Press release

Okta Announces Strong Second Quarter Results

0
Sponsored by Businesswire

Okta, Inc. (Nasdaq: OKTA), the leading independent identity provider, today announced financial results for its second quarter ended July 31, 2021.

“In our first quarter as a combined company with Auth0, we’re off to a fantastic start,” said Todd McKinnon, Chief Executive Officer and co-founder of Okta. “Execution remained sharp with strong demand for Okta’s workforce and customer identity solutions, as well as Auth0’s developer-centric identity solutions. As organizations advance on their journey of improving their customers’ digital experience, adopting zero-trust security environments, and deploying more cloud applications, they continue to turn to Okta to deliver an unmatched array of modern identity solutions to meet these challenges.”

Second Quarter Fiscal 2022 Financial Highlights:

  • Revenue: Total revenue was $316 million, an increase of 57% year-over-year. Subscription revenue was $303 million, an increase of 59% year-over-year. On an Okta standalone basis (excluding $38 million attributable to Auth0), total revenue grew 39%.
  • Remaining Performance Obligations (RPO): RPO, or subscription backlog, was $2.24 billion, an increase of 57% year-over-year. Current RPO, which is contracted subscription revenue expected to be recognized over the next 12 months, was $1.10 billion, up 60% compared to the second quarter of fiscal 2021. On an Okta standalone basis (excluding Auth0), RPO and current RPO increased 42% and 43% year-over-year, respectively.
  • Calculated Billings: Total calculated billings, net of acquired deferred revenue, was $362 million, an increase of 83% year-over-year. Calculated billings includes 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 $345 million, an increase of 74% year-over-year. On an Okta standalone basis, excluding Auth0 and the effect of the billings process improvements, calculated billings increased 47% year-over-year.
  • GAAP Operating Loss: GAAP operating loss was $263 million, or 83% of total revenue, compared to a GAAP operating loss of $45 million, or 23% of total revenue, in the second quarter of fiscal 2021.
  • Non-GAAP Operating Income/Loss: Non-GAAP operating loss was $25 million, or 8% of total revenue, compared to non-GAAP operating income of $6 million, or 3% of total revenue, in the second quarter of fiscal 2021.
  • GAAP Net Loss: GAAP net loss was $277 million, compared to a GAAP net loss of $60 million in the second quarter of fiscal 2021. GAAP net loss per share was $1.83, compared to a GAAP net loss per share of $0.48 in the second quarter of fiscal 2021. GAAP net loss and GAAP net loss per share include $150 million and $0.99, respectively, attributable to Auth0.
  • Non-GAAP Net Income/Loss: Non-GAAP net loss was $16 million, compared to non-GAAP net income of $10 million in the second quarter of fiscal 2021. Non-GAAP basic and diluted net loss per share was $0.11, compared to non-GAAP basic net income per share of $0.08 and non-GAAP diluted net income per share of $0.07 in the second quarter of fiscal 2021.
  • Cash Flow: Net cash used in operations was $3 million, or (1)% of total revenue, compared to net cash provided by operations of $11 million, or 5% of total revenue, in the second quarter of fiscal 2021. Free cash flow was negative $4 million, or (1)% of total revenue, compared to $7 million, or 3% of total revenue, in the second quarter of fiscal 2021.
  • Cash, cash equivalents, and short-term investments were $2.47 billion at July 31, 2021.

The section titled “Non-GAAP Financial Measures” below contains a description of the non-GAAP financial measures, and reconciliations between GAAP and non-GAAP information are contained in the tables below.

Financial Outlook:

Okta’s financial outlook for the third quarter and full year fiscal 2022 includes the expected contribution from the acquisition of Auth0, net of purchase accounting adjustments. The acquisition closed on May 3, 2021.

For the third quarter of fiscal 2022, the Company expects:

  • Total revenue of $325 million to $327 million, representing a growth rate of 50% year-over-year;
  • Non-GAAP operating loss of $35 million to $34 million; and
  • Non-GAAP net loss per share of $0.25 to $0.24, assuming weighted-average shares outstanding of approximately 153 million.

For the full year fiscal 2022, the Company now expects:

  • Total revenue of $1.243 billion to $1.250 billion, representing a growth rate of 49% to 50% year-over-year;
  • Non-GAAP operating loss of $119 million to $114 million; and
  • Non-GAAP net loss per share of $0.77 to $0.74, assuming weighted-average shares outstanding of approximately 147 million.

