Okta (OKTA) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01Adverse general economic, market and industry conditions and reductions in workforce identity and customer identity spending have, in the past, and may, in the future, reduce demand for our solutions, which could harm our revenue, results of operations and cash flows
2. 02We have experienced rapid growth in prior periods, and any failure to effectively manage future growth could harm our business and future prospects
3. 03If we fail to manage our growth effectively or fail to execute our business plan, we may not be able to maintain high levels of service and customer satisfaction or adequately address competitive challenges
4. 04We face intense competition, especially from larger, well-established companies, and we may lack sufficient financial or other resources to maintain or improve our competitive position
5. 05We have a history of losses, and we may not be consistently profitable in the future
6. 06Our business depends on our ability to retain existing customers, and our revenues and results of operations could be adversely impacted if they do not renew their subscriptions or purchase additional licenses or subscriptions with us
7. 07If we are unable to grow our customer base, our revenue growth and profitability could be harmed
8. 08We may experience quarterly fluctuations in our results of operations due to a number of factors that make our future results difficult to predict and could cause our results of operations to fall below analyst or investor expectations
9. 09Any one or more of the factors above may result in significant fluctuations in our results of operations. You should not rely on our past results as an indicator of our future performance
10. 10Future acquisitions, investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of management personnel, disrupt our business, dilute stockholder value and harm our results of operations and financial condition
11. 11Because our long-term success depends, in part, on our ability to expand the sales of our solutions to customers located outside of the United States, our business will be susceptible to risks associated with international operations
12. 12If we fail to adapt to rapid technological change, our ability to remain competitive could be impaired
13. 13Our financial results may fluctuate due to increasing variability in our sales cycles
14. 14To grow our business, we expect to continue to depend on relationships with third parties, such as channel partners. Identifying partners, negotiating and maintaining relationships with them requires significant time and resources
15. 15Various factors may cause implementation of our solutions to be delayed, inefficient or otherwise unsuccessful
16. 16A portion of our revenues are generated by sales to public sector entities, which are subject to a number of challenges and risks
17. 17If we fail to enhance our brand cost-effectively, our ability to expand our customer base will be impaired and our business, results of operations and financial condition may suffer
18. 18We may not set optimal prices for our solutions
19. 19If we are not able to consistently generate cash flows or raise additional capital necessary to expand our operations and invest in new technologies in the future could reduce our ability to compete successfully and harm our results of operations
20. 20We may be subject to liability claims if we breach our contracts and our insurance may be inadequate to cover our losses
21. 21Evolving and complex scrutiny of sustainability matters may require us to incur additional costs or otherwise adversely impact our business

Risks Related to Intellectual Property, Infrastructure Technology, Data Privacy and Security

1. 22Interruptions or performance problems that impact the functionality of our technology, systems, or infrastructure could result in delays in the deployment of our platforms
2. 23regulatory requirements, which could result in proceedings, actions or penalties against us. We may experience similar incidents in the future
3. 24We may face particular privacy, data security and data protection risks due to stringent data protection and privacy laws and increased scrutiny over data transfers
4. 25If we fail to maintain our security attestations and certifications, our business, results of operations and financial condition may suffer
5. 26We provide service level commitments under our customer contracts. If we fail to meet these contractual commitments, we could be obligated to provide credits for future service, which could harm our business, results of operations and financial condition
6. 27Interruptions or delays in the services provided by third-party data centers or internet service providers have, in the past, and could, in the future, impair the delivery of our platforms and our business could suffer
7. 28We rely on software and services from other parties. Defects in or the loss of access to software or services from third parties could increase our costs and adversely affect the quality of our solutions
8. 29Real or perceived errors, failures, vulnerabilities or bugs in our solutions, including deployment complexity, have, in the past and could, in the future, harm our business and results of operations
9. 30Issues in the development and use of artificial intelligence (“AI”), combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations
10. 31If we fail to adequately protect our proprietary rights, our competitive position could be impaired and we may lose valuable assets, generate less revenue and incur costly litigation to protect our rights
11. 32We have in the past, and may in the future be subject to infringement claims, which could result in significant damage awards that could harm our results of operations
12. 33We use open source software in our platforms, which could negatively affect our ability to offer our solutions and subject us to litigation or other actions
13. 34Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses

Risks Related to Legal, Accounting and Tax Matters

1. 35Because we generally recognize revenue from our subscriptions and support services over the term of the relevant service period, a decrease in sales during a reporting period may not be immediately reflected in our results of operations for that period
2. 36We face exposure to foreign currency exchange rate fluctuations
3. 37We are subject to anti-corruption, anti-bribery and similar laws, and non-compliance with such laws can subject us to criminal penalties or significant fines and harm our business and reputation
4. 38We are subject to governmental export controls and economic sanctions laws that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws
5. 39Our international operations may give rise to potentially adverse tax consequences
6. 40Changes in tax laws or regulations in the various tax jurisdictions we are subject to that are applied adversely to us or our customers could increase the costs of our solutions and harm our business
7. 41Our business may be subject to additional obligations to collect and remit sales tax and other taxes, and we may be subject to tax liability for past sales. Any successful action by state, foreign or other authorities to collect additional or past sales tax could harm our business
8. 42Our ability to use our U.S. net operating loss carry-forwards and certain other tax attributes may be limited
9. 43If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired
10. 44Changes in existing financial accounting standards or practices, or taxation rules or practices, may harm our results of operations
11. 45If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected

Risks Related to Ownership of Our Class A Common Stock

1. 46The stock price of our Class A common stock may be volatile or may decline
2. 47Sales of a substantial number of shares of our Class A common stock into the public market, particularly sales by our directors, executive officers, and principal stockholders, or the perception that these sales might occur, could cause the market price of our Class A common stock to decline
3. 48If securities or industry analysts do not publish or cease publishing research, or publish inaccurate or unfavorable research, about our business, the price of our Class A common stock and trading volume could decline
4. 49We do not intend to pay dividends for the foreseeable future
5. 50Provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current board of directors, and limit the market price of our Class A common stock
6. 51Our amended and restated bylaws designate a state or federal court located within the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with us

Risks Related to our Outstanding Convertible Notes

1. 52Servicing our debt may require a significant amount of cash. We may not have sufficient cash flow from our business to pay our indebtedness
2. 53We may not have the ability to raise the funds necessary for cash settlement upon conversion of the Notes or to repurchase the Notes for cash upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion of the Notes or to repurchase the Notes
3. 54The conversion features of the Notes, if triggered, may adversely affect our financial condition and results of operations
4. 55Transactions relating to our Notes may affect the value of our Class A common stock
5. 56We depend on our executive officers and other key employees, and the loss of one or more of these employees or an inability to attract and retain other highly skilled employees could harm our business
6. 57Catastrophic events may disrupt our business