Ladies and gentlemen, thank you for joining today to discuss Okta’s First Quarter 2018 Financial Results. Today’s conference is being recorded. I’d like to turn the conference over to Catherine Buan, Vice President of Investor Relations. Ms. Buan, please go ahead.

Good afternoon and thank you for joining us on today’s conference call to discuss Okta’s fiscal first quarter 2018 financial results. With me on today’s call are Todd McKinnon, Okta’s Co-Founder and Chief Executive Officer; Bill Losch, the Company’s Chief Financial Officer; and Frederic Kerrest, the Company’s Co-Founder and Chief Operating Officer. Statements made on this call 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, uncertainties and other factors that may cause our actual results performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management’s belief and assumptions only as of the date such statements are made. In addition, during today’s call, we’ll 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. There are number of limitations related to the use of these non-GAAP financial measures versus their close of GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. The reconciliation between GAAP and non-GAAP financial measures is available in our earnings release. Further information on these and other factors that could affect the Company’s financial results is included in filings we make with the SEC from time-to-time, including the section titled Risk Factors in the Company’s Form S-1 previously filed with the SEC. Now I’d like to turn the call over to Todd McKinnon. Todd?

Thanks Catherine, and thanks everyone for joining our first earnings call. I’d like to thank our customers, partners and investors who have been essential to our success to date. I’d also like to recognize the employees at Okta who have been instrumental to our growth and success. We are very proud of how far we’ve come since Freddie and I started Okta back in 2009 and look forward to building on our success in the years ahead. With that, I’m pleased to share our very strong first quarter results with you today. I’ll begin with the quick overview of our performance in the quarter and then provide some background on our business for those new to the Okta story. And finally, I’ll touch on some of the exciting developments and customer wins we had in the quarter, before turning it over to Bill, who will walk through the financials in detail. We had a very successful start to the year and achieved record quarterly revenue in billings, while meaningfully improving operating margin. Total revenue grew 67% year-over-year to a record $53 million while subscription revenue grew 75% year-over-year to $48 million. Calculated billings grew 75% year-over-year to $60 million. And what’s even more notable is that our non-GAAP operating margin improved 24 percentage points year-over-year, while we maintain we maintained very strong top-line growth, as we continue to see increasing year-over-year leverage in our business. The rapid growth and expansion we continue to experience as a result of the key role Okta plays in a constantly evolving cloud centric-world, today, you cannot avoid the buzz words digital transformation, but it’s more than just marketing jargon. Organizations of all sizes around the world are rapidly adopting cloud applications and mobile technologies to move their companies forward. These often results in increasing…

Thanks, Todd, and thanks again to everyone for joining us. I’ll start by providing a brief overview of our financial model, and then I’ll go through our first fiscal quarter results in detail before moving onto guidance for the second quarter and full year fiscal 2018. Our cloud-based platform is offered through a SaaS model and we generate revenue primarily by selling subscriptions that are generally three years for our large enterprise customers and range from one to two years for our small and mid-market customers. We typically invoice customers annually and in advance. There’re number of levers that drive our growth including acquiring new customers, increase customer spending when the number of users within a customer expands, and upselling additional products. We also look to grow within customers by expanding their deployment of Okta for both internal and external use cases. Our subscription fees are based on the products our customer using and the number of users on the platform. We also sell professional services which include fees for assisting customers and implementing our products. The primary objective of our professional services team is to make our customers successful, which in turn drives higher subscription revenue as these customers expand their usage of the Okta Identity Cloud. We expect professional services will be a smaller proportion of our overall revenue as our business grows as our service partners lead a larger portion of implementation. We had a strong first quarter and a start to our fiscal year. As Todd mentioned, revenue for the first quarter totaled $53 million, growing 67% year-over-year. Subscription revenue totaled $48.4 million in the first quarter, an increase of 75% year-over-year and comprised 91% of our total revenue. Professional services revenue was $4.7 million, an increase of 10% over the same period last year. In…

Yes, thanks. Hi, guys. So, looking at the quarter, just looking at the adoption and demand, is there any one or two particular key cloud applications whether it’s Office 365 or other that’s really spearheading the demand generation?

