OKTA - NASDAQ

Hi, everybody. Welcome to Okta's First Quarter of Fiscal Year 2024 Earnings Webcast. I'm Dave Gennarelli, Senior Vice President of Investor Relations at Okta. With me in today's meeting, we have Todd McKinnon, our Chief Executive Officer and Co-Founder; and Brett Tighe, our Chief Financial Officer. Today's meeting will include forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to statements regarding our financial outlook and market positioning. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Forward-looking statements represent our management's beliefs and assumptions only as of the date made. Information on factors that could affect our financial results is included in our filings with the SEC from time to time, including the section titled Risk Factors in our previously filed Form 10-K. 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. A reconciliation between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalents is available in our earnings release. You can also find more detailed information in our supplemental financial materials, which include trended financial statements and key metrics posted on our Investor Relations website. In today's meeting, we will quote a number of numeric growth changes as we discuss our financial performance. And unless otherwise noted, each such reference represents a year-over-year comparison. And now, I'd like to turn the meeting over to Todd McKinnon. Todd?

Thanks, Dave, and thank you, everyone, for joining us this afternoon. Okta continues to build on its position as the leading independent identity partner. Our Two Clouds, One Okta strategy has really taken root with our go-to market team and our customers and partners love it too. The actions we've taken over the past few quarters to increase efficiency and improve profitability enabled us to deliver strong non-GAAP operating profit and record cash flow. We achieved these results despite increased pressure in the macroeconomic environment, which we anticipated when we introduced the FY'24 financial targets last quarter. We continue to take a conservative approach to our business outlook. We're also pleased to have turned the corner on the challenges we faced last year. Attrition in our go-to market team has significantly decreased over the past three quarters to its lowest level in two years. The number of fully ramped salespeople is close to a more normalized level as average tenure increases. And we're seeing positive trends in the number of sales reps closing Customer Identity Cloud deals. I'll now cover some of the highlights and achievements in the quarter that we believe position Okta for long-term success. Turning to our Q1 results, we added 450 new customers in the quarter, bringing our total customer base to over 18,000, representing growth of 14%. Like last quarter, new customer growth is an area that we believe has been impacted by the macro environment. We continue to see growth with large customers for both Workforce and Customer Identity and we are proud to work with some of the most important organizations in the world such as OpenAI, the US Air Force Recruiting Service and AIA. In Q1, we added 150 customers with $100,000 plus ACV. Our total base of $100,000 plus ACV customers now stands at over 4,080 and grew 23%. We're also seeing continued strength in customers with over $1 million of ACV. We now have over 300 customers with $1 million plus ACV, which continues to be the fastest growing customer cohort with growth of over 40%. Here are just a few notable examples of customer wins and upsells in Q1, which come from a wide range of industries. A business line of a Fortune 500 semiconductor company was an exciting new business win in Q1. The company's legacy technology was complex, not adequately secure and couldn't meet the needs of the business line. It selected Okta Workforce Identity Cloud to modernize its technology stack to meet industry compliance standards and for Okta's ability to address multiple identity use cases. The business line also selected Okta Identity Governance to manage partner access to critical collaboration applications. We continue to see great cross-selling between Workforce Identity Cloud and Customer Identity Cloud. Two great examples in Q1 were with Indeed and NerdWallet. Indeed, the world's most visited job site started as a self-service customer and has since leveraged Okta Customer Identity Cloud to power authentication for its corporate customers. This quarter, the company expanded with Okta Workforce Identity Cloud, including Okta Identity Governance to bolster its security posture and improve the user experience for its approximately 13,000 employees. NerdWallet a platform that provides financial guidance to consumers and small and mid-sized businesses was another great example of cross-selling between our two clouds and a great illustration of how our customers layer on more and more Okta capabilities over time. NerdWallet has been leveraging Okta Workforce Identity Cloud since 2017 to secure access for its employees. Last year, the company added Okta Identity Governance to streamline its compliance processes. In Q1, NerdWallet further expanded with Okta as it replaced its homegrown Customer Identity Solution with our Customer Identity Cloud. Okta Identity Governance or OIG continues to show strong traction. The initial customer demand is validating the desire for a modern approach to governance, one that is cloud based and integrates seamlessly with access management. In just the past six months hundreds of organizations have purchased OIG, including Q1 wins with Indeed, Amplitude and Australian Football League. We're really excited about the future of OIG, especially since of the customers that have purchased OIG so far. Their OIG spend is typically around one-third or more of their total Workforce Identity Cloud spend. It's great to see OIG off to a fantastic start. Never Stop Innovating is a core Okta value and we continue to make important advancements on that front. We made a number of significant product advancements for our Workforce Identity Cloud in Q1. Advanced phishing resistance is now generally available with Okta FastPass. FastPass gives end users a seamless user experience without passwords. It now protects users against phishing with advanced phishing resistance for the enterprise, covering every user on any device and major operating system. Okta Identity Engine began shipping with every new workforce customer in early 2022. We have made great progress in converting existing customers over to OIE and now over 40% of our workforce customers are on OIE. Building on this, we recently rolled out self-service OIE upgrades so customers can automate their upgrade. This self-service option will help accelerate the pace of upgrades, paving the way for even more customers to reap the benefits and power of OIE. More customers on OIE means greater opportunity to upsell our higher value services and also higher retention rates based on customers converting to date. We're now in beta testing with Okta Privileged Access. We're extending the same great secure access management as well as identity governance capabilities to privileged resources. Businesses will be able to easily integrate modern cloud infrastructure such as AWS, EC2 or Kubernetes into Okta for centralized policies and controls across the resources their workers need. Organizations are recognizing the value in the convergence of IGA, PAM and Access management and Okta is in a unique position to address our Customers Identity needs with a unified identity solution. We continue to expect general availability of Okta Privileged Access by the end of this year. We're also innovating on Okta's Customer Identity cloud, which processes billions of logins per month from around the world and provides a unique vantage point to both network traffic and application level security event data. All of this data enables us to identify patterns and detect anomalies as potential security attacks. We're harnessing that data for Security Center, which is now generally available for Okta Customer Identity Cloud. Security Center is a dashboard delivering real-time insights into potential attacks, allowing for security teams to respond quickly. In a heterogeneous technology world and an ever expanding number of devices and applications, Best-of-Breed technology is the future to help foster Best-of-Breed. Okta continues to expand our technology partnerships so that our customers can deploy the most innovative solutions while enhancing security, all while retaining freedom of choice. Here are just a couple of our latest technology partnership developments. We've had technology integrations and partnerships with Google for over a decade and have a deep base of shared customers. In the first phase of a new go-to market alliance announced last month, Google's Workspaces, global and public sector sellers will now co-sell Okta's Workforce Identity cloud alongside Google Workspace. This expanded partnership will enable both Okta and Google to reach new customers through a Best-of-Breed approach to security and productivity. In partnership with

