Okta Announces Record Third Quarter Fiscal 2018 Financial Results
- Q3 total revenue up 61% year-over-year
- Q3 subscription revenue up 64% year-over-year
- Named a leader and positioned highest in “current offering” and “strategy” in the Forrester Wave™: Identity-As-A-Service, Q4 2017 report
“We are pleased with another strong quarter, reporting 61 percent
year-over-year revenue growth while we continued to improve our free
cash flow margins,” said
Third Quarter Fiscal 2018 Financial Highlights:
- Revenue: Total revenue was
$68.2 million , an increase of 61% year-over-year. Subscription revenue was$62.7 million , an increase of 64% year-over-year. - Operating Loss: GAAP operating loss was
$35.2 million , or 51.6% of total revenue, compared to$21.9 million in the third quarter of fiscal 2017, or 51.8% of total revenue. Non-GAAP operating loss was$20.1 million , or 29.4% of total revenue, compared to$17.0 million in the third quarter of fiscal 2017, or 40.0% of total revenue. - Net Loss: GAAP net loss was
$33.8 million , compared to$21.9 million in the third quarter of fiscal 2017. GAAP net loss per share was$0.35 , compared to$1.14 in the third quarter of fiscal 2017. Non-GAAP net loss was$18.6 million , compared to$17.0 million in the third quarter of fiscal 2017. Non-GAAP net loss per share was$0.19 , compared to$0.89 in the third quarter of fiscal 2017. - Cash Flow: Net cash used in operations was
$9.5 million , compared to$8.5 million in the third quarter of fiscal 2017. Free cash flow was negative$11.2 million , or 16.4% of total revenue, compared to negative$11.8 million , or 27.9% of total revenue, in the third quarter of fiscal 2017. - Cash, cash equivalents and short-term investments were
$223.6 million as of October 31, 2017.
The section titled "Non-GAAP Financial Measures" below contains a description of the non-GAAP financial measures and a reconciliation between historical GAAP and non-GAAP information is contained in the tables below.
Financial Outlook:
For the fourth quarter of fiscal 2018, the Company currently expects:
-
Total revenue of
$70 to $71 million -
Non-GAAP operating loss of
$18 to $17 million -
Non-GAAP net loss per share of
$0.18 to $0.17 , assuming shares outstanding of approximately 100 million
For the full fiscal 2018, the Company now expects:
-
Total revenue of
$252 to $253 million -
Non-GAAP operating loss of
$73 to $72 million -
Non-GAAP net loss per share of
$0.87 to $0.86 , assuming shares outstanding of approximately 82 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 and charitable contributions.
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 the Company's filings and reports with the Securities
and Exchange Commission (
About
OKTA, INC. | |||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
(In thousands, except per share data) |
|||||||||||||||||
(unaudited) |
|||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
October 31, | October 31, | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Revenue | |||||||||||||||||
Subscription | $ | 62,705 | $ | 38,123 | $ | 167,142 | $ | 99,125 | |||||||||
Professional services and other | 5,533 | 4,160 | 15,098 | 12,381 | |||||||||||||
Total revenue | 68,238 | 42,283 | 182,240 | 111,506 | |||||||||||||
Cost of revenue | |||||||||||||||||
Subscription (1) | 13,553 | 8,597 | 37,401 | 24,523 | |||||||||||||
Professional services and other (1) | 7,570 | 5,506 | 20,867 | 15,739 | |||||||||||||
Total cost of revenue | 21,123 | 14,103 | 58,268 | 40,262 | |||||||||||||
Gross profit | 47,115 | 28,180 | 123,972 | 71,244 | |||||||||||||
Operating expenses | |||||||||||||||||
Research and development (1) | 19,190 | 9,706 | 51,472 | 28,127 | |||||||||||||
Sales and marketing (1) | 49,606 | 32,442 | 126,383 | 87,264 | |||||||||||||
General and administrative (1) | 13,546 | 7,922 | 37,133 | 21,009 | |||||||||||||
Total operating expenses | 82,342 | 50,070 | 214,988 | 136,400 | |||||||||||||
Operating loss | (35,227 | ) | (21,890 | ) | (91,016 | ) | (65,156 | ) | |||||||||
Other income, net | 509 | 50 | 872 | 138 | |||||||||||||
Loss before income taxes | (34,718 | ) | (21,840 | ) | (90,144 | ) | (65,018 | ) | |||||||||
