- Q1 revenue grew 19% year-over-year; subscription revenue grew
20% year-over-year
- Current remaining performance obligations (cRPO) grew 15%
year-over-year to $1.949 billion
- Record operating cash flow of $219 million and free cash flow
of $214 million
Okta, Inc. (Nasdaq: OKTA), the leading independent identity
partner, today announced financial results for its first quarter
ended April 30, 2024.
“We began the new fiscal year with record non-GAAP profitability
and cash flow as we continue to benefit from the operating
efficiency actions we’ve taken over the past several quarters,”
said Todd McKinnon, Chief Executive Officer and co-founder of Okta.
“Identity is security and Okta is critical for organizations to
modernize identity for today’s threat landscape. With the
advancements we’ve made on Okta’s Secure Identity Commitment and
our growing product pipeline, we remain well positioned to advance
our market leadership position and win more of the massive
opportunity in both the workforce and customer identity
markets.”
First Quarter Fiscal 2025 Financial Highlights:
- Revenue: Total revenue was $617 million, an increase of
19% year-over-year. Subscription revenue was $603 million, an
increase of 20% year-over-year.
- RPO: RPO, or subscription backlog, was $3.364 billion,
an increase of 14% year-over-year. cRPO, which is subscription
backlog expected to be recognized over the next 12 months, was
$1.949 billion, up 15% compared to the first quarter of fiscal
2024.
- GAAP Operating Loss: GAAP operating loss was $47
million, or (8)% of total revenue, compared to a GAAP operating
loss of $160 million, or (31)% of total revenue, in the first
quarter of fiscal 2024.
- Non-GAAP Operating Income: Non-GAAP operating income was
$133 million, or 22% of total revenue, compared to a non-GAAP
operating income of $37 million, or 7% of total revenue, in the
first quarter of fiscal 2024.
- GAAP Net Loss: GAAP net loss was $40 million, compared
to a GAAP net loss of $119 million in the first quarter of fiscal
2024. GAAP net loss per share was $0.24, compared to a GAAP net
loss per share of $0.74 in the first quarter of fiscal 2024.
- Non-GAAP Net Income: Non-GAAP net income was $117
million, compared to non-GAAP net income of $38 million in the
first quarter of fiscal 2024. Non-GAAP basic and diluted net income
per share were $0.70 and $0.65, respectively, compared to non-GAAP
basic and diluted net income per share of $0.24 and $0.22,
respectively, in the first quarter of fiscal 2024.
- Cash Flow: Net cash provided by operations was $219
million, or 36% of total revenue, compared to net cash provided by
operations of $129 million, or 25% of total revenue, in the first
quarter of fiscal 2024. Free cash flow was $214 million, or 35% of
total revenue, compared to $124 million, or 24% of total revenue,
in the first quarter of fiscal 2024.
- Cash, cash equivalents, and short-term investments were
$2.320 billion at April 30, 2024.
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:
All periods factor in a stable, but still challenging macro
environment, as well as potential impacts on our business related
to the October 2023 security incident.
For the second quarter of fiscal 2025, the Company expects:
- Total revenue of $631 million to $633 million, representing a
growth rate of 13% to 14% year-over-year;
- Current RPO of $1.955 billion to $1.960 billion, representing a
growth rate of 10% to 11% year-over-year;
- Non-GAAP operating income of $123 million to $125 million,
which yields a non-GAAP operating margin of 19% to 20%;
- Non-GAAP diluted net income per share of $0.60 to $0.61,
assuming diluted weighted-average shares outstanding of
approximately 182 million and a non-GAAP tax rate of 26%; and
- Non-GAAP free cash flow margin of approximately 5%.