Thanks, Todd, and thank you, everyone, for joining us today. We continue to make meaningful progress on the actions we've taken to drive efficiency in our cost structure. As Todd noted, we're achieving these results while investing in our platform and business to fuel our future growth. As we navigate the increasing pressures of the macro environment, we remain confident that we have set the path of profitable growth for years to come. I'll review our first quarter results and our outlook for Q2 and FY'24. But first I'll start with some commentary on the macro environment. We're seeing increased macro headwinds on our business, most notably with new business across SMB and enterprise. These impacts were felt in varying degrees on a global basis. Similar to Q4, customers are requesting shorter contract term lengths and our overall business was weighted more towards upsells versus new business. We're also seeing smaller average deal sizes as a result. And finally we continue to experience minor FX headwinds on our top line metrics which are incorporated into our reported numbers and outlook. Turning to our Q1 results. Total revenue growth for the first quarter was 25%, driven by a 26% increase in subscription revenue. Subscription revenue represented 97% of our total revenue. International revenue grew 23% and represented 21% of our total revenue. RPO or subscription backlog grew 9%. Impacting total RPO growth is the general shortening of term lengths of recently signed contracts. Our overall average term length is just over two and half years. Current RPO, which represents subscription backlog, we expect to recognize as revenue over the next 12 months grew 20% to $1.70 billion. Turning to retention, consistent with prior quarters, gross retention rates remain very healthy in the mid 90% range. Our dollar based net retention rate for the trailing 12 month period remained strong at 117%. The sequential downtick in the net retention rate stemmed from a decrease in the upsell rate with both enterprise and SMB customers. Given the current macro environment, customers are not expanding seats at the rate they have in recent years, and we believe this trend will persist in this environment. On a positive note, we are seeing strong growth in cross-selling of products. As always, the net retention rate may fluctuate from quarter-to-quarter as the mix of new business renewals and upsells fluctuates. Before turning to expense items and profitability, I'll point out that I'll be discussing non-GAAP results going forward. Looking at operating expenses. Total operating expenses for the quarter were lower than expected. The better than expected profitability is primarily due to the combination of revenue over performance and better than expected outcomes from spend efficiency measures. Total headcount at the end of Q1 was approximately 5,700. The sequential decrease primarily reflects the restructuring action taken at the beginning of Q1. Q1 free cash flow was a record $124 million, yielding a free cash flow margin of 24%. This includes the cash outlay of approximately $14 million related to the organizational restructuring. During the first quarter, we opportunistically repurchased $366 million of our 2025 convertible debt notes, resulting in a $31 million GAAP only gain. We will continue to regularly evaluate our capital structure and capital allocation priorities. Our balance sheet remains strong anchored by $2.37 billion in cash, cash equivalents and short-term investments. Before getting into our outlook, I wanted to provide an update on equity dilution. At our Investor Day last November, I indicated that our historic norms for net dilution was in the 2% to 3% range and that we expected that range to be elevated in the near term, primarily related to the change in our stock price. I'm pleased to report that due to changes that we implemented, including changes in our granting practices and slowed hiring, net dilution for FY'23 finished better than expected at less than 3.5%. And we now believe that dilution for FY'24 will be back within our historical range. Managing dilution will continue to be a focus area and we remain committed to further reduction over the long-term. Now let's turn to our business outlook for Q2 and FY'24. Our projections continue to factor in the increased pressure from the macroeconomic environment. As a reminder, we've taken several actions to reduce our cost structure and increase our efficiency as an organization which will benefit margins this year and beyond. With that as a backdrop for the second quarter of FY'24, we expect total revenue of $533 million to $535 million, representing growth of 18%. Current RPO of $1.71 billion to $1.72 billion representing growth of 14% to 15%. Non-GAAP operating income of $36 million to $38 million and non-GAAP diluted net income per share of $0.21 to $0.22. Assuming diluted weighted average shares outstanding of approximately 180 million. For FY'24, we are raising our revenue outlook by $15 million at the high end of the range. We now expect revenue of $2.175 billion to $2.185 billion, representing growth of 17% to 18%. We are raising our outlook for non-GAAP operating income by $25 million to $161 million to $170 million, which yields a non-GAAP operating margin of approximately 7% to 8%. Non-GAAP net income per share is raised to $0.88 to $0.93 assuming diluted weighted average shares outstanding of approximately 180 million. And we are raising our free cash flow margin outlook for FY'24 to approximately 12% from approximately 10% previously. Lastly, I want to provide a couple of comments to help with modelling Okta. Similar to years past, Q2 is expected to be the seasonal low for cash flow and we are applying a static 26% non-GAAP effective tax rate for the fiscal year. To wrap things up, we've taken action to drive efficiencies in our cost structure while investing to fuel our future growth. And we're confident that we are positioning the company for many years of profitable growth. With that, I'll turn it back over to Dave for Q&A. Dave?

Thanks, Brett. I see that there are quite a few hands raised already and I'll take them in the order. In the interest of time, please limit yourself to one question and then you're welcome to queue back up with additional questions.

So the first question goes to Rob Owens at Piper.

Thanks, Dave, and good afternoon, everybody. Was hoping you could help me out a little bit with somewhat the disconnect, I guess, between cRPO and how it's trending in annual revenue. I mean, annual revenue is inching up a point here, 17%, 18% but cRPO going the other way. So realizing that a lot of that is subscription revenue, it's already in the bank. But trends definitely are pointing the other way. So is that 14%, 15% guide, is that somewhat of a low watermark as we kind of contemplate the back half of the year? Thanks.

