Hi, everybody. Welcome to Okta's Fourth Quarter and Fiscal Year 2021 Earnings Webcast. I'm Dave Gennarelli, Vice President of Investor Relations at Okta. With me in today's meeting, we have Todd McKinnon, our Chief Executive Officer and Co-Founder; Bill Losch, our Chief Financial Officer; and Frederic Kerrest, our Executive Vice Chairman, Chief Operating Officer and Co-Founder. Also joining us today is Mike Kourey, our incoming CFO; and Eugenio Pace, CEO and Co-Founder of Auth0. 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, market positioning and the proposed acquisition of Auth0. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Forward-looking statements represent our management's beliefs and assumptions only as of the date made. Information on factors that could affect our financial results is included in our filings with the SEC from time to time, including the section titled Risk Factors in our previously filed Form 10-Q. In addition, during today's meeting, we will discuss non-GAAP financial measures. 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 or growth changes as we discuss our financial performance. And unless otherwise noted, each such reference represents a year-over-year comparison. And now I'd like to turn the meeting over to Todd.

Thanks, Dave. And thanks to everyone for joining us today. I hope that you and your families have remained safe and healthy since the last time we spoke. Our strong fourth quarter financial results capped another fantastic year of growth for Okta, thanks to our relentless focus on execution and on customer success. These are results that we could be proud of in any given year, but I'm especially proud of the entire Okta team for being able to deliver amidst the backdrop of the ongoing pandemic. It's a real testament to the team's agility and fortitude, combined with the growing importance of identity, which has only been punctuated by the crisis. This afternoon, we also announced the very exciting news that we entered a definitive agreement to acquire Auth0. I know you want to hear more about Auth0 and the transaction, and we'll do so right after we walk through the Q4 results. To highlight just a few of our fourth quarter financials, total remaining performance obligations, or RPO, grew 49%. Total revenue grew 40%. Subscription revenue grew 42%. And we generated $32 million of free cash flow. It's worth repeating that the three mega trends that have been driving our business for the past several years, the adoption of cloud and hybrid IT, digital transformation and zero trust security, are being accelerated by both the pandemic and periodic security events. Organizations are being spurred to evolve their digital strategy, and their shift to dynamic work environments will remain a key part of their business going forward. We're reaching more customers than ever before. We added a record number of new customers in the quarter and had a milestone of 10,000 customers. That's nearly triple the size of our customer base when we went public less than 4 years ago. A highlight of our expanding customer base is the success we're having with large enterprise customers. In Q4, we added 170 customers with an annual contract value greater than $100,000, which is another quarterly record. And nearly half of these additions were from new customers. Notable wins this quarter include Alaska Air and State of Kansas Department of Labor for customer identity and a customer identity upsell with Dell Boomi. Our base of these large enterprise customers is now approaching 2,000 and continues to contribute approximately 80% of our total annual contract value. I could not be more proud of what we accomplished in fiscal 2021, especially in the face of the pandemic. Just a few of the highlights include another year of record financial results with revenue growing by 43% and record free cash flow of $111 million. With the health and safety of our employees as the first priority, we were able to quickly and effectively transition 100% of our employees to work from home and not miss a beat on execution. And we added over 2,000 new customers. Our investments in innovation paid off with the launch of several new products and services, including workflows for Customer Identity and Advanced Server Access upgrades, which provide even greater value to our customers and increase the number of use cases we can address. We maintained our ability to attract and retain incredible talent, growing our employee base by 25%. And we're very proud of the progress we've made on the ESG front with the formal launch of our ESG program, the undertaking of our first carbon emission study and the publication of our first State of Inclusion report. In summary, Q4 was a strong finish to another exceptional year. I'm very proud of the role that Okta played in helping companies navigate through this pandemic crisis. And I want to thank our employees, our customers and our partners who place their trust in us every day. As we begin our fiscal 2022, we have momentum on our side as we are just scratching the surface of a massive market opportunity. Lastly, I want to take a minute to thank 2 people who have been critical to Okta's success. Charles Race headed up Okta's worldwide sales for the past 4-plus years and has retired after an incredible career. We're super excited that Susan St. Ledger has joined Okta to lead the go-to-market team into our next phase of growth. Her experience in scaling platform companies and expertise in enterprise sales will be essential. I also want to thank Bill Losch again for his invaluable contributions to Okta over the past 7-plus years. Next week, we'll make the official CFO transition to Mike Kourey, who has been a Board member and Audit Committee Chair for the past 5 years. We're really fortunate to transition to someone of Mike's caliber but also someone who is intimately familiar with our business and strategy. To Charles and Bill, we wish you nothing but the best in retirement. Now I'll pass it over to Bill for one last time.

