Okta, Inc. - Annual Report: 2024 (Form 10-K)

/s/

We have served as the Company’s auditor since 2013.

March 1, 2024

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Okta, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Okta, Inc.’s internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Okta, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2024, 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.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

San Jose, California

March 1, 2024

OKTA, INC.

CONSOLIDATED BALANCE SHEETS

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


	As of January 31,
	2024		2023

Assets
Current assets:
Cash and cash equivalents	$		$
Short-term investments
Accounts receivable, net of allowances of $ and $
Deferred commissions
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Deferred commissions, noncurrent
Intangible assets, net
Goodwill
Other assets
Total assets	$		$
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$		$
Accrued expenses and other current liabilities
Accrued compensation

Deferred revenue
Total current liabilities
Convertible senior notes, net, noncurrent
Operating lease liabilities, noncurrent
Deferred revenue, noncurrent
Other liabilities, noncurrent
Total liabilities
Commitments and contingencies (Note 10)

	Amount		Shares		Amount









































































		—		—		—	()	—				()

		$				$	$	$	()	$	()	$

) — ()— — — — — ) ()()

See Notes to Consolidated Financial Statements.

OKTA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


	Year Ended January 31,
	2024		2023		2022

Cash flows from operating activities:
Net loss	$	()	$	()	$	()
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation
Depreciation, amortization and accretion
Amortization of debt issuance costs
Amortization of deferred commissions
Deferred income taxes					()


Lease impairment charges
Gain on early extinguishment of debt	()
Net gain on strategic investments			()		()
Other, net
Changes in operating assets and liabilities:
Accounts receivable	()		()		()
Deferred commissions	()		()		()
Prepaid expenses and other assets	()		()		()
Operating lease right-of-use assets
Accounts payable			()
Accrued compensation			()
Accrued expenses and other liabilities
Operating lease liabilities	()		()		()
Deferred revenue
Net cash provided by operating activities
Cash flows from investing activities:
Capitalized software	()		()		()
Purchases of property and equipment	()		()		()

Purchases of securities available for sale and other	()		()		()
Proceeds from maturities and redemption of securities available for sale
Proceeds from sales of securities available for sale and other
Payments for business acquisitions, net of cash acquired	()		()		()
Purchases of intangible assets	()		()
Net cash provided by (used in) investing activities			()		()
Cash flows from financing activities:


Payments for repurchases of convertible senior notes	()



Payments for warrants related to convertible senior notes	()


Proceeds from stock option exercises

Proceeds from shares issued in connection with employee stock purchase plan

Net cash provided by (used in) financing activities	()
Effects of changes in foreign currency exchange rates on cash, cash equivalents and restricted cash			()		()
Net increase (decrease) in cash, cash equivalents and restricted cash			()		()
Cash, cash equivalents and restricted cash at beginning of year
Cash, cash equivalents and restricted cash at end of year	$		$		$


	Year Ended January 31,
	2024	2023	2022

Supplementary cash flow disclosure:
Cash paid during the period for:
Interest	$	$	$
Income taxes
Non-cash investing and financing activities:
Issuance of common stock and value of equity awards assumed in connection with business combination
Issuance of common stock for repurchases and conversions of convertible senior notes
Benefit from exercise of hedges related to convertible senior notes




Operating lease right-of-use assets exchanged for lease liabilities








Reconciliation of cash, cash equivalents, and restricted cash within the consolidated balance sheets to the amounts shown in the statements of cash flows above:
Cash and cash equivalents	$	$	$
Restricted cash, current included in prepaid expenses and other current assets
Restricted cash, noncurrent included in other assets
Total cash, cash equivalents and restricted cash	$	$	$

See Notes to Consolidated Financial Statements.

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

reportable segment.

Use of Estimates

Foreign Currency

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

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Deferred Revenue

days of the invoice date. Amounts anticipated to be recognized within one year of the balance sheet date are recorded as deferred revenue, current; the remaining portion is recorded as deferred revenue, noncurrent in the consolidated balance sheets.

Deferred Commissions

. 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 , as determined by considering the average contractual term for renewal contracts.

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

million and $ million in fiscal 2024 and 2023, respectively. Amortization of contract costs was $ million, $ million and $ million in fiscal 2024, 2023 and 2022, respectively. Amortization expense is included in sales and marketing expenses in the accompanying consolidated statements of operations.

Cost of Revenue

Research and Development

Software Development Costs

years.

Advertising Expenses

Advertising expense was $ million, $ million, and $ million in fiscal 2024, 2023 and 2022, respectively.

