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• We have experienced rapid growth in recent periods, which makes it difficult to forecast our revenue and evaluate our business and future prospects.
−Removed: • Our recent growth rates may not be indicative of our future growth.
+Added: • We have experienced rapid growth in recent periods, and our prior growth rates may not be indicative of our future growth.
As our costs increase, we may not be able to generate sufficient revenue to achieve and, if achieved, maintain profitability.
−Removed: • 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 have a history of losses, and we expect to incur losses for the foreseeable future.
• If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service and customer satisfaction or adequately address competitive challenges.
+Added: • 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 face intense competition, especially from larger, well-established companies, and we may lack sufficient financial or other resources to maintain or improve our competitive position.
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• 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.
−Removed: • There are risks related to our ability to successfully integrate Auth0, Inc.
−Removed: (“Auth0”) and realize potential benefits from the acquisition.
+Added: • The ongoing integration of Auth0 may cause a disruption in our business.
+Added: • We may not realize potential benefits from the acquisition of Auth0 because of difficulties related to integration, the achievement of synergies, and other challenges.
• 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.
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• 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.
−Removed: • 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 initial public offering (“IPO”), including our directors, executive officers, and their affiliates, who held in the aggregate 41.9% of the voting power of our capital stock as of July 31, 2022.
+Added: • The stock price of our Class A common stock may be volatile or may decline.
+Added: • 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 initial public offering (“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 October 31, 2022.
This will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.
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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.
−Removed: economy and abroad, which in turn could result in reductions in workforce identity and customer identity spending by our existing and prospective customers.
+Added: economy and abroad, which in
+Added: turn could result in reductions in workforce identity and customer identity spending by our existing and prospective customers.
These economic conditions can occur abruptly.
Prolonged economic slowdowns may result in customers requesting us to renegotiate existing contracts on less advantageous terms to us than those currently in place or defaulting on payments due on existing contracts or not renewing at the end of the contract term.
−Removed: For example, rising interest rates in the United States have begun to affect businesses across many industries, including ours, by increasing the costs of labor, employee healthcare and other components, which may further constrain our customers’ or prospective customers’ budgets.
+Added: For example, rising interest rates in the United States have begun to affect businesses across many industries, including ours, by increasing the costs of labor, employee healthcare and other components, which may further constrain our, our customers’ and prospective customers’ budgets.
To the extent there is a sustained general economic downturn and our platforms and services are perceived by customers or potential customers as costly, or too difficult to deploy or migrate to, our revenue may be disproportionately affected by delays or reductions in spending.
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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.
−Removed: We have experienced rapid growth in recent periods, and our recent growth rates may not be indicative of our future growth.
+Added: We have experienced rapid growth in recent periods, and our prior growth rates may not be indicative of our future growth.
As our costs increase, we may not be able to generate sufficient revenue to achieve and, if achieved, maintain profitability.
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In future periods, we may not be able to sustain revenue growth consistent with recent history, or at all.
−Removed: We believe our revenue growth depends on a number of factors, such as macroeconomic conditions including the inflation and interest rate environment and the economic impact of the COVID-19 pandemic, as well as, but not limited to, our ability to:
+Added: 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;
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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.
−Removed: For example, our headcount has grown from 4,176 employees as of July 31, 2021 to 5,776 employees as of July 31, 2022.
+Added: For example, our headcount has grown from 4,584 employees as of October 31, 2021 to 6,037 employees as of October 31, 2022.
We have also experienced significant growth in the number of customers, users and logins and in the amount of data that our Software-as-a-Service (“SaaS”) infrastructure supports.
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This pandemic has resulted in a widespread health crisis that is adversely affecting broader economies and financial markets.
−Removed: As a result of the COVID-19 pandemic, for most of fiscal 2021, we temporarily closed our offices, required our employees to work from home and implemented significant travel restrictions.
−Removed: We shifted our customer, employee and industry events, including our annual user conferences Oktane20 Live and Oktane21 Live, to virtual-only formats.
