What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-05 compared with 2024-03-01 · 247 added, 269 removed, 850 unchanged (38% of the section changed)

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Stockholders’ Equity

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We have audited the accompanying consolidated balance sheets of Okta, Inc.

(the Company) as of January 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows for each of the three years in the period ended January 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of January 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended January 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2025, in conformity with U.S.

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Revenue for the Company’s professional services is recognized as services are performed in proportion to their pattern of transfer.

Auditing the Company’s accounting for revenue recognition was challenging, specifically related to the appropriate identification and evaluation of non-standard terms and conditions.

Auditing the Company’s accounting for revenue recognition was challenging, specifically related to the appropriate identification and evaluation of non-standard terms and conditions for significant arrangements that involve negotiation of otherwise standard terms with the customer.

For example, certain non-standard terms and conditions required judgment to identify the distinct performance obligations.

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We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s internal controls over the identification and evaluation of terms and conditions in contracts that impact revenue recognition, including the identification of performance obligations.

This included testing relevant controls over the information systems that are used in the initiation, billing and recording of revenue transactions.

Among other procedures, on a sample basis, we tested the completeness and accuracy of management’s identification and evaluation of the non-standard terms and conditions in contracts.

Further, we selected a sample of contractual arrangements to test that management had properly assessed the impact of any non-standard terms on the identified performance obligations.

Further, we selected a sample of significant contractual arrangements that may involve negotiation of standard terms to test that management had properly assessed the impact of any non-standard terms on the identified performance obligations.

Additionally, to verify completeness of non-standard terms and conditions, we obtained confirmations of terms and conditions for a sample of arrangements with customers.

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows for each of the three years in the period ended January 31, 2024, and the related notes and our report dated March 1, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended January 31, 2025, and the related notes and our report dated March 5, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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Short-term investments 2,114 1,868

Accounts receivable, net of allowances of $ 6 and $ 8

Accounts receivable, net of allowances of $ 4 and $ 6 , respectively

Deferred commissions 140 113

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Accrued compensation 207 167

Convertible senior notes, net 509 —

Deferred revenue 1,691 1,488

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Interest and other, net 120 179 11

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 )

Net loss per share, basic and diluted $ ( 2.17 ) $ ( 5.16 ) $ ( 5.73 )

Weighted-average shares used to compute net loss per share, basic and diluted 163,634 158,023 148,036

Income (loss) before provision for income taxes

46 ( 337 ) ( 801 )

Provision for income taxes

Net income (loss)

$ 28 $ ( 355 ) $ ( 815 )

Net income (loss) per share, basic $ 0.16 $ ( 2.17 ) $ ( 5.16 )

Net income (loss) per share, diluted $ 0.06 $ ( 2.17 ) $ ( 5.16 )

Weighted-average shares used to compute net income (loss) per share, basic 169,569 163,634 158,023

Weighted-average shares used to compute net income (loss) per share, diluted 175,086 163,634 158,023

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

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2025 2024 2023

Net loss $ ( 355 ) $ ( 815 ) $ ( 848 )

Net income (loss)

$ 28 $ ( 355 ) $ ( 815 )

Other comprehensive income (loss):

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Other comprehensive income (loss) ( 6 ) 27 ( 21 )

Comprehensive loss $ ( 328 ) $ ( 836 ) $ ( 865 )

Comprehensive income (loss)

$ 22 $ ( 328 ) $ ( 836 )

See Notes to Consolidated Financial Statements.

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Balances as of January 31, 2022 149,624 $ — 6,978 $ — $ 7,750 $ ( 12 ) $ ( 1,816 ) $ 5,922

Issuance of common stock in connection with business combinations 19,190 — — — 5,409 — — 5,409

Issuance of common stock in connection with business combinations subject to future vesting 1,269 — — — — — — —

Issuance of common stock upon exercise of stock options and other activity, net 2,552 — 2 — 54 — — 54

Issuance of common stock under employee stock purchase plan, net of cancellations 186 — — — 36 — — 36

Issuance of common stock for settlement of restricted stock units 2,294 — — — — — — —

Issuance of common stock pursuant to charitable donation 30 — — — 7 — — 7

Conversion of Class B common stock to Class A common stock 1,183 — ( 1,183 ) — — — — —

Settlement of convertible senior notes 476 — — — 21 — — 21

Proceeds from hedges related to convertible senior notes ( 380 ) — — — — — — —

Stock-based compensation — — — — 567 — — 567

Other comprehensive loss — — — — — ( 17 ) — ( 17 )

Net loss — — — — — — ( 848 ) ( 848 )

Balances as of January 31, 2022 149,624 $ — 6,978 $ — $ 7,750 $ ( 12 ) $ ( 1,816 ) $ 5,922

Adjustments from adoption of ASU No.

— — — — ( 528 ) — 156 ( 372 )

Forfeiture of unvested common stock issued in connection with business combinations ( 14 ) — — — — — — —

Issuance of common stock upon exercise of stock options and other activity, net 965 — 451 — 17 — — 17

Issuance of common stock under employee stock purchase plan, net of cancellations 492 — — — 31 — — 31

Issuance of common stock for settlement of restricted stock units 2,555 — — — — — — —

Issuance of common stock pursuant to charitable donation 42 — — — 4 — — 4

Issuance of common stock, net

4,040 — 451 — 52 — — 52

Conversion of Class B common stock to Class A common stock 129 — ( 129 ) — — — — —

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Balances as of January 31, 2023 154,009 $ — 7,300 $ — $ 7,974 $ ( 33 ) $ ( 2,475 ) $ 5,466

Class A Common Stock

Class B Common Stock

Additional Paid-in Capital

Accumulated Other Comprehensive Loss

Accumulated Deficit

Total Stockholders’ Equity

Forfeiture of unvested common stock issued in connection with business combinations ( 5 ) — — — — — — —

Issuance of common stock upon exercise of stock options and other activity, net 879 — — — 15 — — 15

Issuance of common stock under employee stock purchase plan, net of cancellations 794 — — — 46 — — 46

Issuance of common stock for settlement of restricted stock units 4,107 — — — — — — —

Issuance of common stock pursuant to charitable donation 75 — — — 6 — — 6

Issuance of common stock, net

5,850 — — — 67 — — 67

Conversion of Class B common stock to Class A common stock 9 — ( 9 ) — — — — —

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159,835 $ — 7,291 $ — $ 8,724 $ ( 6 ) $ ( 2,830 ) $ 5,888

Issuance of common stock, net

5,710 — 623 — 74 — — 74

Taxes withheld related to net share settlement of equity awards

— — — — ( 149 ) — — ( 149 )

Conversion of Class B common stock to Class A common stock 105 — ( 105 ) — — — — —

Stock-based compensation — — — — 570 — — 570

Other comprehensive loss

— — — — — ( 6 ) — ( 6 )

— — — — — — 28 28

Balances as of January 31, 2025

165,650 $ — 7,809 $ — $ 9,219 $ ( 12 ) $ ( 2,802 ) $ 6,405

See Notes to Consolidated Financial Statements.

