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What changed in Okta, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Okta, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+446 added−448 removedSource: 10-K (2024-03-01) vs 10-K (2023-03-03)

Top changes in Okta, Inc.'s 2024 10-K

446 paragraphs added · 448 removed · 337 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

112 edited+18 added−21 removed20 unchanged
Biggest changeWe have a renewable energy program, which matches our electricity consumption from our offices, our remote workforce and cloud services with renewable electricity. Additional information on our ESG programs and initiatives can be found in our “ESG Fact Sheet” on the “Responsibility” page of our website at www.okta.com.
Biggest changeAdditional information on our ESG programs and initiatives can be found in our “ESG Fact Sheet” on the “Responsibility” page of our website at www.okta.com. 15 Financial Information The financial information required under this Item 1 is incorporated herein by reference to “ Financial Statements and Supplementary Data ” included in Part II, Item 8 of this Annual Report on Form 10-K.
Workforce Identity Cloud The Workforce Identity Cloud simplifies the way an organization’s employees, contractors and partners connect to its applications and data from any device, while increasing efficiency and keeping IT environments secure.
Workforce Identity Cloud Workforce Identity Cloud simplifies the way an organization’s employees, contractors and partners connect to its applications and data from any device while increasing efficiency and keeping IT environments secure.
The Workforce Identity Cloud can be used as the central system for an organization’s connectivity, access, authentication and identity lifecycle management needs spanning all of its users, technology and applications.
Workforce Identity Cloud can be used as the central system for an organization’s connectivity, access, authentication and identity lifecycle management needs spanning all of its users, technology and applications.
Access Gateway enables organizations to extend the Workforce Identity Cloud, which is a cloud native platform, from the cloud to their existing on-premises applications, so that they can harness the benefits of Okta to manage all of their critical systems, whether in the cloud, on-premises or hybrid.
Access Gateway enables organizations to extend Workforce Identity Cloud, which is a cloud-native platform, from the cloud to their existing on-premises applications so that they can harness the benefits of Okta to manage all of their critical systems, whether in the cloud, on-premises or hybrid.
Similarly, the Auth0 Marketplace is a trusted catalog of integrations that enables application teams to easily assemble complete identity solutions. The Auth0 Marketplace connects customers with service providers and builders who solve integration use cases and implement integrations with the Customer Identity Cloud.
Similarly, the Auth0 Marketplace is a trusted catalog of integrations that enables application teams to easily assemble complete identity solutions. The Auth0 Marketplace connects customers with service providers and builders who solve integration use cases and implement integrations with Customer Identity Cloud.
Due to the flexibility and breadth of our platform, we can and often do co-exist alongside our competitors’ products within our customer base. 12 Principal competitive factors in our markets include flexibility, independence, product capabilities, total cost of ownership, time to value, scalability, user experience, number of pre-built integrations, customer satisfaction, global reach and ease of integration, management and use.
Due to the flexibility and breadth of our platform, we can and often do co-exist alongside our competitors’ products within our customer base. Principal competitive factors in our markets include flexibility, independence, product capabilities, total cost of ownership, time to value, scalability, user experience, number of pre-built integrations, customer satisfaction, global reach and ease of integration, management and use.
This makes it easier for them to authenticate, manage, scale and secure their applications through comprehensive APIs, software development kits and extensive developer community tools, enabling rapid time to market for the business. Organizations are able to streamline user experience and improve security across all their applications, leading to increased customer acquisition, retention and loyalty.
This makes it easier for them to authenticate, manage, scale and secure their applications through comprehensive APIs, software development kits and extensive developer tools, enabling rapid time to market for the business. Organizations are able to streamline user experience and improve security across all their applications, leading to increased customer acquisition, retention and loyalty.
Private Cloud is a deployment option that allows our customers to run a dedicated cloud instance of the Customer Identity Cloud. Private Cloud capability supports multiple cloud providers. • Organizations . Organizations enable our customers to support a large number of partners or customers of their own with independent configurations, login experiences and security options. • Actions and Extensibility .
Private Cloud is a deployment option that allows our customers to run a dedicated cloud instance of Customer Identity Cloud. Private Cloud capability supports multiple cloud providers. • Organizations . Organizations enable our customers to support a large number of partners or customers of their own with independent configurations, login experiences and security options. • Actions and Extensibility .
We believe that our Okta Identity Platform enables developers to focus their time and attention on innovating within their core application capabilities while relying on our platform for their identity related requirements, leading to more secure and convenient experiences for their own customers. • Leverage Our Unique Data Assets with Powerful Analytics .
We believe that our platform enables developers to focus their time and attention on innovating within their core application capabilities while relying on our platform for their identity-related requirements, leading to more secure and convenient experiences for their own customers. • Leverage Our Unique Data Assets with Powerful Analytics .
Our Universal Directory product also serves as a system of record to help our customers organize, customize and manage their users. Our Lifecycle Management product enables customers to manage users’ access privileges through their entire lifecycle with a no-code approach that improves administrative efficiency and productivity.
Our Universal Directory product offering also serves as a system of record to help our customers organize, customize and manage their users. Our Lifecycle Management product offering enables customers to manage users’ access privileges through their entire lifecycle with a no-code approach that improves administrative efficiency and productivity.
Our customers use the Workforce Identity Cloud to secure their workforces, to create solutions that make their partner networks more collaborative, and to provide more seamless and secure experiences for their end users, which combined with our open approach, enables our customers to future-proof their environments.
Our customers use Workforce Identity Cloud to secure their workforces, to create solutions that make their partner networks more collaborative, and to provide more seamless and secure experiences for their end users, which, combined with our open approach, enables our customers to future-proof their environments.
API Access Management reduces development time, boosts security, helps in achieving compliance and enables seamless end user experiences by providing a unified portable service for authorizing secure and always available access to any API. 8 • Access Gateway .
API Access Management reduces development time, boosts security, helps in achieving compliance and enables seamless end-user experiences by providing a unified portable service for authorizing secure and always available access to any API. • Access Gateway .
Our Workforce Identity and Customer Identity Clouds help organizations effectively harness the power of cloud, mobile and web technologies by securing users and connecting them with the applications and technology they use.
Our Workforce Identity Cloud and Customer Identity Cloud help organizations effectively harness the power of cloud, mobile and web technologies by securing users and connecting them with the applications and technology they use.
In addition to market-competitive base pay, short-term bonus incentives and long-term equity incentives, our total rewards program offers comprehensive employee benefits that may vary by country/region, including an employee stock purchase plan, a 401(k) plan with company matching contributions, comprehensive medical, dental and vision insurance, life and disability insurance, health savings accounts, charitable donation matching, flexible time off, volunteer time off, gender-neutral paid parental leave, fertility and adoption support, family care resources, mobile and internet reimbursement, mental health and lifestyle support programs and a variety of other health and wellness resources.
In addition to market-competitive base pay, short-term bonus incentives and long-term equity incentives, our total rewards program offers comprehensive employee benefits that may vary by country/region, including an employee stock purchase plan, a 401(k) plan in the United States with company matching contributions, comprehensive medical, dental and vision insurance, life and disability insurance, health savings accounts, charitable donation matching, flexible time off, volunteer time off, gender-neutral paid parental leave, fertility and adoption support, family care resources, mobile and internet reimbursement, mental health and lifestyle support programs and a variety of other health and wellness resources.
We expect the value of our analytics to our customer base will increase as customers continue to connect more devices, applications and users to their networks and as we add 7 more customers.
We expect the value of our analytics to our customer base will increase as customers continue to connect more devices, applications and users to their networks and as we add more customers.
We had over 7,000 integrations with cloud, mobile and web applications and IT infrastructure providers as of January 31, 2023, which while not directly correlated to revenue, shows the breadth and acceptance of our platform. We employ a SaaS business model and generate revenue primarily by selling multi-year subscriptions to our cloud-based offerings.
We had over 7,000 integrations with cloud, mobile and web applications and IT infrastructure providers as of January 31, 2024, which, while not directly correlated to revenue, shows the breadth and acceptance of our platform. We employ a SaaS business model and generate revenue primarily by selling multi-year subscriptions to our cloud-based offerings.
We believe global demand for our products will continue to be a long-term opportunity as organizations outside the United States fully embrace the transition to cloud computing, and larger international organizations take advantage of technology consolidation within their global locations. Increase Our Opportunities • Innovate and Extend Our Platform with New Products .
We believe global demand for our product offerings will continue to be a long-term opportunity as organizations outside the United States fully embrace the transition to cloud computing, and larger international organizations take advantage of technology consolidation within their global locations. Increase Our Opportunities • Innovate and Extend Our Platform with New Products .
When used to manage and secure identities for a customer’s workforce, Single Sign-On enables users to access all of their applications, whether in the cloud or on-premise, from any device, with a single entry of their user credentials.
When used to manage and secure identities for a customer’s workforce, Single Sign-On enables users to access all of their applications, whether in the cloud or on-premises, from any device, with a single entry of their user credentials.
Okta Integration Network and Auth0 Marketplace The Okta Integration Network contains over 7,000 integrations with cloud, mobile and web applications, IoT devices and IT infrastructure providers, including Amazon Web Services, Atlassian, DocuSign, Google, Microsoft Office 365, NetSuite, Oracle, Palo Alto Networks, Proofpoint, Salesforce, SAP, ServiceNow, Slack, Splunk, VMware, Workday, Zendesk and Zoom.
Okta Integration Network and Auth0 Marketplace The Okta Integration Network contains over 7,000 integrations with cloud, mobile and web applications, IoT devices and IT infrastructure providers, including AWS, Atlassian, DocuSign, Google, Microsoft Office 365, NetSuite, Oracle, Palo Alto Networks, Proofpoint, Salesforce, SAP, ServiceNow, Slack, Splunk, VMware, Workday, Zendesk and Zoom.
We enable organizations to provide their workforces with immediate and secure access to every application they need from any device they use, without requiring multiple credentials, which significantly enhances user connectivity and productivity. We offer our customers an additional security layer through our Adaptive Multi-Factor Authentication product.
We enable organizations to provide their workforces with immediate and secure access to every application they need from any device they use, without requiring multiple credentials, which significantly enhances user connectivity and productivity. We offer our customers an additional security layer through our Adaptive Multi-Factor Authentication (“Adaptive MFA”) product offering.
As technology and our customers’ needs evolve, we plan to use our platform to help our customers address new challenges, regulatory requirements and use cases. • Leverage Our Integrations . The Okta Integration Network is an extensive ecosystem, which includes over 7,000 integrations with cloud, mobile and web applications and IT infrastructure providers.
As technology and our customers’ needs evolve, we plan to use our platform to help our customers address new challenges, regulatory requirements and use cases. • Leverage Our Integrations . The Okta Integration Network is an extensive ecosystem, which includes over 7,000 integrations with cloud, mobile and web applications as well integrated solutions with IT infrastructure providers.
As we add new customers, users, developers and integrations to our platform, our business, customers, partners and users benefit from powerful network effects that increase the value and security of our Workforce Identity and Customer Identity Clouds.
As we add new customers, users, developers and integrations to our platform, our business, customers, partners and users benefit from powerful network effects that increase the value and security of our Workforce Identity Cloud and Customer Identity Cloud.
We also expect that our analytics ability will enable our customers to use our data and third-party data from our partners, to help customers make more informed and secure access decisions. We do not currently derive direct revenue from our unique data assets, but we may explore opportunities for monetization in the future. • Mergers and Acquisitions and Investments .
We also expect that our analytics ability will enable our customers to use our data and third-party data from our partners, to help customers make more informed and secure access decisions. We do not currently derive direct revenue from our unique data assets, but we may explore opportunities for monetization in the future.
We also heavily leverage operating system management and security technologies across desktops, laptops and mobile devices to provide a transparent, but secure experience for users across a range of devices. These integrations allow us to seamlessly deliver connectivity use cases that previously required significant custom development to achieve.
We also heavily leverage operating system management and security technologies across desktops, laptops and mobile devices to provide a transparent, but secure experience for users across a range of devices. These integrations allow us to seamlessly deliver identity, access, security and management use cases that previously required significant custom development to achieve.
From time to time, we evaluate opportunities to acquire or invest in emerging and adjacent technologies to complement our organic investments and improve our products, services and customers’ experiences. We will continue to use these types of strategic levers as opportunities arise. Our Products Okta's suite of products and services is used to manage and secure identities.
From time to time, we evaluate opportunities to acquire or invest in emerging and adjacent technologies to complement our organic investments and improve our product offerings, services and customers’ experiences. We will continue to use these types of strategic levers as opportunities arise. Our Product Offerings Okta's suite of product offerings and services is used to manage and secure identities.
Additional Information The following filings are available through our investor relations website after we file them with the Securities and Exchange Commission ("SEC"): Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and our Proxy Statement for our annual meeting of stockholders. These filings are also available for download free of charge on our investor relations website.
Additional Information The following filings are available through our investor relations website after we file them with the SEC: Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and our Proxy Statement for our annual meeting of stockholders. These filings are also available for download free of charge on our investor relations website.
We sell our products directly through our field and inside sales teams, as well as indirectly through our network of channel partners, including resellers, system integrators and other distribution partners. 5 The Okta Identity Platform Okta is an independent and neutral cloud-based identity solution that allows our customers to integrate with nearly any application, service or cloud that they choose through our secure, reliable and scalable platform and cloud infrastructure.
We sell our product offerings directly through our field and inside sales teams, as well as indirectly through our network of channel partners, including resellers, system integrators and other distribution partners. 5 Our Platform Okta is an independent and neutral cloud-based identity solution that allows our customers to integrate with nearly any application, service or cloud that they choose through our secure, reliable and scalable platform and cloud infrastructure.
To that end, we strive to make Okta a diverse and inclusive workplace, with opportunities for our employees to grow and develop in their careers, supported by fair and competitive compensation, benefits and wellness programs, and by initiatives that foster connections between and among our employees and their communities.
To that end, we strive to make Okta a diverse and inclusive workplace, with opportunities for our employees to grow and develop in their careers, supported by fair and competitive compensation, benefits and wellness programs, and by initiatives that foster connections between and among our employees and their communities and a sense of belonging.
Our Competitors The markets for our products are rapidly evolving, highly competitive and subject to shifting customer needs and frequent introductions of new competing technologies. As the markets in which we operate continue to mature and new technologies and competitors enter those markets, we expect competition to intensify.
Our Competitors The markets for our product offerings are rapidly evolving, highly competitive and subject to shifting customer needs and frequent introductions of new competing technologies. As the markets in which we operate continue to mature and new technologies and competitors enter those markets, we expect competition to intensify.
Passwordless authentication enables users to login without a password and supports a variety of different login methods, including advanced device biometrics. • Machine to Machine . Machine to Machine provides standards-based authentication and authorization with non-interactive devices and applications. • Private Cloud .
Passwordless authentication enables users to login without a password and supports a variety of different login methods, including advanced device biometrics such as passkeys. • Machine to Machine . Machine to Machine provides standards-based authentication and authorization with non-interactive devices and applications. • Private Cloud .
Our employee engagement program helps us understand employee sentiment on a wide range of topics throughout the employee lifecycle, providing insights that inform our decisions about company initiatives, employee programs, talent risks, management opportunities and more. In fiscal 2023, 84% of our eligible employees participated in our annual employee engagement survey.
Our employee engagement program helps us understand employee sentiment on a wide range of topics throughout the employee lifecycle, providing insights that inform our decisions about company initiatives, employee programs, talent risks, management opportunities and more. In fiscal 2024, 83% of our eligible employees participated in our annual employee engagement survey.
We are committed to fair compensation and opportunity in our workplace. We conduct regular equal pay assessments and adjust as needed to ensure our employees are paid equitably without regard to gender or ethnicity. Dynamic Work We help our employees succeed by providing flexibility in where and how they work.
We are committed to fair compensation and opportunity in our workplace. We conduct regular equal pay assessments and adjust as needed to attempt to ensure our employees are paid equitably without regard to gender or ethnicity. Hybrid and Remote Work We help our employees succeed by providing flexibility in where and how they work.
Most of our products can be used for both customer identity and for workforce identity use cases and we are continuously enhancing our products and services. Our workforce identity products are consumed through web and mobile interfaces, and provide simple ways for IT organizations to manage identities for their employees, contractors and partners.
Most of our product offerings can be used for both customer identity and for workforce identity use cases and we are continuously enhancing our product offerings and services. Our workforce identity product offerings are consumed through web and mobile interfaces and provide simple ways for IT organizations to manage identities for their employees, contractors and business partners.
Our competitor categories include: • Authentication providers; • Lifecycle Management providers; • Multi-factor Authentication providers; • Infrastructure-as-a-service providers; • Other customer identity and access management providers; and • Solutions developed in-house by our potential customers. We compete with both cloud-based and on-premise enterprise application software providers.
Our competitor categories include: • Authentication providers; • Identity governance providers; • Multi-factor authentication providers; • Infrastructure-as-a-service providers; • Other customer identity and access management providers; and • Solutions developed in-house by our potential customers. We compete with both cloud-based and on-premises enterprise application software providers.
