- Q3 revenue grew 45% year-over-year; subscription revenue grew
48% year-over-year
- Total remaining performance obligations, or subscription
revenue backlog, surpasses $1 billion
- The only identity company named a Leader in Zero Trust by
Independent Research Firm
Okta, Inc. (NASDAQ: OKTA), the leading independent provider of
identity for the enterprise, today announced financial results for
its third quarter ended October 31, 2019.
"Our strong third quarter results reflect our expanding
leadership position and the growing importance of identity," said
Todd McKinnon, Chief Executive Officer and co-founder of Okta.
"Industry leading growth in subscription revenue, remaining
performance obligations, and billings were driven by strong
execution and the continued secular tailwinds of increasing
adoption of cloud applications, digital transformation as companies
improve how they connect with their employees and customers, and
deployment of zero trust security environments. Businesses of all
sizes around the world are turning to Okta's cloud-based solutions
for a modern, highly customizable identity platform that meets
their business needs and security challenges. We've made great
progress and continue to innovate to address this large and growing
market opportunity."
Third Quarter Fiscal 2020 Financial Highlights:
- Revenue: Total revenue was $153.0 million, an increase
of 45% year-over-year. Subscription revenue was $144.5 million, an
increase of 48% year-over-year.
- Remaining Performance Obligations (RPO): Total RPO was
$1.03 billion, an increase of 68% year-over-year. Current RPO,
which is revenue expected to be recognized over the next 12 months,
was $515.9 million, up 52% compared to the third quarter of fiscal
2019.
- Calculated Billings: Total calculated billings were
$175.6 million, an increase of 42% year-over-year.
- Operating Loss: GAAP operating loss was $45.7 million,
or 30% of total revenue, compared to $28.5 million, or 27% of total
revenue, in the third quarter of fiscal 2019. Non-GAAP operating
loss was $8.1 million, or 5% of total revenue, compared to $6.5
million, or 6% of total revenue, in the third quarter of fiscal
2019.
- Net Loss: GAAP net loss was $63.5 million, compared to
$29.5 million in the third quarter of fiscal 2019. GAAP net loss
per share was $0.53, compared to $0.27 in the third quarter of
fiscal 2019. Non-GAAP net loss was $8.1 million, compared to $3.9
million in the third quarter of fiscal 2019. Non-GAAP net loss per
share was $0.07, compared to $0.04 in the third quarter of fiscal
2019.
- Cash Flow: Net cash provided by operations was $10.6
million, or 7% of total revenue, compared to net cash used in
operations of $6.4 million, or 6% of total revenue, in the third
quarter of fiscal 2019. Free cash flow was $9.2 million, or 6% of
total revenue, compared to $1.4 million, or 1% of total revenue, in
the third quarter of fiscal 2019.
- Cash, cash equivalents, and short-term investments were
$1.37 billion.
The section titled "Non-GAAP Financial Measures" below contains
a description of the non-GAAP financial measures and
reconciliations between GAAP and non-GAAP information are contained
in the tables below.
Financial Outlook:
For the fourth quarter of fiscal 2020, the company expects:
- Total revenue of $155 million to $156 million, representing a
growth rate of 34% to 35% year-over-year
- Non-GAAP operating loss of $10.1 to $9.1 million
- Non-GAAP net loss per share of $0.05 to $0.04, assuming
weighted shares outstanding of approximately 122 million
For the full year fiscal 2020, the company now expects:
- Total revenue of $574 million to $575 million, representing a
growth rate of 44% year-over-year
- Non-GAAP operating loss of $53.1 to $52.1 million
- Non-GAAP net loss per share of $0.35 to $0.34, assuming
weighted shares outstanding of approximately 117 million
These statements are forward-looking and actual results may
differ materially. Refer to the Forward-Looking Statements safe
harbor below for information on the factors that could cause our
actual results to differ materially from these forward-looking
statements.
Okta has not reconciled its expectations as to non-GAAP
operating loss and non-GAAP net loss per share to their most
directly comparable GAAP measure because certain items are out of
Okta’s control or cannot be reasonably predicted. Accordingly, a
reconciliation for forward-looking non-GAAP operating loss and
non-GAAP net loss per share is not available without unreasonable
effort.
