Okta Reports 59 Percent Subscription Growth in Q2 for FY2019
The company also saw growth in customers with annual recurring revenue over $100,000, a 55 percent increase year-over-year.
Okta (NASDAQ: OKTA) may not be a household name now, but it could be based on the company’s financial results for its second fiscal quarter of 2019 for the period ended July 31, 2018. Among the enterprise-grade, cloud-based identity management service’s impressive results is total revenue of $94.6 million, a 57 percent increase year-over-year and subscription revenue of $87.9 million, a 59 percent increase year-over-year.
“We continued to see momentum across our business in the second quarter of the fiscal year, with year-over-year subscription revenue growth of 59 percent, including particular strength in the enterprise,” said Todd McKinnon, Okta CEO, in a September 6 news release. “Growth in customers with over $100,000 annual recurring revenue accelerated to 55 percent year-over-year in Q2, which is a testament to the increasing strategic need for an identity solution as organizations move to the cloud. This need is pervasive and imperative, and I believe we are in the early stages of capitalizing on this high growth opportunity.”
Other highlights for the quarter include the following:
- Subscription revenue represents 92.9 percent of total revenue. Professional services and other revenue makes up the remainder.
- Net cash used in operations was $5.3 million, or 5.6 percent of total revenue, compared to $6.2 million, or 10.4 percent of total revenue, for the same period last year.
- Operating cash flow margin improved 480 basis points and free cash flow margin improved 540 basis points year-over-year.
- GAAP operating loss was $38.4 million, or 40.6 percent of total revenue, compared to $26.2 million, or 43.5 percent of total revenue, for the same period last year.
- GAAP net loss was $39.2 million, or $0.37 per share, compared to $26.0 million, or $0.28 per share, for Q2 FY2018.
- Cash, cash equivalents and short-term investments were $536.3 million as of July 31, 2018.
The company provided the following guidance for the third quarter of fiscal 2019:
- Total revenue between $96 million and $97 million, representing growth of 43 percent to 45 percent year-over-year
- Non-GAAP operating loss of $14 million to $15 million
- Non-GAAP net loss per share of $0.46 to $0.48
Okta’s Identity Cloud software application is used by more than 5,150 companies including 20th Century Fox, JetBlue, News Corp, National Geographic, Adobe, NASDAQ, Nordstrom, Slack and Twilio.
Okta has seen a nice boost in its stock price since posting its financials on September 6. Stock closed that day at $60.20 per share. As of 3:32 p.m. EDT yesterday, Okta stock was trading at $73.50 per share.
Technology companies are seeing the value in transitioning to subscription models for sustainable revenue. Okta, while posting losses, is seeing strong subscription growth, and investors are recognizing the potential for Okta’s future. As online security and features like single sign-on and multi-factor authentication become more critical for enterprise-sized companies, companies like Okta are poised to support them and provide a path for long-term growth and sustainability.