Restructuring and Other Charges

Stock-Based Compensation

options were granted in fiscal

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

as the Company has never declared or paid any cash dividends and do not currently intend to declare dividends in the foreseeable future.

The fair value of each RSU award is based on the fair value of the underlying common stock as of the grant date. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period, generally three to .

The fair value of each market-based RSU award is measured using a Monte Carlo simulation valuation model which requires the use of various assumptions, including the stock price volatility and risk-free interest rate as of the valuation date corresponding to the length of time remaining in the performance period. Stock-based compensation expense for awards with market conditions is recognized over the requisite service period using the accelerated attribution method and is not reversed if the market condition is not met.

The assumptions used to determine the fair value of the stock awards represent management's best estimates. These estimates involve inherent uncertainties and the application of management's judgment. Forfeitures are accounted for as they occur.

Income Taxes

Cash, Cash Equivalents and Restricted Cash

As of January 31, 2024 and 2023, the Company's restricted cash balance was $ million and $ million, respectively, primarily related to letters of credit for its facility lease agreements.

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Strategic Investments

Accounts Receivable and Allowances

Property and Equipment

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

yearsFurniture and fixtures yearsLeasehold improvementsShorter of estimated useful life or remaining lease term

Business Combinations

Goodwill and Other Long-Lived Assets

goodwill impairments were recorded during the years presented based on the assessments performed.

Long-lived assets, such as property and equipment and finite-lived intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount to the estimated undiscounted future cash flows expected to be generated. If the carrying amount exceeds the undiscounted cash flows, the assets are determined to be impaired and an impairment charge is recognized as the amount by which the carrying amount exceeds its fair value. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives.

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Loss Contingencies

Concentrations of Risk

Net Loss per Share

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Recent Accounting Pronouncements Not Yet Adopted

million in fiscal 2023. In fiscal 2024, the Company recognized an additional $ 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 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 $ 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 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 $ 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 $ million of severance and termination benefit costs related to an insignificant workforce reduction in fiscal 2024.

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

$ Lease impairment chargesTotal$ $ Restructuring chargesCash payments

Balance as of January 31, 2023

Restructuring chargesCash payments()

Balance as of January 31, 2024

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

$ $ $ Total cash equivalents

Level 2:

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

U.S. treasury securities () Corporate debt securities

Certificates of deposit

Total short-term investments () Total$ $ $()$

As of January 31, 2023

Amortized

Cost

Unrealized

Gain

Unrealized

Loss

Estimated

Fair Value

(dollars in millions)

Level 1:

Cash equivalents:

Money market funds

Total cash equivalents

Level 2:

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

U.S. treasury securities

()

Corporate debt securities

()

Total short-term investments

()

Total

()

$ Due between one to five years Total$ $

The weighted-average remaining useful lives of the Company’s acquired intangible assets are as follows:

Weighted-Average Remaining Useful Life

As of January 31,

2024

2023

Purchased developed technology

years

Customer relationships

years

Trade name

years

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

Accrued Expenses and Other Current Liabilities

$ Accrued taxes payable Operating lease liabilities

Accrued restructuring

Other Accrued expenses and other current liabilities$ $

Other Liabilities, Noncurrent

$ Other Other liabilities, noncurrent$ $ (1) Not applicable subsequent to the adoption of ASU No. 2020-06. $

Less: unamortized debt issuance costs and debt discount

()()Net carrying amount$ $ 20232022 $ $ $ $ (1) Not applicable subsequent to the adoption of ASU No. 2020-06. $

Less: unamortized debt issuance costs and debt discount

()()Net carrying amount$ $

2026 Capped Calls

In connection with the pricing of the 2026 Notes, the Company entered into capped call transactions with respect to its Class A common stock. The 2026 Capped Calls are purchased call options that give the Company the option to purchase approximately million shares, subject to anti-dilution adjustments substantially identical to those in the 2026 Notes, of its Class A common stock for approximately $ per share (subject to adjustment), corresponding to the approximate initial conversion price of the 2026 Notes, exercisable upon conversion of the 2026 Notes. The 2026 Capped Calls have initial cap prices of $ per share (subject to adjustment) and will expire in 2026, if not exercised earlier. The 2026 Capped Calls are intended to offset potential dilution to the Company’s Class A common stock and/or offset the potential cash payments that the Company could be required to make in excess of the principal amount upon any conversion of the 2026 Notes under certain circumstances. The 2026 Capped Calls are separate transactions and are not part of the terms of the 2026 Notes. The 2026 Capped Calls meet the criteria for classification as equity and, as such, are not remeasured each reporting period.