Named a Leader in Zero Trust:
Okta was recognized as a Leader in The Forrester WaveTM: Zero
Trust eXtended Ecosystem Platform Providers, Q4 2019, a report
published by Forrester Research, Inc. on October 29, 2019. In the
Forrester report, Okta earned the highest possible scores across
half of the criteria upon which it was evaluated including “network
security,” “people/workforce security,” “automation and
orchestration,” “manageability and usability,” “ZTX vision and
strategy,” “ZTX advocacy,” “customers investing in portfolio,” and
“portfolio growth rate.”
Conference Call Information:
Okta will host a conference call and live webcast for analysts
and investors at 2:00 p.m. Pacific Time on December 5, 2019. The
news release with the financial results will be accessible from the
Company’s website at investor.okta.com prior to the conference
call. Interested parties can access the call by dialing (800)
458-4148 or (323) 794-2093 and using the passcode 7651253.
A live webcast of the conference call will be accessible from
the Okta investor relations website at investor.okta.com.
Supplemental Financial and Other Information:
Supplemental financial and other information can be accessed
through the Company’s investor relations website at
investor.okta.com.
Non-GAAP Financial Measures:
This press release and the accompanying tables contain the
following non-GAAP financial measures: non-GAAP gross profit,
non-GAAP gross margin, non-GAAP operating loss, non-GAAP operating
margin, non-GAAP net loss, non-GAAP net loss per share, free cash
flow, current calculated billings and calculated billings. Certain
of these non-GAAP financial measures exclude stock-based
compensation, amortization of debt discount, charitable
contributions, amortization of intangible assets,
acquisition-related expenses and loss on early extinguishment of
debt, net of debt issuance costs.
Okta believes that non-GAAP financial information, when taken
collectively with GAAP financial measures, may be helpful to
investors because it provides consistency and comparability with
past financial performance and assists in comparisons with other
companies, some of which use similar non-GAAP financial information
to supplement their GAAP results. The non-GAAP financial
information is presented for supplemental informational purposes
only, and should not be considered a substitute for financial
information presented in accordance with GAAP, and may be different
from similarly-titled non-GAAP measures used by other
companies.
The principal limitation of these non-GAAP financial measures is
that they exclude significant expenses and income that are required
by GAAP to be recorded in the Company’s financial statements. In
addition, they are subject to inherent limitations as they reflect
the exercise of judgment by the Company's management about which
expenses and income are excluded or included in determining these
non-GAAP financial measures. A reconciliation is provided below for
each non-GAAP financial measure to the most directly comparable
financial measure stated in accordance with GAAP.
Okta encourages investors to review the related GAAP financial
measures and the reconciliation of these non-GAAP financial
measures to their most directly comparable GAAP financial measures,
which it includes in press releases announcing quarterly financial
results, including this press release, and not to rely on any
single financial measure to evaluate the Company’s business. Please
see the reconciliation tables at the end of this release for the
reconciliation of GAAP and non-GAAP results.
Forward-Looking Statements: This press release contains
"forward-looking statements" within the meaning of the "safe
harbor" provisions of the Private Securities Litigation Reform Act
of 1995, including but not limited to, statements regarding our
financial outlook, product development, business strategy and plans
and market trends, opportunities and positioning. These
forward-looking statements are based on current expectations,
estimates, forecasts and projections. Words such as "expect,"
"anticipate," "should," "believe," "hope," "target," "project,"
"goals," "estimate," "potential," "predict," "may," "will,"
"might," "could," "intend," "shall" and variations of these terms
and similar expressions are intended to identify these
forward-looking statements, although not all forward-looking
statements contain these identifying words. Forward-looking
statements are subject to a number of risks and uncertainties, many
of which involve factors or circumstances that are beyond our
control. For example, the market for our products may develop more
slowly than expected or than it has in the past; our operating
results may fluctuate more than expected; there may be significant
fluctuations in our results of operations and cash flows related to
our revenue recognition or otherwise; a network or data security
incident that allows unauthorized access to our network or data or
our customers’ data could damage our reputation; we could
experience interruptions or performance problems associated with
our technology, including a service outage; we may not be able to
pay off our convertible senior notes when due; and global economic
conditions could deteriorate. Further information on potential
factors that could affect our financial results is included in our
most recent Quarterly Report on Form 10-Q and our other filings
with the Securities and Exchange Commission. The forward-looking
statements included in this press release represent our views only
as of the date of this press release and we assume no obligation
and do not intend to update these forward-looking statements.
