Okta Announces Record First Quarter Fiscal 2018 Financial Results
- Q1 total revenue up 67% year-over-year; subscription revenue up 75% year-over-year
- Q1 GAAP operating margin improved by 17 percentage points; Non-GAAP operating margin improved by 24 percentage points, year-over-year
- Company raised
$200 million in Initial Public Offering
“In our first quarter as a public company, we demonstrated strength by every measure. Total revenue grew by 67%, subscription revenue grew by 75%, and our operating performance improved significantly, year-over-year,” said
First Quarter Fiscal 2018 Financial Highlights:
- Revenue: Total revenue was
$53.0 million , an increase of 66.8% year-over-year. Subscription revenue was$48.4 million , an increase of 75.4% year-over-year. - Operating Loss: GAAP operating loss was
$28.6 million , or 54.0% of total revenue, compared to$22.7 million in the first quarter of fiscal 2017, or 71.4% of total revenue. Non-GAAP operating loss was$19.7 million , or 37.2% of total revenue, compared to$19.3 million of the first quarter of fiscal 2017, or 60.7% of total revenue. - Net Loss: GAAP net loss was
$28.9 million , compared to$22.8 million in the first quarter of fiscal 2017. GAAP net loss per share was$0.73 , compared to$1.22 for the first quarter of fiscal 2017. Non-GAAP net loss was$20.0 million , compared to$19.3 million in the first quarter of fiscal 2017. Non-GAAP net loss per share was$0.50 , compared to$1.04 for the first quarter of fiscal 2017. - Cash Flow: Net cash used in operations was
$9.7 million , compared to$15.0 million for the first quarter of fiscal 2017. Free cash flow was negative$13.3 million , or 25.2% of total revenue, compared to negative$17.2 million , or 54.1% of total revenue, in the first quarter of fiscal 2017. - Cash and cash equivalents and short term investments were
$224.2 million as of April 30, 2017.
The section titled "Non-GAAP Financial Measures" below contains a description of these non-GAAP financial measures and a reconciliation between historical GAAP and non-GAAP information is contained in the tables below.
Financial Outlook:
For the second quarter of fiscal 2018, the Company currently expects:
- Total revenue of
$55.0 to $56.0 million - Non-GAAP operating loss of
$24.0 to $23.0 million - Non-GAAP net loss per share of
$0.26 to $0.25 using shares outstanding of approximately 92.5 million
For the full fiscal 2018, the Company currently expects:
- Total revenue of
$233.0 to $236.0 million - Non-GAAP operating loss of
$91.2 to $88.2 million - Non-GAAP net loss per share of
$1.15 to $1.11 using shares outstanding of approximately 80.2 million
These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.
Conference Call Information:
A live webcast of the conference call will be accessible from the
Non-GAAP Financial Measures:
This press release and the accompanying tables contain the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss per share, free cash flow and calculated billings. Certain of these non-GAAP financial measures exclude stock-based compensation and amortization of intangible assets.
Management of the Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures.
Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.
Forward-Looking Statements:
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook and market positioning. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” “shall” and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Okta’s control. Okta’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Okta’s Prospectus filed with the Securities and Exchange Commission effective on
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OKTA, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (unaudited) |
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Three Months Ended April 30, |
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2017 | 2016 | ||||||
Revenue | |||||||
Subscription | $ | 48,357 | $ | 27,563 | |||
Professional services and other | 4,650 | 4,224 | |||||
Total revenue | 53,007 | 31,787 | |||||
Cost of revenue | |||||||
Subscription (1) | 11,157 | 7,460 | |||||
Professional services and other (1) | 6,306 | 4,919 | |||||
Total cost of revenue | 17,463 | 12,379 | |||||
Gross profit | 35,544 | 19,408 | |||||
Operating expenses | |||||||