Hey, Rob. Nice to see you. I'll take a shot at it from a big picture perspective and then Brett can probably add some details on the guidance. The quarter and the year is off to a solid start. I feel like the customer base is super solid. We're seeing really healthy gross renewals in the same range we've seen for several quarters, indicating that base of customer strength. We're also seeing the momentum in terms of conversations and importance of identity be really quite strong. The macro is a little bit of a different story. We talked a little bit about the macro headwinds we're seeing to an increasing degree. It's interesting, the way it's manifesting itself in the numbers is a little bit average deal size is a little bit lower. The new customer count is a little lower than we would have expected. But interestingly enough, in terms of the -- a lot of the executional -- or a lot of the execution metrics we're looking at, whether it's sales force attrition or the amount of sales reps doing a CIC deal, which is two things we've been watching a lot on the go-to-market side over the last few quarters, are getting better and better. So that's very positive. Another interesting thing is that more -- the large deals over $1 million and customers crossing that $1 million ACV threshold is up over 40% so that's super positive. So it's -- I think it's a lot of things to be positive about, solid execution, improving execution. And -- but the macro backdrop is just there's a lot of uncertainty around it. So that is kind of a high level how we're looking at the business and color some of our outlook.

I can add a little bit there. I mean, I think from a current RPO guide, irrespective, obviously, we've been thoughtful about the macro I mean, we talked about it over the last few minutes and how it's really been affecting us a little bit more every quarter. So we're being prudent about that side. And I think the other thing I want to make sure everybody remembers is current RPO does have some residual effect from those FY'23 execution challenges. It's not the major part of it but that does also weigh on the growth as we go through this year.

Thanks for the color.

Rob.

Let's go to Roger Boyd at UBS.

Great. Thanks for the question. Maybe just to push a little bit further on macro. I think it sounds like the biggest impact is really just around deal sizes. But wonder if you could talk about what you're seeing through the first month of May or the first month of 2Q that's really changed. If you think about sales cycles, pipeline, et cetera, how does that kind of factor into the guidance you've laid out? Thanks.

Yes, pipeline is solid. It's interesting. If you look at the -- like the analytics we look at over the whole of the business, that's where you get that average deal size ticking down. When you just have customers -- when you just have conversations with customers and the kind of the qualitative aspects of how important identity is and being interested in this approach we have, which is hey, you can get Customer Identity and Workforce Identity and Privileged and Governance from one customer very positive conversations. Also more on the qualitative side, we saw a lot of deals or maybe more than normal. We always have some deals that slip out of an end of the quarter, but we had more than normal slip out this quarter. And I guess that's not great. But on the positive news, we've had many of those close in the first quarter of -- or in the first few weeks of Q2 here. And I think what that tells me is that it's more confidence, that it's really just, it's not a question about the value of identity or the long-term strategic nature of what we're selling. It's more of what every company is doing. Okta, we're doing this ourselves internally. We're really asking for scrutiny on every purchase. We're trying to be more efficient. We're making sure -- customers are making sure they're getting ROI. They have a plan for ROI. There's maybe another level of budgetary approval that we didn't see before. And it does slow some things down, but the projects are still moving. And when I talk to CIOs of some of the biggest customers in the world, they say, hey, identity is going to help me be more secure. It's going to help me do more -- have a more efficient workforce. That's going to help me transform digitally, and it's something people are doubling down on and investing in. So I think it's -- you're seeing solid execution, a lot of macro uncertainty, but long-term, identity is going to be an important thing and we're going to be there to serve the market.

Great. Next question goes to Josh Tilton at Wolfe Research.

Can you guys hear me?

Hey, Josh.

Hey, guys. How are you?

Good.

Just a quick one for me, and I don't sorry to come back to the macro here but I just wanted to clarify. Brett, in the same sentence, you kind of said increased macro headwinds but then you also reverted to similar to Q4. So I'm just trying to understand, did the macro actually get worse from last quarter or did it stay the same?

Yes. Yes, it definitely got worse. So what I remember about that is there's some similar trends to Q4 in terms of new business versus upsell mix being much more weighted toward upsells. That's been pretty consistent in terms of us seeing that, right? The contract duration continues to be a little bit lower than what we've historically seen. But some new trends that are coming around are what you heard me talk about around less seat expansions. And when I mean seat expansions, I mean both seat expansion on the workforce side of the house and also on the monthly active users side of the house in terms of customer identity. So we're seeing it broad-based across both products. The other area that we're kind of seeing it more broad-based is around from a geo perspective or a segment perspective, there's no one area where you're like, wow, it's really affecting it more there. It seems from what we can see in the data and everything that we're looking at, it really does feel much more broad-based at this point than it was maybe in the past or so now where we said in the previous couple of quarters ago, we said it's a little bit more small and medium-sized business. We're seeing it both enterprise and small and medium-sized business. So it definitely got worse over the quarter in terms of Q4 -- in Q1 sorry.

And just to finish the question was, if I look at the guidance for the full year that you guys are raising for revenue, does that assume that what you see today gets worse, kind of stays the same? And just maybe how should we think about the cRPO numbers for next quarter, maybe the year-over-year comps with Auth0 in the mix?

Yes, absolutely. It does, in fact, assume that the macro does get worse, both on the current RPO side and on the revenue side. So obviously, when we think about the guidance, both of them have got that incorporated. So in terms of the compares, I mean, what you heard me say a second ago, there is some residual impact from the execution challenges we had in FY'23 in the current RPO guidance. But obviously, we're being thoughtful with how we're thinking about the balance of the year, given what we've seen in the macro and how it's developed over the last few quarters.

Yes. One thing, quick thing there is Auth0 was in the comps last year, so that should be a like-for-like there.

Super helpful. Thanks guys.

Yeah, sure. Thanks, Josh.

Thanks, Josh.

Next up Adam Tindle at Ray J.

Can't hear you, Adam.

We can't hear you, Adam.

There we go. Hey, Todd, I wonder if you could maybe opine on kind of a story that's going on with investors. We're seeing the quantitative metrics here, the NRR is in decline, the average deal size that you talked about is ticking down, but you've got more products to sell in each deal and at least to this qualitative story of perhaps we're in more of a commoditization cycle for core identity. Okta has never been the cheapest. I think you've been proud of that. Stiff competition, there's kind of this platform consolidation narrative across security broadly. So I just wonder if you could maybe talk about that being a premium product with the environment arguably changing. I wonder if you re-evaluate that premium product strategy. And if you could maybe comment on the pricing environment broadly and how to compete now versus years ago, that would be helpful. Thanks.