Item 1. Business Overview Okta is the leading independent identity provider. Our vision is to free everyone to safely use any technology, and we believe identity is the key to making that happen. Our mission is to bring simple and secure digital access to people and organizations everywhere.
Item 1. Business Overview Okta is the leading independent identity partner. Our vision is to free everyone to safely use any technology, and we believe identity is the key to making that happen. Our purpose is to bring simple and secure digital access to people and organizations everywhere.
Further corporate governance information, including our corporate governance guidelines and code of conduct, is also available on our investor relations website under the heading "Corporate Governance." The contents of our websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.
Further corporate governance information, including our corporate governance guidelines and code of conduct, is also available on our investor relations website under the heading "Corporate Governance." Information contained on, or that can be accessed through, our websites is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.
Okta Identity Governance, also referred to as "IGA," provides a unified identity access management and identity governance solution focused on improving an organization’s security and compliance posture, helping customers to mitigate everyday security risks and improve IT efficiency. Okta Identity Governance includes governance capabilities relating to access requests, access certifications and access reporting.
Okta Identity Governance provides a unified identity access management and identity governance solution focused on improving an organization’s security and compliance posture, helping customers to mitigate everyday security risks and improve IT efficiency. Okta Identity Governance includes governance capabilities relating to access requests, access certifications and access reporting.
In addition, prior to our initial public offering ("IPO") in April 2017, we reserved 300,000 shares of our common stock to fund and support the operations of Okta for Good, of which 131,250 shares of Class A common stock remained reserved for future issuances as of January 31, 2023.
Prior to our initial public offering ("IPO") in April 2017, we reserved 300,000 shares of our common stock to fund and support the operations of Okta for Good, of which 56,250 shares of Class A common stock remained reserved for future issuances as of January 31, 2024.
We empower our employees to be authentic and grow through open conversations and engagement resources, including regular safe space DIB discussion forums and facilitated workshops, precise language and inclusive calibrations, personalized DIB learning tools, mentoring and workplace development programs focused on supporting talent from underrepresented communities, and sponsorship of ERGs that strengthen our DIB culture.
We empower our employees to be authentic and grow through open conversations and engagement resources, including facilitated workshops that focus on precise language and inclusive calibrations, personalized DIB learning tools, mentoring and workplace development programs focused on supporting talent from underrepresented communities, and sponsorship of ERGs that strengthen our DIB culture.
We further control the use of our proprietary technology and intellectual property through provisions in both general and product-specific terms of use. Additional information regarding certain risks related to our intellectual property is included in Part I, Item 1A “Risk Factors” of this Annual Report on Form 10-K.
We further control the use of our proprietary technology and intellectual property through provisions in both general and product-specific terms of use. Additional information regarding certain risks related to our intellectual property is included in “ Risk Factors ” under Part I, Item 1A of this Annual Report on Form 10-K.
Our Customer Identity Cloud primarily supports consumer and SaaS applications. It empowers application builders to innovate faster by removing the complexity from identity and making it simple, extensible and customizable. We enable organizations to integrate our powerful identity platform into their cloud, web and mobile applications.
It empowers application builders to innovate faster by removing the complexity from identity and making it simple, extensible and customizable. We enable organizations to integrate our powerful identity platform into their cloud, web and mobile applications.
Additional information regarding our competition is included in Part I, Item 1A “Risk Factors” of this Annual Report on Form 10-K. Human Capital Resources Our core values – love our customers, never stop innovating, act with integrity, be transparent and empower our people – inform and guide our human capital initiatives and objectives.
Additional information regarding our competition is included in “ Risk Factors ” under Part I, Item 1A of this Annual Report on Form 10-K. 13 Human Capital Resources Our core values—love our customers, never stop innovating, act with integrity, be transparent and empower our people—inform and guide our human capital initiatives and objectives.
We also continue to recruit from a range of colleges and engage with organizations that support diverse students and jobseekers through our social impact arm, Okta for Good. 13 Nurturing a culture of inclusion and belonging in our workplace is a key priority.
We also continue to recruit from a range of colleges and engage with organizations that support students and job seekers from marginalized and underrepresented groups through our social impact arm, Okta for Good. Nurturing a culture of inclusion and belonging in our workplace is a key priority.
As of January 31, 2023, more than 17,600 customers across nearly every industry used Okta to secure and manage identities around the world. Our customers consist of leading global organizations ranging from the largest enterprises, to small- and medium-sized businesses, universities, non-profits and government agencies.
As of January 31, 2024, more than 18,950 customers across nearly every industry used Okta to secure and manage identities around the world. Our customers consist of leading global organizations ranging from the largest enterprises to small- and medium-sized businesses, universities, nonprofits and government agencies.
We currently have an affinity group supporting neurodiversity and ERGs supporting women, people of color, veterans, the LGBTQIA+ community and parents and caregivers. Growth and Development We invest significant resources to develop talent and actively foster a learning culture where employees are empowered to drive their personal and professional growth.
We currently have ERGs supporting women, people of collective cultures, veterans, the LGBTQIA+ community, neurodivergent people, and caregivers. Growth and Development We invest significant resources to develop talent and actively foster a learning culture where employees are empowered to drive their personal and professional growth.
Intellectual Property We protect our intellectual property through a combination of trademarks, domain names, copyrights, trade secrets and patents, as well as contractual provisions and restrictions on access to our proprietary technology. As of January 31, 2023, we had thirty-four issued patents in the United States, which expire between 2030 and 2039 and cover various aspects of our products.
Intellectual Property We protect our intellectual property through a combination of trademarks, domain names, copyrights, trade secrets and patents, as well as contractual provisions and restrictions on access to our proprietary technology. As of January 31, 2024, we had fifty-two issued patents in the United States, which expire between 2030 and 2043 and cover various aspects of our product offerings.
With 22% of our revenue generated outside of the United States in fiscal 2023, and our international revenue growing 53% from fiscal 2022 to fiscal 2023, we believe there is significant opportunity to continue to grow our international business.
With 21% of our revenue generated outside of the United States in fiscal 2024, and our international revenue growing 19% from fiscal 2023 to fiscal 2024, we believe there is a significant opportunity to continue to grow our international business.
Our engagement with diversity sourcing programs and partnerships allows us to both source top talent from underrepresented groups for current open roles, and further strengthen our ability to build and nurture diverse talent communities for future roles.
We employ inclusive recruitment and hiring practices to source talent from marginalized and underrepresented groups. Our engagement with diversity sourcing programs and partnerships allows us to both source top talent from underrepresented groups for current open roles, and further strengthen our ability to build and nurture talent communities for future roles.
API Access Management enables organizations to secure APIs as systems connect to each other. Access to these APIs is managed based on the user, which enables organizations to centrally maintain one set of permissions for any employee, partner or customer across every point of access.
Access to these APIs is managed based on the user, which enables organizations to centrally maintain one set of permissions for any employee, partner or customer across every point of access.
As of January 31, 2023, we had 6,013 employees, of which approximately 72% were in the United States and 28% were in our international locations. We have not experienced any work stoppages, and we consider our relations with our employees to be good.
As of January 31, 2024, we had 5,908 employees, of which approximately 67% were in the United States and 33% were in our international locations. We have not experienced any work stoppages, and we consider our relations with our employees to be good.
For customer identity, our APIs are also used by developers to embed Okta identity functionality into their own customer-facing mobile or web applications. We continuously improve our Workforce Identity and Customer Identity Clouds through the release and development of additional products, features and services. Workforce Identity Products • Universal Directory .
For customer identity, our APIs are also used by developers to embed Okta identity functionality into their own customer-facing mobile or web applications. We continuously improve our Workforce Identity Cloud and Customer Identity Cloud through the release and development of additional product offerings, features and services. Workforce Identity Product Offerings Access Management • Single Sign-on .
Extending the benefits of the Workforce Identity Cloud to hybrid IT environments delivers a single point of management for our customers’ administrators and a single location from which end users can access their critical applications. • Advanced Server Access . Advanced Server Access offers continuous, contextual access management to secure cloud infrastructure.
Extending the benefits of Workforce Identity Cloud to hybrid IT environments delivers a single point of management for our customers’ administrators and a single location from which end users can access their critical applications. • Okta Device Access . Okta Device Access extends Okta's secure access management to the device login experience.
We also provide on-demand access to a robust online digital community and customer success hub where customers can find answers to common use cases, information about product features, and interact with Okta experts and industry peers.
We provide 24/7 support for the highest support tiers as well as access to Customer Success and Technical Account Managers. We also provide on-demand access to a robust online digital community and customer success hub, where our customers can find answers to common use cases, information about product features, and interact with Okta experts and industry peers.
Our competitors vary in size and in the breadth and scope of the products and services offered. However, certain of our competitors have substantial competitive advantages such as significantly greater financial, technical, sales and marketing, distribution, customer support or other resources, longer operating histories, greater resources to make strategic acquisitions and greater name recognition than we do.
However, certain of our competitors have substantial competitive advantages, such as significantly greater financial, technical, sales and marketing, distribution, customer support or other resources, longer operating histories, greater resources to make strategic acquisitions, and greater name recognition than we have. Our principal competitor is Microsoft.
Okta Identity Platform with Differentiated Administration, User and Developer Experience Okta provides one common platform and user interface framework supporting our Workforce Identity and Customer Identity Clouds, offering administrators and users a consistent, easy-to-use, consumer-like experience across our products. Our technology integrates with industry-leading browsers and mobile applications to provide seamless access to nearly any web or native mobile application.
Differentiated Administration, User and Developer Experience Workforce Identity Cloud and Customer Identity Cloud offer administrators and users a consistent, easy-to-use, consumer-like experience across our product offerings. Our technology integrates with industry-leading browsers and mobile applications to provide seamless access to nearly any web or native mobile application.
We focus on acquiring and retaining our customers and increasing their spending with us through expanding the number of users who access our Workforce Identity and Customer Identity Clouds and up-selling additional products.
We focus on acquiring and retaining our customers and increasing the value we provide to our customers over time and thus their spending with us through expanding the number of users who access our Workforce Identity Cloud and Customer Identity Cloud and up-selling additional product offerings.
Our customers also use it to enable, manage and secure the identities of their own customers via the powerful APIs we have developed, which we refer to as customer identity as supported by our Customer Identity Cloud.
Our customers use it to manage and secure their employees, contractors and partners, which we refer to as workforce identity as supported by our Workforce Identity Cloud. Our customers also use it to enable, manage and secure the identities of their customers, which we refer to as customer identity as supported by our Customer Identity Cloud.
Once a sale is made, we leverage our land-and-expand sales model to generate incremental revenue, often within the term of the initial agreement, through the addition of new users and the sale of additional products.
We often leverage our expansion sales model to generate incremental revenue, often within the term of the initial agreement, through the addition of new users and the sale of additional product offerings.
Nearly all of the leading cloud application providers are our partners, and many of them drive further customer acquisition for us through co-selling arrangements, building our offerings directly into their products, and product demonstrations running on Okta. We also partner with several of the large technology companies that are driving the movement to the cloud.
We benefit from an expansive partner ecosystem that helps drive additional sales. Nearly all of the leading cloud application providers are our partners, and many of them drive further customer acquisition for us through co-selling arrangements, building our offerings directly into their products, and product demonstrations running on Okta.
The research and development organization also works closely with our technical operations team to ensure the successful deployment and monitoring of our platform. We use test automation and application monitoring to ensure our services are always-on. Customer Support and Professional Services Our products are designed for ease of use and fast deployments.
Research and Development Our research and development organization is responsible for the design, architecture, creation and quality of our platform. The research and development organization also works closely with our technical operations team to ensure the successful deployment and monitoring of our platform. We use test automation and application monitoring to ensure our services are always on.
Our customers span nearly all industry verticals and range from small organizations with fewer than 100 employees to companies in the Fortune 50, with up to hundreds of thousands of employees, some of which use our platform to manage millions of their customers' identities. 10 Sales and Marketing Sales We sell directly to customers through our direct inside and field sales force and also indirectly through our extensive ecosystem of channel partners.
Our customers span nearly all industry verticals and range from small organizations with fewer than 100 employees to companies in the Fortune 50, with up to hundreds of thousands of employees, some of which use our platform to manage millions of their customers' identities.
Employees and contractors sign into the Workforce Identity Cloud to seamlessly and securely access the applications they need to do their most important work. Developers leverage our Customer Identity and Workforce Identity Clouds to securely and efficiently embed identity into the software they build, allowing them to innovate and focus on their core mission.
Developers leverage our Customer Identity Cloud and Workforce Identity Cloud to securely and efficiently embed identity into the software they build, allowing them to innovate and focus on their core mission.
Robust Security Security is a mission-critical issue for Okta and for our customers. Our approach to security spans day-to-day operational practices from the design and development of our software to how customer data is segmented and secured within our multi-tenant platform. We ensure that access to our platform is securely delegated across an organization.
Robust Security Security is essential for Okta and for our customers. Our approach to security spans day-to-day operational practices from the design and development of our software to how customer data is segmented and secured within our multi-tenant platform.
We also believe we can expand our footprint by focusing on current customers that have deployed our Workforce Identity Cloud for workforce identity, and expanding those customers’ use of our Customer Identity Cloud for customer identity, or vice versa. • Leverage Partner Ecosystem .
We strive to further increase revenue from our existing customers by cross-selling and up-selling additional and new product offerings. We also believe we can expand our footprint by focusing on current customers that have deployed our Workforce Identity Cloud and expanding those customers’ use of our Customer Identity Cloud, or vice versa. • Leverage Partner Ecosystem .
Our employee onboarding program helps our employees get off to the right start, our manager development program helps to build a solid foundation for our people managers, and our technical training program quickly brings our new technical employees up to speed on our product offerings.
Our employee onboarding program helps our employees get off to the right start, our manager development program helps to build a solid foundation for our people managers, and our technical training program brings our new technical employees up to speed on our product offerings. 14 Compensation, Benefits and Wellness We provide robust compensation, benefits and wellness programs that help support the varying needs of our employees.
It automates IT processes and ensures user accounts are created and deactivated at the appropriate times, including the workflow and policies needed to power those processes. With Lifecycle Management, organizations can securely manage the entire identity lifecycle, from on-boarding to off-boarding, and ensure compliance requirements are met as user roles evolve and access levels change. • API Access Management .
It automates IT processes and ensures user accounts are created and deactivated at the appropriate times, including the workflow and policies needed to power those processes, and helps ensure compliance requirements are met as user roles evolve and access levels change. • Okta Identity Governance .
Our Customers As of January 31, 2023, we had more than 17,600 customers, including more than 3,930 customers with an annual contract value greater than $100,000.
Our Customers As of January 31, 2024, we had more than 18,950 customers, including more than 4,485 customers with an annual contract value greater than $100,000.
Simple-to-use and adaptable Multi-Factor Authentication that minimizes friction to end users. When using Adaptive Multi-Factor Authentication, our customers leverage risk-assessment algorithms that present Multi-Factor Authentication challenges only to select authentication attempts that require additional validation. • Passwordless .
Attack Protection enables our customers to minimize risks associated with the ever-growing volume of identity-targeted attacks. • Adaptive Multi-Factor Authentication . Simple-to-use and adaptable MFA that minimizes friction to end users. When using Adaptive MFA, our customers leverage risk-assessment algorithms that present MFA challenges only to select authentication attempts that require additional validation. 9 • Passwordless .
Financial Information The financial information required under this Item 1 is incorporated herein by reference to the section of this Annual Report on Form 10-K titled “Part II-Item 8-Financial Statements and Supplementary Data.” For financial information regarding our business, see “Part II-Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K and our consolidated audited financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
For financial information regarding our business, see “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” included in Part II, Item 7 of this Annual Report on Form 10-K and our consolidated audited financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
Our approach provides organizations with the scale, interoperability, efficiency and security they need to build customer-facing applications. Given the growth trends in the number of applications and cloud adoption, and the movement to remote workforces, identity is becoming the most critical layer of an organization’s security.
Given the growth trends in the number of applications and cloud adoption and the movement to remote and hybrid workforces, identity is becoming the most critical layer of an organization’s security.
Our cloud architecture is multi-tenant, encrypted and third-party validated. Our service also allows us to integrate into our customers’ on-premises components and hybrid configurations.
Our Technology We focus on engineering an intuitive and comprehensive platform to solve complex identity management and security challenges. Our cloud architecture is multi-tenant, encrypted and third-party validated. Our service also allows us to integrate into our customers’ on-premises components and hybrid configurations.
Actions and Extensibility allows our customers to visually drag and drop Actions to build custom identity flows that address their unique requirements. • Enterprise Connections . Enterprise Connections enable Enterprise Federation using pre-built integrations with commonly used Enterprise Identity Systems.
Actions and extensibility allow our customers to create customized identity flows that address their unique requirements through a drag-and-drop interface to add pre-built partner integrations and their own custom logic across an authentication flow. • Enterprise Connections . Enterprise Connections enable Enterprise Federation using pre-built integrations with commonly used Enterprise Identity Systems.
