OKTA 10-K & 10-Q changes, risk factors and insider trading

•Adverse general economic, market and industry conditions and reductions in workforce identity and customer identity spending have, in the past,past and may, in the future, reduce demand for our solutions, which could harm our revenue, results of operations and cash flows.

•Interruptions or performance problems that impact the functionality of our technology, systems,systems or infrastructure could result in delays in the deployment of our platforms.

•In the past, we have experienced cybersecurity incidents that allowed unauthorized access to our systems or data or our customers’ data, harmed our reputation, created additional liability,liability and adversely impacted our financial results. We and our third-party service providers may experience similar incidents in the future which may also include disabling access to our service.

•Real or perceived errors, failures, vulnerabilities or bugs in our solutions, including deployment complexity, have,have in the past and could, in the future, harm our business and results of operations.

•The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to the completion of our IPO, including our directors, executive officers, and their affiliates, who held in the aggregate 35.3%32% of the voting power of our capital stock as of January 31, 2025.2026. This will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets,assets or other major corporate transaction requiring stockholder approval.

Adverse general economic, market and industry conditions and reductions in workforce identity and customer identity spending have, in the past,past and may, in the future, reduce demand for our solutions, which could harm our revenue, results of operations and cash flows.

Our revenue, results of operations and cash flows depend on the overall demand for our solutions. ConcernsInternational aboutand regional economic conditions, including instability or security concerns abroad, such as widespread downturns and recessions; geopolitical events; changes in trade policies, trade restrictions, economic sanctions or the inflationthreat andof interestsuch rate environment,actions; the instability of financial institutions, health epidemics, the systemic impact of a widespread recession (in the United States or internationally), energy costs, geopolitical issues, such as Russia’s invasion of Ukraine, orinstitutions; the availability and cost of credit; fluctuations in the inflation and interest rate environment; health epidemics; or energy costs have and could continue to lead to increased market volatility, decreased consumer confidence and diminished growth expectations in the U.S. economy and abroad, which in turn could result in reductions in spending on our platforms by our existing and prospective customers. These economic conditions can occur abruptly. Prolonged economic slowdowns may result in customers requesting us to renegotiate existing contracts on less advantageous terms to us than those currently in place or defaulting on payments due on existing contracts or not renewing at the end of the contract term. For example, rising interest rates in the United States have affected businesses across many industries, including ours, by increasing the costs of labor, employee healthcare and other components, which may further constrain our, our customers’ and prospective customers’ budgets. To the extent there is a sustained general economic downturn, and our platforms and services are perceived by customers or potential customers as costly, or too difficult to deploy or migrate to, our revenue may be disproportionately affected by delays or reductions in spending.

Our ability to increase and maintain revenue growth depends, in part, on our ability to retain and expand our commercial relationships with our existing customers. This requires that our existing customers continue to use our platforms, either by purchasing additional subscriptions or by renewing their subscriptions when existing contract terms expire. Our customers have no obligation to renew their subscriptions after the expiration of their subscription period. They may decide not to renew their subscriptions with a similar contract period, at the same prices and terms,terms or with the same or a greater number of users. In the past, some of our customers have elected not to renew their agreements with us, and it is difficult to accurately predict long-term customer retention and expansion rates. Customer retention and expansion has, in the past,past and may, in the future, decline or fluctuate as a result of a number of factors, such as customers’ satisfaction with our solutions; our prices and pricing plans, including as compared to those of competing software solutions; unfavorable macroeconomic and geopolitical conditions; reductions in customer spending levels; negative sentiment stemming from cybersecurity incidents; customer utilization rates; new offerings; and changes to the packaging of our product offerings. If existing customers do not purchase additional subscriptions or renew their subscriptions, renew on less favorable terms or fail to add more users, our revenue may decline or grow less quickly than anticipated, which would harm our future results of operations.

