Okta, and he would been in the valley visiting a bunch of companies, and he said the same thing you said. he is like, Todd, you are all I do not know what you are saying. You are all the same thing. it is like, you should really you should come up with, like, a blueprint for us. I said, that is a great idea. So that is why we have made this blueprint.

It kind of tries to make clear tries to define the swim lanes. And it is been really well received, and it kinda makes it very clear that there is a bunch of stuff you need to do. Here's the different roles, and here's the different ways to do it, and here's what Okta's doing, and here's-- so, yeah, that is 1 way. And the second way is just customer traction. As we get customers live and, you know, we keep saying that the agent products have are just getting started, but there is still many, many customers on them going live.

And so once that happens, that is gonna be very valuable. that is going to tell those stories and make sure everyone else in the world knows about them and that, you know, that is how you set standards, and that is how you take go from, like, a blueprint and a concept into actionable implementations that people can pivot off of and have their own success. So that is the plan.

And, you know, like I said, a lot of it is it comes down to the reason the I believe strongly that the reason why we are seeing so much pipeline and early momentum is it is because, like I said, we have a good product and a good vision. But it is also it is, you know, because we are in the right position and people give us the credibility to do this. They we have been connecting people to all these resources in a way that is scalable and neutral and the Genentech problem is pretty similar.

I mean, it is different protocols and how they speak and some of the development tools are different, but conceptually, they think of it in the same bucket, which pushes it-- puts us in a good position, I think.

Eric Kelleher: Yeah. that is 1 thing I was going to highlight as well to your point, Corey, about how we cut through the noise is the first point that Todd talked about in our differentiation is our distribution. And our footprint right now is over 20 thousand enterprises that already trust us as their provider to secure identity for their humans and their service accounts. And for those conversations, these customers are gonna look to us first as the natural for them as they think about how they secure agents in their model as well. And so we really we really had very engaging conversations across the board on this.

And because we were responding so directly to what we are hearing these customers need, we have had great success in turning that into pipeline. And so that is why you hear some of the commentary we are sharing today.

Analyst (Gray Powell): All right. Thank you very much. that is really helpful.

Dave Gennarelli: Okay. I see Fatima back. Go ahead, Fatima.

Analyst (Fatima Boolani): Thank you so much. I apologize for, the kerfuffle earlier. Todd, this question is for you. it is a strategic question. I know you have made the choice to offload professional services. To some of your GSI partners. But it is an interesting dynamic we are seeing in broader cyber space and even with larger tech companies that are actually leaning into services on a more direct basis. So I am wondering if there is still an opportunity for you to, maybe take a more strategic and architectural stance as it relates to building and defining strategies around agentic identity, cybersecurity architecture?

So just curious about that sort of dichotomy because you have decided to step away from it, but all your peers are kind of leaning more into it. So would love to know.

Todd McKinnon: it is it is a great it is the great irony of our industry right now. So we are gonna we are gonna automate all the jobs except for the forward deployed engineer. We need people to do that. Right? And so we are doing our services team is evolving into that architectural, overseeing the overall high level consulting and helping the GSIs get enabled to do that and then do that on their own. that is exactly where we are going. We think about it as we are not getting rid of our services. We are repurposing them so they can be in this architectural, consultative type role And then the GSIs can help us just get the scale.

Because overall, there is there is there needs to be way more capacity to do Okta work in the world and, you know, then we need to improve that and increase that, and that is what this move is trying to facilitate that while at the same time making sure the thought leadership and the architecture and the strategic stuff can still be done by our the core of our team here.

Brett Tighe: Also, keep in mind, it was a decision to try to get the partners sourcing more business for us. And if you remember, some of the comments we had earlier, we talked about partner-sourced ARR in Q1 did really well. And partner pipe gen in the quarter also did really well. And so yes, it is only 1 quarter. Let's not get overly excited 1 way or the other. it is a nice first data point for us to suggest that the strategy is the right strategy to go down the path of. And, obviously, we will update you guys as we go through the balance of the fiscal year, but that was also another reason to do this.

And we see these early data points that are suggesting that it was the right decision.

Eric Kelleher: And just 1 clarification for the way you frame that question is, I would not-- we would not describe it as we are stepping away from services. We as Todd mentioned, we are focusing on exactly that high caliber work that you described with our customers. And partnering with the GSIs to give us the scale as Todd mentioned. So we are we are very aligned with the scenario that you identified.

Analyst (Fatima Boolani): I appreciate that. Thank you.

Dave Gennarelli: Okay. Next, we are gonna go to Gabriela Borges at Goldman Sachs.

Analyst (Gabriela Borges): Hey. Good afternoon. Thank you. I have a different glosswing question. Todd, when you and your R&D team, when you get a hold of some of these next generation models, what are you doing internally, either from a vulnerability management standpoint or from an R&D roadmap standpoint? And, Brett, the follow-up here is how do you put the right guardrails on your inference costs such that you do not find yourself spending on tokens inefficiently? Thank you.

Todd McKinnon: Yeah. So we are like everyone else. We are using these models. We are testing our own stuff. We are finding some interesting things. But I think what people miss is that there is a lot of zero days out there. And, you know, we may debate how many more we find with these new models. But it is not taking the number from 0 to 10. You know? it is some it is it is not 0 to 1. it is there is many out there. And so everyone has to have guardrails in place, and everyone has to have capabilities in place to defend fast patching. Multi layered defense. So we are we are no different.