Fair Value Measurements

$ 2026 convertible senior notes$ $

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

per share. The Warrants were exercisable over 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 million shares for total cash payments of $ million. As of January 31, 2024, Warrants remained outstanding.

term, which expires in October 2028. The Company is entitled to options to extend this lease, subject to certain requirements. $ $ )

Cash payments made related to operating lease liabilities were $ million and $ million in fiscal 2024 and 2023, respectively.

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10.

million and $ million were issued and outstanding as of January 31, 2024 and January 31, 2023, respectively. draws have been made under such letters of credit.

Legal Matters

From time to time in the normal course of business, the Company may be subject to various legal matters such as threatened or pending claims or proceedings.

On May 20, 2022, a purported shareholder filed a putative class action lawsuit in the United States District Court for the Northern District of California against the Company and certain of its executive officers, captioned In re Okta, Inc. Securities Litigation, No. 3:22-cv-02990. 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 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.

Additionally, 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. McKinnon et al., No. 3:22-cv-07480 (filed Nov. 28, 2022), and LR Trust v. McKinnon et al., No. 3:22-cv-08627 (filed Dec. 13, 2022). 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. 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 April 14, 2023, another shareholder filed a substantially similar derivative lawsuit in the United States District Court for the District of Delaware against certain of the Company’s current and former executive officers and directors, captioned Buono v. McKinnon et al., No. 1:23-cv-00413. 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.

On January 25, 2024, another shareholder filed a substantially similar derivative lawsuit in the United States District Court for the District of Delaware against certain of the Company’s current and former executive officers and directors, captioned Nasr v. McKinnon, et al., No. 1:24-cv-00106.

The Company is defending these lawsuits vigorously. 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.

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

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11.

vote per share and votes per share, respectively, and the shares of Class A common stock and Class B common stock are identical, except for voting and conversion rights. Shares of Class B common stock may be converted into Class A common stock at any time at the option of the stockholder on a -for-one basis, and are automatically converted into Class A common stock upon sale or transfer, subject to certain limited exceptions. Shares of Class A common stock are not convertible. $ $ $ $ Professional services and other Research and development Sales and marketing General and administrative Total$ $ $

Stock Options

Options issued under the Plan generally are exercisable for periods not to exceed and generally vest over with % vesting after and with the remainder vesting monthly thereafter in equal installments. Shares offered under the Plan may be: (i) authorized but unissued shares or (ii) treasury shares.

100

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

$ $ % - % - % - %

During fiscal 2024, the Company's employees purchased shares of its Class A common stock under the ESPP. The shares were purchased at a weighted-average purchase price of $ per share, with proceeds of $ million. During fiscal 2023, the Company's employees purchased shares of its Class A common stock under the ESPP. The shares were purchased at a weighted-average purchase price of $ per share, with proceeds of $ million.

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

Employee Defined Contribution Plan

The Company has a qualified defined contribution plan under Section 401(k) of the Internal Revenue Code covering eligible employees. 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 $ million and $ million, respectively.

102

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

13.

)$()$()Foreign Loss before provision for (benefit from) income taxes$()$()$() $ $ State Foreign Total current provision for income taxes Deferred: Federal ()State ()Foreign Total deferred provision for (benefit from) income taxes ()Total provision for (benefit from) income taxes$ $ $()

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.

% % %State income taxes, net of federal benefit Change in valuation allowance()()()Stock-based compensation()() Research and development credits Non-deductible expenses () Other, net()()()Effective tax rate()%()% %

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. R&E) or fifteen years (non-U.S. R&E) beginning in fiscal 2023. As a result, for fiscal 2024 and 2023, the

103

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

$ Capitalized research expenditures Stock-based compensation Operating lease liabilities Other reserves and accruals Research and development and other credits Total deferred tax assets Valuation allowance()()Total deferred tax assets, net Deferred tax liabilities:Deferred commissions()()Other deferred tax liabilities()()Operating lease right-of-use assets()()Depreciation and amortization()()Total deferred tax liabilities()()Net deferred tax assets (liabilities)$()$()

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. deferred tax assets, net of U.S. deferred tax liabilities. The U.S. valuation allowance increased by $ million and $ million during fiscal 2024 and 2023, respectively.

As of January 31, 2024, the Company had approximately $ million of federal and $ million of state net operating loss carryforwards available to offset future taxable income. If not utilized, the federal and state net operating loss carryforwards will begin to expire in 2036 and 2025, respectively. As of January 31, 2024, the Company had approximately $ million of UK net operating losses which do not expire.

As of January 31, 2024, the Company had federal research and development tax credit carryforwards of $ million and California research and development tax credit carryforwards of $ million. The federal research and development credits will start to expire in 2038 while the California research and development credits do not expire.

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.

