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OKTA

Okta NasdaqGS:OKTA Stock Report

Last Price

US$59.49

Market Cap

US$9.5b

7D

6.9%

1Y

-74.3%

Updated

05 Oct, 2022

Data

Company Financials +
OKTA fundamental analysis
Snowflake Score
Valuation4/6
Future Growth2/6
Past Performance0/6
Financial Health5/6
Dividends0/6

OKTA Stock Overview

Okta, Inc. provides identity solutions for enterprises, small and medium-sized businesses, universities, non-profits, and government agencies in the United States and internationally.

Okta Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Okta
Historical stock prices
Current Share PriceUS$59.49
52 Week HighUS$272.27
52 Week LowUS$52.75
Beta1.07
1 Month Change-7.95%
3 Month Change-42.61%
1 Year Change-74.35%
3 Year Change-49.67%
5 Year Change108.23%
Change since IPO153.04%

Recent News & Updates

Oct 03

Okta: The Market Leader In Identity Management At A Bargain Valuation

Summary Okta's acquisition of AuthO came with hidden pitfalls. The company was recently forced to noticeably reduce its forecast for the next 2 quarters in terms of revenues. The forecast reduction had most to do with unforced errors in consolidating the two sales forces. There is also some instability in senior executive ranks with a co-founder to take a sabbatical. Yet the company's valuation has become compelling and it remains the leading competitor in identity management, a hot part of the cyber-security landscape. Okta - Can this sow’s ear ever return to silk purse status? Stocks have been cratering! IT stocks have been cratering more! Even shares of cyber-security companies have fallen with the HACK (HACK) ETF, which incorporates the major cyber-security vendors down by 30% on a year-to-date basis. But Okta (NASDAQ:OKTA), the leader in the identity management category, has seen its shares fall far beyond average. Just how much? As of the close on Friday, Sept. 30th, the shares are down by no less than 76% since the start of the year, and by 81% since they made an all-time high less than a year ago. They were the worst performer on NASDAQ for the 3rd calendar quarter, falling 37% Compared to other leading cyber-security names such as CrowdStrike (CRWD), down 22% since the start of the year, Palo Alto (PANW), down 13% since the start of the year, and Zscaler (ZS) down 50% since the start of the year, the performance of Okta is far worse. Okta, by comparison, is all about pivots and turning, and rectifying past miscues of various kinds. I have recommended the shares of the leading cyber-security vendors as “safe havens” in the coming recession. The fact is that all of the 3 companies above have recently reported strong numbers and guided for acceleration in previously anticipated growth and margin performance. Cyber security is not optional, and cyber-criminal don’t recognize recessions. Threat surfaces keep enlarging, and the consequences of breaches continue to escalate. I recommend the shares of Okta from a contrarian perspective. As a former owner of the shares, I think it is fair to say that the operational performance of the company has left a bad taste. The company executed a strategic merger, with AuthO and then basically fumbled the ball in terms of achieving sales synergies that were a key justification for the substantial purchase price. But all of that is now on view, and the shares reflect the disappointment surrounding the fumble, and no longer reflect the potential synergies and accretion from the merger. That, to my mind, is what makes a contrarian opportunity. I don’t want to suggest that the cyber-security companies mentioned above are really quite analogs of Okta in terms of what they sell: CrowdStrike is still mainly a vendor of endpoint security although it recently has begun to sell an identity management module that has proven to be very successful. Zscaler sells zero trust protection for web based networks, while Palo Alto sells both a zero trust solution and next generation firewalls. None of those is identity management, and most users will need a combination of various solutions to develop reasonable protection against cyber-criminals. This is a very unforgiving market-the understatement of the year I suppose. Miscues are punished severely, while strong execution merely slows declines. Sadly, Okta has had its share of miscues including a couple of data breach and a flawed sales force integration strategy. For some years I had been an Okta skeptic. Valuation and lack of profitability had kept me away. And I had wondered about the ability of a company to create a competitive moat around the identity management space. It’s an application that has been around a very long time. But then about a year ago, in the wake of Okta's merger with AuthO, a principal competitor with advanced technology in part of the identity management space, i.e customer identity management, and a different sales focus which was centered on the developer community, I thought I saw an opportunity. I really saw an iceberg, and abandoned my position, down sharply, but down far less than the loss could have been, at the start of this year. I had been concerned that the breach the company had suffered in January, 2022 had been poorly handled and was not satisfied with the Okta’s response. And then reports of sales force integration issues began to emerge, and those were finally confirmed during the company’s latest conference call. I have had to wonder just how it is that a founder led company could mishandle such a key undertaking, which had to be a priority. As mentioned, and to be perfectly clear, I recommend the shares of Okta from a contrarian perspective. I think most of the problems the company has are on full view. And I believe most current investors are expecting that the company will reduce multi-year targets to some extent when it next reports results in early December. The company's latest guidance sets revenue growth goals at very modest levels. In this current quarter, its forecast is for sequential revenue growth of just greater than 2%-that metric was 11% in the same quarter of the prior year, followed by sequential growth of 5% in what will be a fiscal Q4 compared to 9% the prior year. Sequential revenue growth in the just reported quarter was actually 9%. The results of the quarter just reported were a 5% upside when compared to prior guidance for revenues, and non-GAAP profitability was noticeably improved as well compared to the prior forecast. The growth in RPO balances was below forecast, but apparently was mainly a function of duration, as the growth in cRPO, at 36% was certainly acceptable for that metric. That said, the cRPO balance rose just 6% sequentially, which was apparently below prior expectations. This guidance would seem to incorporate the current state of both economic headwinds and the specific sales execution challenges that the company has acknowledged. While self-evidently, the company’s management structure has seen some upheaval, and sales turnover is elevated, with much sales force dysfunction, presumably that is why the shares are valued as they are. There are many investment opportunities these days in the enterprise software space. Skepticism abounds about company forecasts. Just the other day, a forecast affirmation by Splunk (SPLK) brought on a relief rally, albeit of brief duration. The reason is that many commentators think that all forecasts are suspect and will have to be reduced. One well known hedge fund leader, Dan Niles, recently provided an interview forecasting that the estimates of software companies were still exposed and would see further cuts.. One economist, Nouriel Roubini, notorious or not, depending on the disposition of the reader, is forecasting a long and deep recession with the potential for a further 40% drop in the S&P. At the moment, while Todd McKinnon, the company CEO