Okta at BMO 2025: Strategic Focus on Market Specialization

On Tuesday, 10 June 2025, Okta Inc. (NASDAQ:OKTA) participated in the BMO 2025 Virtual Software Conference. The discussion provided a strategic overview of Okta’s future direction, emphasizing both the company’s growth potential and the challenges it faces. Key topics included Okta’s focus on go-to-market specialization, product portfolio expansion, and competitive positioning, particularly against Microsoft. However, the company also acknowledged uncertainties in the macroeconomic environment and the impact of federal contract renewals.

Key Takeaways

• Okta is prioritizing go-to-market specialization to leverage its product portfolio.
• Microsoft remains a significant competitor, especially in workforce identity.
• The company aims to reduce variability in financial guidance as it matures.
• Okta is optimistic about growth in non-human identity and governance markets.
• Federal contract renewals introduce short-term uncertainty.

Financial Results

• Federal Exposure: The U.S. public sector accounts for less than 10% of Okta’s business, with federal contracts requiring annual renewals, adding to short-term volatility.
• Guidance Philosophy: Okta aims for more stable financial guidance, reducing conservatism compared to past years, while considering macroeconomic factors.
• Q1 Performance: The company reported strong new logo acquisition and business growth in Q1.
• Governance Revenue: Governance revenue stands at $100 million, with an additional $300 million from lifecycle management and workflows.
• July CRPO Guide: A $20 million decrease in the July CRPO guide was attributed to go-to-market specialization and macroeconomic headwinds.

Operational Updates

• Go-to-Market Specialization: Okta is focusing on product specialization across geographies and segments to boost new product sales and market penetration.
• New Logos: Emphasis is on acquiring high-value logos, with over 80% of ACV from deals greater than $100,000.
• Workforce Identity: New products in governance, PAM, device access, and threat protection are being developed.
• Governance Penetration: Currently, 1,300 of Okta’s 20,000+ customers utilize governance solutions.
• Lifecycle Management: This is a subset of governance, contributing to the overall strategy.

Future Outlook

• Growth Drivers: Okta expects accelerated growth in workforce and customer identity segments.
• Governance Growth: Significant increase in governance penetration is anticipated over the next three years.
• PAM Contribution: PAM is expected to significantly contribute to growth by 2026 or 2027.
• Non-Human Identity: Okta plans to capitalize on the non-human identity market, expecting it to drive growth in the coming years.

Q&A Highlights

• Federal Uncertainty: Elevated uncertainty in U.S. federal government impacts contract renewals.
• Competitive Dynamics: Microsoft is a major competitor in workforce identity; customer identity decisions often involve build-versus-buy considerations.
• Governance Competition: Okta is improving win rates in governance as its product matures.
• Non-Human Identity Competition: While CyberArk is currently seen as a leader, Okta aims to change this perception.

For a detailed understanding of Okta’s strategies and market positioning, please refer to the full transcript below.

Full transcript - BMO 2025 Virtual Software Conference:

Keith Bachman, Analyst, BMO: Alright. Good morning. Good afternoon, everybody. It’s Keith Bachman here from BMO. We’re continuing on our virtual software comp conference.

Thrilled to have Okta and Brett, and we’re just gonna go ahead and launch Intuit normal format. If anybody wants to ask questions, you can email me or there is the ability to do that on the on the webcast here. Let’s just jump into it, Brett. Thanks very much for joining us today. Let let’s start out broad and then go to some product questions.

But as you think about the the next twelve to eighteen months in totality, what are you most excited about? What are the potential to drive attention to the upside and corresponding what, you know, where would the concerns be?

Brett, Executive, Okta: Yeah. of all, thanks for having me, Keith. Appreciate you hosting us today. You know, there’s four things that we’ve talked about, and I’d just for the last few quarters. One is becoming one of the world’s most secure companies.

The other one’s new product introduction. one is partners in terms of penetrating the partner ecosystem and and getting leverage there. And the one is around go to market specialization and further specializing our field. From my perspective, all of them are important, but the one I’m probably the most excited for in the next twelve to eighteen months is likely go to market specialization and further specialize in the field. And it’s a little bit of a cheater answer in the sense that one ties to the other.

From a go to market specialization perspective, the reason why we’re further specialized in the field is that we know focus works. We look at US public sector. We’ve done really well over the over the years there. That’s a specialized Salesforce. If you look at USSMB, we specialized it last year, and they, they had a really good q four, a a solid q one.

And so you could see it takes time for these to take these things to take effect. Right? We’re not just expecting these these changes to be all overnight, everything goes perfectly. It takes time. There’s a there is a a cost of change.

