OKTA · Forward model · Professional services and other · Bear case
What has to happen in Professional services and other
Model as of
This page changes Professional services and other inside the complete OKTA model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.
Shares this vertical and portfolio case. Slider and horizon edits stay in your browser.
Professional services and other
1.5% of revenue, negative gross margin, and being deliberately wound down. Okta told the market in both the May and the August releases that it is accelerating the shift of this business to partners and that the shift costs about one percentage point of total revenue growth in fiscal 2027. On a non-GAAP basis the line lost $6m of gross profit on $12m of revenue in the basis quarter, so shrinking it raises consolidated margin. It is carried as its own vertical because it is disclosed separately and because folding it into subscription would hide a line that is falling while the other rises.
Latest: $5M (2031Q3E)
| Period | Value |
|---|---|
| 2023Q2 | $15M |
| 2023Q3 | $14M |
| 2023Q4 | $15M |
| 2024Q1 | $14M |
| 2024Q2 | $14M |
| 2024Q3 | $14M |
| 2024Q4 | $14M |
| 2025Q1 | $12M |
| 2025Q2 | $15M |
| 2025Q3 | $17M |
| 2025Q4 | $18M |
| 2026Q1 | $14M |
| 2026Q2 | $15M |
| 2026Q3 | $12M |
| 2026Q4E | $11M |
| 2027Q1E | $10M |
| 2027Q2E | $9M |
| 2027Q3E | $9M |
| 2027Q4E | $8M |
| 2028Q1E | $8M |
| 2028Q2E | $7M |
| 2028Q3E | $7M |
| 2028Q4E | $7M |
| 2029Q1E | $7M |
| 2029Q2E | $6M |
| 2029Q3E | $6M |
| 2029Q4E | $6M |
| 2030Q1E | $6M |
| 2030Q2E | $6M |
| 2030Q3E | $5M |
| 2030Q4E | $5M |
| 2031Q1E | $5M |
| 2031Q2E | $5M |
| 2031Q3E | $5M |
Assumptions & reasoning
- The line is 1.5% of revenue at the basis quarter and 0.5% of terminal revenue in this model - $21.5m across the terminal four quarters against $4,397m of total revenue. Every input here is immaterial to fair value; it is carried because Okta discloses it separately and because folding a falling line into a rising one would hide both.
- Shrinking this line is margin-ACCRETIVE, not a pure headwind. On Okta's own non-GAAP basis the services line lost $6m of gross profit on $12m of revenue in the basis quarter, a -50% margin, so moving the work to partners costs about a point of consolidated revenue growth and adds to consolidated margin at the same time. That is exactly why management is doing it.
- The -8% opening rate is a level check, not a trend fit. It reproduces the disclosed fall - $17m in the July 2025 quarter, then $18m, $14m, $15m and $12m now - and lands fiscal 2027 near $48m against $64m in fiscal 2026. Management's disclosed 'approximately one percentage point' of revenue-growth headwind is measured against a counterfactual in which the line kept growing, so a steeper start would be needed to reach the full point; this path sits just inside it.
- No seasonality is encoded and that is a finding, not a gap. The same ratio-to-centred-moving-average method gives 0.9088 / 0.9897 / 1.0426 / 1.0590, but the window-to-window spread meets or exceeds the signal in all four quarters. On a $12-18m line that Okta rounds to whole millions, one million dollars is 6-8% of the value, so the apparent shape is rounding.