remains in his position, Fred Kerrest, the company’s COO is taking a one year sabbatical. The company has realigned its product development efforts with the former AuthO CEO leading product development efforts for customer identity while the CRO leads the development of workforce identity cloud products. Lots of moving parts, and signs of organizational stress. That said, the company’s CFO, Brett Tighe has been with the company for more than 7 years, and before that he was with Salesforce (CRM) in senior financial roles for 11 years. And the company’s President of Field Operations, Susan St. Ledger has been in her position for about 2 years, while the company’s Chief Revenue Officer, Steve Rowland has been in his position for 18 months. . Ms. St. Ledger held a similar role at Splunk for 4 years, while Rowland, not terribly surprisingly, is also a Splunk alumni. Can this leadership team right this troubled ship? Almost all companies make mistakes and miscues from time to time. The same obviously can be said about analysts except our mistakes are on full view every day from 4:01PM on and often earlier than that. Recently, the analyst at Guggenheim, John DiFucci upgraded the shares, while calling Okta, a company in disarray. Last week, the analyst at Cleveland Research, Ben Bollin, downgraded the shares from buy to hold. He feels that the company is facing more significant fundamental challenges, mainly competitive, and will have to reduce guidance more substantially than has already been the case. The company, during its most recent conference call, suggested it was revisiting its targets for FY ‘26 and I doubt that anyone either owning the shares or providing recommendations is doing so based on a target My reason to revisit the investment thesis is simply that identity management is an enormous, and under-penetrated market, and Okta remains the leading participant in the space. And I have a strategic disposition to increase my portfolio weighting in the cyber-security space, as I believe it will be the most recession resistant segment within IT. There are certainly other choices in the cyber-security space these days other than the 3 companies I already own. Checkpoint (CHKP) has shown some signs of life in terms of its operational performance, and shares of Rapid7 (RPD), now substantially rerated, have interest. CyberArk (CYBR), is also a competitor with a very competitive solution in what is called privileged asset management. But it is infrequent that a software category leader also has the potential for really significant returns. But I think that Okta is one such company. The questions, of course, are whether, and at what cadence, Okta’s leadership can restore its momentum and start to realize the opportunities inherent in the acquisition of AuthO and resume its share gains in the space. This is not a short-term project. Restoring a broken sales force, and crafting the right go-to-market strategy and messaging almost always takes longer than expected. But fortunately for Okta, cyber-security and identity management will be less affected by recessionary headwinds than most other segments of the IT space. That said, unlike most of the other cyber-security vendors, Okta did call out macro headwinds in its prepared remarks, although it is easy to question whether this was real, or an excuse for sales performance. I am not going to uncover some existential valuation metric regarding Okta that hasn’t been analyzed and dissected many times already. After falling by 75%, even while continuing to grow, the EV/S ratio has dropped noticeably below average for the company growth cohort, even when haircutting the company’s expected growth rate to a cohort of around than 30%. But the company is projecting just a modest free cash flow margin, and that is a significant negative in the current investment environment. Despite, or perhaps because of the valuation compression, the shares are not well loved by analysts. In addition to the Cleveland Research downgrade a couple of days ago, the MoffettNathanson analyst started coverage of the shares just a couple of days ago with a sell rating and a $71 price target. At the start of September, the Morgan Stanley analyst lowered his rating on the shares to hold, but set a $93 price target. One of the many reasons why I simply don’t set price targets on companies that I cover is that they frequently follow rather forecast stock prices. Of course, no one would reasonably have a price target 20%+ above a current valuation with a sell rating, and it more than a bit difficult to decipher the logic of a price target more than 60% above the current valuation with a hold rating. But one of the reasons I am reviewing Okta, and not something else, is that actually quantifying the outlook, and using some kind of DPV analysis, really does leave targets far, far above current levels. Therein lies the significant potential. That said, other analysts do see some of the opportunities inherent in category leadership in a key part of the enterprise cyber-security paradigm. The Jefferies analyst, Joseph Gallo, described Okta shares as a “one-of-a-kind” buying opportunity with 50% upside. Of course the upside percentage is greater now, with the shares down more than 15% since the date of the research report. I was recently accused of using touchy-feely analysis in my review of Adobe (ADBE). The problem with that recommendation, and this one as well, is that there isn’t some kind of specific valuation flag that says, “buy me.” One thing about buying wounded assets, as this one appears to be, is that forecasting the timing of a turn is basically impossible. When the sales force is fixed, and observers believe it to be fixed, the shares will most likely appreciate markedly in just a day or two. Much of that is because Okta is the kind of investment that can be very popular with hedge funds due to its size/liquidity and easy to understand functionality. Even now, over 80% of the shares are held by institutions. While that is a substantial percentage, there are no aggressive hedge funds listed as large holders, suggesting a potential significant source for share demand. Another thing to note. Okta is not going to achieve a turn-around from its current condition in a quarter or two. The company has suffered from heightened sales turnover, basically because many previous AuthO sales contributors have felt that their sales targets were unattainable and that the comp plan was deeply flawed. About the most that one might expect in the short term is that the company stops digging. Fixing sales execution issues, which means dealing with lots of unhappy people, doesn’t happen at the flip of a switch. The odds are that Okta will right its ship. I have been surprised that a company of this stature, having a clear priority, which was to create a unified sales platform, failed to do so in a timely fashion. About the most I can say is that this is the opportunity to do so is what is being presented to subscribers/readers at this point. Finally, I should mention Okta uses stock based compensation, and lots of it, and there are readers and commentators who refuse to consider companies using SBC. One of the things that need to be noted about SBC is how the calculation works out for that metric in particular quarters. SBC is calculated based on when an option is vested and not when an option is granted. Because of last year’s acquisition of AuthO, the level of options reaching their vesting conditions has increased. On the other hand, that increase is abating, and thus SBC expense fell year-on-year in the quarter recently reported, and it was flat sequentially. But it is still elevated at 38% of revenues, although the ratio will almost inevitably decline going forward, as the company has moderated its hiring plans. The reality is that SBC is tightly correlated with the