Here are my thoughts on Okta’s October quarter results. I thought it was a splendid report.
Revenue of $106 million, up 58%. That’s great. There’s a little big of inevitable percentage slowing as the base numbers get larger, but the last five quarters were 61% 59% 60% 57% and 58%. That’s pretty stable.
Subscription revenue of $98 million. Also up 58% - and 92% of revenue
Calculated Billings were $124 million up 58% too
Adj operating loss was $6.5 million, or 6% of revenue, improved from $19.4 million, or 29% a year ago !!! …Thus, Operating cash flow margin improved by 23 percentage points yoy !!! That’s remarkable.
Positive free cash flow for the first time
Subscription gross margin was 82.2%, up from 80.4%.
Total gross margin was 75.8% in the third quarter, up from 72.0%
We added over 450 new customers, bringing our total to over 5,600 customers.
Even more exciting is the momentum with our largest customers. We saw 55% growth in customers with over $100,000 annual recurring revenue, representing a record 100 net new adds in a quarter. (Getting large customers)
Our strength is a reflection of the growing pervasiveness of identity and we are well positioned to further benefit from these tailwinds as organizations continue their move to the cloud, while digitally transforming and securing their businesses.
Adj net loss was $3.9 million, improved from $17.9 million a yr ago!!! (Thus it was still a loss, but a huge improvement).
Adj net loss per share was 4 cents, improved from 19 cents yoy !!!
Op Cash Flow: was $6.4 million, or 6% of revenue, improved from negative $9.5 million, or negative 14% of revenue.
Free cash flow was $1.4 million, or 1% of revenue, improved from negative $11.2 million, or negative 17% of revenue.
Cash, was $546 million.
Conference Call
Hertz Global Holdings, which operates in 150 countries, is an exciting new deal for us. It chose Okta to securely connect all of its employees to the hundreds of applications they use to run their business. Next, an international financial services company with over 750,000 members, was a new customer identity and workforce identity win.
A noteworthy up-sell was the US State Dept, which had initially purchased Okta for authentication for its 100,000 external industry partners, but will now expand to its entire workforce.
Large partners such as Deloitte and VMware have recognized Okta as a vendor of choice for identity solutions, which further enhances our positioning.
We’re very pleased with our strong results and momentum and we think it’s being driven by several factors. We believe significant tailwinds are pushing the market in our direction. First, every organization we talk to is on a journey to the cloud. Second, they’re thinking about how to become technology companies and better engage with customers online or through custom and mobile applications. And third, security has become a priority at the highest level. While cloud, digital transformation and security are top priorities, most organizations are still relatively early in their journeys to realize their full potential.
We believe that Okta is leading in identity and winning for important reasons. First, we have a fundamentally different approach to the space than our competitors. The Okta identity cloud is a completely independent and neutral cloud platform for identity. Because our business isn’t tethered to the success of specific applications, customers appreciate that Okta will let them choose and continuously adopt the best technologies for their business.
Many of the reasons our customers love Okta are the result of our continued investments in innovation. Reasons, such as
the speed of implementation,
the ability to rollout applications in days or weeks versus months or years,
the ability to address a very complex set of problems with a simple and intuitive solution and
the ability to keep pace with technology.
We offer a single identity platform for every type of user in an organization’s ecosystem, from employees and contractors to partners and customers. Increasingly, we’re seeing customers adopt Okta as a single standard and retired legacy infrastructure along the way.
In summary, the market is being driven our way, as momentum in cloud, digital transformation and security are all converging on identity and we’re winning because of our independent neutral approach, the breadth and depth of the Okta integration network and our ability to offer one platform for every use case and our customer first focus.
Saul’s Impression: They are doing super-great in every way! I was very impressed and raised them to a 5 star confidence level, and added to my position. They are rapidly eliminating their losses at the same time that they are growing like mad.