And so when you think about specialization, we know that that focus works. And so that’s why I’m most excited about it. And when we think about diving down, like, why does focus work and why do we do this now? If you look at the product portfolios on both sides of the business, the Okta side and the Osteo side, they are very deep, and it is very hard for one individual individual to be able to sell all of it. And so we felt further specializing by product in a lot of our geos and segments was the right thing to do, and that goes back to number two that I mentioned a ago, which is new product introduction.

We believe that eventual focus, that eventual knowledge of your specific area will make it so that we can sell more of those newer products, which we are really excited about. So although go to market specialization is my number one, I think it it ties in nicely with new products as well. I’m excited about all four, by the way. I think they all have a potential to help us grow in the medium and long term. But I if you’re gonna force me into one answer, go to market specialization.

Keith Bachman, Analyst, BMO: Perfect. Perfect. It’s certainly been an interesting journey for Okta over the last number of years on on sort of go to market, but it does seem like you’ve hit your or or or much better rhythm. Maybe as you think about two things. One, just remind us on your FETI exposure this year and and how you’ve made that construct within your guidance?

Brett, Executive, Okta: Yeah. So, you know, federal is part of US public sector. You heard me just talk about it. We’ve done quite well there, but we we’ve talked about it in the past. It’s less than 10 The US public sector is less than 10% of the entire business, and then federal is a subset of that of that that business.

We’re being thoughtful about federal primarily because I think we all read the news just like everyone else. There are levels of uncertainty in the US federal government that are probably elevated relative to other areas of the economy. And so when we think about it, we’re being thoughtful about it. Like I said, it’s still a small percentage of the business, but as you know, Keith, federal contracts are one year deals. And so we have to renew that portion of the business every year.

And so given the level of uncertainty, the heightened level of uncertainty that we see there, we’re being thoughtful about that. And if you think about my macro comments that I said a couple weeks ago, Doge and US Federal was a subset underneath that macro umbrella because we do see the level of uncertainty there, you know, growing over the last couple of months. And so we’re we’re being thoughtful about that in the guidance that we we gave out a couple weeks ago. So we’re excited about it in the long run. We think short term turbulence because, you know, there’s uncertainty right now.

But long run, if you think about what we’re doing, what are the three major things that we do? Security, modernization, and efficiency. What are these three things that the US federal government have said that they want? Security, modernization, and efficiency. So we feel like we’re lined up well for the long run, just maybe a little bit turbulent between, you know, in the short term.

Keith Bachman, Analyst, BMO: Yeah. Fair enough. Okay. Before we go into products, I wanna ask one more bigger picture question is you’ve been pretty clear in your comments that the for lack of a better word, the guidance ups or the upside relative to previous guidance, that that’s not how you’re framing this year.

Brett, Executive, Okta: Yep.

Keith Bachman, Analyst, BMO: And that there’s less upside to guidance is the way investors should think about it. But I’m trying to understand why why the different philosophical approach as you you gave guidance for this year?

Brett, Executive, Okta: Yeah. I think it’s, you know, right time, right place. Right? If you look at our growth rates this year relative to maybe our growth rates two, three years ago, you know, if if we were to con continue to be those levels of conservatism, it it just wouldn’t quite make sense to do that. And, frankly, we’re a much larger company.

We should be able to get closer to the pin. So I think that there those are the two main reasons is, you know, just size of company and the growth rate that we’re growing at, we feel like we can we can do better than what we have in the past.

Keith Bachman, Analyst, BMO: So you’re trying to reduce the variability because you got more I mean, portfolio, you’re a broader company, so you reduce the variability of the variances associated with that.

Brett, Executive, Okta: Yeah. Variability, know, there’s a difference in, you know, hey. If you’re growing nine to 10% of revenue growth like we just guided versus growing 30%, maybe your maybe your approach changes a little bit. And we feel like as we mature as a company, it was the right thing to do and and and really wanna be able to, you know, get closer to the pin. So

Keith Bachman, Analyst, BMO: Okay. Well, it’s not something I’m familiar with is getting close to the pin. But if you think about we’re also pretty clear that, you know, I think investors were were sort of asking a question on is there more conservatism this year? And and and as you approach guidance, particularly with the the Fed uncertainty and maybe the macro deteriorating, but but just try to square that peg in terms of how that how your answer to that comment fits into the know, you’re trying to introduce less variability in the guidance.

Brett, Executive, Okta: Yeah. I think if you look at the guidance, there’s two factors that are in there right now. One is the go to market further specializing the go to market organization, which is the same level of conservatism that we’ve talked about for the last couple of quarters. We talked about that starting in q three of f y twenty five, talked about our q four of f y twenty five, and then reiterated it, this last quarter. So that has remained the same.