•changes in remaining performance obligations (“RPO”) due to seasonality, the timing of and compounding effects of renewals, invoice duration, size and timing, new business linearity between quarters and within a quarter, average contract term or fluctuations due to foreign currency movements, all of which may impact implied growth rates;

•expenses related to real estate, including our office leases,leases and other fixed expenses; and

•general economic, market and industry conditions in domestic or international markets, including the inflation and interest rate environment, geopolitical uncertainty and instability.instability; and

Our business depends upon the successful implementation of our solutions by our customers. Increasingly, we, as well as our customers, rely on our network of partners to deliver implementation services, and there may not be enough qualified implementation partners available to meet customer demand. Various other factors may cause implementations to be delayed, inefficient or otherwise unsuccessful, including significant costs to purchase, implement and enable our solutions; changes in our customers’ functional requirements; timeline delays; or deviation from recommended best practices. These and other circumstances may delay our ability to sell additional solutions or result in customers canceling or failing to renew their subscriptions before our solutions have been fully implemented. Unsuccessful, lengthy,lengthy or costly customer implementation and integration projects could result in claims from customers, harm to our reputation,reputation and opportunities for competitors to displace our solutions, each of which could have an adverse effect on our business and results of operations.

We rely on partners to resell our services to public sector entities, and we have made,made and plan to continue to make,make investments to support future sales opportunities in the public sector. The sale of our services to public sector entities is tied to budget cycles,cycles and there are government requirements and authorizations that we may be required to meet. Changes in fiscal or contracting policies or reductions in government spending or workforce could adversely affect the funding for and purchases of our platforms and, in turn, could negatively impact our revenue and future growth. Further, we may be subject to audits and investigations regarding our role as a subcontractor in government contracts, and violations could result in penalties and sanctions, including contract termination, refunding or forfeiting payments, fines,fines and suspension or debarment from future government business. Selling to these entities can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense. Public sector entities often require contract terms that differ from our standard arrangements and impose additional compliance requirements, require increased attention to pricing practices,practices or are otherwise time consuming and expensive to satisfy. For example, some of our public sector customers contract with us on the basis of our authorization under FedRAMP, which requires us to undertake additional actions and expenses to ensure compliance. Public sector entities may also have statutory, contractual,contractual or other legal rights to terminate contracts with our partners for convenience, for lack of funding or due to a default, and any such termination may adversely impact our future results of operations. If we represent that we meet certain standards, authorizations (such as FedRAMP) or requirements and do not meet them, or if such authorizations are suspended or revoked, we could be subject to increased liability from our customers, investigation by regulators,regulators or termination rights. Even if we do meet them, the additional costs associated with providing our service to public sector entities could harm our margins. Moreover, changes in underlying regulatory requirements could be an impediment to our ability to efficiently provide our service to government customers and to grow or maintain our customer base. Any of these risks related to contracting with, or as a subcontractor supporting, public sector entities could adversely impact our future sales and results of operations,operations or make them more difficult to predict.

We believe that developing and maintaining awareness of our brand in a cost-effective manner is critical to achieving widespread acceptance of our existing and future solutions, and is an important element in attracting new customers and retaining existing customers. Furthermore, we believe that the importance of brand recognition is likely to increase as competition in our market increases. Successful promotion of our brand will depend largely on the effectiveness of our marketing and sales efforts,efforts and on our ability to provide reliable and useful solutions at competitive prices and that align with our customers’ needs. In the past, our efforts to build our brand have involved significant expenses and have not always attracted a sufficient number of new customers to be cost-effective.

AsIn ofFebruary fiscal 2026,2025, we arebegan further specializing our sales force to better align with our customers and evolving market demands, which willhas requirerequired us to invest significant financial and other resources. We may not achieve anticipated revenue growth if we are unable to hire and develop talented sales personnel or retain our existing sales personnel, or if our new sales personnel are unable to achieve desired productivity levels in a reasonable period of time or if we are unable to retain our existing sales personnel.time. If our marketing and sales efforts are unsuccessful and we fail to enhance our brand we may fail to attract new customers or retain our existing customers to the extent necessary to realize a sufficient return on our brand-building efforts,efforts. andAs a result, our business, results of operations and financial condition could suffer.

In the past, we have at times adjusted our prices either for individual customers in connection with long-term agreements or for a particular solution. We expect that we may need to change our pricing in future periods and potentially in response to increased costs, including as a result of the inflation and interest rate environmentenvironment, andgeopolitical increasedconsiderations, costs.as well as changes in trade policies, trade restrictions or the threat of such actions. Further, as competitors introduce new solutions that compete with oursours, or if they reduce their prices,prices or adopt preferable pricing models for evolving technologies, such as AI agents, we may be unable to attract new customers or retain existing customers based on our historical pricing. As we further expand internationally,internationally and into additional verticals, we also must determine the appropriate price to enable us to compete effectively internationally.effectively. In addition, if our mix of solutions sold changes, then we may need to, or choose to, revise our pricing. As a result, we may be required or choose to reduce our prices or change our pricing model, which could harm our business, results of operations and financial condition.