number of hires, so a decline in hiring, as the CFO foreshadowed in the latest conference call, will lead to lower SBC. Since I do not use GAAP estimates or data in addressing valuation, it is necessary to adjust estimates and projections for dilution. This company does forecast outstanding shares on both a quarterly and an annual basis. Based on trends, I use annual dilution of 3.5% in calculating valuation metrics. Macro headwinds: Just how much of the guidance shortfall is a function of a deteriorating economy There is obviously lots to consider when a company which has achieved an organic growth rate in the high 30% range (actually in the mid 40% range-all organic-last quarter) for some time, sees growth atrophying to the mid-20% range in a single quarter. Looking at both Glassdoor reviews and reviews from Best Place to Work, Okta’s evaluations are fairly typical, maybe a bit above average for an relatively large enterprise software company. While Okta’s management did call out macro headwinds in its prepared remarks on this latest conference call as one reason for its reduced guide, management went on to say that the preponderance of its guide down was a function of sales integration, and the concomitant issue of elevated sales turnover. At some level, I would suggest that the scenario being portrayed is quite similar to many of the problems that had upended the Alteryx (AYX) growth outlook before the company took some hard steps and remediated the problems that had crippled its growth. I think at this point almost all investors are aware of demand headwinds for most IT vendors. The company wound up reducing its guidance; in terms of revenues, the guide down for the last 6 months of the year was about 2% ($17 million). It might be noted that because this guide down was 2% and not some considerably greater number, the company’s forecast for its full year non-GAAP operating loss didn’t change, although this was more a factor of the Q2 beat on that metric than any dramatic change in the trajectory of opex. The company suggested that the macro headwinds being experienced weren’t all that substantial, at least at the time that guidance was provided. The company is forecasting that it cRPO balance will increase by 3% sequentially, and that is where the issues of sales force integration and macro headwinds are most visible. While cRPO has its own limitations as a proxy for current bookings, it is the best metric available to portray the strength of demand growth, and the forecast reflects a sharp slowdown in expected sales performance. Although it is difficult to really know, I imagine many investors believe that there are additional shoes to drop with regards to Okta’s guidance. And despite the published consensus that calls for 28% growth in what will be FY ’24, I doubt that many analysts covering the company really expect that kind of performance, although I think the likely trajectory of expected margin improvement as shown by the 1st call consensus will prove to be too conservative. Obviously the question was raised during the conference call. The answer isn’t particularly surprising: Josh Tilton Hey, guys. Thanks for squeezing me in. Just a quick one for Brett. Given all the challenges that you guys mentioned, what gives you the confidence that you're not going to have to take numbers down again in the back half of the year? Brett Tighe Look, we've baked everything in that we know at this point, right? We've taken into account from regardless of what number you're looking at, it's current RPO, revenue, billings, we baked in those headwinds that we've talked about today, whether it be the sales integration issues we've talked about the attrition or even the macro. So we do feel confident in the guidance and taking a similar approach and being very prudent about that like we have in the past. Okta’s basic issues and how the company is moving to fix its problems The most significant issues for this company has essentially been that of sales force execution, and go-to-market messaging. These are the issues that have upended revenue projections for now. Those kinds of errors should never happen as they are entirely within the control of the company. That said, were there not these issues, the shares would never have imploded to this valuation, even in this toxic market for growth shares. I believe that the greatest percentage returns are going to come from identifying those companies with a strong competitive position in a hot space that is generally recession resistant and that is what Okta is, despite the unforced miscues. The CEO had much to explain in terms of what has been happening to Okta and how it can be fixed. One issue, which seems to be very basic, relates to defining which product within the Okta offering is appropriate for which use case. There is overlap between identity management for employees and customer identity management and apparently the overlap has led to salesforce dissension and elevated turnover. The problem surfaced in the wake of combining the two sales forces at the start of this current fiscal year. Okta, before the merge, had a solution for customer identification, as well as a solution for employee identification, essentially its core business. AuthO only focused on identity management solutions that are incorporated by developers into web sites that customers access. The customer identity space is newer, and enjoys stronger growth. The TAM of both spaces is comparable. AuthO certainly has had marketplace momentum in the customer space, most often called CIAM (customer identity access management), and that continued long after the merger. When the sales forced were merged, it became very difficult to match use cases with solutions. The company needed to offer a single customer identity solution, and that solution needed to be transcendent for all B2B SaaS applications that developers are building. While it sounds as though it ought to be a simple problem to remediate, like many other things the devil is in the details, and apparently, the details were not carefully considered in advance of combining the two sales forces. Even on the conference call, after explaining about the two product families that are offered by Okta, some analysts were a bit confused about how the integration of the two sales forces might actually work in practice. There was a need to consolidate and train the sales forces with messaging that identified which solution was appropriate for which use case. One of the advantages that Okta has is that it is a platform neutral solution that offers enterprises the opportunity to optimize their identity management paradigm by standardizing on a single vendor. To sell that paradigm, the company has to reach the CEO level of its prospects to explain why identity management of both customers, and of a workforce are priorities that cannot be properly handled by software in which identity management is an afterthought. The message is simple; it is desirable to partner with a vendor who can offer the whole range of identity management solutions on a multiplicity of cloud deployments and for many different use cases. It seems obvious from afar, but part of the sales force integration issue was dysfunction in Okta’s go-to-market sales motion. At least the company has identified the problem; fixing the sales motion is not going to happen instantaneously but is more of a process. The most visible element of the integration issue comes from the salesforce attrition/turnover rate. Depending on the place in the economic cycle, Okta indicated it had averaged about 15% turnover or a bit less in the years before the pandemic. Turnover is now a bit greater than 20%. And much of that turnover has been amongst the former salespeople of AuthO. Here is some of the comment from Todd Mackinnon specifically on the issue. Like if you're