So we we we still have the same amount of conservatism, which is less. Now we did add in a small amount for for macro, but if you sum the two up, it’s still not nearly the level of conservatism that we’ve had in the past. So we just wanna make sure everybody understood we’re thinking about macro just like I think many other are many others are given the level of uncertainty out there, know, in the business environment.

Keith Bachman, Analyst, BMO: Okay. Let’s do some product related questions, and we’ll try to I have more questions so we could possibly fit in in the time allotted, but I’ll try to be reasonably responsible in asking the question. But let’s start, lack of a better word, is core. And we think about core as both the, you know, the customer and the employee side. And what are the drivers you think on the employee side, specifically?

And and how do you think about the context of of new logos? I think what investors worry about is is the market saturated and there’s really new logo growth. You know, how much how much opportunity you have there in terms of, in particular with new logos on the on the employee side?

Brett, Executive, Okta: Yeah. Yeah. We think there’s still a lot of opportunity out there. I mean, there’s there’s a tremendous need out there in the business environment for a solution for identity, and we feel like we’ve got the best one in the market. And a lot of the things that we’re working on that I you know, the four I just mentioned, security, NPI, go to market specialization, and partners will help us penetrate the market from a new logo perspective.

We actually had a nice quarter in q one from a new new logo perspective and a new business. Actually, just looking at the dollars, we had a nice quarter. And and I mentioned that a couple weeks ago, and I think that goes back to goes back to us continuing to focus the organization, whether it be the hunter farmer, specialization we use at the very bottom end of the market, very, you know, small and medium sized business, whether it’s the focus from a product specialization. We think that that level of focus helps land new logos in the long run. Look.

We’re not expecting it to turn around tomorrow. This is a long term strategic investment that we’re making. And so, yeah, we we definitely think there’s a lot of opportunity out there And when I say logos, I don’t just mean number of logos. We want quality of logos too.

You’ve heard us talk about the greater than a 100 k number. You’ve heard us talk about and that’s, you know, over 80% of the ACV for the business. If you look at the greater than a million, right, that’s over a billion dollars in ACV. So we’re not just talking quantity. We’re talking about quality as well because there is a lot of opportunity for us from a new logo perspective.

And even once they get into Okta, even a lot of those new those customers that are greater than a million dollars in ACV, there’s a lot of upside inside those accounts. There I I can’t think of an account that’s wall to wall everywhere and everything, every license possible. So there’s a lot of runway despite the fact that we do have a lot of those million dollar accounts. So so, yeah, new logos are definitely something that’s on our mind, and we will continue to focus on them as we go forward.

Keith Bachman, Analyst, BMO: And what’s if you had to sort of break that, I’m gonna stay on the the employee side, like, the the greater drivers, you know, logos versus seat versus price. How do you think about is there any ordering of what would drive that side of the business?

Brett, Executive, Okta: In terms of just, like, overall ACV growth? Is that what the like, in terms

Keith Bachman, Analyst, BMO: of For the employee side access.

Brett, Executive, Okta: You. So, I mean, it’s really any vector. I mean, we’ve been growing it significantly, mainly via upsells lately, which has been hampered by the, the seat headwinds we’ve been facing over the last, you know, one to two years that we’ve talked about a bunch. So, really, cross sell is a big opportunity for us. New logos I mean, I can’t say that there’s, like, one that’s gonna be huge and the other ones are small because if you look at the penetration of the market, it’s we’re still very we’re like a we’re a rounding error in a lot of ways in terms of the penetration on the market in a lot of places.

So we feel like there’s a lot of opportunity everywhere, and I think I think it’s up to us to execute to go get that market.

Keith Bachman, Analyst, BMO: Okay. And then how about the bigger bigger question? But if you think about workforce identity versus customer identity over the next two to three years, which is the larger, you you think, driver of net new?

Brett, Executive, Okta: Net new in terms of I mean, net new. Let’s just say with total growth. You know, historically, customer journey has been growing faster. I mean, our goal is to get both of them to grow faster, to be mean, like, we’re not happy with the growth rates as they are today. Yeah.

We think Workforce has got a lot of opportunity out there. I mean, a lot of the newer products that we’ve been talking about, you know, governance, PAM, device access, threat protection, all these things are on, you know, ISPM. We could just keep going down the line, are on the workforce side. But then you look at you look at us the Aucirio side and the customer side, there’s a tremendous amount of opportunity there to to add to the growth, not just via new product, but also just new logos. So I think both can theoretically, from our perspective, grow faster than what we’re doing today.

