- Q3 revenue totaled $105.6 million,
growing 58% year-over-year; subscription revenue grew 58%
year-over-year
- Q3 operating cash flow margin improved
over 20 points year-over-year
- Positive free cash flow for the
quarter
Okta, Inc. (NASDAQ: OKTA), the leading independent provider of
identity for the enterprise, today announced financial results for
its third fiscal quarter ended October 31, 2018.
“We had a record third quarter with 58% year-over-year growth
for both revenue and billings, which was driven by increased
momentum in the enterprise. We saw 55% growth in customers with
over $100,000 annual recurring revenue, representing a record 100
net new adds in a quarter,” said Todd McKinnon, CEO of Okta. “We
are also pleased to report that we were free cash flow positive for
the first time in the third quarter. Our continued strength is a
testament to the growing pervasiveness of identity and we believe
we are well positioned to further benefit from these tailwinds as
organizations continue their move to the cloud, while digitally
transforming and securing their businesses.”
Third Quarter Fiscal 2019 Financial Highlights:
- Revenue: Total revenue was
$105.6 million, an increase of 58% year-over-year. Subscription
revenue was $97.7 million, an increase of 58% year-over-year.
- Operating Loss: GAAP operating
loss was $28.5 million, or 27.0% of total revenue, compared to
$34.5 million, or 51.6% of total revenue, in the third quarter of
fiscal 2018. Non-GAAP operating loss was $6.5 million, or 6.1% of
total revenue, compared to $19.4 million, or 28.9% of total
revenue, in the third quarter of fiscal 2018.
- Net Loss: GAAP net loss was
$29.5 million, compared to $33.1 million in the third quarter of
fiscal 2018. GAAP net loss per share was $0.27, compared to $0.35
in the third quarter of fiscal 2018. Non-GAAP net loss was $3.9
million, compared to $17.9 million in the third quarter of fiscal
2018. Non-GAAP net loss per share was $0.04, compared to $0.19 in
the third quarter of fiscal 2018.
- Cash Flow: Net cash provided by
operations was $6.4 million, or 6.1% of total revenue, compared to
cash used in operations of $9.5 million, or negative 14.2% of total
revenue, in the third quarter of fiscal 2018. Free cash flow was
positive $1.4 million, or 1.3% of total revenue, compared to
negative $11.2 million, or negative 16.8% of total revenue, in the
third quarter of fiscal 2018.
- Cash, cash equivalents and
short-term investments were $546.0 million as of
October 31, 2018.
The section titled "Non-GAAP Financial Measures" below contains
a description of the non-GAAP financial measures and
reconciliations between historical GAAP and non-GAAP information
are contained in the tables below.
Financial Outlook:
For the fourth quarter of fiscal 2019, the Company currently
expects:
- Total revenue of $107 to $108 million,
representing a growth rate of 39% to 40% year-over-year
- Non-GAAP operating loss of $12.5 to
$11.5 million
- Non-GAAP net loss per share of $0.09 to
$0.08, assuming shares outstanding of approximately 110
million
For the full fiscal 2019, the Company now expects:
- Total revenue of $391 to $392 million,
representing a growth rate of 52% to 53% year-over-year
- Non-GAAP operating loss of $49 to $48
million
- Non-GAAP net loss per share of $0.37 to
$0.36, assuming shares outstanding of approximately 107
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 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 December 5, 2018.
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)
256-1007 or (323) 994-2093 and using the passcode 1069664.
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
December 19, 2018 and may be accessed by dialing (888) 203-1112 or
(719) 457-0820, conference ID: 1069664.
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 loss per share, free cash
flow, current calculated billings and calculated billings. The
accompanying tables present and define calculated billings
consistent with ASC 606. Certain of these non-GAAP financial
measures exclude stock-based compensation, amortization of debt
discount, charitable contributions, and amortization of intangible
assets.
Okta believes that non-GAAP financial information, when taken
collectively, 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 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 the Company's management about which
expenses and income 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.
