Okta, Inc.

Previous wording

We are the leading independent identity provider. Our Okta Platform and Auth0 Platform enable our customers to securely connect the right people to the right technologies and services at the right time. Every day, thousands of organizations and millions of people use our platforms to securely access a wide range of cloud, mobile, web and SaaS applications, on-premises servers, application programming interfaces (“APIs”), IT infrastructure providers, and services from a multitude of devices. For IT and security leaders, the Okta Platform governs the seamless and secure access by human users and non-human identities (“NHIs”) to the applications they need to do their most important work. We are expanding these capabilities to include AI agents with the introduction of new product offerings currently in development and early access. Developers leverage our Okta Platform and Auth0 Platform to securely and efficiently embed identity for both human users and, increasingly, AI agents into the software they build, allowing them to innovate and focus on their core mission.

Current wording

We are the leading independent identity provider. Our Okta Platform and Auth0 Platform enable our customers to securely connect the right people to the right technologies and services at the right time. Every day, thousands of organizations and millions of people use our platforms to securely access a wide range of cloud, mobile, web and SaaS applications, on-premises servers, application programming interfaces (“APIs”), IT infrastructure providers, and services from a multitude of devices. For IT and security leaders, the Okta Platform governs the seamless and secure access by human users and non-human identities (“NHIs”) to the applications they need to do their most important work. We are expanding these capabilities to include AI agents through product offerings that are currently available or under development. Developers leverage our Okta Platform and Auth0 Platform to securely and efficiently embed identity for both human users and, increasingly, AI agents into the software they build, allowing them to innovate and focus on their core mission.

Previous wording

Our revenue is relatively predictable as a result of our subscription-based business model, which constituted 98% of total revenue for the three months ended April 30, 2026. Future growth may be impacted by longer sales cycles, which we have experienced, which in turn, could result in delays in deals closing, creating near-term headwinds for cash flow, RPO and current RPO growth as well as potential future impacts on revenue growth and other key metrics on a trailing basis.

Current wording

Our revenue is relatively predictable as a result of our subscription-based business model, which constituted 98% of total revenue for the six months ended July 31, 2026. Future growth may be impacted by longer sales cycles, which we have experienced, which in turn, could result in delays in deals closing, creating near-term headwinds for cash flow, RPO and current RPO growth as well as potential future impacts on revenue growth and other key metrics on a trailing basis.

Previous wording

Comparison of the Three Months Ended April 30, 2026 and 2025

Current wording

Comparison of the Three and Six Months Ended July 31, 2026 and 2025

Previous wording

For the three months ended April 30, 2026, the increase in subscription revenue was primarily due to an increase in users and sales of additional solutions to existing customers and the addition of new customers. The increase in revenue was attributable to increased revenue from existing customers as reflected in our 107% Dollar-Based Net Retention Rate as of April 30, 2026 and an increase in the number of customers as detailed in our Key Business Metrics.

Current wording

For the three and six months ended July 31, 2026, the increase in subscription revenue was primarily due to an increase in users and sales of additional solutions to existing customers and the addition of new customers. The increase in revenue was attributable to increased revenue from existing customers as reflected in our 107% Dollar-Based Net Retention Rate as of July 31, 2026 and an increase in the number of customers as detailed in our Key Business Metrics.

Previous wording

For the three months ended April 30, 2026, professional services and other revenue remained flat. We expect professional services and other revenue to decline as we shift more engagements to our partner ecosystem.

Current wording

For the three and six months ended July 31, 2026, professional services and other revenue decreased as a result of the shift of our professional services business to global systems integrators. We expect professional services and other revenue to decline as we shift more engagements to our partner ecosystem.

Previous wording

Our gross margin for subscription revenue remained flat.

Current wording

Our gross margin for subscription revenue increased to 82% for the three months ended July 31, 2026 compared to 80% for the three months ended July 31, 2025. The increase was primarily driven by lower amortization expense associated with acquired developed technology and improved spend efficiency resulting in lower relative cost of subscription revenue.

Previous wording

Our gross margin for professional services and other revenue decreased to (33)% for the three months ended April 30, 2026 compared to (27)% for the three months ended April 30, 2025 due to an increase in labor costs.

Current wording

Our gross margin for professional services and other revenue decreased to (70)% for the three months ended July 31, 2026 compared to (24)% for the three months ended July 31, 2025 as a result of lower professional services and other revenue while associated costs remained relatively flat.

Previous wording

For the three months ended April 30, 2026, cost of subscription revenue increased primarily due to an increase in hosting fees of $8 million and labor costs of $3 million.

Current wording

For the six months ended July 31, 2026, cost of subscription revenue increased primarily due to an increase in hosting fees of $16 million, software costs of $5 million and labor costs of $4 million, offset by decreases in stock- based compensation expense of $7 million and amortization expense associated with acquired developed technology of $6 million.