We are putting those guardrails in place in our products and our processes, etcetera, etcetera. The cost thing you are talking about is real. The inference costs and the AI tooling and what it is driving in terms of expenses. And I think you are gonna see at Okta and then over the whole industry over the next 6 to 12 months, you are going to see a little bit more scrutiny in terms of ROI. What are you getting from all this, the inference cost you are spending? How is it translating Which is which is not surprising given the amount it is rising across the industry.

And you and you we are gonna come out the other side with a more balanced ROI driven investment portfolio of how we spend these things. And we are optimistic about how it is gonna work out very well for us.

Brett Tighe: Yeah. I would just add that I remember 1 of the number 1 thing we have talked about for years is become 1 of the most world, 1 of the most secure companies in the world. Right? So it is still priority number 1. And this is just another tool for our security teams to try to achieve that goal. Right? So just like Todd was saying, we are gonna prioritize it, and, know, develop an ROI and all that good stuff like any other investment. But it is still in service of that goal of becoming 1 of the world's most secure companies out there.

Todd McKinnon: Yeah. And in that example, it is not limited to the Lasswing, but the ChatGPT-5 for Cyber, and we continue to make those investments. Yeah.

Analyst (Gabriela Borges): it is good stuff. Thank you.

Dave Gennarelli: Okay. Next up, we are gonna go to Rudy Kessinger at DA Davidson.

Analyst (Rudy Kessinger): Hey guys. Thanks. Congrats on the quarter. I am curious how you are approaching pricing some of these agent deals in terms of the number of agents. We have heard in some field conversations you guys are doing deals where basically, the contract is for an unlimited number of agents. The good thing is in those deals, I am hearing that the spend is very, very high relative to your existing spend in other products. But you know, the risk there is what if the customer does not, you know, get to unlimited agents and there is downside, or, you know, other things that could happen.

So how are you how are you approaching that with customers and factory to get into contracts?

Todd McKinnon: I do not-- there is no-- I do not there is no unlimited If there is unlimited, it is time bound. So there are there have been some deals where we have done like, a year and then it is like, we are gonna figure out after a year what the how the use case really unfolded and how to how to snap it back to the kind of normal pricing model. But there is no it is it is not unlimited in the sense of time and volume.

But I think that is just because it is an early market, and there are some uses and some environments where there is more experiment experimentation that is needed, and they wanna sign a deal. We wanna work with them, and so we will do maybe a not a multiyear deal, but a 1 year deal in that fashion.

Dave Gennarelli: Next up, we are gonna go to Ben Bowen at Cleveland.

Analyst: Thanks, David. Good afternoon, everyone. I appreciate the question. Todd, you referenced a bit of a return to fundamentals, in relation to, I think it was Mr. Essex's question on mythos. Could you talk about how this is influencing the core workforce and SIEM pipelines and the opportunity in particular around SIEM to maybe disintermediate some of the DIY Frankenstein solutions. Thanks.

Todd McKinnon: Yeah. I think the I think the SIEM-- I think the impact of this is it is not as big right now as the governance and privilege and access management. I think that is call that core cyber core cyber hygiene and identity infrastructure, identity security. Think that is getting more of a pull-through at this point than the SIEM side. I think the SIEM side is coming because I think you know, a lot of agents and agentic workflows right now are internal automation opportunities. You are gonna see better customer experiences. You are gonna see better support experiences. That 1's actually further along than some of the others customer support.

But I think it is gonna be a big pull through for SIAM as well. And it is like you said, it is the pace of change and the pace of innovation. Once 4 of your competitors have a better agentic customer experience, you gotta get your experience upgraded quickly, and you are not gonna have enough time to you know, roll your own there. You are gonna have to use a package solution. I think I think that will happen eventually.

Dave Gennarelli: it is the top of the hour. We are gonna take 1 more question from Jonathan Ho at William Blair.

Analyst (Jonathan Ho): Thank you for squeezing me in. You mentioned multiple times the stability that you have seen in sort of your sales workforce with, you know, some of the transitions that have happened there with lower attrition, higher productivity and pipeline build. I am just trying to understand how you feel relative to where your go to market is today versus historically? And, you know, can we see more benefit from this over time? Thank you.

Eric Kelleher: Yeah. We feel very positive on the state of go to market right now. We spent a lot of time last year explaining our expectations of the impact of specializing on our buyers for IT security with the platform and developers with the Auth0 platform. You also heard us talk about the importance of continuity and giving people time and tenure and time with their accounts and time to ramp into product over the past few quarters, we have shared our positive view on the improving trends in sales productivity and in AE retention, the inverse of AE attrition. So we feel we feel very strongly that engine is where it needs to be right now.

Because of that, we added some selling capacity in Q1. We spoke about that last quarter. And we are continuing to lean into the model that we believe is working. So we are optimistic we can continue to see increased retention and increased productivity as people get more and more time within their territories. With the expanding portfolio of products they can bring to their customers as well.

Todd McKinnon: I think we have the right team and the right organization to convert this huge pipeline. We are excited about doing that.

Dave Gennarelli: Alright. that is all the time we have. We appreciate it. Before you go, just wanna let you know that in addition to hosting on-site and virtual bus tours this quarter, we will be attending the Evercore TMT conference on June 3 in San Francisco, the Nasdaq conference on June 10 in London, and the FBN virtual technology conference on June 10. So we hope to see you at 1 of those events. Thanks. Everyone. Thanks, everyone.