104

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

$ $ Additions based on tax positions related to a prior year Additions based on tax positions related to current year Reductions based on tax positions taken in a prior year ()() Gross amount of unrecognized tax benefits as of the end of the year$ $ $

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.

accrued a material amount in interest and penalties related to unrecognized tax benefits. The Company does have any significant uncertain tax positions as of January 31, 2024 for which it is reasonably possible that the positions will increase or decrease within the next twelve months.

14.

)$()$()$()$()$()Denominator: Weighted-average shares outstanding, basic and diluted Net loss per share, basic and diluted$()$()$()$()$()$()

105

OKTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Unvested RSUs issued and outstanding Unvested market-based RSUs issued and outstanding

Unvested RSAs issued and outstanding

Shares committed under the ESPP Shares related to the 2023 Notes Shares subject to warrants related to the issuance of the 2023 Notes Shares related to the 2025 Notes Shares related to the 2026 Notes

15.

$ $ International Total$ $ $

Other than the United States, no individual country exceeded 10% of total revenue for fiscal 2024, 2023 and 2022.

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.

16.

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.

106

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Annual Report on Form 10-K.

Based on this evaluation, our management concluded that, as of January 31, 2024, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act. Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("2013 framework"). Our internal control over financial reporting includes policies and procedures that provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of January 31, 2024. Our independent registered public accounting firm, Ernst & Young LLP, has issued an audit report with respect to our internal control over financial reporting, which appears in Part II, Item 8 of this Annual Report on Form 10-K, and is incorporated herein by reference.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended January 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Item 9B. Other Information

, , a of the Company, a Rule 10b5-1 (the "10b5-1 Plan") that is intended to satisfy the affirmative defense of Rule 10b501(c) of the Exchange Act. The 10b5-1 Plan allows for the sale of up to shares of our Class A common stock, commencing on March 14, 2024 and continuing until all shares are sold or until June 15, 2024, whichever comes first.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not Applicable.

107

Part III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item is incorporated by reference to our Proxy Statement relating to our 2024 Annual Meeting of Stockholders. The Proxy Statement will be filed with the SEC within 120 days of the fiscal year ended January 31, 2024.

Code of Conduct

Our board of directors has adopted a code of conduct that applies to all of our employees, officers and directors. The full text of our code of conduct is available on our investor relations website at investor.okta.com under "Corporate Governance." We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendments to, or waiver from, a provision of our code of conduct by posting such information on the website address and location specified above.

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Party Transactions, and Director Independence

Item 14. Principal Accountant Fees and Services

Part IV

Item 15. Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this report:

1.Financial Statements

See Index to Financial Statements under Part II, Item 8 of this Annual Report on Form 10-K.

2.Financial Statement Schedules

Schedules not listed above have been omitted because they are not required, not applicable, or the required information is otherwise included.

3.Exhibits

See the Exhibit Index immediately following the signature page of this Annual Report on Form 10-K.

Item 16. Form 10-K Summary

None.

108

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						OKTA, INC.

March 1, 2024						/s/ Brett Tighe
						Brett Tighe Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Todd McKinnon and Brett Tighe, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with Exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or substitute or substitutes may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature

Title

Date

/s/ Todd McKinnon

Todd McKinnon

Chief Executive Officer and Director

(Principal Executive Officer)

March 1, 2024

/s/ Brett Tighe

Brett Tighe

Chief Financial Officer
(Principal Financial Officer)

March 1, 2024

/s/ Shibu Ninan

Shibu Ninan

Chief Accounting Officer

(Principal Accounting Officer)

March 1, 2024

/s/ Shellye Archambeau
Shellye Archambeau

Director

March 1, 2024

/s/ Emilie Choi
Emilie Choi

Director

March 1, 2024

/s/ Robert L. Dixon, Jr.
Robert L. Dixon, Jr.

Director

March 1, 2024

/s/ Jeff Epstein

Jeff Epstein

Director

March 1, 2024

/s/ Benjamin Horowitz

Benjamin Horowitz

Director

March 1, 2024

/s/ J. Frederic Kerrest

J. Frederic Kerrest

Director

March 1, 2024

/s/ Rebecca Saeger

Rebecca Saeger

Director

March 1, 2024

/s/ Michael Stankey

Michael Stankey

Director

March 1, 2024

109

EXHIBIT INDEX

Exhibit Number

Exhibit Description

Incorporated by Reference from Form

3.1

Amended and Restated Certificate of Incorporation.

Exhibit 3.2 to Form S-1 filed on March 13, 2017

3.2

Amended and Restated Bylaws.

Exhibit 3.4 to Form S-1 filed on March 13, 2017

4.1

Form of Class A Common Stock Certificate.

