Hey everyone,
Apologies for being a bit absent on the board lately. Anyway, I was just thinking about PVTL’s subscription revenues and how its growth is in the ballpark of OKTA’s and the operating losses are both pretty big. So I want to compare the two to put PVTL’s valuation into perspective.
Here are PVTL’s numbers:
Fiscal year ended Jan 16 Jan 17 Jan 18
Revenue
Subscription Revenue $ 95 mil $150 mil $260 mil
Services Revenue $186 mil $286 mil $250 mil
Total Revenue $281 mil $416 mil $509 mil
Gross Cost of Revenue
Cost of Subscription Rev $ 34 mil $ 31 mil $ 30 mil
Cost of Services Rev $ 154 mil $ 203 mil $ 198 mil
Total Cost of Revenue $ 187 mil $ 234 mil $ 228 mil
Gross Margin Profit
Gross Margin dollars $ 94 mil $182 mil $281 mil
Gross Margin percent 33% 44% 55%
Operating Expenses
S&M $187 mil $194 mil $221 mil
R&D $120 mil $152 mil $161 mil
G&A $ 58 mil $ 62 mil $ 67 mil
Total Operating Expense $366 mil $408 mil $449 mil
Operating Loss
Operating Loss dollars $273 mil $227 mil $168 mil
Operating Loss percent 97% 55% 33%
Net Loss
Net Loss dollars $283 mil $233 mil $164 mil
Net Loss percent 101% 56% 32%
Here are OKTA’s:
Fiscal year ended Mar 17 Mar 18
Revenue
Subscription Revenue $ 143 mil $ 239 mil
Services Revenue $ 18 mil $ 21 mil
Total Revenue $ 161 mil $ 260 mil
Gross Cost of Revenue
Cost of Subscription Rev $ 34 mil $ 52 mil
Cost of Services Rev $ 22 mil $ 28 mil
Total Cost of Revenue $ 56 mil $ 80 mil
Gross Margin Profit
Gross Margin dollars $ 104 mil $ 179 mil
Gross Margin percent 65% 69%
Operating Expenses
S&M $119 mil $173 mil
R&D $ 39 mil $ 71 mil
G&A $ 30 mil $ 52 mil
Total Operating Expense $188 mil $296 mil
Operating Loss
Operating Loss dollars $83 mil $116 mil
Operating Loss percent 52% 46%
Net Loss
Net Loss dollars $83 mil $114 mil
Net Loss percent 52% 45%
More Facts:
Expansion Rate in latest quarter:
OKTA: 124%
PVTL: 158%
Number of Customers:
OKTA: Around 4,000
PVTL: 319
More Observations
If we look at just the subscription numbers they are actually more similar than I realized.

Revenues: $260 mil for PVTL vs. $239 mil for OKTA

Subscription gross margin: 88% for PVTL vs. 78% for OKTA

OKTA has a wider operating loss though OKTA is closing the free cash flow negative gap quickly.

OKTA doesn’t have as much customer concentration as it is spread out over 4,000 customers.

Subscription revenue growth: 73% for PVTL vs. 67% for OKTA

Market Cap: PVTL 4.7 billion vs. OKTA 5.2 billion
Conclusion
These facts definitely lean towards PVTL I must say. Starting out I would’ve picked OKTA for sure, but these figures tell an interesting story.
PVTL’s subscription numbers are higher, growing more quickly, have a higher margin, cost less to market and yet, OKTA trades for a higher valuation. And this isn’t even counting PVTL’s additional $250 million in services revenue (which may not be worth a whole lot anyway though). Saul may be onto something…but what’s new!!
Very best,
Fish