We may need to raise additional funds, and we may not be able to obtain additional debt or equity financing on favorable terms, if at all. If we raise additional equity or convertible debt financing, our security holders may experience significant dilution of their ownership interests. If we engage in additional debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions. If we need additional capital and cannot raise it on acceptable terms,terms or at all, we may not be able to effectively grow our business or respond to competitive pressures, which could harm our business, results of operations and financial condition.

We are subject to numerous obligations in our contracts with our customers and partners. Despite the procedures, systems and internal controls we have implemented to comply with our contracts, we may breach these commitments, whether through a weakness in these procedures, systems and internal controls, negligence or the willful act of an employee or contractor. Our insurance policies, including our errors and omissions insurance, may be inadequate to compensate us for the potentially significant losses that may result from claims arising from breaches of our contracts, disruptions in our service, including those caused by cybersecurity incidents, failures or disruptions to our infrastructure, catastrophic events and disasters or otherwise. In addition, such insurance may not be available to us in the future on economically reasonable terms,terms or at all. Further, our insurance may not cover all claims made against us and defending a suit, regardless of its merit, could be costly and divert management’s attention.

Evolving and complex scrutiny of sustainability matters may require us to incur additional costs or otherwise adversely impact our reputation or business.

IncreasedInvestors, attentionregulators, tocustomers environmentaland other stakeholders, both in the United States and internationally, are increasingly attentive to, and have evolving expectations about, sustainability and social issues, as well as societal expectations regarding voluntary sustainability initiatives and disclosures, may result in increased costs (including but not limited to, increased costs related to compliance, stakeholder engagement and contracting), impact our reputation, or otherwise affect our business performance.disclosures. We have undertaken certain sustainability-related initiatives, goals and commitments, which we have communicated on our website, in our SEC filings and elsewhere.elsewhere, Weand may undertake additional actions in the future. These actions, including establishing certain sustainability goals or targets,targets to improve our sustainability profile and/or respond to demandstakeholder fromdemands investors,or regulators,requirements, customersmay result in increased costs (including, but not limited to, increased costs related to compliance, stakeholder engagement and othermeeting stakeholders,our bothcontractual U.S.-basedcommitments). andOur internationally.ability However,to perform or carry out such actions may be costly or subject to numerous conditions that are outside our control, and we cannot guarantee that suchany actions or outcomes will have the desired effect. Our actual or perceived failure to achieve such goals or targets could negatively impact our reputation and impactotherwise affect our abilitybusiness to compete as effectively to recruit or retain employees.performance.

Interruptions or performance problems that impact the functionality of our technology, systems,systems or infrastructure could result in delays in the deployment of our platforms.

Okta,We Inc. isare the leading independent identity partner. Our Okta Platform and Auth0 Platform,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 Software-as-a-Service ("“SaaS"”) applications, on-premises servers, application programming interfaces,interfaces (“APIs”), IT infrastructure providersproviders, and services from a multitude of devices. EmployeesFor IT and contractorssecurity sign intoleaders, the Okta Platform togoverns seamlesslythe seamless and securelysecure access by human users and non-human identities (“NHIs”) to the applications they need to do their most important workwork. We are expanding these capabilities to include AI agents with morethe modernintroduction of new product offerings currently in development and secureearly experiences in the cloud and via mobile devices.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.

As of January 31, 2025, more than 19,650 customers across nearly every industry used our solutions to secure and manage identities around the world. Our customers consist of leading global organizations ranging from the largest enterprises,enterprises to smallsmall- and medium-sized businesses, universities, non-profitsnonprofits and government agencies. We also partner with leadinga broad range of application, IT infrastructure and security vendors through our Okta Integration Network. As of January 31, 2025,2026, we had over 7,000 integrations with these cloud, mobile and web applicationsapplications, and IT infrastructure and security vendors.

We employ a SaaS business model and generate revenue primarily by selling multi-year subscriptions to our cloud-based offerings. We focus on attracting and retaining our customers by building on and increasing the value we provide to them over time. ByThis retainingcommitment customersto andour increasingcustomers’ value,success wehelps increasedrive theirincreased spendingcustomer withinvestment us through expandingin the number of users who accessof our Okta Platform and Auth0 Platform,Platform and byadoption sellingof our additional product offerings. We sell our product offerings directly through our field and inside sales teams, as well as indirectly through our network of channel partners, including cloud marketplaces, resellers, system integrators and other distribution partners. Our subscription fees include the use of our service and our technical support and management of our platforms. We base subscription fees primarily on the solutions used and the number of users on our platforms. We typically invoice customers in advance in annual installments for subscriptions to our platforms.