working for Auth0, this pre-IPO company your -- it's smaller, your territory is probably eight states in the US. And now you're working for Okta and you're expected -- as of the first of this year, you're being asked to sell to these multiple buyers with multiple products and your number of states or your territory really got smaller, because we have this much more scale that sales team. I could see why some of them decided to go maybe work for a smaller company and so forth. I have to confess that in listening to that part of the conference call, and contrasting it with my own experience, I got quite agitated. What’s being described is a rookie mistake, and seems… well the term unforced error comes to mind. I can personally guarantee that the combination of smaller territories with an aggressive hiring plan that will make territories even smaller will inevitably lead to massive sales turnover because salespeople can’t see how they will be able to achieve objectives and make any money-no commission accelerators to be found. About the best thing about that is that it is relatively easy to fix, and from what I gleaned from the conference call, the company is taking steps to remediate that issue. Again, from Mr. Mackinnon: But we're starting to see a lot of these trends reverse already, which is great. We've talked about a lot of the things we're doing. I'm sure those are having some effect, although some of them are recent. But just in terms of the industry, I think a lot of small companies; especially the prospects don't look as good. The valuations aren't as high. The money is not flowing there as much as it was. I've already seen a few go-to-market folks that left for smaller companies, and they've come back and the grass wasn't always greener. While I won’t accuse the rest of the answer as being the most articulate, it probably is reflecting some early trends in which salespeople are discovering that the environment has changed, and there prospects are currently better in a larger, more stable organization than in a start-up whose prospects of going public any time soon are limited. It isn’t terribly surprising that AuthO’s sales force has been composed of risk-takers who wanted to bet on a huge pay day from an IPO, and when, instead, the company was bought, and they weren’t catered to, they went to another situation that appeared to have a similar upside. Without the potential income from an IPO, selling identity management for Okta is probably a more attractive alternative currently than had been the case recently, particularly after some remediation of the comp plan as management has spoken about. The other major issue is that of competition. Recently, Gartner held what it called an identity management conference. Yes, there really are such things as identity management summits. At the conference, some of the presenters and attendees talked about an increased presence by Microsoft (MSFT) in the space, and it was apparently these presentations that were a precipitating factor in the recent Cleveland Research downgrade cited earlier. The fact is, however, that the Microsoft solution is really focused on applications running in Azure. Microsoft has been in the space for almost 10 years at this point, and a company such as Microsoft that sells applications more or less has to have an identity management solution in order to be considered as a real vendor. Microsoft's solution was initially built for to be an on-prem product-there was no Azure back when the product was first launched. Although, of course, Microsoft has a cloud based solution, it is unlikely to have the competitive chops that Okta brings to this market. Most customers, at least those who are serious about identity management, are going to want a specialist vendor because almost inevitably they have a multiplicity of clouds, and they need to work with a vendor whose specialty is a multi-cloud environment-and that obviously is not Microsoft. Identity management can get far more complicated than it might seem, and when the subtleties are properly presented and explained, Okta’s position is very strong. But of course, the issue is carefully crafting the right message and making sure that sales reps are well trained to explain that message carefully and to the right audience. Okta’s problem isn’t that Microsoft had an enhanced set of functionality, but that the company needs to do a better job with trained reps presenting the benefits the company offers to the appropriate audience. Other presenters at Gartner's summit conference focused on what are called Identity Governance ('IGA') and Okta Privileged Access Management ('PAM') which are different sub-categories in the space, where Okta has introduced recent offerings. Of course I wouldn’t expect the CEO, especially given his role and history at Okta to ever admit to a competitive deficiency but I thought he response to the queries was credible and struck me as more likely to be accurate than some of what can be presented in Gartner forums. And so when I hear people say that IGA is IGA light, it's great because that means it's working. That means it's so simple that employees can do these access requests and improve these things just in their chat. They don't have to go to some legacy tool. It means that the integrations are a snap. It comes pre-integrated to thousands of apps. So I think there's -- I think you're going to -- I think the industry is going to see that first of all, IGA is much bigger than we think it is because the solutions have been constraining the size of the pie. It's kind of like everyone said that the ITSM market was very small in ServiceNow started, but a better product made the market bigger. I think you'll see a similar thing here. Investor concerns about competition aren’t going to abate just because of company presentations. And outsiders making some competitive assessment are always in a position of having to avoid sensational claims, or stories based on an agenda. I confess to the temptation myself; I know a couple of very satisfied Okta users in a large enterprise. But looking at the preponderance of the evidence, as best as I can, I don’t think Okta’s problems are competitive, but self-inflicted wounds stemming from very flawed strategies to integrate two dramatically dissimilar sales paradigms. Okta’s Opportunities - Identity management at a high level is required as part of a cyber-security solution There are two primary components to the access market, one having to do with the ability of employees to sign on to applications within their corporate firewalls, and the other market in which customers can sign on to manage their accounts and to order from vendors. There are obviously similarities between both markets, but until Okta bought AuthO competitors had focused on one segment or the other. As mentioned earlier, the key to Okta’s future operational performance is to present to CEO’s and other C-suite decision makers, the benefits they will enjoy by partnering with a leading vendor who has the most complete set of identity management solutions in both spaces and whose solutions are basically cloud-neutral. While market share data can be slippery at best, the Okta future is predicated on its ability to grab market share, and to achieve the kind of market dominance it enjoys in the Single User Sign-on market, a subset of employee identity management. The employee identity management market where Okta started is currently estimated to have revenues of $13 billion rising to $37 billion by the end of the decade. Identity theft use cases continue to rise. They actually increased 45% in 2020, and rose further last year. Just in North America, the cost of identity theft was said to be $56 billion, according to the study linked here. Attackers use machine learning to generate multiple variants of malicious code every day.

