Okta, Inc. (NASDAQ:OKTA), the leading independent provider of
identity for the enterprise, today announced financial results for
its first fiscal quarter ended April 30, 2017.
“In our first quarter as a public company, we
demonstrated strength by every measure. Total revenue grew by 67%,
subscription revenue grew by 75%, and our operating performance
improved significantly, year-over-year,” said Todd McKinnon, CEO of
Okta. “Our strong results were driven by our industry-leading
products, the success we enable for our customers’ digital
initiatives and the need for every organization to manage their
business securely in the cloud. With the Okta Identity Cloud,
we are well positioned to capitalize on two large and growing
markets: the $18 billion addressable market for management of
employee identities, as well as the largely greenfield market for
organizations looking to seamlessly and securely manage the
identities of their customers, partners and suppliers.”
First Quarter Fiscal 2018 Financial
Highlights:
- Revenue: Total revenue was $53.0 million, an
increase of 66.8% year-over-year. Subscription revenue was $48.4
million, an increase of 75.4% year-over-year.
- Operating Loss: GAAP operating loss was $28.6
million, or 54.0% of total revenue, compared to $22.7 million in
the first quarter of fiscal 2017, or 71.4% of total revenue.
Non-GAAP operating loss was $19.7 million, or 37.2% of total
revenue, compared to $19.3 million of the first quarter of fiscal
2017, or 60.7% of total revenue.
- Net Loss: GAAP net loss was $28.9 million,
compared to $22.8 million in the first quarter of fiscal 2017. GAAP
net loss per share was $0.73, compared to $1.22 for the first
quarter of fiscal 2017. Non-GAAP net loss was $20.0 million,
compared to $19.3 million in the first quarter of fiscal 2017.
Non-GAAP net loss per share was $0.50, compared to $1.04 for the
first quarter of fiscal 2017.
- Cash Flow: Net cash used in operations was
$9.7 million, compared to $15.0 million for the first quarter of
fiscal 2017. Free cash flow was negative $13.3 million, or 25.2% of
total revenue, compared to negative $17.2 million, or 54.1% of
total revenue, in the first quarter of fiscal 2017.
- Cash and cash equivalents and short term
investments were $224.2 million as of April 30,
2017.
The section titled "Non-GAAP Financial Measures"
below contains a description of these non-GAAP financial measures
and a reconciliation between historical GAAP and non-GAAP
information is contained in the tables below.
Financial Outlook:
For the second quarter of fiscal 2018, the
Company currently expects:
- Total revenue of $55.0 to $56.0 million
- Non-GAAP operating loss of $24.0 to $23.0 million
- Non-GAAP net loss per share of $0.26 to $0.25 using shares
outstanding of approximately 92.5 million
For the full fiscal 2018, the Company currently
expects:
- Total revenue of $233.0 to $236.0 million
- Non-GAAP operating loss of $91.2 to $88.2 million
- Non-GAAP net loss per share of $1.15 to $1.11 using shares
outstanding of approximately 80.2 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 non-GAAP operating loss and non-GAAP net loss
per share is not available without unreasonable effort.
Conference Call
Information:
Okta will host a conference call and live
webcast for analysts and investors at 2:00 p.m. Pacific time on
June 7, 2017. 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 888-490-2763 or 719-325-2394, using the passcode
8793739.
A live webcast of the conference call will be
accessible from the Okta investor relations website at
investor.okta.com. A telephonic replay of the conference call
will be available through June 21, 2017 and may be accessed by
dialing 888-203-1112 or 719-457-0820, using the passcode
8793739.
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 and calculated billings. Certain of these
non-GAAP financial measures exclude stock-based compensation and
amortization of intangible assets.
Okta believes that these non-GAAP measures of
financial results provide useful information to management and
investors regarding certain financial and business trends relating
to Okta’s financial condition and results of operations. The
Company’s management uses these non-GAAP measures to compare the
Company’s performance to that of prior periods for trend analysis,
for purposes of determining executive and senior management
incentive compensation and for budgeting and planning purposes. The
Company believes that the use of these non-GAAP financial measures
provides an additional tool for investors to use in evaluating
ongoing operating results and trends and in comparing the Company’s
financial measures with other software companies, many of which
present similar non-GAAP financial measures to investors.