These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

Okta has not reconciled its expectations as to non-GAAP operating loss and non-GAAP net loss per share to their most directly comparable GAAP measures because certain items are out of Okta’s control or cannot be reasonably predicted. Accordingly, reconciliations for forward-looking non-GAAP operating loss and non-GAAP net loss per share are not available without unreasonable effort.

Conference Call Information:

Okta will host a live video webcast at 2:00 p.m. Pacific Time on September 1, 2021 to discuss the results and outlook. The news release with the financial results will be accessible from the Company’s website at investor.okta.com prior to the conference call. The live video webcast of the conference call will be accessible from the Okta investor relations website at investor.okta.com.

Supplemental Financial and Other Information:

Supplemental financial and other information can be accessed through the Company’s investor relations website at investor.okta.com.

Non-GAAP Financial Measures:

This press release and the accompanying tables contain the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net margin, non-GAAP net income (loss) per share, basic and diluted, free cash flow, free cash flow margin, current calculated billings and calculated billings. Certain of these non-GAAP financial measures exclude stock-based compensation, non-cash charitable contributions, amortization of acquired intangibles, acquisition and integration-related expenses, amortization of debt discount and debt issuance costs and loss on early extinguishment and conversion of debt.

Okta believes that non-GAAP financial information, when taken collectively with GAAP financial measures, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies.

The principal limitation of these non-GAAP financial measures is that they exclude significant expenses that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by the Company’s management about which expenses are excluded or included in determining these non-GAAP financial measures. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP.

Okta encourages investors to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.

Forward-Looking Statements: This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook, business strategy and plans, market trends and market size, opportunities and positioning and expected benefits that will be derived from the Auth0 transaction. These forward-looking statements are based on current expectations, estimates, forecasts and projections. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” “shall” and variations of these terms and similar expressions are intended to identify these forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. For example, the market for our products may develop more slowly than expected or than it has in the past; our results of operations may fluctuate more than expected; there may be significant fluctuations in our results of operations and cash flows related to our revenue recognition or otherwise; the impact of COVID-19, related public health measures and any associated economic downturn on our business and results of operations may be more than we expect; a network or data security incident that allows unauthorized access to our network or data or our customers’ data could damage our reputation; we could experience interruptions or performance problems associated with our technology, including a service outage; we may not be able to pay off our convertible senior notes when due; global economic conditions could deteriorate; we may not achieve expected synergies and efficiencies of operations between Okta and Auth0, and we may not be able to successfully integrate the companies. Further information on potential factors that could affect our financial results is included in our most recent Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission. The forward-looking statements included in this press release represent our views only as of the date of this press release and we assume no obligation and do not intend to update these forward-looking statements.

About Okta

Okta is the leading independent identity provider. The Okta Identity Cloud enables organizations to securely connect the right people to the right technologies at the right time. With more than 7,000 pre-built integrations to applications and infrastructure providers, Okta provides simple and secure access to people and organizations everywhere, giving them the confidence to reach their full potential. More than 13,050 organizations, including JetBlue, Nordstrom, Siemens, Slack, Takeda, Teach for America, and Twilio, trust Okta to help protect the identities of their workforces and customers.

Okta uses its investor.okta.com website as a means of disclosing material non-public information, announcing upcoming investor conferences and for complying with its disclosure obligations under Regulation FD. Accordingly, you should monitor our investor relations website in addition to following our press releases, SEC filings and public conference calls and webcasts.

OKTA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(unaudited)

 

 

Three Months Ended

July 31,

 

Six Months Ended

July 31,

 

2021

 

2020

 

2021

 

2020

Revenue:

 

 

 

 

 

 

 

Subscription

$

303,121

 

 

$

190,689

 

 

$

543,179

 

 

$

364,470

 

Professional services and other

12,379

 

 

9,757

 

 

23,327

 

 

18,835

 

Total revenue

315,500

 

 

200,446

 

 

566,506

 

 

383,305

 

Cost of revenue:

 

 

 

 

 

 

 

Subscription(1)

84,457

 

 

39,501

 

 

136,855

 

 

76,658

 

Professional services and other(1)

16,649

 

 

11,646

 

 

30,374

 

 

22,975

 

Total cost of revenue

101,106

 

 

51,147

 

 

167,229

 

 

99,633

 

Gross profit

214,394

 

 

149,299

 

 

399,277

 

 

283,672

 

Operating expenses:

 

 

 

 

 

 

 

Research and development(1)