Provision (benefit) for income taxes | (940 | ) | 91 | (463 | ) | 267 | |||||||||||
Net loss | $ | (33,778 | ) | $ | (21,931 | ) | $ | (89,681 | ) | $ | (65,285 | ) | |||||
Net loss per common share, basic and diluted | $ | (0.35 | ) | $ | (1.14 | ) | $ | (1.17 | ) | $ | (3.46 | ) | |||||
Weighted-average shares used to compute net loss per common share | 95,474 | 19,174 | 76,950 | 18,850 | |||||||||||||
______________________________ |
|||||||||||||||||
(1) Amounts include share-based compensation expense as follows (in thousands): |
|||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
October 31, | October 31, | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Cost of subscription revenue | $ | 1,421 | $ | 578 | $ | 3,163 | $ | 1,417 | |||||||||
Cost of professional services and other revenue | 979 | 304 | 2,186 | 890 | |||||||||||||
Research and development | 5,174 | 808 | 12,913 | 2,162 | |||||||||||||
Sales and marketing | 3,894 | 1,619 | 9,290 | 4,385 | |||||||||||||
General and administrative | 2,940 | 1,527 | 7,740 | 3,015 | |||||||||||||
Total share-based compensation expense | $ | 14,408 | $ | 4,836 | $ | 35,292 | $ | 11,869 |
OKTA, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(In thousands) |
||||||||
October 31, | January 31, | |||||||
2017 | 2017 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 137,575 | $ | 23,282 | ||||
Short-term investments | 86,043 | 14,390 | ||||||
Accounts receivable, net of allowances of $976 and $1,306 | 46,882 | 34,544 | ||||||
Deferred commissions | 14,134 | 13,549 | ||||||
Prepaid expenses and other current assets | 10,038 | 7,025 | ||||||
Total current assets |
294,672 | 92,790 | ||||||
Property and equipment, net | 13,122 | 11,026 | ||||||
Deferred commissions, noncurrent | 9,163 | 10,050 | ||||||
Intangible assets, net | 11,455 | 9,155 | ||||||
Goodwill | 6,282 | 2,630 | ||||||
Other assets | 2,463 | 4,984 | ||||||
Total assets | $ | 337,157 | $ | 130,635 | ||||
Liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable (1) | $ | 12,875 | $ | 9,387 | ||||
Accrued expenses and other current liabilities (1) | 4,955 | 8,363 | ||||||
Accrued compensation | 14,671 | 9,866 | ||||||
Deferred revenue | 138,460 | 108,012 | ||||||
Total current liabilities | 170,961 | 135,628 | ||||||
Deferred revenue, noncurrent | 3,188 | 5,711 | ||||||
Other liabilities, noncurrent | 6,553 | 4,947 | ||||||
Total liabilities | 180,702 | 146,286 | ||||||
Commitments and contingencies | ||||||||
Redeemable convertible preferred stock | — | 227,954 | ||||||
Stockholders’ equity (deficit): | ||||||||
Preferred stock | — | — | ||||||
Class A common stock | 2 | — | ||||||
Class B common stock | 8 | 2 | ||||||
Additional paid-in capital | 534,304 | 44,469 | ||||||
Accumulated other comprehensive loss | (69 | ) | (167 | ) | ||||
Accumulated deficit | (377,790 | ) | (287,909 | ) | ||||
Total stockholders’ equity (deficit) | 156,455 | (243,605 | ) | |||||
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) | $ | 337,157 | $ | 130,635 | ||||
(1) Certain reclassifications of prior period amounts have been made in our condensed consolidated balance sheets to conform to the current period presentation. |
OKTA, INC. | ||||||||
SUMMARY OF CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands) |
||||||||
(unaudited) |
||||||||
Nine Months Ended | ||||||||
October 31, | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (89,681 | ) | $ | (65,285 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation, amortization and accretion | 5,111 | 3,177 | ||||||
Stock-based compensation | 35,292 | 11,869 | ||||||
Amortization of deferred commissions | 12,798 | 9,926 | ||||||
Deferred income taxes | (960 | ) | — | |||||
Non-cash charitable contributions | 708 | 129 | ||||||
Other | 997 | 173 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (12,742 | ) | (3,606 | ) | ||||
Deferred commissions | (12,495 | ) | (11,207 | ) | ||||
Prepaid expenses and other current and noncurrent assets | (2,989 | ) | (2,312 | ) | ||||
Accounts payable (1) | 6,255 | 2,453 | ||||||
Accrued compensation | 5,931 | (1,268 | ) | |||||