Sep 20

OKTA Stock: 50% Undervalued, But Demand Headwinds Might Send The Stock Lower

Summary Okta is the global leader in Identity and Access Management (IAM) for both workforce identity and customer identity (CIAM). Following a lower revenue guidance for 2022, the stock crumbled 30%. I’m doing a DCF valuation to see if the market is punishing Okta stock too hard considering its growth perspectives. Investment thesis Following the acquisition of Auth0, Okta (OKTA), the global leader in Identity and Access management ((IAM)), is experiencing difficulties in integrating the two sales teams. These difficulties, in conjunction with demand headwinds, are putting downwards pressure on the stock price, which might create an opportunity for long-term accumulation. Financials The most important aspect about a business's future is its revenue growth. To understand revenue better, we need to remember that Okta made a transformative acquisition in 2021, which led to a bump in its revenue growth. It acquired Customer identity vendor Auth0 in what was the biggest ever deal in the space. OKTA 10-Q Q2 2022 Okta's revenue grew nicely, 43% in Q2 but the company only guided for a 32% revenue growth for 3Q22. This came as a result of difficulties that Okta has in merging the two sales teams. Auth0 has a bottom-up developers first go-to-market strategy, which is different than Okta's top-down approach. The sales teams were integrated in 2022 and it looks like the synergies that Okta was hoping to get by combining these two teams will be delayed. However, Okta raised its guidance for FY 2023 and now expects 40% YoY growth, which remains impressive for its scale. There are only 5 companies with >$1 billion in revenue that are growing faster than Okta: SeekingAlpha.com Revenue is growing nicely considering Okta's scale and while there might still be room for improvement, the successful sales integration is the key to unlocking a lot of potential. The sooner the company can successfully integrate Auth0, the better. Gross Margin In terms of margins, gross margin is arguably the most important margin for a business. I generally try to avoid the low-margin, high turnover businesses because they carry a very high degree of risk. OKTA 10-Q Q2 2022 Okta has a high gross margin, that deteriorated following the integration of Auth0. Since it was growing faster, Auth0 has a much lower gross margin that Okta's core business. Still, the trend is improving, with the Gross margin touching 70% for the first time after the sale was completed. Operating margin OKTA 10-Q Q2 2022 Okta isn't profitable even when considering the adjusted Operating margin, which ignores all the stock-based compensation ((SBC)) expenses. In order to understand why the operating margin is so bad, let's analyze the operating expenses individually: OKTA 10-Q Q2 2022 All the operating expenses are higher than before the merger, with the sales & marketing being the most significant one. This proves that Okta's strategy is optimized for massive growth. The company spends really big amounts on S&M and R&D in order to bring more products to market and cross-sell to its existing customers. How can we tell if OKTA's ((GTM)) strategy is successful? In order to find out, let's look at a crucial operational metric, the customer acquisition costs ((CAC)). This shows how much Okta spends in order to acquire $1 of contractual value: ((CAC)) = S&M Expenses period n-1 / Net new RPO + Net new revenue OKTA 10-Q Q2 2022 Even with its great GTM strategy of Land-and-expand, Okta's sales efficiency crumbled in the first half of 2022. The company spent around $4.6 for every $1 of contracted revenue that it attracted. Moreover, the payback period has seen an all-time high of 38 months before going down to 18 months in the last quarter. The trend remains still very elevated and it is clear that Okta needs to rethink its sales efforts since the company is forced to deal with the "growth-first" strategy after acquiring Auth0. Rule of 40 As a way to keep expenses in check, management follows closely a great operating KPIs, called the Rule of 40.Rule of 40 tells us how fast Okta can grow without burning too much money. So, it's about growing fast while also keeping an eye for profitability. As long as the total is bigger than 40%, the company is executing well. Rule of 40 = YoY revenue growth + Operating margin / FCF margin Unfortunately for Okta, the Rule of 40 saw a major decrease in Q2, with the metric coming in slightly below the management's expectations: OKTA 10-Q Q2 2022 Free Cash Flow (or FCF) One of the most important aspects about a company's execution is its ability to generate free cash flow. Let's see how much free cash flow the company is generating: OKTA 10-Q Q2 2022 The cash flow trend for 2Q22 is a letdown since the company didn't manage to attain operating cash flow, as it set a new minimum of -5% FCF margin. And while you might think that's not so bad since Okta generated consistently cash flows during the last quarters, this is not true. Since the Free cash flow statement adds back all the stock-based compensation that the company pays to its employees, this makes it look like the company actually has FCF. However, if we take a look at the SBC amounts, there are much more significant than the FCF generated, so if we take these into account, Okta has yet to generate Free cash flow. OKTA 10-Q Q2 2022 Dilution Besides the fact that Okta doesn't generate FCF, there's another silent killer for shareholders, which is dilution. Okta diluted its shareholders on average 15.6% every year since it got listed, which means you would lose 15% of your ownership every year without doing anything. SeekingAlpha.com Key Performance Indicators (KPIs) Now let's get into the operating KPIs and see why I believe that Okta still has plenty of potential in spite of its not-so-great financials: Customers Even after one of its partners was hacked, Okta's brand remains strong as the company added around 220 customers with more than $100k in ARR in the last quarter. OKTA 10-Q Q2 2022 Net retention rate ((NRR)) The most important metric regarding customers is the Net retention rate. This shows how much do customers they like your platform and it's calculated as the net expansion of annual contract value ((ACV)) from existing customers over the preceding 12 months: Net Retention Rate = Annual Recurring Revenue (or ARR) / Annual Recurring Revenue (or ARR) from 12 months ago Okta maintained its NRR consistently above 120%. Generally, anything above 120% is a great value, especially considering Okta's scale so NRR is definitely a plus: OKTA 10-Q Q2 2022 Remaining Performance Obligations ((RPO)) Another crucial metric for software companies is the RPO. It consists of amounts that have not been recognized as revenue and offers a good image about the future revenue prospects (tells us how strong future demand is for Okta's services): RPO = Deferred revenue (billed, unearned revenue) + backlog (future performance obligation that hasn't been invoiced) OKTA 10-Q Q2 2022 Unfortunately for OKTA, RPO was relatively flat on a Q/Q basis, which confirms that demand for Okta's services is slowing down and we might see this trend persist in the next quarters. RPO is one of the metrics that I'm going to be following closely to see if Okta can get its momentum back. Management One crucial aspect about every business is its management. Okta is led by its CEO and co-founder, who is also the president of the board and owns around 5% of Okta, which proves that he has skin in the game. Another key to evaluate the team is how well does management deliver on its promises. Okta has an outstanding record as the company delivered on all 13 quarters since it got listed for both revenue and earnings: SeekingAlpha.com As a result, I believe that Okta's management is a plus and for now it looks like they are serving shareholders well (besides the HUGE SBC of course). Industry & expansion opportunities The cyber security industry is growing at a phenomenal pace because of the transition to a Zero Trust paradigm, as well as the migration towards a cloud-based network that will slowly replace the hardware networks: CyberArk.com The IMA space is a critical piece of the bigger Zero Trust movement (Step 1, verify every user). As a result, the total addressable market is huge: OKTA 10-Q Q2 2022 Right now, Okta is the market leader in the IMA space as confirmed by Gartner and Forrester and it seems like Okta is really well positioned to benefit from the significant market expansion. Moreover, because of the nature of the sector and its market position, Okta has plenty of opportunities to expand into adjacent markets: OKTA 10-Q Q2 2022 The first two, Identity Governance and Administration ((IGA)) and Privileged Access Management (or PAM) Okta will be rolled out in 2022 but they won't have any materially impact on the financial results. Still, these represent great opportunities for up-selling its existing customers and increase the potential for growth. As a summary, I love Okta's position in the market and the fact that it has many opportunities to expand. However, this comes at a price. And that's intense competition. Giving the large market opportunity, it's only logical that competition is intense. It is split between dedicated companies like CyberArk or OneLogin but also between deep-pocketed companies like Oracle, IBM or Microsoft. Risks Although Okta is a market leader and has achieved scale, there are still many risks involved with the company, starting with the most important one: the fact that the company doesn't have any real Free cash flow and it might take it a couple of years before it attains any level of real profitability / FCF while also growing fast. Secondly, Okta overpaid for Auth0 in a period where valuation multiples were very high and now carries around $5.4 billion on its balance sheet as Goodwill. This will probably be impaired soon and it seems like the synergies expected from this acquisition will be delayed. Moreover, one of Okta's partners got recently hacked. Although these are isolated events, they have a strong impact on Okta's brand from a potential customer / investor's perspective. Lastly, the stock is volatile and the market is now very fond of profitable companies. This is not the case for Okta so I expect that pain will continue for Okta's stock, which might create a good risk/reward for the future. Valuation & Technical Although Okta is the cheapest that is has ever been, let's look at what I believe to be the maximum price that you would pay for Okta: TIKR.com DCF valuation I believe that right now Okta is worth somewhere between $77 and $100 dollars, with an average price of $88 for the Base case. For the DCF analysis here are the assumptions that I've used: Created by Author Revenue CAGR of 20% between 2021 and 2031, higher than the 13.5% expected for the cyber security sector because of Okta's leading position in the IAM and CIAM fields. In terms of margins, the Base case implies that Okta's EBIT margin will become positive in FY2026. Since management estimated in the Q1 earnings report that Okta will achieve $4 billion in revenue in FY2026, I've used this estimate since management hasn't lowered it in the last earnings report.

Sep 13

Is Okta Stock A Buying Opportunity After Price Crashes Over 25%?