122,407

 

 

53,866

 

 

191,270

 

 

102,360

 

Sales and marketing(1)

198,350

 

 

98,322

 

 

344,871

 

 

202,365

 

General and administrative(1)

157,077

 

 

42,499

 

 

217,257

 

 

76,534

 

Total operating expenses

477,834

 

 

194,687

 

 

753,398

 

 

381,259

 

Operating loss

(263,440

)

 

(45,388

)

 

(354,121

)

 

(97,587

)

Interest expense

(22,872

)

 

(16,931

)

 

(45,632

)

 

(27,695

)

Interest income and other, net

2,211

 

 

3,960

 

 

6,566

 

 

8,859

 

Loss on early extinguishment and conversion of debt

(43

)

 

(2,174

)

 

(179

)

 

(2,174

)

Interest and other, net

(20,704

)

 

(15,145

)

 

(39,245

)

 

(21,010

)

Loss before provision for (benefit from) income taxes

(284,144

)

 

(60,533

)

 

(393,366

)

 

(118,597

)

Provision for (benefit from) income taxes

(7,462

)

 

(433

)

 

(7,452

)

 

(835

)

Net loss

$

(276,682

)

 

$

(60,100

)

 

$

(385,914

)

 

$

(117,762

)

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

$

(1.83

)

 

$

(0.48

)

 

$

(2.72

)

 

$

(0.94

)

 

 

 

 

 

 

 

 

Weighted-average shares used to compute net loss per share, basic and diluted

151,357

 

 

126,319

 

 

141,720

 

 

124,922

 

(1) Amounts include stock-based compensation expense as follows (in thousands):

 

Three Months Ended

July 31,

 

Six Months Ended

July 31,

 

2021

 

2020

 

2021

 

2020

Cost of subscription revenue

$

13,138

 

 

$

5,164

 

 

$

20,388

 

 

$

9,139

 

Cost of professional services and other

3,161

 

 

2,000

 

 

5,503

 

 

3,811

 

Research and development

53,332

 

 

14,953

 

 

73,425

 

 

26,888

 

Sales and marketing

41,288

 

 

13,165

 

 

62,354

 

 

24,325

 

General and administrative

76,795

 

 

13,112

 

 

90,156

 

 

21,959

 

Total stock-based compensation expense

$

187,714

 

 

$

48,394

 

 

$

251,826

 

 

$

86,122

 

OKTA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)

 

 

 

July 31,

 

January 31,

 

 

2021

 

2021

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

225,265

 

 

$

434,607

 

Short-term investments

 

2,243,638

 

 

2,121,584

 

Accounts receivable, net of allowances

 

238,478

 

 

194,818

 

Deferred commissions

 

54,526

 

 

45,949

 

Prepaid expenses and other current assets

 

115,251

 

 

81,609

 

Total current assets

 

2,877,158

 

 

2,878,567

 

Property and equipment, net

 

61,858

 

 

62,783

 

Operating lease right-of-use assets

 

146,492

 

 

149,604

 

Deferred commissions, noncurrent

 

129,671

 

 

108,555

 

Intangible assets, net

 

337,786

 

 

27,009

 

Goodwill

 

5,338,116

 

 

48,023

 

Other assets

 

41,014

 

 

24,256

 

Total assets

 

$

8,932,095

 

 

$

3,298,797

 

Liabilities and stockholders’ equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

9,414

 

 

$

8,557

 

Accrued expenses and other current liabilities

 

80,463

 

 

53,729

 

Accrued compensation

 

85,126

 

 

71,906

 

Convertible senior notes, net

 

15,723

 

 

908,684

 

Deferred revenue

 

721,808

 

 

502,738

 

Total current liabilities

 

912,534

 

 

1,545,614

 

Convertible senior notes, net, noncurrent

 

1,772,511

 

 

857,387

 

Operating lease liabilities, noncurrent

 

171,141

 

 

179,518

 

Deferred revenue, noncurrent

 

15,489

 

 

10,860

 

Other liabilities, noncurrent

 

18,230

 

 

11,375

 

Total liabilities

 

2,889,905

 

 

2,604,754

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock

 

 

 

 

Class A common stock

 

15

 

 

12

 

Class B common stock

 

1

 

 

1

 

Additional paid-in capital

 

7,391,169

 

 

1,656,096

 

Accumulated other comprehensive income

 

4,375

 

 

5,390

 

Accumulated deficit

 

(1,353,370

)

 

(967,456

)

Total stockholders’ equity

 

6,042,190

 

 

694,043

 

Total liabilities and stockholders’ equity

 

$

8,932,095

 

 

$

3,298,797

 

OKTA, INC.

