Company Announcements

Okta Announces First Quarter Fiscal Year 2023 Financial Results

  • Q1 revenue grew 65% year-over-year; subscription revenue grew 66% year-over-year
  • Remaining performance obligations (RPO) grew 43% year-over-year to $2.71 billion; current remaining performance obligations (cRPO) grew 57% year-over-year to $1.41 billion

SAN FRANCISCO--(BUSINESS WIRE)--Jun. 2, 2022-- Okta, Inc. (Nasdaq: OKTA), the leading independent identity provider, today announced financial results for its first quarter ended April 30, 2022.

“We delivered solid first quarter results highlighted by strength in new customer additions, dollar-based net retention rate, and the success we’re having with large customers as they continue their journey to the cloud,” said Todd McKinnon, Chief Executive Officer and co-founder of Okta. “Organizations around the world have made it clear that identity is the foundation for their digital transformation projects and zero trust security environments. Okta is the recognized leader in identity and we’re confident in our ability to capture more of the massive market opportunity.”

First Quarter Fiscal 2023 Financial Highlights:

  • Revenue: Total revenue was $415 million, an increase of 65% year-over-year. Subscription revenue was $398 million, an increase of 66% year-over-year. On an Okta standalone basis (excluding $66 million attributable to Auth0), total revenue grew 39%.
  • Remaining Performance Obligations (RPO):RPO, or subscription backlog, was $2.71 billion, an increase of 43% year-over-year. cRPO, which is contracted subscription revenue expected to be recognized over the next 12 months, was $1.41 billion, up 57% compared to the first quarter of fiscal 2022.
  • Calculated Billings: Total calculated billings was $389 million, an increase of 7% year-over-year. Calculated billings includes the effect of billings process improvements that were enacted at the end of the first quarter of fiscal 2022. Calculated billings increased 52% when viewed on a like-for-like basis, which includes the full effect of the billings process improvements in the first quarter of fiscal 2022.
  • GAAP Operating Loss: GAAP operating loss was $240 million, or 58% of total revenue, compared to a GAAP operating loss of $91 million, or 36% of total revenue, in the first quarter of fiscal 2022.
  • Non-GAAP Operating Loss: Non-GAAP operating loss was $41 million, or 10% of total revenue, compared to non-GAAP operating loss of $16 million, or 6% of total revenue, in the first quarter of fiscal 2022.
  • GAAP Net Loss: GAAP net loss was $243 million, compared to a GAAP net loss of $109 million in the first quarter of fiscal 2022. GAAP net loss per share was $1.56, compared to a GAAP net loss per share of $0.83 in the first quarter of fiscal 2022.
  • Non-GAAP Net Loss: Non-GAAP net loss was $43 million, compared to non-GAAP net loss of $13 million in the first quarter of fiscal 2022. Non-GAAP basic and diluted net loss per share was $0.27, compared to non-GAAP basic and diluted net loss per share of $0.10 in the first quarter of fiscal 2022.
  • Cash Flow: Net cash provided by operations was $19 million, or 5% of total revenue, compared to net cash provided by operations of $56 million, or 22% of total revenue, in the first quarter of fiscal 2022. Free cash flow was $11 million, or 3% of total revenue, compared to $53 million, or 21% of total revenue, in the first quarter of fiscal 2022.
  • Cash, cash equivalents, and short-term investments were $2.49 billion at April 30, 2022.

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 second quarter of fiscal 2023, the Company expects:

  • Total revenue of $428 million to $430 million, representing a growth rate of 36% year-over-year;
  • Current RPO of $1.48 billion to $1.49 billion, representing a growth rate of 35% to 36% year-over-year;
  • Non-GAAP operating loss of $44 million to $43 million; and
  • Non-GAAP net loss per share of $0.32 to $0.31, assuming weighted-average shares outstanding of approximately 156 million.

For the full year fiscal 2023, the Company now expects:

  • Total revenue of $1.805 billion to $1.815 billion, representing a growth rate of 39% to 40% year-over-year;
  • Non-GAAP operating loss of $167 million to $162 million; and
  • Non-GAAP net loss per share of $1.14 to $1.11, assuming weighted-average shares outstanding of approximately 157 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.

