Summary
Okta's FY2022 Q1 revenue rose 37.3% year over year to $251.0 million. Gross profit rose 37.6% to $184.9 million, and gross margin was 73.7%, up 0.2 percentage points. The top line grew quickly, but operating loss widened to $90.7 million and net loss widened to $109.2 million. Diluted EPS was -$0.83, a wider loss than the prior-year quarter. Operating margin was -36.1%, down 7.6 percentage points. The company continued to spend heavily on growth, and the gap between revenue growth and profitability remained wide. Management said broad-based demand for both customer and workforce identity solutions drove the quarter. Okta sees an $80 billion identity market opportunity and expects Auth0 to help it capture more of that market.
Cash generation improved. Operating cash flow rose 44.9% to $56.1 million. Capital expenditures fell 58.9% to $3.3 million. Free cash flow was $52.8 million, or 21% of total revenue. Deferred revenue rose 56.4% to $613.2 million. Remaining performance obligations rose 52.4% to $1.89 billion. Current RPO was $899 million, up 45% year over year. Calculated billings were $364 million, up 74%, but excluding billings process changes they would have been $293 million, up 40%. The company had more than 10,650 customers and over 7,000 integrations. Customers with annual contract value above $100,000 totaled 2,075. Dollar-based net retention rate was 120%. Okta said its revenue is relatively predictable because of its subscription-based business model. The company typically invoices customers in advance in annual installments.
Non-GAAP results showed a smaller loss. Non-GAAP operating loss was $16 million, and non-GAAP net loss was $13 million. Non-GAAP net loss per share was $0.10. Non-GAAP gross margin was 78%. Guidance for the second quarter of fiscal 2022 includes the expected contribution from Auth0, net of purchase accounting adjustments. The company expects a non-GAAP operating loss of $55 million to $53 million and non-GAAP net loss per share of $0.36 to $0.35, assuming about 154 million weighted-average shares. For the full fiscal year 2022, Okta now expects a non-GAAP operating loss of $172 million to $167 million and non-GAAP net loss per share of $1.16 to $1.13, assuming about 150 million weighted-average shares. Okta has not reconciled forward-looking non-GAAP operating loss and non-GAAP net loss per share to GAAP because certain items are out of its control or cannot be reasonably predicted.
Auth0 closed on May 3, 2021. Total consideration net of acquired cash was about $6.5 billion, including about 20.4 million shares of Class A common stock, $268.7 million in cash, and equity awards with a fair market value of $700.2 million. Okta held back $325.0 million for indemnification obligations and established a $25.0 million retention pool. The acquisition brings integration risk. The company also announced that CFO Mike Kourey will step down effective June 1, 2021. Brett Tighe, senior vice president of finance and treasurer, will serve as interim CFO while Okta searches for a permanent replacement. Management flagged several risks. COVID-19 could still affect results. Longer sales cycles could delay deals and create near-term headwinds for cash flow, RPO and billings growth. Other risks include a network or data security incident, service outages, convertible notes coming due, and global economic deterioration. Okta also noted that billings process changes had a favorable effect on calculated billings in the quarter. The company said the Auth0 acquisition will be reflected in its financial information beginning in the second quarter of fiscal 2022. Okta expects future costs to increase as it returns to in-person sales formats and events.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $251.0M | $234.7M | +6.9% | $182.9M | +37.3% |
| Gross profit | $184.9M | $173.6M | +6.5% | $134.4M | +37.6% |
| Gross margin | 73.7% | 74.0% | -0.3 pp | 73.5% | +0.2 pp |
| Research & development | $68.9M | $62.3M | +10.5% | $48.5M | +42.0% |
| Sales & marketing | $146.5M | $115.2M | +27.2% | $104.0M | +40.8% |
| General & administrative | $60.2M | $50.7M | +18.7% | $34.0M | +76.8% |
| Total operating expenses | $275.6M | $228.2M | +20.8% | $186.6M | +47.7% |
| Operating income (loss) | -$90.7M | -$54.6M | -66.1% | -$52.2M | -73.7% |
| Operating margin | -36.1% | -23.3% | -12.9 pp | -28.6% | -7.6 pp |
| Net income (loss) | -$109.2M | -$75.8M | -44.1% | -$57.7M | -89.4% |
| Net margin | -43.5% | -32.3% | -11.2 pp | -31.5% | -12.0 pp |
| Diluted EPS | -$0.83 | — | — | — | — |
| Customers | 10,650 | — | — | 147,195 | -92.8% |
Risks
The completed Auth0 acquisition for approximately $6.5 billion net consideration creates integration, key employee retention, purchase accounting and unknown liability risks. MD&A states Auth0 results will begin affecting financial information in Q2 fiscal 2022.
MD&A states the company has experienced longer sales cycles, which may delay deal closings and create near-term headwinds for cash flow, RPO and billings growth. Risk factors also cite larger enterprise deals and less predictable sales cycles.
The 2023 Notes conditional conversion feature was triggered as of April 30, 2021, making them convertible between May 1 and July 31, 2021, and the 2023 and 2025 Notes were classified as current liabilities. Servicing convertible notes may require significant cash and could dilute stockholders.
Risk factors identify Microsoft as the principal competitor and warn that larger competitors may bundle identity functionality or sell at zero or negative margins. This could pressure pricing, revenue and gross margins.
Dollar-based net retention rate was 120% for the trailing 12 months ended April 30, 2021, compared with 121% in the prior-year period. Risk factors warn any material decline in this rate would harm future results.
The risk factors disclose that the Chief Financial Officer is stepping down and an interim CFO was appointed effective June 1, 2021. Competition for engineering and sales talent in the San Francisco Bay Area is intense.
Risk factors cite adverse general economic conditions, COVID-19 related recession and reductions in workforce identity and customer identity spending that may reduce demand and lengthen sales cycles. MD&A notes allowance for doubtful accounts and sales reserves increased slightly from pre-pandemic levels.
Risk factors state customer growth could fall below expectations, and as the company focuses on the largest organizations it does not expect customer growth to continue at the prior pace. This could cause the stock price to fall and lead to securities class action suits.
Privacy and data security laws such as GDPR and CCPA are evolving and may be interpreted inconsistently, increasing compliance costs and potential penalties. Some customers rely on FedRAMP authorization, which may require additional actions and expense.
SaaS KPIs
All quarters →Remaining Performance Obligations (RPO)
Free Cash Flow Margin
Free Cash Flow
Total Customers
Calculated Billings
Current Remaining Performance Obligations
Summary, forecast, risks and KPIs are extracted from Okta, Inc.'s SEC filings for Q1 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.