- Q1 revenue grew 37% year-over-year; subscription revenue grew
38% year-over-year
- Remaining performance obligations (RPO) grew 52% year-over-year
to $1.89 billion
- Record quarterly operating and free cash flows
- Announces Chief Financial Officer transition
Okta, Inc. (Nasdaq: OKTA), the leading independent identity
provider, today announced financial results for its first quarter
ended April 30, 2021.
"Broad-based demand for both our customer and workforce identity
solutions led to another quarter of strong financial results and an
excellent start to the fiscal year," said Todd McKinnon, Chief
Executive Officer and co-founder of Okta. "Organizations around the
world are turning to Okta to improve the digital customer
experience and to improve how their employees safely connect to
their applications from anywhere. With the closing of the Auth0
acquisition earlier this month, we are further enhancing Okta's
market-leading identity platform, enabling us to provide even more
choice and unprecedented innovation to customers and developers.
Together, we’ll capture more of the massive $80 billion identity
market opportunity even faster."
First Quarter Fiscal 2022 Financial Highlights:
- Revenue: Total revenue was $251 million, an increase of
37% year-over-year. Subscription revenue was $240 million, an
increase of 38% year-over-year.
- Remaining Performance Obligations (RPO): RPO, or
subscription backlog, was $1.89 billion, an increase of 52%
year-over-year. Current RPO, which is contracted subscription
revenue expected to be recognized over the next 12 months, was $899
million, up 45% compared to the first quarter of fiscal 2021.
- Calculated Billings: Total calculated billings were $364
million, an increase of 74% year-over-year. Calculated billings
includes the effect of billings process improvements that were
enacted at the end of the first quarter of fiscal year 2022.
Excluding these changes, calculated billings would have been $293
million, an increase of 40% year-over-year.
- GAAP Operating Loss: GAAP operating loss was $91
million, or 36% of total revenue, compared to a GAAP operating loss
of $52 million, or 29% of total revenue, in the first quarter of
fiscal 2021.
- Non-GAAP Operating Loss: Non-GAAP operating loss was $16
million, or 6% of total revenue, compared to a non-GAAP operating
loss of $12 million, or 7% of total revenue, in the first quarter
of fiscal 2021.
- GAAP Net Loss: GAAP net loss was $109 million, compared
to a GAAP net loss of $58 million in the first quarter of fiscal
2021. GAAP net loss per share was $0.83, compared to a GAAP net
loss per share of $0.47 in the first quarter of fiscal 2021.
- Non-GAAP Net Loss: Non-GAAP net loss was $13 million,
compared to a non-GAAP net loss of $7 million in the first quarter
of fiscal 2021. Non-GAAP basic and diluted net loss per share was
$0.10, compared to a non-GAAP basic and diluted net loss per share
of $0.06 in the first quarter of fiscal 2021.
- Cash Flow: Net cash provided by operations was $56
million, or 22% of total revenue, compared to net cash provided by
operations of $39 million, or 21% of total revenue, in the first
quarter of fiscal 2021. Free cash flow was $53 million, or 21% of
total revenue, compared to $30 million, or 16% of total revenue, in
the first quarter of fiscal 2021.
- Cash, cash equivalents, and short-term investments were
$2.69 billion at April 30, 2021.
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:
Okta's financial outlook for the second quarter and full year
fiscal 2022 includes the expected contribution from the acquisition
of Auth0, net of purchase accounting adjustments. The acquisition
closed on May 3, 2021.
For the second quarter of fiscal 2022, the Company expects:
- Total revenue of $295 million to $297 million, representing a
growth rate of 47% to 48% year-over-year;
- Non-GAAP operating loss of $55 million to $53 million; and
- Non-GAAP net loss per share of $0.36 to $0.35, assuming
weighted-average shares outstanding of approximately 154
million.