Management of the Company does not consider
these non-GAAP measures in isolation or as an alternative to
financial measures determined in accordance with GAAP. 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 management about which expenses and
income are excluded or included in determining these non-GAAP
financial measures. Okta urges investors to review the
reconciliation of its non-GAAP financial measures to the 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.
Reconciliation tables of the most comparable
GAAP financial measures to the non-GAAP financial measures used in
this press release are included with the financial tables at the
end of this release.
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 and
market positioning. These forward-looking statements are made as of
the date they were first issued and were based on current
expectations, estimates, forecasts and projections as well as the
beliefs and assumptions of management. 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
or the negative of these terms and similar expressions are intended
to identify these forward-looking statements. Forward-looking
statements are subject to a number of risks and uncertainties, many
of which involve factors or circumstances that are beyond Okta’s
control. Okta’s actual results could differ materially from those
stated or implied in forward-looking statements due to a number of
factors, including but not limited to, risks detailed in Okta’s
Prospectus filed with the Securities and Exchange
Commission effective on April 6, 2017 as well as other
documents that may be filed by the Company from time to time with
the Securities and Exchange Commission. In particular, the
following factors, among others, could cause results to differ
materially from those expressed or implied by such forward-looking
statements: the market for our products may develop more slowly
than expected or than it has in the past; quarterly and annual
operating results may fluctuate more than expected; variations
related to our revenue recognition may cause significant
fluctuations in our results of operations and cash flows;
assertions by third parties that we violate their intellectual
property rights could substantially harm our business; a network or
data security incident that allows unauthorized access to our
network or data or our customers’ data could harm our reputation,
create additional liability and adversely impact our financial
results; the risk of interruptions or performance problems,
including a service outage, associated with our technology; we face
intense competition in our market; weakened global economic
conditions may adversely affect our industry; the risk of losing
key employees; changes in foreign exchange rates; general political
or destabilizing events, including war, conflict or acts of
terrorism; and other risks and uncertainties. Past performance is
not necessarily indicative of future results. The forward-looking
statements included in this press release represent Okta’s views as
of the date of this press release. The Company anticipates that
subsequent events and developments will cause its views to change.
Okta undertakes no intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. These forward-looking statements should
not be relied upon as representing Okta’s views as of any date
subsequent to the date of this press release.
About Okta
Okta is the leading independent provider of
identity for the enterprise. The Okta Identity Cloud connects and
protects employees of many of the world's largest enterprises. It
also securely connects enterprises to their partners, suppliers and
customers. With deep integrations to over 5,000 applications, the
Okta Identity Cloud enables simple and secure access for any user
from any device. Thousands of customers, including 20th Century
Fox, Adobe, Dish Networks, Experian, Flex, LinkedIn, and News Corp,
trust Okta to help them work faster, boost revenue and stay secure.
Okta helps customers fulfill their missions faster by making it
safe and easy to use the technologies they need to do their most
significant work. Learn more at www.okta.com.
