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Okta: quarterlies, annuals, SEC actions

Okta sees steady growth in revenue for Q1
Okta: quarterlies, annuals, SEC actions
 

June 4, 2024 – Okta’s revenue grew 19 percent year-over-year in Q1 to hit a total of $617 million, according to the firm’s financial results for its first quarter, which ended on April 30, 2024.

Subscription revenue was $603 million, an increase of 20 percent year-over-year. RPO, or subscription backlog, was $3.364 billion, an increase of 14 percent year-over-year. Current remaining performance obligations (cRPO) grew 15% year-over-year to $1.949 billion. Okta posted a record operating cash flow of $219 million (36 percent of total revenue) and free cash flow of $214 million.

The firm credits its Q1 success to recent actions it has taken to increase operating efficiency.

“Identity is security and Okta is critical for organizations to modernize identity for today’s threat landscape,” says Todd McKinnon, CEO of Okta, in a release. “With the advancements we’ve made on Okta’s Secure Identity Commitment and our growing product pipeline, we remain well positioned to advance our market leadership position and win more of the massive opportunity in both the workforce and customer identity markets.”

Okta predicts similar results for Q2, expecting total revenue of between $631 million and $633 million, representing a growth rate of 13 percent to 14 percent over the previous year. A statement on the financial outlook says “All periods factor in a stable, but still challenging macro environment, as well as potential impacts on our business related to the October 2023 security incident.”

The latter refers to a high-profile hack against corporate digital IDs that saw the names and email addresses of all Okta customer support system users exposed. The breach, however, only caused a minor ripple in the company’s stock value, which has been climbing out of a trough since late 2022. It spiked in March 2024 but has recently seen a drop.

Okta’s slog up and out of financial mire continues in Q2

Sep 5, 2023 – Executives with digital ID verification company Okta say its second- and third-quarter revenue will tug the fiscal year a bit higher.

First, a look at new revenue guidance for the fiscal 2024, ending in December, and the third quarter, ending in October.

The company has revised its anticipated fiscal 2023 revenue total to between $2.21 billion and $2.22 billion – 1.8 percent to 1.4 percent, respectively, higher than its previous guidance to the market.

That would be roughly $35 million in new revenue for the year.

According to reporting by investment news service MarketWatch, business-analysis firm FactSet expects fiscal 2024 revenue to be $2.18 billion, at the far high end of what the subscription-and-service company had originally predicted.

Okta executives are telling market analysts and investors they think third-quarter revenue to grow 16 percent, to $560 million.

MarketWatch reports that analysts in aggregate anticipate revenue of $552.9 million in the quarter.

The second quarter, which closed July 31, was an improvement for revenue compared to the same period last year.

Executives closed the quarter with an unaudited $556 million, up from $452 million a year ago. (Related: Okta has a new executive: Ajay Advani, VP of partner and alliances in Asia-Pacific and Japan, shortly after appointing a VP of Presales for the region.)

The profit and loss record is muddled because executives are emphasizing one interpretation of performance over another – the one that shows a profit for Okta.

According to GAAP figures (which all U.S. public companies must report to avoid making performance comparisons deliberately hard to make), the company had a second quarter loss of $111 million, or $0.68 per basic and diluted share, compared to a loss of $210 million, $1.34 per share.

Using non-GAAP figures (which can include important metrics that aren’t included in the GAAP standards), Okta reported a per-share profit of $0.34 basic and $0.31 diluted, compared to a loss of $0.10 basic and diluted for the second quarter of 2023.

The company’s market expansion includes the recent addition of digital identity authentication from Worldcoin to the Auth0 marketplace.

Okta leaders hit with insider-trading class action

Apr 20, 2023 – A shareholder of cloud-based authenticator Okta has filed a potential class action against the company making a number of accusations about insider trading.

Top executives allegedly traded company shares based on information outsiders did not have, enriching themselves in the process. Their reputed actions cost the company money and damage to Okta‘s reputation.

The case, 1:23-cv-00413-UNA, is being heard in the Delaware U.S. District Court.

Austin Buono claims the executives presented an inaccurate picture of how a merger was going. They spoke publicly about how well integration of Okta sales staff was going with the sales team of Auth0, a competitor that Okta acquired in May 2021, according to court documents.

