Summary
Okta closed its fiscal 2022 second quarter with revenue of $315.5 million, up 57.4% from the prior-year quarter, according to the reported figures. Gross profit rose 43.6% to $214.4 million. The top line benefited from demand for workforce and customer identity, and from Auth0, which closed on May 3, 2021. The company ended the quarter with more than 13,050 customers. Customers with annual contract value above $100,000 totaled 2,610, compared with 1,685 a year earlier. Dollar-based net retention for the trailing 12 months was 124%, compared with 121%. RPO was $2.24 billion, up 56.8% year over year. Current RPO was $1.10 billion, up 60%. Calculated billings were $362 million, up 83%. Excluding billings process improvements, calculated billings would have been $345 million, up 74%.
GAAP profitability weakened. Gross margin fell to 68.0% from 74.5%, while gross profit still increased to $214.4 million. The operating loss widened to $263.4 million from $45.4 million, and operating margin was negative 83.5%, compared with negative 22.6%. Net loss widened to $276.7 million from $60.1 million. Diluted loss per share was $1.83, compared with $0.48. The company said the lower gross margin reflected Auth0 revenue, which carries a higher relative cost and a lower gross margin, plus higher amortization of acquired developed technology. Non-GAAP operating loss was $25 million, or 8% of total revenue, compared with non-GAAP operating income of $6 million, or 3% of total revenue.
Operating cash flow was negative $2.6 million for the quarter, down from positive $10.9 million in the prior-year quarter. Year to date, operating cash flow was $53.5 million, up 7.7% from $49.6 million. Capital expenditures were $0.8 million for the quarter, down 71.7% from $2.7 million. Free cash flow was negative $3.8 million for the quarter, compared with $6.9 million in the prior-year quarter. Deferred revenue, current portion, was $721.8 million at July 31, 2021, up 84.5% year over year.
Management raised its outlook for fiscal 2022. For the third quarter of fiscal 2022, Okta expects total revenue growth of 50% year over year, a non-GAAP operating loss of $35 million to $34 million, and a non-GAAP net loss per share of $0.25 to $0.24, assuming weighted-average shares outstanding of approximately 153 million. For the full year fiscal 2022, the company expects total revenue growth of 49% to 50% year over year, a non-GAAP operating loss of $119 million to $114 million, and a non-GAAP net loss per share of $0.77 to $0.74, assuming weighted-average shares outstanding of approximately 147 million. The outlook includes the expected contribution from Auth0.
Risks include uncertainty around COVID-19 and variants, longer sales cycles, delays in deals closing, and near-term headwinds for cash flow, RPO and billings growth, along with potential impacts on revenue growth and other key metrics on a trailing basis. Integration of Auth0 may fail to deliver expected synergies and efficiencies. Other risks include a network or data security incident, service outages, deteriorating global economic conditions, and the ability to pay off convertible senior notes when due. On August 2, 2021, Okta completed the acquisition of atSpoke for total consideration of $89.0 million in cash and Class A common stock.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $315.5M | $251.0M | +25.7% | $200.4M | +57.4% |
| Gross profit | $214.4M | $184.9M | +16.0% | $149.3M | +43.6% |
| Gross margin | 68.0% | 73.7% | -5.7 pp | 74.5% | -6.5 pp |
| Research & development | $122.4M | $68.9M | +77.8% | $53.9M | +127.2% |
| Sales & marketing | $198.3M | $146.5M | +35.4% | $98.3M | +101.7% |
| General & administrative | $157.1M | $60.2M | +161.0% | $42.5M | +269.6% |
| Total operating expenses | $477.8M | $275.6M | +73.4% | $194.7M | +145.4% |
| Operating income (loss) | -$263.4M | -$90.7M | -190.5% | -$45.4M | -480.4% |
| Operating margin | -83.5% | -36.1% | -47.4 pp | -22.6% | -60.9 pp |
| Net income (loss) | -$276.7M | -$109.2M | -153.3% | -$60.1M | -360.4% |
| Net margin | -87.7% | -43.5% | -44.2 pp | -30.0% | -57.7 pp |
| Diluted EPS | -$1.83 | -$0.83 | -$1.00 | — | — |
| Customers | 0 | 10,650 | -100.0% | 8,950 | -100.0% |
Risks
The May 3, 2021 Auth0 acquisition, with estimated transaction value of approximately $6.5 billion, carries integration and synergy risk. MD&A reports acquisition and integration-related expenses of $29.6 million in FY2022 Q2 and $36.6 million YTD, and risk factors warn we may not realize anticipated benefits or could lose key employees and customers.
GAAP gross margin decreased to 68.0% in FY2022 Q2 from 74.5% in FY2021 Q2, and MD&A says subscription gross margin decreased to 72% from 79%, primarily due to Auth0 revenue carrying higher relative cost and lower gross margin plus amortization of acquired developed technology.
Risk factors state sales cycles are lengthening and becoming less predictable, especially as we focus on larger organizations and in light of COVID-19. MD&A says longer sales cycles have been experienced and could delay deals closing, creating near-term headwinds for cash flow, RPO and billings growth.
GAAP operating loss widened to $263.44 million in FY2022 Q2 from $45.39 million in FY2021 Q2, and net loss widened to $276.68 million from $60.10 million. Risk factors state we have a history of losses and expect to incur losses for the foreseeable future.
The conditional conversion feature of the 2023 Notes was triggered as of July 31, 2021, making them convertible at holders' option between August 1, 2021 and October 31, 2021, and the 2023 Notes were classified as current liabilities as of July 31, 2021. Risk factors say servicing debt may require significant cash and we may not have sufficient cash flow from operations.
Risk factors state competition is intense, especially from larger well-established companies, and identify Microsoft as our principal competitor. Larger competitors can bundle products, sell at zero or negative margins, or leverage existing supplier relationships.
Risk factors note our former Chief Financial Officer stepped down and an interim Chief Financial Officer was appointed effective June 1, 2021, and that competition for engineers and sales professionals is intense. Headcount grew to 4,176 employees as of July 31, 2021 from 2,489 as of July 31, 2020.
Risk factors say any material decline in our Dollar-Based Net Retention Rate would harm future results, and customer growth could fall below expectations as we focus on sales to the world's largest organizations. Dollar-based net retention rate was 124% for the trailing 12 months ended July 31, 2021.
Risk factors and MD&A highlight continuing COVID-19 uncertainty, including variants and vaccine distribution, which has affected IT spending and could delay purchasing decisions, lengthen payment terms, or reduce subscription contract value or duration. MD&A says future growth may be impacted by longer sales cycles and near-term headwinds for cash flow, RPO and billings growth.
SaaS KPIs
All quarters →Remaining Performance Obligations (RPO)
Current Remaining Performance Obligations (cRPO)
Non-GAAP Gross Margin
Total Customers
Calculated Billings
Customers with ACV Above $100,000
Summary, forecast, risks and KPIs are extracted from Okta, Inc.'s SEC filings for Q2 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.