SUMMARY OF CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

 

 

Six Months Ended July 31,

 

2021

 

2020

Cash flows from operating activities:

 

 

 

Net loss

$

(385,914

)

 

$

(117,762

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Stock-based compensation

251,826

 

 

86,106

 

Depreciation, amortization and accretion

44,903

 

 

12,691

 

Amortization of debt discount and issuance costs

42,780

 

 

26,330

 

Amortization of deferred commissions

25,135

 

 

18,077

 

Deferred income taxes

(11,506

)

 

(1,915

)

Non-cash charitable contributions

3,663

 

 

2,417

 

Loss on early extinguishment and conversion of debt

179

 

 

2,174

 

Other, net

(5,561

)

 

1,435

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

(14,798

)

 

18,626

 

Deferred commissions

(55,102

)

 

(30,332

)

Prepaid expenses and other assets

718

 

 

(7,622

)

Operating lease right-of-use assets

10,732

 

 

8,972

 

Accounts payable

(2,044

)

 

810

 

Accrued compensation

(6,507

)

 

15,045

 

Accrued expenses and other liabilities

10,092

 

 

(3,131

)

Operating lease liabilities

(13,489

)

 

(7,663

)

Deferred revenue

158,360

 

 

25,369

 

Net cash provided by operating activities

53,467

 

 

49,627

 

Cash flows from investing activities:

 

 

 

Capitalization of internal-use software costs

(378

)

 

(2,326

)

Purchases of property and equipment

(4,034

)

 

(10,669

)

Purchases of securities available for sale and other

(923,620

)

 

(1,029,281

)

Proceeds from maturities and redemption of securities available for sale

763,607

 

 

280,395

 

Proceeds from sales of securities available for sale and other

906

 

 

89,620

 

Payments for business acquisition, net of cash acquired

(148,042

)

 

 

Net cash used in investing activities

(311,561

)

 

(672,261

)

Cash flows from financing activities:

 

 

 

Proceeds from issuance of convertible senior notes, net of issuance costs

 

 

1,135,418

 

Payments for repurchases and conversions of convertible senior notes

(15

)

 

(181

)

Proceeds from hedges related to convertible senior notes

2

 

 

195,046

 

Payments for warrants related to convertible senior notes

 

 

(175,399

)

Purchases of capped calls related to convertible senior notes

 

 

(133,975

)

Proceeds from stock option exercises

31,829

 

 

27,517

 

Proceeds from shares issued in connection with employee stock purchase plan

17,417

 

 

12,821

 

Net cash provided by financing activities

49,233

 

 

1,061,247

 

Effects of changes in foreign currency exchange rates on cash, cash equivalents and restricted cash

193

 

 

578

 

Net increase (decrease) in cash, cash equivalents and restricted cash

(208,668

)

 

439,191

 

Cash, cash equivalents and restricted cash at beginning of period

448,630

 

 

531,953

 

Cash, cash equivalents and restricted cash at end of period

$

239,962

 

 

$

971,144

 

OKTA, INC.

Reconciliation of GAAP to Non-GAAP Data

(In thousands, except percentages and per share data)

(unaudited)

Non-GAAP Gross Profit and Non-GAAP Gross Margin

We define Non-GAAP gross profit and Non-GAAP gross margin as GAAP gross profit and GAAP gross margin, adjusted for stock-based compensation expense included in cost of revenue, amortization of acquired intangibles and acquisition and integration-related expenses.

 

Three Months Ended

July 31,

 

Six Months Ended

July 31,

 

2021

 

2020

 

2021

 

2020

Gross profit

$

214,394

 

 

$

149,299

 

 

$

399,277

 

 

$

283,672

 

Add:

 

 

 

 

 

 

 

Stock-based compensation expense included in cost of revenue(1)

16,299

 

 

7,164

 

 

25,891

 

 

12,950

 

Amortization of acquired intangibles

10,128

 

 

1,594

 

 

11,721

 

 

3,187

 

Acquisition and integration-related expenses(2)

658

 

 

 

 

658

 

 

 

Non-GAAP gross profit

$

241,479

 

 

$

158,057

 

 

$

437,547

 

 

$

299,809

 

Gross margin

68

%

 

74

%

 

70

%

 

74

%

Non-GAAP gross margin

77

%

 

79

%

 

77

%

 

78

%

(1)

See table in footnote (1) to the condensed consolidated statements of operations above for breakdown of stock-based compensation expense by line item.

