Details on OKTA's note offering…

The notes will be senior, unsecured obligations of Okta. The notes will bear interest at a rate of 0.125% per year. Interest will be payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2020. The notes will mature on September 1, 2025, unless earlier redeemed, repurchased or converted. Okta may not redeem the notes prior to September 6, 2022. Okta may redeem for cash all or any portion of the notes, at its option, on or after September 6, 2022, if the last reported sale price of Okta’s Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on and including the trading day preceding the date on which Okta provides notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the notes, which means that Okta is not required to redeem or retire the notes periodically.

Holders of the notes will have the right to require Okta to repurchase all or a portion of their notes upon the occurrence of a fundamental change (as defined in the indenture governing the notes) at a purchase price of 100% of their principal amount plus any accrued and unpaid interest.

The notes will be convertible at an initial conversion rate of 5.2991 shares of Okta’s Class A common stock, per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $188.71 per share, which represents a conversion premium of approximately 47.5% to the last reported sale price of $127.94 per share of Okta’s Class A common stock on NASDAQ on September 4, 2019).

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Fool Evan Niu, CFA, wrote a nice article, Why Okta Shares Fell Today: Hedge funds are establishing convertible arbitrage positions.

It explains in simple terms the implications of the note offerings, especially helpful for those of us without a financial background,….



Thanks for sharing that article. I am glad to know where the selling pressure was coming from.

From the same page I noticed another interesting piece of information regarding how the revenue forecast has been consistently raised by the management.

Okta has the benefit of a robust sales outlook to support those aggressive spending plans. To that end, executives lifted their outlook for the second straight quarter and are now targeting fiscal-year sales of between $560 million and $563 million. That forecast stood at between $543 million and $548 million in late May and ranged from $530 million to $535 million at the start of the year.

there are several companies that are taking advantage of the dipping in long term interest rate. Is That what is happening in OKTA’s case?

on finding some reasons why many SaaS have been behind the market (MDB,ZS…), any such technical explanations?