01—Abstract
Summary
Summary of the 10-Q filed June 1, 2023. Cited figures are marked; the original filing is the authoritative source.
Okta, Inc. reported its quarterly results for the three months ended April 30, 2023 in this Form 10-Q.
Total revenue rose to $518 milliona from $415 million, with subscription revenue at $503 million versus $398 million. Operating loss narrowed to $160 million from $240 million, and net loss narrowed to $119 million from $243 million. Subscription gross margin improved to 76% from 72%.
Operating cash flow was $129 millionb, up from $19 million in the prior-year period. The balance sheet shows cash, cash equivalents and short-term investments totaling $2,370 million as of April 30, 2023. During the quarter the company repurchased $366 million principal amount of its 2025 convertible senior notes for $332 million in cash, producing a $31 million gain on early extinguishment of debt.
Principal outstanding on the 2025 Notes fell to $694 millionc, while the 2026 Notes remained at $1,150 million. Remaining non-cancelable subscription performance obligations were approximately $2,942 million, of which about $1,701 million, or 58%, is expected to be recognized over the next 12 months.
The filing also highlights growth in customers to more than 18,050 from over 15,800 a year earlier, and a Dollar-Based Net Retention Rate of 117%, down from 123%. Investors should note that the company continues to report losses, that restructuring and lease impairment charges of $7 milliond were recorded, and that securities class action and derivative lawsuits relating to cybersecurity controls and the Auth0 integration remain pending.
02—Key points
Key Highlights
- Total revenue of $518 million, up from $415 million in the prior-year quarter; subscription revenue was $503 million versus $398 million.
- Net loss narrowed to $119 million from $243 million; operating loss narrowed to $160 million from $240 million.
- Subscription gross margin improved to 76% from 72%.
- Net cash provided by operating activities was $129 million, compared with $19 million a year earlier.
- Cash, cash equivalents and short-term investments totaled $2,370 million; the company repurchased $366 million principal of 2025 Notes for $332 million, generating a $31 million gain.
- Customers increased to more than 18,050 from over 15,800; Dollar-Based Net Retention Rate was 117%, versus 123% a year earlier.
- Remaining performance obligations were approximately $2,942 million, with about $1,701 million (58%) expected to be recognized over the next 12 months.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2024, Okta lost $0.23.
- Revenue$518.0M100.0%
- Cost of revenue−$142.0M27.4%
- Gross profit$376.0M72.6%
- Operating costs−$536.0M103.5%
- Operating income−$160.0M30.9%
- Interest, other & tax$41.0M7.9%
- Net income−$119.0M23.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed June 1, 2023Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $518.00M$415.00M | +24.8% |
| Cost of Revenue | $142.00M$131.00M | +8.4% |
| Gross Profit | $376.00M$284.00M | +32.4% |
| R&D Expenses | $163.00M$162.00M | +0.6% |
| Operating Expenses | $536.00M$524.00M | +2.3% |
| Operating Income | -$160.00M-$240.00M | +33.3% |
| Interest Expense | $3.00M$3.00M | 0.0% |
| Net Income | -$119.00M-$243.00M | +51.0% |
| EPS (Basic) | $-0.74$-1.56 | +52.6% |
| EPS (Diluted) | $-0.74$-1.56 | +52.6% |
| Shares Outstanding (Basic) | 161.32M155.88M | +3.5% |
| Shares Outstanding (Diluted) | 161.32M155.88M | +3.5% |
05—Questions
Frequently Asked Questions
How did Okta's revenue and losses change in the quarter ended April 30, 2023?
Total revenue increased to $518 million from $415 million. The net loss narrowed to $119 million from $243 million, and the operating loss narrowed to $160 million from $240 million.
What did Okta do with its convertible debt during the quarter?
Okta repurchased $366 million principal amount of its 2025 convertible senior notes for $332 million in cash, recording a $31 million gain on early extinguishment of debt. Principal of the 2025 Notes outstanding fell to $694 million, and the 2026 Notes remained at $1,150 million.
How much liquidity does Okta have, and is it sufficient?
As of April 30, 2023, cash, cash equivalents and short-term investments totaled $2,370 million. Management believes these resources, together with cash from sales, will be sufficient to meet short-term and long-term projected working capital and capital expenditure needs for the foreseeable future.
Are there material legal proceedings affecting Okta?
Yes. A putative securities class action filed in May 2022 alleges misleading statements about cybersecurity controls, data breach vulnerability and the Auth0 integration. Derivative lawsuits on similar allegations are also pending. The company intends to defend these lawsuits vigorously and cannot predict the outcome or estimate potential losses.
What trends in customers and retention does the filing report?
Customers grew 14% to more than 18,050 from over 15,800 a year earlier, and customers with ACV above $100,000 rose to 4,080 from 3,305. The Dollar-Based Net Retention Rate declined to 117% from 123%.
06—Continue