That was untrue, according to Buono. The two sales teams were not working together, apparently, and were largely untrained on each other’s product lines. Confusion of that kind likely would hurt earnings, and, he claims, some executives began selling shares.

It was not until Aug. 31, 2022, that McKinnon and Tighe said during a financial analysts’ call that integration was not occurring, according to court documents. They said they were rethinking growth plans that had made the merger look like a logical business decision.

Named defendants are CEO Todd McKinnon, Chief Finance Officer Brett Tighe, Chief Operating Officer Frederic Kerrest, board members Shellye Archambeau, Robert L. Dixon, Jr., Patrick Grady, Ben Horowitz, Rebecca Saeger, Michael Stankey, and Michelle Wilson, board chair Jeff Epstein, Chief Accounting Officer Christopher Kramer, President of World Wide Field Operations Susan St. Ledger and Jonathan Runyan.

Runyan, Okta’s longtime general counsel, left the firm March 2, 2023.

Between Sept. 2021 and September 2022, Buono alleges, McKinnon sold 85,649 shares and netted $19.4 million. Kerrest disposed of 54,618 shares for $13.3 million. St. Ledger sold 35,008 shares for about $8 million. Runyan sold 26,756 shares for $6.1 million. Tighe disposed of 15,381 shares for $2.4 million.

Okta has had a tough go of it of late. It was hacked late last year, which, not at all incidentally, comes up in this and other lawsuits.

Okta problems mount

Dec 22, 2022 – There are times when a person trips on a crack in a Manhattan sidewalk, collects themselves and continues on. There also are times when the person trips, spills their coffee on a Hell’s Angel idling at the intersection and falls forehead first toward a crosswalk button.

That second person is wearing an Okta T-shirt.

Some of Okta‘s source code was stolen in a Github hack, and that is just one of problems it began encountering this year.

Before going on, it is important to report that executives at the identity and access management software maker have played down the severity of the latest theft.

Trade publication BleepingComputer, which broke the news, has published what it says is a confidential Okta security incident note intended for customers and acknowledging the attack.

But the company says in a statement, the only repositories copied held Workforce Identity Cloud code. No Auth0 customer ID cloud code was accessed. The same is true of customer data.

Removing the proprietary nature of the copied source code, according to Okta, does not make its products less secure. The damage is not catastrophic.

Well, tell that to shareholder lawyers, whose shark senses have been tingling around Okta for weeks.

Indeed, leaders of the company were named in a shareholder lawsuit alleging that they concealed a previous hack and had bobbled a merger.

That hack, also acknowledged by Okta, happened March 1. A hacking group, Lapsus$, claimed to have broken into the systems of Okta proper. In this case customer accounts were potentially hit – 2.5 percent of customers, according to the company.

And the strained merger with Auth0 in 2021. Investing trade publication The Motley Fool said it was one of three reasons Okta’s stock has underperformed in 2022. Foreseeable staff integration problems continue to present headaches.

Then there’s Okta’s zombie status. Equity research firm New Constructs, which owns the analytical concept, says companies that are burning through cash unsustainably fast are zombies.

New Constructs added the company to its list of zombies this month, according to investor news publication MarketWatch.

New Constructs estimates that Okta has used $3.8 billion since fiscal 2018 and that is without buyouts.

And while its third quarter, ending September 30, was strong, Okta’s share prices have dived 72 percent this year. MarketWatch notes that the S&P 500 has had a tough year, too, though the index is only down 17 percent.

This is a case in which everyone on the sidewalk is watching helplessly as a fellow pedestrian bounces off a traffic pole and closer to the curb and traffic.

Okta expands board

Aug 24, 2022 – Okta appointed Emilie Choi, president and COO of cryptocurrency wallet firm Coinbase to its board of directors.

The move, effective from August 19, is aimed at expanding Okta’s expertise in digital identity standards further.

“It’s clear that identity is at the heart of every industry and every digital interaction,” Choi says, commenting on the appointment. “I look forward to working with Okta as the company executes on its mission of freeing anyone to safely use any technology and creating a world where your identity belongs to you.”

Choi joins Okta’s board of directors weeks after the company announced its revenues continued to grow during the first quarter of 2022, particularly thanks to the Auth0 acquisition it completed in May last year.

Auth0 boosts Okta results

June 20, 2022 – Okta continues its strong run with a 65 percent increase in revenue during the first quarter of its fiscal 2022 year, driven by particularly strong performance from Auth0. Excluding Auth0, the company’s revenue was up by 39 percent.

