01—Abstract
Summary
Summary of the 10-Q filed May 30, 2024. Cited figures are marked; the original filing is the authoritative source.
Okta, Inc. reported its first quarter of fiscal 2025 (three months ended April 30, 2024).
Total revenue was $617 milliona, up from $518 million, with subscription revenue at $603 million versus $503 million. Operating loss narrowed to $47 million from $160 million, and net loss narrowed to $40 million from $119 million. Net cash provided by operating activities was $219 million, compared with $129 million a year earlier.
Dollar-based net retention was 111% as of April 30, 2024, down from 117% a year earlier, which the filing attributes primarily to the macroeconomic environment. Customers grew to 19,100 from 18,050, and customers with ACV above $100,000b rose to 4,550 from 4,080. The balance sheet shows cash, cash equivalents and short-term investments totaling $2,320 million, against convertible senior notes with principal of $552 million (2025 Notes) and $608 million (2026 Notes).
Remaining performance obligations were $3,364 millionc, of which approximately $1,949 million is expected to be recognized over the next 12 months. Stock-based compensation was $151 million for the quarter.
The filing also discloses a securities class action (In re Okta, Inc. Securities Litigation) that the parties agreed in principle to settle, with the Company agreeing to pay or cause insurers to pay a total of $60 milliond, recorded as a liability. Two related derivative lawsuits remain pending, and the Company states it cannot predict their outcome or estimate potential losses.
02—Key points
Key Highlights
- Total revenue of $617 million, compared with $518 million in the prior-year quarter; subscription revenue was $603 million and represented approximately 98% of total revenue.
- Operating loss of $47 million, compared with $160 million a year earlier; net loss of $40 million, or $(0.24) per share, versus $119 million, or $(0.74) per share.
- Gross margin of 76%, up from 73%, with subscription gross margin improving to 78% from 76%.
- Dollar-based net retention rate fell to 111% from 117%, which the company attributes primarily to the macroeconomic environment.
- Customers rose to 19,100 from 18,050; customers with ACV above $100,000 increased to 4,550 from 4,080.
- Net cash provided by operating activities was $219 million, up from $129 million; cash, cash equivalents and short-term investments totaled $2,320 million at quarter end.
- Agreed in principle to settle the securities class action for a total of $60 million, recorded as a liability, with a corresponding insurance receivable; derivative lawsuits remain pending.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2025, Okta lost $0.06.
- Revenue$617.0M100.0%
- Cost of revenue−$148.0M24.0%
- Gross profit$469.0M76.0%
- Operating costs−$516.0M83.6%
- Operating income−$47.0M7.6%
- Interest, other & tax$7.0M1.1%
- Net income−$40.0M6.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed May 30, 2024Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $617.00M$518.00M | +19.1% |
| Cost of Revenue | $148.00M$142.00M | +4.2% |
| Gross Profit | $469.00M$376.00M | +24.7% |
| R&D Expenses | $163.00M$163.00M | 0.0% |
| Operating Expenses | $516.00M$536.00M | −3.7% |
| Operating Income | -$47.00M-$160.00M | +70.6% |
| Interest Expense | $2.00M$3.00M | −33.3% |
| Net Income | -$40.00M-$119.00M | +66.4% |
| EPS (Basic) | $-0.24$-0.74 | +67.6% |
| EPS (Diluted) | $-0.24$-0.74 | +67.6% |
| Shares Outstanding (Basic) | 167.47M161.32M | +3.8% |
| Shares Outstanding (Diluted) | 167.47M161.32M | +3.8% |
05—Questions
Frequently Asked Questions
How did Okta's profitability change in the quarter?
Operating loss narrowed to $47 million from $160 million, and net loss narrowed to $40 million from $119 million. Total operating expenses fell to $516 million from $536 million, while gross profit rose to $469 million from $376 million. The prior-year period included a $31 million gain on early extinguishment of debt and $7 million of restructuring charges.
Is customer retention weakening?
Dollar-based net retention was 111% as of April 30, 2024, compared with 117% a year earlier. The company states the decrease was primarily a result of the macroeconomic environment, with ACV from existing customers increasing at a slower rate. Customer count nonetheless grew to 19,100 from 18,050.
What is the status of the securities litigation?
The parties reached an agreement in principle to settle the securities class action and entered into a stipulation of settlement on May 28, 2024, subject to court approval. The Company agreed to pay, or cause its insurers to pay, a total of $60 million, covered by D&O insurance and the balance of its $10 million primary policy retention. The settlement does not admit fault. Derivative lawsuits remain pending, and the Company cannot currently predict their outcome or estimate potential losses.
What is Okta's liquidity position and debt outlook?
Cash, cash equivalents and short-term investments totaled $2,320 million as of April 30, 2024. Convertible senior notes outstanding had principal of $552 million due 2025 and $608 million due 2026. The company believes existing cash and investments, together with cash from sales, will be sufficient to meet its working capital and capital expenditure needs for the foreseeable future.
What does the remaining performance obligations figure indicate?
Remaining performance obligations under subscription contracts were approximately $3,364 million as of April 30, 2024, up from $2,942 million a year earlier. Of this, approximately $1,949 million, or 58%, is expected to be recognized as revenue over the next 12 months, compared with current RPO of $1,701 million a year earlier.
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