Yes. We're -- we hear that narrative as well. And it's interesting, we don't -- we just don't see it in the data. The win rates remain strong. The -- I mentioned the average deal size ticking down a little bit, but the unit price stays -- the unit price we get has stayed consistent. So when we look at the data holistically and be rigorous at it and really something we do culturally, which is check our assumptions and make sure we're seeing the world as it is, we just don't see it. We think that -- that being the case, we think the right strategy is continue to build the best products for identity use cases broadly and package them and sell them as we sell them and make sure that we keep delivering that leadership position to the market. But listen, we're not, I mean, we want to win and we're rigorous in our analysis. And we do make sure we look at things with an open mind that we're executing the best strategy, but we think our strategy and approach, based on all the data and based on what we're seeing, not just quantitatively, too, but just qualitatively with the customer success we're seeing and the traction in our Customer Identity Cloud and the appeal of this, not just the best core access management product, but also this -- the IGA product, which is really off to a super strong start and Privileged Access is coming out and innovations with FastPass, we think we have a winning strategy and we'll keep executing it.

And is there still an intent to replace Susan or is the management changes you talked about with Eugenio today, that is the new strategy, just to clarify? Thanks.

It's great. Thanks for asking. Yes, we are, I am still searching for a go-to-market president. That's a really important search. And in a lot of ways, we have the luxury of making sure we look everywhere and find a truly amazing candidate. And when you look at the people we're talking to, it's not -- there's not a lot of people in the world that have experience taking a company from $2 billion in ARR to $10 billion-plus, which is where we want to go over the next several years. So we have -- thankfully, the team that's in place is doing a great job, whether that's the Interim Chief Revenue Officer, John Addison or our marketing and customer success executive, Eric Kelleher, is doing an amazing job or Eugenio is taking on this role, which is really, really important. It's about how do we make Okta operationally excellent across all dimensions, including very importantly, the strategy and operations of the growth of go-to-market, which is an important component of that, including the automation projects and the technology, IT projects that have to come together to make that happen. It's adjacent to the president, a very important role, but we're going to find a great person for that president role, and I think we're on track to do that.

Let's go to Sterling Auty at MoffettNathanson.

Hey, guys. This is Billy Fitzsimmons on for Sterling Auty. I'll steer away from macro for a sec. How do you both think about Okta's opportunity in the generative AI space and the identity opportunity with the emergence of AI applications?

I have a big newsflash for everyone. I think AI is a big deal. And I think it's one of these things that is getting a lot of hype and is probably still underhyped. And I don't think it's like a -- it's come -- it feels like it's come on all at once, but it's really been a culmination of really a lot of important trends in the world, both just like the algorithmic advancements and what they're doing with originally what was TensorFlow and now the large language models in various domains and -- or it's the compute power, which everyone knows about or. The key thing, too, is just the data. If you think about the breakout application, it's ChatGPT. And ChatGPT really is relevant because of the compute and because of the algorithms, but really because it was trained on the Internet or 20-plus years of the Internet to be that training set for that model. So you have to have the data. So when we look at our own business, one of our huge, we have AI in our products, and we have for a few years, whether it's Threat Insights on the Workforce side or Security Center on the Customer Identity side, which look at our billions of authentications and use AI to make sure we defend other customers from like similar types of threats that have been prosecuted against various customers on the platform. Those products are great, and they'll get better with better algorithms and more data because we have the strategic advantage of having so much data, we can see the patterns. And we'll continue to add more products that take advantage of data and algorithms and compute. So that's -- I'm really excited about the potential. One of the ideas that we're working on that might be a typical use case of how someone like us could use AI is configuring Okta, setting the policy up for Okta across hundreds of applications on the Workforce side or 10 or 20 applications on the Customer Identity side with various access policies and rules about who can access them and how they access them. Be pretty complicated to set up. But we've actually been prototyping using AI to auto-generate that configuration and that policy setup so a customer doesn't have to start from scratch. They can see what 18,000-plus other customers have done and then apply that quickly to their own configuration, decrease in the errors, increasing the speed to value. So that's an idea of in the products, how it could be maybe a nonobvious use case. And then the other one we're excited about is if you zoom out and you think this is a huge platform shift, it's the next generation of technology. So that means that there's going to be tons of new applications built with AI. It means that there's going to be tons of new industries created and industry has changed. And there's going to be a log-in for all these things. You're going to need to log on to these experiences. Sometimes it's going to be machines, sometimes going to be users. That's an identity problem, we can help with that. So in a sense, we're really going to be selling picks and shovels to the gold miners. In fact, you all know that OpenAI is a customer and our Customer Identity Cloud is the login for ChatGPT. So that's, I would say, a very exceptional example of a successful application in the extreme. But there's going to be thousands of these types of applications and they all need identity and we're here to serve as that supplier to them. So that's another positive trend on our business I think.

Perfect. Thank you.

Next up we have Rudy Kessinger from D.A. Davidson.

Thank you for taking my questions. I guess coming back to the guide, the cRPO guidance, certainly the implied second half revenue guide, Brett implies growth exiting the year in the mid-teens, if not maybe even the low teens. And I guess, what can you guys, on the one hand, you talked about improvement in metrics with the sales force productivity and selling CSC, et cetera. I guess, what more do you have to do to maybe put a stock to the deceleration in growth even against a more difficult macro and maybe even potentially reaccelerate growth?

Sorry I had -- my computer just froze. What was the question?

I can take it. I'm happy to take it. I think that there's -- first of all, there's -- we're always improving and trying to get better. And I think I made the comment that we're -- we've made a lot of progress on some of the execution issues we had last year. And we talked about sales attrition being healthy and tenure ramping and productivity of reps being in terms of selling CIC being positive. So we're still doing a lot of things to improve. And that's across the whole company, by the way, whether it's operationally improving our efficiency, our effectiveness, building better products, building products faster, better enablement, better go-to-market operations across the board. So we're going to continue to improve. I think the one in terms of like modeling and going forward, when we see a quarter of some of these trends turn the other way, whether it's mix of new business to upsell, whether it's deal size, as we mentioned, things like that, that's when we're really going to be comfortable that the macro is past us and the business can achieve greater than the guidance we've outlined.

Yes. I would just also add to that, that I would say that we remain committed to this profitable growth concept, right? I mean, we've been talking about this for a while now, and you can see it in this quarter with the margins that we had, 24% margins. On the free cash flow side, 21-point improvement. Non-GAAP operating margin was strong as well. There was a huge improvement year-over-year. So it's not just, obviously, we want to grow as fast as we can but we want to grow responsibly and profitably as we move forward.