Thanks, Todd, and thanks to everyone for joining us. As a reminder, we have posted an earnings presentation that contains our detailed financial results on our Investor Relations website. As such, I will only cover some of the notable highlights in my commentary this afternoon. As Todd noted, we had a strong finish across the board. I'll now touch on some of the Q4 highlights and then go into our outlook for Q1 and the full year fiscal 2022. Turning to our Q4 results. Total revenue increased 40%, driven by a 42% increase in subscription revenue. Subscription revenue represented 96% of our total revenue. RPO or backlog, which for us is contracted subscription revenue, both billed and unbilled, that has not yet been recognized, grew 49% to $1.8 billion. Current RPO, which represents subscription revenue we expect to recognize over the next 12 months, also experienced strong growth of 42%. Year-over-year growth in current RPO is the more meaningful metric when viewed along with subscription revenue and billings growth. Total and current calculated billings grew 40% and 38%, respectively. The strength in billings was driven by our success both in attracting new customers and in maintaining and expanding relationships with existing customers. As a reminder, Q4 billings included a modest headwind of $6 million related to invoice timing that we discussed last quarter. As I've mentioned before, billings can be subject to variability caused by invoice dynamics, including timing, which is why current RPO is an important metric as it eliminates these types of variances, which have no impact on revenues. While we do not provide specific guidance for current RPO, we believe that on an organic basis excluding Auth0, current RPO growth will outpace subscription growth throughout the fiscal year. Turning to retention. Our dollar-based net retention rate for the trailing 12-month period remained strong at 121%, down 2 points from last quarter. Gross retention rates, both in Q4 and throughout the pandemic, have remained strong. Revenue retention continues to be driven by strength with customer upsells, particularly within our enterprise customers. The retention rate may fluctuate from quarter to quarter. And in the current environment, it's possible that fluctuations in retention rates may be more pronounced. Before turning to expense items and profitability, I would like to point out that I will be discussing non-GAAP results going forward. Now looking at operating expenses. Total operating expenses grew 30%, slightly higher than forecasted as we increased investment to support our growth plans. The growth in expenses was partially offset by reduced travel and office-related expenses. Head count growth accelerated to 25% to just over 2,800, with the biggest increase in our go-to-market team as we continue to scale globally. We generated cash flow from operations and free cash flow of $35 million and $32 million, respectively, which yielded a 13.8% free cash flow margin. Free cash flow was driven by strong billings and collections during the quarter. We ended the fourth quarter with a strong balance sheet anchored by $2.56 billion in cash, cash equivalents and short-term investments. Moving on to our business outlook. While there remains some continued uncertainty given the pandemic environment, we remain optimistic about the demand for our products. Before I give our outlook, I do want to note that this guidance is for Okta on a stand-alone basis and does not include any impact from the Auth0 transaction. For the first quarter of fiscal 2022, we expect total revenue of $237 million to $239 million, representing a growth rate of 30% to 31% year-over-year; non-GAAP operating loss of $28 million to $27 million; and non-GAAP net loss per share of $0.21 to $0.20, assuming weighted average shares outstanding of approximately 133 million. For modeling purposes, I want to remind everyone that Q1 has some seasonality for expenses related to Oktane, our annual sales kickoff, and the reset of payroll taxes. In addition, this year we have moved our annual merit cycle forward from Q2. Given our strong Q4 results, for the full year fiscal 2022, we are increasing our revenue outlook from the preliminary view we gave you last quarter. We now expect total revenue of $1.08 billion to $1.09 billion, representing a growth rate of 29% to 30% year-over-year. We also expect non-GAAP operating loss of $61 million to $55 million and non-GAAP net loss per share of $0.49 to $0.44, assuming weighted average shares outstanding of approximately 135 million. The expected increase in operating expenses is related to scaling our business and is driven primarily by increased head count in sales and marketing, especially internationally, to fuel growth, and increased head count across R&D to drive innovation. In summary, we are pleased with our strong fourth quarter performance to end the year. The accelerated tailwinds of cloud, digital transformation and security position us well to achieve our long-term financial targets. We plan to further capitalize on our market leadership position and the tremendous market opportunity ahead of us. And finally, as Todd said, this is my last earnings call. I just want to take a moment to say how thankful I am to have been part of Okta for the past 7-plus years. It's truly been an honor to work with such an incredible team. The future for Okta has never been brighter, and I look forward to seeing the company achieve great things in the many years ahead. I know Okta will be in great hands with Mike. Back over to you, Todd.