Webcast Information:

Okta will host a live video webcast at 2:00 p.m. Pacific Time on June 2, 2022 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 webcast. The live video webcast 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 and integration-related expenses, amortization of debt discount and debt issuance costs and loss on early extinguishment and conversion of debt. Non-GAAP financial measures reflect the adoption of ASU 2020-06 under the modified retrospective method as of February 1, 2022, as applicable.

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, 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 and cause us to incur significant costs; 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 worsen; 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 15,800 organizations, including JetBlue, Nordstrom, Siemens, Slack, 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,

 

 

2022

 

2021

Revenue:

 

 

Subscription

$

397,941

 

$

240,058

 

Professional services and other

 

17,002

 

 

10,948

 

Total revenue

 

414,943

 

 

251,006

 

Cost of revenue:

 

 

Subscription(1)

 

110,876

 

 

52,398

 

Professional services and other(1)

 

20,289

 

 

13,725

 

Total cost of revenue

 

131,165

 

 

66,123

 

Gross profit

 

283,778

 

 

184,883

 

Operating expenses:

 

 

Research and development(1)

 

161,651

 

 

68,863

 

Sales and marketing(1)

 

252,473

 

 

146,521

 

General and administrative(1)

 

109,343

 

 

60,180

 

Total operating expenses

 

523,467

 

 

275,564

 

Operating loss

 

(239,689

)

 

(90,681

)

Interest expense

 

(2,868

)

 

(22,760

)

Interest income and other, net

 

1,704

 

 

4,355

 

Loss on conversion of debt

 

 

 

(136

)

Interest and other, net

 

(1,164

)

 

(18,541

)

Loss before provision for income taxes

 

(240,853

)

 

(109,222

)

Provision for income taxes

 

1,860

 

 

10

 

Net loss

$

(242,713

)

$

(109,232

)

 

 

 

Net loss per share, basic and diluted

$

(1.56

)

$

(0.83

)

 

 

 

Weighted-average shares used to compute net loss per share, basic and diluted

 

155,875

 

 

131,777

 

(1)

Amounts include stock-based compensation expense as follows (in thousands):

 

 

Three Months Ended
April 30,

 

2022

 

2021

Cost of subscription revenue

$

16,625

$

7,250

Cost of professional services and other

 

3,637

 

2,342

Research and development

 

69,044

 

20,093

Sales and marketing

 

39,802

 

21,066

General and administrative

 

40,415

 

13,361

Total stock-based compensation expense

$

169,523

$

64,112

OKTA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)

 

 

April 30,

 

January 31,

 

 

2022

 

2022

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

$

194,227

 

$

260,134

 

Short-term investments

 

2,292,902

 

 

2,241,657

 

Accounts receivable, net of allowances

 

258,911

 

 

397,509

 

Deferred commissions

 

77,120

 

 

74,728

 

Prepaid expenses and other current assets

 

75,483

 

 

66,605

 

Total current assets

 

2,898,643

 

 

3,040,633

 

Property and equipment, net

 

66,418

 

 

65,488

 

Operating lease right-of-use assets

 

144,731

 

 

147,940

 

Deferred commissions, noncurrent

 

188,490

 

 

191,029

 

Intangible assets, net

 

298,823

 

 

316,968

 

Goodwill

 

5,401,343

 

 

5,401,343

 

Other assets

 

47,233

 

 

42,294

 

Total assets

$

9,045,681

 

$

9,205,695

 

Liabilities and stockholders' equity

 

 

Current liabilities:

 

 

Accounts payable

$

33,752

 

$

20,203

 

Accrued expenses and other current liabilities

 

110,928

 

 

89,315

 

Accrued compensation

 

83,207

 

 

143,805

 

Convertible senior notes, net

 

5,198

 

 

16,194

 

Deferred revenue

 

952,190

 

 

973,289

 

Total current liabilities

 

1,185,275

 

 

1,242,806

 

Convertible senior notes, net, noncurrent

 

2,188,675

 

 

1,815,714

 

Operating lease liabilities, noncurrent

 

163,868

 

 

170,611

 

Deferred revenue, noncurrent

 

19,074

 

 

22,933

 

Other liabilities, noncurrent

 

16,095

 

 

31,775

 

Total liabilities

 

3,572,987

 

 

3,283,839

 

 

 

 

Stockholders’ equity:

 

 

Preferred stock

 

 

 

 

Class A common stock

 

15

 

 

15

 

Class B common stock

 

1

 

 

1

 

Additional paid-in capital

 

7,411,550

 

 

7,749,716

 

Accumulated other comprehensive loss

 

(36,148

)

 

(12,009

)

Accumulated deficit

 

(1,902,724

)

 

(1,815,867

)

Total stockholders’ equity

 

5,472,694

 

 

5,921,856

 

Total liabilities and stockholders' equity

$

9,045,681

 

$

9,205,695

 

OKTA, INC.