That's helpful. Thank you.

Let's go to Jonathan Ho at William Blair.

Good afternoon. Can you maybe help us understand where we are with the sales transition, productivity levels? And maybe what's left to be done at this point? You referenced the sales conditions right here. Thank you.

Jonathan, just to catch people up. So we're really -- so that's three quarters into a big change on the clarifying of the positioning of the Workforce Identity Cloud and the Customer Identity Cloud. And that was -- we did that in Q2 of last year, kind of announced it, revealed it to the world in November, so into Q4. This is really the end of Q2 here is really the third quarter since it was publicly launched, kind of the fourth quarter since we started working on it internally. So that was a big milestone behind us. And when we look at evidence of that -- we look for evidence of that is resonating. One thing is just the qualitative conversations with customers, conversations with analysts in the market, industry analysts, et cetera, et cetera, and those are all going very well. Quantitatively, what we look at is we look at the numbers I mentioned over and over. It's how many sales reps have done Customer Identity Cloud deals. That's the big new product suite. Doing a deal in there is -- it demonstrates familiarity and capability to do it, it portends the future of do more so. That one has been trending positively and is really in a healthy place. That's a positive thing. That being said, the tuning of go-to-market and the running of the go-to-market machine on a global basis is something we're always improving, whether it's better top-level, more effective campaigns in terms of driving demand generation, whether it's just operationally, how we're prosecuting leads to opportunities, how the sales team has taken those opportunities and all the kind of the blocking and tackling of sales, the sales funnel and the sales machine, we're continuously improving that. I think -- but the big changes we made last year with that clarifying of the Workforce Identity Cloud and the Customer Identity Cloud positioning and some of the changes we talked through at that time. So I guess it's a tale of two things. It's getting those big rocks behind us. We're also continuing to make sure the go-to-market machine is humming as effectively as it can. But remember, you have a team that's every quarter, the retention is strong or the attrition is low, you have more ramp, and they've done more deals and they have more advice to do more deals and they're getting more and more productive, which is a positive signal.

Yes. I would add one comment to that, Jonathan, which is the CIC trend that Todd talked about in terms of participation in the field is getting better. But the other thing that we saw in the quarter, which was a real strength was cross-selling across all products like whether it was like more WIC products to a WIC customer or a WIC customer buying CIC. It's actually one of the fastest-growing areas we had in the company and was definitely accretive to growth in the quarter. So we're very excited about that trend because that really shows you're getting a go-to-market organization that has a breadth of understanding of how to pitch the value and how to deliver value to our customer base.

Thank you, Brett.

Next, we'll go to Ray McDonough at Guggenheim.

Great. Thanks. This is Ray McDonough on for John DiFucci. Maybe for you, Todd. How important is bringing IGA and PAM together to help maybe accelerate or ramp adoption of IGA? And I know it's early with the product, but do you see any delay or hesitancy in customers purchasing attention around IGA just waiting for the full release of PAM to put those two solutions together?

Yes, it's a really insightful question. We don't. We actually -- the IGA has -- or OIG, Okta Identity Governance, which is our IGA product, has surpassed every goal we've had for it. Hundreds of customers using it. It surpassed the expectations in terms of -- we originally thought it would be more of a mid-enterprise. It's provided value to some of the largest companies as well. Another surprising thing is we thought it would be more, hey, greenfield, you don't have any IGA solution. This would be your first one. We actually see it -- we're seeing it be deployed alongside of some of the other solutions in the market, which is -- was a little bit unexpected, a positive thing. And then also even a few times, it's replacing solutions, which surprised me. I didn't think that -- I thought people once they had something installed, they wouldn't replace particularly the on-premise product with more of the modern new product that we have. So those are all positive trends. I actually think -- I don't think that people are waiting at all for the integration between -- to go with IGA, for the integration between IGA and Privileged. I do think that the flip will be true. I think that the fact that Privileged has integration to IGA will accelerate Privileged because that's something that hasn't happened before. Privileged resources were really around -- or Privileged Access management was really around the admin accounts and dealing with those things and somewhat of a silo. And what we're doing is you can have the same kind of access certification, the same kind of reporting and visibility across all your resources that servers, Kubernetes and you get the governance capabilities with that. So I think there'll be a tailwind there where we're not seeing the hesitancy the other way to -- although I think there could be an upside, but we're just not seeing a lot of people waiting for -- to go with IGA because of the Privileged not being there quite yet.

Thanks.

Next we'll go to Adam Borg at Stifel.

Awesome. Thanks so much for taking the question. Maybe just on the federal vertical. You guys recently talked about Okta for US military. That seems like an interesting announcement. Talked about a growing partnership with Arasoft. So maybe how to think about the federal opportunity more broadly and where you're investing the most there. Thanks.

Yes, federal . Go ahead, Todd.

Yes, I was going to say it's really an important vertical for us. And we've had a -- you mentioned the DoD military, the instance for the DoD, which is the dot military instance. And then also, we achieved FedRAMP High recently, and these are all huge tailwinds to that important business for us. The government is -- and it's not just federal, by the way, it's the state and local as well. Some of our sizable opportunities over the last couple of quarters and over the next few quarters are actually with states, states doing big transformation projects. And yes, we have a big goal and target on federal this year. It's something we invested a lot in and we're very excited about the potential for that to achieve and even overachieve its targets.

Yes, I would just add to that in the sense that if you remember last time we spoke for FY'23, federal specifically was the fastest-growing segment we had across the company, and that's a direct result of the focus we put on in FY'23. And I think that's created a lot of momentum for us as we're going to move through this year. I mean, you saw the US Air Force Recruiting Service sign on for us as a customer. So we definitely are excited about the opportunity in the long run.

Awesome. That's a lot.

Let's go to Stefan Schwarz at Wells Fargo.

Hey, I'm on for Andy Nowinski. Thanks for taking my question. Just a quick one. You mentioned the PAM is in beta. Any early customer feedback from that?

