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Okta Announces Second Quarter Fiscal Year 2025 Financial Results

  • Q2 revenue grew 16% year-over-year; subscription revenue grew 17% year-over-year

  • Current remaining performance obligations (cRPO) grew 13% year-over-year to $1.995 billion

  • Record profitability including GAAP profitability for the first time

  • Operating cash flow of $86 million and free cash flow of $78 million

SAN FRANCISCO, August 28, 2024--(BUSINESS WIRE)--Okta, Inc. (Nasdaq: OKTA), the leading independent Identity partner, today announced financial results for its second quarter ended July 31, 2024.

"Okta is setting the standard for identity security by focusing on relentless innovation and expanding our product offerings within the Workforce Identity Cloud and Customer Identity Cloud," said Todd McKinnon, Chief Executive Officer and co-founder of Okta. "We’re delivering all of this product innovation while achieving record profitability and maintaining strong cash flow. In today's dynamic cybersecurity landscape, identity is security, and Okta is dedicated to providing our customers with modern solutions to meet their evolving needs."

Second Quarter Fiscal 2025 Financial Highlights:

  • Revenue: Total revenue was $646 million, an increase of 16% year-over-year. Subscription revenue was $632 million, an increase of 17% year-over-year.

  • RPO: RPO, or subscription backlog, was $3.505 billion, an increase of 16% year-over-year. cRPO, which represents subscription backlog expected to be recognized over the next 12 months, was $1.995 billion, up 13% compared to the second quarter of fiscal 2024.

  • GAAP Operating Loss: GAAP operating loss was $19 million, or (3)% of total revenue, compared to a GAAP operating loss of $162 million, or (29)% of total revenue, in the second quarter of fiscal 2024.

  • Non-GAAP Operating Income: Non-GAAP operating income was $148 million, or 23% of total revenue, compared to a non-GAAP operating income of $59 million, or 11% of total revenue, in the second quarter of fiscal 2024.

  • GAAP Net Income (Loss): GAAP net income was $29 million, compared to a GAAP net loss of $111 million in the second quarter of fiscal 2024. GAAP basic and diluted net income per share were $0.18 and $0.15, respectively, compared to a GAAP basic and diluted net loss per share of $0.68 in the second quarter of fiscal 2024.

  • Non-GAAP Net Income: Non-GAAP net income was $131 million, compared to non-GAAP net income of $56 million in the second quarter of fiscal 2024. Non-GAAP diluted net income per share was $0.72, compared to non-GAAP diluted net income per share of $0.31 in the second quarter of fiscal 2024.

  • Cash Flow: Net cash provided by operations was $86 million, or 13% of total revenue, compared to net cash provided by operations of $53 million, or 10% of total revenue, in the second quarter of fiscal 2024. Free cash flow was $78 million, or 12% of total revenue, compared to $49 million, or 9% of total revenue, in the second quarter of fiscal 2024.

  • Cash, cash equivalents, and short-term investments were $2.358 billion at July 31, 2024.

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:

All periods factor in a challenging macro environment, and continue to incorporate some conservatism as the Company monitors potential impacts related to the October 2023 security incident.

For the third quarter of fiscal 2025, the Company expects:

  • Total revenue of $648 million to $650 million, representing a growth rate of 11% year-over-year;

  • Current RPO of $1.985 billion to $1.990 billion, representing a growth rate of 9% year-over-year;

  • Non-GAAP operating income of $118 million to $120 million, which yields a non-GAAP operating margin of 18%;

  • Non-GAAP diluted net income per share of $0.57 to $0.58, assuming diluted weighted-average shares outstanding of approximately 183 million and a non-GAAP tax rate of 26%; and

  • Non-GAAP free cash flow margin of approximately 20%.

For the full year fiscal 2025, the Company now expects:

  • Total revenue of $2.555 billion to $2.565 billion, representing a growth rate of 13% year-over-year;

  • Non-GAAP operating income of $535 million to $545 million, which yields a non-GAAP operating margin of 21%;

  • Non-GAAP diluted net income per share of $2.58 to $2.63, assuming diluted weighted-average shares outstanding of approximately 182 million and a non-GAAP tax rate of 26%; and

  • Non-GAAP free cash flow margin of approximately 23%.