For the full year fiscal 2025, the Company now expects:
- Total revenue of $2.530 billion to $2.540 billion, representing
a growth rate of 12% year-over-year;
- Non-GAAP operating income of $490 million to $500 million,
which yields a non-GAAP operating margin of 19% to 20%;
- Non-GAAP diluted net income per share of $2.35 to $2.40,
assuming diluted weighted-average shares outstanding of
approximately 182 million and a non-GAAP tax rate of 26%; and
- Non-GAAP free cash flow margin of approximately 22%.
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 forward-looking non-GAAP financial
measures 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 financial measures are not available without unreasonable
effort.
Webcast Information:
Okta will host a live video webcast at 2:00 p.m. Pacific Time on
May 29, 2024 to discuss the results and outlook. The prepared
remarks and the news release with the financial results will be
accessible from the Company’s website at investor.okta.com prior to
the webcast. The live video webcast will be accessible from the
Okta investor relations website at investor.okta.com. A replay will
be available on the Okta investor relations website following the
completion of the event.
Supplemental Financial and Other Information:
Supplemental financial and other information can be accessed
through the Company’s investor relations website at
investor.okta.com. Okta uses its investor.okta.com website and
okta.com/blog websites (including the Security Blog, Okta Developer
Blog and Auth0 Developer Blog) 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 and
okta.com/blog websites in addition to following our press releases,
SEC filings and public conference calls and webcasts.
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 income, non-GAAP
operating margin, non-GAAP net income, non-GAAP net margin,
non-GAAP net income per share, basic and diluted, non-GAAP tax
rate, free cash flow and free cash flow margin. Certain of these
non-GAAP financial measures exclude stock-based compensation,
non-cash charitable contributions, amortization of acquired
intangibles, acquisition and integration-related expenses,
restructuring costs related to severance and termination benefits
and lease impairments in connection with the closing of certain
leased facilities, certain non-ordinary course legal settlements
and related expenses, amortization of debt issuance costs and gain
on early extinguishment of debt. Acquisition and
integration-related expenses include transaction costs and other
non-recurring incremental costs incurred through the one-year
anniversary of the transaction close.
Stock-based compensation is non-cash in nature and is generally
fixed at the time the stock-based instrument is granted and
amortized over a period of several years. Although stock-based
compensation is an important aspect of the compensation of our
employees and executives, the expense for the fair value of the
stock-based instruments we use may bear little resemblance to the
actual value realized upon the vesting or future exercise of the
related stock-based awards. We believe excluding stock-based
compensation provides meaningful supplemental information regarding
the long-term performance of our core business and facilitates
comparison of our results to those of peer companies.
We also exclude non-cash charitable contributions, amortization
of acquired intangibles, acquisition and integration-related
expenses, restructuring costs related to severance and termination
benefits and lease impairments in connection with the closing of
certain leased facilities, certain non-ordinary course legal
settlements and related expenses, amortization of debt issuance
costs and gain on early extinguishment of debt from the applicable
non-GAAP financial measures because these adjustments are
considered by management to be outside of our core operating
results.
In addition to these exclusions, we subtract an assumed
provision for income taxes to calculate non-GAAP net income. We use
a fixed long-term projected tax rate of 26% in our computation of
the non-GAAP income tax provision to provide better consistency
across the reporting periods. The non-GAAP tax rate could be
subject to change for a variety of reasons, including changes in
tax laws and regulations, significant changes in our geographic
earnings mix, or other changes to our strategy or business
operations. We will periodically reevaluate the projected long-term
tax rate, as necessary, for significant events based on our ongoing
analysis of relevant tax law changes, material changes in the
forecasted geographic earnings mix, and any significant
acquisitions.
We define free cash flow, a non-GAAP financial measure, as net
cash provided by operating activities, less cash used for purchases
of property and equipment, net of sales proceeds, and capitalized
software. Free cash flow margin is calculated as free cash flow
divided by total revenue. We use free cash flow as a measure of
financial progress in our business, as it balances operating
results, cash management, and capital efficiency. We believe
information regarding free cash flow provides investors and others
with an important perspective on the cash available to make
strategic acquisitions and investments, to fund ongoing operations,
and to fund other capital expenditures. Free cash flow can be
volatile and is sensitive to many factors, including changes in
working capital and timing of capital expenditures. Working capital
at any specific point in time is subject to many variables,
including seasonality, the discretionary timing of expense
payments, discounts offered by vendors, vendor payment terms, and
fluctuations in foreign exchange rates.