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Cash flows from operating activities:

Net loss $ ( 355 ) $ ( 815 ) $ ( 848 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss)

$ 28 $ ( 355 ) $ ( 815 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Stock-based compensation 565 684 677

Depreciation, amortization and accretion 88 84 114

Amortization of debt issuance costs 3 6 86

Amortization of deferred commissions 130 104 84

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Gain on early extinguishment of debt

Net gain on strategic investments

( 19 ) ( 106 ) —

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Purchases of securities available-for-sale and other

( 1,812 ) ( 1,709 ) ( 1,411 )

Proceeds from maturities and redemption of securities available-for-sale

1,571 2,134 1,308

Proceeds from sales of securities available-for-sale and other

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Payments for repurchases of convertible senior notes

( 280 ) ( 937 ) —

Taxes paid related to net share settlement of equity awards ( 148 ) — —

Payments for warrants related to convertible senior notes — ( 7 ) —

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Net increase (decrease) in cash, cash equivalents and restricted cash

71 ( 2 ) ( 176 )

Cash, cash equivalents and restricted cash at beginning of year 342 271 273

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Non-cash investing and financing activities:

Issuance of common stock and value of equity awards assumed in connection with business combination — — 5,409

Issuance of common stock for repurchases and conversions of convertible senior notes — — 47

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(the “Company”) is the leading independent identity partner.

The Company’s Workforce Identity Cloud and Customer Identity Cloud, powered by Auth0, enable customers to securely connect the right people to the right technologies and services at the right time.

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 the Company’s Identity Platform to collaborate with their partners, and to provide their customers with more modern and secure experiences in the cloud and via mobile devices.

Developers leverage the Workforce Identity Cloud and Customer Identity Cloud to securely and efficiently embed identity into the software they build, allowing them to innovate and focus on their core missions.

The Company’s Okta Platform and Auth0 Platform enable customers to securely connect the right people to the right technologies and services at the right time.

Employees and contractors sign into the Okta Platform to seamlessly and securely access the applications they need to do their most important work with more modern and secure experiences in the cloud and via mobile devices.

Developers leverage the Okta Platform and Auth0 Platform to securely and efficiently embed identity into the software they build, allowing them to innovate and focus on their core mission.

The Company is headquartered in San Francisco, California.

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All intercompany balances and transactions have been eliminated in consolidation.

The Company conducts business globally and is managed, operated and organized by major functional departments that operate on a consolidated basis.

As a result, the Company operates in one reportable segment.

The Company’s fiscal year ends on January 31.

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Certain prior period amounts have been reclassified to conform to the current period presentation.

The Company conducts business globally and is managed, operated and organized by major functional departments that operate on a consolidated basis.

As a result, the Company operates as one reportable segment.

The Company employs a SaaS business model and generates revenue primarily by selling multi-year subscriptions to its cloud-based offerings.

The Company’s chief operating decision maker ("CODM") is the chief executive officer.

The CODM utilizes consolidated GAAP and non-GAAP measures of profit and loss to evaluate the Company's overall performance and inform resource allocation to support strategic priorities and capital allocation needs.

The profit and loss measure most consistent with GAAP used by the CODM is consolidated net income (loss).

The CODM is regularly provided with budgeted expense information and consolidated expense data.

Accordingly, significant segment expenses are inherently reflected in the consolidated financial statements and related notes.

Use of Estimates

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Revenue and expenses are translated at the average exchange rate during the period.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Summary of Significant Accounting Policies

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Revenue is derived from subscription fees (which include support fees) and professional services fees.

The Company sells subscriptions to its platform through arrangements that are generally one to five years in length.

The Company sells subscriptions to its platforms through arrangements that are generally one to five years in length.

The arrangements are generally non-cancellable and non-refundable.

Furthermore, if a customer reduces the contracted usage or service level, the customer has no right of refund.

The subscription arrangements do not provide customers with the right to take possession of the software supporting the platform and, as a result, are accounted for as service arrangements.

The subscription arrangements do not provide customers with the right to take possession of the software supporting the platforms and, as a result, are accounted for as service arrangements.

This revenue recognition policy is consistent for sales generated directly with customers and sales generated indirectly through channel partners.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Revenue recognition is determined through the following steps:

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the remaining portion is recorded as deferred revenue, noncurrent in the consolidated balance sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Deferred Commissions

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The Company determined the period of benefit by taking into consideration the terms of its customer contracts, its technology and other factors.

Sales commissions for renewal contracts (which are not considered commensurate with sales commissions for new revenue contracts and incremental sales to existing customers) are deferred and then amortized on a straight-line basis over the related period of benefit, which is generally two years , as determined by considering the average contractual term for renewal contracts.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Sales commissions for renewal contracts are deferred and then amortized on a straight-line basis over the contractual term.

Sales commissions capitalized as contract costs totaled $ 186 million and $ 158 million in fiscal 2025 and 2024, respectively.

Amortization of contract costs was $ 104 million, $ 84 million and $ 57 million in fiscal 2024, 2023 and 2022, respectively.

Amortization of contract costs totaled $ 130 million, $ 104 million and $ 84 million in fiscal 2025, 2024 and 2023, respectively.

Amortization expense is included in sales and marketing expenses in the accompanying consolidated statements of operations.

Cost of Revenue

Costs of revenue primarily consist of costs related to providing the Company’s cloud-based platform to its customers, including third-party hosting fees, amortization of capitalized internal-use software and finite-lived purchased developed technology, customer support, other employee-related expenses for security, technical operations and professional services staff, and allocated overhead costs.

Costs of revenue primarily consist of costs related to providing the Company’s cloud-based platforms to its customers, including third-party hosting fees, amortization of capitalized internal-use software and finite-lived purchased developed technology, customer support, other employee-related expenses for security, technical operations and professional services staff, and allocated overhead costs.

Research and Development

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Stock-based compensation expense related to stock awards (including stock options, RSUs, market-based RSUs, and ESPP) is measured based on the fair value of the awards granted and recognized as an expense over the requisite service period.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The fair value of each option and ESPP awards are estimated on the grant date using the Black-Scholes option pricing model which requires the use of various assumptions, including the expected term of the award, the expected volatility of the price of the underlying common stock, risk-free interest rates, and expected dividend yield of the underlying common stock.

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The expected term of the Company’s stock options, which were last granted to employees in fiscal 2022, was determined utilizing the simplified method due to lack of historical exercise data.

No options were granted in fiscal

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2024 and 2023.

The expected volatility was determined using a weighted-average of the historical volatility measures of a group of guideline companies and the Company's own historical volatility.

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Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less from the date of purchase.

Cash equivalents generally consist of investments in money market funds.

Cash equivalents generally consist of investments in money market

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The fair market value of cash equivalents approximated their carrying value as of January 31, 2025 and 2024.

As of January 31, 2025 and 2024, the Company's restricted cash balance was $ 6 million and $ 8 million, respectively, primarily related to letters of credit for its facility lease agreements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Short-Term Investments

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Valuations of privately held securities are inherently complex due to the lack of readily available market data and require the use of judgment.

The determination of whether an orderly transaction is for an identical or similar investment requires significant Company judgment.

The determination of whether an orderly transaction is for an identical or similar investment requires use of significant judgment.

In its evaluation, the Company considers factors such as differences in the rights and preferences of the investments and the extent to which those differences would affect the fair values of those investments.