For the full year fiscal 2022, the Company now expects:
- Total revenue of $1.215 billion to $1.225 billion, representing
a growth rate of 45% to 47% year-over-year;
- Non-GAAP operating loss of $172 million to $167 million;
and
- Non-GAAP net loss per share of $1.16 to $1.13, assuming
weighted-average shares outstanding of approximately 150
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 measures because certain items are out of
Okta’s control or cannot be reasonably predicted. Accordingly,
reconciliations for forward-looking non-GAAP operating loss and
non-GAAP net loss per share are not available without unreasonable
effort.
Chief Financial Officer Transition:
Okta also announced today that Mike Kourey is stepping down from
his position as Chief Financial Officer, effective June 1, 2021.
Kourey will sign the quarterly report on Form 10-Q, which will be
filed later today, and he will remain at Okta in an advisory role
to help ensure a smooth transition. Brett Tighe, Okta’s Senior Vice
President of Finance and Treasurer, has been appointed as interim
Chief Financial Officer while the Company conducts a search for a
permanent replacement. Tighe has been with Okta for the past six
years, most recently leading the FP&A and Treasury functions.
Prior to joining Okta, Tighe spent nearly 11 years at Salesforce in
various leadership roles within its finance organization.
“I want to thank Mike for his significant contributions to Okta
over the five plus years he was the chair of our audit committee
and for his leadership as CFO. Mike will always be a friend and
considered a member of the Okta family, and we wish him all the
best in his future endeavors,” said McKinnon.
Conference Call Information:
Okta will host a live video webcast at 2:00 p.m. Pacific Time on
May 26, 2021 to discuss the results and outlook. The news release
with the financial results will be accessible from the Company’s
website at investor.okta.com prior to the conference call. The live
video 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 margin, non-GAAP net loss
per share, basic and diluted, free cash flow, free cash flow
margin, current calculated billings and calculated billings.
Certain of these non-GAAP financial measures exclude stock-based
compensation, non-cash charitable contributions, amortization of
acquired intangibles, acquisition-related expenses, amortization of
debt discount and debt issuance costs and loss on conversion of
debt.
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 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 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.
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, business strategy and plans, market trends and
market size, opportunities and positioning and expected benefits
that will be derived from the Auth0 transaction. 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 results of
operations 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; the impact
of COVID-19, related public health measures and any associated
economic downturn on our business and results of operations may be
more than we expect; 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; global economic conditions could
deteriorate; we may not achieve expected synergies and efficiencies
of operations between Okta and Auth0, and we may not be able to
successfully integrate the companies. Further information on
potential factors that could affect our financial results is
included in our most recent Annual Report on Form 10-K 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 identity provider. The Okta
Identity Cloud enables organizations to securely connect the right
people to the right technologies at the right time. With more than
7,000 pre-built integrations to applications and infrastructure
providers, Okta provides simple and secure access to people and
organizations everywhere, giving them the confidence to reach their
full potential. More than 10,650 organizations, including JetBlue,
Nordstrom, Siemens, Slack, T-Mobile, Takeda, Teach for America, and
Twilio, trust Okta to help protect the identities of their
workforces and customers.
Okta uses its investor.okta.com website as a means of disclosing
material non-public information, announcing upcoming investor
conferences and for complying with its disclosure obligations under
Regulation FD. Accordingly, you should monitor our investor
relations website in addition to following our press releases, SEC
filings and public conference calls and webcasts.