Yes. It's pretty early. It was released, I think, into beta like six eeks ago. But, yes, they're digging in and there -- a lot of these customers are -- they were familiar with the road map, and so they kind of -- they've really kind of honed their evaluation to be really on the sweet side of the product, which is dynamic environments that use a lot of containers, use a lot of cloud instances, want to control those types of environments with the same types of access management primitives like passwordless, like anti-phishing, access management capabilities that the core Okta platform provides. So they're really kind of perfect fits for this. So it's off to a very good start. It's early. We expect that the next wave of customers will be much broader, and it will also be customers that maybe weren't as hand-selected so we'll get a lot of good signal out of this next wave as well.

Got it. And then just real quick, any timing on when you might see the next wave of customers?

So I would -- instead of the exact time on that, I would focus on the fact that we're on track for the end of the year GA.

Okay. Thank you.

Next up is Joe Gallo from Jefferies.

Hey, guys. Thanks for the question. Todd, you've mentioned CIAM being a key focus area this year. Just any quantitative or qualitative update on the performance of CIAM versus Workforce. And then maybe just a quick update on the sales force's comfortability selling CIAM. Thanks again.

Yes. The 1 -- it is something importantly we watch, and I mentioned a couple of times that just kind of qualitatively, as I have conversations with customers and I do my -- I talk to a lot of customers, and I'm in a lot of both being the executive sponsor for big accounts for Okta but also working with deals and new customers. It's still a relatively small number, given the number of 18,000-plus customers and the number of deals we do in a quarter. So I do like to compare -- the actually quantitative aggregate data with my qualitative data. But qualitatively, the interest is pretty similar across both. There's big Customer Identity customers, there's important Workforce customers that want us to -- are going through strategic transformations and want to make sure that we're going to be there to support them for massive rollouts and huge investment in Okta. And then when you look at the -- but when you look at the aggregate number, the 1 that's really important is just the number of sales reps doing these CIC deals. And that's just more of, more repetition. That's going to lead to, I think, a really balanced business going forward and a go-to-market organization that can sell both products at scale. The one thing I will say in terms of qualitative as well -- or it's quantitative as well is that the macro impacts we're talking about, whether we say smaller than average or decrease in the average deal size or it's the tilt toward upsells versus new business, these are across both use cases. These are consistent across Workforce and Customer. We don't -- you might want to -- one of the ideas we had is it would be impacting 1 more than the other and we don't see that. It's consistent across that, which is also a reason why when you think about market dynamics or pricing or competitive, the two businesses have very different competitive sets. And it's interesting that all these trends we track are impacting both the CIAM, which also gives us confidence that it's macro-related.

Yes, I just would add to that in the sense that if you heard my comment a second ago around our cross-selling across the business, whether it's intra-cloud or inter-cloud, was really good. One of the bright spots in that was the cross-selling of CIC into other types of customers. So it's another good positive sign inside what we're seeing in the execution of the organization.

Thanks.

Next, we'll go to Fred Havemeyer at Macquarie.

Yes. Thank you very much for taking the question. And I'm sorry to return the conversation back to macro, but --

No worries. No worries at all.

I'm hoping to get a better picture or a more intuitive understanding about kind of where the macro headwinds are originating. So wanted to ask if you could elaborate about just, is this something that could be coupled perhaps the layoffs and hire increases that are ongoing ubiquitously across a whole range of markets? Or is this something perhaps more related to just general cost controls within organizations or is it something completely different?

I would say it's a mix of both of what you just said. Because when you look at the Workforce Identity Cloud, you heard me talk about seat expansions. Well, the seat expansions are really our customers' employees, right? They don't have as many as they expected so they're not going to buy more, or maybe they have less than they had when they originally contractually agreed with us. So -- and that's happening, by the way, on the CIC side, the Customer Identity Cloud side as well. We're seeing the commitments to and expectations around their own websites or their own customer-facing applications being a little less so. So we're seeing that component, but then we're also seeing, if you look at contract durations, seeing how they're a little bit shorter than normal. I think people are just being more thoughtful about the uncertainty out there in the macro. That's all the quantitative we can see. There's also the qualitative that we hear from the field of budgets being reduced a little bit or, hey, the CFO and procurement being a little slower to close deals because they want to be thoughtful about how they enter into contracts. So we're seeing a variety of those things of what you just said, Fred. So I think you've got it spot on.

Okay. Thank you for the context.

No problem.

Let's go to Shrenik Kothari at Baird.

Hey, thanks for taking my question. So on the positive side I know Brett mentioned that you guys have seen strong growth in cross-sell across products. So I'm assuming it's both Customer Identity as well as IGA beginning to move the needle in terms of ACV. But I mean, since you guys mentioned about the future of Identity Governance, you guys are seeing almost one-thirds or more of the total kind of Workforce Identity Cloud spend going to OIG. So just wondering, and I think you touched upon it in terms of essentially, the majority of the business still being greenfield, but the replacements are also in terms of your ability to win and RFPs exceeding your expectations. So can you provide some more color there? Has there been more replacements compared to last quarter in terms of the mix, how that's trending? Thanks.

Yes, I think, it's a really good -- it's some really good questions there. I'll separate the kind of aggregate statistics of the healthy cross-sell and upsell numbers. So this is inclusive of you have a Workforce. You add multi-factor. You have single sign-on, you add advanced multi-factor or governance. So there's -- it's upsell products within Workforce. It's also upsells -- sorry, cross-sells within Workforce. It's also cross-sells where you have Workforce and you buy Customer or you buy Customer -- you have Customer and you buy Workforce. So that's just in the data holistically. So IGA, it's off to a strong start, but it's only in the hundreds of customers so it's very optimistic, but I don't -- it's not really moving that needle yet. We think it will over time. But it is off to a very fast start. And I think one thing that -- just to clarify what I said, I think that our assumption was that it would be more greenfield. It's a very -- it's a modern IGA. It's super integrated with access management. It's -- it covers all of the basic use cases and all the integrations that a customer that is more cloud-centric and modern in their technical architecture want to need -- would want or need. And the -- so I thought it would be more greenfield. The surprising thing is that it's being installed next to legacy deployments. So even though they chose a legacy vendor, for whatever reason, they couldn't expand it fast enough, they didn't get the value or it didn't get as broad as they want it to. They're putting Okta Identity Governance next to it for kind of and surrounding it in that. I don't -- we have seen a couple of replacements, but I think full rip-outs of an IGA solution are going to be relatively rare. I think once people get these things installed, they work and they don't touch them. But we also think there's a big opportunity. I mean, the IGA market right now is not that big. We think with a great product like Okta Identity Governance, we can make it much, much larger. And that's why these early trends are super exciting.