Summary Okta sold off over 35% after its recent earnings, and has rebounded slightly since then. That makes it very cheap relative to peers. There's still a lot to like about Okta's business, but also a lot that could be improved. Because of how management framed its recent earnings, there's too much uncertainty surrounding Okta at this point. Thesis Okta (NASDAQ:OKTA) is a leader in the lucrative cybersecurity industry, but multiple execution issues have plagued the company lately. At this point, Okta is a risky bet that will only pay off if management can improve the company's quality. Introduction I've been an Okta bull for a long time. I named it one of my top 10 stock picks for 2022 and also recommended the stock to members of Tech Investing Edge, my private investing community. It's been a tough ride, with the stock down 71% year to date, although it's somewhat consoling that my other top cybersecurity pick CrowdStrike (CRWD) is handily outperforming the S&P 500 year to date. In this article, I revise my Okta thesis to hold due to a very high uncertainty rating on the stock. I think that Okta has the most upside, but also the most downside, of top cybersecurity companies. If Okta can improve its execution, then it's one of the most undervalued stocks in the market today. But if not, then there is no path to profitability or future alpha generation. Cybersecurity Leaders Comparison Let's first take a look at the differences between Okta and its peers to better understand what I mean by execution and quality issues. Financials Ticker TTM Revenue Rev. Growth Rule of 40 Gross Margin R&D S&M P/S OKTA 1.5B 43% -12 72% 36% 61% 6 CRWD 1.6B 61% 51 74% 26% 42% 23 ZS 1.0B 63% 35 77% 27% 67% 21 Source: Financial Statements Comparing the three cloud cybersecurity leaders, it's clear why Okta is the ugly duckling. It has slower revenue growth and a terrible Rule of 40 score and thus deserves a lower multiple. No argument from me there. The key question is how much lower does Okta's multiple have to be for it to be an interesting investment. Structurally, there's no reason why Okta can't eventually become as high quality as CrowdStrike or Zscaler (ZS). All of Okta, CrowdStrike, and Zscaler have gross margins within the 72-77% range. Like its peers, Okta is an asset-light software business whose main expense is its employees. The main difference is that Okta has much higher R&D and S&M expenses compared to peers. Relative to CrowdStrike, Okta loses 29 points on the Rule of 40 due to these expenses. While Okta is probably multiple quarters from a turnaround - if one even comes - the good news is that it's not in immediate danger of bankruptcy. Their nearly $2.5B in cash and short term investments should fund their losses for at least a few more years even if they fail to improve when it comes to profitability. So, investors do have time to wait for a turnaround if they choose to stick with Okta. Competition A key question for the Okta thesis is whether these operating expenses can and will come down, without an adverse impact on revenue growth. Considering that gross margins aren't the issue, the other main consideration is whether Okta faces too much competition and thus needs to have these high operating expenses to fund its growth. Gartner As shown, Okta, CrowdStrike, and Zscaler are all leaders in their respective magic quadrants, with Microsoft being the only competitor listed ahead of Okta and CrowdStrike, and nobody ahead of Zscaler. In fact, the landscape for identity and access management looks much less crowded relative to CrowdStrike's endpoint protection platform sub-industry; Okta actually shows up in the leaders corner of its magic quadrant twice thanks to its acquisition of Auth0. Personally, I use Okta every day in my day job and it works very well. Instant login into all my work apps saves a lot of time and is more secure than alternatives. In my experience, Okta is a quiet and reliable service; it's never gone offline or prevented me from getting my work done. The same can't be said for alternatives I've used, even an in-house one developed by a much larger company. I'd actually argue that in theory, Okta has a wider moat than other cybersecurity leaders. If I want to make a new endpoint protection platform, I just build it and can sell almost immediately to customers. On the other hand, if I want to build an identity management platform, I first have to convince thousands of leading software products to integrate with me, and only then will any customers be interested in buying my product. Sure, other areas of cybersecurity benefit from network effects, but I believe that they're strongest in identity management. Thus, as far as I can tell, competition is no more of an issue for Okta than it is for its peers. That's another data point that supports Okta eventually getting on track. Valuation A key component of valuation is profitability. If Okta isn't spending excessively to fend off competition, then why is it so much less profitable than its peers? Well, I'm scratching my head about this one as well, and a key part of my thesis is that these expenses eventually come down. Fortunately, this quarter Okta's expenses did come in lower than expected due to slowing headcount growth and strong-than-expected revenue growth. The other key component is growth. While Okta's growth is lower than that of CrowdStrike and Zscaler, I expect the gap to narrow going forward as I don't think >60% growth is sustainable for Okta's peers in the long term. Meanwhile, there are signs that Okta's growth could be sustained above 30% for a while. That's what management guided to prior to this quarter. The current growth of 43% was supported by 26% growth in customer count and 35% growth in large customer count. Alongside a 122% dollar-based net retention rate, this level of growth sets Okta up well for years of strong top line performance. What does that mean for Okta's valuation? In the model I shared with Tech Investing Edge members, if Okta can sustain 28% revenue growth and eventually reach 15% profit margin, I believe that its fair value is $133. This is much lower than my fair value estimate at the start of the year, but still more than double its current price of $65. On the other hand, I believe that CrowdStrike and Zscaler are near their fair value today. That makes Okta the highest upside option, assuming they can deliver on my growth and profitability targets. Understanding The Reaction Okta stock sold off more than 35% after earnings. At first glance, there wasn't much cause for concern, as Okta posted a 5% revenue beat and 67% EPS beat, continuing a long streak of top and bottom line beats. They also slightly raised full year top and bottom line guidance. Based on these numbers, management probably could have spun these results as solid and within expectations. Instead, CEO Todd McKinnon opened the call with a mixed message: While the identity market opportunity remains healthy, our Q2 financial results were mixed. We produced better than expected profitability, but our top line metrics were not where we wanted them to be due to challenges related to the integration of the Auth0 and Okta sales organizations, as well as modest macro headwinds. Despite the mixed messaging, management once again reiterated the security incident earlier in the year hasn't had a material impact on Okta's business; that incident contributed heavily to Okta stock's recent slide nevertheless. They also said that macro issues are showing up a bit, but they don't appear to be as big of an issue for Okta as they are for less defensive companies.

Sep 01

If You Like Okta, Better Like It With Options

Summary Okta is down over -30% today on the back of poor forward guidance. The current front end options implied volatility has spiked, going over 70% for 1-month options. The article outlines a simple options strategy that can yield discounts to current spot levels of over 10% for investors looking to enter the name. This article covers options from our suite of products - we focus on macro portfolio allocation, CEFs, and yield-generating options strategies, targeting overall yearly portfolio returns of 9%+. Thesis Okta (OKTA) is down over -30% today on the back of poor forward guidance. That brings the stock price to over -70% year to date and to a level not seen since January 2019! The tech bubble is deflating under our very own eyes, but a long term investor might want to start dabbling in the stock with a very long term holding window. For said investor we are going to outline an options based strategy that provides for a 10% discount to spot prices or to annualized yields exceeding 100% if the stock stabilizes. Why implied volatility matters When stocks sell-off substantially, that moves up the most important options pricing factor, namely volatility. A high implied volatility results in very rich options premiums. A retail investor does not need to be an options trading guru to understand that there are several ways to purchase a stock: i) outright in the market at spot levels, ii) via various options strategies (delayed purchase). In this article we are going to describe a cash covered put strategy with a very short window which serves as a better way to enter a stock like OKTA which has seen such a steep sell-off as of late. The old adage "Do not catch a falling knife" is centered in our minds when looking at the OKTA chart. However, for long term investors who see value here we are outlining the fact that nobody can call a bottom accurately, and a covered put strategy provides for much better price entry points if the stock keeps sliding. What is the trade? We are putting forward a 1-month covered put options strategy that takes advantage of short end implied volatility that is exceeding 70% currently: Options Chain (Market Chameleon) Courtesy of Market Chameleon we can have a look above at the October 7, 2022 OKTA options chain. The trade we are proposing is to sell October 7 puts at a $65 strike for $6.75 per contract. Given OKTA's spot price of roughly $62 as of the writing of this article, that given a retail investor a 10% discount to the current spot price if the trade is triggered (i.e. ultimate purchase price is $58.3). What can happen? Scenario 1

Shareholder Returns

OKTAUS ITUS Market
7D6.9%5.8%4.4%
1Y-74.3%-33.9%-18.2%

Return vs Industry: OKTA underperformed the US IT industry which returned -33.9% over the past year.