We periodically reassess the components of our non-GAAP
adjustments for changes in how we evaluate our performance and
changes in how we make financial and operational decisions, and
consider the use of these measures by our competitors and peers to
ensure the adjustments remain relevant and meaningful.
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. 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, global economic conditions
have in the past and could in the future reduce demand for our
products; we and our third-party service providers have in the past
and could in the future experience cybersecurity incidents; we may
be unable to manage or sustain the level of growth that our
business has experienced in prior periods; our financial resources
may not be sufficient to maintain or improve our competitive
position; we may be unable to attract new customers, or retain or
sell additional products to existing customers; customer growth has
slowed in recent periods and could continue to decelerate in the
future; we could experience interruptions or performance problems
associated with our technology, including a service outage; we and
our third-party service providers have failed, or were perceived as
having failed, to fully comply with various privacy and security
provisions to which we are subject, and similar incidents could
occur in the future; we may not achieve expected synergies and
efficiencies of operations from recent acquisitions or business
combinations, and we may not be able to successfully integrate the
companies we acquire; and we may not be able to pay off our
convertible senior notes when due. 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 World’s Identity Company. As the leading independent
Identity partner, we free everyone to safely use any
technology—anywhere, on any device or app. The most trusted brands
trust Okta to enable secure access, authentication, and automation.
With flexibility and neutrality at the core of our Okta Workforce
Identity and Customer Identity Clouds, business leaders and
developers can focus on innovation and accelerate digital
transformation, thanks to customizable solutions and more than
7,000 pre-built integrations. We’re building a world where Identity
belongs to you. Learn more at okta.com.
OKTA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(dollars in millions, shares in
thousands, except per share data)
(unaudited)
Three Months Ended
April 30,
2024
2023
Revenue:
Subscription
$
603
$
503
Professional services and other
14
15
Total revenue
617
518
Cost of revenue:
Subscription(1)
130
122
Professional services and other(1)
18
20
Total cost of revenue
148
142
Gross profit
469
376
Operating expenses:
Research and development(1)
163
163
Sales and marketing(1)
236
256
General and administrative(1)
117
110
Restructuring and other charges
—
7
Total operating expenses
516
536
Operating loss
(47
)
(160
)
Interest expense
(2
)
(3
)
Interest income and other, net
27
17
Gain on early extinguishment of debt
—
31
Interest and other, net
25
45
Loss before provision for income taxes
(22
)
(115
)
Provision for income taxes
18
4
Net loss
$
(40
)
$
(119
)
Net loss per share, basic and diluted
$
(0.24
)
$
(0.74
)
Weighted-average shares used to compute
net loss per share, basic and diluted
167,465
161,323
(1) Amounts include stock-based compensation expense as
follows:
Three Months Ended
April 30,
2024
2023
Cost of subscription revenue
$
19
$
16
Cost of professional services and
other
3
4
Research and development
63
68
Sales and marketing
30
38
General and administrative
36
40
Total stock-based compensation expense
$
151
$
166
OKTA, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(dollars in millions)
(unaudited)
April 30,
January 31,
2024
2024
Assets
Current assets:
Cash and cash equivalents
$
322
$
334
Short-term investments
1,998
1,868
Accounts receivable, net of allowances
307
559
Deferred commissions
117
113
Prepaid expenses and other current
assets
173
106
Total current assets
2,917
2,980
Property and equipment, net
47
48
Operating lease right-of-use assets
81
83
Deferred commissions, noncurrent
232
242
Intangible assets, net
184
182
Goodwill
5,448
5,406
Other assets
46
48
Total assets
$
8,955
$
8,989
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
12
$
12
Accrued expenses and other current
liabilities
166
115
Accrued compensation
117
167
Deferred revenue
1,391
1,488
Total current liabilities
1,686
1,782
Convertible senior notes, net,
noncurrent
1,155
1,154
Operating lease liabilities,
noncurrent
108
112
Deferred revenue, noncurrent
19
23
Other liabilities, noncurrent
34
30
Total liabilities
3,002
3,101
Stockholders’ equity:
Preferred stock
—
—
Class A common stock
—
—
Class B common stock
—
—
Additional paid-in capital
8,840
8,724
Accumulated other comprehensive loss
(17
)
(6
)
Accumulated deficit
(2,870
)
(2,830
)
Total stockholders’ equity
5,953
5,888
Total liabilities and stockholders'
equity
$
8,955
$
8,989
OKTA, INC.