−Removed: In fiscal 2022, as the administration of vaccines increased, we reopened our offices to partial capacity, allowing our employees to voluntarily return, and in fiscal 2023, we are shifting to hybrid in-person and virtual sales formats and experiences for future annual user conferences.
The conditions caused by the COVID-19 pandemic have and may continue to affect the rate of IT spending and have and could adversely affect our current and potential customers’ ability or willingness to purchase our offerings.
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Our competitors vary in size and in the breadth and scope of the products and services offered.
−Removed: 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.
+Added: 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
+Added: histories, greater resources to make strategic acquisitions and greater name recognition than we do.
Our principal competitor is Microsoft.
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The substantial majority of these costs will be non-recurring expenses relating to the Acquisition.
−Removed: We also could be subject to litigation related to the Acquisition, which could result in significant costs and expenses.
+Added: We also have been and may become subject to further litigation related to the Acquisition, as discussed in Item 1, “Legal Proceedings” above, which could result in significant costs and expenses.
We may not realize potential benefits from the Acquisition because of difficulties related to integration, the achievement of synergies, and other challenges.
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For example, the January 2022 compromise of one of our third-party service providers by a threat actor, even though not material and not a breach of our product or systems, nonetheless was widely publicized and focused attention on the security of our systems and the systems of our third-party service providers.
−Removed: 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 a lawsuit, as discussed in Item 1, “Legal Proceedings” above.
+Added: 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 1, “Legal Proceedings” above.
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.
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We have attained multiple certifications, including SOC 2 Type II certifications, CSA Star Level 2 Attestation, ISO/IEC 27001:2013, ISO/IEC 27018:2019 certifications, and agency FedRAMP Moderate Authorities to Operate.
−Removed: We also support FIPS 140-2 validated encryption in our Okta Verify MFA product.
+Added: We also support FIPS 140-2 encryption requirements.
If we fail to maintain our security attestations and certifications, we may fail to meet our contractual commitments and we may fail to retain our existing customers or attract new customers, and our business, results of operations and financial condition could suffer.
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As we continue to expand the number of our customers and products available to our customers, we may not be able to scale our technology to accommodate the increased capacity requirements, which may result in interruptions or delays in service.
−Removed: In addition, the failure of third-party virtual data centers, or third-party internet service providers, or other third-party service providers whose services are integrated with our platform, to meet our capacity requirements could result in interruptions or delays in access to our platform or impede our ability to scale our operations.
+Added: In addition, the failure of third-party virtual data centers, third-party internet service providers, or other third-party service providers whose services are integrated with our platform, to meet our capacity requirements could result in interruptions or delays in access to our platform or impede our ability to scale our operations.
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.
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Our international operations may give rise to potentially adverse tax consequences.
−Removed: We are expanding our international operations and staff to better support our growth into the international markets.
−Removed: Our corporate structure and associated transfer pricing policies anticipate future growth into the international markets.
+Added: We are expanding our international operations and staff to better support our growth into certain international markets.
+Added: Our corporate structure and associated transfer pricing policies anticipate future growth into certain international markets.
The amount of taxes we pay in different jurisdictions may depend on the application of the tax laws of the various jurisdictions, including the United States, to our international business activities, changes in tax rates, new or revised tax laws or interpretations of existing tax laws and policies and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements.
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Changes in tax laws or regulations in the various tax jurisdictions we are subject to that are applied adversely to us or our customers could increase the costs of our products and harm our business.
−Removed: New income, sales, use, value-added or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time.
+Added: 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.
1 unchanged sentence
These events could require us or our customers to pay additional tax amounts on a prospective or retroactive basis, as well as require us or our customers to pay fines and/or penalties and interest for past amounts deemed to be due.
−Removed: If we raise our prices to offset the costs of these changes, existing and potential future customers may elect not to purchase our products in the future.