Okay. Now let's talk about why we're so excited about Auth0 and why we believe this is a real game changer for the identity market and for all current and prospective customers. Freddy and I started Okta 12 years ago because we saw the need for a modern identity solution for a company's workforce that would scale and grow with the burgeoning adoption of cloud applications. Importantly, it had to be independent and neutral from the big platform companies who want to sell you other applications as well, the opposite of best of breed. In the ensuing years, we built out a portfolio of workforce identity products that help our customers meet the growing challenges of security and identity in complex environments. Several years ago, we broadened our product and market scope to include customer identity, or CIAM, to help organizations meet similar identity and security challenges for their customer experiences. CIAM is now 1/4 of our business and grew approximately 50% in Q4. Okta's vision is a world where everyone can safely use any technology. As part of that vision, we view a world where cloud adoption continues to proliferate and that 5-plus years from now, there will be just a few primary clouds that really matter inside an organization. These clouds might be for collaboration, CRM, infrastructure and ERP, for example. We firmly believe that identity will be one of these primary clouds. Identity is the connected tissue to all of the other primary clouds as it facilitates choice and flexibility while enhancing security and reducing risk in all other technologies. This vision, which is shared by Auth0, underpins one of the many reasons why the combination of our two companies makes so much sense. By supporting more use cases such as developer, security operations, IT and digital transformation, the more we become the standard across organizations. Supporting more customer identity use cases makes the identity cloud even more strategic and an essential primary cloud. The total addressable market we're addressing is massive and nearly evenly split between workforce and customer identity. Today, the majority of our business is workforce identity. We've seen tremendous growth in both sides of the business with customer identity growing faster off a smaller base. And like I said earlier, we're only just beginning to scratch the surface of these markets. Auth0 is also a leader in the customer identity market and brings a complementary go-to-market motion and a more developer-centric approach to the market. Combining the companies really accelerates our penetration into that $25 billion market. They've grown the company on a trajectory to generate over $200 million in annual recurring revenue here in FY '22, representing growth of over 50%. Like Okta, Auth0 has a highly recurring revenue stream that is very loyal. It's growth accretive from day one, and we've identified many areas that we believe will yield synergies. Combining with Auth0 accelerates our vision to establish Okta as a standard for digital identity at a time when customers are accelerating their digital transformations and looking for scalable and secure ways to digitally interact with their customers. With Auth0, we will be adding thousands of customers, a significant number of end developers and hundreds of millions of users. We'll also be adding more strategic partners, increasing use cases and expanding our international footprint. These network effects will allow the combined company to better serve our customers with a more comprehensive offering. I'd like to bring on Eugenio Pace, Co-Founder and CEO of Auth0, who can tell you more about the incredible company they've built.

Thanks, Todd. We are just as excited about joining the Okta team when this transaction closes. It is true that we share the same market vision and opportunities. Matias Woloski, our CTO, and I started Auth0 8 years ago with a mission to secure the world's identities so that innovation can happen faster. We serve innovators across a wide range of companies, big and small, startups and well-established, across all geographies in all verticals. We believe every company is a software company, and every company is building applications to deliver better experiences to their customers. This is especially true in this COVID era with the rapid acceleration of digital transformation efforts. We empower the software developers who are creating these applications to innovate faster by removing the complexity from identity and making it simple, extensible and customizable. In short, we solve complex and large-scale identity use cases for global companies of all sizes with our extensible and easy-to-integrate platform, securing billions of login transactions every month. We believe combining with Okta accelerates our vision on many levels. As Todd mentioned, the market opportunity is huge but still new as the largest incumbent is internally built solutions. As applications scale and security risks grow, companies can turn to us to better secure their digital footprint and free up one of their most valuable and scarce resources: their developers. Organizations implement Auth0's CIM, both for consumers and for businesses, just like how they turn to Stripe for payments or Twilio for messaging. They are doing this because what we do is much more flexible, much more extensible and more secure than in-house solutions. We take a developer-centric approach to the market, which is very complementary to Okta. We have a large thriving developer community, which provides powerful grassroots support for Auth0 within SMB and enterprise that we leverage in our sales motion. Our developer-led adoption fosters rapid customer growth, and the vast majority of our customers are up and running in less than 30 days. Taking a closer look at our solutions. We provide a universal authentication and authorization service for application builders. Developers can connect any application written in any language or stack with us, with Auth0, and then define how users will authenticate. We give developers exceptional flexibility with our advanced rules engine, which allows them to integrate with anything with an API. And our systems are designed with cloud scale in mind, so we can serve applications with millions of users and large spikes in user volume. In summary, we give developers the building blocks they need to secure their applications today without having to become security experts themselves, while we prepare them for the challenges and opportunities of the future. Developers can focus on what truly matters to their business, which is innovation, better customer engagement and loyalty and a superior user experience, all of which translate into larger revenue-generating opportunities and growth. With our shared vision and complementary approach to the identity market, combining with Okta will be fantastic for customers. Now let me hand the call over to you, Todd.

Thanks, Eugenio. It's clear that you and the Auth0 team have built an extraordinary company. First and foremost, we are committed to do everything we can, not only to maintain but to accelerate our combined innovation and momentum in the market. That's why Auth0 will run as an independent unit within Okta. Both platforms will be maintained and invested in, and Auth0 will be integrated over time with the Okta Identity Cloud, making both platforms even more compelling. In addition to the added scale and further acceleration into the $25 billion customer identity market, our businesses are complementary in so many ways, for instance, customer choice. With Okta's enterprise expertise and Auth0's significant developer community, every customer will have more choice in finding a solution that best addresses their identity use cases, no matter the audience or user. We see synergies for international expansion as Auth0 generates approximately 40% of their business outside the U.S. We believe the combination will also speed innovations for our customers. Beyond a shared market vision, we share many of the same core values. We're both maniacally focused on customer success and product innovation. We care deeply about our employees. Transparency is shared in our DNA. And we strive to be involved in and give back to the communities in which we operate. Okta has established itself as a category leader in identity and access management. And the combination with Auth0 expands our value proposition to the ethos of developers, extends our go-to-market model through self-service and allows Okta to efficiently address more market segments. Auth0 accelerates the development of Okta's Identity Cloud and product road map to more quickly and effectively serve our customers' ever-evolving identity needs. We expect the CIAM market to continue to grow rapidly. And with Auth0, we will be able to address customer needs much more quickly and completely. Now I'll turn it over to Mike Kourey, our incoming CFO, to wrap things up. Mike?