So I don’t have I’m not gonna say no. I can’t I can’t pick my favorite child, Keith. Like, they they they’ve they’re both they’re both near and dear to me, I think they both got a lot of opportunity in the in in the future.

Keith Bachman, Analyst, BMO: Alright. Well, let’s do the competitive dynamics in each of those categories, customer and and employee. And I think one time you said to me, this is probably last year, that, you know, in terms of competitive dynamics, Microsoft’s really the only one that matters. But but but how would you characterize any change in the competitive dynamics and and any change in your win rates on both the employee and customer side?

Brett, Executive, Okta: Yeah. I mean, the competitive dynamics and when I when I answered that question, I think I was answering really around work the workforce side of things.

Keith Bachman, Analyst, BMO: Yeah.

Brett, Executive, Okta: You know, Microsoft is, you know, the thousand pound gorilla, if you will, the the the the biggest competitor we have in the market. They’ve been around the entire time our company has existed, and we have thrived in that entire in that time frame. So they continue to run the same play that they have run for years, which is, you know, bundle it with e three or e five license and give it away for free. And, you know, we’ve gotten to this place despite that. And I think we have a better product, and we have just a broader product if you look at it.

Right? Access management, governance, PAM’s coming along. So so that that dynamic has not changed. Their their competitive approach has has remained the same. On the customer identity side, it’s really the build versus buy.

Right? When the developer’s all over, make sure that they know that using, our product can help them be more efficient, build a more scalable product, build a more secure product. We think that there’s a lot of opportunity, obviously, on that side as well. And so we’ve gotta continue to, evangelize in the market that you really need to use use the Okta products or Auth0 products to be able to to to help yourself here. So we we feel like there’s no change in the environment there.

We we just

Keith Bachman, Analyst, BMO: Do think there’s anything different on Ping and ForgeRock since they’ve gone private?

Brett, Executive, Okta: I I can’t say that I’ve seen any changes or heard a significant change there. They’re in in in in a in a lot of ways, they tend to run us I don’t wanna say a similar play to Microsoft, but something along the lines of, you don’t wanna compete on price and not on functionality. But that’s been the case for years. I don’t think that’s I don’t think that’s different. It seems it seems fairly similar from our perspective.

Keith Bachman, Analyst, BMO: Okay. Okay. Let’s continue on to government governance governance, which is, I think, a really exciting area. We’ve been doing a lot of work on it, including at RSA a few months back. You’ve commented that you had you have 1,300 customers out of 20,000 something customers.

And so relatively small penetration rate, but but where do you think that could go in three years?

Brett, Executive, Okta: In three years, it should be significantly higher. I mean, that’s one of the reasons to do the go to market specialization so we can have the focus for folks to sell into that. We think that is clearly the best upsell we’ve got on the workforce side Yeah. From a size perspective at this point. Now granted, there’s a couple others that we’re looking at them that in the long run may be really healthy as well and are excited about, like, the PAMs of the world and threat protection and ISPM, all those things.

But, yeah, we they’re they definitely should be higher, and that’s our goal. Don’t have an exact percentage for you, Keith, but that is something we’re focusing on.

Keith Bachman, Analyst, BMO: What’s a common is there a histogram of wins? What I mean by that, is there a common use case or industry or company size? I’ve always thought you you a, winning in OIG with your installed base, and then b, probably more mid market companies. But but you sort of pushed back on that line of reasoning, I think, after the last earning call. But I just wanted to hear a little bit more about, you know, where are you winning and why do you think you’re winning in in those 1,300 accounts?

Brett, Executive, Okta: Yeah. The it it it is mainly an upsell game at this point, Keith, to be very clear. And, really, where we win let’s start with the they’re kind of like is it greenfield versus rip and replace? There’s a mixture of greenfield, and, the one is also side by side with a legacy provider. So imagine a company using a legacy provider, and they have a more modern workflow or flow they wanna, put under the, under the umbrella of governance, and they go to a a company like us and say, hey.

We can you can do the new one, but we’ll keep the old one. So it’s like a side by side implementation. So that’s one those are probably two major things to think about. In terms of size of company, you know, you you gotta remember what is our what is our heritage here in terms of how to access a market. What we do with access management, start with middle market and lower enterprise and then, you know, kinda go both directions, go actually down and actually up.

