Okta, Inc. (OKTA) Earnings Call Transcript & Summary

Good day, everyone, and welcome to one of our sessions here at the BofA 2021 Global Technology Conference. I'm Brian Fenske. I'm the TMT sector specialist, and it's my pleasure to be hosting this conversation with the Co-Founder of Okta, Frederic Kerrest. Now Okta is the market leader in identity and access management for both workforce and customer identity. There's a lot to talk about with the company. We'll get right to it. In the latest quarter, I thought an impressive set of results: the accelerated CRPOs of 48% year-over-year growth, up from 34% in the prior quarter; added an impressive 650 new customers. Net retention was impressive. So all the metrics that software investors get excited about looked great. So I wanted to welcome Frederic. It's great to have you here. And just let everyone know, there's an ability to ask questions through the Veracast tool. And I'm on Bloomberg IB. If it's easier for you to just hit me on IB and fire off a question, we're happy to do that. So Frederic, welcome.

Thanks, Brian. Thanks for having me. Excited to be here.

Yes. Of course, of course. So identity has been around a long time. You're competing against a lot of companies that have been doing it for much longer. How did Okta find its way into this market, gain share, disrupt it and build this impressive identity cloud? Tell us a little bit about how you did it.

Yes. Sure. Happy to do that. Like I said, thanks a lot for having me. Very happy to be here and appreciate the opportunity to chat a little bit about Okta and our business and how we've gotten here. We've been in business about 12 years now. Business has gone well as an entrepreneur. If you told me when I started with my co-founder, the 2 of us still run the company that today we'd have north of 3,000 employees, 10,000 customers and just posted a $250 million quarter with RPO growing north of 50% year-over-year after being in public for 17 quarters, who's counting, but I think it's 17, I would have taken it in a heartbeat. But based on where I am right now, it feels like a quaint small business compared to what it's going to be. So I'm always excited to talk about it. Identity, like you said, has been around for a long, long time. I mean traditional enterprise identity management has been around since the '90s. Oracle, IBM, CA, legacy on-prem software providers have had full suites of identity and access management for a long, long time. And traditionally, enterprise identity management was known as something that only large companies could do and only for on-prem software and only for their employees, their workforces, which made a lot of sense because people -- companies used to be a very monolithic stack. You have an SAP shop or an Oracle shop or an IBM shop. So identity always existed, but it existed inside those platforms because the Oracle web server had to talk to the Oracle app server, had to talk to the Oracle database. And it was very simple. If you fired me, when Brian fired Frederic, you just took away my VPN token and my batch to the building, and I was effectively deprovisioned from these systems. It didn't matter when you took me out of the Oracle database. I couldn't get to it, and I couldn't get inside the office anyway. So that was -- it was a good business, but it was a very -- a business that was very focused on companies doing the work themselves. So IBM, Oracle, CA would show up. They'd give you a toolkit. They'd say, implement it yourself. Every implementation was custom because even if you and I had the exact same infrastructure internally, we all had to build and support our own integrations. And if I change either the identity management system or the target application, the whole thing broke and you have to start over. And that means the CEO can't get his e-mail, so you probably hear about it very quickly. And so it was traditionally an on-prem business. It was $1 of software for $5 or $10 of professional services. And when we looked at this business, Todd and I, we worked previously together at Salesforce.com. I served there 19 years ago, and it was about 100 people. He started the year after. He built -- he was in charge of product and engineering. I built a bunch of businesses over 5 years. And we saw the prevalence of early Software as a Service. This is the mid offs, right? So you had -- Salesforce was starting to do okay, SuccessFactors, these other ones. And we talked to our customers and they said, "Look, we want to buy more of these services, but we're starting to run into basic problems." The problems that you and I still have at home today, too many users and too many passwords. And IT had no control because at Salesforce, we were really good around selling around IT. And then SuccessFactors do the same thing. But then when Brian fired Frederic and you didn't deprovision me from these publicly available Internet systems and I went home and logged in from home, IT would get the speeding tickets. And so we realized that like before we thought that Software as a Service are now what we call Enterprise Cloud is just a much better way for most companies to consume most software, ROI, TCO, time to value all the rest of it. But for them to do that effectively and efficiently, we knew that there had to be a new integration layer that was created. And that's what we've came out to build when we started Okta in 2009 as the Okta -- what is now known as the Okta Identity Cloud. And one of the big differentiators is our catalog. I mean we are focused on independence and neutrality, and we have 7,000 pieces of technology that are pre-integrated into the Okta identity network. So all that bespoke professional services work that I talked about that you had to be 20 years ago to Google in all your stuff, that's already set up. So now companies can get up and running much more quickly. It's configuration, not a bunch of coding. And we manage it. So when something happens with a provider, we keep it up to date for the 10,000-plus customers we have today. And that just allows them to go much quicker. And then finally, that whole workforce business, traditional enterprise identity management, we also now have this giant customer identity management business. Digital transformation, most of used term in the world. Basically, everyone just needs to have a better website, better mobile app, better interface and applications with their customers. And that's also a big part of our business. So that's where we've gone over the last 25, 30 years. It's a very exciting time. Like I said, our results are very good. We're very happy about it. But compared to what we now estimate to be an $80 billion TAM that's growing very quickly. Like I said, it feels like a very quaint small business that -- compared to what it could be in 3 or 5 years. So...