Our Workforce Identity and Customer Identity Clouds are powered by our category-defining Okta Identity Platform that enables our customers to securely connect the right people to the right technologies and services at the right time.
Our Workforce Identity Cloud and Customer Identity Cloud, powered by Auth0, enable our customers to securely connect the right people to the right technologies and services at the right time.
Okta Identity Governance, our unified identity access management and identity governance solution, helps our customers improve their security and compliance posture while mitigating modern security risks and increasing efficiency.
Okta Identity Governance, our unified identity access management and identity governance product offering, helps our customers improve their security and compliance posture while mitigating modern security risks and increasing efficiency. Our Privileged Access Management product offering provides unified access and governance for privileged resources and increases visibility, compliance and security without compromising user experience.
Universal Login is a standards-based login infrastructure with centralized feature management and configuration for websites and applications that can be integrated with a wide range of social providers, enterprise login services and customer-provided databases. Universal Login enables our customers to provide a consistent login experience across many different applications and devices. • Attack Protection .
Customer Identity Cloud Product Offerings • Universal Login . Universal Login is a standards-based login infrastructure with centralized feature management and configuration for websites and applications that can be integrated with a wide range of social media login credential providers, enterprise login services and customer-provided databases.
We also have registered other trademarks in the United States including “Okta Workforce Identity Cloud,” “Okta Customer Identity Cloud,” “Okta WIC,” “Okta CIC,” “The World’s Identity Company,” "Okta Your Cloud, Covered," "Enterprise Identity, Delivered," "Work Outside the Perimeter," "Oktane" and "Never Build Auth Again." We are the registered holder of a variety of domestic and international domain names that include “Okta,” "Auth0" and similar variations.
We also have filed other trademark applications pending in various jurisdictions throughout the world. We also have registered other trademarks in the United States including “Okta Workforce Identity Cloud,” “Okta Customer Identity Cloud,” “The World’s Identity Company,” and “Oktane". We are the registered holder of a variety of domestic and international domain names that include “Okta,” "Auth0" and similar variations.
Community and Social Impact The mission of our social impact arm, Okta for Good, is to strengthen the connections between people, technology and community, which we believe fosters a more meaningful, fulfilling and enjoyable workplace. Our employees are passionate about many causes and Okta for Good connects them with numerous giving and volunteering opportunities in service of our communities.
Our employees are passionate about many causes and Okta for Good connects them with numerous giving and volunteering opportunities in service of our communities. We believe this fosters a more meaningful, fulfilling and enjoyable workplace. In addition, through Okta for Good we donate and discount access to our service for non-profit organizations.
Organizations use our platform to collaborate with their partners, and to provide their customers with more modern and secure experiences in the cloud and via mobile devices.
Employees and contractors sign into Workforce Identity Cloud to seamlessly and securely access the applications they need to do their most important work. Organizations use our platform to collaborate with their partners and to provide their customers with more modern and secure experiences in the cloud and via mobile devices.
By continuing to innovate, introduce new products and extend our platform, we believe that we can offer increasing value to our existing and potential customers. • Extend Our Accessible Market with New Use Cases .
We intend to continue making significant investments in research and development, hiring top technical talent and maintaining an agile organization. By continuing to innovate, introduce new product offerings and extend our platform, we believe that we can offer increasing value to our existing and potential customers. • Extend Our Accessible Market with New Use Cases .
Attack Protection is a suite of security capabilities that protect our customers from different types of malicious traffic, including bots, breached passwords, suspicious IP addresses and brute force attacks. Attack Protection enables our customers to minimize risks associated with the ever-growing volume of identity-targeted attacks. • Adaptive Multi-Factor Authentication .
Universal Login enables our customers to provide a consistent login experience across many different applications and devices. • Attack Protection . Attack Protection is a suite of security capabilities that protect our customers from different types of malicious traffic, including bots, breached passwords, suspicious IP addresses and brute force attacks.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny material decline in our Dollar-Based Net Retention Rate would harm our future results of operations. • Customer growth could fall below expectations. • The effects of the COVID-19 pandemic have affected how we and our customers are operating our businesses, and the duration and extent to which this will impact our future results of operations and overall financial performance remains uncertain. • We may experience quarterly fluctuations in our results of operations due to a number of factors that make our future results difficult to predict and could cause our results of operations to fall below analyst or investor expectations. 16 • If there are interruptions or performance problems associated with our technology or infrastructure, our existing customers may experience service outages, and our new customers may experience delays in the deployment of our platform. • In the past we have experienced and in the future we may experience cybersecurity incidents that may allow unauthorized access to our systems or data or our customers’ data, disable access to our service, harm our reputation, create additional liability and adversely impact our financial results. • Any actual or perceived failure by us to comply with the privacy or security provisions of our privacy policy, our contracts and/or legal or regulatory requirements could result in proceedings, actions or penalties against us. • The stock price of our Class A common stock may be volatile or may decline. • The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to the completion of our IPO, including our directors, executive officers, and their affiliates, who held in the aggregate 41.7% of the voting power of our capital stock as of January 31, 2023.
Biggest changeAny material decline in our Dollar-Based Net Retention Rate would harm our future results of operations. • Customer growth has slowed in recent periods and could fall below expectations. • We may experience quarterly fluctuations in our results of operations due to a number of factors that make our future results difficult to predict and could cause our results of operations to fall below analyst or investor expectations. • If there are interruptions or performance problems associated with our technology or infrastructure, our existing customers may experience service outages, and our new customers may experience delays in the deployment of our platform. • We have, in the past, failed or been perceived to have failed to fully comply with the privacy or security provisions of our privacy policy, our contracts and/or legal or regulatory requirements, which could result in proceedings, actions or penalties against us.
Any claim of infringement, regardless of its merit or our defenses, could: • require costly litigation to resolve and/or the payment of substantial damages, ongoing royalty payments or other amounts to settle such disputes; • require significant management time and attention; • cause us to enter into unfavorable royalty or license agreements, if such arrangements are available at all; • require us to discontinue the sale of some or all of our products, remove or reduce features or functionality of our products or comply with other unfavorable terms; • require us to indemnify our customers or third-party service providers; and/or • require us to expend additional development resources to redesign our products.
Any claim of infringement, regardless of its merit or our defenses, could: • require costly litigation to resolve and/or the payment of substantial damages, ongoing royalty payments or other amounts to settle such disputes; • require significant management time and attention; • cause us to enter into unfavorable royalty or license agreements, if such arrangements are available at all; 37 • require us to discontinue the sale of some or all of our products, remove or reduce features or functionality of our products or comply with other unfavorable terms; • require us to indemnify our customers or third-party service providers; and/or • require us to expend additional development resources to redesign our products.
In addition, security breaches impacting our platform have in certain cases resulted in and could in the future result in a risk of loss or unauthorized disclosure of this information, or the denial of access to this information, which, in turn, could lead to enforcement actions, litigation, regulatory or governmental audits, investigations and possible liability, and increased requests by individuals regarding their personal data.
In addition, security breaches impacting our platform have in certain cases resulted in and could in the future result in a risk of loss or unauthorized disclosure or theft of this information, or the denial of access to this information, which, in turn, could lead to enforcement actions, litigation, regulatory or governmental audits, investigations and possible liability, and increased requests by individuals regarding their personal data.
If we need additional capital and cannot raise it on acceptable terms, or at all, we may not be able to, among other things: • develop and enhance our products; • continue to expand our product development, sales and marketing organizations; • hire, train and retain employees; • respond to competitive pressures or unanticipated working capital requirements; or • pursue acquisition opportunities.
If we need additional capital and cannot raise it on acceptable terms, or at all, we may not be able to, among other things: • develop and enhance our products; • continue to expand our product development, sales and marketing organizations; 27 • hire, train and retain employees; • respond to competitive pressures or unanticipated working capital requirements; or • pursue acquisition opportunities.
However, many of our competitors have substantial competitive advantages such as significantly greater financial, technical, sales and marketing, distribution, customer support or other resources, larger intellectual property portfolios, longer operating 19 histories, greater resources to make strategic acquisitions and greater name recognition than we do. Our principal competitor is Microsoft.
However, many of our competitors have substantial competitive advantages such as significantly greater financial, technical, sales and marketing, distribution, customer support or other resources, larger intellectual property portfolios, longer operating histories, greater resources to make strategic acquisitions and greater name recognition than we do. Our principal competitor is Microsoft.
Our customers’ use of Okta to access business systems and store data concerning, among others, their employees, contractors, partners and customers is essential to their use of our platform, which stores, transmits and processes customers’ proprietary information and users’ personal data. Okta has experienced and likely will in the future experience attacks targeting such customer data.
Our customers’ use of Okta to access business systems and store data concerning, among others, their employees, contractors, partners and customers is essential to their use of our platform, which stores, transmits and 29 processes customers’ proprietary information and users’ personal data. Okta has experienced and likely will in the future experience attacks targeting such customer data.
Any failure to meet and address these factors could harm our business, results of operations and financial condition. If we are unable to attract new customers, sell additional products to our existing customers or develop new products and enhancements to our products that achieve market acceptance, our revenue growth and profitability will be harmed.
Any failure to meet and address these factors could harm our business, results of operations and financial condition. 20 If we are unable to attract new customers, sell additional products to our existing customers or develop new products and enhancements to our products that achieve market acceptance, our revenue growth and profitability will be harmed.
Future laws, regulations, standards and other obligations, and changes in the interpretation of existing laws, regulations, standards and other obligations could impair our or our customers’ ability to collect, use or disclose information relating to consumers, which could decrease demand for our applications, restrict our business operations, or increase our costs and impair our ability to maintain and grow our customer base and increase our revenue.
Future laws, regulations, standards and other obligations, and changes in the interpretation of existing laws, regulations, standards and other obligations could impair our or our customers’ ability to collect, use or disclose information relating to consumers, which could decrease demand for our applications, restrict our business operations, or increase our costs and impair our ability to maintain and grow our customer base and increase our 31 revenue.
In addition, we may not have adequate insurance coverage to compensate for losses from a major interruption. If any of these events were to occur, it could harm our business, results of operations and financial condition. We rely on software and services from other parties.
In addition, we may not have adequate insurance coverage to compensate for losses from a major interruption. If any of these events were to occur, it could harm our business, results of operations and financial condition. 35 We rely on software and services from other parties.
Any failure or perceived failure by us to comply with federal, state or foreign laws or regulations, industry standards, contractual obligations or other legal obligations, compliance frameworks that Okta has contractually 31 committed to comply with, or any actual or suspected privacy or security incident, even if unfounded, whether or not resulting in unauthorized access to, or acquisition, release or transfer of personal data or other data, may result in enforcement actions and prosecutions, private litigation, fines, penalties and censure, claims for damages by customers and other affected individuals, or adverse publicity and could cause our customers to lose trust in us, which could have an adverse effect on our reputation and business.
Any failure by us to comply with federal, state or foreign laws or regulations, industry standards, contractual obligations or other legal obligations, compliance frameworks that Okta has contractually committed to comply with, or any actual or suspected privacy or security incident, even if unfounded, whether or not resulting in unauthorized access to, or acquisition, release or transfer of personal data or other data, may result in enforcement actions and prosecutions, private litigation, fines, penalties and censure, claims for damages by customers and other affected individuals, or adverse publicity and could cause our customers to lose trust in us, which could have an adverse effect on our reputation and business.
Further, we may be subject to audits and investigations regarding our role as a subcontractor in government contracts, and violations could result in penalties and sanctions, including contract termination, refunding or forfeiting payments, fines, and suspension or debarment from future government business.
Further, we may be subject to audits and investigations regarding 26 our role as a subcontractor in government contracts, and violations could result in penalties and sanctions, including contract termination, refunding or forfeiting payments, fines, and suspension or debarment from future government business.
In addition, techniques used to sabotage or to obtain unauthorized 29 access to networks in which data is stored or through which data is transmitted change frequently, become more complex over time and generally are not recognized until launched against a target.
In addition, techniques used to sabotage or to obtain unauthorized access to networks in which data is stored or through which data is transmitted change frequently, become more complex over time and generally are not recognized until launched against a target.
Any one or more of the above could harm our business, results of operations and financial condition. 37 We use open source software in our products, which could negatively affect our ability to offer our products and subject us to litigation or other actions.
Any one or more of the above could harm our business, results of operations and financial condition. We use open source software in our products, which could negatively affect our ability to offer our products and subject us to litigation or other actions.
If we are unable to manage our continued growth successfully, our business and results of operations could suffer. In addition, as we expand our business, it is important that we continue to maintain a high level of customer service and satisfaction.
If we are unable to manage our continued growth successfully, our business and results of operations could suffer. 19 In addition, as we expand our business, it is important that we continue to maintain a high level of customer service and satisfaction.
We have in the past acquired, and we may in the future seek to acquire or invest in, businesses, products or technologies that we believe could complement or expand our current platform, enhance our technical capabilities or otherwise offer growth opportunities.
We have in the past acquired, and we may in the future seek to acquire or invest in, businesses, products, teams or technologies that we believe could complement or expand our current platform, enhance our technical capabilities or otherwise offer growth opportunities.
If we engage in additional debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specified 27 liquidity or other ratios or restrict our ability to pay dividends or make acquisitions.
If we engage in additional debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions.
Although we normally contractually limit our liability with respect to such obligations, the existence of such a dispute may have adverse effects on our customer relationship and reputation and we may still incur substantial liability related to them.
Although we normally contractually limit our liability with 38 respect to such obligations, the existence of such a dispute may have adverse effects on our customer relationship and reputation and we may still incur substantial liability related to them.
These breaches, or any perceived breach, of our systems, our customers’ systems, or other systems or networks secured by our products, whether or not any such breach is due to a vulnerability in our platform, may also undermine confidence in our platform or our industry and result in damage to our reputation and brand, negative publicity, loss of ISVs and other channel partners, customers and sales, increased costs to remedy any problem, costly litigation and other liability.
These breaches, or any perceived breach, of our systems, our customers’ systems, our service providers’ systems, or other systems or networks secured by our products, whether or not any such breach is due to a vulnerability in our platform, may also undermine confidence in our platform or our industry and result in damage to our reputation and brand, negative publicity, loss of ISVs and other channel partners, customers and sales, increased costs to remedy any problem, costly litigation and other liability.
Such disclosures may also be at least partially reliant on third-party information that we have not independently verified or cannot be independently 28 verified.
Such disclosures may also be at least partially reliant on third-party information that we have not independently verified or cannot be independently verified.
Any of these negative outcomes could adversely impact market acceptance of our products and could harm our business, results of operations and financial condition.
Any of these 30 negative outcomes could adversely impact market acceptance of our products and could harm our business, results of operations and financial condition.
Although we have disaster recovery plans that use multiple virtual data center locations, any incident affecting their infrastructure that may be caused by fire, flood, severe storm, earthquake, power loss, telecommunications failures, unauthorized intrusion, computer viruses and disabling devices, natural disasters, war, criminal act, military actions, terrorist attacks and other similar events beyond our control could negatively affect our platform.
Although we have disaster recovery plans that use multiple virtual data center locations, any incident affecting their infrastructure that may be caused by fire, flood, severe storm, earthquake, power loss, telecommunications failures, unauthorized intrusion or malicious action, computer viruses and disabling devices, natural disasters, war, criminal act, military actions, terrorist attacks and other similar events beyond our control could negatively affect our platform.
Accordingly, these shares will be able to be freely sold in the public market upon issuance, subject to applicable vesting requirements. Furthermore, a substantial number of shares of our Class A common stock is reserved for issuance upon the exercise of the Notes (as defined below) and the Warrants (as defined below).
Accordingly, these shares will be able to be freely sold in the public market upon issuance, subject to applicable vesting requirements. Furthermore, a substantial number of shares of our Class A common stock is reserved for issuance upon the exercise of the Notes (as defined below).
For example, we have experienced and continue to experience aspects of such challenges in connection with our May 2021 acquisition of Auth0. We may not be able to find and identify desirable acquisition targets or we may not be successful in entering into an agreement with any particular target.
For example, we have experienced aspects of such challenges in connection with our May 2021 acquisition of Auth0. We may not be able to find and identify desirable acquisition targets or we may not be successful in entering into an agreement with any particular target.
In addition to threats from traditional computer “hackers,” malicious code (such as malware, viruses, worms and ransomware), employee or contractor theft or misuse, password spraying, phishing and denial-of-service attacks, we and our third-party service providers now also face threats from sophisticated nation-state and nation-state-supported actors who engage in attacks (including advanced persistent threat intrusions) that add to the risks to our systems (including those hosted on AWS’ or other cloud services providers’ systems), internal networks, our customers’ systems and the information that they store and process.
In addition to threats from traditional computer “hackers,” malicious code (such as malware, viruses, worms and ransomware), employee or contractor theft or misuse, password spraying, phishing and denial-of-service attacks, we and our third-party service providers now also face threats from sophisticated nation-state actors and organized crime groups who engage in attacks (including advanced persistent threat intrusions) that add to the risks to our systems (including those hosted on AWS’ or other cloud services providers’ systems), internal networks, our customers’ systems and the information that we and they store and process.
