- Reaffirms revenue outlook and improves operating profit outlook
for fiscal 2021
- Q1 revenue grew 46% year-over-year; subscription revenue grew
48% year-over-year
- Remaining performance obligations, or subscription revenue
backlog, grew 57% year-over-year
- Record operating and free cash flows
Okta, Inc. (NASDAQ: OKTA), the leading independent provider of
identity for the enterprise, today announced financial results for
its first quarter ended April 30, 2020.
"Okta is at the forefront of helping organizations adapt to the
current environment where secure remote access has become a top
priority across industries," said Todd McKinnon, Chief Executive
Officer and co-founder of Okta. "Our strong first quarter
performance reflects our market leadership and ability to
effectively and quickly shift to a fully remote workforce. This
shift is enabled through our core technology, which allows secure
access to any technology from anywhere. When this crisis is over,
we don't expect organizations to revert to their prior ways of
working. Our commitment to our customers and continued focus on
operational agility will help us navigate this environment, lead
the new way of work, and seize the opportunity to emerge in an even
stronger position."
First Quarter Fiscal 2021 Financial Highlights:
- Revenue: Total revenue was $182.9 million, an increase
of 46% year-over-year. Subscription revenue was $173.8 million, an
increase of 48% year-over-year.
- Remaining Performance Obligations (RPO): RPO was $1.24
billion, an increase of 57% year-over-year. Current RPO, which is
contracted subscription revenue expected to be recognized over the
next 12 months, was $619.1 million, up 49% compared to the first
quarter of fiscal 2020.
- Calculated Billings: Total calculated billings were
$209.5 million, an increase of 42% year-over-year.
- Operating Loss: GAAP operating loss was $52.2 million,
or 28.5% of total revenue, compared to $51.8 million, or 41.4% of
total revenue, in the first quarter of fiscal 2020. Non-GAAP
operating loss was $12.3 million, or 6.7% of total revenue,
compared to $24.9 million, or 19.9% of total revenue, in the first
quarter of fiscal 2020.
- Net Loss: GAAP net loss was $57.7 million, compared to
$52.0 million in the first quarter of fiscal 2020. GAAP net loss
per share was $0.47, compared to $0.46 in the first quarter of
fiscal 2020. Non-GAAP net loss was $8.1 million, compared to $21.4
million in the first quarter of fiscal 2020. Non-GAAP net loss per
share was $0.07, compared to $0.19 in the first quarter of fiscal
2020.
- Cash Flow: Net cash provided by operations was a record
$38.7 million, or 21.2% of total revenue, compared to net cash
provided by operations of $21.3 million, or 17.0% of total revenue,
in the first quarter of fiscal 2020. Free cash flow was a record
$29.8 million, or 16.3% of total revenue, compared to $13.2
million, or 10.5% of total revenue, in the first quarter of fiscal
2020.
- Cash, cash equivalents, and short-term investments were
$1.45 billion at April 30, 2020.
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:
"We are pleased with our continued execution and strong first
quarter results," said Bill Losch, Chief Financial Officer of Okta.
"Looking ahead, our strong first quarter revenue performance and
highly recurring business model give us confidence in reiterating
our fiscal year 2021 revenue outlook. In addition, we are improving
our operating loss and loss per share outlook for the fiscal year.
While we believe it's prudent to continue to expect some near-term
business headwinds as the economic impacts from the pandemic
further unfold, we remain highly confident in our long-term success
as the leader in the massive identity and access management
market."
For the second quarter of fiscal 2021, the Company expects:
- Total revenue of $185 million to $187 million, representing a
growth rate of 32% to 33% year-over-year
- Non-GAAP operating loss of $5.0 million to $4.0 million
- Non-GAAP net loss per share of $0.02 to $0.01, assuming
weighted shares outstanding of approximately 125 million
For the full year fiscal 2021, the Company now expects:
- Total revenue of $770 million to $780 million, representing a
growth rate of 31% to 33% year-over-year
- Non-GAAP operating loss of $37.0 million to $30.0 million
- Non-GAAP net loss per share of $0.23 to $0.18, assuming
weighted shares outstanding of approximately 125 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 its most directly
comparable GAAP measure because certain items are out of Okta’s
control or cannot be reasonably predicted. Accordingly, a
reconciliation for forward-looking non-GAAP operating loss and
non-GAAP net loss per share is not available without unreasonable
effort.
Conference Call Information:
Okta will host a conference call and live webcast for analysts
and investors at 2:00 p.m. Pacific Time on May 28, 2020. The news
release with the financial results will be accessible from the
Company’s website at investor.okta.com prior to the conference
call. Interested parties can access the call by dialing (800)
263-0877 or (323) 794-2094 and using the passcode 7487393.
A live webcast of the conference call will be accessible from
the Okta investor relations website at investor.okta.com.
Supplemental Financial and Other Information:
Supplemental financial and other information can be accessed
through the Company’s investor relations website at
investor.okta.com.