Research and development (1) | 15,359 | 8,766 | |||||
Sales and marketing (1) | 37,180 | 26,401 | |||||
General and administrative (1) | 11,639 | 6,945 | |||||
Total operating expenses | 64,178 | 42,112 | |||||
Operating loss | (28,634 | ) | (22,704 | ) | |||
Other income (expense), net | (19 | ) | 32 | ||||
Loss before income taxes | (28,653 | ) | (22,672 | ) | |||
Provision for income taxes | 248 | 81 | |||||
Net loss | $ | (28,901 | ) | $ | (22,753 | ) | |
Net loss per common share, basic and diluted | $ | (0.73 | ) | $ | (1.22 | ) | |
Weighted-average shares used to compute net loss per common share | 39,783 | 18,574 |
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(1) Amounts include share-based compensation expense as follows (in thousands):
Three Months Ended April 30, |
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2017 | 2016 | ||||||
Cost of subscription revenue | $ | 686 | $ | 393 | |||
Cost of professional services and other revenue | 469 | 273 | |||||
Research and development | 3,301 | 618 | |||||
Sales and marketing | 2,375 | 1,354 | |||||
General and administrative | 2,075 | 731 | |||||
Total share-based compensation expense | $ | 8,906 | $ | 3,369 |
OKTA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) |
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April 30, 2017 | January 31, 2017 | ||||||
(unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 221,726 | $ | 23,282 | |||
Short-term investments | 2,500 | 14,390 | |||||
Accounts receivable, net of allowances of $1,025 and $1,306 | 32,171 | 34,544 | |||||
Deferred commissions | 13,131 | 13,549 | |||||
Prepaid expenses and other current assets | 10,271 | 7,025 | |||||
Total current assets | 279,799 | 92,790 | |||||
Property and equipment, net | 13,180 | 11,026 | |||||
Deferred commissions, noncurrent | 9,463 | 10,050 | |||||
Intangible assets, net | 9,835 | 9,155 | |||||
Goodwill | 6,282 | 2,630 | |||||
Other assets | 1,671 | 4,984 | |||||
Total assets | $ | 320,230 | $ | 130,635 | |||
Liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 15,909 | $ | 11,897 | |||
Accrued expenses and other current liabilities | 4,822 | 5,853 | |||||
Accrued compensation | 6,613 | 9,866 | |||||
Deferred revenue | 115,717 | 108,012 | |||||
Total current liabilities | 143,061 | 135,628 | |||||
Deferred revenue, noncurrent | 4,927 | 5,711 | |||||
Other liabilities, noncurrent | 6,323 | 4,947 | |||||
Total liabilities | 154,311 | 146,286 | |||||
Commitments and contingencies (Note 8) | |||||||
Redeemable convertible preferred stock | — | 227,954 | |||||
Stockholders’ equity (deficit): | |||||||
Preferred stock | — | — | |||||
Class A common stock | 1 | — | |||||
Class B common stock | 8 | 2 | |||||
Additional paid-in capital | 483,019 | 44,469 | |||||
Accumulated other comprehensive loss | (99 | ) | (167 | ) | |||
Accumulated deficit | (317,010 | ) | (287,909 | ) | |||
Total stockholders’ equity (deficit) | 165,919 | (243,605 | ) | ||||
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) | $ | 320,230 | $ | 130,635 |
OKTA, INC. SUMMARY OF CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (unaudited) |
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Three Months Ended April 30, | |||||||
2017 | 2016 | ||||||
Operating activities: | |||||||
Net loss | $ | (28,901 | ) | $ | (22,753 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation, amortization and accretion | 1,575 | 887 | |||||
Stock-based compensation | 8,906 | 3,369 | |||||
Amortization of deferred commissions | 4,039 | 3,053 | |||||
Other | 270 | (130 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 2,243 | 3,090 | |||||
Deferred commissions | (3,033 | ) | (2,756 | ) | |||
Prepaid expenses and other assets | (3,143 | ) | (2,876 | ) | |||
Accounts payable | 3,782 | 3,681 | |||||
Accrued compensation | (2,121 | ) | (2,855 | ) | |||
Accrued expenses and other liabilities | (223 | ) | (182 | ) | |||
Deferred revenue | 6,920 | 2,437 | |||||
Net cash used in operating activities | (9,686 | ) | (15,035 | ) | |||
Investing activities: | |||||||
Capitalization of internal-use software costs | (1,208 | ) | (1,232 | ) | |||
Purchases of property and equipment and other | (2,448 | ) | (927 | ) | |||
Other investing activities | 11,873 | 3,000 | |||||
Net cash provided by investing activities | 8,217 | 841 | |||||