Thanks, Todd. First, I couldn't agree more with Todd that both Bill and Charles have been instrumental to Okta's success, and we owe you a debt of gratitude. In my role as Okta Board member and the Audit Committee chair, it was a pleasure working with you both. For those who don't know me, I've built a career in finance and have been an executive leader and Board member with several public and private technology companies, including holding the CFO position at Polycom, Medallia and most recently at Vlocity, which was acquired by Salesforce last year. My decision to move from the Board and Audit Committee Chair was pretty easy. For the past 5 years, I've had an up-close view into Okta's business, strategy and opportunities. From that unique perspective, I'm more excited than ever about Okta's future and ability to build the company into an iconic cloud company. I'm really looking forward to working with you all and being part of the next chapter of Okta. Turning back to the acquisition of Auth0. I'll walk through some of the nuts and bolts. Under the terms of the definitive agreement, Okta will acquire Auth0 for $6.5 billion in stock based on an Okta price of $276.21. The purchase price represents a revenue multiple that is slightly lower than Okta's FY '23 revenue multiple based on current consensus estimates. We expect the acquisition to close in our second quarter, subject to customary closing conditions. We expect Auth0 to be accretive to the FY '22 revenue guidance that Bill outlined earlier. We expect the combined company to remain cash flow positive on an annual basis, excluding the impact of integration and transaction-related costs. While we expect there to be some cost synergies, we plan to reinvest any potential savings to support growth for the combined entity. We will provide more specific company combined guidance after the transaction closes, likely during our next quarterly earnings call. Okta's and Auth0's immediate go-to-market priorities will remain the same. And as Todd mentioned, we're committed to propelling the success that Auth0 has achieved through this transaction and beyond as we consider this an ideal combination. We'll provide more details and insights regarding the transaction and Okta's vision and strategy at our next Investor Day event on April 7, which is being held in conjunction with Oktane21. Now I'll turn it over to Dave, who will open it up for questions. Dave?

Great. Thanks, Mike. And first up, we have Rob Owens from Piper Sandler. Rob?

Todd, I guess at a high level, as we transition throughout this year, you talked about certain demand trends that were potentially increasing as you look forward, either in terms of usage or in terms of customer engagement. If we look at the initial take around guidance, it does look like a bit of a deceleration. And understanding that the CIAM side of the business is growing faster, just curious if anything's changed relative to the enterprise side of the business. I know that you tend to kick off every year with a level of conservatism relative to expectations. So maybe just help us with where the demand picture is right now and your execution from an enterprise sales perspective.

Yes, I believe demand is strong. The numbers show over 100,000 additions and nearly 2,000, which is a record for the quarter. Business is robust. Bill will provide more details on the future guidance, but the pandemic is still ongoing, and there remains some economic uncertainty. Therefore, we are being cautious with our guidance. The trends we've discussed for a while, such as increased cloud usage, the rise of remote work, and heightened security requirements, are all driving demand for identity solutions. We are well-positioned to assist our customers, as identity management can be a significant challenge. Additionally, our independent CIAM business is performing well, and the combination with Auth0, an outstanding company, enhances our flexibility and solutions in this area, which will invigorate and accelerate the market. We have a lot of work ahead of us, and there is a substantial total addressable market of $55 billion for workforce and customer identity, but we are making progress every day.

Yes, I'll add to that, Rob. We're cautiously optimistic about the macro environment. However, as Todd mentioned, we are very confident in our business and the demand for our products, which is why we've increased our full-year guidance by $20 million compared to what we communicated last December. Additionally, as I noted in my prepared remarks, we believe that our current RPO growth will actually exceed our subscription revenue growth this year. This indicates that we are confident in our pipeline and the demand for our products. Lastly, as you pointed out, it's still early in the year, so we believe the guidance we've provided for the year is reasonable at this stage.

Thanks, Rob. Okay. Next question from Andy Nowinski from D.A. Davidson. Andy?

Great. So Bill, it was great working with you, and I really hope you enjoy the next chapter of your life. And Mike, very excited to work with you again. I guess I just have a few questions on Auth0. I think just from talking to our own developers, I know they really like it. And I think the reason they chose Auth0 was for that reason that they are able to integrate with more sort of, call it, uncommon applications, homegrown applications, etc. Do you think the developer framework that Auth0 has will really allow you to expand sort of that API library that you already have and get you into more of the uncommon applications?