Return vs Market: OKTA underperformed the US Market which returned -18.2% over the past year.

Price Volatility

Is OKTA's price volatile compared to industry and market?
OKTA volatility
OKTA Average Weekly Movement12.1%
IT Industry Average Movement8.0%
Market Average Movement6.9%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.8%

Stable Share Price: OKTA is more volatile than 75% of US stocks over the past 3 months, typically moving +/- 12% a week.

Volatility Over Time: OKTA's weekly volatility (12%) has been stable over the past year, but is still higher than 75% of US stocks.

About the Company

FoundedEmployeesCEOWebsite
20095,776Todd McKinnonhttps://www.okta.com

Okta, Inc. provides identity solutions for enterprises, small and medium-sized businesses, universities, non-profits, and government agencies in the United States and internationally. The company offers Okta Identity Cloud, a platform that offers a suite of products and services, such as Universal Directory, a cloud-based system of record to store and secure user, application, and device profiles for an organization; Single Sign-On that enables users to access applications in the cloud or on-premise from various devices; Adaptive Multi-Factor Authentication provides a layer of security for cloud, mobile, Web applications, and data; Lifecycle Management that enables IT organizations or developers to manage a user's identity throughout its lifecycle; API Access Management that enables organizations to secure APIs; Access Gateway that enables organizations to extend the Okta Identity Cloud from the cloud to their existing on-premise applications; and Advanced Server Access to secure cloud infrastructure. It also provides Auth0 products, including Universal Login that allows customers to provide login experience across different applications and devices; Attack Protection, a suite of security capabilities that protect from malicious traffics; Adaptive Multi-Factor Authentication that minimizes friction to end users; Passwordless authentication enables users to login without a password and supports in various login methods; Machine to Machine provides standards-based authentication and authorization; private Cloud that allows customers to run a dedicated cloud instance of Auth0; and Organizations that enables customers to independent configurations, login experiences, and security options.

Okta Fundamentals Summary

How do Okta's earnings and revenue compare to its market cap?
OKTA fundamental statistics
Market CapUS$9.50b
Earnings (TTM)-US$915.68m
Revenue (TTM)US$1.60b

5.9x

P/S Ratio

-10.3x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
OKTA income statement (TTM)
RevenueUS$1.60b
Cost of RevenueUS$496.35m
Gross ProfitUS$1.10b
Other ExpensesUS$2.02b
Earnings-US$915.68m

Last Reported Earnings

Jul 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-5.76
Gross Margin68.99%
Net Profit Margin-57.21%
Debt/Equity Ratio40.3%

How did OKTA perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is OKTA undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

  • Price-To-Sales vs Peers

  • Price-To-Sales vs Industry

  • Price-To-Sales vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for OKTA?

Other financial metrics that can be useful for relative valuation.

OKTA key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue5.9x
Enterprise Value/EBITDA-14.3x
PEG Ration/a

Price to Sales Ratio vs Peers

How does OKTA's PS Ratio compare to its peers?

OKTA PS Ratio vs Peers
The above table shows the PS ratio for OKTA vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPSEstimated GrowthMarket Cap
Peer Average12.4x
TWLO Twilio
4.2x21.0%US$14.2b
MDB MongoDB
12.9x23.4%US$14.0b
SWCH Switch
8.2x10.0%US$8.3b
NET Cloudflare
24.4x28.0%US$19.8b
OKTA Okta
5.9x21.4%US$9.5b

Price-To-Sales vs Peers: OKTA is good value based on its Price-To-Sales Ratio (5.9x) compared to the peer average (12.4x).


Price to Earnings Ratio vs Industry

How does OKTA's PE Ratio compare vs other companies in the US IT Industry?

Price-To-Sales vs Industry: OKTA is expensive based on its Price-To-Sales Ratio (5.9x) compared to the US IT industry average (2.5x)


Price to Sales Ratio vs Fair Ratio

What is OKTA's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

OKTA PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio5.9x
Fair PS Ratio10.1x

Price-To-Sales vs Fair Ratio: OKTA is good value based on its Price-To-Sales Ratio (5.9x) compared to the estimated Fair Price-To-Sales Ratio (10.1x).


Share Price vs Fair Value

What is the Fair Price of OKTA when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: OKTA ($59.49) is trading below our estimate of fair value ($156.39)

Significantly Below Fair Value: OKTA is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.


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Future Growth

How is Okta forecast to perform in the next 1 to 3 years based on estimates from 31 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


5.8%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: OKTA is forecast to remain unprofitable over the next 3 years.

Earnings vs Market: OKTA is forecast to remain unprofitable over the next 3 years.

High Growth Earnings: OKTA is forecast to remain unprofitable over the next 3 years.

Revenue vs Market: OKTA's revenue (21.4% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: OKTA's revenue (21.4% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: OKTA's Return on Equity is forecast to be low in 3 years time (1.1%).


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Past Performance

How has Okta performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-49.6%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: OKTA is currently unprofitable.

Growing Profit Margin: OKTA is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: OKTA is unprofitable, and losses have increased over the past 5 years at a rate of 49.6% per year.

Accelerating Growth: Unable to compare OKTA's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: OKTA is unprofitable, making it difficult to compare its past year earnings growth to the IT industry (19.2%).


Return on Equity

High ROE: OKTA has a negative Return on Equity (-16.79%), as it is currently unprofitable.


Discover strong past performing companies

Financial Health

How is Okta's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Stable Cash Runway

  • Forecast Cash Runway

Financial Position Analysis

Short Term Liabilities: OKTA's short term assets ($2.9B) exceed its short term liabilities ($1.2B).

Long Term Liabilities: OKTA's short term assets ($2.9B) exceed its long term liabilities ($2.4B).


Debt to Equity History and Analysis

Debt Level: OKTA has more cash than its total debt.

Reducing Debt: Insufficient data to determine if OKTA's debt to equity ratio has reduced over the past 5 years.