Right. Exactly. That's very exciting. So you recently announced and it's underway the, I think, $6.5 billion acquisition of Auth0. Can you describe what that brings to the table? You obviously did an investor deck on this and presented and had a call. But yes, just talk a little bit about why now. If this market opportunity is so large, why -- what was the opportunity that presented itself the need to do this deal now?

Yes. Totally. So as you mentioned, we purchased a company called Auth0. The transaction closed just about a month ago, very beginning of May. We're very excited about it. So Auth0 was -- or is now as part of Okta, the other leading cloud provider for customer identity and access management. So together, we create a very powerful combination. First of all, it strengthens our position as the world's leading independent identity cloud. If you're going to buy a modern identity cloud for customer identity and access management, it's Okta or Auth0 and conveniently, they're now combined, so they have even more strength together. Number two, it creates much more powerful network effects. So we can drive platform innovation, we can better serve our customers, a broader range of use cases and audiences. And I'll talk a little bit about that. And number three, it allows us to capture much more of the massive and growing $80 billion identity market opportunity even faster. So that's why -- that's at a high level the rationale behind it. Auth0 is a great company. We've known them for a long time. In fact, the first picture I have of my co-founder, Todd McKinnon and Eugenio Pace, their CEO, having dinner together was 2015, so 6 years ago. So it's nice, as always, a weekend date that worked out really well. We've known them for a long time and I have a lot of respect for what they're doing. They were founded with really a developer focus on how they build customer identity and access management. The 2 founders were developers. They were developer evangelists. In fact a decade ago, they wrote the book on how to write identity as a developer when they worked at Microsoft. And so they built this great ground-up motion around how developers can get up and running. They had an awesome set of libraries. They have great documentation. They have great sample code. You can really try things out very quickly. And if you're a developer or if you're a technology-focused shop, you can really start to get a lot of flexibility, a lot of speed and a lot of power with their platform. We have built -- we started workforce identity and access management because that was our history. If you look at our first 1,000 customers, that's all they could buy. And then we kind of got sucked into the customer identity and access management business in kind of 2014, 2015, 2016, when some of our larger pharmaceutical customers said, "Hey, there's awesome universal directory. It's a meta directory. It's a virtual directory. It runs in the public cloud. I want to use it for my customer-facing properties, too." And so we kind of got pulled into the business. It's now about 1/4 of our business standalone, without Auth0. So it's $250 million annualized business, growing very fast. So we just added Auth0, which is a $200 million -- it's going to exit this year, $200 million-plus ARR run rate. So now it's going to be $450 million business, which is great. The TAM is $30 billion. So I think that just speaks to how big that market is and how much we can do there. Our motion has traditionally been a lower-code or no-code approach. We give packaged solutions to larger enterprises so that they know how to manage it. We focused a lot on things like high regulation. So when it comes to like FedRAMP with the government or HIPAA compliance or all the rest of this, we work a lot with financial services organizations. So it's a lot more companies that want something more packaged out of the box. So now we've got kind of this great packaging if you want something that you want to just kind of configure as well as a platform if you really want to develop all the tools to make it super customized yourself, and we're putting them together under 1 umbrella. The culture has been very good. We are very bullish about the integration. And in the first month alone, it's gone even better than we thought. There's -- it's a lot of greenfield out there. So a lot of great opportunity. People are going to say -- your next question is probably like, what are you going to do next? The first thing is don't screw up either business. Both businesses are going very well. They got to hit their numbers. We got to hit our numbers. So far so good. The core is looking good. Yours is looking good, like we're in good shape. Okay, fine. Next, we think there's some very easy product integrations we can do to augment both services, make them both better. And then over time, we're going to be able to really broaden out. And if you're now a forward-thinking C-level executive at a Global 2000 company and you're thinking about a new customer identity and access management initiative, you're going to say yourself, "Am I getting my on-prem software? No, I want a cloud solution, conveniently Okta and Auth0 have the powerful combination you need. So.