OKTA, INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except
per share data)(unaudited) |
|
|
|
Three Months Ended April 30, |
|
2017 |
|
2016 |
|
|
|
|
Revenue |
|
|
|
Subscription |
$ |
48,357 |
|
|
$ |
27,563 |
|
Professional services and other |
4,650 |
|
|
4,224 |
|
Total revenue |
53,007 |
|
|
31,787 |
|
Cost of revenue |
|
|
|
Subscription (1) |
11,157 |
|
|
7,460 |
|
Professional services and other (1) |
6,306 |
|
|
4,919 |
|
Total cost of
revenue |
17,463 |
|
|
12,379 |
|
Gross profit |
35,544 |
|
|
19,408 |
|
Operating expenses |
|
|
|
Research
and development (1) |
15,359 |
|
|
8,766 |
|
Sales and
marketing (1) |
37,180 |
|
|
26,401 |
|
General
and administrative (1) |
11,639 |
|
|
6,945 |
|
Total operating
expenses |
64,178 |
|
|
42,112 |
|
Operating loss |
(28,634 |
) |
|
(22,704 |
) |
Other
income (expense), net |
(19 |
) |
|
32 |
|
Loss before income
taxes |
(28,653 |
) |
|
(22,672 |
) |
Provision
for income taxes |
248 |
|
|
81 |
|
Net loss |
$ |
(28,901 |
) |
|
$ |
(22,753 |
) |
|
|
|
|
Net loss
per common share, basic and diluted |
$ |
(0.73 |
) |
|
$ |
(1.22 |
) |
|
|
|
|
Weighted-average shares used to compute net loss per common
share |
39,783 |
|
|
18,574 |
|
___________________________________(1)
Amounts include share-based compensation expense as follows (in
thousands):
|
Three Months Ended April 30, |
|
2017 |
|
2016 |
|
|
|
|
Cost of subscription
revenue |
$ |
686 |
|
|
$ |
393 |
|
Cost of professional
services and other revenue |
469 |
|
|
273 |
|
Research and
development |
3,301 |
|
|
618 |
|
Sales and
marketing |
2,375 |
|
|
1,354 |
|
General and
administrative |
2,075 |
|
|
731 |
|
Total share-based
compensation expense |
$ |
8,906 |
|
|
$ |
3,369 |
|
OKTA, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(In thousands) |
|
|
|
|
|
April 30, 2017 |
|
January 31, 2017 |
|
(unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
221,726 |
|
|
$ |
23,282 |
|
Short-term investments |
2,500 |
|
|
14,390 |
|
Accounts
receivable, net of allowances of $1,025 and $1,306 |
32,171 |
|
|
34,544 |
|
Deferred
commissions |
13,131 |
|
|
13,549 |
|
Prepaid
expenses and other current assets |
10,271 |
|
|
7,025 |
|
Total
current assets |
279,799 |
|
|
92,790 |
|
Property and equipment,
net |
13,180 |
|
|
11,026 |
|
Deferred commissions,
noncurrent |
9,463 |
|
|
10,050 |
|
Intangible assets,
net |
9,835 |
|
|
9,155 |
|
Goodwill |
6,282 |
|
|
2,630 |
|
Other assets |
1,671 |
|
|
4,984 |
|
Total
assets |
$ |
320,230 |
|
|
$ |
130,635 |
|
Liabilities,
redeemable convertible preferred stock and stockholders’ equity
(deficit) |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
15,909 |
|
|
$ |
11,897 |
|
Accrued
expenses and other current liabilities |
4,822 |
|
|
5,853 |
|
Accrued
compensation |
6,613 |
|
|
9,866 |
|
Deferred
revenue |
115,717 |
|
|
108,012 |
|
Total
current liabilities |
143,061 |
|
|
135,628 |
|
Deferred revenue,
noncurrent |
4,927 |
|
|
5,711 |
|
Other liabilities,
noncurrent |
6,323 |
|
|
4,947 |
|
Total
liabilities |
154,311 |
|
|
146,286 |
|
Commitments and
contingencies (Note 8) |
|
|
|
Redeemable convertible preferred stock |
— |
|
|
227,954 |
|
Stockholders’ equity
(deficit): |
|
|
|
Preferred
stock |
— |
|
|
— |
|
Class A
common stock |
1 |
|
|
— |
|
Class B
common stock |
8 |
|
|
2 |
|
Additional paid-in capital |
483,019 |
|
|
44,469 |
|
Accumulated other comprehensive loss |
(99 |
) |
|
(167 |
) |
Accumulated deficit |