Thank you for the question. Auth0 is an incredible company, and we feel fortunate to partner with them. I want to highlight that they have built their company with a strong focus on developers. This focus is evident in many ways, but primarily it reflects a cultural ethos of flexibility and expressiveness that developers require. This is seen in their application integrations and the overall approach and branding of the company, which is very powerful.

Okay. I have a follow-up question on that. I believe their focus was more on the customer identity use case rather than the workforce, which seems somewhat complementary. However, I’m curious if there was something in their customer identity solution that might have been superior to what you already offer, considering you plan to operate these two companies separately at first.

It's very, very, very complementary. I think if you look at the customer identity market, $25 billion total addressable market. And I mean we've talked about this in the past. The biggest 'competitor' in that market is 'build your own'. So customers are going to build their own, or they're going to buy a service from Auth0 or any other vendor, right? And if you look at developers, you have to have a very, very flexible solution that's built from the ground up to address the needs of a developer in a way that they want to use it exactly or they're going to choose to build their own. So that's the magic that Auth0 has captured, and that's why we're so excited.

To add to what you said, Todd, and thank you, Andy, for your kind words and those from your team. It's a pleasure to meet everyone this afternoon. Building a platform focused on developers involves handling the unexpected because we can't foresee everything that will happen. We aim for simplicity and extensibility, a term Todd frequently uses, because we want to address the 20% of use cases that occur 80% of the time with little effort. At the same time, we want to empower you to manage the less common situations, such as corner cases and legacy integrations, that your developers may face, without resorting to inefficient solutions. We want to provide you with the flexibility to experiment and complete the final integrations needed for your needs without relying on us for solutions. Your developers can take the platform as it is and extend it to fit their requirements when necessary.

Thanks, Andy. Okay. Next question from Alex Henderson of Needham.

Great. Just a housekeeping. Could you tell us what the share count would be for the full year guide if you were profitable? So that we have a baseline for valuation purposes. And then the second question I wanted to ask is when you look at the overlap between the customer-facing portion of Auth0 and the customer-facing portion of Okta, can you talk about how long it takes to integrate those two and to what extent there is overlap in feature functionality that might require some rewrites? So just how much complexity is there in integrating the two pieces that are customer-facing?

The customer identity market is substantial, with a total addressable market of $25 billion. The dynamics in this market involve whether developers choose to build their own solutions or purchase existing ones. Additionally, CIOs, Chief Technical Officers, and Chief Security Officers are considering buying solutions from familiar vendors to solve their problems. This combination benefits customers because developers are actively seeking better solutions than building in-house. Executives recognize solutions like Okta, which may serve their workforce or parts of their customer identity and access management needs. This shift encourages a transition from questioning whether to build internally or use a legacy vendor to recognizing a clear cloud leader that can meet all customer needs. It's important to note that Auth0 is a native cloud company, designed for the cloud from the start, unlike many identity solutions that rely on legacy technologies. This distinction makes for an exciting opportunity. In terms of integration, both Okta and Auth0 are experiencing rapid growth, with Okta exceeding 40% and Auth0 exceeding 50%. The priority is supporting and innovating for customers while both companies grow. The platforms are already somewhat integrated; users can log into Auth0 using Okta and vice versa. However, there is significant potential for deeper integration to enhance capabilities for customers.

We already have a large number of customers in common. It's common for us to work with major financial services companies on the East Coast that utilize Okta for their workforce needs and rely on us for their customer-facing portals. As Todd mentioned, the integration is already in place; users can log in and cross-log in. There are various workflows for both products that are connected. While there will certainly be many more opportunities to create additional value through collaboration, our primary focus is on the customer—their goals and needs—and making their experience simpler.

Thanks, Eugenio. Okay. Next question from Alex Henderson of Needham.

If I could, just one last item. Can you tell us whether the integrated, combined company roughly doubles the consumer-oriented portion of the business? And I know you've said it's 25% of Okta currently, but when I put the two together, does it double the size of the customer-facing portion of the business?

Yes, just right about there. Yes, we mentioned the number of $200 million ARR by the end of this year for Auth0. So yes, that puts it right about there.

Great. Well, congratulations to both. You guys have done a great job.

And Bill can comment on it, too. Bill?

Alex, fully diluted shares is 144 million, but that obviously excludes the Auth0 transaction.

Okay. Next question from Jonathan Ho at William Blair. Jonathan?

Bill, just wanted to echo my congratulations as well on the retirement. It's been a fantastic pleasure to work with you. Just really starting out with, I guess, the acquisition rationale. Can you talk about why the need to make the acquisition now and maybe some of the process that you went through around the acquisition?

Yes, I can provide insights from Okta's perspective. Looking ahead ten years, our primary strategic goal is to position identity as a key cloud service. While many vendors will offer technology to companies, only a select few—about five or six—will truly emerge as core players in the cloud landscape. Collaboration will be one of those areas, as will infrastructure, among a few others. We are very dedicated to ensuring that identity secures its place as one of those critical components as well. To achieve this, we need to broaden the range of use cases and excel in both workforce identity and customer identity. When we examine the customer identity market, it’s clear that many developers are involved. They often face the choice of building their own solutions versus partnering with a vendor. From our joint company perspective, we have the ability to energize that market due to Okta's strengths. We excel in engaging with executives and have developed a service with unique capabilities, particularly in customer identity and access management, allowing integration with specific data stores and applications. Coupled with Auth0’s impressive developer focus and its flexible, extensible platform, we present a very attractive option for customers. This not only enhances the customer identity segment but also increases the overall value of Okta’s identity portfolio. Therefore, it's crucial for us to collaborate. Over the past year, as we engaged with each other, it became evident that we should join forces rather than operate separately. Together, we can accelerate the growth of this market more effectively than we could on our own.