That's awesome. That's something to be excited about. Local numbers look great. And I guess I had a question about this $80 billion TAM. I think sometimes there's a dual response we get from investors. When there's an $80 billion TAM and you're a very finite or a very small percentage of it, people say, the TAM might as well be anything. So can you help us really contextualize who you're taking that TAM from? Who are you displacing? And what's the road map to get to be a $5 billion company one day?

Yes. I totally agree. First of all, we laid out that we plan on being a $4 billion company by FY '26. So it's not even someday, it's very clear, with growth of at least 35% each year and a target FCF margin of like 20% in FY '26. So just to be very clear, like we are putting a fine point on it. But I totally agree with you. It doesn't matter if it's 10, 20, 80 or 180. Right now, the business is $1 billion. So how do you get bigger? And how do you do that efficiently and effectively? And I'd like to say that we run the company like responsible mature adults. We're not burning dollar bills just for the heck of it. So your question is very well posed. So when we went public in April '17, the total TAM we thought was about $18 billion. That was basically all workforce identity and access management. And those were -- when we think about these TAMs, it's the products that we have today or that we're going to have in the very near future that we've announced and how much we could sell of those, okay? So when we went public, it was basically like Universal Directory, single sign-on, some Lifecycle Management, a little MFA. And then we're kind of trying to grow from there. We redid all those calculations a couple of years ago. But we also just redid them which is what composed of the $80 billion. So we think that $18 billion has gone to about $35 billion. So the total workforce identity and access management business has about doubled in total addressable market, and that's a few things. First of all, it's just there's a lot of legacy on-prem technology that we can now replace. Oracle Identity and Access Management; IBM, Tivoli, TIM and TAM, access and identity manager; all the CA Siteminder infrastructure; all the RSA infrastructure; a lot of the legacy paying identity infrastructure people are starting to replace. So as people think about modernizing their solutions, especially, unfortunately, with what happened last year with COVID, people couldn't get access to their infrastructure, and it just advanced things a little more quickly than even we thought was possible. So people think about, okay, I want to get rid of all that infrastructure, and our products have obviously improved. We ship -- we release about 40 times a year. So you rolled out 4 years, 150 releases. There's a lot more that we can do to help people get rid of their legacy on-prem software today, number one. Number two, traditionally, enterprise identity management for the workforce has been only for large companies. We've kind of democratized it, right? You think a lot about Software as a Service, it's democratized IT. It's a common refrain. What it really means is that the small business and the mid-market can now access technology and power that only used to be reserved for large companies who could afford on-prem deployments. So not only are we able to do a lot more on-prem and get rid of all that on-prem stuff for large companies, but the mid-market now has access to all this new technology that they didn't before. And so that's why that business has basically grown in terms of addressable market over the last 4 years. Then we've added in customer identity management, which we estimated at 0 because it's very hard to estimate, and I'll explain why, and now we think is about $30 billion. The reason why is, look, if you need to ask people if they have budgeted line items than they have had for 20 years, like on workforce, how much do you spend on Oracle? How much do you spend on IBM? How much do you spend on CA Siteminder? I think it's very clear on the IT line item budgets. What's different for customer identity management is the competition is basically build your own. Look, Amazon is very good. You and I have had Amazon log-ins for 20 years buying e-commerce stuff. But most companies do not have the sophistication that Amazon has when it comes to technology nor do they have the people. There's a shortage of 250,000 developers in North America alone today. We're only printing 30,000 a year in our universities, which means it's going to take 7 years to catch up, assuming there was no more growth. I think we all believe there's going to be more growth in software. What does that mean? That means Okta is going to get the developers they need, Facebook probably will, Google might also. Look, FedEx, awesome Okta customer, love them, been to Memphis, Tennessee a whole bunch of times. They have 1,000 job openings for developers right now on their website. They're just not going to get all those developers. And so that's why if we have an opportunity with customer identity and access management, the Okta and Auth0 combination to provide better tools off the shelf for them to plug identity right into their applications, the better off we're all going to be. Now it's very hard if I call the CISO at FedEx, who I know very well. And I say to him, "Hey, Gene, how much are you spending on