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 forward-looking non-GAAP financial measures 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 financial measures are not available without unreasonable effort.

Webcast Information:

Okta will host a live video webcast at 2:00 p.m. Pacific Time on August 28, 2024 to discuss the results and outlook. The prepared remarks and the news release with the financial results will be accessible from the Company’s website at investor.okta.com prior to the webcast. The live video webcast will be accessible from the Okta investor relations website at investor.okta.com. A replay will be available on the Okta investor relations website following the completion of the event.

Supplemental Financial and Other Information:

Supplemental financial and other information can be accessed through the Company’s investor relations website at investor.okta.com. Okta uses its investor.okta.com website and okta.com/blog websites (including the Security Blog, Okta Developer Blog and Auth0 Developer Blog) 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 and okta.com/blog websites in addition to following our press releases, SEC filings and public conference calls and webcasts.

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, non-GAAP operating margin, non-GAAP net income, non-GAAP net margin, non-GAAP diluted net income per share, non-GAAP tax rate, free cash flow and free cash flow margin. Certain of these non-GAAP financial measures exclude stock-based compensation, non-cash charitable contributions, amortization of acquired intangibles, acquisition and integration-related expenses, restructuring costs related to severance and termination benefits and lease impairments in connection with the closing of certain leased facilities, certain non-ordinary course legal settlements and related expenses, amortization of debt issuance costs and gain on early extinguishment of debt. Acquisition and integration-related expenses include transaction costs and other non-recurring incremental costs incurred through the one-year anniversary of the transaction close.

Stock-based compensation is non-cash in nature and is generally fixed at the time the stock-based instrument is granted and amortized over a period of several years. Although stock-based compensation is an important aspect of the compensation of our employees and executives, the expense for the fair value of the stock-based instruments we use may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. We believe excluding stock-based compensation provides meaningful supplemental information regarding the long-term performance of our core business and facilitates comparison of our results to those of peer companies.

We also exclude non-cash charitable contributions, amortization of acquired intangibles, acquisition and integration-related expenses, restructuring costs related to severance and termination benefits and lease impairments in connection with the closing of certain leased facilities, certain non-ordinary course legal settlements and related expenses, amortization of debt issuance costs and gain on early extinguishment of debt from the applicable non-GAAP financial measures because these adjustments are considered by management to be outside of our core operating results.

In addition to these exclusions, we subtract an assumed provision for income taxes to calculate non-GAAP net income. We use a fixed long-term projected tax rate of 26% in our computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. The non-GAAP tax rate could be subject to change for a variety of reasons, including changes in tax laws and regulations, significant changes in our geographic earnings mix, or other changes to our strategy or business operations. We will periodically reevaluate the projected long-term tax rate, as necessary, for significant events based on our ongoing analysis of relevant tax law changes, material changes in the forecasted geographic earnings mix, and any significant acquisitions.

We define free cash flow, a non-GAAP financial measure, as net cash provided by operating activities, less cash used for purchases of property and equipment, net of sales proceeds, and capitalized software. Free cash flow margin is calculated as free cash flow divided by total revenue. We use free cash flow as a measure of financial progress in our business, as it balances operating results, cash management, and capital efficiency. We believe information regarding free cash flow provides investors and others with an important perspective on the cash available to make strategic acquisitions and investments, to fund ongoing operations, and to fund other capital expenditures. Free cash flow can be volatile and is sensitive to many factors, including changes in working capital and timing of capital expenditures. Working capital at any specific point in time is subject to many variables, including seasonality, the discretionary timing of expense payments, discounts offered by vendors, vendor payment terms, and fluctuations in foreign exchange rates.

We periodically reassess the components of our non-GAAP adjustments for changes in how we evaluate our performance and changes in how we make financial and operational decisions, and consider the use of these measures by our competitors and peers to ensure the adjustments remain relevant and meaningful.

