Okta Inc (OKTA)

Cash conversion cycle

		Jan 31, 2025	Jan 31, 2024	Jan 31, 2023	Jan 31, 2022	Jan 31, 2021
Days of inventory on hand (DOH)	days	—	—	61.50	—	—
Days of sales outstanding (DSO)	days	86.84	90.16	94.49	111.73	85.12
Number of days of payables	days	7.68	7.54	8.02	18.42	14.35
Cash conversion cycle	days	79.17	82.62	147.97	93.31	70.77

January 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 86.84 – 7.68
= 79.17

The cash conversion cycle (CCC) for Okta Inc demonstrates significant fluctuations over the observed period from January 2021 to January 2025. Initially, on January 31, 2021, the CCC was recorded at approximately 70.77 days, indicating the average duration it takes for the company to convert its investments in inventory and receivables into cash, net of payables.

By January 31, 2022, the cycle lengthened notably to approximately 93.31 days, reflecting an increase of about 22.54 days. This extension suggests that Okta experienced delays or inefficiencies in converting its operational activities into cash, potentially due to longer collection periods, slower inventory turnover, or changes in payment terms with suppliers.

The most pronounced change occurred by January 31, 2023, when the CCC surged to approximately 147.97 days. This significant increase of nearly 55 days indicates a substantial decline in operational efficiency, which could be attributed to extended receivables, increased inventory holdings, or reduced leverage of payables. Such a rise generally signals strategic or operational shifts that have led to longer cash conversion timelines or potential liquidity management challenges.

Subsequently, a notable improvement was observed by January 31, 2024, with the CCC decreasing to approximately 82.62 days. The reduction of roughly 65 days signifies a turnaround in cash conversion efficiency, potentially attributable to optimized receivables collection, accelerated inventory turnover, or improved payment terms.

Finally, by January 31, 2025, the CCC further slightly declined to about 79.17 days, reflecting a stabilization at a level slightly below the 2024 figure. This recent measure suggests that Okta has maintained a relatively efficient cash conversion cycle, balancing the operational factors impacting the collection, inventory, and payment processes.

Overall, the trend illustrates a period of operational inefficiency around 2023, followed by a recovery and stabilization in subsequent years. The fluctuations in the cash conversion cycle highlight the dynamic nature of Okta’s working capital management, with recent data pointing toward improvements in operational efficiencies and cash flow management.