Third parties have induced and may continue to fraudulently induce employees, contractors, customers or our customers’ users into disclosing sensitive information such as user names, passwords or other information or otherwise compromise the security of our applications, internal networks, electronic systems and/or physical facilities in order to gain access to our data or our customers’ data, which could result in significant legal and financial exposure, a loss of confidence in the security of our platform, interruptions or malfunctions in our 30 operations, account lock outs, and, ultimately, harm to our future business prospects and revenue.
Third parties have induced and may continue to fraudulently induce employees, contractors, customers or our customers’ users into disclosing sensitive information such as user names, passwords or other information or otherwise compromise the security of our applications, internal networks, electronic systems and/or physical facilities in order to gain access to our data or our customers’ data, which could result in significant legal and financial exposure, a loss of confidence in the security of our platform, interruptions or malfunctions in our operations, account lockouts, and, ultimately, harm to our future business prospects and revenue.
The conditional conversion features of the 2025 Notes were triggered as of January 31, 2021 and the 2025 Notes were convertible at the option of the holders between February 1, 2021 and April 30, 2021; however, as of January 31, 2023, the conditions allowing holders of the 2025 Notes to convert were not met.
The conditional conversion features of the 2025 Notes were triggered as of January 31, 2021 and the 2025 Notes were convertible at the option of the holders between February 1, 2021 and April 30, 2021; however, as of January 31, 2024, the conditions allowing holders of the 2025 Notes to convert were not met.
In addition, many state laws govern the privacy and security of health information in certain circumstances, many of which differ from HIPAA and each other in significant ways and may not have the same effect. In addition, the U.S.
In addition, many state laws govern the privacy and security of health information in certain circumstances, many of which differ from HIPAA and each other in significant ways and may not have the same effect.
We may experience occasional system interruptions that make some or all systems or data unavailable or prevent us from efficiently providing access to our platform. We also rely on third-party computer systems, broadband and other communications systems and service providers in connection with providing access to our platform generally.
We may experience occasional system interruptions that make some or all systems or data unavailable or prevent us from efficiently providing access to our platform. We also rely on third-party information technology systems, broadband and other communications systems and service providers in connection with providing access to our platform generally.
Our quarterly results of operations fluctuate from quarter to quarter as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including, but not limited to: • the level of demand for our platform; • our ability to attract new customers, obtain renewals from existing customers and upsell or otherwise increase our existing customers’ use of our platform; • health epidemics, such as COVID-19, influenza and other highly communicable diseases or viruses; • the timing and success of new product introductions by us or our competitors or any other change in the competitive landscape of our market; • pricing pressure as a result of competition, the inflation and interest rate environment and increased costs, COVID-19 or otherwise; • seasonal buying patterns for IT spending; • the mix of revenue attributable to larger transactions as opposed to smaller transactions, and the associated volatility and timing of our transactions; • changes in remaining performance obligations (“RPO”) due to seasonality, the timing of and compounding effects of renewals, invoice duration, size and timing, new business linearity between quarters and within a quarter, average contract term or fluctuations due to foreign currency movements, all of which may impact implied growth rates; • errors in our forecasting of the demand for our products, which could lead to lower revenue, increased costs or both; • increases in and timing of sales and marketing and other operating expenses that we may incur to grow and expand our operations and to remain competitive; • significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform and products; • our ability to comply with privacy laws and requirements, including the General Data Protection Regulation and California Consumer Privacy Act; • costs related to the acquisition of businesses, talent, technologies or intellectual property, including potentially significant amortization costs and possible write-downs; • credit or other difficulties confronting our channel partners; • adverse litigation judgments, settlements of litigation and other disputes or other litigation-related or dispute-related costs; • the impact of new accounting pronouncements and associated system implementations; • changes in the legislative or regulatory environment; • fluctuations in foreign currency exchange rates; • expenses related to real estate, including our office leases, and other fixed expenses; and • general economic conditions in either domestic or international markets, including the inflation and interest rate environment, geopolitical uncertainty and instability. 22 Any one or more of the factors above may result in significant fluctuations in our results of operations.
Our quarterly results of operations fluctuate from quarter to quarter as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including, but not limited to: • the level of demand for our platform; • our ability to attract new customers, obtain renewals from existing customers and upsell or otherwise increase our existing customers’ use of our platform; • the timing and success of new product introductions by us or our competitors or any other change in the competitive landscape of our market; • security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform and products, and any negative market perception or customer reactions related to, or arising from the disclosure of, such breaches, difficulties or interruptions; • pricing pressure as a result of competition, the inflation and interest rate environment and increased costs; • seasonal buying patterns for IT spending; • the mix of revenue attributable to larger transactions as opposed to smaller transactions, and the associated volatility and timing of our transactions; • changes in remaining performance obligations (“RPO”) due to seasonality, the timing of and compounding effects of renewals, invoice duration, size and timing, new business linearity between quarters and within a quarter, average contract term or fluctuations due to foreign currency movements, all of which may impact implied growth rates; • errors in our forecasting of the demand for our products, which could lead to lower revenue, increased costs or both; • increases in and timing of sales and marketing and other operating expenses that we may incur to grow and expand our operations and to remain competitive; • our ability to comply with privacy laws and requirements; • costs related to the acquisition of businesses, talent, technologies or intellectual property, including potentially significant amortization costs and possible write-downs; • credit or other difficulties confronting our channel partners; • adverse litigation judgments, settlements of litigation and other disputes or other litigation-related or dispute-related costs; • the impact of new accounting pronouncements and associated system implementations; • changes in the legislative or regulatory environment; • fluctuations in foreign currency exchange rates; • expenses related to real estate, including our office leases, and other fixed expenses; • health epidemics, such as COVID-19, influenza and other highly communicable diseases or viruses; and • general economic conditions in either domestic or international markets, including the inflation and interest rate environment, geopolitical uncertainty and instability.
For example, like other companies, we have experienced numerous cybersecurity attacks and have had to expend increasing amounts of human and financial capital to respond. We expect that these cybersecurity attacks will continue and that the scope and sophistication of these efforts may increase in future periods.
For example, like other companies, we have experienced an increase in cybersecurity attacks and have had to expend increasing amounts of human and financial capital to respond. We expect that these cybersecurity attacks will continue and that the scope and sophistication of these efforts will increase in future periods.
Furthermore, if our contractual subscription terms were to shorten it could lead to increased volatility of, and diminished visibility into, future recurring revenue. If our sales of new or recurring subscriptions and software-related support service contracts decline from existing customers, our revenue and revenue growth may decline, and our business will suffer. Customer growth could fall below expectations.
Furthermore, if our contractual subscription terms were to shorten it could lead to increased volatility of, and diminished visibility into, future recurring revenue. If our sales of new or recurring subscriptions and software-related support service contracts decline from existing customers, our revenue and revenue growth may decline, and our business will suffer.
As we continue to focus on sales to larger organizations and in light of the current COVID-19 environment, our sales cycles are lengthening in certain circumstances and becoming less predictable, which may harm our financial results.
As we continue to focus on sales to larger organizations and in light of the current macroeconomic environment, our sales cycles are lengthening in certain circumstances and becoming less predictable, which may harm our financial results.
We expect our operating expenses to significantly increase over the next several years as a result of the Auth0 acquisition, and as we hire additional personnel, particularly in sales and marketing, expand and improve the effectiveness of our distribution channels, expand our operations and infrastructure, both domestically and internationally, pursue business combinations and continue to develop our platform.
We expect our operating expenses to significantly increase over the next several years as we hire additional personnel, particularly in sales and marketing, expand and improve the effectiveness of our distribution channels, expand our operations and infrastructure, both domestically and internationally, pursue business combinations and continue to develop our platform.
State, foreign and local taxing jurisdictions have differing rules and regulations governing sales, use and other indirect taxes, and these rules and regulations are subject to varying interpretations that may change over time. In particular, the applicability of sales and value-added taxes to our platform in various jurisdictions is unclear.
State, foreign and local taxing jurisdictions have differing rules and regulations governing sales, use and other indirect taxes (including digital services taxes), and these rules and regulations are subject to varying interpretations that may change over time. In particular, the applicability of certain sales, value-added and digital services taxes to our platform in various jurisdictions is unclear.
The market price of our Class A common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including, but not limited to: • overall performance of the equity markets and/or publicly-listed technology companies; • volatility in the market prices and trading volumes of technology and high-growth companies generally, or those in our industry in particular; • actual or anticipated fluctuations in our revenue or other financial or operating metrics; • our ability to meet or exceed forward-looking guidance we have given, our ability to give forward-looking guidance consistent with past practices, and changes to or withdrawal of previous guidance or long-range targets; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates and/or recommendations by any securities analysts who follow our company; • our failure to meet the estimates or the expectations of securities analysts or investors; • actions and investment positions taken by institutional and other stockholders, including activist investors; • recruitment or departure of key personnel; • significant security breaches, technical difficulties or interruptions of our service; • the economy as a whole, the inflation and interest rate environment and market and industry conditions; • rumors and market speculation involving us or other companies in our industry; • announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • lawsuits threatened or filed against us; • other events or factors, including those resulting from war, incidents of terrorism, or responses to these events; and • sales of additional shares of our Class A common stock by us, our directors, our officers or our stockholders.
The market price of our Class A common stock fluctuates significantly in response to numerous factors, many of which are beyond our control, including, but not limited to: • overall performance of the equity markets and/or publicly-listed technology companies; • volatility in the market prices and trading volumes of technology and high-growth companies generally, or those in our industry in particular; • actual or anticipated fluctuations in our revenue or other financial or operating metrics; • our ability to meet or exceed forward-looking guidance we have given, our ability to give forward-looking guidance consistent with past practices, and changes to or withdrawal of previous guidance or long-range targets; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates and/or recommendations by any securities analysts who follow our company; • our failure to meet the estimates or the expectations of securities analysts or investors; • actions and investment positions taken by institutional and other stockholders, including activist investors; • recruitment or departure of key personnel; • security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform and products, and any negative market perception or customer reactions related to, or arising from the disclosure of, such breaches, difficulties or interruptions; • the economy as a whole, the inflation and interest rate environment and market and industry conditions; • rumors and market speculation involving us or other companies in our industry; • announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • lawsuits threatened or filed against us; • other events or factors, including those resulting from war, incidents of terrorism, or responses to these events; and • sales of additional shares of our Class A common stock by us, our directors, our officers or our stockholders.
While we have taken a number of remediation steps, there is no guarantee that our preventative and mitigation actions with respect to this incident and others like it will fully eliminate the risk of a malicious compromise of our, our third-party service providers’ or our customers’ systems.
While we have taken a number of remediation steps, there is no guarantee that our preventative and mitigation actions with respect to this incident and others like it will fully eliminate the risk of a malicious compromise of our or our customers’ systems.
From the date of issuance through January 31, 2023, the conditions allowing holders of the 2026 Notes to convert were not met.
From the date of issuance through January 31, 2024, the conditions allowing holders of the 2026 Notes to convert were not met.
The security measures we have integrated into our internal systems and platform, which are designed to detect unauthorized activity and prevent or minimize security breaches, may not function as expected or may not be sufficient to protect our internal networks and platform against certain attacks.
The security measures we have integrated into our internal systems and platform, which are designed to detect unauthorized activity and prevent or minimize security breaches, may not function as expected and have not in the past been, and may not in the future be, sufficient to protect our internal networks and platform against certain attacks.
This, in turn, may reduce the value of our service, and slow or eliminate the growth of our business, or cause our business to contract. Privacy is a mission-critical issue for Okta and for our customers.
This, in turn, may reduce the value of our service, and slow or eliminate the growth of our business, or cause our business to contract. Privacy is a key issue for Okta and for our customers.
Furthermore, as a well-known provider of identity and security solutions, any such breach, including a breach of our customers’ systems, could compromise systems secured by our products, creating system disruptions or slowdowns and exploiting security vulnerabilities of our or our customers’ systems, and the information stored on our or our customers’ systems could be accessed, publicly disclosed, altered, lost or stolen, which could subject us to liability and cause us financial harm.
Furthermore, as a well-known provider of identity and security solutions that form a part of our customers’ security software supply chain, any such breach, including a breach of our customers’ systems, could compromise systems secured by our products, creating system disruptions or slowdowns and exploiting security vulnerabilities of our or our customers’ systems, and the information stored on our or our customers’ systems could be accessed, publicly disclosed, altered, lost or stolen, which could subject us to liability and cause us financial harm.
We have a history of losses, and we expect to incur losses for the foreseeable future. We have incurred significant net losses in each year since our inception, including net losses of $266 million, $848 million and $815 million in fiscal 2021, 2022 and 2023, respectively. We expect to continue to incur net losses for the foreseeable future.
We have a history of losses, and we expect to incur losses for the foreseeable future. We have incurred significant net losses in each year since our inception, including net losses of $848 million, $815 million and $355 million in fiscal 2022, 2023 and 2024, respectively. We expect to continue to incur net losses for the foreseeable future.
If we are unable to successfully develop new products, enhance our existing products to meet customer requirements, or otherwise gain market acceptance, our business, results of operations and financial condition would be harmed. Further, to grow our business, we must convince developers to adopt and build their applications using our application programming interfaces (“APIs”) and products.
If we are unable to successfully develop new products, enhance our existing products to meet customer requirements, or otherwise gain market acceptance, our business, results of operations and financial condition would be harmed. Further, to grow our business, we must convince developers to adopt and build their applications using our APIs and products.
We currently have sales personnel outside the United States and maintain offices outside the United States in the Americas, Asia-Pacific and Europe, and we plan to continue to expand our international operations. Our international revenue was 20% and 22% of our total revenue in fiscal 2022 and fiscal 2023, respectively.
We currently have sales personnel outside the United States and maintain offices outside the United States in the Americas, Asia-Pacific and Europe, and we plan to continue to expand our international operations. Our international revenue was 22% and 21% of our total revenue in fiscal 2023 and fiscal 2024, respectively.
New income, sales, use, value-added or other taxes, tax laws, statutes, rules, regulations or ordinances could be enacted at any time. Those enactments could harm our domestic and international business operations, and our business and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us.
New income, sales, use, value-added or other transaction level taxes, tax laws, statutes, rules, regulations or ordinances could be enacted at any time. Those enactments could adversely impact our domestic and international business operations, and our business and financial performance. Further, existing tax laws, statutes, rules, 40 regulations or ordinances could be interpreted, changed, modified or applied adversely to us.
We have experienced, and may continue to experience, rapid growth and organizational change, which has placed, and may continue to place, significant demands on our management and our operational and financial resources. For example, our headcount has grown from 5,030 employees as of January 31, 2022 to 6,013 employees as of January 31, 2023.
We have experienced, and may continue to experience, rapid growth and organizational change, which has placed, and may continue to place, significant demands on our management and our operational and financial resources. For example, our headcount has grown from 5,030 employees as of January 31, 2022 to 5,908 employees as of January 31, 2024.
We have implemented various features intended to enable our customers to better comply with applicable privacy and security requirements in their collection and use of data within our online service, but these features do not ensure their compliance and may not be effective against all potential privacy or related regulatory concerns.
We have implemented various features intended to enable our customers to better comply with applicable privacy and security requirements in their collection and use of data within our online service, but these features have, in the past, not ensured and may, in the future, not ensure our customers’ compliance and may not be effective against all potential privacy or related regulatory concerns.
Our efforts to attract new personnel may be compounded by intensified restriction on travel (including during the COVID-19 pandemic), changes to immigration policy or the availability of work visas. Many of the companies with which we compete for experienced personnel have greater resources than we have.
Our efforts to attract new personnel may be compounded by intensified restriction on travel, changes to immigration policy or the availability of work visas. Many of the companies with which we compete for experienced personnel have greater resources than we have.
Concerns about the inflation and interest rate environment, the COVID-19 pandemic, the systemic impact of a widespread recession (in the United States or internationally), energy costs, geopolitical issues, such as Russia’s invasion of Ukraine, or the availability and cost of credit have and could continue to lead to increased market volatility, decreased consumer confidence and diminished growth expectations in the U.S. economy and abroad, which in turn could result in reductions in workforce identity and customer identity spending by our existing and prospective customers.
Concerns about the inflation and interest rate environment, the instability of financial institutions, health epidemics, the systemic impact of a widespread recession (in the United States or internationally), energy costs, geopolitical 17 issues, such as Russia’s invasion of Ukraine, or the availability and cost of credit have and could continue to lead to increased market volatility, decreased consumer confidence and diminished growth expectations in the U.S. economy and abroad, which in turn could result in reductions in workforce identity and customer identity spending by our existing and prospective customers.
As a result, we and our third-party service providers may be unable to anticipate these techniques or implement adequate preventative measures quickly enough to prevent either an electronic intrusion into our systems or services or a compromise of customer data, employee data or other protected information.