customer-facing development of identity infrastructure? He would say, "I have no idea what you're talking about. There's no budgeted line item for it." So we're trying to estimate how much people are spending because everyone has to build these customer-facing properties, websites, mobile apps, new application, new infrastructure for their consumers, their business partners, their supply chains. So we estimate it to be $30 billion. It might be $20 billion, it might be $40 billion. I don't know. Like you said, it doesn't really matter. It's huge, and we're not there yet. So that's $30 billion and $35 billion, that's $65 billion of the $80 billion. The last $15 billion are identity, governance and administration and privileged access management, 2 existing markets today where we announced that we're going to be GA-ing products early next year. And we already have those products well in the works already. If you looked at our Advanced Server Access product, which has been doing very well, which we've had for a couple of years, which basically allows people to control access to production development environments for their developers. So if you're a company, you're building a bunch of software, a bunch of websites, you want to make sure your developers, you're controlling their access into AWS and Azure and everything else so that if one of them leaves, he or she doesn't take away the keys to the kingdom and do nefarious acts or something like that. So that's Advanced Server Access. That's the beginning of our privileged access management product suite. And that product is doing very well. We know where the road map is going. PAM is going to be a new SKU. So you're going to be able to buy that product. You're going to be able to buy a bigger kind of supersized version of the product, which is going to be privileged access management. Same is true in IGA, and then I'll talk about how the market is calculated and whose business we're going to steal, which is what you want to know. On the IGA side of the house, governance and administration, same thing. It's basically Lifecycle Management. So the join or move or leave a problem when people -- when employees join. So they join, they get a certain amount of access. They change jobs. That access has not always changed. They leave. Hopefully, you take away they had access, but a lot of times, you don't. Then it's a bunch of entitlement management and a bunch of reporting so that you can give those logs to the others. When Brian fires Frederic and the others show up, they'd say, "Hey, show me where you -- the systems where you -- the auto logs where you deprovisioned Frederic on these publicly available Internet systems that has this mission-critical data in it." Okay, here you go. Perfect. That's what governance and administration is. We have a first set of products there. Lifecycle Management has done very well. Advanced Lifecycle Management has done extremely well. Workflows, which we introduced last year, which beat all of our internal targets. So you combine all those, you do some reporting, some fine grain authorization stuff, and you basically have the beginnings of that product. Again, it will be an additional add-on SKU for more money that customers will buy as part of that whole product suite. So there are existing legacy software vendors in both of those spaces. Those people are selling to large enterprise, exactly the same story I told you about access management earlier. They're selling to large enterprise, on-prem deployments, heavyweight, only works for the biggest companies in the world. The next 50,000 companies who want governance and administration but who don't want to buy the legacy on-prem providers who only sell to 1,000 customers or something, the next 50,000, the mid-market, the lower enterprise, they are the ones who are going to be the first buyers of our products. And by the way, they've been knocking on the door and screaming out at least for 2 years now saying, "When are you going to build this? When are you going to build this? I want to buy it. I want to buy it. And I don't want to buy the old on-prem stuff because I'm moving forward to the cloud." And if you think about what PAM and IGA are, privileged access and identity governance and administration, they're basically derivatives of access management, right? So core access management, which is what our bread and butter is, and then IGA is basically derivative information. It's not net new information. It's giving you the reports on what happened on your identity. Well, if all your identity stuff is running in the cloud, it makes sense, you're not going to take all that identity information and bring it back on-premise to run a bunch of reports to get your auditors. You're going to want to run it all in the cloud. And again, you're going to want it lightweight, modern, using all the modern tools and going in the right direction with 40 releases a year and all the rest of it. So there are legacy vendors there. They have fine businesses. Our first part of the business is not to go in there and go and try and replace their 500 or 1,000 customers. It's to go service the next 10,000 or 20,000 customers. And then over time, when those maintenance changes come up and when our product is fully featured and replace -- can replace those things, we'll go and we'll replace them nice and slowly like we will for Oracle and IBM.