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. 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, global economic conditions have in the past and could in the future reduce demand for our products; we and our third-party service providers have in the past and could in the future experience cybersecurity incidents; we may be unable to manage or sustain the level of growth that our business has experienced in prior periods; our financial resources may not be sufficient to maintain or improve our competitive position; we may be unable to attract new customers, or retain or sell additional products to existing customers; customer growth has slowed in recent periods and could continue to decelerate in the future; we could experience interruptions or performance problems associated with our technology, including a service outage; we and our third-party service providers have failed, or were perceived as having failed, to fully comply with various privacy and security provisions to which we are subject, and similar incidents could occur in the future; we may not achieve expected synergies and efficiencies of operations from recent acquisitions or business combinations, and we may not be able to successfully integrate the companies we acquire; and we may not be able to pay off our convertible senior notes when due. 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 World’s Identity Company™. We secure Identity, so everyone is free to safely use any technology. Our customer and workforce solutions empower businesses and developers to use the power of Identity to drive security, efficiencies, and success — all while protecting their users, employees, and partners. Learn why the world’s leading brands trust Okta for authentication, authorization, and more at okta.com.

OKTA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in millions, shares in thousands, except per share data)

(unaudited)

 

 

Three Months Ended

July 31,

 

Six Months Ended

July 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenue:

 

 

 

 

 

 

 

Subscription

$

632

 

 

$

542

 

 

$

1,235

 

 

$

1,045

 

Professional services and other

 

14

 

 

 

14

 

 

 

28

 

 

 

29

 

Total revenue

 

646

 

 

 

556

 

 

 

1,263

 

 

 

1,074

 

Cost of revenue:

 

 

 

 

 

 

 

Subscription(1)

 

137

 

 

 

128

 

 

 

267

 

 

 

250

 

Professional services and other(1)

 

18

 

 

 

21

 

 

 

36

 

 

 

41

 

Total cost of revenue

 

155

 

 

 

149

 

 

 

303

 

 

 

291

 

Gross profit

 

491

 

 

 

407

 

 

 

960

 

 

 

783

 

Operating expenses:

 

 

 

 

 

 

 

Research and development(1)

 

164

 

 

 

172

 

 

 

327

 

 

 

335

 

Sales and marketing(1)

 

238

 

 

 

261

 

 

 

474

 

 

 

517

 

General and administrative(1)

 

108

 

 

 

119

 

 

 

225

 

 

 

229

 

Restructuring and other charges

 

 

 

 

17

 

 

 

 

 

 

24

 

Total operating expenses

 

510

 

 

 

569

 

 

 

1,026

 

 

 

1,105

 

Operating loss

 

(19

)

 

 

(162

)

 

 

(66

)

 

 

(322

)

Interest expense

 

(1

)

 

 

(2

)

 

 

(3

)

 

 

(5

)

Interest income and other, net

 

29

 

 

 

18

 

 

 

56

 

 

 

35

 

Gain on early extinguishment of debt

 

3

 

 

 

42

 

 

 

3

 

 

 

73

 

Interest and other, net

 

31

 

 

 

58

 

 

 

56

 

 

 

103

 

Income (loss) before provision for (benefit from) income taxes

 

12

 

 

 

(104

)

 

 

(10

)

 

 

(219

)

Provision for (benefit from) income taxes

 

(17

)

 

 

7

 

 

 

1

 

 

 

11

 

Net income (loss)

$

29

 

 

$

(111

)

 

$

(11

)

 

$

(230

)

 

 

 

 

 

 

 

 

Net income (loss) per share, basic

$

0.18

 

 

$

(0.68

)

 

$

(0.06

)

 

$

(1.42

)

Net income (loss) per share, diluted

$

0.15

 

 

$

(0.68

)

 

$

(0.06

)

 

$

(1.42

)

 

 

 

 

 

 

 

 

Weighted-average shares used to compute net income (loss) per share, basic

 

168,612

 

 

 

162,755

 

 

 

168,045

 

 

 

162,051

 

Weighted-average shares used to compute net income (loss) per share, diluted

 

174,443

 

 

 

162,755

 

 

 

168,045

 

 

 

162,051

 

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

 

Three Months Ended

July 31,

 

Six Months Ended

July 31,

 

2024

 

2023

 

2024

 