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Amounts deemed uncollectible are recorded as an allowance in the consolidated balance sheets with an offsetting decrease in deferred revenue or a charge to general and administrative expense in the consolidated statements of operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Property and Equipment

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Repairs and maintenance costs are expensed as incurred.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The useful lives of property and equipment are as follows:

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The determination of the fair value of assets acquired and liabilities assumed involves assessments of factors such as the expected future cash flows associated with individual assets and liabilities and appropriate discount rates at the date of the acquisition.

Significant management inputs used in the estimation of fair value of assets acquired and liabilities assumed include, but are not limited to, expected future cash flows, future changes in technology, estimated replacement costs, person hours required in recreating certain acquired technologies, discount rates and assumptions about the period of time the brand will continue to be used in the Company’s product portfolio.

Where appropriate, external advisers are consulted to assist in the determination of fair value.

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Lease liabilities are measured based on the present value of the total lease payments not yet paid, discounted based on the more readily determinable of either the rate implicit in the lease or the incremental borrowing rate, which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease.

Lease liabilities due within twelve months are included within accrued expenses and other current liabilities on the consolidated balance sheet.

The estimation of the incremental borrowing rate is based on an estimate of the Company's unsecured borrowing rate, adjusted for tenor and collateralized security features.

Lease liabilities due within twelve months are included within accrued expenses and other current liabilities on the consolidated balance sheet.

Right-of-use assets are measured based on the corresponding lease liability adjusted for (i) payments made to the lessor at or before the commencement date, (ii) initial direct costs incurred and (iii) tenant incentives received, incurred or payable under the lease.

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Even with these procedures for disaster recovery in place, access to the Company's service could be significantly interrupted, resulting in an adverse effect on its operating results and financial condition.

Net Loss per Share

The Company computes basic and diluted net loss per share attributable to common stockholders for Class A and Class B common stock using the two-class method required for participating securities.

Under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net loss

Net Income (Loss) per Share

The Company computes basic and diluted net income (loss) per share attributable to common stockholders for Class A and Class B common stock using the two-class method required for participating securities.

Under the two-class method, basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

Diluted earnings per share attributable to common stockholders is computed by giving effect to all potential shares of common stock, including shares underlying convertible senior notes and warrants, unvested RSUs, outstanding stock options, unvested common stock and restricted stock issued in connection with certain business combinations, and ESPP obligations, to the extent they are dilutive.

As the Company has reported losses for all periods presented, all potentially dilutive securities are antidilutive and accordingly, basic net loss per share equals diluted net loss per share.

Diluted earnings per share attributable to common stockholders is computed by giving effect to all potential shares of common stock, including shares underlying convertible senior notes, unvested RSUs, outstanding stock options, unvested common stock and restricted stock issued in connection with certain business combinations, and ESPP obligations, to the extent they are dilutive.

The dilutive effect of potentially dilutive common shares included in diluted earnings per share is determined in accordance with the treasury stock, if-converted, or contingently issuable accounting methods, depending on the nature of the security.

The rights of the holders of the Company's Class A and Class B common stock are identical, except with respect to voting and conversion rights.

See Note 1 4 to our consolidated financial statements "Net Loss Per Share" for additional information.

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance which requires disclosure of incremental segment information on an annual and interim basis.

Accounting Pronouncements Recently Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance which requires potential disclosure of incremental segment information on an annual and interim basis.

This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of this Accounting Standards Update ("ASU"), and intends to adopt this guidance in fiscal 2025.

The Company adopted this guidance in fiscal 2025 with no material impact to its consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued guidance to provide disaggregated income tax disclosures on the rate reconciliation and income taxes paid.

This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this ASU.

The Company intends to adopt this guidance in fiscal 2026 and expects the adoption of the updated guidance to result in disclosure of additional disaggregated tax information.

In November 2024, the FASB issued guidance requiring the disclosure, in the notes to financial statements, of specified disaggregated income statement expense information.

This guidance is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of this guidance.

Restructuring and Other Charges

During the third quarter of fiscal 2023, the Company announced a real estate optimization plan which provided for closing duplicative sites and decommissioning underutilized offices and floors.

The Company recognized non-cash lease impairment charges of $ 14 million in fiscal 2023.

In fiscal 2024, the Company recognized an additional $ 28 million of non-cash lease impairment charges as a result of the real estate optimization plan.

The non-cash lease impairment charges represent the amount that the carrying value of the asset groups exceeded their estimated fair values.

The asset groups primarily include operating lease right-of-use assets, leasehold improvements, and related property and equipment.

To estimate the fair value of the asset group, the Company utilized a discounted cash flow approach using market participant assumptions of the expected cash flows and discount rate.

During the fourth quarter of fiscal 2023, the Company approved a restructuring plan (the “2023 Restructuring Plan”) intended to reduce operating expenses and improve profitability.

The 2023 Restructuring Plan involved a reduction of the Company’s workforce by approximately 300 full-time employees.

The 2023 Restructuring Plan was substantially complete by the first quarter of fiscal 2024 and the Company recognized aggregate restructuring costs of $ 15 million in the fourth quarter of fiscal 2023.

During the fourth quarter of fiscal 2024, the Company approved a restructuring plan (the “2024 Restructuring Plan”) intended to improve operating efficiencies and profitability.

The 2024 Restructuring Plan involves a reduction of the Company’s workforce by approximately 400 full-time employees.

The 2024 Restructuring Plan is expected to be substantially complete by the first quarter of fiscal 2025.

Aggregate restructuring costs associated with the 2024 Restructuring Plan are estimated to be approximately $ 24 million.

The charges that the Company expects to incur throughout the completion of the 2024 Restructuring Plan are subject to a number of factors and assumptions, including local law requirements in various jurisdictions, and the actual remaining expenses may differ from the original estimates.

Separate from the 2024 Restructuring Plan, the Company recognized $ 4 million of severance and termination benefit costs related to an insignificant workforce reduction in fiscal 2024.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the Company’s restructuring and other charges during fiscal 2025, 2024 and 2023 :

Year Ended January 31,

2025 2024 2023

(dollars in millions)

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Total $ 11 $ 56 $ 29

The following table summarizes the Company’s restructuring liability that is included in Accrued expenses and other current liabilities on the consolidated balance sheets:

The following table summarizes the Company’s restructuring liability related to severance and termination benefit costs that is included in Accrued expenses and other current liabilities on the consolidated balance sheets:

Severance and termination benefit costs

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Balance as of January 31, 2025

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2025 Restructuring Plan

During fiscal 2025, the Company approved a restructuring plan (the “2025 Restructuring Plan”) intended to reallocate resources toward priorities to drive growth.

The 2025 Restructuring Plan involved a reduction of the Company’s workforce by approximately 180 full-time employees.

The 2025 Restructuring Plan is expected to be substantially complete by the first quarter of fiscal 2026, and the Company recognized aggregate restructuring costs of $ 11 million in fiscal 2025.

2024 Restructuring Plan

During fiscal 2024, the Company approved a restructuring plan (the “2024 Restructuring Plan”) intended to improve operating efficiencies and profitability.

The 2024 Restructuring Plan involved a reduction of the Company’s workforce by approximately 400 full-time employees.