Exhibit 4.1 to Form S-1 filed on March 13, 2017

4.2

Indenture, dated as of September 9, 2019, between Okta, Inc. and Wilmington Trust, National Association, as trustee.

Exhibit 4.1 to Form 8-K filed on September 10, 2019

4.3

Form of 0.125% Convertible Senior Notes due 2025.

Exhibit 4.1 to Form 8-K filed on September 10, 2019

4.4

Indenture, dated as of June 12, 2020, between Okta, Inc. and Wilmington Trust, National Association, as trustee.

Exhibit 4.1 to Form 8-K filed on June 15, 2020

4.5

Form of 0.375% Convertible Senior Notes due 2026.

Exhibit 4.1 to Form 8-K filed on June 15, 2020

4.6

Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.

Exhibit 4.6 to Form 10-K filed on March 6, 2020

10.1#

Form of Indemnification Agreement between the Registrant and each of its directors and executive officers.

Exhibit 10.1 to Form S-1 filed on March 13, 2017

10.2#

Amended and Restated 2009 Stock Plan, as amended, and forms of agreements thereunder.

Exhibit 10.2 to Form S-1 filed on March 13, 2017

10.3#

2017 Equity Incentive Plan, and forms of agreements thereunder.

Exhibit 10.3 to Form S-1A filed on March 27, 2017

10.4#

2017 Employee Stock Purchase Plan.

Exhibit 10.4 to Form S-1A filed on March 27, 2017

10.5#

Amended and Restated Senior Executive Incentive Bonus Plan.

Exhibit 99.2 to Form 8-K filed on March 7, 2019

10.6#

Executive Severance Plan.

Exhibit 10.8 to Form S-1 filed on March 13, 2017

10.7#

Non-Employee Director Compensation Policy.

Exhibit 10.9 to Form S-1 filed on March 13, 2017

10.8#

Form of Offer Letter between the Registrant and each of its executive officers.

Exhibit 10.10 to Form S-1 filed on March 13, 2017

10.9#

Auth0, Inc. 2014 Equity Incentive Plan.

Exhibit 99.1 to Form S-8 filed on May 10, 2021

10.10#

Auth0, Inc. Phantom Unit Plan.

Exhibit 99.2 to Form S-8 filed on May 10, 2021

110

Exhibit Number

Exhibit Description

Incorporated by Reference from Form

10.11

Office Lease Agreement dated December 2, 2017 between the Registrant and KR 100 First Street Owner, LLC.

Exhibit 10.1 to Form 8-K filed on December 6, 2017

10.11.1

Amendment dated August 29, 2019 to Office Lease Agreement dated December 2, 2017 between the Registrant and KR 100 First Street Owner, LLC.

Exhibit 10.2 to Form 10-Q filed on December 6, 2019

10.11.2

Second Amendment dated October 14, 2020 to Office Lease Agreement dated December 2, 2017 between the Registrant and KR 100 First Street Owner, LLC.

Exhibit 10.9.2 to Form 10-K filed on March 4, 2021

10.11.3

Third Amendment dated August 17, 2021 to Office Lease Agreement dated December 2, 2017 between the Registrant and KR 100 First Street Owner, LLC.

Exhibit 10.1 to Form 10-Q filed on December 2, 2021

10.12

Form of Capped Call Transaction Confirmation.

Exhibit 10.1 to Form 8-K filed on September 10, 2019

10.13

Form of Capped Call Transaction Confirmation.

Exhibit 10.1 to Form 8-K filed on June 15, 2020

10.14#

Transition Agreement, dated February 2 7, 2023, between J onathan Runyan and Ok ta, Inc.

Exhibit 10.1 to Form 10-Q filed on June 1, 2023

21.1

Subsidiaries of the Registrant.

Filed herewith

23.1

Consent of Independent Registered Public Accounting Firm.

Filed herewith

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.

Filed herewith

31.2

Certification of the Chief Financial 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.

Filed herewith

32.1*

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Furnished herewith

97.1

Policy Relating to Recovery of Erroneously Awarded Compensation.

Filed herewith

101.INS

XBRL Instance Document

Filed herewith

101.SCH

XBRL Taxonomy Extension Schema Document

Filed herewith

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

Filed herewith

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

Filed herewith

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith

104

Cover Page Interactive Data File (formatted as inline XBRL with applicable

taxonomy extension information contained in Exhibits 101.*)

Filed herewith

* The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Annual Report on Form 10-K 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.

# Indicates management contract or compensatory plan, contract or agreement.

111

Okta, Inc. - Annual Report: 2024 (Form 10-K)

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