In the past we have experienced cybersecurity incidents, such as the January 2022 incident involving one of our third-party service providers and the October 2023 incident where a threat actor gained unauthorized access to and stole information from our third-party customer support system, that harmed our reputation and customer relations,relations and adversely impacted our financial results and may create additional liabilities.results. While we expect the impact of these security incidents to adversely affect our future financial performance, we cannot predict the extent of such impact with certainty. Due to the nature of our business, the announcement of any security incidents, even if not significant, could have these impacts.

Worldwide economic and political uncertainties and negative trends, including financial and credit market fluctuations, tariffs and increasing trade protectionism, changes in government spending levels, uncertainty in the banking sector, risingchanging interest rates, inflation and other impacts from the macroeconomic environment have, and could continue to, adversely affect our business operations or financial results. As we continue to monitor the direct and indirect impacts of these circumstances, the broader implications of these macroeconomic and political events on our business, results of operations and overall financial position remain uncertain. See the section titled “Risk Factors''Factors” included under Part I, Item 1A above for further discussion of the possible impact of these factors and other risks on our business.

We operate our business as one reportable segment. For fiscal 2025,2026, 20242025 and 2023,2024, our revenue was $2,610$2,919 million, $2,263$2,610 million and $1,858$2,263 million, respectively, representing a growth rate of 15%12% and 22%15% in fiscal 20252026 and 2024,2025, respectively. For fiscal 2026 and 2025, we generated net income of $235 million and $28 million, respectively, and for fiscal 2024 and 2023,2024, we generated a net lossesloss of $355 million and $815 million, respectively.million. Our accumulated deficit as of January 31, 20252026 was $2,802$2,567 million.

Total Customers and Number of Customers with Annual Contract Value Above $100,000

The number of customers who have greater than $100,000 in ACV with us was 4,800,5,100, 4,4854,800 and 3,9304,485 as of January 31, 2025,2026, 20242025 and 2023,2024, 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.

We intend to continue to invest additional resources in our platform infrastructure, our platformsplatforms’ support organizations and security posture. We will continue to invest in technology innovation and we anticipate that costs qualifying for capitalization of internal-use software costs and related amortization may fluctuate over time. We expect our investment in technology to expand the capability of our platform,platforms, enabling us to improve our gross margin over time. The level and timing of investment in these areas could affect our cost of subscription revenue in the future.

General and Administrative. General and administrative expenses consist primarily of employee compensation costs for finance, accounting, legal, information technology and human resources personnel. In addition, general and administrative expenses include acquisition and integration-related costs, non-personnel costs, such as legal, accounting and other professional fees, charitable contributions, allocated overhead and all other supporting corporate expenses, such as information technology, not allocated to other departments.expenses.

For fiscal 2025,2026, the decreaseincrease in professional services and other revenue was due to lowerhigher bookings associated with professional services. Beginning in fiscal 2027, we expect professional services and other revenue to decline as we shift more engagements to our partner ecosystem.

For fiscal 2025,2026, cost of professional services and othersubscription revenue decreasedincreased primarily due to aan reductionincrease of $20 million in labor costs, third-party hosting costs of $7$15 million, and software costs of $9 million. This was offset by decreases in consulting costs of $10 million and a decrease in stock-based compensation of $3$8 million, driven by lower headcount.million.

Our gross margin for professional services and othersubscription revenue improved from 79% to (29)%80% during fiscal 20252026. fromThe (36)%increase during fiscal 2024was primarily duedriven toby improved spend efficiency resulting in lower relative cost of professionalsubscription services and other.revenue.

For fiscal 2025,2026, research and development expenses decreased due to a reduction in stock-based compensation expense of $61$20 million, offset by increases in labor costs of $28 million, hosting fees of $6$15 million and softwarehosting costsfees of $2 million. The decrease in research and development as a percentage of total revenue was primarily driven by improved spend efficiency.