Please see the reconciliation tables at the end of this release
for the reconciliation of GAAP and non-GAAP results.
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 the
Company's filings and reports with the Securities and Exchange
Commission (SEC), including our Form 10-Q for the fiscal
quarter ended July 31, 2018, as well as other filings and
reports that may be filed by the Company from time to time with
the SEC. 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;
any unreleased products, features or functionality referenced in
this or other presentations, press releases or public statements
are not currently available and may not be delivered on time or at
all; 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; 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; our ability to successfully identify and integrate
acquisitions, strategic investments, partnerships or alliances; our
ability to pay off our convertible senior notes when due; 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 enables organizations to
both secure and manage their extended enterprise, and transform
their customers’ experiences. With over 5,500 pre-built
integrations to applications and infrastructure
providers, Okta customers can easily and securely adopt
the technologies they need to fulfill their missions. Over 5,600
organizations, including 20th Century
Fox, JetBlue, Nordstrom, Slack, Teach for America
and Twilio, trust Okta to securely connect their
people and technology.
OKTA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share data)
(unaudited)
Three Months EndedOctober 31, Nine
Months EndedOctober 31, 2018 2017
2018 2017 As Adjusted (1) As
Adjusted (1) Revenue: Subscription $ 97,698 $
61,863 $ 262,393 $ 165,459 Professional services and other 7,878
5,048 21,390 14,036 Total revenue
105,576 66,911 283,783 179,495 Cost of revenue: Subscription (2)
20,265 13,553 55,808 37,401
Professional services and other (2)
9,435 7,570 26,227 20,867 Total cost of
revenue 29,700 21,123 82,035 58,268
Gross profit 75,876 45,788 201,748 121,227 Operating expenses:
Research and development (2) 27,596 19,190 72,354 51,472 Sales and
marketing (2) 56,911 47,567 165,408 120,761 General and
administrative (2) 19,848 13,546 55,873 37,133
Total operating expenses 104,355 80,303
293,635 209,366 Operating loss (28,479 ) (34,515 )
(91,887 ) (88,139 ) Other income (expense), net (1,705 ) 509
(4,682 ) 872 Loss before provision for (benefit from) income
taxes (30,184 ) (34,006 ) (96,569 ) (87,267 ) Provision for
(benefit from) income taxes (667 ) (940 ) (1,883 ) (463 ) Net loss
$ (29,517 ) $ (33,066 ) $ (94,686 ) $ (86,804 ) Net loss per
share attributable to common stockholders, basic and diluted $
(0.27 ) $ (0.35 ) $ (0.89 ) $ (1.13 ) Weighted-average
shares used to compute net loss per share attributable to common
stockholders, basic and diluted 108,776 95,474
106,587 76,950
___________________________________
(1) The condensed consolidated statement
of operations for the prior periods presented above have been
adjusted to reflect the adoption of ASC 606.