Our goal is to do the same thing with governance, and I’m sure we’ll talk about PAM at some point. The goal with PAM is the same thing. Start in these areas where the legacy providers have not necessarily been able to provide a product to that segment of the market because maybe it’s too expensive, maybe it takes too long to implement, or you don’t have the time, all that good stuff. So so we’re running the same play from from a governance perspective, and we’ve had, actually, even, like, early success in enterprise and above and strat Kinda actually a little bit to our surprise, frankly, because we expected to be more in that middle market and lower enterprise. And that was with a product a year ago.

That was good, but it wasn’t what we thought was we didn’t we weren’t totally sure it was good enough for that upper end. Now if you look at what all the product improvements we’ve made, and we’ll continue to make more product improvements to be very clear. We still think there’s more room to run. The latest ones of segregation of duties, latest one of on prem connectors. So Okta, although not an on prem product, can actually connect to on prem applications via our governance tool.

And so we think the the continuous innovation by the Okta team, which has done a really good job over the last couple years of innovating on the governance side, we think that we can spread up toward that higher end of the market. Now are we gonna sit here and say we can do a highly on, you know, highly complex on prem deployment? No. Because we’re still a cloud provider with on prem connectors. But we do believe Yeah.

That we can really penetrate that higher end of the market, and that old tape of Okta has a light IGA tool, I don’t think you can say it anymore. Okta has a lit legitimate IGA tool at this point. And so, we’re we’re excited about it. And so I think that to your question, where are we gonna win? Well, theory, it should allow us to win further up the stack in terms of segmentation.

Keith Bachman, Analyst, BMO: And how does that work with you you mentioned part is greenfield, part is side by side. How does it work in the side by side? Is it so BMO might have a division that segregate our wealth management might go and the rest of the business might stay with sale or something?

Brett, Executive, Okta: Yep. Or you’ve used you’ve implemented some you know, let’s say you have multiple HR systems or multiple insert any system here, and one’s an older legacy tool, and you’ve got, oh, okay. Well, you wanna connect to Workday now. Right? Or you wanna connect to Salesforce or, you know, insert whatever major systems that are cloud oriented, and you had the older version somewhere else.

But, yeah, that’s I mean, your business unit idea is also an area that that happens in. That’s actually the play we’ve run for years and continue to run-in, access management, which is you get in there prove your value. And that’s I mean, that’s the overall I mean, it’s the land and expand at its finest. Right? You go in, small project, make sure they’re successful, and then you earn the right to future.

Right? It’s not about that one. It’s about the pop possibility of building off that that initial implementation and showing your value and showing a really high ROI for the for the organization that you’re trying to help.

Keith Bachman, Analyst, BMO: And any thoughts on how the market unfolds? And I’m still on governance. In in terms of do you think we tend to standardize at BMO on one? I won’t say who it is. But do do you see that more as companies are gonna use multiple governance tools?

And the reason I asked the question is you highlighted your thought more of a cloud centric model. You have on premise connectors, but do you think you’re, you know, better oriented towards more cloud workloads in at Workday or Salesforce or what have you?

Brett, Executive, Okta: Yeah. I mean, I think right now, yes, we’re definitely more oriented toward the cloud because we think that’s where the market is going. And your question is, do you would you use one provider versus multiple providers? Well, right now, we we’re seeing people use multiple providers for the reasons we just, discussed. I ultimately believe in the long run, there will be there will be more of a platform that will do all this for you.

So access management, governance, PAM, and that’s what we’re that’s our strategic bet. I mean, we’re we think it’s better to be able to use one tool as opposed to multiple tools, and it’ll be Yeah. Become a of use. It’ll become an ROI conversation. It’ll become, you know, a security conversation, all those things.

Things that we’re all pretty good at. So we we think we wanna

Keith Bachman, Analyst, BMO: Right. Right.

Brett, Executive, Okta: If you look at the customers who have built bought and built the entire product suite on the workforce side, that’s what their that’s what that’s their strategic bet as well. It’s like, look. We want it from one provider, not not multiple. But I think that’s gonna take time. As you know, Keith, you’d you’re very well educated in this area in the sense there’s a lot of technology sprawl out there.

And it’s it’s hard to bring everything under one umbrella, you you know, right out of the gate because of the the technology that’s just out there, and there’s a lot there’s a lot going on.

Keith Bachman, Analyst, BMO: Yeah. Okay. We’re gonna come back to that at the end kinda consolidation theme. But how important is price when you think about the governance? Oh, you’re just pricing.

Brett, Executive, Okta: Is it, like, winning deals and

Keith Bachman, Analyst, BMO: whatnot? Yeah. I mean, because part of your value proposition candidly is your in my opinion is you’re a lower cost solution, easier to deploy, easier to get up and running. But but how important is that overall price slash TCO in in your in your your win rates?