It’s a great question. We think that -- so, we release this report called the Businesses @ Work report, we release it about every quarter and it’s a broad survey of adoption of cloud applications that we see on our platform and then as an extrapolation of what is there in the industry. And you see pretty consistent results from the top 10, Microsoft, Office 365 is very heavily adopted, Salesforce is very heavily adopted, Box and some of the other collaboration services are adopted. So, those have all remained steady and they’re all going up. I mean, you’re seeing more-and-more cloud, more-and-more users on those services. There’s also interesting things in the bottom tier. In our last report we saw Zoom, which is a video conferencing and collaborations service really take off and we saw that emerge on our platform and that -- some of the more emerging companies, there’re some more interesting results. But I would say in the top, it’s the usual folks all doing very well and cloud is really growing robustly.

And one follow-up question, any changes to the competitive landscape in terms of who you’re seeing and the final shortlist of RFPs?

The competitive landscape is -- remains consistent and with our win rates against the competitors remaining consistent, particularly Microsoft where win rates are consistent. And it’s interesting because that’s largely on the internal market. So, we’ve identity for internal which is for employees and then identity for external which is people outside of the employee base of our customers. So, identity for customers’ customers, our customers’ partners, anything they’re trying to do to really connect their systems to the broader ecosystem outside their enterprise. And the competitive dynamic there is actually very different, it’s more a Greenfield, it’s companies deciding to build versus buy this technology. And when they make the decision to buy, we’re the clear leader and so the competitive dynamic there is pretty different.

Our next question comes from Heather Bellini with Goldman Sachs.

I wanted to dig into -- you just were talking about the external opportunity. I was just wondering if you could share with us kind of how you saw the momentum for that adoption progress during the quarter. And as you look out kind of over the course of the next 12 months, how are you seeing the pipeline for that business start to evolve and how is the messaging with customers?

It’s something we watch very closely, obviously. And it’s over the last three years, it’s grown very quickly. And in terms of looking out in the future, the pipeline is growing very quickly and what we see in that part of our business is going to be very -- all the indicators are it’s going to be a very robust growth and a big part of our business results. It’s harder to size because there’s not -- it’s not as much of a replacement market as the internal market. The internal market -- internal identity, there’s billions-and-billions of dollars are spent on existing products that are legacy products that we’re replacing in the enterprise. And then down market and smaller companies we’ll be the first identity solution in there. On the external side, it’s really -- it’s a new market in a sense that the competition there is companies building this themselves. And so, it’s little bit harder to forecast the market size. But if you look at all of the indicators inside in our pipeline, what we’re seeing with customers and our results I mentioned early in the prepared comments about the North American Bank who chose us to be the identity layer for their consumer banking website. And once an organization makes the decision to like that, to buy the technology, buy this identity component versus building themselves, that’s really powerful. And the more and more successes we see like that, the bigger this opportunity will become. So, we are very bullish on this.

And then, I just had one follow-up, if I could, just related to Sterling’s question about Microsoft, you said, your win rates stayed the same. I was wondering if you could just share with us kind of the list of reasons and how those might be changing in terms of why you are winning versus Azure AD. Are you seeing the reasons as to why people are going with Okta overlooking at them or maybe going with the legacy provider, is kind of why people are migrating or choosing you changing at all?

Yes, the…

…longer?