Accrued expenses and other current and noncurrent liabilities (1) | (1,545 | ) | 259 | |||||
Deferred revenue | 27,925 | 20,293 | ||||||
Net cash used in operating activities | (25,395 | ) | (35,399 | ) | ||||
Cash flows from investing activities: | ||||||||
Capitalization of internal-use software costs | (4,072 | ) | (3,992 | ) | ||||
Purchases of property and equipment and other | (5,570 | ) | (4,647 | ) | ||||
Net purchases of securities available for sale | (71,821 | ) | 11,207 | |||||
Net cash provided by (used in) investing activities | (81,463 | ) | 2,568 | |||||
Cash flows from financing activities: | ||||||||
Proceeds from initial public offering, net of underwriters' discounts and commissions | 199,948 | — | ||||||
Other financing activities | 21,419 | 462 | ||||||
Net cash provided by financing activities | 221,367 | 462 | ||||||
Effects of changes in foreign currency exchange rates on cash and cash equivalents | 53 | (144 | ) | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 114,562 | (32,513 | ) | |||||
Cash, cash equivalents and restricted cash at beginning of period | 23,282 | 58,081 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 137,844 | $ | 25,568 | ||||
(1) Certain reclassifications of prior period amounts have been made in our condensed consolidated statements of cash flows to conform to the current period presentation. |
OKTA, INC. | |||||||||||||||||||||
Reconciliation of GAAP to Non-GAAP Data | |||||||||||||||||||||
(In thousands, except percentages and per share data) |
|||||||||||||||||||||
(unaudited) |
|||||||||||||||||||||
Nine Months Ended October 31, 2017 | |||||||||||||||||||||
GAAP |
Stock-based |
Charitable |
Amortization |
Non-GAAP | |||||||||||||||||
Costs and expenses: | |||||||||||||||||||||
Cost of subscription services | $ | 37,401 | $ | (3,163 | ) | $ | — | $ | (4 | ) | $ | 34,234 | |||||||||
Cost of professional services | 20,867 | (2,186 | ) | — | — | 18,681 | |||||||||||||||
Gross profit | 123,972 | 5,349 | — | 4 | 129,325 | ||||||||||||||||
Gross margin | 68 | % | 3 | % | — | — | 71 | % | |||||||||||||
Research and development | 51,472 | (12,913 | ) | — | — | 38,559 | |||||||||||||||
Sales and marketing | 126,383 | (9,290 | ) | — | — | 117,093 | |||||||||||||||
General and administrative | 37,133 | (7,740 | ) | (754 | ) | — | 28,639 | ||||||||||||||
Operating loss | (91,016 | ) | 35,292 | 754 | 4 | (54,966 | ) | ||||||||||||||
Operating margin | (50 | )% | 20 | % | — | % | — | (30 | )% | ||||||||||||
Net loss | $ | (89,681 | ) | $ | 35,292 | $ | 754 | $ | 4 | $ | (53,631 | ) | |||||||||
Net loss per share (1) | $ | (1.17 | ) | $ | 0.46 | $ | 0.01 | $ | — | $ | (0.70 | ) | |||||||||
(1) GAAP and Non-GAAP net loss per common share calculated based upon 76,950 basic and diluted weighted-average shares of common stock. |
|||||||||||||||||||||
Nine Months Ended October 31, 2016 |
|||||||||||||||||||||
GAAP |
Stock-based |
Charitable |
Amortization |
Non-GAAP | |||||||||||||||||
Costs and expenses: | |||||||||||||||||||||
Cost of subscription services | $ | 24,523 | $ | (1,417 | ) | $ | — | $ | (141 | ) | $ | 22,965 | |||||||||
Cost of professional services | 15,739 | (890 | ) | — | — | 14,849 | |||||||||||||||
Gross profit | 71,244 | 2,307 | — | 141 | 73,692 | ||||||||||||||||
Gross margin | 64 | % | 2 | % | — | — | 66 | % | |||||||||||||
Research and development | 28,127 | (2,162 | ) | — | — | 25,965 | |||||||||||||||
Sales and marketing | 87,264 | (4,385 | ) | — | — | 82,879 | |||||||||||||||
General and administrative | 21,009 | (3,015 | ) | — | — | 17,994 | |||||||||||||||
Operating loss | (65,156 | ) | 11,869 | — | 141 | (53,146 | ) | ||||||||||||||
Operating margin | (58 | )% | 10 | % | — | — | % | (48 | )% | ||||||||||||
Net loss | $ | (65,285 | ) | $ | 11,869 | $ | — | $ | 141 | $ | (53,275 | ) | |||||||||
Net loss per share (1) | $ | (3.46 | ) | $ | 0.63 | $ | — | $ | — | $ | (2.83 | ) | |||||||||
(1) GAAP and Non-GAAP net loss per common share calculated based upon 18,850 basic and diluted weighted-average shares of common stock. |
OKTA, INC. | ||||||||||||||||||||
Reconciliation of GAAP to Non-GAAP Data | ||||||||||||||||||||