The 2024 Restructuring Plan was substantially complete by the first quarter of fiscal 2025 and the Company recognized aggregate restructuring costs of $ 24 million in fiscal 2024.

Separate from the 2024 Restructuring Plan, the Company recognized $ 4 million of severance and termination benefit costs related to an insignificant workforce reduction in fiscal 2024.

2023 Restructuring Plan & Real Estate Optimization Plan

During fiscal 2023, the Company approved a restructuring plan (the “2023 Restructuring Plan”) intended to reduce operating expenses and improve profitability.

The 2023 Restructuring Plan involved a reduction of the Company’s workforce by approximately 300 full-time employees.

The 2023 Restructuring Plan was substantially complete by the first quarter of fiscal 2024 and the Company recognized aggregate restructuring costs of $ 15 million in fiscal 2023.

Additionally, during fiscal 2023 the Company implemented a real estate optimization plan which provided for closing duplicative sites and decommissioning underutilized offices and floors.

As result, the Company recognized non-cash lease impairment charges of $ 28 million and $ 14 million in fiscal 2024 and fiscal 2023, respectively .

Cash Equivalents and Investments

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following tables present the amortized cost, unrealized gain (loss) and estimated fair value of cash equivalents and short-term investments:

The following table presents the estimated fair value of cash equivalents and short-term investments:

As of January 31,

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Cash equivalents:

Money market funds $ 151 $ — $ — $ 151

Money market funds (Level 1)

Certificates of deposit (Level 2)

Total cash equivalents 248 151

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Total $ 2,362 $ 2,019

As of January 31, 2023

(dollars in millions)

Cash equivalents:

Money market funds $ 133 $ — $ — $ 133

Total cash equivalents 133 — — 133

Short-term investments (Available-for-sale):

treasury securities 2,207 — ( 22 ) 2,185

Corporate debt securities 133 — ( 2 ) 131

Total short-term investments 2,340 — ( 24 ) 2,316

Total $ 2,473 $ — $ ( 24 ) $ 2,449

The following table presents the contractual maturities of the Company's short-term investments:

As of January 31, 2025

Estimated Fair Value

(dollars in millions)

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Interest receivable of $ 24 million and $ 20 million is included in Prepaid expenses and other current assets on the consolidated balance sheets as of January 31, 2025 and 2024, respectively.

The Company had 41 and 159 short-term investments in unrealized loss positions as of January 31, 2024 and 2023, respectively.

For available-for-sale debt securities that have unrealized losses, the Company evaluates whether (i) the Company has the intention to sell any of these investments, (ii) it is not more likely than not that the Company will be required to sell any of these available-for-sale debt securities before recovery of the entire amortized cost basis

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

and (iii) the decline in the fair value of the investment is due to credit or non-credit related factors.

There were no material credit or non-credit related impairments for short-term investments as of January 31, 2024 and 2023.

There were no material differences between the estimated fair value and amortized cost of our cash equivalents and short-term investments as of January 31, 2025 and 2024.

For available-for-sale debt securities that have unrealized losses, there were no material credit or non-credit related impairments for short-term investments as of January 31, 2025 and 2024.

Strategic Investments

Strategic investments primarily include equity investments in privately-held companies, which do not have a readily determinable fair value.

Strategic investments are classified as Level 3 in the fair value hierarchy as nonrecurring fair value measurements may include observable and unobservable inputs.

As of January 31, 2025 and 2024, the balance of strategic investments was $ 30 million and $ 26 million, respectively.

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No goodwill impairments were recorded during fiscal 2025, 2024 and 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Intangible Assets, net

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(dollars in millions)

Capitalized internal-use software costs $ 48 $ ( 17 ) $ 31

Purchased developed technology $ 239 $ ( 179 ) $ 60

Customer relationships 116 ( 85 ) 31

Capitalized internal-use software costs 54 ( 19 ) 35

Trade name 21 ( 16 ) 5

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(dollars in millions)

Capitalized internal-use software costs $ 48 $ ( 28 ) $ 20

Purchased developed technology $ 220 $ ( 134 ) $ 86

Customer relationships 116 ( 62 ) 54

Capitalized internal-use software costs 48 ( 17 ) 31

Trade name 21 ( 12 ) 9

Other 4 ( 2 ) 2

$ 409 $ ( 227 ) $ 182

5 unchanged sentences

Trade name 1.3 years 2.3 years

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of January 31, 2025, estimated remaining amortization expense for the intangible assets by fiscal year was as follows:

2 unchanged sentences

Amortization expense of intangible assets was $ 85 million, $ 87 million and $ 93 million in fiscal 2025, 2024 and 2023, respectively.

Balance Sheet Components

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Property and Equipment, net

7 unchanged sentences

Property and equipment, net $ 43 $ 48

Depreciation expense was $ 12 million in fiscal 2024, 2023 and 2022.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

As of January 31,

(dollars in millions)

Accrued expenses $ 48 $ 52

Accrued taxes payable 4 5

Operating lease liabilities 31 32

Accrued restructuring

Accrued expenses and other current liabilities $ 115 $ 112

Other Liabilities, Noncurrent

Other liabilities, noncurrent consisted of the following:

As of January 31,

(dollars in millions)

Deferred tax liabilities $ 16 $ 12

Other liabilities, noncurrent $ 30 $ 23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Depreciation expense was $ 13 million in fiscal 2025 and $ 12 million in fiscal 2024 and 2023.

Deferred Revenue and Performance Obligations

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Deferred revenue, which is a contract liability, consists primarily of payments received and accounts receivable recorded in advance of revenue recognition under the Company’s contracts with customers and is recognized as the revenue recognition criteria are met.

Subscription revenue recognized during fiscal 2024 and 2023 included $ 1,229 million and $ 952 million, respectively, from deferred revenue balances at the beginning of the respective periods.

Professional services and other revenue recognized in fiscal 2024 and 2023 from deferred revenue balances at the beginning of the respective periods was $ 10 million and $ 14 million, respectively.

Subscription revenue recognized during fiscal 2025 and 2024 that was included in the deferred revenue balances at the beginning of the respective periods was $ 1,456 million and $ 1,229 million, respectively.

Transaction Price Allocated to the Remaining Performance Obligations

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Convertible Senior Notes

The 2025 Notes and 2026 Notes are recorded at face value less unamortized debt issuance costs.

During fiscal 2024, the Company repurchased $ 508 million principal amount of the 2025 Notes for $ 462 million in cash and $ 542 million principal amount of the 2026 Notes for $ 475 million in cash, resulting in an aggregate gain on early extinguishment of debt of $ 106 million.

The convertible senior notes due in 2025 (“2025 Notes”) and 2026 (“2026 Notes” and together with the 2025 Notes, the “Notes”), are recorded at face value less unamortized debt issuance costs.

During fiscal 2025, the Company repurchased $ 42 million principal amount of the 2025 Notes for $ 40 million in cash, and $ 258 million principal amount of the 2026 Notes for $ 240 million in cash, resulting in a gain on early extinguishment of debt of $ 19 million.

During fiscal 2024, the Company repurchased $ 508 million principal amount of the 2025 Notes for $ 462 million in cash, and $ 542 million principal amount of the 2026 Notes for $ 475 million in cash, resulting in a gain on early extinguishment of debt of $ 106 million.