Brett, Executive, Okta: Well, I think that’s with any cloud software is gonna typically build a good case around TCO and the ROI associated with that, so I don’t think we’re any different from that. You know, we feel good about our pricing and where it is today and and feel like we’re getting really good value. So we’re gonna continue to push the the program as as it is today.

Keith Bachman, Analyst, BMO: Okay. And the last one, I think, on here on governance, because we’re gonna run out of time and it is is you mentioned you you we talked about win rates. How often are you going against sale or savvy? And and what how are your win rates trends changing as your product matures as you alluded to?

Brett, Executive, Okta: Yeah. We we don’t have I think there’s probably more of the the case of, like, are you in the right place at the right time? Right? I mean, like, I go I go back to what I just said. It’s like, you’re going against a a highly customized on prem, we’re not gonna win that often.

But as you Yeah. As you’ve now discovered, you know, the market really likes our opportunity and our offering and thinks it’s quite good. You know, our our win rates just in general for governance, we feel solid about, and we feel like we feel like we can improve from here primarily because of the specialization effort that I just I’ve I’ve been talking about on this call a few times. So, yeah, we we look forward to to to penetrate in that market as much as possible. We we feel like there’s a real good opportunity.

Keith Bachman, Analyst, BMO: Okay. Lifecycle management, we’ll we’ll do quickly, which is not fair. But, know, any context you can give us about growth rates and where you are in penetration rates, does that essentially get pulled along with governance or is that a separate, you know, cadence that that work life cycle management moves along?

Brett, Executive, Okta: Well, think about it as life cycle management is actually a subset of governance. Right? It it’s just it’s workflows. That’s all it is. And if you think about workflows as a component of governance, you could actually think of the life cycle management piece as a place to graduate from to governance.

So a lot of our a lot of our upsell motion is actually with customers that start with s o m f a u d. Right? U d is universal directory. And then they they start to dabble in life cycle management or workflows. And then they’re like, oh, wow.

Life cycle management and workflows. Okay. Maybe I should add governance. And that’s a natural kind of, like, upsell flow that we’ve been running for years, and I think that’s one of the reasons why governance has been so good over the years is because we already had that natural upsell and the aptitude to sell. So, yeah, I would actually wouldn’t say, like, life cycle management gets dragged along.

I would actually say quite maybe the opposite is the way to to governance. Now that’s changing a little bit as we’ve gotten the product and governance to be, like, you’ve heard me say a ago, really good, you know, you’re seeing actually some of the some more just governance straight buys as opposed to stopping along the way at life cycle management. And so we you know, it’s it’s a big part of that that number that we talked about the other day. We talked about a $100,000,000 of governance, another $300,000,000 cycle management and and workflows for a total business on governance size of $400,000,000. So I’m feeling pretty good about that, but, like, we talked about earlier, it’s only 1,300 customers on the governance side.

We need to we need to improve that and make that a lot bigger.

Keith Bachman, Analyst, BMO: And when your sales reps are out there selling life-site management, who are they competing against? What what is it competing against? Sorry.

Brett, Executive, Okta: What is it competing against? Yeah. It’s a good question. I there’s there’s there’s not many out there. I mean, you know, I’m sure on the Microsoft side, you’re having to deal with something there, but it’s, I mean, it’s a workflow technology.

It’s not it’s it’s identity of workflow technology. So it’s not like it’s there’s some, like, specific provider that’s only providing that piece of technology. So you’re really you you’re likely, once again, going against the the Microsofts of the world in that situation. Yeah.

Keith Bachman, Analyst, BMO: Okay. Let’s switch to PAM. One of my big surprises coming back from RSA is we candidly been a little dubious on the the ability of of Okta to grow PAM because it’s a very sophisticated solution, but I was pleasantly surprised that some of the VARs we talked to at RSA said that PAM’s actually getting a little bit of traction for Okta. Now it wasn’t really talked about on your most recent earning call, but maybe help us you know, give us a little context on where do you think you are in your capabilities, where are you, which is nascent into your penetration, but how can this unfold over the next twelve to eighteen months?

Brett, Executive, Okta: Yeah. That’s nice of them to say that, by the way. I we appreciate the compliment. But, look, I I think Pam is not nearly as far along in terms of technology features and whatnot relative to governance. We’ve got a lot of work to do there.

But if you look at what we’ve done with governance, we feel confident over the coming quarters and years that we’re gonna be able to develop a really solid product there. I think from my perspective, it might take a little bit longer because I think as you know, Keith, the pan market’s a little bit more fragmented than

Keith Bachman, Analyst, BMO: Yes.