Financing activities: | |||||||
Proceeds from initial public offering, net of underwriters' discounts and commissions | 199,997 | — | |||||
Other financing activities | 111 | (337 | ) | ||||
Net cash provided by (used in) financing activities | 200,108 | (337 | ) | ||||
Effects of changes in foreign currency exchange rates on cash and cash equivalents | 68 | 47 | |||||
Net increase (decrease) in cash and cash equivalents and restricted cash | 198,707 | (14,484 | ) | ||||
Cash and cash equivalents and restricted cash at beginning of year | 23,282 | 58,081 | |||||
Cash and cash equivalents and restricted cash at end of year | $ | 221,989 | $ | 43,597 |
OKTA, INC. Reconciliation of GAAP to Non-GAAP Data (In thousands, except percentages and per share data) (unaudited) |
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Three Months Ended April 30, 2017 | ||||||||||||||||
GAAP | Stock-based compensation |
Amortization of acquired intangibles |
Non-GAAP | |||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of subscription services | $ | 11,157 | $ | (686 | ) | $ | (4 | ) | $ | 10,467 | ||||||
Cost of professional services | 6,306 | (469 | ) | — | 5,837 | |||||||||||
Gross profit | 35,544 | 1,155 | 4 | 36,703 | ||||||||||||
Gross margin | 67 | % | 2 | % | — | 69 | % | |||||||||
Research and development | 15,359 | (3,301 | ) | — | 12,058 | |||||||||||
Sales and marketing | 37,180 | (2,375 | ) | — | 34,805 | |||||||||||
General and administrative | 11,639 | (2,075 | ) | — | 9,564 | |||||||||||
Operating loss | (28,634 | ) | 8,906 | 4 | (19,724 | ) | ||||||||||
Operating margin | (54 | )% | 17 | % | — | (37 | )% | |||||||||
Net loss | $ | (28,901 | ) | $ | 8,906 | $ | 4 | $ | (19,991 | ) | ||||||
Net loss per share (1) | $ | (0.73 | ) | $ | 0.22 | $ | 0.01 | $ | (0.50 | ) |
(1) GAAP and Non-GAAP net loss per common share calculated based upon 39,783 basic and diluted weighted-average shares of common stock.
Three Months Ended April 30, 2016 | ||||||||||||||||
GAAP | Stock-based compensation |
Amortization of acquired intangibles |
Non-GAAP | |||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of subscription services | $ | 7,460 | $ | (393 | ) | $ | (47 | ) | $ | 7,020 | ||||||
Cost of professional services | 4,919 | (273 | ) | — | 4,646 | |||||||||||
Gross profit | 19,408 | 666 | 47 | 20,121 | ||||||||||||
Gross margin | 61 | % | 2 | % | — | 63 | % | |||||||||
Research and development | 8,766 | (618 | ) | — | 8,148 | |||||||||||
Sales and marketing | 26,401 | (1,354 | ) | — | 25,047 | |||||||||||
General and administrative | 6,945 | (731 | ) | — | 6,214 | |||||||||||
Operating loss | (22,704 | ) | 3,369 | 47 | (19,288 | ) | ||||||||||
Operating margin | (71 | )% | 10 | % | — | (61 | )% | |||||||||
Net loss | $ | (22,753 | ) | $ | 3,369 | $ | 47 | $ | (19,337 | ) | ||||||
Net loss per share (1) | $ | (1.22 | ) | $ | 0.18 | $ | — | $ | (1.04 | ) |
(1) GAAP and Non-GAAP net loss per common share calculated based upon 18,574 basic and diluted weighted-average shares of common stock.
OKTA, INC. Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands) (unaudited) |
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Free Cash Flow | |||||||
Three Months Ended April 30, |
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2017 | 2016 | ||||||
Net cash used in operating activities | $ | (9,686 | ) | $ | (15,035 | ) | |
Less: | |||||||
Purchases of property and equipment | (2,448 | ) | (927 | ) | |||
Capitalized internal-use software costs | (1,208 | ) | (1,232 | ) | |||
Free Cash Flow | $ | (13,342 | ) | $ | (17,194 | ) | |
Net cash provided by investing activities | $ | 8,217 | $ | 841 | |||
Net cash (used in) provided by financing activities | $ | 200,108 | $ | (337 | ) | ||
Free Cash Flow Margin | (25 | )% | (54 | )% |
Calculated Billings | |||||||
Three Months Ended April 30, |
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2017 | 2016 | ||||||
Total revenue | $ | 53,007 | $ | 31,787 | |||
Add: | |||||||
Deferred revenue (end of period) | 120,644 | 81,962 | |||||
Less: | |||||||
Deferred revenue (beginning of period) | (113,723 | ) | (79,525 | ) | |||
Calculated Billings | $ | 59,928 | $ | 34,224 |
Investor Contact:Catherine Buan investor@okta.com 415-604-3346 Media Contact:Jenna Kozel jenna.kozel@okta.com 415-418-9600