(317,010 |
) |
|
(287,909 |
) |
Total stockholders’
equity (deficit) |
165,919 |
|
|
(243,605 |
) |
Total
liabilities, redeemable convertible preferred stock and
stockholders’ equity (deficit) |
$ |
320,230 |
|
|
$ |
130,635 |
|
OKTA, INC.SUMMARY OF CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands)(unaudited) |
|
|
|
Three Months Ended April 30, |
|
2017 |
|
2016 |
|
|
|
|
Operating
activities: |
|
|
|
Net loss |
$ |
(28,901 |
) |
|
$ |
(22,753 |
) |
Adjustments to
reconcile net loss to net cash used in operating activities: |
|
|
|
Depreciation, amortization and accretion |
1,575 |
|
|
887 |
|
Stock-based compensation |
8,906 |
|
|
3,369 |
|
Amortization of deferred commissions |
4,039 |
|
|
3,053 |
|
Other |
270 |
|
|
(130 |
) |
Changes
in operating assets and liabilities: |
|
|
|
Accounts
receivable |
2,243 |
|
|
3,090 |
|
Deferred
commissions |
(3,033 |
) |
|
(2,756 |
) |
Prepaid
expenses and other assets |
(3,143 |
) |
|
(2,876 |
) |
Accounts
payable |
3,782 |
|
|
3,681 |
|
Accrued
compensation |
(2,121 |
) |
|
(2,855 |
) |
Accrued
expenses and other liabilities |
(223 |
) |
|
(182 |
) |
Deferred
revenue |
6,920 |
|
|
2,437 |
|
Net cash used in
operating activities |
(9,686 |
) |
|
(15,035 |
) |
Investing
activities: |
|
|
|
Capitalization of
internal-use software costs |
(1,208 |
) |
|
(1,232 |
) |
Purchases of property
and equipment and other |
(2,448 |
) |
|
(927 |
) |
Other investing
activities |
11,873 |
|
|
3,000 |
|
Net cash provided by
investing activities |
8,217 |
|
|
841 |
|
Financing
activities: |
|
|
|
Proceeds from initial
public offering, net of underwriters' discounts and
commissions |
199,997 |
|
|
— |
|
Other financing
activities |
111 |
|
|
(337 |
) |
Net cash provided by
(used in) financing activities |
200,108 |
|
|
(337 |
) |
Effects of changes in
foreign currency exchange rates on cash and cash
equivalents |
68 |
|
|
47 |
|
Net increase (decrease)
in cash and cash equivalents and restricted cash |
198,707 |
|
|
(14,484 |
) |
Cash and cash
equivalents and restricted cash at beginning of year |
23,282 |
|
|
58,081 |
|
Cash and cash
equivalents and restricted cash at end of year |
$ |
221,989 |
|
|
$ |
43,597 |
|
OKTA, INC.Reconciliation of
GAAP to Non-GAAP Data(In thousands, except percentages and
per share data)(unaudited) |
|
|
|
|
|
Three Months Ended April 30,
2017 |
|
|
GAAP |
|
Stock-basedcompensation |
|
Amortizationof
acquiredintangibles |
|
Non-GAAP |
Costs and
expenses: |
|
|
|
|
|
|
|
|
Cost of subscription
services |
|
$ |
11,157 |
|
|
$ |
(686 |
) |
|
$ |
(4 |
) |
|
$ |
10,467 |
|
Cost of professional
services |
|
6,306 |
|
|
(469 |
) |
|
— |
|
|
5,837 |
|
Gross profit |
|
35,544 |
|
|
1,155 |
|
|
4 |
|
|
36,703 |
|
Gross margin |
|
67 |
% |
|
2 |
% |
|
— |
|
|
69 |
% |
Research and
development |
|
15,359 |
|
|
(3,301 |
) |
|
— |
|
|
12,058 |
|
Sales and
marketing |
|
37,180 |
|
|
(2,375 |
) |
|
— |
|
|
34,805 |
|
General and
administrative |
|
11,639 |
|
|
(2,075 |
) |
|
— |
|
|
9,564 |
|
Operating loss |
|
(28,634 |
) |
|
8,906 |
|
|
4 |
|
|
(19,724 |
) |
Operating margin |
|
(54 |
)% |
|
17 |
% |
|
— |
|
|
(37 |
)% |
Net loss |
|
$ |
(28,901 |
) |
|
$ |
8,906 |
|
|
$ |
4 |
|
|
$ |
(19,991 |
) |
Net loss per share
(1) |
|
$ |
(0.73 |
) |
|
$ |
0.22 |
|
|
$ |
0.01 |
|
|
$ |
(0.50 |
) |
(1) GAAP and Non-GAAP net loss per common share calculated based
upon 39,783 basic and diluted weighted-average shares of common
stock.
