Okta Inc. (OKTA) on Wednesday reported a loss of $221.3 million in its fiscal third quarter. The San Francisco-based company said it had a loss of $1.44 per share. Losses, adjusted for stock option expense and amortization costs, came to 7 cents per share.
The results beat Wall Street expectations. The average estimate of 12 analysts surveyed by Zacks Investment Research was for a loss of 23 cents per share.
“Our strong third quarter results reflect the continued shift to Identity-First architectures and the critical adoption of Zero Trust security environments, which are both propelling our market leading position,” said Todd McKinnon, Chief Executive Officer and co-founder of Okta. “We’re maintaining the momentum of both Okta and Auth0 and are making great progress on the integration. We’re already seeing early success cross-selling into each other’s customer bases and are on our way to capturing more of the massive identity market faster together.”
Third Quarter Fiscal 2022 Financial Highlights:
Revenue:
Total revenue was $351 million, an increase of 61% year-over-year. Subscription revenue was $337 million, an increase of 63% year-over-year. On an Okta standalone basis (excluding $46 million attributable to Auth0), total revenue grew 40%.
Remaining Performance Obligations (RPO):
RPO, or subscription backlog, was $2.35 billion, an increase of 49% year-over-year. Current RPO, which is contracted subscription revenue expected to be recognized over the next 12 months, was $1.18 billion, up 57% compared to the third quarter of fiscal 2021.
Calculated Billings:
Total calculated billings, net of acquired deferred revenue, was $389 million, an increase of 54% year-over-year. Calculated billings include the effect of billings process improvements that were enacted at the end of the first quarter of fiscal 2022. Excluding these changes, calculated billings would have been $387 million, an increase of 53% year-over-year.
GAAP Operating Loss:
GAAP operating loss was $199 million, or 57% of total revenue, compared to a GAAP operating loss of $52 million, or 24% of total revenue, in the third quarter of fiscal 2021.
Non-GAAP Operating Income/Loss:
Non-GAAP operating loss was $10 million, or (3)% of total revenue, compared to non-GAAP operating income of $6 million, or 3% of total revenue, in the third quarter of fiscal 2021.
GAAP Net Loss:
GAAP net loss was $221 million, compared to a GAAP net loss of $73 million in the third quarter of fiscal 2021. GAAP net loss per share was $1.44, compared to a GAAP net loss per share of $0.56 in the third quarter of fiscal 2021. GAAP net loss and GAAP net loss per share include $120 million and $0.78, respectively, attributable to Auth0 in the third quarter of fiscal 2022.
Non-GAAP Net Income/Loss:
Non-GAAP net loss was $11 million, compared to non-GAAP net income of $6 million in the third quarter of fiscal 2021. Non-GAAP basic and diluted net loss per share was $0.07, compared to non-GAAP basic and diluted net income per share of $0.04 in the third quarter of fiscal 2021.
Cash Flow:
Net cash provided by operations was $37 million, or 11% of total revenue, compared to net cash provided by operations of $43 million, or 20% of total revenue, in the third quarter of fiscal 2021. Free cash flow was $33 million, or 10% of total revenue, compared to $42 million, or 19% of total revenue, in the third quarter of fiscal 2021.
Cash, cash equivalents, and short-term investments were $2.48 billion on October 31, 2021.
Outlook for next Quarter
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.28 on $355.34 million in revenues for the coming quarter and -$0.75 on $1.25 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet – Software and Services is currently in the top 43% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Financial Statement:
|
OKTA, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (unaudited) |
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Three Months Ended |
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Nine Months Ended |
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|
2021 |
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2020 |
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2021 |
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|
2020 |
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Revenue: |
|
|
|
|
|
|
|
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|
Subscription |
$ |
336,702 |
|
|
|
$ |
206,743 |
|
|
|
$ |
879,881 |
|
|
|
$ |
571,213 |
|
|
|
|
Professional services and other |
13,978 |
|
|
|
10,636 |
|
|
|
37,305 |
|
|
|
29,471 |
|
|
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|
Total revenue |
350,680 |
|
|
|
217,379 |
|
|
|
917,186 |
|
|
|
600,684 |
|
|
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|
Cost of revenue: |
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|
|
|
|
|
|
|||||||||||||
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Subscription(1) |
91,048 |
|
|
|
44,762 |
|
|
|
227,903 |
|
|
|
121,420 |
|
|
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|
Professional services and other(1) |
18,626 |
|
|
|
12,146 |
|
|
|
49,000 |
|
|
|
35,121 |
|
|
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The total cost of revenue |
109,674 |
|
|
|
56,908 |
|
|
|
276,903 |
|
|
|
156,541 |
|
|
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Gross profit |
241,006 |
|
|
|
160,471 |
|
|
|
640,283 |
|
|
|
444,143 |
|
|
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Operating expenses: |
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|
|
|
|
|
|
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Research and development(1) |
130,535 |
|
|
|
58,150 |
|
|
|
321,805 |
|
|
|
160,510 |
|
|
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Sales and marketing(1) |
203,878 |
|
|
|
109,812 |
|
|
|
548,749 |
|
|
|
312,177 |
|
|
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General and administrative(1) |
105,149 |
|
|
|
44,485 |
|
|
|
322,406 |
|
|
|
121,019 |
|
|
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Total operating expenses |
439,562 |
|
|
|
212,447 |
|
|
|
1,192,960 |
|
|
|
593,706 |
|
|
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|
Operating loss |
(198,556 |
) |
|
|
(51,976 |
) |
|
|
(552,677 |
) |
|
|
(149,563 |
) |
|
|||||
|
Interest expense |
(23,144 |
) |
|
|
(22,368 |
) |
|
|
(68,776 |
) |
|
|
(50,063 |
) |
|
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|
Interest income and other, net |
1,056 |
|
|
|
1,878 |
|
|
|
7,622 |
|
|
|
10,737 |
|
|
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|
Loss on early extinguishment and conversion of debt |
— |
|
|
|
(89 |
) |
|
|
(179 |
) |
|
|
(2,263 |
) |
|
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|
Interest and other, net |
(22,088 |
) |
|
|
(20,579 |
) |
|
|
(61,333 |
) |
|
|
(41,589 |
) |
|
|||||
|
Loss before provision for (benefit from) income taxes |
(220,644 |
) |
|
|
(72,555 |
) |
|
|
(614,010 |
) |
|
|
(191,152 |
) |
|
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|
Provision for (benefit from) income taxes |
667 |
|
|
|
209 |
|
|
|
(6,785 |
) |
|
|
(626 |
) |
|
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|
Net loss |
$ |
(221,311 |
) |
|
|
$ |
(72,764 |
) |
|
|
$ |
(607,225 |
) |
|
|
$ |
(190,526 |
) |
|
|
|
|
|
|
|
|
|
|
|
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Net loss per share, basic and diluted |
$ |
(1.44 |
) |
|
|
$ |
(0.56 |
) |
|
|
$ |
(4.17 |
) |
|
|
$ |
(1.51 |
) |
|
|
|
|
|
|
|
|
|
|
|
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Weighted-average shares used to compute net loss per share, basic and diluted |
153,756 |
|
|
|
128,813 |
|
|
|
145,782 |
|
|
|
126,222 |
|
|
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