“Organizations around the world have made it clear that identity is the foundation for their digital transformation projects and zero trust security environments,” says Okta Co-founder and CEO Todd McKinnon. “Okta is the recognized leader in identity and we’re confident in our ability to capture more of the massive market opportunity.”

Okta revenues up

March 10, 2022 – Okta’s digital identity and access management revenues for fiscal 2022 were up 56 percent to $1.3 billion, with fourth quarter revenues rising 63 percent year-over-year.

GAAP net loss for Okta in Q4 was $241 million, following a Q4 2021 GAAP net loss of $76 million.

The company reports a GAAP net loss of $848 million for the year, compared to a loss of $266 million the previous fiscal year.

“Identity management is at the forefront of today’s rapidly evolving security environment,” said Todd McKinnon, Chief Executive Officer and co-founder of Okta. “Today, C-level executives and developers are increasingly turning to Okta to help provide their employees and customers the freedom to safely use any technology. We exited FY22 with accelerating top-line metrics driven by strong execution and robust demand across our workforce solutions and both Okta and Auth0 customer identity solutions. Okta brings an unparalleled platform of cloud native identity management solutions to a massive market that continues to move towards us, propelled by the three mega-trends of cloud and hybrid IT, digital transformation, and zero trust security.”

Okta expects to earn between $1.78 and $1.79 billion in revenue in its fiscal 2023 year, for a growth rate of 37 to 38 percent.

Okta revenue up 57 percent

Sep 2, 2021 – Okta has announced a 57 percent increase in revenue on a year-over-year basis to $316 million in its fiscal Q2 2022. Most of that revenue was made up of subscriptions, which grew at an even faster rate.

The company has also acquired workplace operations platform atSpoke to support its planned identity governance tool, having picked up biometrics and identity tools provider Auth0 earlier this year.

Auth0 contributed $38 million to Okta’s total earnings.

“In our first quarter as a combined company with Auth0, we’re off to a fantastic start,” says Todd McKinnon, CEO 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.”

The company’s GAAP net loss during the quarter was $277 million, or $1.83 per share, increased from a GAAP net loss of $60 million, or $0.49 per share a year earlier.

Okta CEO says total addressable IAM market near $80B

Jun 23, 2021 – The identity and access management (IAM) market continues to adapt to the surge of new users and use cases prompted by the combination of stay-at-home orders and cybersecurity breaches. In this context, Entrust and Yubico have partnered on government IAM, LoginRadius has added a feature, Jamf has launched a biometric access control app, and a new certification program has been launched by IDPro.

The challenges associated with using biometrics in the IAM space are mainly solved through effective integration, Okta Co-founder and CEO Todd McKinnon tells Barron’s in a recent interview.

Developers are forced to deal with complexity in the implementation of biometrics, like any authentication method, but without passing it on to users. That complexity includes challenges around resetting biometric credentials, in an example provided by McKinnon.

One of the main IAM challenges faced by companies undergoing forced digital transformation has been bringing together disparate back-end databases with unified user profiles, McKinnon says.

Discussing the effects of the pandemic, McKinnon says use of Okta’s SMS service for multi-factor authentication (MFA) spiked by a thousand percent at the beginning of the pandemic. The company also helped put 25,000 employees of the State of Iowa online, as well as helping people throughout the state access public services, as the pandemic struck.

Asked about Okta’s acquisition of Auth0, McKinnon lauds its developer APIs for the ease with which they allow businesses to build digital identity capabilities into their new or existing applications.

The total addressable market for Okta is $80 billion, between the workforce and customer digital identity markets, according to McKinnon.

Okta revenues improve

May 27, 2021 – Okta revenues grew by 37 percent in Q1 of its fiscal 2022, on a year-over-year basis, to $251 million, with similar growth in subscription revenue, giving the company record quarterly operating and free cash flows.

“Broad-based demand for both our customer and workforce identity solutions led to another quarter of strong financial results and an excellent start to the fiscal year,” says Todd McKinnon, CEO and co-founder of Okta. “Organizations around the world are turning to Okta to improve the digital customer experience and to improve how their employees safely connect to their applications from anywhere. With the closing of the Auth0 acquisition earlier this month, we are further enhancing Okta’s market-leading identity platform, enabling us to provide even more choice and unprecedented innovation to customers and developers. Together, we’ll capture more of the massive $80 billion identity market opportunity even faster.”

