Okta IPO Profitable?

On the face of it, the potential profitability of an Okta IPO in the early months looked to be doubtful for one large reason: the cloud storage identity platform was, for all the uptake of its innovative services, not profitable. The figures for 2016 showed Okta with losses of US$76.3 million for a revenue of US$160.3 million. Such bottom line considerations might seem at first glance to signify that while an Okta IPO might be many things, profitable would not be one of them. However first glances often only show a part of the picture and a closer look might reveal a trend that is definitely more optimistic. Yes, the company was operating at a loss in 2016. It also operated at a loss in 2015 and here are the figures: US$59.1 million loss, US$41 million in revenue. In other words, we saw revenue growth from US$41 million to $85.9 million, while losses rose from US$59.1 million to $US76.3 million. Revenue growth is outstripping loss growth and the ratio between revenue and loss is widening. If we consider why this is the case then we might see why the IPO of Okta might very well prove to be a profitable one.

The Okta IPO will benefit from the innovative nature of the product that the company provides. Cloud storage is obviously the way ahead but for those who are not actively involved in the tech industries, the actual mechanics of the service may be confusing, especially when you consider the baffling variety of apps that are available. How a prospective user of cloud storage to decide what is is the best for him or her and for his or her company? This is where Okta has scored heavily with its concentration of the idea of “Cloud Identity.” The Okta platform integrates the apps a customer needs and then secures them into one specific, tailored entity. In so doing it provides a way to securely connect the technology to all of the people who need to use it, employers, employees and customers. Okta provides a way to manage cloud storage and was one of the very first companies to identify the need for the service and to provide it. Is it any wonder then that the business is on the up and up and prospects for the Okta IPO looked rosy in early 2017?

In fact, the matter of the Okta IPO shows us that there is more to a business than its last set of figures and more to its prospects than a basic survey might reveal. It is a truism that most tech start-ups operate at a loss for a while and that judging future performance requires study of elements specific to the industry as well as awareness of longer term trends. When it comes to the matter of the Okta IPO and the question whether it will be profitable or not, we can say with some degree of certainty that in early 2017 the figures all seemed to be pointing in the right direction.


(Simon Topliss, Research)


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