+Added: If we raise our prices to offset the costs of these additional taxes, existing and potential future customers may elect not to purchase our products in the future.
Additionally, new, changed, modified or newly interpreted or applied tax laws could increase our customers’ and our compliance, operating and other costs, as well as the costs of our products.
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Any failure to maintain effective controls could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods.
−Removed: Any failure to maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports that are filed with the SEC.
+Added: Any failure to maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports that are filed with the Securities and Exchange Commission (“SEC”).
Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our Class A common stock.
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Further, such changes could potentially affect our reporting of transactions completed before such changes are effective.
−Removed: Accounting principles generally accepted in the United States (“GAAP”) are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the Securities and Exchange Commission (“SEC”) and various bodies formed to promulgate and interpret appropriate accounting principles.
+Added: Accounting principles generally accepted in the United States (“GAAP”) are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles.
A change in these principles or interpretations could have a significant effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change.
7 unchanged sentences
The stock price of our Class A common stock may be volatile or may decline.
−Removed: Prior to our IPO, there was no public market for shares of our Class A common stock.
−Removed: The market prices of the securities of other newly public companies have historically been highly volatile, and our stock price has been volatile since our IPO.
−Removed: For example, from August 1, 2021 through July 31, 2022, the trading price of our Class A common stock has ranged from $77.01 per share to $276.30 per share.
+Added: The trading price of our Class A common stock has been, and in the future, may be, subject to substantial volatility and wide fluctuations.
+Added: For example, from November 1, 2021 through October 31, 2022, the trading price of our Class A common stock has ranged from $47.54 per share to $272.27 per share.
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:
5 unchanged sentences
• our failure to meet the estimates or the expectations of securities analysts or investors;
+Added: • actions and investment positions taken by institutional and other stockholders, including activist investors;
• recruitment or departure of key personnel;
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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.
−Removed: 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 41.9% of the voting power of our capital stock as of July 31, 2022.
+Added: 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 October 31, 2022.
This will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.
Our Class B common stock has ten votes per share and our Class A common stock has one vote per share.
−Removed: As of July 31, 2022, our directors, executive officers, and their affiliates, held in the aggregate 41.9% of the voting power of our capital stock.
+Added: As of October 31, 2022, our directors, executive officers, and their affiliates, held in the aggregate 41.7% of the voting power of our capital stock.
Because of the ten-to-one voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively could continue to control nearly a majority of the combined voting power of our common stock and be able to effectively control all matters submitted to our stockholders for approval until April 12, 2027, the date that is the ten-year anniversary of the closing of our IPO.
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In addition, if we incur additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase.
−Removed: The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and results of operations.
−Removed: In the event the conditional conversion feature of the Notes is triggered, holders of the Notes will be entitled to convert the Notes, as applicable, at any time during specified periods at their option.
+Added: The conversion features of the Notes, if triggered, may adversely affect our financial condition and results of operations.
+Added: As disclosed in Note 9 to our condensed consolidated financial statements, the 2023 Notes are currently convertible at the option of the holders, in whole or in part, as of October 15, 2022 until the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the conversion conditions.
+Added: In the event the conditional conversion features of the 2025 Notes and the 2026 Notes are triggered, holders of the Notes will be entitled to convert the Notes, as applicable, at any time during specified periods at their option.
If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class A common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
−Removed: As disclosed in Note 9 to our condensed consolidated financial statements, the conditional conversion features of the 2023 Notes were triggered as of July 31, 2022, and the 2023 Notes are currently convertible at the option of the holders, in whole or in part, between August 1, 2022 and October 31, 2022.
−Removed: Whether the 2023 Notes will be convertible following such fiscal quarter will depend on the continued satisfaction of this condition or another conversion condition in the future.
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;
−Removed: however, as of July 31, 2022, the conditions allowing holders of the 2025 Notes to convert were not met.
−Removed: From the date of issuance through July 31, 2022, the conditions allowing holders of the 2026 Notes to convert were not met.
