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Okta Acquisition Spree Continues

Posted on Wednesday, Apr 3rd 2019

Identity access management company Okta (Nasdaq: OKTA) recently announced stellar fourth quarter results. Its record performance for the quarter outpaced market expectations. However, the market wasn’t impressed with its weak earnings outlook and the stock fell 10% following the results.

Okta’s Financials

Revenues for the quarter increased 50% to $115.5 million, ahead of the market’s forecast of $107.9 million. GAAP net loss for the quarter came in at $30.8 million, compared to $23 million reported a year ago. Non-GAAP net loss per share of $0.04 was lower than previous year’s loss of $0.08 per share. The market had also forecast a loss of $0.08 a share for the quarter.

By segment, subscription services revenues increased 53% over the year to $108.5 million. Professional services and the others segment revenues grew 15% to $7 million.

Total calculated billings for the quarter grew 52% to $158.9 million due to strength from new and existing as well as commercial and enterprise customers. Trailing 12-month calculated billings grew 55% to $488.2 million. Okta’s total customer base increased 40% over the year to 6,100 as it added 500 new customers during the quarter.

Okta ended the year with revenues growing 56% to $399.3 million. GAAP net loss of $125.5 million was higher than previous year’s net loss of $109.8 million. Non-GAAP net loss per share of $0.32 was significantly better than the previous year’s loss of $0.71 per share.

For the current quarter, Okta forecast revenues of $116-$117 million with a net loss of $0.22-$0.21 per share. It expects to end the year with $530-$535 million in revenues and non-GAAP net loss per share of $0.53-$0.48. The market was looking for revenues of $111.7 million with a net loss of $0.22 per share for the quarter and revenues of $518.3 million with a net loss of $0.12 per share for the year. The significantly higher loss forecast for the year sent the stock tumbling post the result announcement.

Okta’s Product Innovation

During the quarter, Okta continued to release several new product and platform innovations. Recently, it announced the launch of a new tool called Advanced Server Access that provides identity management capabilities for Windows and Linux Servers. The tool also supports major cloud infrastructures including AWS, Azure, and Google Cloud.

Additionally, it also upgraded its identity management capabilities with the recent announcement of the Identity Engine. The Okta Identity Engine is a set of customizable building blocks for every identity experience that breaks apart pre-defined authentication, authorization, and registration flows. It allows customers to create dynamic, context-based user journeys, thus delivering password-less experiences, progressive profiling, and per-app branding. Okta plans to release the Engine in the second half of 2019.

Within its platform offering, Okta enhanced its Cloud platform with the launch of Okta Hooks. Okta Hooks is a new functionality of its Identity Cloud that will allow developers to create custom integrations for the Okta Integration Network. Developers will be able to add identity proofing and verification into consumer registration decisions and also automate IT Service Management actions. They will be able to leverage external context to modify workflows within the Okta platform while still maintaining control, visibility, and security. It will also be possible to integrate these Okta workflows with third-party services to deliver a more flexible and seamless identity management experience.

Recently, Okta announced the acquisition of workflow automation company Azuqua for an estimated $52.5 million. Seattle-based Azuqua was founded in 2013 to provide no-code, cloud-based business application integration and workflow automation solutions. Azuqua had 40 employees based mostly in downtown Seattle at the time of the deal. It had raised $16 million prior to the acquisition from investors including Insight Venture Partners, Ignition Partners, Techstars, and Microsoft Accelerator. Its financial performance is not disclosed. Okta plans to integrate Azuqua’s offering within its cloud offering to provide a no-code capability to its developers. It is focusing on helping non-developers build Hooks integrations using Azuqua’s capabilities to offer unlimited use cases to its customers.

Okta has built a robust developer community around its platform. Today, it offers more than 5,550 apps that integrate into the cloud and on-premises systems. It can provision users to more than 130 cloud and on-premise apps and help organizations adopt latest apps, centralize user management, and automate access workflows across cloud, premise, and mobile applications. I would like to know from Okta which of these apps has seen the most traction? What other features should developers focus on?

Its stock is currently trading at $85.79 with a market capitalization of $9.6 billion. It touched a 52-week high of $87.72 in February this year. The stock was trading at a 52-week low of $37.85 nearly a year ago.


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