About Okta
Okta is the leading independent provider of identity for the
enterprise. The Okta Identity Cloud enables organizations to
securely connect the right people to the right technologies at the
right time. With over 6,500 pre-built integrations to applications
and infrastructure providers, Okta customers can easily and
securely use the best technologies for their business. Over 7,400
organizations, including 20th Century Fox, JetBlue, Nordstrom,
Slack, Teach for America and Twilio, trust Okta to help protect the
identities of their workforces and customers.
OKTA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share
data)
(unaudited)
Three Months Ended October
31,
Nine Months Ended October
31,
2019
2018
2019
2018
Revenue:
Subscription
$
144,517
$
97,698
$
394,174
$
262,393
Professional services and other
8,520
7,878
24,566
21,390
Total revenue
153,037
105,576
418,740
283,783
Cost of revenue:
Subscription (1)
30,124
20,265
82,581
55,808
Professional services and other (1)
10,700
9,435
32,118
26,227
Total cost of revenue
40,824
29,700
114,699
82,035
Gross profit
112,213
75,876
304,041
201,748
Operating expenses:
Research and development (1)
41,832
27,596
115,909
72,354
Sales and marketing (1)
87,224
56,911
247,721
165,408
General and administrative (1)
28,887
19,848
81,540
55,873
Total operating expenses
157,943
104,355
445,170
293,635
Operating loss
(45,730
)
(28,479
)
(141,129
)
(91,887
)
Interest expense
(7,826
)
(4,118
)
(16,371
)
(10,893
)
Other income, net
4,982
2,413
11,346
6,211
Loss on early extinguishment of debt
(14,572
)
—
(14,572
)
—
Interest expense and other income, net
(17,416
)
(1,705
)
(19,597
)
(4,682
)
Loss before provision for (benefit from)
income taxes
(63,146
)
(30,184
)
(160,726
)
(96,569
)
Provision for (benefit from) income
taxes
349
(667
)
(2,285
)
(1,883
)
Net loss
$
(63,495
)
$
(29,517
)
$
(158,441
)
$
(94,686
)
Net loss per share, basic and diluted
$
(0.53
)
$
(0.27
)
$
(1.37
)
$
(0.89
)
Weighted-average shares used to compute
net loss per share, basic and diluted
118,976
108,776
115,598
106,587
(1) Amounts include share-based
compensation expense as follows (in thousands):
Three Months Ended October
31,
Nine Months Ended October
31,
2019
2018
2019
2018
Cost of subscription revenue
$
3,604
$
2,383
$
9,137
$
5,813
Cost of professional services and other
revenue
1,900
1,305
5,292
3,277
Research and development
10,894
6,291
26,322
15,776
Sales and marketing
10,937
6,228
26,959
15,852
General and administrative
8,400
5,335
21,984
13,181
Total share-based compensation expense
$
35,735
$
21,542
$
89,694
$
53,899
OKTA, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(unaudited)
October 31, 2019
January 31, 2019
As Adjusted (1)
Assets
Current assets:
Cash and cash equivalents
$
1,039,626
$
298,394
Short-term investments
326,629
265,374
Accounts receivable, net of allowances
101,778
91,926
Deferred commissions
29,544
24,185
Prepaid expenses and other current
assets
29,023
28,237
Total current assets
1,526,600
708,116
Property and equipment, net
51,730
52,921
Operating lease right-of-use assets
126,746
121,389
Deferred commissions, noncurrent
65,466
54,812
Intangible assets, net
33,826
13,897
Goodwill
47,964
18,089
Other assets
18,445
15,089
Total assets
$
1,870,777
$
984,313
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
4,924
$
2,431
Accrued expenses and other current
liabilities
33,288
33,653
Accrued compensation
34,212
19,770
2023 Convertible senior notes, net
99,227
271,628
Deferred revenue
306,743
245,622
Total current liabilities
478,394
573,104
2025 Convertible senior notes, net
828,237
—
Operating lease liabilities,
noncurrent
153,960
147,046
Deferred revenue, noncurrent
7,013
8,768
Other liabilities, noncurrent
4,779
3,018
Total liabilities
1,472,383
731,936
Stockholders’ equity:
Preferred stock
—
—
Class A common stock
11
10
Class B common stock
1
1
Additional paid-in capital
1,048,899
744,896
Accumulated other comprehensive income
(loss)
135
(319
)
Accumulated deficit
(650,652
)
(492,211
)
Total stockholders’ equity
398,394
252,377
Total liabilities and stockholders'
equity
$
1,870,777
$
984,313
(1)
The condensed consolidated balance sheet
for the prior period has been adjusted to reflect the adoption of
ASC 842.