As a result, we and our third-party service providers have in the past been, and may in the future be, unable to anticipate these techniques or implement adequate preventative measures quickly enough to prevent either an electronic intrusion into our systems or services or a compromise of customer data, employee data or other protected information.
Our involvement in securities litigation could subject us to substantial costs, divert resources and the attention of management from our business, and harm our business. 43 The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to the completion of our IPO, including our directors, executive officers, and their affiliates, who held in the aggregate 41.7% of the voting power of our capital stock as of January 31, 2023.
Our involvement in securities litigation has, in the past, and could, in the future, subject us to substantial costs, divert resources and the attention of management from our business, and harm our business. 43 The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to the completion of our IPO, including our directors, executive officers, and their affiliates, who held in the aggregate 40.4% of the voting power of our capital stock as of January 31, 2024.
Any changes in such technologies that degrade the functionality of our products or give preferential treatment to competitive services could adversely affect adoption and usage of our platform.
Past and future changes in such technologies that degrade the functionality of our products or give preferential treatment to competitive services have, in the past, and could, in the future, adversely affect adoption and usage of our platform.
Other factors that may influence the length and variability of our sales cycle include, among other things: • the need to raise awareness about the uses and benefits of our platform, including our customer identity products; • the need to allay privacy, regulatory and security concerns; • the discretionary nature of purchasing and budget cycles and decisions; • the competitive nature of evaluation and purchasing processes; 25 • announcements or planned introductions of new products, features or functionality by us or our competitors; and • often lengthy purchasing approval processes.
Other factors that may influence the length and variability of our sales cycle include, among other things: • the need to raise awareness about the uses and benefits of our platform, including our customer identity products; • the need to allay privacy, regulatory and security concerns; • the discretionary nature of purchasing and budget cycles and decisions; • the competitive nature of evaluation and purchasing processes; • announcements or planned introductions of new products, features or functionality by us or our competitors; and • often lengthy purchasing approval processes. 25 Our increasing focus on sales to larger organizations may further increase the variability of our financial results.
Fire, flood, power loss, telecommunications failure, hurricanes, tornadoes, earthquakes, other natural disasters, acts of war or terrorism and similar events or disruptions may damage or interrupt computer, broadband or other communications systems and infrastructure at any time.
Fire, flood, power loss, telecommunications failure, hurricanes, tornadoes, earthquakes, other natural disasters, acts of war or terrorism, unauthorized access or malicious acts, and similar events or disruptions may damage or interrupt computers, broadband or other communications systems and infrastructure at any time.
If we do not address these risks successfully, our results of operations could differ materially from our estimates and forecasts or the expectations of investors, causing our business to suffer and our stock price to decline. We have experienced rapid growth in recent periods, and our prior growth rates may not be indicative of our future growth.
If we do not address these risks successfully, our results of operations could differ materially from our estimates and forecasts or the expectations of investors, causing our business to suffer and our stock price to decline. Our prior growth rates may not be indicative of our future growth.
Risks Related to Our Business and Industry Adverse general economic, market and industry conditions and reductions in workforce identity and customer identity spending may reduce demand for our products, which could harm our revenue, results of operations and cash flows. Our revenue, results of operations and cash flows depend on the overall demand for our products.
Risks Related to Our Business and Industry Adverse general economic, market and industry conditions and reductions in workforce identity and customer identity spending have, in the past, and may, in the future, reduce demand for our products, which could harm our revenue, results of operations and cash flows.
The regulatory environment applicable to the handling of EEA and UK residents' personal data, and our actions taken in response, may cause us to assume additional liabilities or incur additional costs and could result in our business, operating results and financial condition being harmed.
This regulatory environment applicable to the handling of personal data, and our actions taken in response, may cause us to assume additional liabilities or incur additional costs and could result in our business, results of operations and financial condition being harmed.
Our disclosures concerning security incidents also may become the subject of litigation, and our disclosures concerning the January 2022 compromise, for example, have become the subject of lawsuits, as discussed in Item 3 , “Legal Proceedings” below.
Our disclosures concerning security incidents also may become the subject of litigation, and our disclosures concerning the January 2022 compromise, for example, have become the subject of lawsuits, as discussed in Item 3, “ Legal Proceedings ” below.
As our customer base continues to grow, we will need to expand our account management, customer service and other personnel, and our network of ISVs, system integrators and other channel partners, to provide personalized account management and customer service.
As our customer base continues to grow, we will need to expand our account management, customer service and other personnel, and our network of independent software vendors (“ISVs”), system integrators and other channel partners, to provide personalized account management and customer service.
Numerous factors, however, may impede our ability to add new customers and sell additional products to our existing customers, including our failure to convert new organizations into paying customers, failure to attract, effectively train, retain and motivate sales and marketing personnel, failure to develop or expand relationships with channel partners, failure to successfully deploy products for new customers and provide quality customer support or failure to ensure the effectiveness of our marketing programs.
Numerous factors, however, may impede our ability to add new customers and sell additional products to our existing customers, including our failure to convert new organizations into paying customers, failure to attract, effectively train, retain and motivate sales and marketing personnel, failure to develop or expand relationships with channel partners, failure to successfully deploy products for new customers and provide quality customer support, failure to ensure the effectiveness of our marketing programs, or any negative market perception stemming from past or future security breaches.
All of our products use resources operated by us in these locations. Our operations depend on protecting the virtual cloud infrastructure hosted in AWS or other cloud services by maintaining its configuration, architecture and interconnection specifications, as well as the information stored in these virtual data centers and which third-party internet service providers transmit.
Our operations depend on protecting the virtual cloud infrastructure hosted in AWS or other cloud services by maintaining its configuration, architecture and interconnection specifications, as well as the information stored in these virtual data centers and which third-party internet service providers transmit.
In the event that our third-party service agreements are terminated, or there is a lapse of service, interruption of internet service provider connectivity or damage to such facilities, we could experience interruptions in access to our platform as well as delays and additional expense in arranging new facilities and services. 35 Our success depends, in part, on the integrity and scalability of our systems and infrastructures.
In the event that our third-party service agreements are terminated, or there is a lapse of service, interruption of internet service provider connectivity or damage to such facilities, we could experience interruptions in access to our platform as well as delays and additional expense in arranging new facilities and services.
As our costs increase, we may not be able to generate sufficient revenue to achieve and, if achieved, maintain profitability. From fiscal 2021 to fiscal 2022, our revenue grew from $835 million to $1,300 million, an increase of 56%, and from fiscal 2022 to fiscal 2023, our revenue grew from $1,300 million to $1,858 million, an increase of 43%.
As our costs increase, we may not be able to generate sufficient revenue to achieve and, if achieved, maintain profitability. From fiscal 2022 to fiscal 2023, our revenue grew from $1,300 million to $1,858 million, an increase of 43%, and from fiscal 2023 to fiscal 2024, our revenue grew from $1,858 million to $2,263 million, an increase of 22%.
We may incur substantial expense in complying with any new obligations and we may be required to make significant changes in our business operations and product and services development, all of which may adversely affect our revenues and our business overall.
We may incur substantial expense in complying with any new obligations, we may be required to make significant changes in our business operations and product and services development, and we may not be able to comply with some of these regulatory developments, all of which may adversely affect our revenues and our business overall.
Despite significant efforts to create security barriers to such threats, it is virtually impossible for us to entirely mitigate these risks. As a well-known provider of identity and security solutions, we pose an attractive target for such attacks.
Despite significant efforts to create security barriers to such threats, it is virtually impossible for us to entirely mitigate these risks. As a well-known provider of identity and security solutions that form a part of our customers’ security software supply chain, we pose an attractive target for such attacks.
Some observers see this influx of state privacy regimes as a trend toward more stringent privacy legislation in the United States, including a potential federal privacy law, all of which could increase our potential liability and adversely affect our business.
This influx of state privacy regimes indicates a trend toward more stringent privacy legislation in the United States, including a potential federal privacy law, which could also increase our potential liability and adversely affect our business.
Our customer retention and expansion may decline or fluctuate as a result of a number of factors, including our customers’ satisfaction with our products, our product support, our prices and pricing plans, particularly in light of COVID-19-related economic conditions, the inflation and interest rate environment and increased costs, the prices of competing software products, reductions in our customers’ spending levels, user adoption of our platform, deployment success, utilization rates by our customers, new product releases and changes to the packaging of our product offerings.
Our customer retention and expansion has, in the past, and may, in the future, decline or fluctuate as a result of a number of factors, including our customers’ satisfaction with our products, our product support, our prices and pricing plans, particularly in light of macroeconomic conditions, the inflation and interest rate environment and increased costs, the prices of competing software products, reductions in our customers’ spending levels, user adoption of our platform, deployment success, negative sentiment stemming from cybersecurity incidents, utilization rates by our customers, new product releases and changes to the packaging of our product offerings.
If these developers stop developing on or supporting our platform, we will lose the benefit of network effects that have contributed to the growth in our number of customers, and our business (including the performance levels of our products), results of operations and financial condition could be harmed. 20 Our business depends on our customers renewing their subscriptions and purchasing additional licenses or subscriptions from us.
If these developers stop developing on or supporting our platform, we will lose the benefit of network effects that have contributed to the growth in our number of customers, and our business (including the performance levels of our products), results of operations and financial condition could be harmed.
System interruption and a lack of integration and redundancy in our information systems and infrastructure may adversely affect our ability to operate websites, process and fulfill transactions, respond to customer inquiries and generally maintain cost-efficient operations.
Our success depends, in part, on our ability to maintain the integrity of our systems and infrastructure, including websites, information and related systems. System interruption and a lack of integration and redundancy in our information systems and infrastructure may adversely affect our ability to operate websites, process and fulfill transactions, respond to customer inquiries and generally maintain cost-efficient operations.
We have encountered and will continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries, including the risks and uncertainties described in this document.
We have encountered and will continue to encounter risks and uncertainties that growing companies frequently experience in rapidly changing industries and macroeconomic environments, including the risks and uncertainties described in this document.
Furthermore, we might be forced to limit the features available in our current or future products. These delays and feature limitations, if they occur, could harm our business, results of operations and financial condition. Real or perceived errors, failures, vulnerabilities or bugs in our products, including deployment complexity, could harm our business and results of operations.
Furthermore, we might be forced to limit the features available in our current or future products. These delays and feature limitations, if they occur, could harm our business, results of operations and financial condition.
We rely on a combination of patents, copyrights, trademarks, service marks, trade secret laws and contractual restrictions to establish and protect our proprietary rights. However, the steps we take to protect our intellectual property may be inadequate.
Our success is dependent, in part, upon protecting our proprietary information and technology. We rely on a combination of patents, copyrights, trademarks, service marks, trade secret laws and contractual restrictions to establish and protect our proprietary rights. However, the steps we take to protect our intellectual property may be inadequate.
In addition, various countries regulate the import of certain encryption technology, including through import and licensing requirements, and have enacted laws that could limit our ability to distribute our service or could limit our customers’ ability to implement our service in those countries.
In addition, various countries regulate the import of certain encryption technology, including through import and licensing requirements, and have enacted laws that could limit our ability to distribute our service or could limit our customers’ ability to implement our service in those countries. These laws and regulations may change frequently in response to evolving international issues.
Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly and prohibit companies and their employees and agents from promising, authorizing, making or offering improper payments or other benefits to government officials and others in the private sector. As we increase our international sales and business, our risks under these laws may increase.
Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly and prohibit companies and their employees and agents from promising, authorizing, making or offering improper payments or other benefits to government officials and others in the private sector.
We believe our revenue growth depends on a number of factors, such as macroeconomic conditions including the inflation and interest rate environment, budget constraints and the economic impact of the COVID-19 pandemic, as well as, but not limited to, our ability to: • price our platform effectively so that we are able to attract and retain customers without compromising our profitability; • attract new customers, successfully deploy and implement our platform, upsell or otherwise increase our existing customers’ use of our platform, obtain customer renewals and provide our customers with excellent customer support; • increase our network of channel partners, which include resellers, system integrators and other distribution partners and independent software vendors (“ISVs”); • adequately expand our sales force, and maintain or increase our sales force’s productivity; • successfully identify and enter into agreements with suitable acquisition targets, integrate any acquisitions and integrate acquired technologies into our existing products or use them to develop new products; • successfully introduce new products, enhance existing products and address new use cases; • introduce our platform to new markets outside of the United States; • successfully compete against larger companies and new market entrants; and • increase awareness of our brand on a global basis.
We believe our revenue growth depends on a number of factors, such as macroeconomic conditions including the inflation and interest rate environment and budget constraints, as well as, but not limited to, our ability to: • price our platform effectively so that we are able to attract and retain customers without compromising our profitability; • attract new customers, successfully deploy and implement our platform, upsell or otherwise increase our existing customers’ use of our platform, obtain customer renewals and provide our customers with excellent customer support; • increase our network of channel partners; • adequately expand our sales force, and maintain or increase our sales force’s productivity; • protect against security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform and products, and any negative market perception or customer reactions related to, or arising from the disclosure of, such breaches, difficulties or interruptions; 18 • successfully identify and enter into agreements with suitable acquisition targets, integrate any acquisitions and integrate acquired technologies into our existing products or use them to develop new products; • successfully introduce new products, enhance existing products and address new use cases; • introduce our platform to new markets outside of the United States; • successfully compete against larger companies and new market entrants; and • increase awareness of our brand on a global basis.
Because techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and generally are not recognized until launched against a target, we, our third-party service providers and our customers may be unable to anticipate these techniques or to implement adequate preventive measures.
Techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and generally are not recognized until launched against a target. As a result, we, our third-party service providers and our customers have not in the past been, and may not in the future be, able to anticipate these techniques or to implement adequate preventive measures.
System interruption and the lack of integration, redundancy and scalability in these systems and infrastructures may harm our business, results of operations and financial condition. Our success depends, in part, on our ability to maintain the integrity of our systems and infrastructure, including websites, information and related systems.
Our success depends, in part, on the integrity and scalability of our systems and infrastructures. System interruption and the lack of integration, redundancy and scalability in these systems and infrastructures may harm our business, results of operations and financial condition.
Future acquisitions, investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of management personnel, disrupt our business, dilute stockholder value and harm our results of operations and financial condition.
Such a loss of anticipated revenue to offset our research and development expenditures may harm our business, results of operations and financial condition. Future acquisitions, investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of management personnel, disrupt our business, dilute stockholder value and harm our results of operations and financial condition.
A portion of our sales are to partners that resell our services to government agencies, and we have made, and plan to continue to make, investments to support future sales opportunities in the government sector.
A portion of our revenues are generated by sales to government entities, which are subject to a number of challenges and risks. A portion of our sales are to partners that resell our services to government agencies, and we have made, and plan to continue to make, investments to support future sales opportunities in the government sector.
We believe that developing and maintaining awareness of our brand in a cost-effective manner is critical to achieving widespread acceptance of our existing and future products and is an important element in attracting new customers.
We believe that developing and maintaining awareness of our brand in a cost-effective manner is critical to achieving widespread acceptance of our existing and future products and is an important element in attracting new customers. Furthermore, we believe that the importance of brand recognition will increase as competition in our market increases.
We rely on a number of third-party service providers to operate our services, any of which, if it encountered interruptions or delays, could negatively affect our platform, damage our reputation, expose us to liability, cause us to lose customers or otherwise harm our business. For example, we host our platform using AWS data centers and other third-party cloud infrastructure services.
We rely on a number of third-party service providers to operate our services, any of which, if it encounters interruptions or delays, could negatively affect our platform, damage our reputation, expose us to liability, cause us to lose customers or otherwise harm our business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters is located in San Francisco, California, where we currently lease approximately 285,996 square feet under a lease, as amended, that expires in October 2028. We are entitled to two five-year options to extend this lease, subject to certain requirements.
Biggest changeItem 2. Properties Our corporate headquarters is located in San Francisco, California, where we currently lease approximately 285,996 square feet under a lease, as amended, that expires in October 2028. We are entitled to two five-year options to extend this lease, subject to certain requirements. We sublease approximately 111,168 square feet of space under this lease to third parties.
We also lease space in various locations in the Americas, Europe and Asia-Pacific. 48 We believe that our facilities are suitable to meet our current needs.
We also lease space in various locations in the Americas, Europe and Asia-Pacific. We believe that our facilities are suitable to meet our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe lawsuit asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, alleging that the defendants made false or misleading statements or omissions concerning the Company’s cybersecurity controls, vulnerability to data breaches, and the Company’s integration of Auth0. The lawsuit seeks an order certifying the lawsuit as a class action and unspecified damages.
Biggest changeThe lawsuit asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), alleging that the defendants made false or misleading statements or omissions concerning the Company’s cybersecurity controls, vulnerability to data breaches, and the Company’s integration of Auth0.
Item 3. Legal Proceedings On May 20, 2022, a purported shareholder filed a putative class action lawsuit in the United States District Court for the Northern District of California against the Company and certain of its executive officers, captioned In re Okta, Inc. Securities Litigatio n, No. 3:22-cv-02990.
