PVTL vs. OKTA

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.

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

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

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

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

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

  6. 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

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Great work! Some differences between the two might be larger TAM for OKTA (broader application), higher competition for PVTL or how much further OKTA has to run compared to PVTL. From the little I’ve read on PVTL there seems to be a fair amount of competition and PVTL products are limited in their application. Just my .02

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