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Okta Announces First Quarter Fiscal Year 2023 Financial Results – StreetInsider.com

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StreetInsider.com Top Tickers, 6/3/2022
SAN FRANCISCO–(BUSINESS WIRE)– 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:
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:
For the full year fiscal 2023, the Company now expects:
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
 
 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220601006235/en/
Investor Contact:
Dave Gennarelli
[email protected]
Media Contact:
Vitor De Souza
[email protected]
Source: Okta, Inc.
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