Previous wording

For the three months ended April 30, 2026, research and development expenses increased due to an increase in labor costs of $11 million and hosting fees of $3 million, offset by a decrease in stock-based compensation expense of $6 million.

Current wording

For the three months ended July 31, 2026, research and development expenses increased due to an increase in labor costs of $10 million and hosting fees of $5 million, offset by a decrease in stock-based compensation expense of $15 million. The decrease in research and development as a percentage of total revenue was primarily driven by improved spend efficiency.

Previous wording

For the three months ended April 30, 2026, sales and marketing expenses increased primarily due to increases in labor costs of $30 million, marketing costs of $6 million and travel costs of $3 million, offset by a decrease in stock-based compensation expense of $3 million. We expect our sales and marketing expenses will continue to be our largest operating expense category for the foreseeable future.

Current wording

For the three months ended July 31, 2026, sales and marketing expenses increased primarily due to increases in labor costs of $25 million and marketing costs of $2 million, offset by a decrease in stock-based compensation expense of $3 million.

Previous wording

For the three months ended April 30, 2026, general and administrative expenses remained relatively flat. The decrease in general and administrative as a percentage of total revenue was primarily driven by improved spend efficiency. We expect general and administrative expenses as a percentage of total revenue to decrease as our total revenue grows.

Current wording

For the three months ended July 31, 2026, general and administrative expenses decreased primarily due to decreases in stock-based compensation expense of $5 million and the impact of timing of Okta for Good grants of $4 million. The decrease in general and administrative as a percentage of total revenue was primarily driven by improved spend efficiency. We expect general and administrative expenses as a percentage of total revenue to decrease as our total revenue grows.

Previous wording

For the three months ended April 30, 2026, interest and other, net decreased primarily due to lower interest income from our short-term investment holdings. We expect interest income to decrease in fiscal 2027 as we deploy investable cash to fund our Share Repurchase Program and settle our 2026 Convertible Senior Notes obligation.

Current wording

For the three and six months ended July 31, 2026, interest and other, net decreased primarily due to lower interest income from our short-term investment holdings. We expect interest income to decrease in fiscal 2027 following the cash settlement of our 2026 Notes and as we deploy investable cash to fund our Share Repurchase Program.

Previous wording

The number of customers who have greater than $100,000 in annual contract value (“ACV”) with us was 5,180 and 4,870 as of April 30, 2026 and 2025, respectively. We expect this trend to continue as larger enterprises recognize the value of our platforms and replace their legacy identity access management infrastructure. We define a customer as a separate and distinct buying entity, such as a company, an educational or government institution, or a distinct business unit of a large company that has an active contract with us or one of our partners to access our platforms. For purposes of determining our customer count, we do not include customers that use our platforms under self-service arrangements only.

Current wording

The number of customers who have greater than $100,000 in annual contract value (“ACV”) with us was 5,255 and 4,945 as of July 31, 2026 and 2025, respectively. We expect this trend to continue as larger enterprises recognize the value of our platforms and replace their legacy identity access management infrastructure. We define a customer as a separate and distinct buying entity, such as a company, an educational or government institution, or a distinct business unit of a large company that has an active contract with us or one of our partners to access our platforms. For purposes of determining our customer count, we do not include customers that use our platforms under self-service arrangements only.

Previous wording

As of April 30, 2026, our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $2,589 million, which were held for working capital and general corporate purposes, including potential future acquisition activity. Our cash equivalents and investments consisted primarily of U.S. government securities, money market funds, corporate debt securities and certificates of deposit.

Current wording

As of July 31, 2026, our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $2,299 million, which were held for working capital and general corporate purposes, including potential future acquisition activity. Our cash equivalents and investments consisted primarily of U.S. government securities, money market funds, corporate debt securities and certificates of deposit.

Previous wording

In January 2026, our board authorized a stock repurchase program of up to $1 billion of our outstanding shares of Class A common stock. We have repurchased and may continue to repurchase shares of our Class A common stock from time to time through open market purchases, in privately negotiated transactions, or by other means. Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18. We may also, from time to time, enter into Rule 10b5-1 trading plans to facilitate repurchases of shares. The timing and the amount of stock repurchases under the Share Repurchase Program will be based on our evaluation of factors including business and market conditions, corporate and regulatory requirements, and other considerations. The Share Repurchase Program does not obligate us to repurchase any specific number of shares and may be modified, suspended, or terminated at any time. During the three months ended April 30, 2026, we repurchased and immediately retired 3,026,820 shares of our Class A common stock for an aggregate amount, including commissions, of $241 million under the Share Repurchase Program. As of April 30, 2026, $680 million of the originally authorized amount under the Share Repurchase Program remained available for future repurchases.

