Okta, Inc. reports 46.8% revenue growth in FY2020 and 3.1 pp EBITDA Margin decline from -22.1% to -25.3%
03/05/2020 • About Okta, Inc. (
$OKTA) • By InTwits
Okta, Inc. reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Okta, Inc. is a fast growth stock: FY2020 revenue growth was 46.8%, 5 year revenue CAGR was 70.2% at FY2020 ROIC -16.1%
- The company operates at negative EBITDA Margin: -25.3%
- Okta, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 5.2%. Average EBITDA Margin for the same period was -33.1%
- Okta, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.8%. At the same time it's a lot of higher than industry average of 3.7%.
- CAPEX is quite volatile: $15m in FY2020, $20m in FY2019, $7m in FY2018, $6m in FY2017, $4m in FY2016
- The company has unprofitable business model: ROIC is -16.1%
- It operates with high leverage: Net Debt/EBITDA is 17.6x while industry average is 2.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Okta, Inc.'s Revenue jumped on 46.8%. Revenue growth showed small slowdown in FY20Q4 - it was 44.9% YoY. Revenue decline was accelerating on average at -15.6 pp per annum in FY2016-FY2020. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 3.1 pp from -22.1% to -25.3% in FY2020. EBITDA Margin stuck to a growing trend at 14.7 pp per annum in the last 5 years.
Gross Margin increased slightly on 1.2 pp from 71.6% to 72.8% in FY2020. Gross Margin followed a growing trend at 3.6 pp per annum in FY2016-FY2020. SG&A as a % of Revenue increased slightly on 1.4 pp from 75.9% to 77.3% in FY2020. SG&A as a % of Revenue followed a declining trend at -8.8 pp per annum in FY2016-FY2020.
Net Income margin decreased on 4.2 pp from -31.4% to -35.6% in FY2020. Net Income margin grew at 12.7 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
Okta, Inc.'s CAPEX/Revenue was 2.6% in FY2020. CAPEX/Revenue decreased slightly on 1.3 pp from 3.9% in FY2017 to 2.6% in FY2020. Average CAPEX/Revenue for the last three years was 3.4%.
Return on investment
The company operates at negative ROIC (-16.1%) and ROE (-63.5%). ROIC surged on 11.2 pp from -27.4% to -16.1% in FY2020. ROE decreased on 8.0 pp from -55.6% to -63.5% in FY2020. During FY2016-FY2020 ROIC bottomed in FY2017 at -498% and was growing since that time.
Leverage (Debt)
Debt level is 17.6x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in FY2020. Debt jumped on 164% while cash jumped on 74.3%.
Okta, Inc. has no short term refinancing risk: cash is higher than short term debt (461.2%).
Management team
The company's CEO Todd Mckinnon has spent 12 years with the company.