OKTA, INC.
SUMMARY OF CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Nine Months Ended October
31,
2019
2018
As Adjusted (1)
Cash flows from operating
activities:
Net loss
$
(158,441
)
$
(94,686
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Stock-based compensation
89,691
53,899
Depreciation, amortization and
accretion
12,336
5,824
Amortization of debt discount and issuance
costs
15,653
10,315
Amortization of deferred commissions
20,541
14,963
Deferred income taxes
(3,069
)
(2,269
)
Non-cash charitable contributions
1,162
1,008
Loss on early extinguishment of debt
14,572
—
Other
84
153
Changes in operating assets and
liabilities:
Accounts receivable
(9,393
)
(17,539
)
Deferred commissions
(36,641
)
(25,907
)
Prepaid expenses and other assets
(1,518
)
(2,822
)
Operating lease right-of-use assets
7,851
12,209
Accounts payable
1,962
(334
)
Accrued compensation
17,352
7,973
Accrued expenses and other liabilities
4,017
1,859
Operating lease liabilities
(4,128
)
(5,614
)
Deferred revenue
58,737
46,036
Net cash provided by operating
activities
30,768
5,068
Cash flows from investing
activities:
Capitalization of internal-use software
costs
(2,659
)
(2,329
)
Purchases of property and equipment
(9,980
)
(14,253
)
Purchases of securities available for sale
and other
(321,462
)
(478,138
)
Proceeds from maturities of securities
available for sale
244,393
219,650
Proceeds from sales of securities
available for sale and other
17,329
12,470
Purchases of intangible assets
(8,500
)
—
Payments for business acquisition, net of
cash acquired
(44,223
)
(15,616
)
Net cash used in investing activities
(125,102
)
(278,216
)
Cash flows from financing
activities:
Proceeds from issuance of convertible
senior notes, net of issuance costs
1,040,760
334,980
Payments for repurchases of 2023
convertible senior notes
(224,414
)
—
Purchases of hedges related to 2023
convertible senior notes
—
(80,040
)
Proceeds from hedges related to 2023
convertible senior notes
405,851
—
Proceeds from issuance of warrants related
to 2023 convertible senior notes
—
52,440
Payments for warrants related to 2023
convertible senior notes
(358,622
)
—
Purchases of capped calls related to 2025
convertible senior notes
(74,094
)
—
Proceeds from stock option exercises, net
of repurchases
36,371
28,524
Proceeds from shares issued in connection
with employee stock purchase plan
9,005
6,654
Other, net
(126
)
(206
)
Net cash provided by financing
activities
834,731
342,352
Effects of changes in foreign currency
exchange rates on cash, cash equivalents and restricted cash
(241
)
(990
)
Net increase in cash, cash equivalents and
restricted cash
740,156
68,214
Cash, cash equivalents and restricted cash
at beginning of period
311,215
136,233
Cash, cash equivalents and restricted
cash at end of period
$
1,051,371
$
204,447
(1)
The condensed consolidated statement of
cash flows for the prior period has been adjusted to reflect the
adoption of ASC 842.
OKTA, INC.