Item 3. Legal Proceedings On May 20, 2022, a purported shareholder filed a putative class action lawsuit in the United States District Court for the Northern District of California against the Company and certain of its executive officers, captioned In re Okta, Inc. Securities Litigation , No. 3:22-cv-02990.
See Note 11 to our consolidated financial statements "Commitments and Contingencies" for information related to legal proceedings. Item 4. Mine Safety Disclosures Not Applicable. 49 Part II
See Note 10 to our consolidated financial statements "Commitments and Contingencies" for information related to legal proceedings. Item 4. Mine Safety Disclosures Not Applicable. 51 Part II
The lawsuits seek orders permitting the plaintiffs to maintain this action derivatively on behalf of the Company, awarding unspecified damages allegedly sustained by the Company, awarding restitution from the individual defendants, and requiring the Company to make certain reforms to its corporate governance and controls. The Company intends to defend these lawsuits vigorously.
The lawsuits seek orders permitting the plaintiffs to maintain the actions derivatively on behalf of the Company, awarding unspecified damages allegedly sustained by the Company, awarding restitution from the individual defendants, and requiring the Company to make certain reforms to its corporate governance and controls.
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The lawsuit seeks an order certifying the lawsuit as a class action and unspecified damages. The defendants moved to dismiss the amended complaint. On March 31, 2023, the court issued an order granting in part and denying in part the motion to dismiss.
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The court dismissed in full the claims based on the plaintiff’s allegations related to the Company’s cybersecurity controls and vulnerability to data breaches, and dismissed in part and denied in part the claims based on allegations related to the Auth0 integration.
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On November 1, 2023, the plaintiffs filed a motion for class certification, on January 17, 2024, the defendants filed a notice of non-opposition to the motion, and on February 5, 2024, the court granted the motion. The court has not otherwise issued a scheduling order, and discovery is proceeding.
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On February 22, 2023, the court entered a stipulated order consolidating the derivative actions, appointing co-lead counsel for plaintiffs, and staying the consolidated derivative actions during the pendency of the motion to dismiss in the securities class action lawsuit. The consolidated derivative action is captioned In re Okta, Inc. Stockholder Derivative Litigation , No. 3:22-cv-07480.
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On May 9, 2023, the court entered a stipulated order continuing the stay through the close of discovery in the securities class action lawsuit.
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On April 14, 2023, another shareholder filed a substantially similar derivative lawsuit in the United States District Court for the District of Delaware against certain of the Company’s current and former executive officers and directors, captioned Buono v. McKinnon et al. , No. 1:23-cv-00413.
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On May 31, 2023, the court entered a stipulated order whereby the defendants agreed to accept service and stay the derivative action through the close of discovery in the securities class action lawsuit.
Added
On January 25, 2024, another shareholder filed a substantially similar derivative lawsuit in the United States District Court for the District of Delaware against certain of the Company’s current and former executive officers and directors, captioned Nasr v. McKinnon, et al. , No. 1:24-cv-00106. The Company is defending these lawsuits vigorously.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed4 unchanged
Biggest changeCompany/Index 1/31/2018 1/31/2019 1/31/2020 1/31/2021 1/31/2022 1/31/2023 Okta $ 100 $ 280 $ 435 $ 879 $ 672 $ 250 S&P 500 Index 100 98 119 139 172 158 S&P 500 Information Technology Index 100 99 145 199 251 212 51 Securities Authorized for Issuance under Equity Compensation Plans The information required by this item with respect to our equity compensation plans is incorporated by reference to our Proxy Statement for the 2023 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days of the fiscal year ended January 31, 2023.
Biggest changeCompany/Index 1/31/2019 1/31/2020 1/31/2021 1/31/2022 1/31/2023 1/31/2024 Okta $ 100 $ 155 $ 314 $ 240 $ 89 $ 100 S&P 500 Index 100 122 143 176 161 195 S&P 500 Information Technology Index 100 146 200 253 214 320 53 Securities Authorized for Issuance under Equity Compensation Plans The information required by this item with respect to our equity compensation plans is incorporated by reference to our 2024 Annual Report to Stockholders, which includes our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended January 31, 2024.
The following graph shows a five-year comparison of cumulative total return (equal to dividends plus stock appreciation) for our Class A common stock, the Standard & Poor’s 500 Stock Index ("S&P 500 Index") and Standard & Poor's Information Technology Index ("S&P 500 Information Technology Index").
The following graph shows a five-year comparison of cumulative total return (equal to dividends plus stock appreciation) for our Class A common stock, the Standard & Poor’s 500 Index ("S&P 500 Index") and Standard & Poor's Information Technology Index ("S&P 500 Information Technology Index").
Any further determination to pay dividends on our capital stock will be at the discretion of our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors considers relevant. 50 Stock Performance Graph This performance graph shall not be deemed "soliciting material" or to be "filed" with the Securities and Exchange Commission ("SEC") for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Okta, Inc. under the Securities Act of 1933, as amended ("Securities Act") or the Exchange Act.
Any further determination to pay dividends on our capital stock will be at the discretion of our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors considers relevant. 52 Stock Performance Graph This performance graph shall not be deemed "soliciting material" or to be "filed" with the Securities and Exchange Commission ("SEC") for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Okta, Inc. under the Securities Act of 1933, as amended ("Securities Act") or the Exchange Act.
Unregistered Sales of Equity Securities In connection with conversions of certain convertible notes due in 2023 ("2023 Notes") during the fiscal year ended January 31, 2023, we issued 355,932 shares of our Class A common stock. These issuances were made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.
Unregistered Sales of Equity Securities In connection with conversions of certain convertible notes due in 2023 ("2023 Notes") during the fiscal year ended January 31, 2024, we issued 81 shares of our Class A common stock. These issuances were made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.
We relied on this exemption from registration based in part on representations made by the holders of the 2023 Notes in the exchange agreements pursuant to which the shares of Class A Common Stock were issued. Issuer Purchases of Equity Securities None. 52 OKTA, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We relied on this exemption from registration based in part on representations made by the holders of the 2023 Notes in the exchange agreements pursuant to which the shares of Class A Common Stock were issued. Issuer Purchases of Equity Securities None. Item 6. [Reserved] 54 OKTA, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Class B common stock is not listed or traded on any stock exchange. As of February 27, 2023, we had 104 holders of record of our Class A common stock and 17 holders of record of our Class B common stock.
Our Class B common stock is not listed or traded on any stock exchange. As of February 26, 2024, we had 68 holders of record of our Class A common stock and 17 holders of record of our Class B common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

66 edited+28 added−44 removed50 unchanged
Biggest changeYear Ended January 31, 2023 2022 2021 (dollars in millions) Total revenue $ 1,858 $ 1,300 $ 835 Add: Deferred revenue (end of period) 1,260 996 514 Unbilled receivables (beginning of period) 3 3 1 Acquired unbilled receivables — 2 — Less: Deferred revenue (beginning of period) (996) (514) (371) Unbilled receivables (end of period) (2) (3) (3) Acquired deferred revenue — (66) — Calculated Billings $ 2,123 $ 1,718 $ 976 Liquidity and Capital Resources As of January 31, 2023, our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $2,580 million, which were held for working capital and general corporate purposes, including potential future acquisition activity.
Biggest changeMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Liquidity and Capital Resources As of January 31, 2024, our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $2,202 million, which were held for working capital and general corporate purposes, including potential future acquisition activity.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors” under Part I, Item 1A in this Annual Report on Form 10-K. Our fiscal year ends January 31.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors” under Part I, Item 1A of this Annual Report on Form 10-K. Our fiscal year ends January 31.
We base subscription fees primarily on the products used and the number of users on our platform. We typically invoice customers in advance in annual installments for subscriptions to our platform. Our revenue is relatively predictable as a result of our subscription-based business model, which constituted approximately 97% of total revenue for fiscal 2023.
We base subscription fees primarily on the products used and the number of users on our platform. We typically invoice customers in advance in annual installments for subscriptions to our platform. Our revenue is relatively predictable as a result of our subscription-based business model, which constituted approximately 97% of total revenue for fiscal 2024.
Our cash equivalents and investments consisted primarily of U.S. treasury securities, corporate debt securities and money market funds. Historically, we have generated significant operating losses and both positive and negative cash flows from operations as reflected in our accumulated deficit and consolidated statements of cash flows.
Our cash equivalents and investments consisted primarily of U.S. treasury securities, money market funds, corporate debt securities and certificates of deposit. Historically, we have generated significant operating losses and both positive and negative cash flows from operations as reflected in our accumulated deficit and consolidated statements of cash flows.
A discussion regarding our financial condition and results of operations for fiscal 2022 compared to fiscal 2021 can be found under Item 7 in our Annual Report on Form 10-K for fiscal 2022, filed with the SEC on March 7, 2022, which is available free of charge on the SEC’s website at www.sec.gov and our Investor Relations website at investor.okta.com.
A discussion regarding our financial condition and results of operations for fiscal 2023 compared to fiscal 2022 can be found under Item 7 in our Annual Report on Form 10-K for fiscal 2023, filed with the SEC on March 3, 2023, which is available free of charge on the SEC’s website at www.sec.gov and our Investor Relations website at investor.okta.com.
Future growth may be impacted by longer sales cycles, which we have experienced, which in turn, could result in delays in deals closing, creating near-term headwinds for cash flow, remaining performance obligations (“RPO”) and billings growth as well as potential future impacts on revenue growth and other key metrics on a trailing basis.
Future growth may be impacted by longer sales cycles, which we have experienced, which in turn, could result in delays in deals closing, creating near-term headwinds for cash flow, remaining performance obligations (“RPO”) and billings growth as well as potential future impacts on revenue growth and other key metrics on a trailing basis. 55 OKTA, INC.
These expenses include employee-related costs associated with our cloud-based infrastructure and our customer support organization, third-party hosting fees, software and maintenance costs, outside services associated with the delivery of our subscription services, amortization expense associated with capitalized internal-use software and acquired developed technology and allocated overhead. 55 OKTA, INC.
These expenses include employee-related costs associated with our cloud-based infrastructure and our customer support organization, third-party hosting fees, software and maintenance costs, outside services associated with the delivery of our subscription services, amortization expense associated with capitalized internal-use software and acquired developed technology and allocated overhead.
(2) See Note 10 to our consolidated financial statements "Leases" for additional information. (3) Purchase obligations primarily relate to data center hosting facilities, and other sales and marketing obligations.
(2) See Note 9 to our consolidated financial statements "Leases" for additional information. (3) Purchase obligations primarily relate to data center hosting facilities, and other sales and marketing obligations.
We sell our products directly through our field and inside sales teams, as well as indirectly through our network of channel partners, including resellers, system integrators and other distribution partners. Our subscription fees include the use of our service and our technical support and management of our platform.
We sell our product offerings directly through our field and inside sales teams, as well as indirectly through our network of channel partners, including resellers, system integrators and other distribution partners. Our subscription fees include the use of our service and our technical support and management of our platform.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) A discussion regarding our financial condition and results of operations for fiscal 2023 compared to fiscal 2022 is presented below.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) A discussion regarding our financial condition and results of operations for fiscal 2024 compared to fiscal 2023 is presented below.
Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards.
Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. 66 OKTA, INC.
Increasing awareness of our platform and capabilities, coupled with the mainstream adoption of cloud technology, has expanded the diversity of our customer base to include organizations of all sizes across all industries. The number of customers who have greater than $100,000 in ACV with us was 3,930, 3,100 and 1,950 as of January 31, 2023, 2022 and 2021, respectively.
Increasing awareness of our platform and capabilities, coupled with the mainstream adoption of cloud technology, has expanded the diversity of our customer base to include organizations of all sizes across all industries. The number of customers who have greater than $100,000 in ACV with us was 4,485, 3,930 and 3,100 as of January 31, 2024, 2023 and 2022, respectively.
Current RPO represents the portion of RPO expected to be recognized during the next 12 months. RPO fluctuates due to a number of factors, including the timing, duration and dollar amount of customer contracts and fluctuations in foreign currency exchange rates.
Current RPO represents the portion of RPO expected to be recognized during the next 12 months. RPO fluctuates due to a number of factors, including the timing, duration and dollar amount of customer contracts and fluctuations in foreign currency exchange rates. Components of Results of Operations Revenue Subscription Revenue.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) The following table sets forth our results of operations for the periods presented as a percentage of our total revenue: Year Ended January 31, 2023 2022 2021 Revenue Subscription 97 % 96 % 95 % Professional services and other 3 4 5 Total revenue 100 100 100 Cost of revenue Subscription 25 25 20 Professional services and other 4 5 6 Total cost of revenue 29 30 26 Gross profit 71 70 74 Operating expenses Research and development 33 36 27 Sales and marketing 58 59 51 General and administrative 22 34 20 Restructuring and other charges 2 — — Total operating expenses 115 129 98 Operating loss (44) (59) (24) Interest expense (1) (7) (9) Interest income and other, net 2 1 1 Loss on early extinguishment and conversion of debt — — — Interest and other, net 1 (6) (8) Loss before provision for (benefit from) income taxes (43) (65) (32) Provision for (benefit from) income taxes 1 — — Net loss (44) % (65) % (32) % 58 OKTA, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) The following table sets forth our results of operations for the periods presented as a percentage of our total revenue: Year Ended January 31, 2024 2023 2022 Revenue Subscription 97 % 97 % 96 % Professional services and other 3 3 4 Total revenue 100 100 100 Cost of revenue Subscription 22 25 25 Professional services and other 4 4 5 Total cost of revenue 26 29 30 Gross profit 74 71 70 Operating expenses Research and development 29 33 36 Sales and marketing 46 58 59 General and administrative 20 22 34 Restructuring and other charges 2 2 — Total operating expenses 97 115 129 Operating loss (23) (44) (59) Interest expense — (1) (7) Interest income and other, net 4 2 1 Gain on early extinguishment of debt 4 — — Interest and other, net 8 1 (6) Loss before provision for (benefit from) income taxes (15) (43) (65) Provision for (benefit from) income taxes 1 1 — Net loss (16) % (44) % (65) % 60 OKTA, INC.
As of January 31, 2023, we had deferred revenue of $1,260 million, of which $1,242 million was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.
As of January 31, 2024, we had deferred revenue of $1,511 million, of which $1,488 million was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.
Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended January 31, 2023 2022 2021 (dollars in millions) Net cash provided by operating activities $ 86 $ 104 $ 128 Net cash used in investing activities (130) (367) (1,305) Net cash provided by financing activities 48 89 1,092 Effects of changes in foreign currency exchange rates on cash, cash equivalents and restricted cash (6) (2) 2 Net decrease in cash, cash equivalents and restricted cash $ (2) $ (176) $ (83) Operating Activities Our largest source of operating cash is cash collections from our customers for subscription and professional services.
Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended January 31, 2024 2023 2022 (dollars in millions) Net cash provided by operating activities $ 512 $ 86 $ 104 Net cash provided by (used in) investing activities 441 (130) (367) Net cash provided by (used in) financing activities (883) 48 89 Effects of changes in foreign currency exchange rates on cash, cash equivalents and restricted cash 1 (6) (2) Net increase (decrease) in cash, cash equivalents and restricted cash $ 71 $ (2) $ (176) Operating Activities Our largest source of operating cash is cash collections from our customers for subscription and professional services.
Employee compensation costs reflected in each of the cost of revenue and operating expense categories include salaries, bonuses, compensation related taxes, benefits and stock-based compensation. Additionally included in the sales and marketing expense category are sales commissions and related taxes. Cost of Revenue and Gross Margin Cost of Subscription .
Employee compensation costs reflected in each of the cost of revenue and operating expense categories include salaries, bonuses, compensation related taxes, benefits and stock-based compensation. Additionally included in the sales and marketing expense category are sales commissions and related taxes. 57 OKTA, INC.
As of January 31, 2023, we had over 7,000 integrations with these cloud, mobile and web applications and IT infrastructure and security vendors. We employ a SaaS business model and generate revenue primarily by selling multi-year subscriptions to our cloud-based offerings.
We also partner with leading application, IT infrastructure and security vendors through our Okta Integration Network. As of January 31, 2024, we had over 7,000 integrations with these cloud, mobile and web applications and IT infrastructure and security vendors. We employ a SaaS business model and generate revenue primarily by selling multi-year subscriptions to our cloud-based offerings.
Recent Accounting Pronouncements See Note 2 to our consolidated financial statements “Summary of Significant Accounting Policies — Recently Adopted Accounting Pronouncements" for more information. 69
Recent Accounting Pronouncements See Note 2 to our consolidated financial statements “Summary of Significant Accounting Policies — Recent Accounting Pronouncements Not Yet Adopted" for more information. 68
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) We intend to continue to invest additional resources in our platform infrastructure and our platform support organizations. We will continue to invest in technology innovation and we anticipate that costs qualifying for capitalization of internal-use software costs and related amortization may fluctuate over time.
We intend to continue to invest additional resources in our platform infrastructure, our platform support organizations and security posture. We will continue to invest in technology innovation and we anticipate that costs qualifying for capitalization of internal-use software costs and related amortization may fluctuate over time.