Okay. That's great. So switching gears here a little bit. Some of the people listening to the call maybe intimately familiar with the company and others might. But can you give us a real-world example of how customer identity is priced? How is it for a midsized company coming in and wanting to engage with you guys? How is the product priced? How does the deal work? And then you have, like you said, impressive net retention numbers. So what's that renewal process like or that upsell? What products are they most likely to upsell to?

Yes. Sure. First of all, I don't understand. You mean not everyone on this call spends all their time on Okta? Sorry, I get the question right.

Exactly.

So sure. So there's 2 different sides of the house. Like you said, workforce identity and access management is per user per year, annual contracts, build upfront, multiyear contracts. So you're McKesson, Fortune 8, big Okta customer, 125,000 employees. They have 125,000 seats of a whole bunch of our different products, and they pay us annually, multiyear contracts, annually build in advance, et cetera, et cetera. Okay, fine. Then we've got customer identity and access management, which is different, right, because let's take it a real-world example. MLB, Major League Baseball, is a big Okta customer for workforce, but they only have a couple of thousand employees for CIAM, customer identity and access management, much more importantly. So the 60 million consumers who authenticate into majorleaguebaseball.com or their application to stream the World Series or whatever else, that's all using the Okta authentication infrastructure, okay, so all the identity infrastructure there. Now we don't charge Major League Baseball for the 60 million users that they load in the database. We charge them by what's called annual monthly active users. So it's basically how many real users have authenticated during a monthly period. So it's a bucket of 100,000 or 500,000 or 3 million or whatever it is. It's not to load up the database. It's just what that bucket is. And then it's annual contracts, build up from multiyear just like the rest of it. In terms of dollar-based net retention, I mean, all the cohorts are doing very well, as you said, for -- historically, since as far as I can remember, it's been 115% to 120% dollar-based net retention. I think it went up to 122%. And then it went back down to 121%. People said, "What's going on?" And it's like, "Well, we got more net new customers than existing customers that upsold that quarter." So you'll never win that one, but the numbers are very good, and the net retention is very good as well. And that makes sense. Look, our business is about helping customers be successful. In subscription side, no surprise, right? We drink a lot of Kool-Aid. Salesforce, we brought that along with us. Love our customers is our number one corporate value, and I think we've done a very good job of that. And that leads to that in addition to having obviously the product that works very well and continuing innovation and all that I said. Now when you think about a subscription service like your cell phone or might be a bad example because it's basically an oligopoly. But let's assume there's a whole bunch of different vendors, and you didn't like yours. You could bring number -- especially with number of portability, you could go over to the other guy. In theory, that could happen with cloud-based software as well. But if you're making your customers successful, especially with these customer identity and access management initiatives, they're going to continue to grow their customer-facing properties. And as they do, that's going to be more and more opportunities for us as well. Now we can both upsell from things like Lifecycle Management to Advanced Lifecycle Management. We can cross-sell from workforce to customer identity management or customer identity management to workforce. There's a lot of different ways. And now our products are so full featured, we can really land and expand a whole bunch of different ways. So it used to be the case 5 years ago, it was basically like Universal Directory, single sign-on, maybe some MFA, maybe some LFM, Lifecycle Management. Now it's really you can land everywhere. I mean we start with MFA deals on customer-facing properties where financial institutions were like, "Hey, I need to improve my private wealth management infrastructure because my competitor is doing it and they're eating my lunch, right?" Customer data management is often in the revenue line. Or it will be like, "Hey, I'm trying to deprecate some of my on-prem identity management stuff? Can I buy Okta access gateway to plug it into the Okta identity cloud to get rid of Oracle?" Sure. You can do that too. So there's a whole bunch of different places. It happens on both sides, it cross-sells and upsells over the place. But that's how it's priced.

