There are a couple initiations that stand out. On the positive side, JP Morgan initiated with an Overweight and $33 target -- the highest price target we see. On the flip side, Goldman Sachs appears to be pretty bearish on the stock, assigning it a Neutral and $22 target, which is actually 14% lower than where the stock is trading now. Canaccord Genuity's $25 price target is also slightly below current prices.
For those unfamiliar with the name, OKTA describes itself as the pioneer and leader of identity for the enterprise. It has developed a category-defining platform called "Okta Identity Cloud" which enables customers to securely connect people to technology from anywhere at anytime and from any device. The Identity Cloud is used as the central system for an organization's connectivity, access, authentication and identity lifecycle management needs spanning all of their users and applications. Moreover, the platform is used in two distinct ways: 1). to manage and secure internal users (employees); and 2). to connect and secure a customers external users (partners, suppliers, customers) via the APIs it has developed.
Like many other cloud software providers, OKTA uses a "land and expand" business model. In other words, it seeks to gain new subscribers by offering base products at a lower price. Then, as those customers implement and integrate the initial application into their business processes, it sells additional products to increase the value of those customers.
In regards to the financials, revenue growth has been strong, up 87% in FY17 to $160.3 million. This was due to a 40% increase in customers, as well as an increase in users and sales of additional products to existing customers as reflected by the Dollar-Based Retention Rate of 123% for the year ended January 31, 2017. Additionally, gross margin improved to 65% from 58%. This has been driven by economies of scale as its subscription revenue grows.
Total operating expenses climbed by 49% year/year to $187.5 million. However, on a percentage of revenue basis, operating expenses declined to 117% from 147% in 2016 and 198% in 2015. Still, the company reported a hefty operating loss of ($83.1) million for the fiscal year.