2025 Convertible Senior Notes

2 unchanged sentences

The 2025 Notes mature on September 1, 2025 unless earlier redeemed, repurchased or converted.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The terms of the 2025 Notes are governed by an Indenture by and between the Company and Wilmington Trust, National Association, as Trustee (the "2025 Indenture").

3 unchanged sentences

• during any fiscal quarter commencing after the fiscal quarter ending on January 31, 2020 (and only during such fiscal quarter), if the last reported sale price of Class A common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price of the 2025 Notes on each applicable trading day;

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

• during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the 2025 Notes for each trading day of that five consecutive trading day period was less than 98 % of the product of the last reported sale price of Class A common stock and the conversion rate on such trading day;

2 unchanged sentences

On or after June 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2025 Notes regardless of the foregoing circumstances.

During the three months ended January 31, 2024, the conditions allowing holders of the 2025 Notes to convert during the three months ending April 30, 2024 were not met, and as a result, the 2025 Notes were classified as noncurrent liabilities as of January 31, 2024.

During the three months ended January 31, 2025, the conditions allowing holders of the 2025 Notes to convert during the three months ending April 30, 2025 were not met.

As of January 31, 2025, the 2025 Notes are classified as current liabilities due to their upcoming maturity on September 1, 2025.

The Company may redeem for cash all or any portion of the 2025 Notes, at its option, on or after September 6, 2022, if the last reported sale price of the Company’s Class A common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on and including the trading day preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the 2025 Notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date.

1 unchanged sentence

Additionally, in the event of a corporate event that constitutes a fundamental change (as defined in the 2025 Indenture), holders of the 2025 Notes may require the Company to repurchase all or a portion of their 2025 Notes at a price equal to 100 % of the principal amount of the 2025 Notes being repurchased, plus any accrued and unpaid interest.

During fiscal 2024 and 2023, the effective interest rate on the 2025 Notes was 0.43 %.

During fiscal 2022, prior to the adoption of ASU No.

2020-06, the effective interest rate on the liability component of the 2025 Notes was 4.10 %.

The following table sets forth total interest expense recognized related to the 2025 Notes:

Year Ended January 31,

2024 2023 2022

(dollars in millions)

Contractual interest expense $ 1 $ 1 $ 1

Amortization of debt issuance costs 2 3 2

Amortization of debt discount (1)

Total $ 3 $ 4 $ 39

(1) Not applicable subsequent to the adoption of ASU No.

The net carrying amount of the 2025 Notes consisted of the following:

As of January 31, 2024 As of January 31, 2023

As of January 31,

(dollars in millions)

Principal $ 510 $ 552

unamortized debt issuance costs and debt discount

unamortized debt issuance costs

Net carrying amount $ 509 $ 549

26 unchanged sentences

Additionally, in the event of a corporate event that constitutes a fundamental change (as defined in the 2026 Indenture), holders of the 2026 Notes may require the Company to repurchase all or a portion of their 2026 Notes at a price equal to 100 % of the principal amount of the 2026 Notes being repurchased, plus any accrued and unpaid interest.

During fiscal 2024 and 2023, the effective interest rate on the 2026 Notes was 0.60 %.

During fiscal 2022, prior to the adoption of ASU No.

2020-06, the effective interest rate on the liability component of the 2026 Notes was 5.75 %.

The following table sets forth total interest expense recognized related to the 2026 Notes:

Year Ended January 31,

2024 2023 2022

(dollars in millions)

Contractual interest expense $ 4 $ 4 $ 4

Amortization of debt issuance costs 1 3 1

Amortization of debt discount (1)

Total $ 5 $ 7 $ 51

(1) Not applicable subsequent to the adoption of ASU No.

The net carrying amount of the 2026 Notes consisted of the following:

As of January 31, 2024 As of January 31, 2023

As of January 31,

(dollars in millions)

Principal $ 350 $ 608

unamortized debt issuance costs and debt discount

unamortized debt issuance costs

Net carrying amount $ 349 $ 605

14 unchanged sentences

2026 convertible senior notes $ 350 $ 329

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The estimated fair values of the Notes, which are Level 2 financial instruments, were determined based on the quoted bid prices of the Notes in an over-the-counter market on the last trading day of the reporting period.

In February 2018, the Company sold net-share-settled (or, at the Company’s election subject to certain conditions, cash-settled) warrants (the “Warrants”) to acquire shares of the Company’s Class A common stock at an initial exercise price of approximately $ 68.06 per share.

The Warrants were exercisable over 80 scheduled trading days beginning on May 15, 2023.

The Company elected to cash settle the Warrants.

During fiscal 2024, the Company settled Warrants corresponding to approximately 1.0 million shares for total cash payments of $ 7 million.

As of January 31, 2024, no Warrants remained outstanding.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company has entered into various non-cancelable office space operating leases with original lease periods expiring between 2025 and 2030.

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Cash payments made related to operating lease liabilities were $ 41 million and $ 47 million in fiscal 2025 and 2024, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Commitments and Contingencies

7 unchanged sentences

3:22-cv-02990.

The lawsuit asserts claims under Sections 10(b) and 20(a) of 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.

The lawsuit seeks an order certifying the lawsuit as a class action and unspecified damages.

The lawsuit asserted 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, Inc.

The lawsuit sought 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.

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.

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.

On March 31, 2023, the court dismissed in full the claims based on the plaintiff’s allegations related to the Company’s cybersecurity controls and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

vulnerability to data breaches, and dismissed in part and denied in part the claims based on allegations related to the Auth0 integration.

On May 28, 2024, the parties entered into a stipulation of settlement (the “Stipulation”) where, in exchange for the release and dismissal with prejudice of all claims, the Company agreed to pay and/or to cause its insurance carriers to pay a total of $ 60 million, which is covered through a combination of the Company’s Director & Officer ("D&O") insurance and the balance of the Company’s $ 10 million retention on the primary D&O policy.

The Stipulation does not constitute an admission of fault or wrongdoing by the Company or its executives.

On November 19, 2024, the court granted final approval of the Stipulation and dismissed the lawsuit in its entirety, with prejudice.

Additionally, two purported shareholders filed derivative lawsuits on behalf of the Company in the United States District Court for the Northern District of California against certain of its current and former executive officers and directors, captioned O’Dell v.

4 unchanged sentences

3:22-cv-08627 (filed Dec.

The lawsuits allege, among other things, that the defendants breached their fiduciary duties by making false or misleading statements or omissions concerning the Company’s cybersecurity controls, vulnerability to data breaches, and the Company’s integration of Auth0.

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.

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.

13, 2022) (the "California Federal Derivative Actions").

The California Federal Derivative Actions allege, among other things, that the defendants breached their fiduciary duties by making false or misleading statements or omissions concerning the Company’s cybersecurity controls, vulnerability to data breaches, and the Company’s integration of Auth0.

The California Federal Derivative Actions 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.

On February 22, 2023, the court entered a stipulated order consolidating the California Federal Derivative Actions, appointing co-lead counsel for plaintiffs, and staying the consolidated California Federal Derivative Actions during the pendency of the motion to dismiss in the securities class action lawsuit.