The company’s GAAP net loss was $109 million, compared to a loss of $58 million in the same quarter a year ago.

A good day for investing in digital identity management

March 4, 2021 – Okta has acquired Auth0 in an all-stock transaction valued at $6.5 billion. The purchase gave Okta a market cap of $31.2 billion.

Okta Chief Executive Todd McKinnon wrote in a post on his company’s site that he is investing to become more things to more customers. McKinnon says his buyers need to grow from providing secure customer experiences through products to creating identity platforms for “every identity use case.”

Okta sells tools that buyers use to manage and track the identity and rights of their employees as they use work software. Auth0 makes a digital identity platform for developers.

In an interview with Forbes, he said he is concerned that Okta’s destiny will be stunted unless digital ID management becomes a “primary cloud” on par with CRM, infrastructure and collaboration.

Presumably, such an ascension is possible only if would-be buyers see identity management as a strategic advantage. And if companies like Okta can create identity platforms that are too complex and expensive for individual firms to build or assemble.

Auth0 will become an Okta unit, said McKinnon. No word if the acquired firm will retain one of its more distinctive positioning mottos: “give a shit” about customer value.

Okta sees improved operating profit outlook

July 1, 2020 – Okta has reported a 46 percent year-over-year increase in revenue for the first quarter of 2021 to $182.9 million, with subscription revenue up by 48 percent from the same period a year ago.

The company booked a net loss under GAAP of $57.7 million, but it has record operating and free cash flows, reaffirmed its revenue outlook and improved its operating profit outlook for fiscal 2021. GAAP operating loss in Q1 was $52.2 million, though non-GAAP operating loss was only $12.3 million.

“Okta is at the forefront of helping organizations adapt to the current environment where secure remote access has become a top priority across industries,” said Todd McKinnon, Chief Executive Officer and co-founder of Okta. “Our strong first quarter performance reflects our market leadership and ability to effectively and quickly shift to a fully remote workforce. This shift is enabled through our core technology, which allows secure access to any technology from anywhere. When this crisis is over, we don’t expect organizations to revert to their prior ways of working. Our commitment to our customers and continued focus on operational agility will help us navigate this environment, lead the new way of work, and seize the opportunity to emerge in an even stronger position.”

The company has also launched a new native integration with Amazon Web Services Single Sign-on (AWS SSO) to improve user experiences and expand the automation capabilities of large and complex organizations.

The new capability is available through the Okta Integration Network, allowing Okta customers to provision identities with AWS SSO to perform authorization management, with user identities and groups automatically synchronized.

FedEx has successfully deployed the Okta Identity Cloud to provide secure remote access to critical applications for its global workforce, which is considered essential for delivering goods and services during COVID-19 lockdowns.

Okta has also announced expanded partnerships with the Australian Red Cross, Moody’s, Mouvement Edouard Leclerc, Parsons, Servus Credit Union, State of Illinois, T-Mobile, Workday, and Zoom.

Okta partners with IBM Security Services

April 7, 2020 – Okta has formed a partnership with IBM Security Services, adding Okta Identity Cloud to the latter’s end-to-end consulting and managed services for IDaaS platforms. The combinations enables the delivery of customized identity solutions for organizations as they transition to cloud and hybrid environments, according to an Okta blog post.

The company just launched support for biometric passwordless identity verification with the Okta Identity Cloud through its new FastPass feature.

Okta launches $50 million VC fund

Apr 4, 2019 – Okta has unveiled a $50 million venture capital fund to invest in early-stage startups focusing on using artificial intelligence, machine learning, and blockchain technology for identity and authentication, and has also formed a trio of integration partnerships to expand its customer base and capabilities.

The new Okta Ventures fund was announced at the company’s Oktane event in San Francisco, TechCrunch reports, and its first investment is in blockchain-based digital identity platform Trusted Key, which has previously raised $3 million. The fund will invest in existing Okta partners and other companies, and provide one year of access to Okta products for use and integration.

The fund will chose 8 to 10 businesses per year for investments of $250,000 to $2 million, and the team managing the fund will be supported in the deal sourcing process by early backers Sequoia Andreessen Horowitz, and Greylock.

More financial and industry news about Okta here.

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