Reconciliation of GAAP to
Non-GAAP Data
(In thousands, except percentages
and per share data)
(unaudited)
Three Months Ended October 31,
2019
GAAP
Stock-based
compensation
Charitable
contributions
Amortization of acquired
intangibles
Amortization of debt
discount
Loss on early extinguishment
of debt (2)
Non-GAAP
Cost of revenue:
Cost of subscription services
$
30,124
$
(3,604
)
$
—
$
(1,347
)
$
—
$
—
$
25,173
Cost of professional services
10,700
(1,900
)
—
—
—
—
8,800
Gross profit
112,213
5,504
—
1,347
—
—
119,064
Gross margin
73.3
%
3.6
%
—
0.9
%
—
—
77.8
%
Operating expenses:
Research and development
41,832
(10,894
)
—
—
—
—
30,938
Sales and marketing
87,224
(10,937
)
—
—
—
—
76,287
General and administrative
28,887
(8,400
)
(510
)
—
—
—
19,977
Operating loss
(45,730
)
35,735
510
1,347
—
—
(8,138
)
Operating margin
(29.9
)%
23.4
%
0.3
%
0.9
%
—
—
(5.3
)%
Interest expense and other Income, net
(17,416
)
—
—
—
7,052
10,794
430
Net loss
$
(63,495
)
$
35,735
$
510
$
1,347
$
7,052
$
10,794
$
(8,057
)
Net loss per share (1)
$
(0.53
)
$
0.30
$
—
$
0.01
$
0.06
$
0.09
$
(0.07
)
(1)
GAAP and Non-GAAP net loss per share
calculated based upon 118,976 basic and diluted weighted-average
shares of common stock.
(2)
Excludes debt issuance costs.
Three Months Ended October 31,
2018
GAAP
Stock-based
compensation
Amortization of acquired
intangibles
Amortization of debt
discount
Non-GAAP
Cost of revenue:
Cost of subscription services
$
20,265
$
(2,383
)
$
(449
)
$
—
$
17,433
Cost of professional services
9,435
(1,305
)
—
—
8,130
Gross profit
75,876
3,688
449
—
80,013
Gross margin
71.9
%
3.4
%
0.5
%
—
75.8
%
Operating expenses:
Research and development
27,596
(6,291
)
—
—
21,305
Sales and marketing
56,911
(6,228
)
—
—
50,683
General and administrative
19,848
(5,335
)
—
—
14,513
Operating loss
(28,479
)
21,542
449
—
(6,488
)
Operating margin
(27.0
)%
20.5
%
0.4
%
—
(6.1
)%
Interest expense and other Income, net
(1,705
)
—
—
3,604
1,899
Net loss
$
(29,517
)
$
21,542
$
449
$
3,604
$
(3,922
)
Net loss per share (1)
$
(0.27
)
$
0.20
$
—
$
0.03
$
(0.04
)
(1)
GAAP and Non-GAAP net loss per share
calculated based upon 108,776 basic and diluted weighted-average
shares of common stock.
OKTA, INC.
Reconciliation of GAAP to
Non-GAAP Data
(In thousands, except percentages
and per share data)
(unaudited)
Nine Months Ended October 31,
2019
GAAP
Stock-based
compensation
Charitable
contributions
Amortization of acquired
intangibles
Amortization of debt
discount
Acquisition- related
expenses
Loss on early extinguishment
of debt (2)
Non-GAAP
Cost of revenue:
Cost of subscription services
$
82,581
$
(9,137
)
$
—
$
(3,895
)
$
—
$
—
$
—
$
69,549
Cost of professional services
32,118
(5,292
)
—
—
—
—
—
26,826
Gross profit
304,041
14,429
—
3,895
—
—
—
322,365
Gross margin
72.6
%
3.4
%
—
0.9
%
—
—
—
77.0
%
Operating expenses:
Research and development
115,909
(26,322
)
—
—
—
—
—
89,587
Sales and marketing
247,721
(26,959
)
—
—
—
—
—
220,762
General and administrative
81,540
(21,984
)
(1,162
)
—
—
(3,449
)
—
54,945
Operating loss
(141,129
)
89,694
1,162
3,895
—
3,449
—
(42,929
)
Operating margin
(33.7
)%
21.4
%
0.3
%
0.9
%
—
0.8
%
—
(10.3
)%
Interest expense and other Income, net
(19,597
)
—
—
—
14,517
—
10,794
5,714
Net loss
$
(158,441
)
$
89,694
$
1,162
$
3,895
$
14,517
$
3,449
10,794
$
(34,930
)
Net loss per share (1)
$
(1.37
)
$
0.78
$
0.01
$
0.03
$
0.13
$
0.03
$
0.09
$
(0.30
)
(1)
GAAP and Non-GAAP net loss per share
calculated based upon 115,598 basic and diluted weighted-average
shares of common stock.