Yes, I would say the big reason is the more cloud, the more likelihood of Okta winning. So, what I mean by that is, not just cloud apps, but cloud infrastructure. And companies doing more cloud means more likely that Okta will win versus other providers, Microsoft being included where a lot of their stack on the identity side is -- it’s implemented as an on-premise service, at least partially and different servers required and different complexities is required. So, more cloud equals more success for Okta, which is good in the world today where everyone wants to do more cloud. I would say the other dynamic, particularly with Microsoft is the Company makes a decision as to how strategic the identity platform is to them. And once the identity is of any level of strategic importance, we win nearly every time versus where they see identity as more of just a slight adjunct or an add-on to a certain apps, that’s a more challenging environment for us. But more cloud and the more they see identity as being a strategic choice for the company and really enabling platform for a broad ecosystem and array of technologies and applications, that’s very, very high, high win rate there. And by the way, those strategic deals are also more valuable. So, it’s a nice correlation between us winning and the deals being bigger.

Our next question comes from Rob Owens with Pacific Crest Securities.

I was wondering if you could talk a little bit more about the cadence of your land and expand, and in particular provide a little color around the 123% renewal rate that you had this quarter. Is that influenced more by feed expansion, cross-sell of other solutions? And I guess in particular, there was a couple of large user expansions that you referred to, maybe you can color them. Thanks.

So, when we think about our land and expand, obviously with the two different main use cases that we have both internal identity and external identity and the six integrated products that we have on the platform, we now have a lot of different ways that we can land. A good example would be as Todd just mentioned the North American Bank that decided to use us for their external opportunity, something that we are seeing more and more of. Of course we continue to land internal. As we talked about, there is a new large North American grocery chain. And then finally, the up-sell opportunity where you see us going from an internal opportunity that we have for example at Wyndham that went very well and then they come back and say there is a new opportunity for us to use them now externally. So, you see a lot of that land and expand opportunity. I think the vectors that you see there are not only additional users but also additional products, and then as I just mentioned, expanded used cases where we can go from internal to external or start externally and then go internally. We have a large number of examples of that.

Yes. I would add to that and specifically to your question Rob about this past quarter, those customers that we refer to as a large user expansion that really a situation where it was predominantly a situation where the customer basically provisioned for more users and that probably in that particular instance back this past quarter, we saw a more expansion coming from additional users than typically what that mix is because typically that mix is, as Freddie said, user expansion, product expansion, cross-sell and historically that mix has been fairly consistent among the three.

And then second, you mentioned you had achieved a FedRAMP? Can you talk about what maybe some of the early conversations look like there? And federal fiscal year-end obviously coming up in the next few months, next few quarters, I guess. Do you plan on any impact to this fiscal year relative to the federal states or is that something with long sales cycle that’s more of a fiscal 2019 type of play?

It’s a great question. We are very excited about helping the -- not just the federal government but state and local governments and also educational institutions adopt the technology and be more productive and more strategic. As you know that’s a big-big part of the economy overall. So, we are very excited about the opportunity there. But that being said, while I think all of the state and local government education and federal governments are excited about cloud, it’s a new thing for them. They are figuring out what it means for the regulatory and what it means for their procurement cycles and so forth. So, while we are very bullish and we’ve invested in sales resources to attack this market and we have the certification now, we talked about FedRAMP, we’re being prudent with how long it will take those investments to pay off, but it’s still something down the road, it’s going to be the big part of our business.

Our next question is from Richard Davis with Canaccord.

So, I think as I recall, you are about a year into the SCIM developer program and I also -- and as I recall it was supposed to automate kind of on and off-boarding multiple apps. Could you talk -- you’ve touched a little bit on it in the prepared remarks. But, how satisfied have you been with this effort, specifically have you added SaaS vendors that have got under the bandwagon and how we should we just kind of think about that? Thanks.

Yes, it’s a great question. And this is basically the ability for an application to maintain their own integration to Okta and that’s going very well. We mentioned that we have -- I mentioned in the prepared remarks, we have 5,000 integrations to different web applications and SaaS applications. And that number almost understates the true number of integrations because those are just the ones that are publicly available. There is several thousands more that are developed privately by customers and then shared across the network with other customers, once those integrations are tested by us and certified by us as shareable. So, that program is going very well. It’s a big part of our strategy too to connect to the most applications with the most seamless integrations, and not only at one point in time but maintain those integrations over time and to do that we really have to enable the community. And we’re making good progress on that and very excited about what we’ll be doing there in the future as well.