SUMMARY OF CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

 

 

Three Months Ended April 30,

 

 

2022

 

2021(1)

Cash flows from operating activities:

 

 

Net loss

$

(242,713

)

$

(109,232

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

Stock-based compensation

 

169,523

 

 

64,112

 

Depreciation, amortization and accretion

 

30,060

 

 

13,134

 

Amortization of debt discount and issuance costs

 

1,449

 

 

21,331

 

Amortization of deferred commissions

 

19,140

 

 

11,816

 

Deferred income taxes

 

(355

)

 

(829

)

Non-cash charitable contributions

 

1,381

 

 

2,024

 

Loss on conversion of debt

 

 

 

136

 

Gain on strategic investments

 

(1,380

)

 

(2,895

)

Other, net

 

(648

)

 

(909

)

Changes in operating assets and liabilities:

 

 

Accounts receivable

 

139,247

 

 

(22,747

)

Deferred commissions

 

(21,928

)

 

(14,861

)

Prepaid expenses and other assets

 

(12,952

)

 

(3,861

)

Operating lease right-of-use assets

 

6,643

 

 

5,072

 

Accounts payable

 

15,177

 

 

1,627

 

Accrued compensation

 

(60,318

)

 

(23,837

)

Accrued expenses and other liabilities

 

9,470

 

 

10,965

 

Operating lease liabilities

 

(8,007

)

 

(6,285

)

Deferred revenue

 

(24,958

)

 

111,314

 

Net cash provided by operating activities

 

18,831

 

 

56,075

 

Cash flows from investing activities:

 

 

Capitalization of internal-use software costs

 

(2,487

)

 

(10

)

Purchases of property and equipment

 

(5,328

)

 

(3,259

)

Purchases of securities available for sale and other

 

(306,831

)

 

(189,533

)

Proceeds from maturities and redemption of securities available for sale

 

231,314

 

 

344,820

 

Purchases of intangible assets

 

(1,040

)

 

(113

)

Payments for business acquisitions, net of cash acquired

 

(3,970

)

 

 

Net cash provided by (used in) investing activities

 

(88,342

)

 

151,905

 

Cash flows from financing activities:

 

 

Payments for conversions of convertible senior notes

 

(4

)

 

(12

)

Proceeds from hedges related to convertible senior notes

 

 

 

1

 

Proceeds from stock option exercises

 

5,386

 

 

16,190

 

Net cash provided by financing activities

 

5,382

 

 

16,179

 

Effects of changes in foreign currency exchange rates on cash, cash equivalents and restricted cash

 

(4,041

)

 

647

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

(68,170

)

 

224,806

 

Cash, cash equivalents and restricted cash at beginning of period

 

272,656

 

 

448,630

 

Cash, cash equivalents and restricted cash at end of period

$

204,486

 

$

673,436

 

(1)

The condensed consolidated statement of cash flows for the prior period has been adjusted to conform to current period presentation.

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, amortization of acquired intangibles and acquisition and integration-related expenses.

 

 

Three Months Ended

April 30,

 

 

2022

 

2021

Gross profit

 

$

283,778

 

 

$

184,883

 

Add:

 

 

 

 

Stock-based compensation expense included in cost of revenue(1)

 

 

20,262

 

 

 

9,592

 

Amortization of acquired intangibles

 

 

11,335

 

 

 

1,593

 

Acquisition and integration-related expenses(2)

 

 

459

 

 

 

 

Non-GAAP gross profit

 

$

315,834

 

 

$

196,068

 

Gross margin

 

 

68

%

 

 

74

%

Non-GAAP gross margin

 

 

76

%

 

 

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.

(2)

 

Acquisition and integration-related expenses include transaction costs and other non-recurring incremental costs incurred through the one-year anniversary of transaction close.

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 and integration-related expenses.