+Added: however, as of October 31, 2022, the conditions allowing holders of the 2025 Notes to convert were not met.
+Added: From the date of issuance through October 31, 2022, the conditions allowing holders of the 2026 Notes to convert were not met.
In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the notes as a current rather than long-term liability, which would result in a material reduction of our net working capital and could limit our ability to raise future capital.
−Removed: The 2023 Notes were classified as current liabilities on the condensed consolidated balance sheet as of July 31, 2022.
+Added: The 2023 Notes were classified as current liabilities on the condensed consolidated balance sheet as of October 31, 2022.
Transactions relating to our Notes may affect the value of our Class A common stock.
The conversion of some or all of the Notes would dilute the ownership interests of existing stockholders to the extent we satisfy our conversion obligation by delivering shares of our Class A common stock upon any conversion of such Notes.
−Removed: Our Notes may become in the future convertible at the option of their holders under certain circumstances.
+Added: Our 2023 Notes are currently convertible at the option of their holders and our 2025 Notes and 2026 Notes may become in the future convertible at the option of their holders under certain circumstances.
If holders of our Notes elect to convert their notes, we may settle our conversion obligation by delivering to them a significant number of shares of our Class A common stock, which would cause dilution to our existing stockholders.
3 unchanged sentences
The Warrant transactions could separately have a dilutive effect to the extent that the market price per share of our Class A common stock exceeds the strike price of any Warrants unless, subject to the terms of the Warrant transactions, we elect to cash settle the Warrants.
−Removed: Through July 31, 2022, Note Hedges corresponding to approximately 7.0 million shares have been terminated or settled.
−Removed: As of July 31, 2022, Note Hedges giving us the option to purchase approximately 0.1 million shares (subject to adjustment) remained outstanding.
−Removed: Through July 31, 2022, we have terminated Warrants corresponding to approximately 6.1 million shares.
−Removed: As of July 31, 2022, Warrants to acquire up to approximately 1.0 million shares (subject to adjustment) remained outstanding.
+Added: Through October 31, 2022, Note Hedges corresponding to approximately 7.0 million shares have been terminated or settled.
+Added: As of October 31, 2022, Note Hedges giving us the option to purchase approximately 0.1 million shares (subject to adjustment) remained outstanding.
+Added: Through October 31, 2022, we have terminated Warrants corresponding to approximately 6.1 million shares.
+Added: As of October 31, 2022, Warrants to acquire up to approximately 1.0 million shares (subject to adjustment) remained outstanding.
In addition, in connection with the issuance of the 2025 Notes and 2026 Notes, we entered into capped call transactions (“Capped Calls”) with certain financial institutions (the 2025 Notes and 2026 Notes Capped Call Counterparties and together with the 2023 Notes Option Counterparties, the “Option Counterparties”).
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From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives.
−Removed: For example, we appointed a new Chief Accounting Officer effective in August 2022 and our Executive Vice Chairman, Chief Operating Officer and co-founder intends to take a sabbatical from November 2022 through October 2023.
+Added: For example, we recently announced the upcoming retirement of our President, Worldwide Field Operations at the end of our fiscal year, we appointed a new Chief Accounting Officer effective in August 2022 and our Executive Vice Chairman, Chief Operating Officer and co-founder is on sabbatical from November 2022 through October 2023.
Such changes in our executive management team may be disruptive to our business.
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Incorporated by Reference from
+Added: Sabbatical Letter Agreement dated August 26, 2022, between J.
+Added: Frederic Kerrest and Okta, Inc.
+Added: Exhibit 99.2 to Form 8-K filed on August 31, 2022
31.1 Certification of the Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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* The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.
+Added: # Indicates management contract or compensatory plan, contract or agreement.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
−Removed: August 31, 2022 /s/ Brett Tighe
+Added: November 30, 2022 /s/ Brett Tighe
Chief Financial Officer
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.