Balance Sheet


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: Whilst unprofitable OKTA has sufficient cash runway for more than 3 years if it maintains its current positive free cash flow level.

Forecast Cash Runway: OKTA is unprofitable but has sufficient cash runway for more than 3 years, due to free cash flow being positive and growing by 57.9% per year.


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Dividend

What is Okta current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Okta Dividend Yield vs Market
How does Okta dividend yield compare to the market?
SegmentDividend Yield
Company (Okta)n/a
Market Bottom 25% (US)1.6%
Market Top 25% (US)4.5%
Industry Average (IT)1.6%
Analyst forecast in 3 Years (Okta)0%

Notable Dividend: Unable to evaluate OKTA's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate OKTA's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if OKTA's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if OKTA's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as OKTA has not reported any payouts.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

1.7yrs

Average management tenure


CEO

Todd McKinnon (50 yo)

13.75yrs

Tenure

US$31,820,477

Compensation

Mr. Todd McKinnon serves as Chief Executive Officer of Okta at Auth0, Inc. since 2021. He co-founded Okta, Inc. in 2008 and has been its Chief Executive Officer since January 2009. From October 2003 to Feb...


CEO Compensation Analysis

Todd McKinnon's Compensation vs Okta Earnings
How has Todd McKinnon's remuneration changed compared to Okta's earnings?
DateTotal Comp.SalaryCompany Earnings
Jul 31 2022n/an/a

-US$916m

Apr 30 2022n/an/a

-US$982m

Jan 31 2022US$32mUS$306k

-US$848m

Oct 31 2021n/an/a

-US$683m

Jul 31 2021n/an/a

-US$534m

Apr 30 2021n/an/a

-US$318m

Jan 31 2021n/an/a

-US$266m

Oct 31 2020n/an/a

-US$241m

Jul 31 2020n/an/a

-US$232m

Apr 30 2020n/an/a

-US$215m

Jan 31 2020US$9mUS$306k

-US$209m

Oct 31 2019n/an/a

-US$189m

Jul 31 2019n/an/a

-US$155m

Apr 30 2019n/an/a

-US$152m

Jan 31 2019US$5mUS$306k

-US$125m

Oct 31 2018n/an/a

-US$118m

Jul 31 2018n/an/a

-US$121m

Apr 30 2018n/an/a

-US$108m

Jan 31 2018US$417kUS$285k

-US$110m

Oct 31 2017n/an/a

-US$105m

Jul 31 2017n/an/a

-US$94m

Apr 30 2017n/an/a

-US$88m

Jan 31 2017US$8mUS$248k

-US$75m

Oct 31 2016n/an/a

-US$87m

Jan 31 2016US$2mUS$236k

-US$76m

Compensation vs Market: Todd's total compensation ($USD31.82M) is above average for companies of similar size in the US market ($USD8.48M).

Compensation vs Earnings: Todd's compensation has increased whilst the company is unprofitable.


Leadership Team

Experienced Management: OKTA's management team is not considered experienced ( 1.7 years average tenure), which suggests a new team.


Board Members

Experienced Board: OKTA's board of directors are considered experienced (4.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

What is the ownership structure of OKTA?
Owner TypeNumber of SharesOwnership Percentage
State or Government52,5350.03%
Private Companies122,4730.08%
Individual Insiders8,549,5245.4%
General Public26,298,09216.6%
Institutions123,850,20078.0%

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 2.7%.


Top Shareholders

Top 25 shareholders own 54.44% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
8.71%
The Vanguard Group, Inc.
13,841,459$823.4m2.48%0.02%
8.08%
T. Rowe Price Group, Inc.
12,833,704$763.5m-7.28%0.09%
7.23%
BlackRock, Inc.
11,484,835$683.2m-6.08%0.02%
3.57%
Todd McKinnon
5,676,022$337.7m5.75%no data
2.74%
FMR LLC
4,357,434$259.2m19.12%0.02%
2.61%
Wellington Management Group LLP
4,139,538$246.3m183.87%0.04%
2.21%
First Trust Advisors LP
3,507,050$208.6m51.11%0.23%
1.82%
State Street Global Advisors, Inc.
2,898,370$172.4m-0.81%0.01%
1.67%
Sands Capital Management, LLC
2,657,882$158.1m0.92%0.48%
1.55%
Deer Management Company, LLC
2,461,821$146.5m-5.1%5.8%
1.35%
Allianz Asset Management AG
2,145,237$127.6m-10.81%0.11%
1.29%
Franklin Resources, Inc.
2,052,287$122.1m-5.82%0.05%
1.2%
Citadel Advisors LLC
1,908,765$113.6m516.88%0.17%
1.2%
Geode Capital Management, LLC
1,901,242$113.1m0.8%0.01%
1.14%
Jennison Associates LLC
1,804,757$107.4m0%0.1%
1.04%
American Century Investment Management Inc
1,644,870$97.9m-0.15%0.07%
0.97%
Jacques Kerrest
1,546,383$92.0m0.15%no data
0.91%
Champlain Investment Partners, LLC
1,443,267$85.9m21.92%0.54%
0.89%
Janus Henderson Group plc
1,411,378$84.0m8.69%0.05%
0.82%
Steadfast Capital Management LP
1,299,598$77.3m139.9%1.71%
0.74%
J.P. Morgan Asset Management, Inc.
1,177,551$70.1m18.51%0.01%
0.7%
UBS Asset Management
1,115,940$66.4m19.86%0.01%
0.69%
Norges Bank Investment Management
1,099,349$65.4m0%0.01%
0.68%
Renaissance Technologies LLC
1,077,000$64.1m134.79%0.08%
0.63%
Legal & General Investment Management Limited
1,007,600$59.9m6.28%0.02%

Company Information

Okta, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Okta, Inc.
  • Ticker: OKTA
  • Exchange: NasdaqGS
  • Founded: 2009
  • Industry: Internet Services and Infrastructure
  • Sector: Software
  • Implied Market Cap: US$9.496b
  • Shares outstanding: 158.87m
  • Website: https://www.okta.com

Number of Employees


Location

  • Okta, Inc.
  • 100 First Street
  • Suite 600
  • San Francisco
  • California
  • 94105
  • United States


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
OKTANasdaqGS (Nasdaq Global Select)YesClass A Common StockUSUSDApr 2017
0OKDB (Deutsche Boerse AG)YesClass A Common StockDEEURApr 2017
0KB7LSE (London Stock Exchange)YesClass A Common StockGBUSDApr 2017
OKTA *BMV (Bolsa Mexicana de Valores)YesClass A Common StockMXMXNApr 2017
O1KT34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 20 REPR 1 COM NPVBRBRLOct 2020

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/10/05 00:00
End of Day Share Price2022/10/05 00:00
Earnings2022/07/31
Annual Earnings2022/01/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.