Next question from Eric Heath at KeyBanc.

Could you talk about the decision to double down in access management with Auth0 versus maybe making more of an aggressive push into IGA or PAM?

I think they're all really interesting opportunities. And we're going to be broad across all of these identity use cases because back to the strategic priority of this primary cloud, it's got to be all these use cases, right? It's not just customer or part of workforce. It's anything that touches identity and how we can add strategic value to customers, whether that's through integrations, whether that's through partnerships or whether that's through building ourselves. I think the unique thing about customer identity is the size and the scale and the strategic importance to customer and this dynamic. This developer focus and this mindset of building something for developers, you have to start from scratch to have it. If you look at great companies that do this like Twilio or Stripe, they started from scratch this way. And that's what Auth0 has. The first line of code, it was this focus. I mean, Eugenio, you should jump in here and talk a little bit about this. But it's core to what they have.

Absolutely. When discussing developers, we hold strong beliefs. Many years ago, a paper was published stating that 'Software is eating the world and now developers are the new kingmakers.' Developers are a limited resource, and we struggle to hire enough across all industries. No company today can thrive without software, and the critical decision lies in which software to invest in with resources and expertise. Our hypothesis from the beginning was that anything that reduces friction in a developer's daily tasks will be successful. Twilio serves as a prime example; I initially described our company as 'Twilio for authentication.' Stripe is another excellent case. Developers wield significant influence; while they may not control budgets, they impact the technology stack that simplifies their work. They move between projects and companies, creating a viral effect that spreads ideas globally. They are a loyal group, often relying on peer recommendations. Conversations like, 'What are you using for authentication? I'm using Auth0; it's the best choice,' are prevalent. While I may be oversimplifying, this dynamic is undeniably powerful.

Great. That's helpful. And then a follow-up, if I may. Could you talk about maybe any changes you're seeing competitively with Microsoft? And could you elaborate maybe on why customers are better off using an independent platform like Okta and Auth0?

Yes, I'm happy to discuss that. We're very pleased with our results and feel fortunate about our performance across various areas, including workforce and customer identity and access management. We continue to execute effectively and help many customers achieve success. It's important to highlight that we release go-live announcements to emphasize not only acquiring new customers but also ensuring their successful implementation. For example, we announced today that Crate and Barrel has gone live in the retail sector with a centralized customer identity and access management solution for both in-person and online interactions. This reflects a broader trend across industries, including retail, where technology adoption is essential for improving customer interactions. We see positive outcomes, and our results reflect that. Regarding competitive dynamics, not much has changed. In the past, companies tended to stick to one vendor for their technology needs, but that's shifting. Today, there are over 7,000 technologies that are pre-integrated into the Okta Identity Cloud. In conversations with customers and prospects, I notice a growing number who prefer not to put all their resources into a single vendor. This independence and neutrality have served us well, as has Auth0's approach to being open and integrated with everything, allowing for high levels of extensibility and customization. The trend toward best-of-breed solutions is becoming a reality. Lastly, Office 365 continues to perform exceptionally well, and we remain the leading identity provider for the largest enterprises using Office 365. As major global companies deploy Office 365, it's important to note that those enterprises focus less on the identity provider and more on their specific needs. We excel at getting customers operational quickly and efficiently, which bodes well for our future prospects.

All right. Let's go to Matt Hedberg at RBC. Matt?

I know in the past, Bill, you've talked about, I think, 11% of your customers are in impacted verticals. Just wondering how they performed in the quarter and sort of what's embedded into the guide. And I guess for Mike as well on how those impacted verticals perhaps recover with the vaccines.

Yes. Thanks, Matt. So we've talked about the impacted industries. They continue to be about 11% of our annual contract value. So that stayed pretty consistent. As we said throughout the year, as we got deeper into the year, the headwinds that we thought were going to impact some of those companies did to a certain extent, but not nearly as much as we had anticipated as it relates to our business. Obviously, we believe, and it's demonstrated by that, that identity is still very much an essential strategic need for those companies. I do think that in particular, an example of that is, as Todd talked about earlier, a new customer Alaskan Airline. Obviously an impacted industry but a good example of a company that saw identity as very strategic and therefore wanted to do a project with us. As far as how we've thought about the guidance for the year, as I said earlier, we're cautiously optimistic about the macro. We still think there's still some uncertainty out there, especially with those impacted industries, but that has been considered in the guidance that we gave today.