OKTA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share
data)
(unaudited)
Three Months Ended April
30,
2021
2020
Revenue:
Subscription
$
240,058
$
173,781
Professional services and other
10,948
9,078
Total revenue
251,006
182,859
Cost of revenue:
Subscription(1)
52,398
37,157
Professional services and other(1)
13,725
11,329
Total cost of revenue
66,123
48,486
Gross profit
184,883
134,373
Operating expenses:
Research and development(1)
68,863
48,494
Sales and marketing(1)
146,521
104,043
General and administrative(1)
60,180
34,035
Total operating expenses
275,564
186,572
Operating loss
(90,681
)
(52,199
)
Interest expense
(22,760
)
(10,764
)
Interest income and other, net
4,355
4,899
Loss on conversion of debt
(136
)
—
Interest and other, net
(18,541
)
(5,865
)
Loss before provision for (benefit from)
income taxes
(109,222
)
(58,064
)
Provision for (benefit from) income
taxes
10
(402
)
Net loss
$
(109,232
)
$
(57,662
)
Net loss per share, basic and diluted
$
(0.83
)
$
(0.47
)
Weighted-average shares used to compute
net loss per share, basic and diluted
131,777
123,494
(1) Amounts include stock-based
compensation expense as follows (in thousands):
Three Months Ended April
30,
2021
2020
Cost of subscription revenue
$
7,250
$
3,975
Cost of professional services and
other
2,342
1,811
Research and development
20,093
11,935
Sales and marketing
21,066
11,160
General and administrative
13,361
8,847
Total stock-based compensation expense
$
64,112
$
37,728
OKTA, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(unaudited)
April 30,
January 31,
2021
2021
Assets
Current assets:
Cash and cash equivalents
$
659,886
$
434,607
Short-term investments
2,030,180
2,121,584
Accounts receivable, net of allowances
218,474
194,818
Deferred commissions
47,822
45,949
Prepaid expenses and other current
assets
55,777
81,609
Total current assets
3,012,139
2,878,567
Property and equipment, net
62,515
62,783
Operating lease right-of-use assets
145,462
149,604
Deferred commissions, noncurrent
110,098
108,555
Intangible assets, net
24,190
27,009
Goodwill
48,023
48,023
Other assets
28,020
24,256
Total assets
$
3,430,447
$
3,298,797
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
9,542
$
8,557
Accrued expenses and other current
liabilities
108,727
53,729
Accrued compensation
48,244
71,906
Convertible senior notes, net
20,781
908,684
Deferred revenue
613,167
502,738
Total current liabilities
800,461
1,545,614
Convertible senior notes, net,
noncurrent
1,751,326
857,387
Operating lease liabilities,
noncurrent
173,467
179,518
Deferred revenue, noncurrent
11,745
10,860
Other liabilities, noncurrent
10,670
11,375
Total liabilities
2,747,669
2,604,754
Stockholders’ equity:
Preferred stock
—
—
Class A common stock
13
12
Class B common stock
1
1
Additional paid-in capital
1,753,842
1,656,096
Accumulated other comprehensive income
5,610
5,390
Accumulated deficit
(1,076,688
)
(967,456
)
Total stockholders’ equity
682,778
694,043
Total liabilities and stockholders'
equity
$
3,430,447
$
3,298,797
OKTA, INC.
SUMMARY OF CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three Months Ended April
30,
2021
2020
Cash flows from operating
activities:
Net loss
$
(109,232
)
$
(57,662
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Stock-based compensation
64,112
37,728
Depreciation, amortization and
accretion
13,134
5,466
Amortization of debt discount and issuance
costs
21,331
10,357
Amortization of deferred commissions
11,816
8,680
Deferred income taxes
(829
)
(905
)
Non-cash charitable contributions
2,024
536
Loss on conversion of debt
136
—
Other, net
(3,804
)
915
Changes in operating assets and
liabilities:
Accounts receivable
(22,747
)
18,250
Deferred commissions
(14,861
)
(11,865
)
Prepaid expenses and other assets
(3,861
)
(3,493
)
Operating lease right-of-use assets
5,072
4,055
Accounts payable
1,627
3,943
Accrued compensation
(23,837
)
2,995
Accrued expenses and other liabilities
10,965
(2,773
)
Operating lease liabilities
(6,285
)
(4,270
)
Deferred revenue
111,314
26,740
Net cash provided by operating
activities
56,075
38,697
Cash flows from investing
activities:
Capitalization of internal-use software
costs
(10
)
(1,000
)