(2) Amounts include share-based
compensation expense as follows (in thousands):
Three Months EndedOctober 31, Nine Months
EndedOctober 31, 2018 2017 2018
2017 Cost of subscription revenue $ 2,383 $ 1,421 $
5,813 $ 3,163 Cost of professional services and other revenue 1,305
979 3,277 2,186 Research and development 6,291 5,174 15,776 12,913
Sales and marketing 6,228 3,894 15,852 9,290 General and
administrative 5,335 2,940 13,181 7,740
Total share-based compensation expense $ 21,542 $ 14,408
$ 53,899 $ 35,292
OKTA, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(unaudited)
October 31,2018
January 31,2018
As Adjusted (1) Assets Current assets:
Cash and cash equivalents $ 195,898 $ 127,949 Short-term
investments 350,105 101,765 Accounts receivable, net of allowances
of $1,425 and $1,472 70,136 52,248 Deferred commissions 21,695
17,755 Prepaid expenses and other current assets 20,280
17,781 Total current assets 658,114 317,498
Property and equipment, net 44,251 12,540 Deferred commissions,
noncurrent 47,756 40,755 Intangible assets, net 14,989 11,761
Goodwill 18,074 6,282 Other assets 13,525 10,427
Total assets $ 796,709 $ 399,263
Liabilities and stockholders’ equity Current liabilities:
Accounts payable $ 12,085 $ 9,566 Accrued expenses and other
current liabilities 6,305 6,187 Accrued compensation 20,250 12,374
Deferred revenue 206,146 159,816 Total current
liabilities 244,786 187,943 Convertible senior notes,
net 267,665 — Deferred revenue, noncurrent 4,977 4,963 Other
liabilities, noncurrent 34,778 7,017 Total
liabilities 552,206 199,923 Commitments and
contingencies Stockholders’ equity: Preferred stock — — Class A
common stock 10 7 Class B common stock 1 3 Additional paid-in
capital 706,810 565,653 Accumulated other comprehensive income
(loss) (918 ) 391 Accumulated deficit (461,400 ) (366,714 ) Total
stockholders’ equity 244,503 199,340
Total
liabilities and stockholders’ equity $ 796,709 $ 399,263
(1) The condensed consolidated balance
sheet for the prior period has been adjusted to reflect the
adoption of ASC 606.
OKTA, INC.
SUMMARY OF CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Nine Months Ended October 31, 2018
2017 As Adjusted (1) Cash flows from
operating activities: Net loss $ (94,686 ) $ (86,804 )
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities: Stock-based compensation 53,899 35,292
Depreciation, amortization and accretion 5,824 5,111 Amortization
of debt discount and issuance costs 10,315 — Amortization of
deferred commissions 14,963 10,911 Deferred income taxes (2,269 )
(960 ) Non-cash charitable contributions 1,008 708 Other 153 997
Changes in operating assets and liabilities, net of business
combination: Accounts receivable (17,539 ) (12,742 ) Deferred
commissions (25,907 ) (16,230 ) Prepaid expenses and other assets
(4,238 ) (2,353 ) Accounts payable 1,354 6,255 Accrued compensation
7,973 5,931 Accrued expenses and other liabilities 8,182 (1,545 )
Deferred revenue 46,036 30,034 Net cash provided by
(used in) operating activities 5,068 (25,395 )
Cash flows
from investing activities: Capitalization of internal-use
software costs (2,329 ) (4,072 ) Purchases of property and
equipment (14,253 ) (5,570 ) Purchases of securities available for
sale (478,138 ) (95,344 ) Proceeds from maturities of securities
available for sale 219,650 21,985 Proceeds from sales of securities
available for sale 12,470 1,538 Payments for business acquisition,
net of cash acquired (15,616 ) — Net cash used in investing
activities (278,216 ) (81,463 )
Cash flows from financing
activities: Proceeds from initial public offering, net of
underwriters' discounts and commissions — 199,948 Proceeds from
issuance of convertible senior notes, net of issuance costs 334,980
— Purchase of convertible senior notes hedge (80,040 ) — Proceeds
from issuance of warrants related to convertible notes 52,440 —
Payments of deferred offering costs — (4,038 ) Proceeds from stock
option exercises, net of repurchases 28,524 25,800 Proceeds from
shares issued in connection with employee stock purchase plan 6,654
— Other (206 ) (343 ) Net cash provided by financing activities
342,352 221,367 Effects of changes in foreign
currency exchange rates on cash and cash equivalents (990 ) 53
Net increase in cash, cash equivalents and restricted cash
68,214 114,562 Cash, cash equivalents and restricted cash at
beginning of period 136,233 23,282
Cash, cash
equivalents and restricted cash at end of period $ 204,447
$ 137,844
(1) The condensed consolidated statement
of cash flows for the prior period has been adjusted to reflect the
adoption of ASC 606.
OKTA, INC.
