01—Abstract
Summary
Summary of the 10-Q filed December 4, 2024. Cited figures are marked; the original filing is the authoritative source.
Okta, Inc. filed its Form 10-Q for the quarter ended October 31, 2024, reporting third-quarter fiscal 2025 total revenue of $665 milliona, up from $584 million a year earlier, with subscription revenue of $651 million.
Gross profit rose to $508 millionb from $439 million, and operating loss narrowed to $16 million from $111 million. The company reported net income of $16 million for the quarter, compared with a net loss of $81 million in the prior-year quarter. For the nine months, total revenue was $1,928 million versus $1,658 million, and net income was $5 million versus a net loss of $311 million.
Operating expenses declined, with sales and marketing down to $256 millionc from $270 million, research and development to $158 million from $165 million, and stock-based compensation falling to $135 million from $172 million for the quarter. Operating cash flow for the nine months was $464 million, up from $338 million. Dollar-based net retention was 108% as of October 31, 2024, down from 115% a year earlier, which the filing attributes primarily to the macroeconomic environment.
Customers grew to 19,450 from 18,800, and customers with ACV above $100,000d rose to 4,705 from 4,365. Balance sheet liquidity remained substantial, with cash, cash equivalents and short-term investments totaling $2,248 million.
The company's $510 million of 2025 convertible notes is classified as current due to a September 1, 2025 maturity, and $350 million of 2026 notes remain outstanding. The filing also discloses a $60 million settlement of the securities class action, covered through D&O insurance and the company's retention, with final court approval granted on November 19, 2024, and continuing derivative lawsuits whose outcome cannot be estimated.
02—Key points
Key Highlights
- Total revenue of $665 million for the quarter, up from $584 million, and $1,928 million for the nine months, up from $1,658 million.
- Net income of $16 million for the quarter versus a net loss of $81 million a year earlier; nine-month net income of $5 million versus a net loss of $311 million.
- Operating loss narrowed to $16 million for the quarter from $111 million, with gross profit of $508 million and total operating expenses of $524 million.
- Net cash provided by operating activities was $464 million for the nine months, compared with $338 million a year earlier.
- Dollar-based net retention rate declined to 108% from 115%, which the filing attributes primarily to the macroeconomic environment.
- Cash, cash equivalents and short-term investments totaled $2,248 million, while 2025 Notes of $510 million principal are classified as current.
- A $60 million securities class action settlement received final court approval on November 19, 2024, with derivative lawsuits remaining pending.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, Okta kept $0.02.
- Revenue$665.0M100.0%
- Cost of revenue−$157.0M23.6%
- Gross profit$508.0M76.4%
- Operating costs−$524.0M78.8%
- Operating income−$16.0M2.4%
- Interest, other & tax$32.0M4.8%
- Net income$16.0M2.4%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed December 4, 2024Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $665.00M$584.00M | +13.9% |
| Cost of Revenue | $157.00M$145.00M | +8.3% |
| Gross Profit | $508.00M$439.00M | +15.7% |
| R&D Expenses | $158.00M$165.00M | −4.2% |
| Operating Expenses | $524.00M$550.00M | −4.7% |
| Operating Income | -$16.00M-$111.00M | +85.6% |
| Net Income | $16.00M-$81.00M | +119.8% |
| EPS (Basic) | $0.09$-0.49 | +118.4% |
| Shares Outstanding (Basic) | 170.22M164.38M | +3.6% |
| Shares Outstanding (Diluted) | 170.67M164.38M | +3.8% |
05—Questions
Frequently Asked Questions
Did Okta return to profitability this quarter?
Yes, on a GAAP basis. The company reported net income of $16 million for the three months ended October 31, 2024, compared with a net loss of $81 million a year earlier. The filing notes that the company achieved profitability for the quarters ended July 31, 2024 and October 31, 2024.
Why did the dollar-based net retention rate decline?
The filing states that the decrease to 108% as of October 31, 2024, from 115% a year earlier was primarily a result of the macroeconomic environment, with overall ACV from existing customers increasing at a slower rate in the current period.
How is the company's convertible debt position changing?
During the three months ended October 31, 2024, Okta repurchased $42 million principal of 2025 Notes for $40 million and $215 million principal of 2026 Notes for $200 million, recording a $16 million gain on early extinguishment. Principal outstanding was $510 million for the 2025 Notes and $350 million for the 2026 Notes as of October 31, 2024. The 2025 Notes are classified as current due to their September 1, 2025 maturity.
What is the status of the securities class action litigation?
The company agreed to pay, or cause its insurers to pay, a total of $60 million to settle the securities class action, covered by D&O insurance and the balance of its $10 million retention. The court granted final approval on November 19, 2024. The company recognized a $60 million liability with a corresponding insurance receivable. Related derivative lawsuits remain pending, and the company stated it cannot predict their outcome or estimate potential losses.
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