Purchases of property and equipment
(3,259
)
(7,930
)
Purchases of securities available for sale
and other
(189,533
)
(129,079
)
Proceeds from maturities and redemption of
securities available for sale
344,820
102,293
Proceeds from sales of securities
available for sale and other
—
86,320
Purchases of intangible assets
(113
)
—
Net cash provided by investing
activities
151,905
50,604
Cash flows from financing
activities:
Payments for conversions of convertible
senior notes
(12
)
—
Proceeds from hedges related to
convertible senior notes
1
—
Proceeds from stock option exercises
16,190
14,172
Other, net
—
(5
)
Net cash provided by financing
activities
16,179
14,167
Effects of changes in foreign currency
exchange rates on cash, cash equivalents and restricted cash
647
(1,128
)
Net increase in cash, cash equivalents and
restricted cash
224,806
102,340
Cash, cash equivalents and restricted cash
at beginning of period
448,630
531,953
Cash, cash equivalents and restricted
cash at end of period
$
673,436
$
634,293
OKTA, INC. Reconciliation of GAAP to
Non-GAAP Data (In thousands, except percentages and per share
data) (unaudited)
Non-GAAP Gross Profit and Non-GAAP Gross Margin
We define non-GAAP gross profit and non-GAAP gross margin as
GAAP gross profit and GAAP gross margin, adjusted for stock-based
compensation expense included in cost of revenue and amortization
of acquired intangibles.
Three Months Ended April
30,
2021
2020
Gross profit
$
184,883
$
134,373
Add:
Stock-based compensation expense included
in cost of revenue(1)
9,592
5,786
Amortization of acquired intangibles
1,593
1,593
Non-GAAP gross profit
$
196,068
$
141,752
Gross margin
74
%
73
%
Non-GAAP gross margin
78
%
78
%
(1)
See table in footnote (1) to the condensed
consolidated statements of operations above for breakdown of
stock-based compensation expense by line item.
Non-GAAP Operating Loss and Non-GAAP Operating Margin
We define non-GAAP operating loss and non-GAAP operating margin
as GAAP operating loss and GAAP operating margin, adjusted for
stock-based compensation expense, non-cash charitable
contributions, amortization of acquired intangibles and
acquisition-related expenses.
Three Months Ended April
30,
2021
2020
Operating loss
$
(90,681
)
$
(52,199
)
Add:
Stock-based compensation expense(1)
64,112
37,728
Non-cash charitable contributions
2,024
536
Amortization of acquired intangibles
1,593
1,593
Acquisition-related expenses(2)
7,054
—
Non-GAAP operating loss
$
(15,898
)
$
(12,342
)
Operating margin
(36
)%
(29
)%
Non-GAAP operating margin
(6
)%
(7
)%
(1)
See table in footnote (1) to the condensed
consolidated statements of operations above for breakdown of
stock-based compensation expense by line item.
(2)
Acquisition-related expenses include
transaction costs and other non-recurring incremental costs
incurred through the one-year anniversary of transaction close.
Non-GAAP Net Loss, Non-GAAP Net Margin and Non-GAAP Net Loss
Per Share, Basic and Diluted
We define non-GAAP net loss and non-GAAP net margin as GAAP net
loss and GAAP net margin, adjusted for stock-based compensation
expense, non-cash charitable contributions, amortization of
acquired intangibles, acquisition-related expenses, amortization of
debt discount and debt issuance costs and loss on conversion of
debt.
We define non-GAAP net loss per share, basic, as non-GAAP net
loss divided by GAAP weighted-average shares used to compute net
loss per share, basic and diluted.
We define non-GAAP net loss per share, diluted, as non-GAAP net
loss divided by GAAP weighted-average shares used to compute net
loss per share, basic and diluted adjusted for the potentially
dilutive effect of (i) employee equity incentive plans, excluding
the impact of unrecognized stock-based compensation expense, and
(ii) convertible senior notes outstanding and related warrants. In
addition, non-GAAP net loss per share, diluted, includes the
anti-dilutive impact of the Company’s note hedge and capped call
agreements on convertible senior notes outstanding. Accordingly,
the Company did not record any adjustments to non-GAAP net loss for
the potential impact of the convertible senior notes outstanding
under the if-converted method.