2023

Cost of subscription revenue

$

22

 

$

21

 

$

41

 

$

37

Cost of professional services and other

 

3

 

 

4

 

 

6

 

 

8

Research and development

 

56

 

 

74

 

 

119

 

 

142

Sales and marketing

 

36

 

 

41

 

 

66

 

 

79

General and administrative

 

31

 

 

45

 

 

67

 

 

85

Total stock-based compensation expense

$

148

 

$

185

 

$

299

 

$

351

OKTA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in millions)

(unaudited)

 

 

July 31,

 

January 31,

 

 

2024

 

 

 

2024

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

515

 

 

$

334

 

Short-term investments

 

1,843

 

 

 

1,868

 

Accounts receivable, net of allowances

 

377

 

 

 

559

 

Deferred commissions

 

122

 

 

 

113

 

Prepaid expenses and other current assets

 

181

 

 

 

106

 

Total current assets

 

3,038

 

 

 

2,980

 

Property and equipment, net

 

47

 

 

 

48

 

Operating lease right-of-use assets

 

82

 

 

 

83

 

Deferred commissions, noncurrent

 

230

 

 

 

242

 

Intangible assets, net

 

168

 

 

 

182

 

Goodwill

 

5,448

 

 

 

5,406

 

Other assets

 

54

 

 

 

48

 

Total assets

$

9,067

 

 

$

8,989

 

Liabilities and stockholders' equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

11

 

 

$

12

 

Accrued expenses and other current liabilities

 

142

 

 

 

115

 

Accrued compensation

 

113

 

 

 

167

 

Deferred revenue

 

1,394

 

 

 

1,488

 

Total current liabilities

 

1,660

 

 

 

1,782

 

Convertible senior notes, net, noncurrent

 

1,113

 

 

 

1,154

 

Operating lease liabilities, noncurrent

 

107

 

 

 

112

 

Deferred revenue, noncurrent

 

21

 

 

 

23

 

Other liabilities, noncurrent

 

33

 

 

 

30

 

Total liabilities

 

2,934

 

 

 

3,101

 

 

 

 

 

Stockholders’ equity:

 

 

 

Preferred stock

 

 

 

 

 

Class A common stock

 

 

 

 

 

Class B common stock

 

 

 

 

 

Additional paid-in capital

 

8,981

 

 

 

8,724

 

Accumulated other comprehensive loss

 

(7

)

 

 

(6

)

Accumulated deficit

 

(2,841

)

 

 

(2,830

)

Total stockholders’ equity

 

6,133

 

 

 

5,888

 

Total liabilities and stockholders' equity

$

9,067

 

 

$

8,989

 

OKTA, INC.

SUMMARY OF CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in millions)

(unaudited)

 

 

Six Months Ended

July 31,

 

 

2024

 

 

 

2023

 

Cash flows from operating activities:

 

 

 

Net loss

$

(11

)

 

$

(230

)

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

 

 

 

Stock-based compensation

 

299

 

 

 

351

 

Depreciation, amortization and accretion

 

42

 

 

 

43

 

Amortization of deferred commissions

 

62

 

 

 

49

 

Deferred income taxes

 

(4

)

 

 

3

 

Lease impairment charges

 

 

 

 

25

 

Gain on early extinguishment of debt

 

(3

)

 

 

(73

)

Other, net

 

7

 

 

 

6

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

181

 

 

 

92

 

Deferred commissions

 

(59

)

 

 

(65

)

Prepaid expenses and other assets

 

(82

)

 

 

(14

)

Operating lease right-of-use assets

 

10

 

 

 

12

 

Accounts payable

 

(1

)

 

 

1

 

Accrued compensation

 

(55

)

 

 

24

 

Accrued expenses and other liabilities

 

33

 

 

 

(4

)

Operating lease liabilities

 

(18

)

 

 

(20

)

Deferred revenue

 

(96

)

 

 

(18

)

Net cash provided by operating activities

 

305

 

 

 

182

 

Cash flows from investing activities:

 

 

 

Capitalized software

 

(7

)

 

 

(7

)

Purchases of property and equipment

 

(6

)

 

