Okta Inc (OKTA) Reports Strong Revenue Growth and Record Cash Flow in Q4 and Fiscal Year 2024
Revenue Growth: Okta Inc (NASDAQ:OKTA) reported a 19% year-over-year increase in Q4 revenue, reaching $605 million.
Subscription Revenue: Subscription revenue grew by 20% year-over-year to $591 million in Q4.
Profitability: Non-GAAP operating income soared to $129 million in Q4, marking a significant rise from $46 million in the same period last year.
Cash Flow: Record operating cash flow of $174 million and free cash flow of $166 million were achieved in Q4.
Full Year Financials: For the fiscal year 2024, total revenue was $2.263 billion, a 22% increase from the previous year, with a non-GAAP net income of $286 million.
On February 28, 2024, Okta Inc (NASDAQ:OKTA), a leader in cloud-native security solutions specializing in identity and access management, released its 8-K filing. The San Francisco-based company, which went public in 2017, has continued to demonstrate robust financial performance in the fourth quarter and fiscal year 2024, driven by strong demand from large customers and a focus on expanding its margin.
Okta's offerings cater to two main client groups: workforces and customers. The company's solutions enable secure access to both cloud-based and on-premises resources for employees, while also allowing secure application access for clients' customers.
Financial Performance and Challenges
Okta's fourth-quarter revenue growth to $605 million, up 19% from the previous year, underscores the company's ability to expand its market share in the identity management sector. Subscription revenue, which is a critical metric for software companies like Okta, increased by 20% year-over-year to $591 million. This growth is a testament to the company's successful subscription-based business model and its ability to retain and grow its customer base.
Despite these achievements, Okta faces a challenging macro environment and potential impacts related to the October 2023 security incident. The company's forward-looking statements indicate expectations of continued growth, albeit at a moderated pace, with total revenue projected to increase by 10% to 11% year-over-year in fiscal 2025.
Key Financial Metrics
Okta's financial strength is further evidenced by its record operating cash flow of $174 million and free cash flow of $166 million in Q4. These figures represent significant improvements from the previous year and highlight the company's efficient cash management and operational execution.
For the full fiscal year 2024, Okta reported a total revenue of $2.263 billion, marking a 22% increase from the previous year. The non-GAAP operating income for the year stood at $310 million, a stark contrast to the non-GAAP operating loss of $10 million in fiscal 2023. The non-GAAP net income reached $286 million, compared to a non-GAAP net loss of $7 million in the prior year, demonstrating a remarkable turnaround in profitability.
Okta's balance sheet remains strong, with cash, cash equivalents, and short-term investments totaling $2.202 billion as of January 31, 2024. The company's disciplined approach to capital allocation is also reflected in the repurchase of $150 million principal amount of convertible senior notes due in 2026, resulting in a gain on early extinguishment of debt of $15 million.
"We achieved record non-GAAP profitability and record cash flow in the fourth quarter, capping a year of significant margin expansion," said Todd McKinnon, Chief Executive Officer and co-founder of Okta. "Were also pleased with the strong top-line performance, which was driven by strength with large customers."
Analysis and Outlook
Okta's impressive financial results for Q4 and the full fiscal year 2024 reflect the company's strategic focus on large customers and its commitment to innovation and security. The company's outlook for fiscal 2025, with expected total revenue of $2.495 billion to $2.505 billion and a non-GAAP operating margin of 18% to 19%, suggests confidence in its business model and market position despite external challenges.
Value investors and potential GuruFocus.com members should note Okta's strong performance in a competitive industry and its ability to generate significant cash flow. The company's focus on expanding its product offerings and enhancing security features positions it well for sustained growth and profitability.
For a detailed view of Okta's financials and future expectations, investors are encouraged to review the full earnings report and consider the company's potential as a valuable addition to their investment portfolios.
Explore the complete 8-K earnings release (here) from Okta Inc for further details.
This article first appeared on GuruFocus.