(2)

Acquisition and integration-related expenses include transaction costs and other non-recurring incremental costs incurred through the one-year anniversary of transaction close.

Non-GAAP Operating Income (Loss) and Non-GAAP Operating Margin

We define Non-GAAP operating income (loss) and Non-GAAP operating margin as GAAP operating loss and GAAP operating margin, adjusted for stock-based compensation expense, non-cash charitable contributions, amortization of acquired intangibles and acquisition and integration-related expenses.

 

Three Months Ended

July 31,

 

Six Months Ended

July 31,

 

2021

 

2020

 

2021

 

2020

Operating loss

$

(263,440

)

 

$

(45,388

)

 

$

(354,121

)

 

$

(97,587

)

Add:

 

 

 

 

 

 

 

Stock-based compensation expense(1)

187,714

 

 

48,394

 

 

251,826

 

 

86,122

 

Non-cash charitable contributions

1,639

 

 

1,881

 

 

3,663

 

 

2,417

 

Amortization of acquired intangibles

19,998

 

 

1,594

 

 

21,591

 

 

3,187

 

Acquisition and integration-related expenses(2)

29,550

 

 

 

 

36,604

 

 

 

Non-GAAP operating income (loss)

$

(24,539

)

 

$

6,481

 

 

$

(40,437

)

 

$

(5,861

)

Operating margin

(83

)%

 

(23

)%

 

(63

)%

 

(25

)%

Non-GAAP operating margin

(8

)%

 

3

%

 

(7

)%

 

(2

)%

(1)

See table in footnote (1) to the condensed consolidated statements of operations above for breakdown of stock-based compensation expense by line item.

(2)

Acquisition and integration-related expenses include transaction costs and other non-recurring incremental costs incurred through the one-year anniversary of transaction close.

Non-GAAP Net Income (Loss), Non-GAAP Net Margin and Non-GAAP Net Income (Loss) Per Share, Basic and Diluted

We define Non-GAAP net income (loss) and Non-GAAP net margin as GAAP net loss and GAAP net margin, adjusted for stock-based compensation expense, non-cash charitable contributions, amortization of acquired intangibles, acquisition and integration-related expenses, amortization of debt discount and debt issuance costs and loss on early extinguishment and conversion of debt.

We define Non-GAAP net income (loss) per share, basic, as Non-GAAP net income (loss) divided by GAAP weighted-average shares used to compute net loss per share, basic and diluted.

We define Non-GAAP net income (loss) per share, diluted, as Non-GAAP net income (loss) divided by GAAP weighted-average shares used to compute net loss per share, basic and diluted adjusted for the potentially dilutive effect of (i) employee equity incentive plans, excluding the impact of unrecognized stock-based compensation expense, and (ii) convertible senior notes outstanding and related warrants. In addition, Non-GAAP net income (loss) per share, diluted, includes the anti-dilutive impact of the Company’s note hedge and capped call agreements on convertible senior notes outstanding. Accordingly, the Company did not record any adjustments to Non-GAAP net income (loss) for the potential impact of the convertible senior notes outstanding under the if-converted method.

 

Three Months Ended

July 31,

 

Six Months Ended

July 31,

 

2021

 

2020

 

2021

 

2020

Net loss

$

(276,682

)

 

$

(60,100

)

 

$

(385,914

)

 

$

(117,762

)

Add:

 

 

 

 

 

 

 

Stock-based compensation expense(1)

187,714

 

 

48,394

 

 

251,826

 

 

86,122

 

Non-cash charitable contributions

1,639

 

 

1,881

 

 

3,663

 

 

2,417

 

Amortization of acquired intangibles

19,998

 

 

1,594

 

 

21,591

 

 

3,187

 

Acquisition and integration-related expenses(2)

29,550

 

 

 

 

36,604

 

 

 

Amortization of debt discount and debt issuance costs

21,449

 

 

15,973

 

 

42,780

 

 

26,330

 

Loss on early extinguishment and conversion of debt

43

 

 

2,174

 

 

179

 

 

2,174

 

Non-GAAP net income (loss)

$

(16,289

)

 

$

9,916

 

 

$

(29,271

)

 

$

2,468

 

 

 

 

 

 

 

 

 