The consolidated California Federal Derivative Actions are captioned In re Okta, Inc.

Stockholder Derivative Litigation , No.

3:22-cv-07480.

On May 9, 2023, the court entered a stipulated order continuing the stay through the close of discovery in the securities class action lawsuit.

On May 9, 2023, the court entered a stipulated order continuing the stay through the close of discovery in the securities class action lawsuit and, on January 27, 2025, the court entered an order continuing the stay.

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.

1:23-cv-00413.

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.

1:23-cv-00413 (the "Buono Action").

On May 31, 2023, the court entered a stipulated order whereby the defendants agreed to accept service and stay the Buono Action through the close of discovery in the securities class action lawsuit.

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.

1:24-cv-00106.

The Company is defending these lawsuits vigorously.

At this time, the Company is unable to predict the outcome or estimate the amount of loss or range of losses that could potentially result from these lawsuits.

1:24-cv-00106 (together with the Buono Action, the "Delaware Federal Derivative Actions").

On March 18, 2024, 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.

On July 1, 2024, another shareholder filed a substantially similar derivative lawsuit in the Court of Chancery for the State of Delaware (the “Delaware Chancery Court”) against certain of the Company’s current and former executive officers and directors, captioned Grimaldi v.

McKinnon, et al.

2024-0685-PAF (the “Grimaldi Action”).

On July 19, 2024, the Delaware Chancery Court entered a stipulated order whereby the defendants agreed to accept service and to stay the derivative action through final approval of the settlement in the securities class action lawsuit.

On October 18, 2024, another shareholder filed a substantially similar derivative lawsuit in the Delaware Chancery Court against certain of the Company’s current and former executive officers and directors, captioned Duprat v.

McKinnon, et al ., C.A.

2024-1072-PAF (the “Duprat Action”).

On November 8, 2024, the Delaware Chancery Court entered a stipulated order where the defendants agreed to accept service in the Duprat Action;

the Grimaldi Action and the Duprat Action were consolidated (the "Delaware Chancery Actions");

and the Delaware Chancery Actions were stayed pursuant to the terms previously entered in the Grimaldi Action.

On January 10, 2025, the Company and defendants agreed in principle to the non-monetary terms of a global resolution of the California Federal Derivative Actions, the Delaware Federal Derivative Actions, and the Delaware Chancery Actions, and executed a Memorandum of Understanding in connection therewith containing the agreed-upon material, non-monetary terms of the proposed settlement.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

While the Company and defendants have agreed in principle to settle the above-referenced derivative lawsuits, the Company is unable to predict the outcome or estimate the amount of loss or range of losses that could potentially result from these lawsuits.

Warranties and Indemnification

The Company’s subscription services are generally warranted to perform materially in accordance with the Company’s online help documentation under normal use and circumstances.

Additionally, the Company’s arrangements generally include provisions for indemnifying customers against liabilities if its subscription services

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

infringe a third party’s intellectual property rights.

Additionally, the Company’s arrangements generally include provisions for indemnifying customers against liabilities if its subscription services infringe a third party’s intellectual property rights.

Furthermore, the Company may also incur liabilities if it breaches the security or confidentiality obligations in its arrangements.

4 unchanged sentences

To date, the Company has not experienced any significant failures to meet defined levels of uptime reliability and performance as a result of those agreements and, as a result, the Company has not incurred significant costs and has not accrued any material liabilities in the accompanying consolidated financial statements as a result of these warranties.

Agreements with customers and other third parties may include indemnification or other provisions under which the Company agrees to indemnify or otherwise be liable to them for losses suffered or incurred as a result of claims of intellectual property infringement, damages caused by us to property or persons, or other liabilities relating to or arising from the use of the Company’s platform or other acts or omissions.

The Company cannot reasonably estimate potential payment obligations as a result of indemnification claims because it cannot predict when and under what circumstances they may be incurred.

64 unchanged sentences

No options were granted during fiscal 2025, 2024 and 2023.

The weighted-average grant-date fair value of options granted was $ 211.58 during fiscal 2022.

The total grant-date fair value of stock options vested was $ 16 million, $ 48 million and $ 104 million during fiscal 2025, 2024 and 2023, respectively.

The intrinsic value of the options exercised, which represents the difference between the fair market value of the Company’s common stock on the date of exercise and the exercise price of each option, was $ 213 million, $ 57 million and $ 108 million during fiscal 2025, 2024 and 2023, respectively.

As of January 31, 2024 and January 31, 2023, there was a total of $ 16 million and $ 90 million, respectively, of unrecognized stock-based compensation expense related to options, which is being recognized over a weighted-average period of 0.9 years.

Windfall tax benefits realized upon exercise of stock options were $ 47 million during fiscal 2025, while no windfall tax benefits were realized in fiscal years 2024 and 2023.

Restricted Stock Units

12 unchanged sentences

The total fair value of RSUs vested during fiscal 2025, 2024 and 2023 was $ 382 million, $ 335 million and $ 229 million, respectively.

During the first quarter of fiscal 2025, the Company began funding withholding taxes due upon the vesting of employee RSUs in certain jurisdictions by net share settlement, rather than its previous approach of selling shares of the Company’s common stock.

The amount of withholding taxes related to net share settlement of employee RSUs is reflected as (i) a reduction to additional paid-in-capital, and (ii) cash outflows for financing activities when the payments are made.

The shares withheld by the Company as a result of the net share settlement of RSUs are not considered issued and outstanding, and do not impact the calculation of basic net income (loss) per share attributable to the Class A and Class B common stockholders.

Market-based Restricted Stock Units

In March 2022, the Company granted market-based RSUs to certain members of management.

In March 2022, the Company granted market-based RSUs to certain members of management with an average grant date fair value of $ 244.73 .

The target number of market-based RSUs granted was 58,150 .

One-third of these market-based RSUs vest over each of a one-, two- and three-year performance period, each starting on February 1, 2022.

The number of shares that can be earned ranges from 0 % to 200 % of the target number of shares based on the relative performance of the per share price of the Company’s common stock as compared to the Nasdaq Composite Index over the respective performance periods and subject to continuous employment through the vesting dates.

The $ 244.73 average grant date fair value per target market-based RSU was determined using a Monte Carlo simulation approach.

Compensation expense for awards with market conditions is recognized over the service period using the accelerated attribution method and is not reversed if the market condition is not met.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In March 2023, the Company granted market-based RSUs to certain members of management.

In March 2023, the Company granted market-based RSUs to certain members of management with an average grant date fair value of $ 149.78 .

The target number of market-based RSUs granted was 192,843 .

One-third of these market-based RSUs vest over each of a one-, two- and three-year performance period, each starting on February 1, 2023.

The $ 149.78 average grant date fair value per target market-based RSU was determined using a Monte Carlo simulation approach.

In March 2024, the Company granted market-based RSUs to certain members of management with an average grant date fair value of $ 182.15 .

The target number of market-based RSUs granted was 183,595 .

One-third of these market-based RSUs vest over each of a one-, two- and three-year performance period, each starting on February 1, 2024.

For each granted market-based RSU award, the number of shares that can be earned ranges from 0 % to 200 % of the target number of shares based on the relative performance of the per share price of the Company’s common stock as compared to the Nasdaq Composite Index over the respective performance periods and subject to continuous employment through the vesting dates.