That's helpful. And it's kind of maybe an odd question, but you guys grew up at Salesforce. You cut your teeth there. Unbelievable company, great culture and a leader, and now you've grown up alongside them. What did you learn from working at that culture? Were there any kind of seminal lessons about either the business model or just from working alongside and near Benioff at that point in time?

Yes. I actually personally interviewed with Marc because there was only 100 people in the company when I got my job. So yes, I mean, absolutely. First of all, the -- I mean, first of all, the technology, right? So Todd and I are both software developers. I have not written a line of production code in 20 years, and I think the world is better off for it. But I did start -- I did learn how to write software in the '90s and get a computer science degree and as did Todd. And we both learned to do it in the client server world, right, where you showed up, you implemented on-prem, heavy-duty PS. Conveniently, you had to call the PS, place every time something broke or every time something changed and that's why extension all these guys developed, these giant businesses, and it was $10 of services for $1 of software. And it was -- I would say that the vendor -- so we grew up in this world. And so that was the world that we started writing software in we saw. And then obviously, we sat at Salesforce, and we had a front row seat to drinking a lot of Kool-Aid in the value of enterprise cloud, Software as a Service, what we now call Enterprise Cloud. TCO, total cost of ownership, much lower. Time to value is much faster, right? And the return on investment is very, very clear. It's also conveniently OpEx, not CapEx, right, when you're buying these services as the customer. So there's just a lot of value in that. There's also continual innovation. You're not just buying a piece of stagnant software that you're then going to implement and the vendor is going to disappear for 18 months until they show up with a maintenance bill and sue you, if you're Oracle, because you're out of compliance. They actually are providing new software for you every week or every 2 weeks or every 3 weeks or every month or whatever it is. The continual innovation of product is what you are paying for in your subscription, okay? So there is much better incentive alignment between the vendor and the customer in the Enterprise Cloud model than there ever was on-prem. Because if I don't make you successful, you're not going to renew. And that's not going to be good for my business. My dollar -- but then I'm going to go on a conference, and Brian is going to ask me about my dollar base net retention is not going to look good, right? And so the business doesn't continue. And so that virtuous cycle is much clearer, and there's much better alignment between the 2. And then just from a culture perspective, putting customers first. I mean customers were never first when it came to on-prem software mainly because it was super complicated. It was only available to the top end of the market. And those are the only people who had any developers in any budget anyway, and then those are the only people got the large -- that the vendors would go sell to. So if you are a mid-market company, you couldn't take advantage of all this technology, this innovation, the democratization of IT that we talked about because it just wasn't available. You didn't have the software developers, and no one will come sell to you anyway. It's like, "Oh, you can't afford a $5 million bill. Forget it. We're not even showing up." Whereas now with the -- such the prevalence of the ease of actually developing software getting in people's hands, of revving it with them, I mean, I spend some time just trying to stay current. We developed a group called Okta Ventures, a $50 million venture fund a couple of years ago, where we've made about a dozen investments in early-stage software companies, obviously all related to identity, security, privacy. That's kept us very current, not only just in terms of what's happening in the technology and the trends, but also seeing how quickly people can develop very robust enterprise software. I also spent a bunch of my time working with the next generation of enterprise software entrepreneurs. We were helped a lot in our growth period, and still are today, by kind of the peers ahead of us. And so I want to pay the favor back. The commence circle keeps going. So I spend a bunch of time with leading enterprise software entrepreneurs who are building the next generation of companies just kind of seeing what they're doing and the speed and the efficiency and the effectiveness of how they're developing software, it's lightyears compared to where it was 25 years ago when I learned how to write software myself. And I think that the benefit really goes to the customer, and I think that's something that is here to stay for sure.