Reconciliation of GAAP to Non-GAAP
Data
(In thousands, except percentages and per
share data)
(unaudited)
Three Months Ended October 31, 2018 GAAP
Stock-basedcompensation
Amortizationof
acquiredintangibles
Amortizationof
debtdiscount
Non-GAAP Cost of revenue: Cost of subscription
services $ 20,265 $ (2,383 ) $ (449 ) $ — $ 17,433 Cost of
professional services 9,435 (1,305 ) — — 8,130 Gross profit 75,876
3,688 449 — 80,013 Gross margin 71.9
%
3.4 % 0.5 % — % 75.8
%
Operating expenses: Research and development 27,596 (6,291 ) — —
21,305 Sales and marketing 56,911 (6,228 ) — — 50,683 General and
administrative 19,848 (5,335 ) — — 14,513 Operating loss (28,479 )
21,542 449 — (6,488 ) Operating margin (27.0 )% 20.5 % 0.4 % — %
(6.1 )% Other income (expense), net (1,705 ) — — 3,604 1,899 Net
loss $ (29,517 ) $ 21,542 $ 449 $ 3,604 $ (3,922 ) Net loss per
share (1) $ (0.27 ) $ 0.20 $ — $ 0.03 $ (0.04 )
(1) GAAP and Non-GAAP net loss per common
share calculated based upon 108,776 basic and diluted
weighted-average shares of common stock.
Three Months Ended October 31, 2017
GAAP (2)
Stock-basedcompensation
Charitablecontributions
Non-GAAP (2) Cost of revenue: Cost of
subscription services $ 13,553 $ (1,421 ) $ — $ 12,132 Cost of
professional services 7,570 (979 ) — 6,591 Gross profit 45,788
2,400 — 48,188 Gross margin 68.4
%
3.6 % — 72.0
%
Operating expenses: Research and development 19,190 (5,174 ) —
14,016 Sales and marketing 47,567 (3,894 ) — 43,673 General and
administrative 13,546 (2,940 ) (754 ) 9,852 Operating loss (34,515
) 14,408 754 (19,353 ) Operating margin (51.6 )% 21.6 % 1.1 % (28.9
)% Other income (expense), net 509 — — 509 Net loss $ (33,066 ) $
14,408 $ 754 $ (17,904 ) Net loss per share (1) $ (0.35 ) $ 0.15 $
0.01 $ (0.19 )
(1) GAAP and Non-GAAP net loss per common
share calculated based upon 95,474 basic and diluted
weighted-average shares of common stock.
(2) Financial information for prior period
presented above has been adjusted to reflect the adoption of ASC
606.
OKTA, INC.
Reconciliation of GAAP to Non-GAAP
Data
(In thousands, except percentages and per
share data)
(unaudited)
Nine Months Ended October 31, 2018 GAAP
Stock-basedcompensation
Charitablecontributions
Amortizationof
acquiredintangibles
Amortizationof
debtdiscount
Non-GAAP Cost of revenue: Cost of subscription
services $ 55,808 $ (5,813 ) $ — $ (449 ) $ — $ 49,546 Cost of
professional services 26,227 (3,277 ) — — — 22,950 Gross profit
201,748 9,090 — 449 — 211,287 Gross margin 71.1
%
3.2 % — % 0.2 % — % 74.5
%
Operating expenses: Research and development 72,354 (15,776 ) — — —
56,578 Sales and marketing 165,408 (15,852 ) — — — 149,556 General
and administrative 55,873 (13,181 ) (1,008 ) — — 41,684 Operating
loss (91,887 ) 53,899 1,008 449 — (36,531 ) Operating margin (32.4
)% 18.9 % 0.4 % 0.2 % — % (12.9 )% Other income (expense), net
(4,682 ) — — — 9,539 4,857 Net loss (94,686 ) 53,899 1,008 449
9,539 (29,791 ) Net loss per share (1) $ (0.89 ) $ 0.51 $ 0.01 $ —
$ 0.09 $ (0.28 )
(1) GAAP and Non-GAAP net loss per common
share calculated based upon 106,587 basic and diluted
weighted-average shares of common stock.