The average grant date fair value per target market-based RSU is determined using a Monte Carlo simulation approach.

Compensation expense for awards with market conditions is recognized over the service period using the accelerated attribution method and is not reversed if the market condition is not met.

Restricted Stock Awards Issued in Connection with Business Combinations

In fiscal 2022, the Company entered into revesting agreements with the founders of the acquired businesses pursuant to which 1,269,008 restricted shares of Okta’s Class A common stock with a weighted-average fair value per share of $ 268.98 issued as of the respective closing dates will vest over 3 years.

In connection with the business combinations, as of January 31, 2024, there was $ 29 million of unrecognized stock-based compensation expense related to unvested restricted shares, which is being recognized over a weighted-average period of 0.3 years based on vesting under the award service conditions.

Employee Stock Purchase Plan

Restricted Stock Awards

As of January 31, 2025, there was $ 15 million of unrecognized stock-based compensation expense related to unvested restricted stock awards, which is being recognized over a weighted-average period of 2.1 years based on vesting under the award service conditions.

Employee Stock Purchase Plan (ESPP)

The ESPP provides for 12-month offering periods beginning June 21 and December 21 of each year, and each offering period consists of up to two six-month purchase periods.

17 unchanged sentences

A portion of employee contributions are matched up to a fixed maximum dollar amount per year per employee.

The Company began matching contributions in fiscal 2023.

During fiscal 2024 and 2023, matching contributions related to the plan were $ 19 million and $ 21 million, respectively.

During fiscal 2025, 2024 and 2023, matching contributions related to the plan were $ 18 million, $ 19 million and $ 21 million, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The domestic and foreign components of pre-tax loss for fiscal 2024, 2023 and 2022 were as follows:

The Company is subject to taxation in the U.S.

and various other state and foreign jurisdictions.

The domestic and foreign components of pre-tax income (loss) for fiscal 2025, 2024 and 2023 were as follows:

Year Ended January 31,

3 unchanged sentences

Foreign 18 23 33

Loss before provision for (benefit from) income taxes $ ( 337 ) $ ( 801 ) $ ( 850 )

The components of the provision for (benefit from) income taxes for fiscal 2024, 2023 and 2022 were as follows:

Income (loss) before provision for income taxes

$ 46 $ ( 337 ) $ ( 801 )

The components of the provision for income taxes for fiscal 2025, 2024 and 2023 were as follows:

Year Ended January 31,

4 unchanged sentences

Total current provision for income taxes 16 11 7

Federal — — ( 8 )

State — — ( 1 )

Foreign 2 7 7

Total deferred provision for (benefit from) income taxes 7 7 ( 6 )

Total provision for (benefit from) income taxes $ 18 $ 14 $ ( 2 )

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.

For fiscal 2023, income tax expense resulted primarily from income in profitable foreign jurisdictions, the tax impact of shortfalls from stock-based compensation in the United Kingdom, and state taxes.

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.

Total deferred provision for income taxes

Total provision for income taxes

$ 18 $ 18 $ 14

For fiscal 2025, income tax expense resulted primarily from profitable foreign jurisdictions, federal and state taxes resulting from limitations on tax attribute utilization, offset by the impact of tax windfalls from stock-based compensation in the United States.

For fiscal 2024, the income tax expense resulted primarily from income tax expense related to profitable foreign jurisdictions, federal and state taxes resulting from limitations on tax attribute utilization, and the tax impact of shortfalls from stock-based compensation in the United Kingdom.

For fiscal 2023, income tax expense resulted primarily from income tax expense related to profitable foreign jurisdictions, the tax impact of shortfalls from stock-based compensation in the United Kingdom, and state taxes.

The Company does not provide for income taxes on undistributed earnings of subsidiaries that are intended to be indefinitely reinvested.

Where the Company does not intend to indefinitely reinvest subsidiary earnings, income and withholding taxes, as applicable, are provided on such undistributed earnings and are insignificant.

The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for fiscal 2025, 2024 and 2023:

5 unchanged sentences

Stock-based compensation 14.5 ( 28.4 ) ( 11.9 )

Effect of foreign operations

8.1 ( 0.7 ) ( 1.0 )

Research and development credits ( 51.7 ) 5.3 2.6

Non-deductible expenses 19.2 ( 1.5 ) ( 6.2 )

Provision to return true-up

( 7.1 ) 0.2 —

Unrecognized tax benefits

Other, net ( 4.0 ) 0.6 0.2

Effective tax rate 39.0 % ( 5.3 ) % ( 1.6 ) %

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Tax Cuts and Jobs Act enacted on December 22, 2017 amended Internal Revenue Code Section 174 to require that specific research and experimental (“R&E”) expenditures be capitalized and amortized over five years (U.S.

1 unchanged sentence

R&E) beginning in fiscal 2023.

As a result, for fiscal 2024 and 2023, the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Company disavowed certain tax deductions, which resulted in the utilization of federal and state tax attributes to offset this impact.

As a result, for fiscal 2024 and 2023, the Company disavowed certain tax deductions, which resulted in the utilization of federal and state tax attributes to offset this impact.

The tax effects of temporary differences and related deferred tax assets and liabilities as of January 31, 2025 and 2024 were as follows:

17 unchanged sentences

Total deferred tax liabilities ( 148 ) ( 128 )

Net deferred tax assets (liabilities) $ ( 8 ) $ ( 2 )

As a result of continuing losses, the Company has determined that it is not more likely than not that it will realize the benefits of its U.S.

deferred tax assets and, therefore, the Company has recorded a valuation allowance to reduce the carrying value of the U.S.

Net deferred tax liabilities

$ ( 13 ) $ ( 8 )

The Company has determined that it is not more likely than not that it will realize the benefits of its net deferred tax assets in the United States due to negative evidence such as a continued cumulative loss and an increase in net deferred tax assets despite attribute utilization.

Therefore, the Company has recorded a valuation allowance to reduce the carrying value of the U.S.

deferred tax assets, net of U.S.

3 unchanged sentences

If not utilized, the federal and state net operating loss carryforwards will begin to expire in 2036 and 2026, respectively.

The federal and state net operating losses for fiscal 2025 consider the impacts of the amendments of prior-year federal and state tax returns as discussed in the effective tax rate reconciliation section.

As of January 31, 2025, the Company had approximately $ 34 million of UK net operating losses which do not expire.

2 unchanged sentences

The Company’s ability to utilize the net operating loss and tax credit carryforwards in the future may be subject to substantial restrictions in the event of future ownership changes as defined in Section 382 of the Internal Revenue Code and similar state tax laws.

Accounting guidance for income taxes requires a deferred tax liability to be established for the U.S.

tax impact of undistributed earnings of foreign subsidiaries unless it can be shown that these earnings will be permanently reinvested outside the U.S.

If the Company repatriated its accumulated foreign earnings, any deferred income taxes for the estimated U.S.

income tax, foreign income tax, and applicable withholding taxes on earnings of subsidiaries is insignificant.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8 unchanged sentences

Gross amount of unrecognized tax benefits as of the end of the year $ 65 $ 49 $ 43

The Company is subject to taxation in the U.S.

and various other state and foreign jurisdictions.