 

Three Months Ended

April 30,

 

2022

 

2021

Operating loss

$

(239,689

)

 

$

(90,681

)

Add:

 

 

 

Stock-based compensation expense(1)

 

169,523

 

 

 

964,112

 

Non-cash charitable contributions

 

1,381

 

 

 

2,024

 

Amortization of acquired intangibles

 

21,205

 

 

 

1,593

 

Acquisition and integration-related expenses(2)

 

6,555

 

 

 

7,054

 

Non-GAAP operating loss

$

(41,025

)

 

$

(15,898

)

Operating margin

 

(58

)%

 

 

(36

)%

Non-GAAP operating margin

 

(10

)%

 

 

(6

)%

(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 and integration-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 and integration-related expenses, amortization of debt discount and debt issuance costs and loss on early extinguishment and conversion of debt. Adjustments reflect the adoption of ASU 2020-06 under the modified retrospective method as of February 1, 2022, as applicable.

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 our note hedge and capped call agreements on convertible senior notes outstanding, as applicable. Accordingly, we 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,

 

2022

 

2021

Net loss

$

(242,713

)

$

(109,232

)

Add:

 

 

Stock-based compensation expense(1)

 

169,523

 

 

64,112

 

Non-cash charitable contributions

 

1,381

 

 

2,024

 

Amortization of acquired intangibles

 

21,205

 

 

1,593

 

Acquisition and integration-related expenses(2)

 

6,555

 

 

7,054

 

Amortization of debt discount and debt issuance costs(3)

 

1,449

 

 

21,331

 

Loss on conversion of debt(3)

 

 

 

136

 

Non-GAAP net loss

$

(42,600

)

$

(12,982

)

 

 

 

Net margin

 

(58

)%

 

(44

)%

Non-GAAP net margin

 

(10

)%

 

(5

)%

 

 

 

Weighted-average shares used to compute net loss per share, basic and diluted

 

155,875

 

 

131,777

 

Non-GAAP weighted-average effect of potentially dilutive securities

 

 

 

 

Non-GAAP weighted-average shares used to compute non-GAAP net loss per share, diluted

 

155,875

 

 

131,777

 

 

 

 

Net loss per share, basic and diluted

$

(1.56

)

$

(0.83

)

Non-GAAP net loss per share, basic and diluted

$

(0.27

)

$

(0.10

)

(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 and integration-related expenses include transaction costs and other non-recurring incremental costs incurred through the one-year anniversary of transaction close.

(3)

Reflects the adoption of ASU 2020-06 under the modified retrospective method effective February 1, 2022.

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, net of sales proceeds, 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,

 

 

2022

 

 

 

2021

 

Net cash provided by operating activities

$

18,831

 

$

56,075

 

Less:

 

 

Purchases of property and equipment

 

(5,328

)

 

(3,259

)

Capitalization of internal-use software costs

 

(2,487

)

 

(10

)

Free cash flow

$

11,016

 

$

52,806

 

Net cash provided by (used in) investing activities

$

(88,342

)

$

151,905

 

Net cash provided by financing activities

$

5,382

 

$

16,179

 

Free cash flow margin

 

3

%

 

21

%

Calculated Billings

We define Calculated Billings as total revenue plus the change in deferred revenue, net of acquired deferred revenue, and less the change in unbilled receivables, net of acquired unbilled receivables, in the period.

 

Three Months Ended

April 30,

 

 

2022

 

 

 

2021

 

Total revenue

$

414,943

 

$

251,006

 

Add:

 

 

Deferred revenue, current (end of period)

 

952,190

 

 

613,167

 

Unbilled receivables, current (beginning of period)

 

3,228

 

 

2,604

 

Less:

 

 

Deferred revenue, current (beginning of period)

 

(973,289

)

 

(502,738

)

Unbilled receivables, current (end of period)

 

(4,039

)

 

(894

)

Current Calculated Billings

 

393,033

 

 

363,145

 

Add:

 

 

Deferred revenue, noncurrent (end of period)

 

19,074

 

 

11,745

 

Less:

 

 

Deferred revenue, noncurrent (beginning of period)

 

(22,933

)

 

(10,860

)

Calculated Billings

$

389,174

 

$

364,030

 

 

Investor Contact:
Dave Gennarelli
investor@okta.com

Media Contact:
Vitor De Souza
press@okta.com

Source: Okta, Inc.