As of January 31, 2023 2022 2021 (dollars in millions) Number of customers 17,600 15,000 10,000 Customers with annual contract value ("ACV") above $100,000 3,930 3,100 1,950 Dollar-based net retention rate for the trailing 12 months ended 120 % 124 % 121 % Current remaining performance obligations $ 1,684 $ 1,351 $ 842 Remaining performance obligations $ 3,007 $ 2,694 $ 1,797 Calculated billings $ 2,123 $ 1,718 $ 976 Total Customers and Number of Customers with Annual Contract Value Above $100,000 As of January 31, 2023, we had over 17,600 customers on our platform.
As of January 31, 2024 2023 2022 (dollars in millions) Number of customers 18,950 17,600 15,000 Customers with annual contract value ("ACV") above $100,000 4,485 3,930 3,100 Dollar-based net retention rate for the trailing 12 months ended 111 % 120 % 124 % Current remaining performance obligations $ 1,952 $ 1,684 $ 1,351 Remaining performance obligations $ 3,385 $ 3,007 $ 2,694 Total Customers and Number of Customers with Annual Contract Value Above $100,000 As of January 31, 2024, we had over 18,950 customers on our platform.
On August 2, 2021, we completed the acquisition of Townsend Street Labs, Inc. ("atSpoke"), providing total cash consideration, net of cash acquired of $79 million. Of this amount, $13 million of consideration was held back as partial security for any adjustments and indemnification obligations and will be paid within 18 months of the closing date.
On August 2, 2021, we completed the acquisition of Townsend Street Labs, Inc. ("atSpoke"), providing total cash consideration, net of cash acquired of $79 million. Of this amount, $13 million of consideration was held back as partial security for any adjustments and indemnification obligations and was paid during fiscal 2024. 64 OKTA, INC.
The increase in revenue was attributable to a 17% increase in total customers, from over 15,000 as of January 31, 2022, to over 17,600 as of January 31, 2023, and revenue from existing customers as reflected in our Dollar-Based Net Retention Rate of 120% as of January 31, 2023.
The increase in revenue was attributable to a 8% increase in total customers, from over 17,600 as of January 31, 2023, to over 18,950 as of January 31, 2024, and revenue from existing customers as reflected in our Dollar-Based Net Retention Rate of 111% as of January 31, 2024.
We believe our existing cash and cash equivalents, our investments and cash provided by sales of our products and services will be sufficient to meet our short-term and long-term projected working capital and capital expenditure needs for the foreseeable future.
See Note 16 to our consolidated financial statements "Subsequent Events" for additional information. We believe our existing cash and cash equivalents, our investments and cash provided by sales of our products and services will be sufficient to meet our short-term and long-term projected working capital and capital expenditure needs for the foreseeable future.
Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Restructuring and Other Charges Year Ended January 31, 2023 2022 $ Change % Change (dollars in millions) Restructuring and other charges $ 29 $ — $ 29 — % Percentage of revenue 2 % — % For fiscal 2023, restructuring and other charges relate to severance and termination benefit costs of $15 million and lease impairment charges of $14 million.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Restructuring and Other Charges Year Ended January 31, 2024 2023 $ Change % Change (dollars in millions) Restructuring and other charges $ 56 $ 29 $ 27 92 % Percentage of revenue 2 % 2 % For fiscal 2024, restructuring and other charges increased primarily due to an increase of $14 million in lease impairment charges and an increase of $13 million in severance and termination benefit costs.
Key Business Metrics We review a number of operating and financial metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.
Our accumulated deficit as of January 31, 2024 was $2,830 million. Key Business Metrics We review a number of operating and financial metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.
These services include application configuration, system integration and training services. We generally invoice customers as the work is performed for time-and-materials arrangements, and up front for fixed fee arrangements. All professional services revenue is recognized as the services are performed.
Professional services revenue includes fees from assisting customers in implementing and optimizing the use of our products. These services include application configuration, system integration and training services. We generally invoice customers as the work is performed for time-and-materials arrangements, and up front for fixed fee arrangements. Professional services revenue is recognized as the services are performed.
Subscription revenue is driven primarily by the number of customers, the number of users per customer and the products used. We typically invoice customers in advance in annual installments for subscriptions to our platform. Professional Services and Other . Professional services revenue includes fees from assisting customers in implementing and optimizing the use of our products.
Subscription revenue primarily consists of fees for access to and usage of our cloud-based platform and related support. Subscription revenue is driven primarily by the number of customers, the number of users per customer and the products used. We typically invoice customers in advance in annual installments for subscriptions to our platform. Professional Services and Other .
Operating Expenses Research and Development Expenses Year Ended January 31, 2023 2022 $ Change % Change (dollars in millions) Research and development $ 620 $ 469 $ 151 32 % Percentage of revenue 33 % 36 % For fiscal 2023, research and development expenses increased primarily due to an increase of $139 million in employee compensation costs related to higher headcount.
Operating Expenses Research and Development Expenses Year Ended January 31, 2024 2023 $ Change % Change (dollars in millions) Research and development $ 656 $ 620 $ 36 6 % Percentage of revenue 29 % 33 % For fiscal 2024, research and development expenses increased primarily due to an increase of $39 million in employee compensation costs.
We focus on acquiring and retaining our customers and increasing their spending with us through expanding the number of users who access our Workforce Identity and Customer Identity Clouds and up-selling additional products.
We focus on acquiring and retaining our customers and increasing the value we provide to our customers over time, and thus their spending with us through expanding the number of users who access our Workforce Identity Cloud and Customer Identity Cloud and up-selling additional product offerings.
Provision for (Benefit from) Income Taxes Year Ended January 31, 2023 2022 $ Change % Change (dollars in millions) Provision for (benefit from) income taxes $ 14 $ (2) $ 16 (1,158) % For fiscal 2023, income tax expense resulted primarily from income from profitable foreign jurisdictions, the tax impact of shortfalls from stock-based compensation in the United Kingdom, and state taxes.
Provision for Income Taxes Year Ended January 31, 2024 2023 $ Change % Change (dollars in millions) Provision for income taxes $ 18 $ 14 $ 4 31 % For fiscal 2024, income tax expense resulted primarily from income in profitable foreign jurisdictions, federal and state taxes resulting from tax attribution utilization limitations, and the tax impact of shortfalls from stock-based compensation in the United Kingdom.
References to fiscal 2023, for example, refer to the fiscal year ended January 31, 2023. Overview Okta is the leading independent identity provider. Our Workforce Identity and Customer Identity Clouds are powered by our category-defining Okta Identity Platform that enables our customers to securely connect the right people to the right technologies and services at the right time.
References to fiscal 2024, for example, refer to the fiscal year ended January 31, 2024. Overview Okta is the leading independent identity partner. Our Workforce Identity Cloud and Customer Identity Cloud, powered by Auth0, enable our customers to securely connect the right people to the right technologies and services at the right time.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Results of Operations The following table sets forth our results of operations for the periods presented: Year Ended January 31, 2023 2022 2021 (dollars in millions) Revenue Subscription $ 1,794 $ 1,249 $ 797 Professional services and other 64 51 38 Total revenue 1,858 1,300 835 Cost of revenue Subscription (1) 464 329 170 Professional services and other (1) 82 67 48 Total cost of revenue 546 396 218 Gross profit 1,312 904 617 Operating expenses Research and development (1) 620 469 223 Sales and marketing (1) 1,066 771 427 General and administrative (1) 409 432 171 Restructuring and other charges 29 — — Total operating expenses 2,124 1,672 821 Operating loss (812) (768) (204) Interest expense (11) (91) (73) Interest income and other, net 22 9 13 Loss on early extinguishment and conversion of debt — — (2) Interest and other, net 11 (82) (62) Loss before provision for (benefit from) income taxes (801) (850) (266) Provision for (benefit from) income taxes 14 (2) — Net loss $ (815) $ (848) $ (266) (1) Includes stock-based compensation expense as follows: Year Ended January 31, 2023 2022 2021 (dollars in millions) Cost of subscription revenue $ 69 $ 49 $ 21 Cost of professional services and other revenue 14 12 9 Research and development 275 193 63 Sales and marketing 159 136 53 General and administrative 160 176 49 Total stock-based compensation expense $ 677 $ 566 $ 195 57 OKTA, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Results of Operations The following table sets forth our results of operations for the periods presented: Year Ended January 31, 2024 2023 2022 (dollars in millions) Revenue Subscription $ 2,205 $ 1,794 $ 1,249 Professional services and other 58 64 51 Total revenue 2,263 1,858 1,300 Cost of revenue Subscription (1) 502 464 329 Professional services and other (1) 79 82 67 Total cost of revenue 581 546 396 Gross profit 1,682 1,312 904 Operating expenses Research and development (1) 656 620 469 Sales and marketing (1) 1,036 1,066 771 General and administrative (1) 450 409 432 Restructuring and other charges 56 29 — Total operating expenses 2,198 2,124 1,672 Operating loss (516) (812) (768) Interest expense (8) (11) (91) Interest income and other, net 81 22 9 Gain on early extinguishment of debt 106 — — Interest and other, net 179 11 (82) Loss before provision for (benefit from) income taxes (337) (801) (850) Provision for (benefit from) income taxes 18 14 (2) Net loss $ (355) $ (815) $ (848) (1) Includes stock-based compensation expense as follows: Year Ended January 31, 2024 2023 2022 (dollars in millions) Cost of subscription revenue $ 75 $ 69 $ 49 Cost of professional services and other revenue 15 14 12 Research and development 277 275 193 Sales and marketing 156 159 136 General and administrative 161 160 176 Total stock-based compensation expense $ 684 $ 677 $ 566 59 OKTA, INC.
In June 2020, we completed our private offering of the 2026 Notes due on June 15, 2026 and received aggregate proceeds of $1,150 million. The interest rate on the 2026 Notes is fixed at 0.375% per year and is payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2020.
The interest rate on the 2026 Notes is fixed at 0.375% per year and is payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2020.
We refer to accounting estimates of this type as critical accounting estimates, which we discuss below. 67 OKTA, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Income Taxes Income taxes are accounted for in accordance with the liability method.
We refer to accounting estimates of this type as critical accounting estimates, which we discuss below. Income Taxes Income taxes are accounted for in accordance with the liability method.
Material Cash Requirements Contractual Obligations The following table represents the Company’s known short-term (i.e., the next twelve months) and long-term (i.e., beyond the next twelve months) obligations as of January 31, 2023: Short-term Long-term Total (dollars in millions) Convertible Senior Notes: (1) Principal payments $ — $ 2,210 $ 2,210 Interest payments 6 13 19 Operating leases (2) 43 160 203 Purchase obligations (3) 237 361 598 Total contractual obligations $ 286 $ 2,744 $ 3,030 (1) See Note 9 to our consolidated financial statements "Convertible Senior Notes, Net" for additional information.
Material Cash Requirements Contractual Obligations The following table represents the Company’s known short-term (i.e., the next twelve months) and long-term (i.e., beyond the next twelve months) obligations as of January 31, 2024: Short-term Long-term Total (dollars in millions) Convertible Senior Notes: (1) Principal payments $ — $ 1,160 $ 1,160 Interest payments 3 4 7 Operating leases (2) 37 124 161 Purchase obligations (3) 262 240 502 Total contractual obligations $ 302 $ 1,528 $ 1,830 (1) See Note 8 to our consolidated financial statements "Convertible Senior Notes, Net" for additional information.
In September 2019, we completed our private offering of the 2025 Notes due on September 1, 2025 and received aggregate gross proceeds of $1,060 million The interest rate on the 2025 Notes is fixed at 0.125% per annum and is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2020.
The interest rate on the 2025 Notes is fixed at 0.125% per year and is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2020.
Given the growth trends in the number of applications and cloud adoption, and the movement to remote workforces, identity is becoming the most critical layer of an organization’s security. As workforces have transitioned to fully remote and hybrid work models, Zero Trust has become an increasingly important security model and identity an increasingly critical service.
Given the growth trends in the number of applications and cloud adoption and the movement to remote and hybrid workforces, identity is becoming the most critical layer of an organization’s security.
For fiscal 2023, 2022 and 2021, our revenue was $1,858 million, $1,300 million and $835 million, respectively, representing a growth rate of 43% and 56%, respectively. For fiscal 2023, 2022 and 2021, we generated net losses of $815 million, $848 million and $266 million, respectively. Our accumulated deficit as of January 31, 2023 was $2,475 million.
For fiscal 2024, 2023 and 2022, our revenue was $2,263 million, $1,858 million and $1,300 million, respectively, representing a growth rate of 22% and 43% in fiscal 2024 and 2023, respectively. For fiscal 2024, 2023 and 2022, we generated net losses of $355 million, $815 million and $848 million, respectively.
Comparison of the Years Ended January 31, 2023 and 2022 Revenue Year Ended January 31, 2023 2022 $ Change % Change (dollars in millions) Revenue: Subscription $ 1,794 $ 1,249 $ 545 44 % Professional services and other 64 51 13 27 Total revenue $ 1,858 $ 1,300 $ 558 43 % Percentage of revenue: Subscription 97 % 96 % Professional services and other 3 4 Total 100 % 100 % For fiscal 2023, subscription revenue increased primarily due to the addition of new customers, an increase in users and sales of additional products to existing customers.
Comparison of the Years Ended January 31, 2024 and 2023 Revenue Year Ended January 31, 2024 2023 $ Change % Change (dollars in millions) Revenue: Subscription $ 2,205 $ 1,794 $ 411 23 % Professional services and other 58 64 (6) (10) Total revenue $ 2,263 $ 1,858 $ 405 22 % Percentage of revenue: Subscription 97 % 97 % Professional services and other 3 3 Total 100 % 100 % For fiscal 2024, the increase in subscription revenue was primarily due to the addition of new customers, an increase in users and sales of additional products to existing customers.
Employees and contractors sign into the Workforce Identity Cloud to seamlessly and securely access the applications they need to do their most important work. Developers leverage our Customer Identity and Workforce Identity Clouds to securely and efficiently embed identity into the software they build, allowing them to innovate and focus on their core mission.
Developers leverage our Customer Identity Cloud and Workforce Identity Cloud to securely and efficiently embed identity into the software they build, allowing them to innovate and focus on their core missions.
We expect our sales and marketing expenses will continue to be our largest operating expense category for the foreseeable future as we expand our sales and marketing efforts. In the short-term, our sales and marketing expenses may increase as a percentage of our total revenue, however, over time, we expect this percentage to decrease as our total revenue grows.
The decrease in sales and marketing expenses as a percentage of total revenue was primarily driven by improved spend efficiency. We expect our sales and marketing expenses will continue to be our largest operating expense category for the foreseeable future. We expect sales and marketing expenses as a percentage of total revenue to decrease as our total revenue grows.
Our gross margin may fluctuate from period to period as a result of the timing and amount of investments to expand our hosting capacity, our continued efforts to build platform support and professional services teams, increased stock-based compensation expenses, as well as the amortization of costs associated with capitalized internal-use software and acquired intangible assets. Operating Expenses Research and Development.
Gross margin is gross profit expressed as a percentage of total revenue. Our gross margin may fluctuate from period to period as a result of the timing and amount of investments to expand our hosting capacity and our continued efforts to build platform support and professional services teams. Operating Expenses Research and Development.
During fiscal 2023, cash provided by operating activities was $86 million, decreasing by $18 million compared to fiscal 2022. The decrease was primarily attributable to an increase in cash paid to employees and vendors, partially offset by an increase in cash received from customers. 66 OKTA, INC.
The increase was primarily attributable to an increase in cash received from customers and improved spend efficiency, partially offset by an increase in cash paid to vendors. Investing Activities During fiscal 2024, cash provided by investing activities was $441 million, compared to cash used in investing activities of $130 million during fiscal 2023.
Cost of subscription primarily consists of expenses related to hosting our services and providing support.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Cost of Revenue and Gross Margin Cost of Subscription . Cost of subscription primarily consists of expenses related to hosting our services and providing support.
Current Period ACV includes any upsells and is net of contraction or churn over the trailing twelve months but excludes ACV from new customers in the current period. 54 OKTA, INC.
Current Period ACV includes any upsells and is net of contraction or churn over the trailing twelve months but excludes ACV from new customers in the current period. We then divide the Current Period ACV by the Prior Period ACV to arrive at our Dollar-Based Net Retention Rate. Our Dollar-Based Net Retention Rate is inclusive of ACV from self-service customers.
Cost of Revenue, Gross Profit and Gross Margin Year Ended January 31, 2023 2022 $ Change % Change (dollars in millions) Cost of revenue: Subscription $ 464 $ 329 $ 135 41 % Professional services and other 82 67 15 22 Total cost of revenue $ 546 $ 396 $ 150 38 % Gross profit $ 1,312 $ 904 $ 408 45 % Gross margin: Subscription 74 % 74 % Professional services and other (27) (32) Total gross margin 71 % 70 % For fiscal 2023, cost of subscription revenue increased primarily due to an increase of $69 million in employee compensation costs related to higher headcount to support the growth in our subscription services, an increase of $26 million in third-party hosting costs as we expanded capacity to support our growth, an increase of $17 million in software costs and an increase in amortization of acquired developed technology of $11 million. 59 OKTA, INC.