SUMMARY OF CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
(unaudited)
Three Months Ended
April 30,
2024
2023
Cash flows from operating
activities:
Net loss
$
(40
)
$
(119
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Stock-based compensation
151
166
Depreciation, amortization and
accretion
21
25
Amortization of deferred commissions
30
23
Deferred income taxes
1
1
Lease impairment charges
—
8
Gain on early extinguishment of debt
—
(31
)
Other, net
3
3
Changes in operating assets and
liabilities:
Accounts receivable
251
191
Deferred commissions
(26
)
(25
)
Prepaid expenses and other assets
(70
)
(13
)
Operating lease right-of-use assets
5
6
Accounts payable
—
(2
)
Accrued compensation
(51
)
(11
)
Accrued expenses and other liabilities
54
(9
)
Operating lease liabilities
(9
)
(10
)
Deferred revenue
(101
)
(74
)
Net cash provided by operating
activities
219
129
Cash flows from investing
activities:
Capitalized software
(4
)
(5
)
Purchases of property and equipment
(1
)
—
Purchases of securities available-for-sale
and other
(459
)
(431
)
Proceeds from maturities and redemption of
securities available-for-sale
324
456
Proceeds from sales of securities
available-for-sale and other
2
61
Payments for business acquisitions, net of
cash acquired
(56
)
(22
)
Net cash provided by (used in) investing
activities
(194
)
59
Cash flows from financing
activities:
Payments for repurchases of convertible
senior notes
—
(332
)
Taxes paid related to net share settlement
of equity awards
(41
)
—
Proceeds from stock option exercises
4
6
Net cash used in financing activities
(37
)
(326
)
Effects of changes in foreign currency
exchange rates on cash, cash equivalents and restricted cash
(1
)
1
Net decrease in cash, cash equivalents and
restricted cash
(13
)
(137
)
Cash, cash equivalents and restricted cash
at beginning of period
342
271
Cash, cash equivalents and restricted cash
at end of period
$
329
$
134
OKTA, INC. Reconciliation of GAAP to
Non-GAAP Data (dollars in millions, shares in thousands, except
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, amortization of
acquired intangibles and acquisition and integration-related
expenses.
Three Months Ended
April 30,
2024
2023
Gross profit
$
469
$
376
Add:
Stock-based compensation expense included
in cost of revenue
22
20
Amortization of acquired intangibles
12
12
Non-GAAP gross profit
$
503
$
408
Gross margin
76
%
73
%
Non-GAAP gross margin
82
%
79
%
Non-GAAP Operating Income and Non-GAAP Operating
Margin
We define non-GAAP operating income 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, acquisition
and integration-related expenses, restructuring costs related to
severance and termination benefits and lease impairments in
connection with the closing of certain leased facilities and
certain non-ordinary course legal settlements and related
expenses.
In fiscal 2025, we updated our definition of non-GAAP operating
income and non-GAAP operating margin to include certain
non-ordinary course legal settlements and related expenses.