 

(2

)

Purchases of securities available-for-sale and other

 

(779

)

 

 

(577

)

Proceeds from maturities and redemption of securities available-for-sale

 

808

 

 

 

1,101

 

Proceeds from sales of securities available-for-sale and other

 

2

 

 

 

61

 

Payments for business acquisitions, net of cash acquired

 

(56

)

 

 

(22

)

Net cash provided by (used in) investing activities

 

(38

)

 

 

554

 

Cash flows from financing activities:

 

 

 

Payments for repurchases of convertible senior notes

 

(40

)

 

 

(671

)

Taxes paid related to net share settlement of equity awards

 

(80

)

 

 

 

Payments for warrants related to convertible senior notes

 

 

 

 

(4

)

Proceeds from stock option exercises

 

9

 

 

 

8

 

Proceeds from shares issued in connection with employee stock purchase plan

 

24

 

 

 

26

 

Net cash used in financing activities

 

(87

)

 

 

(641

)

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

 

 

 

 

2

 

Net increase in cash, cash equivalents and restricted cash

 

180

 

 

 

97

 

Cash, cash equivalents and restricted cash at beginning of period

 

342

 

 

 

271

 

Cash, cash equivalents and restricted cash at end of period

$

522

 

 

$

368

 

OKTA, INC.
Reconciliation of GAAP to Non-GAAP Data
(dollars in millions, shares in thousands, except 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,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Gross profit

$

491

 

 

$

407

 

 

$

960

 

 

$

783

 

Add:

 

 

 

 

 

 

 

Stock-based compensation expense included in cost of revenue

 

25

 

 

 

25

 

 

 

47

 

 

 

45

 

Amortization of acquired intangibles

 

12

 

 

 

12

 

 

 

24

 

 

 

24

 

Non-GAAP gross profit

$

528

 

 

$

444

 

 

$

1,031

 

 

$

852

 

Gross margin

 

76

%

 

 

73

%

 

 

76

%

 

 

73

%

Non-GAAP gross margin

 

82

%

 

 

80

%

 

 

82

%

 

 

79

%

Non-GAAP Operating Income and Non-GAAP Operating Margin

We define non-GAAP operating income 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, acquisition and integration-related expenses, restructuring costs related to severance and termination benefits and lease impairments in connection with the closing of certain leased facilities and certain non-ordinary course legal settlements and related expenses.

In fiscal 2025, we updated our definition of non-GAAP operating income and non-GAAP operating margin to include certain non-ordinary course legal settlements and related expenses.

 

Three Months Ended

July 31,

 

Six Months Ended

July 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Operating loss

$

(19

)

 

$

(162

)

 

$

(66

)

 

$

(322

)

Add:

 

 

 

 

 

 

 

Stock-based compensation expense

 

148

 

 

 

185

 

 

 

299

 

 

 

351

 

Non-cash charitable contributions

 

1

 

 

 

1

 

 

 

4

 

 

 

2

 

Amortization of acquired intangibles

 

18

 

 

 

18

 

 

 

37

 

 

 

41

 

Restructuring costs

 

 

 

 

17

 

 

 

 

 

 

24

 

Legal settlements and related expenses

 

 

 

 

 

 

 

7

 

 

 

 

Non-GAAP operating income

$

148

 

 

$

59

 

 

$

281

 

 

$

96

 

Operating margin

 

(3

)%

 

 

(29

)%

 

 

(5

)%

 

 

(30

)%

Non-GAAP operating margin

 

23

%

 

 

11

%

 

 

22

%

 

 

9

%

Non-GAAP Net Income, Non-GAAP Net Margin and Non-GAAP Diluted Net Income Per Share

We define non-GAAP net income and non-GAAP net margin as GAAP net income (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 issuance costs, gain on early extinguishment of debt, restructuring costs related to severance and termination benefits and lease impairments in connection with the closing of certain leased facilities and certain non-ordinary course legal settlements and related expenses. In addition, we subtract an assumed provision for income taxes to calculate non-GAAP net income. We use a fixed long-term projected tax rate of 26% in our computation of the non-GAAP income tax provision to provide better consistency across the reporting periods.

