Delaware (State or other jurisdiction of incorporation or organization) | 001-38044 (Commission File Number) | 26-4175727 (I.R.S. Employer Identification Number) |
100 First Street, Suite 600 San Francisco, California 94105 | ||
(Address of principal executive offices) | ||
(888) 722-7871 | ||
(Registrant's telephone number, including area code) | ||
___________________________________ | ||
___________________________________ |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Class A common stock, par value $0.0001 per share | OKTA | The NASDAQ Stock Market LLC |
Exhibit Number | Description | |
99.1 | ||
Okta, Inc. | ||
By: | /s/ William E. Losch | |
Name: | William E. Losch | |
Title: | Chief Financial Officer | |
• | Q2 revenue grew 49% year-over-year; subscription revenue grew 51% year-over-year |
• | GAAP operating margin improved 10 percentage points year-over-year; Non-GAAP operating margin improved 13 percentage points year-over-year |
• | Named a Leader and placed highest for ability to execute and furthest for completeness of vision in the 2019 Gartner Magic Quadrant for Access Management* |
• | Revenue: Total revenue was $140.5 million, an increase of 49% year-over-year. Subscription revenue was $132.5 million, an increase of 51% year-over-year. |
• | Calculated Billings: Total calculated billings were $155.8 million, an increase of 42% year-over-year. |
• | Operating Loss: GAAP operating loss was $43.6 million, or 31.0% of total revenue, compared to $38.4 million, or 40.6% of total revenue, in the second quarter of fiscal 2019. Non-GAAP operating loss was $9.9 million, or 7.1% of total revenue, compared to $19.2 million, or 20.3% of total revenue, in the second quarter of fiscal 2019. |
• | Net Loss: GAAP net loss was $43.0 million, compared to $39.2 million in the second quarter of fiscal 2019. GAAP net loss per share was $0.37, compared to $0.37 in the second quarter of fiscal 2019. Non-GAAP net loss was $5.5 million, compared to $16.4 million in the second quarter of fiscal 2019. Non-GAAP net loss per share was $0.05, compared to $0.15 in the second quarter of fiscal 2019. |
• | Cash Flow: Net cash used in operations was $1.1 million, or 0.8% of total revenue, compared to net cash used in operations of $5.3 million, or 5.6% of total revenue, in the second quarter of fiscal 2019. Free cash flow was negative $4.3 million, or 3.1% of total revenue, compared to negative $11.3 million, or 12.0% of total revenue, in the second quarter of fiscal 2019. |
• | Cash, cash equivalents, and short-term investments were $557.5 million as of July 31, 2019. |
• | Remaining Performance Obligation (RPO): Total RPO was $913.6 million, an increase of 68% year-over-year. Current RPO, which is RPO expected to be recognized over the next 12 months, grew 52% compared to the second quarter of fiscal 2019, and represented 50% of total RPO. |
• | Total revenue of $143 million to $144 million, representing a growth rate of 35% to 36% year-over-year |
• | Non-GAAP operating loss of $17.5 to $16.5 million |
• | Non-GAAP net loss per share of $0.13 to $0.12, assuming shares outstanding of approximately 117 million |
• | Total revenue of $560 to $563 million, representing a growth rate of 40% to 41% year-over-year |
• | Non-GAAP operating loss of $64.0 to $62.0 million |
• | Non-GAAP net loss per share of $0.44 to $0.42, assuming shares outstanding of approximately 116 million |
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenue: | |||||||||||||||
Subscription | $ | 132,494 | $ | 87,854 | $ | 249,657 | $ | 164,695 | |||||||
Professional services and other | 7,986 | 6,732 | 16,046 | 13,512 | |||||||||||