|
|
Three Months Ended April 30,
2016 |
|
|
GAAP |
|
Stock-basedcompensation |
|
Amortizationof
acquiredintangibles |
|
Non-GAAP |
Costs and
expenses: |
|
|
|
|
|
|
|
|
Cost of subscription
services |
|
$ |
7,460 |
|
|
$ |
(393 |
) |
|
$ |
(47 |
) |
|
$ |
7,020 |
|
Cost of professional
services |
|
4,919 |
|
|
(273 |
) |
|
— |
|
|
4,646 |
|
Gross profit |
|
19,408 |
|
|
666 |
|
|
47 |
|
|
20,121 |
|
Gross margin |
|
61 |
% |
|
2 |
% |
|
— |
|
|
63 |
% |
Research and
development |
|
8,766 |
|
|
(618 |
) |
|
— |
|
|
8,148 |
|
Sales and
marketing |
|
26,401 |
|
|
(1,354 |
) |
|
— |
|
|
25,047 |
|
General and
administrative |
|
6,945 |
|
|
(731 |
) |
|
— |
|
|
6,214 |
|
Operating loss |
|
(22,704 |
) |
|
3,369 |
|
|
47 |
|
|
(19,288 |
) |
Operating margin |
|
(71 |
)% |
|
10 |
% |
|
— |
|
|
(61 |
)% |
Net loss |
|
$ |
(22,753 |
) |
|
$ |
3,369 |
|
|
$ |
47 |
|
|
$ |
(19,337 |
) |
Net loss per share
(1) |
|
$ |
(1.22 |
) |
|
$ |
0.18 |
|
|
$ |
— |
|
|
$ |
(1.04 |
) |
(1) GAAP and Non-GAAP net loss per common share calculated based
upon 18,574 basic and diluted weighted-average shares of common
stock.
OKTA, INC.Reconciliation of
GAAP to Non-GAAP Financial Measures(In
thousands)(unaudited) |
|
|
|
|
Free Cash
Flow |
|
|
|
|
Three Months Ended April 30, |
|
2017 |
|
2016 |
Net cash used in
operating activities |
$ |
(9,686 |
) |
|
$ |
(15,035 |
) |
Less: |
|
|
|
Purchases
of property and equipment |
(2,448 |
) |
|
(927 |
) |
Capitalized internal-use software costs |
(1,208 |
) |
|
(1,232 |
) |
Free Cash Flow |
$ |
(13,342 |
) |
|
$ |
(17,194 |
) |
Net cash provided by
investing activities |
$ |
8,217 |
|
|
$ |
841 |
|
Net cash (used in)
provided by financing activities |
$ |
200,108 |
|
|
$ |
(337 |
) |
Free Cash Flow
Margin |
(25 |
)% |
|
(54 |
)% |
Calculated
Billings |
|
|
|
|
Three Months Ended April 30, |
|
2017 |
|
2016 |
Total revenue |
$ |
53,007 |
|
|
$ |
31,787 |
|
Add: |
|
|
|
Deferred revenue (end
of period) |
120,644 |
|
|
81,962 |
|
Less: |
|
|
|
Deferred
revenue (beginning of period) |
(113,723 |
) |
|
(79,525 |
) |
Calculated Billings |
$ |
59,928 |
|
|
$ |
34,224 |
|
Investor Contact:
Catherine Buan
investor@okta.com
415-604-3346
Media Contact:
Jenna Kozel
jenna.kozel@okta.com
415-418-9600
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