In fiscal 2025, we updated our definition of non-GAAP net income and non-GAAP net margin to include certain non-ordinary course legal settlements and related expenses.

We define non-GAAP diluted net income per share, as non-GAAP net income divided by GAAP weighted-average shares used to compute net income (loss) per share, basic, 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 per share, diluted, includes the impact of our capped call agreements on convertible senior notes outstanding. The capped call agreements are intended to offset potential dilution to our Class A common stock upon any conversion or settlement of the convertible senior notes under certain circumstances. Accordingly, we did not record any adjustments 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,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net income (loss)

$

29

 

 

$

(111

)

 

$

(11

)

 

$

(230

)

Add:

 

 

 

 

 

 

 

Stock-based compensation expense

 

148

 

 

 

185

 

 

 

299

 

 

 

351

 

Non-cash charitable contributions

 

1

 

 

 

1

 

 

 

4

 

 

 

2

 

Amortization of acquired intangibles

 

18

 

 

 

18

 

 

 

37

 

 

 

41

 

Amortization of debt issuance costs

 

1

 

 

 

1

 

 

 

1

 

 

 

2

 

Gain on early extinguishment of debt

 

(3

)

 

 

(42

)

 

 

(3

)

 

 

(73

)

Restructuring costs

 

 

 

 

17

 

 

 

 

 

 

24

 

Legal settlements and related expenses

 

 

 

 

 

 

 

7

 

 

 

 

Tax adjustment

 

(63

)

 

 

(13

)

 

 

(86

)

 

 

(23

)

Non-GAAP net income

$

131

 

 

$

56

 

 

$

248

 

 

$

94

 

 

 

 

 

 

 

 

 

Net margin

 

5

%

 

 

(20

)%

 

 

(1

)%

 

 

(21

)%

Non-GAAP net margin

 

20

%

 

 

10

%

 

 

20

%

 

 

9

%

 

 

 

 

 

 

 

 

Weighted-average shares used to compute net income (loss) per share, basic

 

168,612

 

 

 

162,755

 

 

 

168,045

 

 

 

162,051

 

Non-GAAP weighted-average effect of potentially dilutive securities

 

13,752

 

 

 

15,987

 

 

 

13,358

 

 

 

15,430

 

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

 

182,364

 

 

 

178,742

 

 

 

181,403

 

 

 

177,481

 

 

 

 

 

 

 

 

 

Net income (loss) per share, diluted

$

0.15

 

 

$

(0.68

)

 

$

(0.06

)

 

$

(1.42

)

Non-GAAP net income per share, diluted

$

0.72

 

 

$

0.31

 

 

$

1.37

 

 

$

0.53

 

OKTA, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(dollars in millions)
(unaudited)

Free Cash Flow and Free Cash Flow Margin

We define free cash flow, a non-GAAP financial measure, as net cash provided by operating activities, less cash used for purchases of property and equipment, net of sales proceeds, and capitalized software. Free cash flow margin is calculated as free cash flow divided by total revenue.

 

Three Months Ended

July 31,

 

Six Months Ended

July 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net cash provided by operating activities

$

86

 

 

$

53

 

 

$

305

 

 

$

182

 

Less:

 

 

 

 

 

 

 

Purchases of property and equipment

 

(5

)

 

 

(2

)

 

 

(6

)

 

 

(2

)

Capitalized software

 

(3

)

 

 

(2

)

 

 

(7

)

 

 

(7

)

Free cash flow

$

78

 

 

$

49

 

 

$

292

 

 

$

173

 

Net cash provided by (used in) investing activities

$

156

 

 

$

495

 

 

$

(38

)

 

$

554

 

Net cash used in financing activities

$

(50

)

 

$

(315

)

 

$

(87

)

 

$

(641

)

Operating cash flow margin

 

13

%

 

 

10

%

 

 

24

%

 

 

17

%

Free cash flow margin

 

12

%

 

 

9

%

 

 

23

%

 

 

16

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240827337445/en/

Contacts

Investor Contact:
Dave Gennarelli
investor@okta.com

Media Contact:
Kyrk Storer
press@okta.com