Non-GAAP Financial Measures:
This press release and the accompanying tables contain the
following non-GAAP financial measures: non-GAAP gross profit,
non-GAAP gross margin, non-GAAP operating loss, non-GAAP operating
margin, non-GAAP net loss, non-GAAP net margin, non-GAAP net loss
per share, free cash flow, current calculated billings and
calculated billings. Certain of these non-GAAP financial measures
exclude stock-based compensation, amortization of debt discount,
charitable contributions, amortization of acquired intangibles,
acquisition-related expenses and loss on early extinguishment of
debt, net of debt issuance costs.
Okta believes that non-GAAP financial information, when taken
collectively with GAAP financial measures, may be helpful to
investors because it provides consistency and comparability with
past financial performance and assists in comparisons with other
companies, some of which use similar non-GAAP financial information
to supplement their GAAP results. The non-GAAP financial
information is presented for supplemental informational purposes
only, and should not be considered a substitute for financial
information presented in accordance with GAAP, and may be different
from similarly-titled non-GAAP measures used by other
companies.
The principal limitation of these non-GAAP financial measures is
that they exclude significant expenses 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, product development, 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 operating
results may fluctuate more than expected; there may be significant
fluctuations in our results of operations and cash flows related to
our revenue recognition or otherwise; 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; and global economic conditions could
deteriorate. 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 provider of identity for the
enterprise. The Okta Identity Cloud enables organizations to
securely connect the right people to the right technologies at the
right time. With over 6,500 pre-built integrations to applications
and infrastructure providers, Okta customers can easily and
securely use the best technologies for their business. Over 8,400
organizations, including 20th Century Fox, JetBlue, Nordstrom,
Slack, Teach for America and Twilio, trust Okta to help protect the
identities of their workforces and customers.
Okta 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,
2020
2019
Revenue:
Subscription
$
173,781
$
117,163
Professional services and other
9,078
8,060
Total revenue
182,859
125,223
Cost of revenue:
Subscription(1)
37,157
24,540
Professional services and other(1)
11,329
10,555
Total cost of revenue
48,486
35,095
Gross profit
134,373
90,128
Operating expenses:
Research and development(1)
48,494
34,032
Sales and marketing(1)
104,043
82,112
General and administrative(1)
34,035
25,766
Total operating expenses
186,572
141,910
Operating loss
(52,199
)
(51,782
)
Interest expense
(10,764
)
(4,241
)
Interest income and other, net
4,899
2,900
Interest and other, net
(5,865
)
(1,341
)
Loss before benefit from income taxes
(58,064
)
(53,123
)
Benefit from income taxes
(402
)
(1,157
)
Net loss
$
(57,662
)
$
(51,966
)
Net loss per share, basic and diluted
$
(0.47
)
$
(0.46
)
Weighted-average shares used to compute
net loss per share, basic and diluted
123,494
112,682
(1) Amounts include stock-based
compensation expense as follows (in thousands):
Three Months Ended April
30,
2020
2019
Cost of subscription revenue
$
3,975
$
2,422
Cost of professional services and other
revenue
1,811
1,519
Research and development
11,935
6,346
Sales and marketing
11,160
6,786
General and administrative
8,847
5,612
Total share-based compensation expense
$
37,728
$
22,685
OKTA, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(unaudited)
April 30,
January 31,
2020
2020
Assets
Current assets:
Cash and cash equivalents
$
619,221
$
520,048
Short-term investments
827,556
882,976
Accounts receivable, net of allowances
111,039
130,115
Deferred commissions
34,795
33,636
Prepaid expenses and other current
assets
40,912
32,950
Total current assets
1,633,523
1,599,725
Property and equipment, net
61,914
53,535
Operating lease right-of-use assets
162,763
125,204
Deferred commissions, noncurrent
79,270
77,874
Intangible assets, net
31,032
32,529
Goodwill
48,023
48,023
Other assets
20,482
18,505
Total assets
$
2,037,007
$
1,955,395
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
8,021
$
3,837
Accrued expenses and other current
liabilities
36,601
36,887
Accrued compensation
31,447
40,300
2023 convertible senior notes, net
102,198
100,703
Deferred revenue
392,121
365,236
Total current liabilities
570,388
546,963
2025 convertible senior notes, net
845,862
837,002
Operating lease liabilities,
noncurrent
194,889
154,511
Deferred revenue, noncurrent
6,070
6,214
Other liabilities, noncurrent
6,702
5,361
Total liabilities
1,623,911
1,550,051
Stockholders’ equity:
Preferred stock
—
—
Class A common stock
12
11
Class B common stock
1
1
Additional paid-in capital
1,168,127
1,105,564
Accumulated other comprehensive income
3,742
892
Accumulated deficit
(758,786
)
(701,124
)
Total stockholders’ equity
413,096
405,344
Total liabilities and stockholders'
equity
$
2,037,007
$
1,955,395
OKTA, INC.