Financial and operational results
FY ended 01/31/2020
Okta, Inc. ($OKTA) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 85.9 | 160.3 | 256.5 | 399.3 | 586.1 | 46.8% |
| Gross Profit | 49.9 | 104.4 | 175.8 | 285.8 | 426.7 | 49.3% |
| SG&A | 97.1 | 148.8 | 216.8 | 303.1 | 453.2 | 49.6% |
| EBITDA | -73.1 | -78.6 | -104.9 | -88.3 | -148.0 | |
| EBIT | -76.0 | -83.1 | -111.9 | | | |
| Tax | 0.3 | 0.4 | -0.3 | | | |
| Net Income | -76.3 | -83.5 | -109.8 | -125.5 | -208.9 | |
| Stock Based Compensation | 9.8 | 17.1 | 49.9 | | | |
Balance Sheet
|
|---|
| Cash | 54.4 | 23.3 | 127.9 | 298.4 | 520.0 | 74.3% |
| Accounts Receivable | 23.0 | 34.5 | 52.2 | | | |
| Accounts Payable | 5.9 | 11.9 | 9.6 | | | |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 271.6 | 112.8 | -58.5% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 147.0 | 991.5 | 574.3% |
Cash flow
|
|---|
| Capex | 4.1 | 6.3 | 6.6 | 19.8 | 15.4 | -22.1% |
Ratios
|
|---|
| Revenue growth | 109.5% | 86.6% | 60.0% | 55.6% | 46.8% | |
| EBITDA growth | 28.6% | 7.5% | 33.5% | -15.8% | 67.6% | |
|
|---|
| Gross Margin | 58.1% | 65.1% | 68.5% | 71.6% | 72.8% | 1.2% |
| EBITDA Margin | -85.1% | -49.0% | -40.9% | -22.1% | -25.3% | -3.1% |
| EBIT Margin | -88.5% | -51.8% | -43.6% | | |
| SG&A, % of revenue | 113.0% | 92.8% | 84.5% | 75.9% | 77.3% | 1.4% |
| SBC, % of revenue | 11.4% | 10.7% | 19.4% | | |
| Net Income Margin | -88.8% | -52.1% | -42.8% | -31.4% | -35.6% | -4.2% |
| CAPEX, % of revenue | 4.8% | 3.9% | 2.6% | 5.0% | 2.6% | -2.3% |
|
|---|
| ROIC | -178.4% | -497.6% | -120.0% | -27.4% | -16.1% | 11.2% |
| ROE | | | | -55.6% | -63.5% | -8.0% |
People
|
|---|
| Insider ownership | 1.9% | 1.9% | 1.9% | | | |
| Employees | | | 1,176 | | | |
| Revenue/Employee, th. $ | | | 218 | | | |
Okta, Inc. ($OKTA) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 125 | 140 | 153 | 167 | | 49.8% | 48.5% | 45.0% | 44.9% |
| EBITDA | -44 | -34 | -36 | -34 | | - | - | - | - |
| Net Income | -52 | -43 | -63 | -50 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 208 | 207 | 1,040 | 520 | | -1.7% | 7.2% | 430.7% | 74.3% |
| Short Term Debt | 289 | 295 | 114 | 113 | | - | - | - | -58.5% |
| Long Term Debt | 146 | 144 | 982 | 992 | | -43.8% | -45.5% | 267.0% | 574.3% |
Ratios
|
|---|
| Gross Margin | 72.0% | 72.4% | 73.3% | 73.3% | | 0.8% | 2.2% | 1.5% | 0.5% |
| EBITDA Margin | -34.8% | -24.3% | -23.7% | -20.3% | | -7.4% | 14.6% | 1.3% | -4.3% |
| Net Income Margin | -41.5% | -30.6% | -41.5% | -30.2% | | -10.5% | 10.9% | -13.5% | -3.5% |
Peers in Internet Services & Infrastructure
Below we provide Okta, Inc. benchmarking against other companies in Internet Services & Infrastructure industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MongoDB, Inc. ($MDB) | - | 55.3% | 63.8% | 60.8% | 57.9% |
| Twilio Inc. ($TWLO) | - | 43.9% | 62.9% | 74.5% | 55.3% |