Total revenue | 140,480 | 94,586 | 265,703 | 178,207 | |||||||||||
Cost of revenue: | |||||||||||||||
Subscription (1) | 27,917 | 19,211 | 52,457 | 35,543 | |||||||||||
Professional services and other (1) | 10,863 | 9,017 | 21,418 | 16,792 | |||||||||||
Total cost of revenue | 38,780 | 28,228 | 73,875 | 52,335 | |||||||||||
Gross profit | 101,700 | 66,358 | 191,828 | 125,872 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development (1) | 40,045 | 24,829 | 74,077 | 44,758 | |||||||||||
Sales and marketing (1) | 78,385 | 59,004 | 160,497 | 108,497 | |||||||||||
General and administrative (1) | 26,887 | 20,955 | 52,653 | 36,025 | |||||||||||
Total operating expenses | 145,317 | 104,788 | 287,227 | 189,280 | |||||||||||
Operating loss | (43,617 | ) | (38,430 | ) | (95,399 | ) | (63,408 | ) | |||||||
Interest expense | (4,304 | ) | (4,058 | ) | (8,545 | ) | (6,775 | ) | |||||||
Other income, net | 3,464 | 2,296 | 6,364 | 3,798 | |||||||||||
Loss before benefit from income taxes | (44,457 | ) | (40,192 | ) | (97,580 | ) | (66,385 | ) | |||||||
Benefit from income taxes | (1,477 | ) | (985 | ) | (2,634 | ) | (1,216 | ) | |||||||
Net loss | $ | (42,980 | ) | $ | (39,207 | ) | $ | (94,946 | ) | $ | (65,169 | ) | |||
Net loss per share, basic and diluted | $ | (0.37 | ) | $ | (0.37 | ) | $ | (0.83 | ) | $ | (0.62 | ) | |||
Weighted-average shares used to compute net loss per share, basic and diluted | 115,033 | 106,702 | 114,042 | 105,475 | |||||||||||
(1) | Amounts include share-based compensation expense as follows (in thousands): |
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Cost of subscription revenue | $ | 3,111 | $ | 1,901 | $ | 5,533 | $ | 3,430 | |||||||
Cost of professional services and other revenue | 1,873 | 1,083 | 3,392 | 1,972 | |||||||||||
Research and development | 9,082 | 5,272 | 15,428 | 9,485 | |||||||||||
Sales and marketing | 9,236 | 5,471 | 16,022 | 9,624 | |||||||||||
General and administrative | 7,972 | 4,495 | 13,584 | 7,846 | |||||||||||
Total share-based compensation expense | $ | 31,274 | $ | 18,222 | $ | 53,959 | $ | 32,357 |
July 31, 2019 | January 31, 2019 | ||||||
As Adjusted (1) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 206,753 | $ | 298,394 | |||
Short-term investments | 350,712 | 265,374 | |||||
Accounts receivable, net of allowances of $1,331 and $2,098 | 87,851 | 91,926 | |||||
Deferred commissions | 27,062 | 24,185 | |||||
Prepaid expenses and other current assets | 24,642 | 28,237 | |||||
Total current assets | 697,020 | 708,116 | |||||
Property and equipment, net | 51,858 | 52,921 | |||||
Operating lease right-of-use assets | 116,706 | 121,389 | |||||
Deferred commissions, noncurrent | 59,560 | 54,812 | |||||
Intangible assets, net | 34,712 | 13,897 | |||||
Goodwill | 47,964 | 18,089 | |||||
Other assets | 18,990 | 15,089 | |||||
Total assets | $ | 1,026,810 | $ | 984,313 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 3,492 | $ | 2,431 | |||
Accrued expenses and other current liabilities | 31,843 | 33,653 | |||||
Accrued compensation | 21,869 | 19,770 | |||||
Convertible senior notes, net | 279,741 | 271,628 | |||||
Deferred revenue | 283,724 | 245,622 | |||||
Total current liabilities | 620,669 | 573,104 | |||||
Operating lease liabilities, noncurrent | 143,706 | 147,046 | |||||
Deferred revenue, noncurrent | 7,469 | 8,768 | |||||
Other liabilities, noncurrent | 4,241 | 3,018 | |||||
Total liabilities | 776,085 | 731,936 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock | — | — | |||||
Class A common stock | 11 | 10 | |||||
Class B common stock | 1 | 1 | |||||
Additional paid-in capital | 839,523 | 744,896 | |||||