(In thousands, except percentages and per share data) |
||||||||||||||||||||
(unaudited) |
||||||||||||||||||||
Three Months Ended October 31, 2017 | ||||||||||||||||||||
GAAP |
Stock-based |
Charitable |
Amortization |
Non-GAAP | ||||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of subscription services | $ | 13,553 | $ | (1,421 | ) | $ | — | $ | — | $ | 12,132 | |||||||||
Cost of professional services | 7,570 | (979 | ) | — | — | 6,591 | ||||||||||||||
Gross profit | 47,115 | 2,400 | — | — | 49,515 | |||||||||||||||
Gross margin | 69 | % | 4 | % | — | — | 73 | % | ||||||||||||
Research and development | 19,190 | (5,174 | ) | — | — | 14,016 | ||||||||||||||
Sales and marketing | 49,606 | (3,894 | ) | — | — | 45,712 | ||||||||||||||
General and administrative | 13,546 | (2,940 | ) | (754 | ) | — | 9,852 | |||||||||||||
Operating loss | (35,227 | ) | 14,408 | 754 | — | (20,065 | ) | |||||||||||||
Operating margin | (52 | )% | 23 | % | — | % | — | (29 | )% | |||||||||||
Net loss | $ | (33,778 | ) | $ | 14,408 | $ | 754 | $ | — | $ | (18,616 | ) | ||||||||
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. |
||||||||||||||||||||
Three Months Ended October 31, 2016 |
||||||||||||||||||||
GAAP |
Stock-based |
Charitable |
Amortization |
Non-GAAP | ||||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of subscription services | $ | 8,597 | $ | (578 | ) | $ | — | $ | (47 | ) | $ | 7,972 | ||||||||
Cost of professional services | 5,506 | (304 | ) | — | — | 5,202 | ||||||||||||||
Gross profit | 28,180 | 882 | — | 47 | 29,109 | |||||||||||||||
Gross margin | 67 | % | 2 | % | — | — | 69 | % | ||||||||||||
Research and development | 9,706 | (808 | ) | — | — | 8,898 | ||||||||||||||
Sales and marketing | 32,442 | (1,619 | ) | — | — | 30,823 | ||||||||||||||
General and administrative | 7,922 | (1,527 | ) | — | — | 6,395 | ||||||||||||||
Operating loss | (21,890 | ) | 4,836 | — | 47 | (17,007 | ) | |||||||||||||
Operating margin | (52 | )% | 11 | % | — | 1 | % | (40 | )% | |||||||||||
Net loss | $ | (21,931 | ) | $ | 4,836 | $ | — | $ | 47 | $ | (17,048 | ) | ||||||||
Net loss per share (1) | $ | (1.14 | ) | $ | 0.25 | $ | — | $ | — | $ | (0.89 | ) | ||||||||
(1) GAAP and Non-GAAP net loss per common share calculated based upon 19,174 basic and diluted weighted-average shares of common stock. |
||||||||||||||||||||
OKTA, INC. | ||||||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures | ||||||||||||||||
(In thousands) |
||||||||||||||||
(unaudited) |
||||||||||||||||
Free Cash Flow | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | October 31, | |||||||||||||||
2017 |
2016 | 2017 | 2016 | |||||||||||||
Net cash used in operating activities | $ | (9,471 | ) | $ | (8,526 | ) | $ | (25,395 | ) | $ | (35,399 | ) | ||||
Less: | ||||||||||||||||
Purchases of property and equipment | (414 | ) | (1,618 | ) | (5,570 | ) | (4,647 | ) | ||||||||
Capitalized internal-use software costs | (1,329 | ) | (1,667 | ) | (4,072 | ) | (3,992 | ) | ||||||||
Free Cash Flow | $ | (11,214 | ) | $ | (11,811 | ) | $ | (35,037 | ) | $ | (44,038 | ) | ||||
Net cash provided by (used in) investing activities | (1,161 | ) | 715 | (81,463 | ) | 2,568 | ||||||||||
Net cash provided by (used in) financing activities | 21,814 | 751 | 221,367 | 462 | ||||||||||||
Free Cash Flow Margin | (16 | )% | (28 | )% | (19 | )% | (39 | )% | ||||||||
Calculated Billings |
||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | October 31, | |||||||||||||||
|
2017 |
2016 | 2017 | 2016 | ||||||||||||
Total revenue |
$ |
68,238 |
$ | 42,283 | $ | 182,240 | $ | 111,506 | ||||||||
Add: | ||||||||||||||||
Deferred revenue (end of period)
|
141,648 |
99,818 | 141,648 | 99,818 | ||||||||||||
Less: | ||||||||||||||||
Deferred revenue (beginning of period)
|
(131,326 |
) |
(90,981 | ) | (113,723 | ) | (79,525 | ) | ||||||||
Calculated Billings |
$ |
78,560 |
$ | 51,120 | $ | 210,165 | $ | 131,799 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20171206006072/en/
Source:
Okta, Inc.
Investor Contact:
Catherine Buan,
415-604-3346
investor@okta.com
or
Media
Contact:
Jenna Kozel, 888-722-7871
press@okta.com