(2)
Excludes debt issuance costs.
Nine Months Ended October 31,
2018
GAAP
Stock-based
compensation
Charitable
contributions
Amortization of acquired
intangibles
Amortization of debt
discount
Non-GAAP
Cost of revenue:
Cost of subscription services
$
55,808
$
(5,813
)
$
—
$
(449
)
$
—
$
49,546
Cost of professional services
26,227
(3,277
)
—
—
—
22,950
Gross profit
201,748
9,090
—
449
—
211,287
Gross margin
71.1
%
3.2
%
—
0.2
%
—
74.5
%
Operating expenses:
Research and development
72,354
(15,776
)
—
—
—
56,578
Sales and marketing
165,408
(15,852
)
—
—
—
149,556
General and administrative
55,873
(13,181
)
(1,008
)
—
—
41,684
Operating loss
(91,887
)
53,899
1,008
449
—
(36,531
)
Operating margin
(32.4
)%
18.9
%
0.4
%
0.2
%
—
(12.9
)%
Interest expense and other Income, net
(4,682
)
—
—
—
9,539
4,857
Net loss
$
(94,686
)
$
53,899
$
1,008
$
449
$
9,539
$
(29,791
)
Net loss per share (1)
$
(0.89
)
$
0.51
$
0.01
$
—
$
0.09
$
(0.28
)
(1)
GAAP and Non-GAAP net loss per share
calculated based upon 106,587 basic and diluted weighted-average
shares of common stock.
OKTA, INC.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(dollars in thousands)
(unaudited)
Free Cash Flow
Three Months Ended October
31,
Nine Months Ended October
31,
2019
2018
2019
2018
Net cash provided by (used in) operating
activities
$
10,640
$
6,439
$
30,768
$
5,068
Less:
Purchases of property and equipment
(63
)
(4,463
)
(9,980
)
(14,253
)
Capitalization of internal-use software
costs
(1,329
)
(604
)
(2,659
)
(2,329
)
Free cash flow
$
9,248
$
1,372
$
18,129
$
(11,514
)
Net cash provided by (used in) investing
activities
$
22,888
$
(10,545
)
$
(125,102
)
$
(278,216
)
Net cash provided by financing
activities
$
798,399
$
7,469
$
834,731
$
342,352
Free cash flow margin
6.0%
1.3%
4.3%
(4.1)%
Calculated Billings
Three Months Ended October
31,
Nine Months Ended October
31,
2019
2018
2019
2018
Total revenue
$
153,037
$
105,576
$
418,740
$
283,783
Add:
Unbilled receivables, current (beginning
of period)
1,004
818
1,457
809
Deferred revenue, current (end of
period)
306,743
206,146
306,743
206,146
Less:
Unbilled receivables, current (end of
period)
(1,028
)
(1,581
)
(1,028
)
(1,581
)
Deferred revenue, current (beginning of
period)
(283,724
)
(186,427
)
(245,622
)
(159,816
)
Current calculated billings
176,032
124,532
480,290
329,341
Add:
Deferred revenue, noncurrent (end of
period)
7,013
4,977
7,013
4,977
Less:
Deferred revenue, noncurrent (beginning of
period)
(7,469
)
(5,471
)
(8,768
)
(4,963
)
Calculated billings
$
175,576
$
124,038
$
478,535
$
329,355
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191205005300/en/
Investor Contact: Dave Gennarelli investor@okta.com
415-699-0143
Media Contact: Jenna Kozel press@okta.com
415-418-9600
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