Cost of Revenue, Gross Profit and Gross Margin Year Ended January 31, 2024 2023 $ Change % Change (dollars in millions) Cost of revenue: Subscription $ 502 $ 464 $ 38 8 % Professional services and other 79 82 (3) (4) Total cost of revenue $ 581 $ 546 $ 35 6 % Gross profit $ 1,682 $ 1,312 $ 370 28 % Gross margin: Subscription 77 % 74 % Professional services and other (36) (27) Total gross margin 74 % 71 % For fiscal 2024, cost of subscription revenue increased primarily due to an increase of $22 million in employee compensation costs, an increase of $7 million in software costs and an increase of $5 million in third-party hosting costs as we expanded capacity to support our growth.
In connection with the 2025 Notes, we used a portion of the proceeds to enter into capped call transactions ("2025 Capped Calls") with respect to our Class A common stock. Concurrent with the private offering of the 2025 Notes, we repurchased a portion of the 2023 Notes and terminated a portion of our existing Note Hedges and Warrants.
In connection with the 2025 Notes, we used a portion of the proceeds to enter into capped call transactions ("2025 Capped Calls") with respect to our Class A common stock. In June 2020, we completed our private offering of the 2026 convertible senior notes ("2026 Notes") due on June 15, 2026 and received aggregate gross proceeds of $1,150 million.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Investing Activities During fiscal 2023, cash used in investing activities was $130 million, decreasing by $237 million compared to fiscal 2022.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Financing Activities During fiscal 2024, cash used in financing activities was $883 million, compared to cash provided by financing activities of $48 million during fiscal 2023. The change was primarily attributable to payments made for repurchases of the Notes.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Our gross margin for subscription revenue remained consistent at 74% during fiscal 2023.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Our gross margin for professional services and other revenue decreased to (36)% during fiscal 2024 from (27)% during fiscal 2023 primarily due to a decrease in professional services and other revenue.
General and Administrative Expenses Year Ended January 31, 2023 2022 $ Change % Change (dollars in millions) General and administrative $ 409 $ 432 $ (23) (5) % Percentage of revenue 22 % 34 % For fiscal 2023, general and administrative expenses decreased primarily due to a decrease in acquisition and integration-related costs of $46 million, partially offset by increases in employee compensation and related costs associated with headcount growth.
General and Administrative Expenses Year Ended January 31, 2024 2023 $ Change % Change (dollars in millions) General and administrative $ 450 $ 409 $ 41 10 % Percentage of revenue 20 % 22 % For fiscal 2024, general and administrative expenses increased primarily due to an increase of $26 million in employee compensation costs.
For purposes of determining our customer count, we do not include customers that use our platform under self-service arrangements only. Dollar-Based Net Retention Rate Our ability to generate revenue is dependent upon our ability to maintain our relationships with our customers and to increase their utilization of our platform.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Dollar-Based Net Retention Rate Part of our ability to generate revenue is dependent upon our ability to maintain our relationships with our customers and to increase their utilization of our platform.
For fiscal 2022, the income tax benefit resulted from the release of valuation allowance in the United States in connection with acquisitions and excess tax benefits from stock-based compensation in the United Kingdom, offset by income tax expense related to profitable foreign jurisdictions.
For fiscal 2023, income tax expense resulted primarily from income from profitable foreign jurisdictions, the tax impact of shortfalls from stock-based compensation in the United Kingdom, and state taxes.
The decrease was primarily attributable to a decrease in payments for business acquisitions, net of cash acquired, and a decrease in cash used from net investment purchases, sales, and maturities. Financing Activities During fiscal 2023, cash provided by financing activities was $48 million, decreasing by $41 million compared to fiscal 2022.
The change was primarily attributable to an increase in cash provided from investment maturities and sales, net of purchases, partially offset by cash paid for business acquisitions, net of cash acquired. 65 OKTA, INC.
Interest and Other, Net Interest and other, net consists of interest expense, which primarily includes amortization of debt discount (in comparative periods prior to the adoption of Accounting Standards Update ("ASU") No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06")), amortization of debt issuance costs, contractual interest expense for our 2023 Notes, convertible notes due in 2025 ("2025 Notes") and convertible notes due in 2026 ("2026 Notes", together with the 2023 Notes and 2025 Notes, the "Notes"), interest income from our investment holdings, and gains and losses from our strategic investments.
Interest and Other, Net Interest and other, net consists of interest expense, which primarily includes amortization of debt issuance costs and contractual interest expense for our convertible senior notes, interest income from our investment holdings, gains on early extinguishment of debt and gains and losses from our strategic investments.
Interest and Other, Net Year Ended January 31, 2023 2022 $ Change % Change (dollars in millions) Interest expense $ (11) $ (91) $ 80 (88) % Interest income and other, net 22 9 13 126 Interest and other, net $ 11 $ (82) For fiscal 2023, the change in interest and other, net was primarily due to a decrease in interest expense resulting from the adoption of ASU 2020-06 and an increase in interest income from our short-term investments.
Interest and Other, Net Year Ended January 31, 2024 2023 $ Change % Change (dollars in millions) Interest expense $ (8) $ (11) $ 3 (25) % Interest income and other, net 81 22 59 265 Gain on early extinguishment of debt 106 — 106 — Interest and other, net $ 179 $ 11 $ 168 1,571 % For fiscal 2024, the change in interest and other, net was primarily due to the gain on early extinguishment of debt related to repurchases of convertible senior notes and an increase in interest income from our short-term investments.
The primary difference between our effective tax rate and the federal statutory rate relates to the net operating losses in jurisdictions with a valuation allowance against related deferred tax assets. 56 OKTA, INC.
The difference between our effective tax rate and the federal statutory rate is primarily due to a valuation allowance against U.S. deferred tax assets, the tax effect of foreign operations and state taxes. 58 OKTA, INC.
Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations.
Additional assets acquired or liabilities assumed in an acquisition that were not recognized at the acquisition date might be identified during the measurement period. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, no further adjustments are made.
Our customers consist of leading global organizations ranging from the largest enterprises, to small and medium-sized businesses, universities, non-profits and government agencies. We also partner with leading application, IT infrastructure and security vendors through our Okta Integration Network.
As of January 31, 2024, more than 18,950 customers across nearly every industry used Okta to secure and manage identities around the world. Our customers consist of leading global organizations ranging from the largest enterprises, to small and medium-sized businesses, universities, non-profits and government agencies.
Sales and Marketing Expenses Year Ended January 31, 2023 2022 $ Change % Change (dollars in millions) Sales and marketing $ 1,066 $ 771 $ 295 38 % Percentage of revenue 58 % 59 % For fiscal 2023, sales and marketing expenses increased primarily due to an increase of $217 million in employee compensation costs related to headcount growth, an increase in travel expenses of $19 million, an increase in marketing and event costs of $16 million primarily due to increases in demand generation programs, advertising and brand awareness efforts aimed at acquiring new customers and an increase in amortization expense of $10 million for acquired customer relationships and trade names.
Sales and Marketing Expenses Year Ended January 31, 2024 2023 $ Change % Change (dollars in millions) Sales and marketing $ 1,036 $ 1,066 $ (30) (3) % Percentage of revenue 46 % 58 % For fiscal 2024, sales and marketing expenses decreased primarily due to a decrease in marketing costs of $15 million and a decrease in amortization expense of $9 million for acquired customer relationships and trade names.
We expect our general and administrative expenses will increase in absolute dollars as our business grows. 60 OKTA, INC.
We expect general and administrative expenses as a percentage of total revenue to decrease as our total revenue grows. 62 OKTA, INC.
During the measurement period, which may be up to one year from the acquisition date, adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed may be recorded, with the corresponding offset to 68 OKTA, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) goodwill.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) provisional amounts may be recorded for which the accounting was incomplete, with the corresponding offset to goodwill.
For fiscal 2023, professional services revenue increased primarily due to an increase in implementation and other services associated with growth in the number of new customers purchasing our subscription services.
For fiscal 2024, the decrease in professional services and other revenue was due to lower bookings associated with professional services.
Our primary uses of cash from operating activities are for employee-related expenditures, marketing expenses and third-party hosting costs. In recent periods, we have supplemented working capital requirements through net proceeds from the issuance of the 2023, 2025 and 2026 Notes in February 2018, September 2019 and June 2020, respectively.
Our primary uses of cash from operating activities are for employee-related expenditures, marketing expenses and third-party hosting costs. During fiscal 2024, cash provided by operating activities was $512 million, an increase of $426 million compared to fiscal 2023.
Our approach to identity allows our customers to simplify and efficiently scale their security infrastructures across internal IT systems and external customer facing applications. As of January 31, 2023, more than 17,600 customers across nearly every industry used Okta to secure and manage identities around the world.
As organizations shift from network-based security models to a Zero Trust security model focusing on adaptive and context-aware controls, identity has become the most reliable way to manage user access and protect digital assets. Our approach to identity allows our customers to simplify and efficiently scale their security infrastructures across internal IT systems and external customer facing applications.
Removed
Acquisition of Auth0 On May 3, 2021, we completed the acquisition of Auth0, Inc. ("Auth0"). The acquisition date fair value, net of acquired cash, was approximately $5,671 million, including shares of our Class A common stock, cash, and assumed equity awards. In addition, we issued unvested restricted stock and assumed unvested equity and 53 OKTA, INC.
Added
Employees and contractors sign into the Workforce Identity Cloud to seamlessly and securely access the applications they need to do their most important work. Organizations use our platform to collaborate with their partners and to provide their customers with more modern and secure experiences in the cloud and via mobile devices.
Removed
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) restricted cash awards, which are subject to future vesting and will be recorded as expense over the period the services are provided.
Added
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Impact of Cybersecurity Incidents In the past we have experienced cybersecurity incidents, such as the January 2022 incident involving one of our third-party service providers and the October 2023 incident where a threat actor gained unauthorized access to and stole information from our third-party customer support system, that harmed our reputation and customer relations, adversely impacted our financial results and may create additional liabilities.
Removed
A portion of the total consideration was held back by us to secure the indemnification obligations of the Auth0 securityholders and was paid in full during fiscal 2023. Financial Information and Segments We operate our business as one reportable segment.
Added
While we expect the impact of these security incidents to adversely affect our future financial performance, we cannot predict the extent of such impact with certainty. Due to the nature of our business, the announcement of any security incidents, even if not significant, could have these impacts.
Removed
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) We then divide the Current Period ACV by the Prior Period ACV to arrive at our Dollar-Based Net Retention Rate. Our Dollar-Based Net Retention Rate is inclusive of ACV from self-service customers.
Added
Impact of Current Economic Conditions Worldwide economic uncertainties and negative trends, including financial and credit market fluctuations, uncertainty in the banking sector, rising interest rates, inflation and other impacts from the macroeconomic environment have, and could continue to, adversely affect our business operations or financial results.
Removed
Calculated Billings Calculated Billings represent our total revenue plus the change in deferred revenue, net of acquired deferred revenue, and less the change in unbilled receivables, net of acquired unbilled receivables, in the period.
Added
As we continue to monitor the direct and indirect impacts of these circumstances, the broader implications of these macroeconomic events on our business, results of operations and overall financial position remain uncertain.
Removed
Calculated Billings in any particular period reflect sales to new customers plus subscription renewals and upsells to existing customers, and represent amounts invoiced for subscription, support and professional services. We typically invoice customers in advance in annual installments for subscriptions to our platform. Calculated Billings increased 24% in fiscal 2023 over fiscal 2022.
Added
See the section titled “ Risk Factors '' included under Part I, Item 1A above for further discussion of the possible impact of these factors and other risks on our business. Financial Information and Segments We operate our business as one reportable segment.
Removed
See the section titled “Non-GAAP Financial Measures” for additional information and a reconciliation of Calculated Billings to total revenue. Components of Results of Operations Revenue Subscription Revenue. Subscription revenue primarily consists of fees for access to and usage of our cloud-based platform and related support.
Added
For purposes of determining our customer count, we do not include customers that use our platform under self-service arrangements only. 56 OKTA, INC.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+1 added−3 removed7 unchanged
Biggest changeIn June 2020, we issued the 2026 Notes due June 15, 2026 with a principal amount of $1,150 million. Concurrently with the issuance of the 2026 Notes, we entered into separate capped call transactions. The 2026 Capped Calls were completed to reduce the potential dilution from the conversion of the 2026 Notes.
Biggest changeAs of January 31, 2024, $552 million principal amount of the 2025 Notes remain outstanding. In June 2020, we issued the 2026 Notes due June 15, 2026 with a principal amount of $1,150 million. Concurrently with the issuance of the 2026 Notes, we entered into separate capped call transactions.
Our consolidated results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments.
Our consolidated results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign currency exchange rates. To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments.
In September 2019, we issued the 2025 Notes due September 1, 2025 with a principal amount of $1,060 million. Concurrently with the issuance of the 2025 Notes, we entered into separate capped call transactions. The 2025 Capped Calls were completed to reduce the potential dilution from the conversion of the 2025 Notes.
Convertible Senior Notes In September 2019, we issued the 2025 Notes due September 1, 2025 with a principal amount of $1,060 million. Concurrently with the issuance of the 2025 Notes, we entered into separate capped call transactions. The 2025 Capped Calls were completed to reduce the potential dilution from the conversion of the 2025 Notes.
Changes in the interest rate environment upon maturity of this fixed rate debt could have an effect on our future cash flows and earnings, depending on whether the debt is replaced with other fixed rate debt, variable rate debt or equity. 71
Changes in the interest rate environment upon maturity of this fixed rate debt could have an effect on our future cash flows and earnings, depending on whether the debt is replaced with other fixed rate debt, variable rate debt or equity. 69
The 2023 Notes, 2025 Notes and 2026 Notes have a fixed annual interest rate of 0.25%, 0.125% and 0.375%, respectively; accordingly, we do not have economic interest rate exposure on the Notes. However, the fair value of the Notes is exposed to interest rate risk.
The 2025 Notes and 2026 Notes have a fixed annual interest rate of 0.125% and 0.375%, respectively; accordingly, we do not have economic interest rate exposure on the Notes. However, the fair value of the Notes is exposed to interest rate risk.
During fiscal 2023, 2022 and 2021, a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our consolidated financial statements.
During fiscal 2024, 2023 and 2022, a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our consolidated financial statements.
As of January 31, 2023, a hypothetical 10% relative change in interest rates would not have had a material impact on the value of our cash equivalents or investment portfolio.
As of January 31, 2024, a hypothetical 10% relative change in interest rates would not have had a material impact on the value of our cash equivalents or investment portfolio.
Generally, the fair market value of the fixed interest rate of the Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair value of the Notes fluctuates when the market price of our common stock fluctuates.
Generally, the fair market value of the Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair value of the Notes fluctuates when the market price of our common stock fluctuates.
Interest Rate Risk We had cash, cash equivalents and short-term investments totaling $2,580 million as of January 31, 2023, of which $2,449 million was invested in U.S. treasury securities, corporate debt securities and money market funds. Our cash and cash equivalents are held for working capital and general corporate purposes, including potential future acquisition activity.
Interest Rate Risk We had cash, cash equivalents and short-term investments totaling $2,202 million as of January 31, 2024, of which $2,019 million was invested in U.S. treasury securities, money market funds, corporate debt securities and certificates of deposit. Our cash and cash equivalents are held for working capital and general corporate purposes, including potential future acquisition activity.
The fair value was determined based on the 70 quoted bid price of the Notes in an over-the-counter market on the last trading day of the reporting period. See Note 5 to our consolidated financial statements for more information.
The fair value was determined based on the quoted bid price of the Notes in an over-the-counter market on the last trading day of the reporting period. See Note 8 to our consolidated financial statements "Convertible Senior Notes, Net" for additional information.
Removed
Convertible Senior Notes In February 2018, we issued the 2023 Notes due February 15, 2023 with a principal amount of $345 million, of which $224 million and $70 million were repurchased in September 2019 and June 2020, respectively.
Added
The 2026 Capped Calls were completed to reduce the potential dilution from the conversion of the 2026 Notes. As of January 31, 2024, $608 million principal amount of the 2026 Notes remain outstanding.
Removed
Concurrently with the issuance of the 2023 Notes, we entered into separate Note Hedges and Warrant transactions, a portion of which were terminated in September 2019 and June 2020 in connection with the partial repurchases of the 2023 Notes. The Note Hedges were completed to reduce the potential dilution from the conversion of the 2023 Notes.
Removed
Additionally, through January 31, 2023, we received and completed requests to convert approximately $51 million principal amount of 2023 Notes (not in connection with the partial repurchases of the 2023 Notes) and exercised and net-share-settled Note Hedges corresponding to approximately $45 million principal amount of 2023 Notes.

Other OKTA 10-K year-over-year comparisons