Nine Months Ended October 31, 2017 GAAP
(2)
Stock-basedcompensation
Charitablecontributions
Amortizationof
acquiredintangibles
Non-GAAP (2) Cost of revenue: Cost of
subscription services $ 37,401 $ (3,163 ) $ — $ (4 ) $ 34,234 Cost
of professional services 20,867 (2,186 ) — — 18,681 Gross profit
121,227 5,349 — 4 126,580 Gross margin
67.5
%
3.0 % — % — % 70.5
%
Operating expenses: Research and development 51,472 (12,913 ) — —
38,559 Sales and marketing 120,761 (9,290 ) — — 111,471 General and
administrative 37,133 (7,740 ) (754 ) — 28,639 Operating loss
(88,139 ) 35,292 754 4 (52,089 ) Operating margin (49.1 )% 19.7 %
0.4 % — % (29.0 )% Other income (expense), net 872 — — — 872 Net
loss $ (86,804 ) $ 35,292 $ 754 $ 4 $ (50,754 ) Net loss per share
(1) $ (1.13 ) $ 0.46 $ 0.01 $ — $ (0.66 )
(1) GAAP and Non-GAAP net loss per common
share calculated based upon 76,950 basic and diluted
weighted-average shares of common stock.
(2) Financial information for prior period
presented above has been adjusted to reflect the adoption of ASC
606.
OKTA, INC.
Reconciliation of GAAP to Non-GAAP
Financial Measures
(In thousands)
(unaudited)
Free Cash Flow Three
Months EndedOctober 31, Nine Months
EndedOctober 31, 2018 2017 2018
2017 Net cash provided by (used in) operating activities $
6,439 $ (9,471 ) $ 5,068 $ (25,395 ) Less: Purchases of property
and equipment (4,463 ) (414 ) (14,253 ) (5,570 ) Capitalization of
internal-use software costs (604 ) (1,329 ) (2,329 ) (4,072 ) Free
Cash Flow $ 1,372 $ (11,214 ) $ (11,514 ) $ (35,037 ) Net
cash used in investing activities (10,545 ) (1,161 ) (278,216 )
(81,463 ) Net cash provided by financing activities 7,469 21,814
342,352 221,367 Free Cash Flow Margin 1.3 % (16.8 )% (4.1 )% (19.5
)%
Calculated Billings
Three Months EndedOctober 31, Nine Months
EndedOctober 31,
2018
2017 (1)
2018
2017 (1)
Total revenue $ 105,576 $ 66,911 $ 283,783 $ 179,495 Add: Unbilled
receivables, current (beginning of period) 818 498 809 1,537
Deferred revenue, current (end of period) 206,146 135,010 206,146
135,010 Less: Unbilled receivables, current (end of period) (1,581
) (902 ) (1,581 ) (902 ) Deferred revenue, current (beginning of
period) (186,427 ) (122,173 ) (159,816 ) (102,966 ) Current
calculated billings 124,532 79,344 329,341 212,174 Add: Deferred
revenue, noncurrent (end of period) 4,977 2,145 4,977 2,145 Less:
Deferred revenue, noncurrent (beginning of period) (5,471 ) (2,929
) (4,963 ) (4,154 ) Calculated billings $ 124,038 $ 78,560
$ 329,355 $ 210,165
(1) Current calculated billings and
calculated billings for the three and nine months ended October 31,
2017 presented above have been modified to conform with the
adoption of ASC 606, which now includes unbilled receivables.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181205005192/en/
Investor Contact:Catherine
Buaninvestor@okta.com415-604-3346
Media Contact:Jenna Kozelpress@okta.com888-722-7871
Okta (NASDAQ:OKTA)
Historical Stock Chart
From Apr 2024 to May 2024
Okta (NASDAQ:OKTA)
Historical Stock Chart
From May 2023 to May 2024