SUMMARY OF CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three Months Ended April
30,
2020
2019
Cash flows from operating
activities:
Net loss
$
(57,662
)
$
(51,966
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Stock-based compensation
37,728
22,685
Depreciation, amortization and
accretion
5,466
3,399
Amortization of debt discount and issuance
costs
10,357
4,025
Amortization of deferred commissions
8,680
6,328
Deferred income taxes
(905
)
(1,369
)
Non-cash charitable contributions
536
—
Other, net
915
(100
)
Changes in operating assets and
liabilities:
Accounts receivable
18,250
9,297
Deferred commissions
(11,865
)
(9,795
)
Prepaid expenses and other assets
(3,493
)
5,975
Operating lease right-of-use assets
4,055
3,066
Accounts payable
3,943
1,640
Accrued compensation
2,995
4,143
Accrued expenses and other liabilities
(2,773
)
3,288
Operating lease liabilities
(4,270
)
(39
)
Deferred revenue
26,740
20,685
Net cash provided by operating
activities
38,697
21,262
Cash flows from investing
activities:
Capitalization of internal-use software
costs
(1,000
)
(369
)
Purchases of property and equipment
(7,930
)
(7,710
)
Purchases of securities available for sale
and other
(129,079
)
(146,545
)
Proceeds from maturities and redemption of
securities available for sale
102,293
61,244
Proceeds from sales of securities
available for sale
86,320
11,996
Payments for business acquisition, net of
cash acquired
—
(44,223
)
Net cash provided by (used in) investing
activities
50,604
(125,607
)
Cash flows from financing
activities:
Proceeds from stock option exercises
14,172
13,388
Other, net
(5
)
(126
)
Net cash provided by financing
activities
14,167
13,262
Effects of changes in foreign currency
exchange rates on cash, cash equivalents and restricted cash
(1,128
)
(282
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
102,340
(91,365
)
Cash, cash equivalents and restricted cash
at beginning of period
531,953
311,215
Cash, cash equivalents and restricted
cash at end of period
$
634,293
$
219,850
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 and amortization of acquired intangibles.
Three Months Ended April
30,
2020
2019
Gross profit
$
134,373
$
90,128
Add:
Stock-based compensation expense included
in cost of revenue(1)
5,786
3,941
Amortization of acquired intangibles
1,593
763
Non-GAAP gross profit
$
141,752
$
94,832
Gross margin
73
%
72
%
Non-GAAP gross margin
78
%
76
%
(1) See table 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, charitable contributions,
amortization of acquired intangibles and acquisition-related
expenses.
Three Months Ended April
30,
2020
2019
Operating loss
$
(52,199
)
$
(51,782
)
Add:
Stock-based compensation expense(1)
37,728
22,685
Charitable contributions
536
—
Amortization of acquired intangibles
1,593
763
Acquisition-related expenses(2)
—
3,449
Non-GAAP operating loss
$
(12,342
)
$
(24,885
)
Operating margin
(29
)%
(41
)%
Non-GAAP operating margin
(7
)%
(20
)%
(1)
See table above for breakdown of
stock-based compensation expense by line item.
(2)
We define acquisition-related expenses as
costs associated with acquisitions, including transaction costs and
other non-recurring incremental costs incurred.
Non-GAAP Net Loss and Non-GAAP Net Margin
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, charitable contributions, amortization of acquired
intangibles, acquisition-related expenses, amortization of debt
discount and loss on early extinguishment of debt, net of debt
issuance costs.
Three Months Ended April
30,
2020
2019
Net loss
$
(57,662
)
$
(51,966
)
Add:
Stock-based compensation expense(1)
37,728
22,685
Charitable contributions
536
—
Amortization of acquired intangibles
1,593
763
Acquisition-related expenses(2)
—
3,449
Amortization of debt discount
9,724
3,706
Non-GAAP net loss
$
(8,081
)
$
(21,363
)
Net margin
(32
)%
(41
)%
Non-GAAP net margin
(4
)%
(17
)%
Net loss per share
$
(0.47
)
$
(0.46
)
Non-GAAP net loss per share
$
(0.07
)
$
(0.19
)
(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)
We define acquisition-related expenses as
costs associated with acquisitions, including transaction costs and
other non-recurring incremental costs incurred.
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,
2020
2019
Net cash provided by operating
activities
$
38,697
$
21,262
Less:
Purchases of property and equipment
(7,930
)
(7,710
)
Capitalization of internal-use software
costs
(1,000
)
(369
)
Free cash flow
$
29,767
$
13,183
Net cash provided by (used in) investing
activities
$
50,604
$
(125,607
)
Net cash provided by financing
activities
$
14,167
$
13,262
Free cash flow margin
16%
11%
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,
2020
2019
Total revenue
$
182,859
$
125,223
Add:
Unbilled receivables, current (beginning
of period)
1,026
1,457
Deferred revenue, current (end of
period)
392,121
268,033
Less:
Unbilled receivables, current (end of
period)
(1,121
)
(799
)
Deferred revenue, current (beginning of
period)
(365,236
)
(245,622
)
Current calculated billings
209,649
148,292
Add:
Deferred revenue, noncurrent (end of
period)
6,070
7,671
Less:
Deferred revenue, noncurrent (beginning of
period)
(6,214
)
(8,768
)
Calculated billings
$
209,505
$
147,195
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200528005245/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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