Got it. Thanks a lot.

Next up, let's go to Scotiabank.

This is Joe Vandrick on for Patrick Colville. Can you hear me okay?

Hey, Joe. Loud and clear.

All right. So going back to the governance product, adding an incremental 33% or so to customer spend for those who adopt it, should we expect a similar uplift for customers who adopt PAM once that's rolled out? Thanks.

Yes, I think that's realistic. We want to see it in the market and see it contribute that because that one-third increase is based on looking at customers in the market, hundreds of customers. So when we look at PAM right now, we see kind of the pricing of it and we model it out. We think it could be that -- contribute that much. But we want to see it actually before we're as confident as what we're seeing in Okta Identity Governance.

Let's go to Madeline Brooks at BofA.

Hey, guys. Can you hear me okay?

Loud and clear.

Great. Thanks so much for taking the question. Just oneclarifying question and then one quick follow-up. I guess, on the cRPO guide, if I'm thinking about the impact from Auth0 integration last year, can you just give us some parameters on how large that is? I mean, a 1% impact is very different from 5% impact.

You mean like the impact associated from the Customer Identity Cloud selling last year?

Right. And some of the selling issues and how that's reflected in cRPO growth?

Look, I couldn't give you the exact percentage. I mean, obviously, it creates a headwind for us, both on revenue and cRPO because we didn't execute as well as we want. But obviously, as you've heard today, we feel like we've turned the corner on a lot of those execution issues and we've actually had quite a nice quarter, both top line and bottom line. So, yes, I can't give you an exact number.

Okay. Got it. No worries. And then on the customer side, too, I mean, I know you said that there's no -- you guys aren't seeing an impact, a difference from macro impact on that. But given that customer is a little bit more of a transformational project.If we think forward as to how the year is going to go, are you forecasting any slowdown on the Customer side because of that? And if you look forward to it, Brett, you mentioned that you are having a little bit more conservative going forward. So where is that conservatism coming from? Is it still assuming you're going to see similar impacts on both product lines?

The guidance right now assumes it's -- it gets worse in both product lines because we are seeing the impact in both product lines. So that's really how we're thinking about it going forward.

Okay. Thank you.

Let's go to Keith Bachman of BMO.

Good afternoon and thank you. I wanted to ask Brett for a second. If you could talk a little bit about the net retention rate, the latest 12 months number. And so presumably, this quarter was a pretty big step down on a quarter-over-quarter basis. But how should investors be thinking about the net retention rate as we look out over the next couple of quarters? And related to that, you've talked about IGA and PAM and presumably some other products being interesting to customers. And so if the macro just stays the same or maybe gets a little bit worse, if we think over the next two to four quarters, how might these products really be able to help the mix or the upsell, if you will? Because what I think investors are really struggling with is the cRPO guide is candidly deemed to be disappointing. But the larger question is, is that 14% to 15%, is that the bottom or does it get worse from here?

Yes, okay. So in terms of net retention rate, the decline quarter-over-quarter from 120 to 117, like we spoke about previously, we did expect the number to decline, and they were for two reasons. If you remember last time, I talked about macro worsening, and we basically spent most of this call talking about macro worsening. So it definitely kind of played out like we thought it was. You can see it due to seat expansion, stats that we talked about today. The other thing we talked about is why we thought it was going to drop throughout FY'24 was around FY'23 customer adds. We didn't add as much new business in new customers in FY'23, thus makes it less customers to upsell into in FY'24. Both of those obviously came to fruition, 117 is where we landed. But the thing that I want to make sure everybody is very clear on is that the gross retention rate has remained stable in that mid-90% range. And we do expect that to continue throughout the balance of FY'24. In terms of those two other factors, which basically influence your upsell rate, the upsell rate is basically the difference between net retention rate and gross retention rate, we do believe that there's a continued headwind through the year, and we do believe we tick down from here in terms of net retention rate through the balance of FY'24. Now to your question on OIG and PAM, yes, obviously, we're actively working that to have those offset, those seat expansions, but I mean, OIG, off to a great start, as you've heard Todd talk about. But the numbers are still small. We all need hundreds of customers versus 18,000-plus customers, right? And then PAM is only going GA at the very end of the year. So we'll see the effects from PAM more likely in '25 and '26. So that's how I would think about net retention going forward.

Yes. The other thing, too, is that when you think about the products to potentially upsell, the Customer Identity or Workforce Identity, selling Workforce Identity to someone that has Customer or a customer that has some in the Workforce is a way bigger impact than PAM and IGA at this point. That could change next year or '26, but for this year, the big upsell opportunities are selling the other cloud.

Okay. And just to finish off though, is there anything you want to say about the cRPO growth? I mean, can you say this was the bottom or is it just too hard to call at this point?

We'll update you as we go. Obviously, it's a fluid macro environment and so we don't want to get too far out in front of ourselves at this point.

Okay. Thank you.

I know we're a little bit past the top of the hour, but we'll go into overtime a little bit more here, try to get to a few more questions. So next, let's go to Gabriela Borges at Goldman.

Hi. Thank you. I want to stay on the topic of net retention. Brett, could you remind us, what percentage or how do you think about net retention split between upsell? If you look back over the past couple of years, how much has seat count growth or classic upsell contributed to net retention versus how much is cross-sell today?

So that was what I was saying earlier, which is seat expansion definitely was a headwind to growth and also a headwind to net retention in Q1. And we do expect that to continue to be a headwind as we move forward, given our lens on macro and what we're seeing. So cross-sell had a nice quarter, like you've heard us say, but it's really that seat expansion is really what we're seeing is -- and when I say seats, to be very clear, it's both seats on the workforce side and MAUs on the customer side. So we're seeing it in both sides of the business. And we do believe that continues to be a headwind throughout the balance of FY'24.

Is there a way to think about what the typical magnitude of contribution would be in a normal year from classic upsell seat count and MAUs?

It varies from year-to-year but it's been a mix between the two. It hasn't been like 90-10, one or the other, right? It's been a mix between the two.

Okay. Thank you.

Let's go to Eric Heath at KeyBanc.

Thanks, Dave. Todd, Just a question for you, I mean, Microsoft last week at their Build Conference announced kind of a new program or a new product around CIAM. So just curious to get your initial thoughts here on kind of that product and maybe how that may alter the competitive landscape if you will?