Net margin

(88

)%

 

(30

)%

 

(68

)%

 

(31

)%

Non-GAAP net margin

(5

)%

 

5

%

 

(5

)%

 

1

%

 

 

 

 

 

 

 

 

Weighted-average shares used to compute net loss per share, basic and diluted

151,357

 

 

126,319

 

 

141,720

 

 

124,922

 

Non-GAAP weighted-average effect of potentially dilutive securities

 

 

15,936

 

 

 

 

16,281

 

Non-GAAP weighted-average shares used to compute non-GAAP net income (loss) per share, diluted

151,357

 

 

142,255

 

 

141,720

 

 

141,203

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

$

(1.83

)

 

$

(0.48

)

 

$

(2.72

)

 

$

(0.94

)

Non-GAAP net income (loss) per share, basic

$

(0.11

)

 

$

0.08

 

 

$

(0.21

)

 

$

0.02

 

Non-GAAP net income (loss) per share, diluted

$

(0.11

)

 

$

0.07

 

 

$

(0.21

)

 

$

0.02

 

(1)

See table in footnote (1) to the condensed consolidated statements of operations above for breakdown of stock-based compensation expense by line item.

(2)

Acquisition and integration-related expenses include transaction costs and other non-recurring incremental costs incurred through the one-year anniversary of transaction close.

OKTA, INC.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except percentages)

(unaudited)

Free Cash Flow and Free Cash Flow Margin

We define Free cash flow as net cash provided by operating activities, less cash used for purchases of property and equipment and capitalized internal-use software costs. Free cash flow margin is calculated as Free cash flow divided by total revenue.

 

Three Months Ended

July 31,

 

Six Months Ended

July 31,

 

2021

 

2020

 

2021

 

2020

Net cash provided by (used in) operating activities

$

(2,608

)

 

$

10,930

 

 

$

53,467

 

 

$

49,627

 

Less:

 

 

 

 

 

 

 

Purchases of property and equipment

(775

)

 

(2,739

)

 

(4,034

)

 

(10,669

)

Capitalization of internal-use software costs

(368

)

 

(1,326

)

 

(378

)

 

(2,326

)

Free cash flow

$

(3,751

)

 

$

6,865

 

 

$

49,055

 

 

$

36,632

 

Net cash used in investing activities

$

(463,466

)

 

$

(722,865

)

 

$

(311,561

)

 

$

(672,261

)

Net cash provided by financing activities

$

33,054

 

 

$

1,047,080

 

 

$

49,233

 

 

$

1,061,247

 

Free cash flow margin

(1

)%

 

3

%

 

9

%

 

10

%

Calculated Billings

We define Calculated billings as total revenue plus the change in deferred revenue, net of acquired deferred revenue, and less the change in unbilled receivables, net of acquired unbilled receivables, in the period.

 

Three Months Ended

July 31,

 

Six Months Ended

July 31,

 

2021

 

2020

 

2021

 

2020

Total revenue

$

315,500

 

 

$

200,446

 

 

$

566,506

 

 

$

383,305

 

Add:

 

 

 

 

 

 

 

Unbilled receivables, current (beginning of period)

894

 

 

1,121

 

 

2,604

 

 

1,026

 

Acquired unbilled receivables, current

2,327

 

 

 

 

2,327

 

 

 

Deferred revenue, current (end of period)

721,808

 

 

391,246

 

 

721,808

 

 

391,246

 

Less:

 

 

 

 

 

 

 

Unbilled receivables, current (end of period)

(3,409

)

 

(2,113

)

 

(3,409

)

 

(2,113

)

Deferred revenue, current (beginning of period)

(613,167

)

 

(392,121

)

 

(502,738

)

 

(365,236

)

Acquired deferred revenue, current

(60,522

)

 

 

 

(60,522

)

 

 

Current calculated billings

363,431

 

 

198,579

 

 

726,576

 

 

408,228

 

Add:

 

 

 

 

 

 

 

Deferred revenue, noncurrent (end of period)

15,489

 

 

5,574

 

 

15,489

 

 

5,574

 

Less:

 

 

 

 

 

 

 

Deferred revenue, noncurrent (beginning of period)

(11,745

)

 

(6,070

)

 

(10,860

)

 

(6,214

)

Acquired deferred revenue, noncurrent

(4,817

)

 

 

 

(4,817

)

 

 

Calculated billings

$

362,358

 

 

$

198,083

 

 

$

726,388

 

 

$

407,588