Brett, Executive, Okta: Than the current market. And so, we feel good about the effort we’re putting in, and we feel like we wanna we wanna continue to, drive forward there because it goes back to the the theme we’ve been we were talking about earlier, which is there should be a cohesive platform or product suite that addresses all of these workforce use cases, and we feel that the sum of the parts is greater than the individual pieces. And so we are excited about the PAM market, but we are not suggesting at this point that we can go head to head with a legacy provider. We feel like we can go leg go head to head with legacy providers in the governance market and obviously access management. But at this point, we still feel, we’re making progress there.

So

Keith Bachman, Analyst, BMO: Right. If we think about, like, a, is there key features that still need to be added? And b, could Pam contribute in, calendar ’26?

Brett, Executive, Okta: Calendar. Yeah. I think I think that’s our I mean, obviously, we wanna grow all the new products, and governance is the biggest one in that group. But Pam has the chance to to be one that could make some real difference. I can’t say ’26 versus ’27, but I think we we’re we’re getting there in terms of the product.

And like I said, there’s still a lot of work to do, but we we have a lot of lot of positive intention in that market. I think we can we can make a difference.

Keith Bachman, Analyst, BMO: Okay. Let’s let’s switch to nonhuman, which I always find a curious name. There’s a lot of feedback on why different vendors in the identity space may win that not all of it, but a portion of the nonhuman market. And each vendor has sort of has a different story. And so the broader question is, a, what needs to happen for the market to emerge?

Because it’s it’s virtually nothing right now. And then b, why does Okta win in in the nonhuman market or will be a winner in the nonhuman market?

Brett, Executive, Okta: Yeah. I’m gonna I’m gonna answer them in reverse order. Primarily, I think why Okta can win in this market is nonhuman identities, AI, they all have the same problem that humans do. Something we’ve been doing for years, which is who has access to what, what that’s all identity is. It’s pretty simple.

Yeah. We may try to make it sound more complicated than that, but that’s really all it is. And so if you think about what I just said, which is the nonhuman identities have the same problem. Like, think about a a service account. Right?

A service account is supposed to access something and do it securely and have access to the right stuff. And if you look at the new products that we’ve been designing here, like ISPM, is designed for service accounts to find the holes, remediate them immediately, and then we can implement PAM. Right? PAM will sit in behind it, which will then automate that that service account. So you, put MFA on it.

You, create a password for it, of all. Let’s go create a password for it. Go ahead and have MFA on it, rotate that secret, vault that secret, give it just in time credentials, do the reporting on it, all that good stuff. So we think we’ve got a product that that and then if you wanna have a human access to that AHI, that’s when you have the governance tool. So everything we’ve been doing for years ties in nicely to this nonhuman identity concept on the workforce side, and we feel like there’s a lot of upside for us in the long run.

Now from a technology perspective, are is everyone there yet from a technical perspective? No. They are not. But I think if you look at the stats out there, the market is acknowledging that they have a problem. It’s just there’s Yeah.

They’re they’re they’re not sure how to solve it. And that’s why if you look at product showcase back in early April, that was the main portion of it on the workforce side was all about nonhuman identities, how to secure them, how to rotate those secrets, how to do how to federate the identity, make sure everything’s working correctly. So we we feel really strongly that this is a really big opportunity for us from a nonhuman identity perspective on the on the workforce side. And if you look at Agenic AI on the Auth0 side, on the customer side, we think that’s a really big opportunity too because it’s the exact same problem. It’s does the agent have the access to the right things at the right time?

And so we we feel like we’re very well positioned. Obviously, like you said, Keith, we’re early on in this market trend, so we’re not expecting anything from it in the near term. But in the long term, we think this is a really good opportunity.

Keith Bachman, Analyst, BMO: Does when do you think it’ll matter for if I take the market segment, which is CyberArk and SailPoint and Okta, when do you think it’ll matter for the industry in terms of contributing to aggregate growth? Is it next year? I’ll use calendar years to make it easy.

Brett, Executive, Okta: Yeah. No. It’s it’s a good it’s a good question. I I I think you I think it depends which side you’re because, like, nonhuman identities and Gentika are two different beasts. Yeah.

I mean, I think it’s gonna start to matter probably, you know, next year, twenty, you know, couple years from now. Think it’s I think it takes time. Right. But we I mean, we could see it earlier than that. Let’s see let’s see once again.

This is about us convincing the market they need to find the solution from us. Just like we’re talking about with the developer market earlier, we need to do a better job of evangelizing that we’ve got some really cool tools and some really interesting stuff that can help to help our customers.