That's great. And then maybe just a quick follow-up. Clearly, Susan St. Ledger now owns the number this year. Can you discuss the potential impact of Auth0 coming in and how she might influence the trajectory this year? Additionally, what changes might she bring to Okta or the combined company now?

Yes, we're very excited about that. I'm glad you mentioned it, Matt. We've known Susan for a long time, dating back to our days at Salesforce.com over a decade ago, and she's exceptional. We tried to bring her on board several times, and I'm thrilled we were finally able to do so. Her track record speaks for itself; what she accomplished at Splunk over the last four years is something we would gladly embrace. She significantly expanded the go-to-market organization across both named and global accounts. It's also important to recognize the stage of our company; we are just beginning to evolve from various products to a comprehensive platform approach, transitioning from workforce to customer identity management. With Auth0 joining us, there will be even more opportunities ahead. In my conversations with Susan, especially during her first month here, I've noticed her strategic mindset that emphasizes not just products but also the importance of platforms and long-term customer relationships. I've introduced her to several of our existing large customers and prospective clients, and it's evident that she brings a unique dynamic in terms of leadership, approach, and relationship-building. Her extensive experience at scale will be invaluable. I've learned a great deal from her already, and I believe her presence will significantly enhance our go-to-market efforts as well as our overall organization. The collaboration between go-to-market, product, and engineering is crucial for company growth, and she excels at fostering that synergy. So yes, we are extremely excited about this development. It'll be great.

Thanks, Matt. All right. We're going to go to Patrick from Deutsche Bank.

It's good to be on the call. Congratulations on the Auth0 deal; that’s a great company. Can I ask about the fiscal '22 guidance? Billings growth in fiscal '21 was 44%, but the guidance for fiscal '22 is just under 30%. Could you help me understand why the forward-looking number isn’t translating into your expectations for guidance? Is this a matter of conservatism since it's still early?

Thank you, Patrick. There are several points to consider. As I mentioned earlier, we tend to be conservative at the start of the year, which has been our historical approach. This caution is prudent given the early timing in the year. We believe there's significant demand for our product and feel positive about our business. While there's some ongoing macro uncertainty due to the pandemic, we remain cautiously optimistic. When it comes to guidance, we base our forecasts on these factors. We also anticipate that our current RPO will grow faster than our revenue, suggesting that we expect an increase in bookings this year, which is reflected in our guidance. Additionally, early in the pandemic, like many companies, we reduced our investments, which in retrospect might have limited our potential, as the pandemic's impact was less severe than expected. Although we are pleased with our performance, it's possible we could have achieved even better results. Since we operate on a subscription model, this will slightly affect this year's revenue, as revenue tends to lag. Overall, I would emphasize that we expect our current RPO to outpace revenue growth, indicating strong demand for our product and confidence in our business. As it is still early in the year, we believe it is wise to be cautious with our guidance.

Okay. Understood. And can I ask about the competitive environment in customer identity? I mean who is it that you guys feel you come up against most in bake-offs? And do Azure AD B2C feature in that list?

Yes, Patrick. We're very pleased with the results we've achieved, and Auth0 has developed an exceptional business. However, even when combining our efforts, we're just beginning to tap into a market worth tens of billions of dollars. The main competitor we face is the 'build your own' approach. There's currently a significant shortage of developers worldwide, with reports indicating a shortfall of up to 250,000 in North America alone, where universities produce only 30,000 graduates annually. This trend is likely applicable globally. Without any growth in software, it could take eight years to bridge this gap, but we know that software will continue to expand, leading to growing numbers in our sector. As Eugeno highlighted earlier, most companies will struggle to hire all the developers they require. Therefore, our goal is to simplify access to an off-the-shelf identity solution for their application initiatives, enabling them to advance their critical projects. Our challenge is to effectively communicate how easy it is to implement our solutions, enhance customer success, and demonstrate that building and maintaining their own systems isn't the most efficient path. This is the primary competition we're facing in customer identity and access management, which is why we believe there is a significant opportunity ahead, and we are still in the early stages of this market.

Next, we go to Hamza Fodderwala, Morgan Stanley.

Best of luck, Bill, on your retirement. And congratulations, Eugenio, on the acquisition. Definitely enjoyed speaking with you a little while ago, and definitely a great cap to the story. So I wanted to ask, Eugenio, just on your thought process of accepting a deal from Todd and the acquisition. Obviously, you were building a really strong ecosystem on your own. What do you think that Okta adds to Auth0 that will allow it to become that multibillion-dollar company that you see it becoming?

Thank you, Hamza, it's great to see you again. I see this from two different perspectives. First, there's the foundational level, which I find very significant. What we share is our vision for the future and how we believe our industry will evolve. Todd mentions the cloud and identity cloud, but we refer to it as the identity operating system. Despite using different terms, we are discussing the same concepts. We share a common vision, mission, and values—though we have three core values and they have a few more, at the core, we are aligned. We prioritize our customers, their challenges, and the ecosystems we belong to. We strive for continual innovation and investment in improved technology for our clients. These fundamentals are essential for execution. Moreover, we complement each other well. For instance, 40% of our revenue comes from international markets, while Okta is more U.S.-focused, providing us with a broader perspective. We've functioned as a remote company since the beginning, which has allowed us to build an effective distributed team. Okta tends to engage with IT leaders like CIOs and CTOs, while we focus more on developers and customer identity management. This partnership feels like a perfect fit. The vision and ambition we share for the future are substantial, and I can envision achieving our goals together in just a couple of years, rather than taking five to ten years on our own. The prospect of collaborating in the industry for our customers is very exciting. Since this is an all-stock deal, we are fully committed to this long-term vision because we see this as an ongoing journey with no end in sight.