That's great. That's -- I'd love to hear that and pretty inspirational. So I would say we've heard from a lot of companies that COVID has pulled forward shift to the cloud or digital transformation. I would say Brad Sills here, our software analyst, did a CIO survey that confirmed that, that the view of the cloud is that it's more reliable, more secure. And that's a bit of a tone change. What changes are happening out there in the field with your salespeople and you're in customer engagements? What has changed specifically post-COVID versus pre-COVID in the tenor of these conversations, the size of deals, anything?

Yes. Well, first of all, I hope that we are somewhere near post-COVID. That would be amazing.

Yes.

Yes. I mean -- so first of all, the COVID, very unfortunate situation, obviously, for many, many people. We were fortunate that we could help a lot of companies get up and running quickly with modern cloud technology. So it might not have been an acceleration of deals, but we did see a lot more MFA usage. I remember the story actually with FedEx. They became a customer in the fall of '19. They had this rollout plan for like summer of '20, a big company, 85,000 employees -- of net employees, 500,000 globally, if you include all the distribution centers and stuff, I mean, they have like 1,500 ops they want to roll over at the beginning for their workforce. And I remember talking to Gene and like -- Gene Sun, their CISO, in January of '20, and he said, "Yes, yes. We're on plan. May is going to be great." And then he called me in March and was like, "We need to go live next weekend." And I said, "Well, look, I mean, with all due respect, like we can do that. Is FedEx prepared to do that?" He said, "Yes." And sure enough, I mean, it was a little bit bumpy, but it worked out great, so much so that in the May conference call last year, earnings call, he was happy to give a whole bunch of quotes on their successful go-live in a little time. And so I think that they maintain that. FedEx is a great company. But if you think about all of these organizations who're really forced to like jump start into this new world. So these market tailwinds that we've been working on for the last decade, cloud and hybrid IT, digital transformation and Zero Trust security, these are not new. They are all very early, early innings of all this stuff, and there's a long way to go. That's why I think the business is going to do very well in the times ahead, right? Long-term growth is here for the core businesses that we're focused on. What did happen, though, is people realized there was an acceleration by COVID. People saying, "Well, I can't even get into my infrastructure. I can't even go to my data center. Like I can't get in there." Like there's -- the laws say that I can't go outside. There's lockdowns. So how can I -- or I have firewalls and my firewalls were set to support 5,000 people working from home, and instantly, 25,000 people went home. And like this infrastructure came to its knees. And so forward-thinking C-level executives who have been around the industry a long time and/or who've been inside their companies a long time and have a lot of capital realized that this is one of those technology leapfrog moments. And I think that they really took advantage of that. Now people are like, "Oh, did you pull forward a bunch of business last year and now it's going to hurt you this year?" It's like, "No, we talked about -- you made fun of me about how big my TAMs are and how small my business was just 10 minutes ago." So there's certainly plenty of business to do. I think it did help people shift in this realization that, holy cow, this is really one of those opportunities to understand what's going on. And then if you layer on the unfortunate recent and periodic security events that we hear about, whether it's SolarWinds in December, whether it's Microsoft in Q1 of this year, telling everyone with exchange on-prem that they are -- they have security holes in their infrastructure. I think people are starting to realize, "Well, you know what, on-prem software might not also be the best solution for me either. I have limited number of developers. They're not security experts. We have holes. Like let me go and talk to the cloud vendors who can do this for me at scale." So those are kind of the meta trends that have been happening and more recently that accelerated. Look, when we're talking to customers, I mean, our business continues to do very well. If you look at -- we added a record 650 new customers in Q1. Now we have over 10,000 customers. We added 125 companies paying us over $100,000 a year in Q1. We now have over 2,000 large enterprise customers. Half of that 125 were net new to us. You just see the growing opportunities when it comes to the presidential executive order to improve nation's cybersecurity posture. The federal government must advance towards Zero Trust and adopt MFA. I mean these are going to be big things and communally, they have to buy from an improved vendor, which we are. Segment authorization, we have DoD impact Level 4 provisional authorization. We're going to FedRAMP high. So what you really see is we have the opportunity to help all these organizations move forward. And by doing that, you see identity in Okta becoming a primary cloud, right? We're expanding our use cases beyond just core access management with PAM and IGA. We're expanding our customer identity and access management, obviously, with workflows and now Auth0. And what you see happening is identity is becoming the epicenter of an organization's technology connections, and that's a huge opportunity for us. I mean even the forward-thinking group at Gartner has come around. They recently noted in their -- last month, they had a state of the access management conference, and they said they saw a very clear convergence of identity as a foregone conclusion, access management, IGA, PAM and possibly even fraud detection down the line. Now I'm not saying that they announced it a month after we announced it, so we thought we were right. I'm just saying the timing worked out very well for us. So all these things being said, look, we're very fortunate. Business has been good. We're very proud of the results. 45% current RPO year-over-year growth, 52% total RPO growth. I think there's almost $1.9 billion of total RPO now, which is amazing. It's a small business compared to where it's going to be, and I think that's the exciting part of it.