Accumulated other comprehensive loss | (1,653 | ) | (319 | ) | |||
Accumulated deficit | (587,157 | ) | (492,211 | ) | |||
Total stockholders’ equity | 250,725 | 252,377 | |||||
Total liabilities and stockholders’ equity | $ | 1,026,810 | $ | 984,313 |
Six Months Ended July 31, | |||||||
2019 | 2018 | ||||||
As Adjusted (1) | |||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (94,946 | ) | $ | (65,169 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Stock-based compensation | 53,959 | 32,357 | |||||
Depreciation, amortization and accretion | 7,916 | 3,699 | |||||
Amortization of debt discount and issuance costs | 8,113 | 6,413 | |||||
Amortization of deferred commissions | 13,192 | 9,613 | |||||
Deferred income taxes | (3,057 | ) | (1,575 | ) | |||
Non-cash charitable contributions | 652 | 1,008 | |||||
Other | 84 | 18 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 4,459 | (7,240 | ) | ||||
Deferred commissions | (21,372 | ) | (14,240 | ) | |||
Prepaid expenses and other assets | 1,534 | 622 | |||||
Operating lease right-of-use assets | 6,189 | 7,540 | |||||
Accounts payable | 1,368 | 767 | |||||
Accrued compensation | 4,717 | 498 | |||||
Accrued expenses and other liabilities | 1,304 | 2,061 | |||||
Operating lease liabilities | (159 | ) | (4,554 | ) | |||
Deferred revenue | 36,175 | 26,811 | |||||
Net cash provided by (used in) operating activities | 20,128 | (1,371 | ) | ||||
Cash flows from investing activities: | |||||||
Capitalization of internal-use software costs | (1,330 | ) | (1,725 | ) | |||
Purchases of property and equipment | (9,917 | ) | (9,790 | ) | |||
Purchases of securities available for sale and other | (237,693 | ) | (320,018 | ) | |||
Proceeds from maturities of securities available for sale | 136,344 | 79,500 | |||||
Proceeds from sales of securities available for sale and other | 17,329 | — | |||||
Purchases of intangible assets | (8,500 | ) | — | ||||
Payments for business acquisition, net of cash acquired | (44,223 | ) | (15,638 | ) | |||
Net cash used in investing activities | (147,990 | ) | (267,671 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of convertible senior notes, net of issuance costs | — | 334,980 | |||||
Purchase of convertible senior notes hedge | — | (80,040 | ) | ||||
Proceeds from issuance of warrants related to convertible notes | — | 52,440 | |||||
Proceeds from stock option exercises, net of repurchases | 27,453 | 21,055 | |||||
Proceeds from shares issued in connection with employee stock purchase plan | 9,005 | 6,654 | |||||
Other, net | (126 | ) | (206 | ) | |||
Net cash provided by financing activities | 36,332 | 334,883 | |||||
Effects of changes in foreign currency exchange rates on cash, cash equivalents and restricted cash | (1,187 | ) | (632 | ) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | (92,717 | ) | 65,209 | ||||
Cash, cash equivalents and restricted cash at beginning of period | 311,215 | 136,233 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 218,498 | $ | 201,442 |
(1) | The condensed consolidated statement of cash flows for the prior period has been adjusted to reflect the adoption of ASC 842. |
Three Months Ended July 31, 2019 | ||||||||||||||||||||||||
GAAP | Stock-based compensation | Charitable contributions | Amortization of acquired intangibles | Amortization of debt discount | Non-GAAP | |||||||||||||||||||
Cost of revenue: | ||||||||||||||||||||||||
Cost of subscription services | $ | 27,917 | $ | (3,111 | ) | $ | — | $ | (1,785 | ) | $ | — | $ | 23,021 | ||||||||||
Cost of professional services | 10,863 | (1,873 | ) | — | — | — | 8,990 | |||||||||||||||||
Gross profit | 101,700 | 4,984 | — | 1,785 | — | 108,469 | ||||||||||||||||||