For fiscal 2025,2026, sales and marketing expenses decreasedincreased primarily due to aan reductionincrease in labor costs of $34$23 million, marketing costs of $12 million, travel and entertainment of $8 million, software costs of $2 million and a decrease in stock-based compensation expense of $25$1 million, driven by lower headcount.million. The decrease in sales and marketing as a percentage of total revenue was primarily driven by improved spend efficiency. We expect our sales and marketing expenses will continue to be our largest operating expense category for the foreseeable future. We expect sales and marketing expenses as a percentage of total revenue to decrease as our total revenue grows.

For fiscal 2025,2026, general and administrative expenses decreasedremained primarilyflat. due to a reductionIncreases in labor costs of $13 million and stock-based compensation expense of $37$8 million,million were partially offset by increasesdecreases in legal and professional fees of $10 million and consulting costs of $12 million, labor costs of $9 million, and software costs of $6$8 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.

For fiscal 2025, restructuringRestructuring and other charges decreased primarilyin fiscal 2026 due to a reduction in the absencescale of lease impairments along with a smaller overall restructuring plan implemented in fiscal 2025initiatives compared to fiscal 2024.2025.

For fiscal 2025,2026, interest and other, net decreased primarily due to a decrease in gains on early extinguishment of debt related to repurchases of the convertible senior notes offset by an increase in interest income from our short-term investments. We expect interest income to decrease in fiscal 2027 as we deploy investable cash to fund our Share Repurchase Program, settle our 2026 Convertible Senior Notes obligation, and due to changes in the interest rate environment.

We periodically evaluate the realizability of our deferred tax assets based on all available evidence, both positive and negative. The realization of the net deferred tax assets is dependent on our ability to generate sufficient future taxable income during the periods prior to the expiration of tax attributes to fully utilize these assets. Given our current and anticipated future earnings, we may release a significant portion of our valuation allowance in the foreseeable future if there is sufficient positive evidence that outweighs the negative evidence. The release of the valuation allowance would result in the recognition of certain deferred tax assets and a corresponding decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of any potential valuation allowance releasedrelease remains uncertain and is uncertain.subject to change on the basis of the level of profitability that we are able to actually achieve. As of January 31, 20252026 we continue to maintain a full valuation allowance on our deferred tax assets in the United States.

As of January 31, 2025,2026, our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $2,523$2,553 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. treasury securities, money market funds, corporate debt securities and certificates of deposit. Historically, we have generated significant operating losses and both positive and negative cash flows from operations as reflected in our accumulated deficit and consolidated statements of cash flows.

Recent macroeconomic events, including risingchanges in interest rates, global inflation and bank failures, have led to further economic uncertainty in the global economy. To mitigate risk, our cash and cash equivalents are distributed across large financial institutions. In addition, we have policy restrictions in place on the types of securities that can be purchased as part of our available-for-sale securities portfolio. These restrictions take credit quality, liquidity and diversification into consideration among other criteria. We continue to monitor the impacts of this situation; however, there can be no assurances that conditions in the banking sector and in global financial markets will not worsen and/or adversely affect us.

In September 2019, we completed our private offering of the 2025 convertible senior notes (“2025 Notes”) due on September 1, 2025 and received aggregate gross proceeds of $1,060 million. The interest rate on the 2025 Notes is fixed at 0.125% per year and is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2020. In connection with the 2025 Notes, we used a portion of the proceeds to enter into capped call transactions ("“2025 Capped Calls"”) with respect to our Class A common stock. As of January 31, 2025, theThe 2025 Notes are classified as current liabilities due to their upcoming maturitymatured on September 1, 2025, and we currentlysettled intendin to settlefull the principal amount then outstanding of $510 million in cash and the associated then outstanding 2025 NotesCapped inCalls cash.expired unexercised.

In June 2020, we completed our private offering of the 2026 convertible senior notes (“2026 Notes”) due on June 15, 2026 and received aggregate gross proceeds of $1,150 million. The interest rate on the 2026 Notes is fixed at 0.375% per year and is payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2020. In connection with the 2026 Notes, we used a portion of the proceeds to enter into capped call transactions ("“2026 Capped Calls"”) with respect to our Class A common stock. As of January 31, 2026, the outstanding principal balance of the 2026 Notes of $350 million is classified as a current liability due to their upcoming maturity on June 15, 2026 and we currently intend to settle the principal amount of the 2026 Notes in cash.