Yes, I'm not -- I didn't pay attention to it. I'm not familiar with that announcement so I can't comment on that specifically. But I do know that it's just -- they've tried customer identity stuff in the past. I think it's just pretty different than -- it's pretty different than -- their workforce identity picture is it's kind of like a identity as part of your e-mail. And the whole focus of their identity program really is to be identity for e-mail and then by extension, be identity for security. And it's just a pretty different motion than Customer Identity and having a great developer experience and having the integrations that you have to have on the customer identity side. So I think -- I don't know the specifics, but it's just a pretty different world and I think that's why we're pretty unique to have such scale businesses in both. By far, the biggest customer identity vendor, it's a pretty -- it's important to bring both to customers, but one of the reasons why it's so valuable from a company perspective from -- to be that vendor is because you have to really build two muscles to do it successfully, which is what we've done.

Thanks, Todd.

Let's go to Brian Wilcox at Cleveland.

Great. Thanks for taking the question. Could you talk about the contribution you're seeing from cloud marketplace transactions and how you think about that channel longer term, given we're hearing many customers are using it as a way to work down cloud -- excess cloud commits?

Yes. We're definitely seeing that as well. The AWS Marketplace has been pretty successful for us. It's still relatively small in terms of our partner channels, but it's growing quite rapidly. And the same thing, it sounds like you've heard, we hear as well. Customers like they can spend their enterprise credits that they've purchased. They can spend it on Okta through the marketplace. That's pretty compelling to them. But I think there's a bigger reason why Amazon is a really good partner for us and customers use the marketplace. And that's because if a customer has Okta, that means that they're more likely to use a choice of cloud providers versus being locked into one. And that's -- I think that's why it resonates to not just Amazon but a lot of the partners that we have, whether it's -- we talked about the Google announcement, the

Thanks.

Let's go to Matt Hedberg at RBC.

Hey, thanks, guys. So there's been a lot of talk about better cross-sell and upsell within your base versus new logos. I'm curious, Todd, when you look at the new logo side, how do you think we could start to unlock the broader legacy identity, access management replacement? Like there's hundreds, if not billions of dollars, out there on the legacy side seemingly waiting to be sort of like unlocked.

Yes. It's -- so I think I've said this before, for folks that have listened to the calls and I've had the pleasure to meet and talk to. I think the biggest opportunity for Okta is really the mass -- which is coming, the mass movement of people to do security and identity from the cloud, whether that's on the workforce side, where the default in especially large organizations, the default is just to kind of do it in their own data center and do it on-premise, do it in their own office and their own -- they think about the old world of local area networks and VPNs. And on the customer identity side, it's just kind of build it yourself. So the -- I guess the good news and the bad news is that the good news is that it's changing. I guess the bad news is that, I think in cases the -- maybe people being more conservative with technology investments and some questions about the macro economy can slow down some of that big change that would lead them up to a place where they want to -- they've chosen so much modern SaaS applications or so much cloud infrastructure or so much security stack outside of their own firewall, that now they're going to choose a cloud-based identity provider. They might be, in some cases, more reticent to do that in a macro environment that's maybe softer. So what that means is that our strategy is really we look for companies and we look for opportunities that are going through change, whether it's -- they are adopting apps or they're adopting cloud infrastructure or they're maybe doing M&A, merging things together, divesting things, something that's a catalyst for change, and that's when we do very well. So I think how do you unlock that? Well, one thing you do is you keep having success with customers and you keep building great products and you keep building a company that can help customers when they're ready. And then the other part of it is just it's kind of inevitable. I mean, it's going to change. Technology is going to move forward. Companies are going to make these investments, and we're going to be there to provide the identity solution when they do.

Maybe we can get these last two quickly. We'll go to Peter Weed at Bernstein.

Thank you. One of the things that I'm kind of taking out of some of your guidance and numbers here is -- and look I get that some deals slipped into the next quarter that you had anticipated to get in this quarter. But it looks like you have yourself kind of reaccelerating a bit into the next quarter and actually even more in the second half of this year. And it's modest, obviously, but hopefully, those are conservative and might imply that you've got some optimism for reacceleration. What's giving you that sense of optimism and continuing to kind of raise your full year guide and perhaps quarter-over-quarter acceleration in the second half?

Yes. I mean, I think for us, when we're thinking about the guidance, I mean, I don't think we're getting overly aggressive here. I think we're obviously being prudent with the environment. And we've seen some good execution in the quarter. And so we're obviously balancing that off with the effect from the macro. So that's really how we're thinking about the guidance.

Yes. Let's take our last question from Param Singh.

Hi. Thank you. This is Param Singh on for Ittai Kidron and thank you so much for squeezing me in. So firstly, I wanted to get a sense between the Customer Identity Cloud and the Workforce Cloud, how much of a cross-sell opportunity still exists. I mean, just trying to get a sense of out of the 18,000 customers, how many use bulk? And then I had a quick follow-up.

The -- I think the opportunity is huge. I think just the Customer Identity and Workforce Identity, if our existing 18,000 customers had both fully all the products in both clouds, would power success for many, many quarters.

I would say, I would actually say years.

Yes, many, many quarters like all plus.

Is there any way to quantify that? You have like 15%, 20%, 50%?

So it's interesting, so we've done some work on this. The tricky part about it is trying to uniformly, across 18,000 customers, quantify the Customer Identity side of it because you have to -- it's not like Workforce where you can say how many employees making assumptions about partners and contractors and then look at the spend. With customer, you have to kind of make a leap about when's the next ChatGPT or how much digital transformation are these industries going to go through broadly? So it's a little bit harder to calculate, but we know enough to know that it's -- if we execute, we have a big opportunity.

And then the real quick follow-up is, do you think you're right-sized with the restructuring you had in the first quarter? Or do you think there's some more opportunity here to trim fat here and there?

We think the plan is in terms of the guidance and the profitability and the profitable growth, we think it's a good plan. We're always [indiscernible].

You think you're right-sized at this time?

We think it's a good plan, yes.

Okay. Thank you so much.

Well, great. We appreciate everybody attending in today. Before you go, I wanted to let you know that we'll be attending the Mizuho Cyber Summit virtual event on June 12th. We'll also be participating in several bus tours this June and we hope to see you at one of those events. So that's it for today's meeting. And if you have any follow-up questions, you can e-mail us at [email protected].

Thanks, everyone.