Gross margin | 72.4 | % | 3.5 | % | — | 1.3 | % | — | % | 77.2 | % | |||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Research and development | 40,045 | (9,082 | ) | — | — | — | 30,963 | |||||||||||||||||
Sales and marketing | 78,385 | (9,236 | ) | — | — | — | 69,149 | |||||||||||||||||
General and administrative | 26,887 | (7,972 | ) | (652 | ) | — | — | 18,263 | ||||||||||||||||
Operating loss | (43,617 | ) | 31,274 | 652 | 1,785 | — | (9,906 | ) | ||||||||||||||||
Operating margin | (31.0 | )% | 22.2 | % | 0.4 | % | 1.3 | % | — | % | (7.1 | )% | ||||||||||||
Interest expense | (4,304 | ) | — | — | — | 3,759 | (545 | ) | ||||||||||||||||
Net loss | $ | (42,980 | ) | $ | 31,274 | $ | 652 | $ | 1,785 | $ | 3,759 | $ | (5,510 | ) | ||||||||||
Net loss per share (1) | $ | (0.37 | ) | $ | 0.27 | $ | 0.01 | $ | 0.01 | $ | 0.03 | $ | (0.05 | ) |
(1) | GAAP and Non-GAAP net loss per common share calculated based upon 115,033 basic and diluted weighted-average shares of common stock. |
Three Months Ended July 31, 2018 | ||||||||||||||||||||
GAAP | Stock-based compensation | Charitable contributions | Amortization of debt discount | Non-GAAP | ||||||||||||||||
Cost of revenue: | ||||||||||||||||||||
Cost of subscription services | $ | 19,211 | $ | (1,901 | ) | $ | — | $ | — | $ | 17,310 | |||||||||
Cost of professional services | 9,017 | (1,083 | ) | — | — | 7,934 | ||||||||||||||
Gross profit | 66,358 | 2,984 | — | — | 69,342 | |||||||||||||||
Gross margin | 70.2 | % | 3.1 | % | — | — | 73.3 | % | ||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 24,829 | (5,272 | ) | — | — | 19,557 | ||||||||||||||
Sales and marketing | 59,004 | (5,471 | ) | — | — | 53,533 | ||||||||||||||
General and administrative | 20,955 | (4,495 | ) | (1,008 | ) | — | 15,452 | |||||||||||||
Operating loss | (38,430 | ) | 18,222 | 1,008 | — | (19,200 | ) | |||||||||||||
Operating margin | (40.6 | )% | 19.3 | % | 1.1 | % | — | (20.3 | )% | |||||||||||
Interest expense | (4,058 | ) | — | — | 3,554 | (504 | ) | |||||||||||||
Net loss | $ | (39,207 | ) | $ | 18,222 | $ | 1,008 | $ | 3,554 | $ | (16,423 | ) | ||||||||
Net loss per share (1) | $ | (0.37 | ) | $ | 0.17 | $ | 0.01 | $ | 0.04 | $ | (0.15 | ) |
(1) | GAAP and Non-GAAP net loss per common share calculated based upon 106,702 basic and diluted weighted-average shares of common stock. |
Six Months Ended July 31, 2019 | ||||||||||||||||||||||||||||
GAAP | Stock-based compensation | Charitable contributions | Amortization of acquired intangibles | Amortization of debt discount | Acquisition- related expenses | Non-GAAP | ||||||||||||||||||||||
Cost of revenue: | ||||||||||||||||||||||||||||
Cost of subscription services | $ | 52,457 | $ | (5,533 | ) | $ | — | $ | (2,548 | ) | $ | — | $ | — | $ | 44,376 | ||||||||||||
Cost of professional services | 21,418 | (3,392 | ) | — | — | — | — | 18,026 | ||||||||||||||||||||
Gross profit | 191,828 | 8,925 | — | 2,548 | — | — | 203,301 | |||||||||||||||||||||
Gross margin | 72.2 | % | 3.3 | % | — | % | 1.0 | % | — | % | — | % | 76.5 | % | ||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Research and development | 74,077 | (15,428 | ) | — | — | — | — | 58,649 | ||||||||||||||||||||
Sales and marketing | 160,497 | (16,022 | ) | — | — | — | — | 144,475 | ||||||||||||||||||||
General and administrative | 52,653 | (13,584 | ) | (652 | ) | — | — | (3,449 | ) | 34,968 | ||||||||||||||||||
Operating loss | (95,399 | ) | 53,959 | 652 | 2,548 | — | 3,449 | (34,791 | ) | |||||||||||||||||||
Operating margin | (35.9 | )% | 20.3 | % | 0.2 | % | 1.0 | % | — | % | 1.3 | % | (13.1 | )% | ||||||||||||||