So one, I guess -- we're getting towards the end here. So just international opportunity, and how do you think about that? How is the identity market and access management market different, if at all? I assume it's a little more on-prem still in that world international market. So can you talk about your strategy and thoughts there?

Yes. I think that's exactly right. So first of all, our revenue is 17% international, 83% North America. That's Okta not including Auth0 since obviously that transaction just closed. Auth0 is 40% international. So that will help us a little bit. But the numbers are much lower than they need to be. There's no reason that our international business can't be 25%, 30%, 35% of the business over time. I mean there's no reason at all. Cloud is a global phenomenon, Enterprise Cloud. It's across every industry. It's across every geography. It's across every size of the company. Everyone needs a modern identity solution. So now people say, well, why is it only 17%? Well, there's a lot of low-hanging fruit in North America, and we're slowly making the business more and more profitable. And so if you could put $1 of marketing inside ROI that's faster in North America, you tend to do that. Now people are like, "Why is international not bigger?" Okay. So now we've got to spend the money internationally. But there's no excuse. We're in all the right countries, but we probably have 20, 50, 100 people running around those countries. So we need to make it 3x the size. I think that we have at the top level of the corporate strategy this year and next year already for international, not even expansion but investment in the places where we are because we're in all the right places. But just making sure those investments are really paying off is something we're real focused on. We're going to do that with channel as well. And our new President of Worldwide Go-to-market, Susan St. Ledger, has a great experience in history of doing that internationally; as well as Steve Dodenhoff, our new Head of Worldwide Channels. So obviously, we've been a little bit hampered because we can't get on a plane internationally, and you have to go help those places. The last time I was in Europe was right before the pandemic set in to open the Munich office. Germany did great last year for us, but they could probably do even better if we can go over there. So as soon as we can, we'll go over and support them. But yes, huge opportunity for us. There's no reason it can't be a big market for us internationally. It can't be a much bigger contributor to the business, and it's something we're going to continue to focus on. So...

All right. Well, it looks like we're up against our time limit here. But I want to thank you, Frederic. This was amazing. I'm biased, but you were the best presenter so far.

That's -- I was probably the first one that's what you're saying.

No. Thank you very much. And clients, audience, if anyone has any follow-up questions, please reach out to us and we'll help solve them.

Thanks, Brian. I really appreciate it. Have a good day.

Of course. Bye.

Guys, take care. See you. Bye.