| Wix.com Ltd. ($WIX) | - | 46.7% | 41.8% | 26.1% | 29.9% |
| Limelight Networks, Inc. ($LLNW) | - | 9.6% | 6.1% | 2.5% | 14.7% |
| Crexendo Inc ($CXDO) | - | 11.7% | 16.9% | 21.2% | 13.5% |
| |
|---|
| Median (9 companies) | 20.7% | 10.6% | 16.9% | 12.3% | 13.5% |
|---|
| Okta, Inc. ($OKTA) | - | 86.6% | 60.0% | 55.6% | 46.8% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VeriSign, Inc. ($VRSN) | 82.6% | 83.4% | 84.2% | 85.3% | 85.8% |
| MongoDB, Inc. ($MDB) | 68.0% | 70.5% | 74.2% | 72.4% | 70.3% |
| Crexendo Inc ($CXDO) | 60.2% | 67.9% | 67.9% | 69.9% | 69.8% |
| Wix.com Ltd. ($WIX) | 84.4% | 83.7% | 79.0% | 74.1% | 68.1% |
| GoDaddy Inc. ($GDDY) | 64.4% | 65.3% | 66.4% | 65.6% | 65.1% |
| |
|---|
| Median (9 companies) | 61.5% | 61.7% | 64.9% | 65.9% | 65.1% |
|---|
| Okta, Inc. ($OKTA) | 58.1% | 65.1% | 68.5% | 71.6% | 72.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VeriSign, Inc. ($VRSN) | 65.2% | 65.0% | 67.1% | 69.2% | 68.8% |
| Akamai Technologies, Inc. ($AKAM) | 33.9% | 27.6% | 29.4% | 39.5% | 41.0% |
| GoDaddy Inc. ($GDDY) | 11.4% | 12.2% | 14.4% | 15.6% | 15.8% |
| Crexendo Inc ($CXDO) | -28.7% | -6.2% | -1.0% | 10.6% | 7.8% |
| Brightcove Inc. ($BCOV) | -0.8% | -8.0% | -3.8% | -2.6% | 5.5% |
| |
|---|
| Median (9 companies) | -2.8% | -1.1% | 16.8% | 3.8% | 5.5% |
|---|
| Okta, Inc. ($OKTA) | -85.1% | -49.0% | -40.9% | -22.1% | -25.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Akamai Technologies, Inc. ($AKAM) | 13.5% | 16.7% | 14.9% | 19.4% | 22.9% |
| Limelight Networks, Inc. ($LLNW) | 5.7% | 11.2% | 8.2% | 17.3% | 10.9% |
| Crexendo Inc ($CXDO) | 0.0% | 0.0% | 0.1% | 0.5% | 4.5% |
| VeriSign, Inc. ($VRSN) | 2.3% | 4.2% | 3.0% | 3.3% | 3.4% |
| GoDaddy Inc. ($GDDY) | 2.9% | 3.7% | 3.3% | 2.9% | 2.0% |
| |
|---|
| Median (9 companies) | 3.3% | 4.0% | 3.3% | 2.9% | 2.0% |
|---|
| Okta, Inc. ($OKTA) | 4.8% | 3.9% | 2.6% | 5.0% | 2.6% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VeriSign, Inc. ($VRSN) | 65.2% | 54.3% | 81.9% | 228.3% | 221.3% |
| Akamai Technologies, Inc. ($AKAM) | 11.9% | 7.9% | 8.2% | 10.8% | 10.9% |
| GoDaddy Inc. ($GDDY) | 2.9% | 2.7% | 4.6% | 6.0% | 8.1% |
| Crexendo Inc ($CXDO) | -114.0% | -44.3% | -10.5% | 35.4% | 7.3% |
| Brightcove Inc. ($BCOV) | -11.3% | -26.9% | -19.0% | -24.8% | -5.2% |
| |
|---|
| Median (9 companies) | -11.3% | -13.2% | 1.4% | -8.6% | -5.2% |
|---|
| Okta, Inc. ($OKTA) | -178.4% | -497.6% | -120.0% | -27.4% | -16.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Limelight Networks, Inc. ($LLNW) | - | -1.7x | -1.8x | -0.4x | 5.7x |
| GoDaddy Inc. ($GDDY) | 2.3x | 6.8x | 3.9x | 3.4x | 4.9x |
| Akamai Technologies, Inc. ($AKAM) | 0.4x | 0.5x | 0.7x | 2.0x | 1.8x |
| VeriSign, Inc. ($VRSN) | 2.2x | 2.6x | 1.8x | 1.5x | 1.6x |
| Brightcove Inc. ($BCOV) | - | - | - | - | -2.6x |
| |
|---|
| Median (6 companies) | 2.2x | 4.5x | 1.4x | 1.5x | 1.7x |
|---|