Interest expense | (8,545 | ) | — | — | — | 7,465 | — | (1,080 | ) | |||||||||||||||||||
Net loss | $ | (94,946 | ) | $ | 53,959 | $ | 652 | $ | 2,548 | $ | 7,465 | $ | 3,449 | $ | (26,873 | ) | ||||||||||||
Net loss per share (1) | $ | (0.83 | ) | $ | 0.47 | $ | 0.01 | $ | 0.02 | $ | 0.06 | $ | 0.03 | $ | (0.24 | ) |
(1) | GAAP and Non-GAAP net loss per common share calculated based upon 114,042 basic and diluted weighted-average shares of common stock. |
Six Months Ended July 31, 2018 | ||||||||||||||||||||
GAAP | Stock-based compensation | Charitable contributions | Amortization of debt discount | Non-GAAP | ||||||||||||||||
Cost of revenue: | ||||||||||||||||||||
Cost of subscription services | $ | 35,543 | $ | (3,430 | ) | $ | — | $ | — | $ | 32,113 | |||||||||
Cost of professional services | 16,792 | (1,972 | ) | — | — | 14,820 | ||||||||||||||
Gross profit | 125,872 | 5,402 | — | — | 131,274 | |||||||||||||||
Gross margin | 70.6 | % | 3.1 | % | — | % | — | % | 73.7 | % | ||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 44,758 | (9,485 | ) | — | — | 35,273 | ||||||||||||||
Sales and marketing | 108,497 | (9,624 | ) | — | — | 98,873 | ||||||||||||||
General and administrative | 36,025 | (7,846 | ) | (1,008 | ) | — | 27,171 | |||||||||||||
Operating loss | (63,408 | ) | 32,357 | 1,008 | — | (30,043 | ) | |||||||||||||
Operating margin | (35.6 | )% | 18.2 | % | 0.5 | % | — | % | (16.9 | )% | ||||||||||
Interest expense | (6,775 | ) | — | — | 5,935 | (840 | ) | |||||||||||||
Net loss | $ | (65,169 | ) | $ | 32,357 | $ | 1,008 | $ | 5,935 | $ | (25,869 | ) | ||||||||
Net loss per share (1) | $ | (0.62 | ) | $ | 0.31 | $ | 0.01 | $ | 0.05 | $ | (0.25 | ) |
(1) | GAAP and Non-GAAP net loss per common share calculated based upon 105,475 basic and diluted weighted-average shares of common stock. |
Free Cash Flow | |||||||||||||||
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net cash provided by (used in) operating activities | $ | (1,134 | ) | $ | (5,343 | ) | $ | 20,128 | $ | (1,371 | ) | ||||
Less: | |||||||||||||||
Purchases of property and equipment | (2,207 | ) | (5,313 | ) | (9,917 | ) | (9,790 | ) | |||||||
Capitalization of internal-use software costs | (961 | ) | (674 | ) | (1,330 | ) | (1,725 | ) | |||||||
Free Cash Flow | $ | (4,302 | ) | $ | (11,330 | ) | $ | 8,881 | $ | (12,886 | ) | ||||
Net cash provided by (used in) investing activities | $ | (22,383 | ) | $ | (28,729 | ) | $ | (147,990 | ) | $ | (267,671 | ) | |||
Net cash provided by financing activities | 23,070 | 15,438 | 36,332 | 334,883 | |||||||||||
Free cash flow margin | (3.1)% | (12.0)% | 3.3% | (7.2)% | |||||||||||
Calculated Billings | |||||||||||||||
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 (1) | ||||||||||||
Total revenue | $ | 140,480 | $ | 94,586 | $ | 265,703 | $ | 178,207 | |||||||
Add: | |||||||||||||||
Unbilled receivables, current (beginning of period) | 799 | 1,619 | 1,457 | 809 | |||||||||||
Deferred revenue, current (end of period) | 283,724 | 186,427 | 283,724 | 186,427 | |||||||||||
Less: | |||||||||||||||
Unbilled receivables, current (end of period) | (1,004 | ) | (818 | ) | (1,004 | ) | (818 | ) | |||||||
Deferred revenue, current (beginning of period) | (268,033 | ) | (173,548 | ) | (245,622 | ) | (159,816 | ) | |||||||
Current calculated billings | 155,966 | 108,266 | 304,258 | 204,809 | |||||||||||
Add: | |||||||||||||||
Deferred revenue, noncurrent (end of period) | 7,469 | 5,471 | 7,469 | 5,471 | |||||||||||
Less: | |||||||||||||||
Deferred revenue, noncurrent (beginning of period) | (7,671 | ) | (4,346 | ) | (8,768 | ) | (4,963 | ) | |||||||
Calculated billings | $ | 155,764 | $ | 109,391 | $ | 302,959 | $ | 205,317 | |||||||