As the Company has net operating loss carryforwards for the U.S.

federal and state jurisdictions, the statute of limitations is open for all years.

For material foreign jurisdictions, the tax years open to examination include the tax years 2018 and forward.

For all years presented, the Company has an immaterial amount of unrecognized tax benefits that if recognized would impact the effective tax rate.

For all periods presented, the Company has an immaterial amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate.

The Company's policy is to include interest and penalties related to unrecognized tax benefits within the provision for income taxes.

1 unchanged sentence

The Company does not have any significant uncertain tax positions as of January 31, 2025 for which it is reasonably possible that the positions will increase or decrease within the next twelve months.

Net Loss Per Share

The Company computes net loss per share of common stock in conformity with the two-class method required for participating securities.

The following table presents the calculation of basic and diluted net loss per share:

As the Company has net operating loss carryforwards for the U.S.

federal and state jurisdictions, the statute of limitations is open for all years.

For material foreign jurisdictions, the tax years open to examination include the tax years 2017 and forward.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Net Income (Loss) Per Share

The following table presents the calculation of basic and diluted net income (loss) per share.

Net income (loss) is reported in millions and rounded from amounts in thousands;

as a result, net income (loss) per share may not recalculate exactly due to rounding.

Year Ended January 31,

2025 2024 2023

Class A Class B Class A Class B Class A

Class A Class B Class A Class B Class A Class B

(dollars in millions, shares in thousands, except per share data)

Net loss $ ( 339 ) $ ( 16 ) $ ( 778 ) $ ( 37 ) $ ( 806 ) $ ( 42 )

Weighted-average shares outstanding, basic and diluted 156,335 7,299 150,891 7,132 140,684 7,352

Net loss per share, basic and diluted $ ( 2.17 ) $ ( 2.17 ) $ ( 5.16 ) $ ( 5.16 ) $ ( 5.73 ) $ ( 5.73 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

As the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common shares outstanding would have been anti-dilutive.

Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:

Basic net income (loss) per share:

Net income (loss), basic $ 27 $ 1 $ ( 339 ) $ ( 16 ) $ ( 778 ) $ ( 37 )

Weighted-average shares outstanding, basic 162,082 7,487 156,335 7,299 150,891 7,132

Net income (loss) per share, basic $ 0.16 $ 0.16 $ ( 2.17 ) $ ( 2.17 ) $ ( 5.16 ) $ ( 5.16 )

Diluted net income (loss) per share:

Net income (loss) $ 27 $ 1 $ ( 339 ) $ ( 16 ) $ ( 778 ) $ ( 37 )

Gain on extinguishment of debt, net of interest expense 1

( 17 ) ( 1 ) — — — —

Net income (loss), diluted $ 10 $ — $ ( 339 ) $ ( 16 ) $ ( 778 ) $ ( 37 )

Number of shares used in basic calculation 162,082 7,487 156,335 7,299 150,891 7,132

Weighted-average effect of diluted securities related to:

Employee share-based awards 1,832 2,942 — — — —

Convertible senior notes 743 — — — — —

Assumed conversion of Class B to Class A common shares 10,429 — — — — —

Number of shares used in diluted calculation 175,086 10,429 156,335 7,299 150,891 7,132

Net income (loss) per share, diluted $ 0.06 $ 0.06 $ ( 2.17 ) $ ( 2.17 ) $ ( 5.16 ) $ ( 5.16 )

1 Under the if-converted method, net income is adjusted to reflect the assumption that the convertible senior notes were converted at the beginning of the period.

Potentially dilutive securities excluded because they would be anti-dilutive were as follows:

Year Ended January 31,

1 unchanged sentence

(shares in thousands)

Issued and outstanding stock options 5,038 6,353 7,984

Unvested RSUs issued and outstanding 8,871 9,317 6,226

Unvested market-based RSUs issued and outstanding 435 116 —

Unvested RSAs issued and outstanding

206 627 1,269

Shares committed under the ESPP 629 921 253

Shares related to the 2023 Notes — — 356

Shares subject to warrants related to the issuance of the 2023 Notes — 1,048 1,048

Shares related to the 2025 Notes 2,925 5,617 5,617

Shares related to the 2026 Notes 2,548 4,820 4,820

20,652 28,819 27,573

Employee share-based awards 4,503 15,179 17,334

Convertible senior notes 4,170 5,473 11,485

Total 8,673 20,652 28,819

The Company entered into capped call transactions in connection with the issuance of the convertible senior notes.

The effect of the capped calls was also excluded from the calculation of diluted net income per share as the effect of the capped calls would have been anti-dilutive.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Geographical Information

9 unchanged sentences

Property and equipment by geographic location is based on the location of the legal entity that owns the asset.

As of January 31, 2024 and 2023, substantially all of the Company's long-lived assets, which primarily consist of property and equipment and operating lease right-of-use assets, were located in the United States.

Subsequent Events

On February 1, 2024, the Company completed its acquisition of Spera.

The acquisition of Spera, an identity security platform provider, is expected to broaden the Company's identity threat detection and security posture management capabilities.

The Company provided total net consideration, subject to final adjustments, of approximately $ 80 million consisting of cash and the Company’s Class A common stock.

An agreed upon amount of consideration was deposited into a third party escrow account to secure the indemnification obligations of the selling stockholders.

Due to the limited amount of time since closing the transaction, the preliminary allocation of the purchase price is not yet complete.

The initial, provisional purchase price allocation, subject to measurement period adjustments, will be provided within the Company's Form 10-Q for the first quarter of fiscal 2025.

As of January 31, 2025 and 2024, the majority of the Company's long-lived assets, which primarily consist of property and equipment and operating lease right-of-use assets, were located in the United States.

Business Combinations

On February 1, 2024, the Company acquired all of the outstanding equity of Spera, an identity security platform provider.

The acquisition of Spera is expected to broaden the Company's identity threat detection and security posture management capabilities.

The Spera acquisition was accounted for as a business combination.

The acquisition date fair value of purchase consideration for Spera of $ 58 million was paid in cash.

Of this amount, $ 12 million of consideration was transferred to an escrow fund as partial security for any purchase price adjustments and indemnification obligations, and will be paid to the former Spera stockholders following the 18 -month anniversary of the closing date (less any such adjustments or indemnification obligations).

The Company recorded $ 18 million for developed technology intangible assets with an estimated useful life of 5 years and recorded $ 42 million of goodwill which is primarily attributed to the assembled workforce as well as the integration of Spera’s technology and the Company’s technology.

None of the goodwill is expected to be deductible for U.S.

federal income tax purposes.

The Company entered into revesting agreements with Spera’s founders pursuant to which 238,795 additional shares of Okta’s Class A common stock were issued as of the closing date which vest over three years .

The $ 20 million fair value of the unvested restricted stock award is attributable to a post-combination service condition and will be accounted for by the Company separately from the business combination as stock-based compensation expense.

Acquisition related expenses incurred were not material.

This acquisition did not have a material impact on the Company’s consolidated financial statements;

therefore, historical financial information and pro forma disclosures have not been presented.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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.

What changed 10-K

Item 8. Financial Statements and Supplementary Data