Keith Bachman, Analyst, BMO: Some of the VARs have commented to us that governance is gonna be important for nonhuman identities, particularly agents. Because once you get access to it, they want you know, organizations wanna limit what those agents can do, and governance would be part of it. And so it’s if that’s true, it sort of speaks to the importance of having a broader portfolio. So, a, would you agree with that thesis that you need to bring several capabilities to bear to to nonhuman identities?

Brett, Executive, Okta: Yeah. Absolutely. And that’s what I was just talking about in terms of we’re actually doing that via our PAM tool. Because if you think about a lot of the the concept of a gun governance tool and a PAM tool, they actually kind of overlap overlap a little bit. Right?

Keith Bachman, Analyst, BMO: Yes. Yes.

Brett, Executive, Okta: You know, giving access to the right stuff, making sure it’s just in time, reporting on that, certifying it. Those are all governance concepts. They’re also PAM concepts as well. So we see those markets blending over time, and that’s why the example I just gave around, having those NHIs, you know, in PAM doing all those factors that I just mentioned about MFA, token vaulting, rotating the the secret, certifying, all this stuff, we think that we’re gonna we we wanna do that via PAM for the actual NHI itself. Now if you look at what we wanna do from a governance perspective, it’s the human accessing the NHI at that point.

So there’s the NHI having access to the right stuff, and then there’s having the humans Yeah. Access the NHI. So one is PAM. one is governance. So we think that that’s a like I said, we think this is a big opportunity for us in the long run.

Keith Bachman, Analyst, BMO: And and, Brett, how would you we only got time for one or two more questions. We’ll say two. But a lot of investors, if I did a poll and said, which identity organization is best suited to capture the emergence of NHIs, I think seven out of 10 would say CyberArk. How would you respond to that?

Brett, Executive, Okta: I I think that’s a reasonable, a reasonable approach. I mean, they buy did a big acquisition in Venafi, and we only really came out with all this really interesting technology in early April. So I think that’s a reasonable approach and and a reasonable opinion, but I think we’re gonna change that opinion over the next couple years.

Keith Bachman, Analyst, BMO: Good. And I would also argue them that it’s pretty darn early. Yeah. So making declarative statements on winners might be a little bit premature.

Brett, Executive, Okta: Might be a little bit less. Yeah.

Keith Bachman, Analyst, BMO: Yeah. I think it is. So I think there’s gonna be lots of opportunities. It sort of reminds me years ago, people would ask us, you know, who’s gonna win Azure or AWS? And our answer was probably both.

So if we think about the last question then in interest of time, the the July c p r the CRPO, guide was a little bit weaker than I think investors had gone into the quarter with expectation. It’s basically implied decrease round numbers of 20,000,000 or something along those lines. Maybe just revisit on why there was such a delta or what what factors were really contemplated in that guide.

Brett, Executive, Okta: Yeah. I mean, we’re just taking into account all the the things that we’ve talked about around go to market specialization and also the the the potential headwinds from an uncertain macro perspective. I think when we when we came into f y twenty six, we took a very methodical approach to further specialize in the field. And so that’s what you see reflected in the guidance that we gave last time, The guidance we gave this time, we guys will likely give the the time in the future because we we know that, it takes time, and there’s a cost of change to further specialize in the field. But we know in the long run, it’s the right thing to do and are confident that we’ll be accretive to growth in the long run.

So, we feel like we’re on track and, yeah, feel good with where we are at this point, from a execution perspective. Obviously, we got three quarters to go. Q one’s q one’s a q one. Let’s not get overly excited one way direct one way or the other.

Keith Bachman, Analyst, BMO: Yeah. So We’ve mentioned a a number of times during this conversation the maturity of the field. You know, at at some point, that that field will be mature, and and and therefore, the guidance presumably will not give a handicap because of that. When do you think that point is?

Brett, Executive, Okta: I I hope it’s sooner rather than later. I don’t have an exact date for you, but we are taking a a measured approach to our expectations at this point. Now we do good feel good about the tenure of the field. The average tenure of the field is at multiyear highs. But we have been seeing them to do different different roles, and they are excited about it, or at least that’s what they tell us.

And so we believe the proof will be in the pudding in the numbers in the quarters and years to come.

Keith Bachman, Analyst, BMO: Okay, perfect. Let’s leave it there. We’re two minutes over. Brett, in two days on the background, we appreciate your time on behalf of Bank of Montreal. Thanks very much for participating and we wish you the best of luck.

Many thanks.

Brett, Executive, Okta: Thanks, Keith. Appreciate the time.

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