2017 Tech IPO Okta Reports Earnings, Talks Growth

Shares of Okta are up nearly five percent in after-hours trading today after the enterprise identity management company reported its fiscal first-quarter earnings.

Okta, a 2017 technology IPO, recently sold $300 million of convertible debt under unicorn-era terms. Heading into its earnings report, therefore, the firm already had a head of steam built up.

Its financial report beat expectations. Analysts had anticipated Okta to report an adjusted $0.16 per share loss off $78.8 million in revenue. Okta accrued a smaller $0.09 per-share adjusted loss off revenue of $83.6 million.

The company also posted positive operating cash flow of $4.0 million, a nearly $14 million swing compared to the year-ago period. The company also reported a dusting of positive operating cash generation in the sequentially preceding quarter, giving Okta two in a row.

Among SaaS companies, positive operating cash flow is a critical moment. It is when the software company in question becomes Pretty Damn Hard To Kill. It’s somewhat analogous to SaaS startups reaching the $10 million ARR mark, but for older subscription companies.

In its first-quarter report, Okta reported that it expects its revenue for the full fiscal year of $353 million to $357 million, leading to an adjusted loss of $0.54 to $0.58. Analysts had forecast $347.1 million and an adjusted loss of $0.64 per share.

Going Abroad

In addition to its earnings report, Okta announced several new offices and an increase to its Silicon Valley area presence today. To chew over both the earnings and the expansion, Crunchbase News caught up with Okta COO Frederic Kerrest on the phone.

Asked about the firm’s new offices and how they were selected, Kerrest noted that new regional footprints could be “lagging indicators” of where the firm is growing. That’s reasonable enough. What the company’s new office locations tell us in a sense, then, is where identity management is seeing material penetration. Okta now has offices in Paris, Stockholm, and DC.

Okta’s recent expansion fits with its quick revenue growth, which in its most recent quarter came in just under 60 percent. That topline expansion was interesting, given the company’s intense competitive landscape. I asked Kerrest about the size of the market that Okta sells into, and he landed on a number north of $15 billion, depending on how you measure the market. More broadly, he detailed his view on the expansion of cloud software as a percentage of the larger enterprise software market.1

In his view, cloud and SaaS have picked up a double-digit share of the larger enterprise software market, but a percentage share that begins with a one. That means that there’s room to run. We’ll see how much of that ground Okta can cover in its next earnings report.

  1. Notably, “lagging indicator” as a bit of business speak is popular at the moment; another good example of the trend is Microsoft’s CEO calling revenue lagging indicator that follows usage. Therefore, offices are the true lagging indicator of rising product usage.

iStockPhoto / Oksana Raievska

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