Summary
Okta posted $200.4 million of revenue in its FY2021 second quarter, up 42.7% from the prior-year quarter. Gross profit was $149.3 million, and gross margin reached 74.5%, up 2.1 percentage points. The GAAP picture is still loss-making. Operating loss widened to $45.4 million, though operating margin improved to negative 22.6% from the prior-year quarter. Net loss widened to $60.1 million, and diluted EPS was negative $0.48.
Non-GAAP results were profitable. Non-GAAP operating income was $6.5 million, or 3.2% of revenue, against a non-GAAP operating loss in the prior-year quarter. Non-GAAP net income was $9.9 million, and non-GAAP diluted net income per share was $0.07. Free cash flow was $6.9 million, or 3.4% of revenue. Operating cash flow was $10.9 million, up sharply from the prior-year quarter. Capital expenditures were $2.7 million, up 24.1%. The wide gap between GAAP and non-GAAP outcomes comes largely from stock-based compensation and other adjustments.
The demand metrics held up. Remaining performance obligations were $1.43 billion, up 56.2% year over year. Current RPO was $684.5 million, up 48% compared with the second quarter of fiscal 2020. Calculated billings were $198.1 million, up 27% year over year, a slower rate than revenue growth. Current deferred revenue was $391.2 million, up 37.9%. Okta reported over 8,950 customers, and customers with annual contract value above $100,000 rose to 1,685 from 1,222 a year earlier. Management tied the quarter to cloud adoption, digital transformation, and zero trust security, three trends it says the pandemic accelerated.
Guidance for the third quarter of fiscal 2021 points to revenue growth of 32% to 33% year over year, a non-GAAP operating loss of $3.0 million to $2.0 million, and a non-GAAP net loss per share of $0.02 to $0.01, assuming roughly 129 million weighted shares outstanding. For the full fiscal year 2021, the company raised its outlook to revenue growth of 37% year over year, a non-GAAP operating loss of $13.0 million to $11.0 million, and a non-GAAP net loss per share of $0.03 to $0.01, assuming roughly 127 million weighted shares outstanding.
Management framed the outlook with caution. It expects near-term economic uncertainty as the pandemic unfolds, and it flagged longer sales cycles and delays in deals closing as possible headwinds for cash flow, remaining performance obligations, and billings growth. The company also listed a network or data security incident, service outages, and its ability to pay off convertible senior notes when due among the risks. Interest expense rose on the newer note issuances, and Okta recorded a small loss on early extinguishment of debt tied to the repurchase of 2023 notes.
The quarter shows a business scaling revenue quickly while still posting sizable GAAP losses, with the non-GAAP adjustments carrying the profit line. Billings growth of 27% trailed revenue growth of 42.7%, a gap worth watching because billings feed future revenue. The raised full-year outlook rests on demand holding through a period the company itself describes as uncertain. Large-customer growth and a remaining performance obligations balance of $1.43 billion support the case that enterprise identity spending remains a priority even in a difficult macro backdrop.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $200.4M | $182.9M | +9.6% | $140.5M | +42.7% |
| Gross profit | $149.3M | $134.4M | +11.1% | $101.7M | +46.8% |
| Gross margin | 74.5% | 73.5% | +1.0 pp | 72.4% | +2.1 pp |
| Research & development | $53.9M | $48.5M | +11.1% | $40.0M | +34.5% |
| Sales & marketing | $98.3M | $104.0M | -5.5% | $78.4M | +25.4% |
| General & administrative | $42.5M | $34.0M | +24.9% | $26.9M | +58.1% |
| Total operating expenses | $194.7M | $186.6M | +4.3% | $145.3M | +34.0% |
| Operating income (loss) | -$45.4M | -$52.2M | +13.0% | -$43.6M | -4.1% |
| Operating margin | -22.6% | -28.6% | +5.9 pp | -31.1% | +8.4 pp |
| Net income (loss) | -$60.1M | -$57.7M | -4.2% | -$43.0M | -39.8% |
| Net margin | -30.0% | -31.5% | +1.6 pp | -30.6% | +0.6 pp |
| Customers | 8,950 | 147,195 | -93.9% | 7,000 | +27.9% |
Risks
COVID-19 has materially affected how Okta and its customers operate, with offices temporarily closed, travel restricted, and events moved to virtual-only formats. The filing states the duration and extent of impact remains uncertain and could delay purchasing decisions, lengthen payment terms, reduce subscription contract value or duration, and affect customer attrition; MD&A also notes increased allowance for doubtful accounts and sales reserves due to uncertainty and concession requests.
Okta's sales cycles are lengthening in certain circumstances and becoming less predictable as it focuses on larger organizations and manages the COVID-19 environment. MD&A warns this could delay deals closing and create near-term headwinds for cash flow, remaining performance obligations, and billings growth.
Okta faces intense competition, especially from larger well-established companies, and names Microsoft as its principal competitor. Larger competitors can bundle identity functionality, sell at zero or negative margins, or use closed platforms to discourage adoption of Okta's products.
As a well-known identity and security provider, Okta is an attractive target for sophisticated nation-state and other attacks. A breach of customer data or of systems secured by Okta's products could create significant liability, service disruptions, reputational harm, and costs that its cybersecurity insurance may not fully cover.
The conditional conversion feature of Okta's 2023 Notes was triggered as of July 31, 2020, making them convertible by holders between August 1, 2020 and October 31, 2020, and the notes were classified as current liabilities. Future conversions could require cash settlement or dilute stockholders.
Okta is subject to evolving privacy and data security laws, including the CCPA that took effect January 1, 2020 and the CPRA that qualified for the November 2020 ballot, plus data residency and FedRAMP obligations. Noncompliance could lead to enforcement, fines, private litigation, and increased compliance costs.
Okta's headcount grew from 1,943 employees as of July 31, 2019 to 2,489 as of July 31, 2020, placing significant demands on management and operational resources. The filing says failure to hire, develop, and retain sales personnel or manage growth could harm revenue growth and customer service.
SaaS KPIs
All quarters →Remaining Performance Obligations (RPO)
Current Remaining Performance Obligations (cRPO)
Free Cash Flow Margin
Non-GAAP Gross Margin
Non-GAAP Operating Margin
Customers with annual contract value (ACV) above $100,000
Total Customers
Calculated Billings
Summary, forecast, risks and KPIs are extracted from Okta, Inc.'s SEC filings for Q2 FY2021 (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.