All right. We're going to go to Joshua Tilton at Berenberg.

I just wanted to start on the cross-sell opportunity. So I know you mentioned that a lot of customers already use Okta for workforce identity and Auth0 for customer identity. So when you look at just the existing customer base alone, how much opportunity is there to cross-sell the current workforce customers on Auth0's offerings? And then given that you view Auth0 as, I guess, complementary to your current customer identity solutions, should we assume that you're going to cross-sell your current customer identity customers on Auth0 as well?

Thank you, Joshua, for the question. There is definitely a lot of opportunity. We have just announced the deal, and since it hasn't closed yet, we haven't had a chance to explore joint customers and customer overlap beyond publicly available information. However, I believe there is significant potential. We have built a strong business in workforce identity and access management, and many of our customers are also customer identity management clients. Still, many are not; some are Auth0 customers, while others are still evaluating their options regarding whether to build their own solutions or purchase something. This presents a considerable opportunity for us. As a company, we recently surpassed 10,000 customers, which is three times the number we had at our IPO four years ago, and I'm very excited about this growth. However, this is just a small fraction of the total potential accounts available. Thus, there are still many penetration opportunities with our existing products within our customer base. Integrating Auth0 into our team will not only lead to more customers for our products but also more clients with whom we can strengthen our relationships. Moreover, the scope of potential prospects far exceeds the joint customer base we have with Okta and Auth0. Hence, cross-selling will definitely present ample opportunities. Additionally, we aim to enhance our messaging, widen our appeal, and provide improved solutions to customers and the industry, allowing them to seamlessly incorporate identity into their applications and projects, facilitating progress on their most critical initiatives. Overall, we are very enthusiastic about the possibilities ahead.

If I may, I'd love to jump in here. I think both Eugenio and Freddy did a terrific job explaining the clear synergies. This is a growth story. When examining the growth synergies, there is a cross-sell of customers and prospects that we just discussed. The international penetration is noteworthy, with Auth0's international revenue being more than twice the percentage of ours. This serves as a significant driver for one of our core initiatives. The products complement each other, as we've mentioned. Additionally, we have a very strong channel at this point, which will create a tremendous opportunity to integrate Auth0 into our channel once the deal closes. There's a substantial opportunity there. Furthermore, even considering the current scale with Auth0 and Okta on customer identity solutions, it represents a very small percentage of a $25 billion annual market for customer identity and access management that is growing. These are the main points, at least from my perspective, and I feel increasingly optimistic about them.

That was very helpful. And I guess when you think about the developer angle that you guys kind of just acquired through Auth0, how would you think that would benefit the sales of some of your other offerings, such as Advanced Server Access?

Yes. I think that's a really insightful question. We talk about CIAM and workforce as separate, but there's a lot of reasons why they can be better together, and you just highlighted one. So if you're using Okta or Auth0 for your customer login for your customer website or mobile app and then you use Advanced Server Access for the engineers that are logging into the infrastructure to then build that and then deploy that CIAM solution, it's better to have that from one player. That's better integrated. You better have better visibility into the threat data. That is consistent across all those, can keep you more protected. There's a really good compelling synergy there.

Great. Okay. We're running into overtime here, but we're going to take one more question from Matthew Parron at JPMorgan.

It's Matt on for Sterling Auty. I was wondering if you could talk about how do you plan on investing in both Okta and Auth0 going forward. The customer identity segment was growing faster, so I would think that you guys were investing heavily in that. How does this change the way that you guys invest in the core Okta business going forward?

Yes, Mike mentioned that this is a growth story and a growth company. We are making significant investments in both businesses, which are both experiencing rapid growth. We will continue to support, maintain, and invest in both platforms. Over time, we will seek synergies on the R&D side by sharing services or combining platforms in ways that benefit customers and enhance our value proposition. The encouraging news is that these markets are vast and the growth potential is strong, providing us ample opportunity to deliver value to our customers and ultimately create one unified platform.

Okay. Well, thanks, everybody. And before you go, I just want to let you know that we're going to be attending two virtual conferences next week. We have the Truist Technology Conference on March 9 and then the Berenberg Security DevOps Conference on March 11. And as Mike mentioned, we'll be hosting our virtual Investor Day on April 7. That's in conjunction with Oktane21. And please be sure to register for that event ahead of time. And that's it for today. Thanks for joining. And if you have any follow-up questions, you can reach us at [email protected]. Talk to you next quarter.

Thank you, everybody.

Thanks, everybody.

Thank you.