Current wording

In January 2026, our board authorized a stock repurchase program of up to $1 billion of our outstanding shares of Class A common stock. We have repurchased and may continue to repurchase shares of our Class A common stock from time to time through open market purchases, in privately negotiated transactions, or by other means. Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18. We may also, from time to time, enter into Rule 10b5-1 trading plans to facilitate repurchases of shares. The timing and the amount of stock repurchases under the Share Repurchase Program will be based on our evaluation of factors including business and market conditions, corporate and regulatory requirements, and other considerations. The Share Repurchase Program does not obligate us to repurchase any specific number of shares and may be modified, suspended, or terminated at any time. During the six months ended July 31, 2026, we repurchased and immediately retired 4,569,262 shares of our Class A common stock for an aggregate amount, including commissions, of $366 million under the Share Repurchase Program. As of July 31, 2026, $555 million of the originally authorized amount under the Share Repurchase Program remained available for future repurchases.

Previous wording

We satisfy employee tax withholding obligations due upon the vesting of share-based awards through net share settlement using available cash. This practice reduces our equity dilution rate and impacts liquidity as our cash requirements for these obligations are primarily driven by the market price of our Class A common stock at the time of vesting. During the three months ended April 30, 2026 and April 30, 2025, cash paid to satisfy these employee tax withholding obligations was$48 million and$54 million, respectively.

Current wording

We satisfy employee tax withholding obligations due upon the vesting of share-based awards through net share settlement using available cash. This practice reduces our equity dilution rate and impacts liquidity as our cash requirements for these obligations are primarily driven by the market price of our Class A common stock at the time of vesting. During thesix months ended July 31, 2026 and July 31, 2025, cash paid to satisfy these employee tax withholding obligations was$100 million and$102 million, respectively.

Previous wording

A significant majority of our customers pay in advance for annual subscriptions. Therefore, a substantial source of our cash is from our deferred revenue, which is included on our condensed consolidated balance sheet as a liability. Deferred revenue consists of the unearned portion of billed fees for our subscriptions, which is recognized as revenue in accordance with our revenue recognition policy. As of April 30, 2026, we had deferred revenue of $1,752 million, of which $1,729 million was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.

Current wording

A significant majority of our customers pay in advance for annual subscriptions. Therefore, a substantial source of our cash is from our deferred revenue, which is included on our condensed consolidated balance sheet as a liability. Deferred revenue consists of the unearned portion of billed fees for our subscriptions, which is recognized as revenue in accordance with our revenue recognition policy. As of July 31, 2026, we had deferred revenue of $1,781 million, of which $1,751 million was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.

Previous wording

During the three months ended April 30, 2026, cash provided by operating activities was $277 million, an increase of $36 million compared to the three months ended April 30, 2025. The increase was primarily attributable to an increase in cash received from customers and improved spend efficiency.

Current wording

During the six months ended July 31, 2026, cash provided by operating activities was $511 million, an increase of $103 million compared to the six months ended July 31, 2025. The increase was primarily attributable to an increase in cash received from customers and improved spend efficiency.

Previous wording

During the three months ended April 30, 2026, cash used in investing activities was $78 million compared to cash used in investing activities of $120 million during the three months ended April 30, 2025. The change was primarily driven by higher proceeds from sales, maturities and redemption of available-for-sale securities partially offset by higher purchases of securities available-for-sale.

Current wording

During the six months ended July 31, 2026, cash provided by investing activities was $193 million compared to cash provided by investing activities of $118 million during the six months ended July 31, 2025. The change was primarily driven by higher proceeds from sales, maturities and redemption of available-for-sale securities partially offset by higher purchases of securities available-for-sale.

Previous wording

During the three months ended April 30, 2026, cash used in financing activities was $293 million, an increase of $248 million compared to the three months ended April 30, 2025. The increase was primarily attributable to an increase in common stock repurchases. The cash outlay for common stock repurchases and taxes paid on net share settlement of equity awards are generally predicated on the closing price of our stock on the respective transaction dates.

Current wording

During the six months ended July 31, 2026, cash used in financing activities was $794 million, an increase of $727 million compared to the six months ended July 31, 2025. The increase was primarily attributable to an increase in common stock repurchases and payments upon maturity of the 2026 Notes. The cash outlay for common stock repurchases and taxes paid on net share settlement of equity awards are generally predicated on the closing price of our stock on the respective transaction dates.

Previous wording

There have been no significant changes to our critical accounting estimates for the three months ended April 30, 2026 from those discussed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

Current wording

There have been no significant changes to our critical accounting estimates for the six months ended July 31, 2026 from those discussed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.