Three Months Ended April
30,
2021
2020(1)
Net loss
$
(109,232
)
$
(57,662
)
Add:
Stock-based compensation expense(2)
64,112
37,728
Non-cash charitable contributions
2,024
536
Amortization of acquired intangibles
1,593
1,593
Acquisition-related expenses(3)
7,054
—
Amortization of debt discount and debt
issuance costs(4)
21,331
10,357
Loss on conversion of debt
136
—
Non-GAAP net loss
$
(12,982
)
$
(7,448
)
Net margin
(44
)%
(32
)%
Non-GAAP net margin
(5
)%
(4
)%
Weighted-average shares used to compute
net loss per share, basic and diluted
131,777
123,494
Non-GAAP weighted-average effect of
potentially dilutive securities
—
—
Non-GAAP weighted-average shares used to
compute non-GAAP net loss per share, diluted
131,777
123,494
Net loss per share, basic and diluted
$
(0.83
)
$
(0.47
)
Non-GAAP net loss per share, basic and
diluted(5)
$
(0.10
)
$
(0.06
)
(1)
Prior period has been adjusted to conform
to the current presentation. See footnotes (4) and (5) for
additional details.
(2)
See table in footnote (1) to the condensed
consolidated statements of operations above for breakdown of
stock-based compensation expense by line item.
(3)
Acquisition-related expenses include
transaction costs and other non-recurring incremental costs
incurred through the one-year anniversary of transaction close.
(4)
Amortization of debt issuance costs is an
adjustment to non-GAAP net loss, effective July 31, 2020. Debt
issuance costs included are $0.9 million for the three months ended
April 30, 2021 and $0.6 million for the three months ended April
30, 2020.
(5)
The total impact of the adjustment noted
in footnote (4) for the period noted in footnote (1) above on
non-GAAP net loss per share, basic and diluted is $0.01 for the
three months ended April 30, 2020.
OKTA, INC. Reconciliation of GAAP to
Non-GAAP Financial Measures (In thousands, except percentages)
(unaudited)
Free Cash Flow and Free Cash Flow Margin
We define Free Cash Flow as net cash provided by operating
activities, less cash used for purchases of property and equipment
and capitalized internal-use software costs. Free cash flow margin
is calculated as free cash flow divided by total revenue.
Three Months Ended April
30,
2021
2020
Net cash provided by operating
activities
$
56,075
$
38,697
Less:
Purchases of property and equipment
(3,259
)
(7,930
)
Capitalization of internal-use software
costs
(10
)
(1,000
)
Free cash flow
$
52,806
$
29,767
Net cash used in investing activities
$
151,905
$
50,604
Net cash provided by financing
activities
$
16,179
$
14,167
Free cash flow margin
21
%
16
%
Calculated Billings
We define Calculated Billings as total revenue plus the change
in deferred revenue and less the change in unbilled receivables
during the period.
Three Months Ended April
30,
2021
2020
Total revenue
$
251,006
$
182,859
Add:
Unbilled receivables, current (beginning
of period)
2,604
1,026
Deferred revenue, current (end of
period)
613,167
392,121
Less:
Unbilled receivables, current (end of
period)
(894
)
(1,121
)
Deferred revenue, current (beginning of
period)
(502,738
)
(365,236
)
Current calculated billings
363,145
209,649
Add:
Deferred revenue, noncurrent (end of
period)
11,745
6,070
Less:
Deferred revenue, noncurrent (beginning of
period)
(10,860
)
(6,214
)
Calculated billings
$
364,030
$
209,505
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210526005361/en/
Investor Contact: Dave Gennarelli investor@okta.com
415-851-4744
Media Contact: Jenna Kozel press@okta.com
415-418-9600
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