In the ordinary course of our business, we have and may, at any time and from time to time, seek to extinguish our outstanding 2026 Notes through cash purchases and/or exchanges for equity, in open-market purchases, privately negotiated transactions or otherwise. Such extinguishments, if any, will be conducted on such terms and at such prices as we may determine, and will depend on our evaluation of the prevailing market conditions, trading price of the 2025 Notes and 2026 Notes (collectively, "the Notes"),Notes, our liquidity requirements, legal and contractual restrictions and other factors. During fiscal 2025, we repurchased $42 million principal amount of the 2025 Notes for $40 million in cash, and $258 million principal amount of the 2026 Notes for $240 million in cash, which resulted in an aggregate gain on early extinguishment of debt of $19 million. During fiscal 2024, we repurchased $508 million principal amount of the 2025 Notes for $462 million in cash, and $542 million principal amount of the 2026 Notes for $475 million in cash, which resulted in an aggregate gain on early extinguishment of debt of $106 million. The 2025 Capped Calls and 2026 Capped Calls remained outstanding notwithstanding such repurchase. We may, however, elect to terminate the 2025 Capped Calls or 2026 Capped Calls, in full or in part. In connection with any such termination, the option counterparties or their respective affiliates are expected to modify their hedge positions, which activity could affect the market price of our Class A common stock or the trading price of the Notes that remain outstanding. See Note 8 to our consolidated financial statements “Convertible Senior Notes, Net” and the section titled “Transactions relating to ourthe 2026 Notes may affect the value of our Class A common stock” in “Risk Factors” included under Part I, Item 1A of this Annual Report on Form 10-K for additional information.

We believe our existing cash and cash equivalents, our investments and cash provided by sales of our solutions will be sufficient to meet our short-term and long-term projected working capital and capital expenditure needs for the foreseeable future. Our future capital requirements will depend on many factors, including our subscription growth rate, subscription renewal activity, billing frequency, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the expansion of our international operations, the introduction of new and enhanced product offerings, and the continuing market adoption of our platforms. We continue to assess our capital structure and evaluate the merits of deploying available cash. We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights.rights; additionally, we have, and may in the future, repurchase shares of our Class A common stock from time to time under our Share Repurchase Program. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies this could reduce our ability to compete successfully and harm our results of operations.

During fiscal 2025,2026, cash provided by investing activities was $271 million, compared to cash used in investing activities wasof $314 million, compared to cash provided by investing activities of $441 million during fiscal 2024.2025. The change was primarily attributabledriven toby a decrease inhigher proceeds from maturities and salesredemption of available-for-sale securities and ana increasedecrease in payments for business acquisitions and purchases of securities available-for-sale and other.other securities.

During fiscal 2025,2026, cash used in financing activities was $359$720 million, aan decreaseincrease of $524$361 million compared to fiscal 2024.2025. The decreaseincrease was primarily attributable to loweran volumeincrease ofin payments madeupon formaturity and repurchases of theconvertible Notessenior offsetnotes, byan theincrease in taxes paid related to net share settlement of equity awardsawards, duringand further impacted by common stock repurchases related to the initiation of our share repurchase program in fiscal 2025.2026. 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.

The following table represents the Company’sour known short-term (i.e., the next twelve months) and long-term (i.e., beyond the next twelve months) obligations as of January 31, 20252026:

In the ordinary course of business, we enter into agreements of varying scope and terms pursuant to which we agree to indemnify customers, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by us or from intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with our directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No material demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our consolidated balance sheets, consolidated statements of operations and comprehensive loss,income (loss), or consolidated statements of cash flows.

We primarily derive our revenues primarily from subscription fees and professional services fees. A description of our revenue recognition policies is included in Note 2 to our consolidated financial statements "“Summary of Significant Accounting Policies."”

Our business, results of operations, financial condition, reputation, growth prospects and stock price can be materially and adversely affected by a number of risks and uncertainties, whether currently known or unknown, including those described under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 5, 2026 (the “2026 Form 10-K”). There have been no material changes to the Company’sour risk factors since the 2026 Form 10-K.

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 newthrough product offerings that are currently inavailable developmentor andunder early access.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.

Our customers consist of leading global organizations ranging from the largest enterprises to small- and medium-sized businesses, universities, nonprofits and government agencies. We partner with a broad range of application, IT infrastructure and security vendors through our Okta Integration Network. As of AprilJuly 30,31, 2026, we had over 7,000 integrations with these cloud, mobile and web applications and IT infrastructure and security vendors.