Three Months Ended
April 30,
2024
2023
Operating loss
$
(47
)
$
(160
)
Add:
Stock-based compensation expense
151
166
Non-cash charitable contributions
3
1
Amortization of acquired intangibles
19
23
Restructuring costs
—
7
Legal settlements and related expenses
7
—
Non-GAAP operating income
$
133
$
37
Operating margin
(8
)%
(31
)%
Non-GAAP operating margin
22
%
7
%
Non-GAAP Net Income, Non-GAAP Net Margin and Non-GAAP Net
Income Per Share, Basic and Diluted
We define non-GAAP net income 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 and integration-related expenses,
amortization of debt issuance costs, gain on early extinguishment
of debt, restructuring costs related to severance and termination
benefits and lease impairments in connection with the closing of
certain leased facilities and certain non-ordinary course legal
settlements and related expenses. In addition, we subtract an
assumed provision for income taxes to calculate non-GAAP net
income. We use a fixed long-term projected tax rate of 26% in our
computation of the non-GAAP income tax provision to provide better
consistency across the reporting periods.
In fiscal 2025, we updated our definition of non-GAAP net income
and non-GAAP net margin to include certain non-ordinary course
legal settlements and related expenses.
We define non-GAAP net income per share, basic, as non-GAAP net
income divided by GAAP weighted-average shares used to compute net
loss per share, basic and diluted.
We define non-GAAP net income per share, diluted, as non-GAAP
net income 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 income per share, diluted, includes the
impact of our capped call agreements on convertible senior notes
outstanding. The capped call agreements are intended to offset
potential dilution to our Class A common stock upon any conversion
or settlement of the convertible senior notes under certain
circumstances. Accordingly, we did not record any adjustments for
the potential impact of the convertible senior notes outstanding
under the if-converted method.
Three Months Ended
April 30,
2024
2023
Net loss
$
(40
)
$
(119
)
Add:
Stock-based compensation expense
151
166
Non-cash charitable contributions
3
1
Amortization of acquired intangibles
19
23
Amortization of debt issuance costs
—
1
Gain on early extinguishment of debt
—
(31
)
Restructuring costs
—
7
Legal settlements and related expenses
7
—
Tax adjustment
(23
)
(10
)
Non-GAAP net income
$
117
$
38
Net margin
(7
)%
(23
)%
Non-GAAP net margin
19
%
7
%
Weighted-average shares used to compute
net loss per share, basic and diluted
167,465
161,323
Non-GAAP weighted-average effect of
potentially dilutive securities
12,962
14,872
Non-GAAP weighted-average shares used to
compute non-GAAP net income per share, diluted
180,427
176,195
Net loss per share, basic and diluted
$
(0.24
)
$
(0.74
)
Non-GAAP net income per share, basic
$
0.70
$
0.24
Non-GAAP net income per share, diluted
$
0.65
$
0.22
OKTA, INC. Reconciliation of GAAP to
Non-GAAP Financial Measures (dollars in millions)
(unaudited)
Free Cash Flow and Free Cash Flow Margin
We define free cash flow, a non-GAAP financial measure, as net
cash provided by operating activities, less cash used for purchases
of property and equipment, net of sales proceeds, and capitalized
software. Free cash flow margin is calculated as free cash flow
divided by total revenue.
Three Months Ended
April 30,
2024
2023
Net cash provided by operating
activities
$
219
$
129
Less:
Purchases of property and equipment
(1
)
—
Capitalized software
(4
)
(5
)
Free cash flow
$
214
$
124
Net cash provided by (used in) investing
activities
$
(194
)
$
59
Net cash used in financing activities
$
(37
)
$
(326
)
Operating cash flow margin
36
%
25
%
Free cash flow margin
35
%
24
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240528364983/en/
Investor Contact: Dave Gennarelli investor@okta.com
Media Contact: Kyrk Storer press@okta.com
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