First the numbers.
Revenue 2019 Q1 83.6 59.2% Q2 94.58 55.8% Q3 105.6 56% Q4 158.8 49.6%
Revenue growth dropped to 50%, q4 2018 it was 58.2%. They didn’t address why in the conference call.
Billing 2019 Q1 95.92 60.05% Q2 109.39 52.63% Q3 124.04 57.89% Q4 158.8 51.67%
If the revenue growth slow down was due to a bunch of revenue being deferred then we would have seen the billings growth be much higher. Instead it was 51.67%.
Customers 2019 Q1 4700 40.3% Q2 5150 41.1% Q3 5600 41.77% Q4 6100 40.23% Customer QOQ growth 2019 Q1 350 Q2 450 Q3 450 Q4 500
Customer growth continues nicely
Gross Margin 2019 Q1 74.1 Q2 73.3 Q3 75.8 Q4 76.4
Margins were lower in q2 because they held their annual conference in Q2.
Doll based retention rate. They use a trailing twelve month measure. Holding more or less steady at 120. Started the year at 121.
Cash Flow from Operations 2019 Q1 4 Q2 -5.3 (annual conference) Q3 6.4 Q4 10.1 Free Cash Flow 2019 Q1 -1.6 Q2 -11.3 Q3 1.4 Q4 4.3
Cash flow has improved dramatically. They started the year with 547 million in cash and ended it with 564 million.
I haven’t been tracking their growth in ACV > 100k but that is obviously where they are seeing lots of growth. In large accounts with large enterprises. That was up 55%.
I think OKTA is a pretty great company. I initially viewed OKTA as a single sign on company but they obviously viewed themselves as so so so much more. By controlling sign on they get to be in the middle of the heart of a business. It is a truly powerful place to be and OKTA has run with their prime place within enterprises.
They control application integration which they are now expanding with their acquisition of Azuqua. Now they will be able to automate business workflows. Azuqua is a pretty cool acquisition. They are a no-code, cloud-based integration platform that automates workflows between apps and service. Pretty much perfect for OKTA because at their core that is what they help do. They have always called out their integrations as one of their main advantages, this will help take that to a new level. In the CC they said it will take about a year to integrate Azuqua into their product stack. This was a technology acquisition, so will not improve their revenue in any meaningful way and will hurt their gross margins a little bit. 2%.
Since they control sign on they need to know who you are. So they have move in a big way into identity management which segues directly into….
Security. OKTA acquired ScaleFT this year as a way to beef up their security offering. By controlling identity they can implement a zero trust environment which is perfect for the cloud.
We should start seeing the fruits of the acquisitions later this year. OKTA is obviously spending heavily to beef up their lands but we are also seeing the benefit of their operational leverage. They are cash flow positive and basically self funding. Next quarter will probably be cash flow negative due to their annual conference but hopefully they continue to operate near cash flow even or positive for the year.
All in all i was a little disappointed in this quarter’s numbers, as exciting as all the above is…they still need to grow quickly to support their valuation. As long as the growth doesn’t trend down over the next couple of quarters then I’ll be happy. I was hoping for an AYX or ZS type of quarter…but alas it wasn’t to be. I wasn’t worried about their guidance. They always guide mid 30% for the year and 40ish% for the first quarter. The conference call was pretty exciting. In summary, OK quarter for OTKA (see what I did there?) . Exciting stuff ahead.
Looking forward to their analyst day in a month.