Our revenue is relatively predictable as a result of our subscription-based business model, which constituted 98% of total revenue for the threesix months ended AprilJuly 30,31, 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.

Comparison of the Three and Six Months Ended AprilJuly 30,31, 2026 and 2025

For the three and six months ended AprilJuly 30,31, 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 AprilJuly 30,31, 2026 and an increase in the number of customers as detailed in our Key Business Metrics.

For the three and six months ended AprilJuly 30,31, 2026, professional services and other revenue remaineddecreased flat.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.

For the three months ended AprilJuly 30,31, 2026, cost of subscription revenue increaseddecreased primarily due to a $7 million decrease in amortization expense associated with acquired developed technology, and a $6 million decrease in stock-based compensation expense, offset by an $8 million increase in hosting fees ofand $8a $3 million andincrease laborin costssoftware of $3 million.costs.

Our gross margin for professional services and othersubscription revenue decreasedincreased to (33)%82% for the three months ended AprilJuly 30,31, 2026 compared to (27)%80% for the three months ended AprilJuly 30,31, 20252025. due to anThe increase was primarily driven by lower amortization expense associated with acquired developed technology and improved spend efficiency resulting in laborlower costs.relative cost of subscription revenue.

For the three months ended AprilJuly 30,31, 2026, research and development expenses increased due to an increase in labor costs of $11$10 million and hosting fees of $3$5 million, offset by a decrease in stock-based compensation expense of $6$15 million. The decrease in research and development as a percentage of total revenue was primarily driven by improved spend efficiency.

For the three months ended AprilJuly 30,31, 2026, sales and marketing expenses increased primarily due to increases in labor costs of $30$25 million,million and marketing costs of $6 million and travel costs of $3$2 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.

For the three months ended AprilJuly 30,31, 2026, general and administrative expenses remaineddecreased relativelyprimarily flat.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.

For the three and six months ended AprilJuly 30,31, 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 and settle our 2026 Convertible Senior Notes obligation.Program.

We periodically evaluate the realizability of our deferred tax assets based on all available evidence, both positive and negative. The realization of the net deferred tax assets is dependent on our ability to generate sufficient future taxable income during the periods prior to the expiration of tax attributes to fully utilize these assets. Given our current and anticipated future earnings, we may release a significant portion of our valuation allowance in the foreseeable future if there is sufficient positive evidence that outweighs the negative evidence. The release of the valuation allowance would result in the recognition of certain deferred tax assets and a corresponding decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of any potential valuation allowance release remains uncertain and is subject to change on the basis of the level of profitability that we are able to actually achieve. As of AprilJuly 30,31, 2026, we continue to maintain a full valuation allowance on our deferred tax assets in the United States.

The number of customers who have greater than $100,000 in annual contract value (“ACV”) with us was 5,1805,255 and 4,8704,945 as of AprilJuly 30,31, 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.

As of AprilJuly 30,31, 2026, our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $2,589$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.

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 threesix months ended AprilJuly 30,31, 2026, we repurchased and immediately retired 3,026,8204,569,262 shares of our Class A common stock for an aggregate amount, including commissions, of $241$366 million under the Share Repurchase Program. As of AprilJuly 30,31, 2026, $680$555 million of the originally authorized amount under the Share Repurchase Program remained available for future repurchases.

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 threesix months ended AprilJuly 30,31, 2026 and AprilJuly 30,31, 2025, cash paid to satisfy these employee tax withholding obligations was $48$100 million and $54$102 million, respectively.

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 AprilJuly 30,31, 2026, we had deferred revenue of $1,752$1,781 million, of which $1,729$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.

During the threesix months ended AprilJuly 30,31, 2026, cash provided by operating activities was $277$511 million, an increase of $36$103 million compared to the threesix months ended AprilJuly 30,31, 2025. The increase was primarily attributable to an increase in cash received from customers and improved spend efficiency.

During the threesix months ended AprilJuly 30,31, 2026, cash usedprovided inby investing activities was $78$193 million compared to cash usedprovided inby investing activities of $120$118 million during the threesix months ended AprilJuly 30,31, 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.

During the threesix months ended AprilJuly 30,31, 2026, cash used in financing activities was $293$794 million, an increase of $248$727 million compared to the threesix months ended AprilJuly 30,31, 2025. The increase was primarily attributable to an increase in common stock repurchases.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.

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