And just a quick follow-up, you announced this as I think early March as I recall, but your new connection with Stormpath, is there anything in terms of technological footprint or improved go to market cadence that should be thinking about as outsider to the company?

Yes. Stormpath is -- it’s super important for us. The way to think about that is there’s -- in the world today where every company is trying to build better mobile applications and better web services to connect with their customers and partners, there’s a new constituency involved in that company. It’s not just IT, it’s not just security, and that new constituency is development; not -- like product development and engineers in those companies building these services, even if they’re not software companies, it’s every industry, every company. So, this developer is they like to try and buy things different way than IT or security. And Stormpath for us is really making sure we have the best product and the best go to market and the best documentation and the best tool kits to make those developers super successful very quickly with our platform. So, it’s really -- it’s developer focused tuning and improving of our platform to make sure that our external opportunity reaches its full potential because in every external opportunity, there’s a big developer of voice. And so, having a good go to market and a good product and service for developers is paramount of importance.

Our last question comes from Pat Walravens with JMP Securities.

So, you mentioned in your prepared remarks, the Gartner report which actually looks like it just got published on our service. So, yes, I’m seeing it already, it’s pretty fantastic. I mean basically you and Microsoft are at the very top, and you’re number one in the ability to execute. But, I went right to the concerns, just like all the customers will, and one of the concerns is that you raised prices in the last year and that they say that Okta is one of the higher average price scenarios is how they word it. So, I’m sure you have a perspective that you share with your customers, I was wondering if you could share with us.

Yes. Thanks, Pat. We saw preview of it and I haven’t seen the final report, given that it just came out a few minutes ago, but I trust you saying it’s positive just like the preview we saw. On the -- and it’s really exciting because it is -- customers are trying to figure out this market and Gartner helps them. So, we’re excited that they’re kind of doing the work and seeing what we see, which is that we’re the leader. On pricing, I think that we have the best product and it’s taken a lot of ingenuity and investment to build that product. And I think you’ve seen it command premium in the marketplace. And it’s because of the value we deliver to customers. And I think that customers see that our product is unique and differentiated and can do things for them that other products can’t. And we’ve gotten also very good in helping customers, understand the value and quantifying it which has led to our ability to have a product that can be priced at a premium level.

Good. So, you’re capturing some of the value. And then, just a slightly related question. So for me as a consumer, let’s say that my bank starts using Okta for the external use case, am I going to experience anything different?

It depends on how they use it. So, they might use it just as a backend infrastructure piece to store the user profile and really automate the backend. But they might use it also to really automate the Multi-Factor Authentication and make it, so you don’t have to carry around the hard token, make it so that you can choose or receive an SMS or a push notification when you log into your bank. So, it depends on how it’s implemented. And that’s why as companies choose to use Okta for external, that’s why the developer is so important, because there is a developer that’s going to be integrating this into the website of the mobile app. But the good news is that with the Okta platform, it’s very easy for the customers to make these decisions and deliver better end user experience while also maintaining super high security, which is why we are seeing the traction we are seeing in that segment of the market and across all segments of the market.

That does conclude our question-and-answer session. I would like to turn the call back over to Todd McKinnon for any closing remarks.

So, thanks everyone again for joining us today. We are really excited about the results from today. I would just like to close with the final remainder that we are holding Oktane, which is our annual customer and partner event, it’s August 29th in Las Vegas. And this year, we are going to have about 2,000 customers and partners and prospects there, and we will be making exciting announcements about the product and about the Company. And really it’s like a big celebration with our customers on their success and the potential of what we could do together in the future. So, hopefully, we will see you all there. And thanks again for your time and I look forward to meeting you in person soon. Have a good afternoon.

Once again, that does conclude today’s call. We appreciate your participation.