Okta, Inc.OKTA

Okta, Inc. Fair Value Disclosure

10-KFiled Mar 3, 20232 min read
Fair Value Measurements
Financial assets are measured at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
 Three levels of inputs may be used to measure as follows:
Level 1—Valuations based on observable inputs that reflect quoted prices for identical assets or liabilities in
active markets.
Level 2—Valuations based on other inputs that are directly or indirectly observable in the marketplace.
Level 3—Valuations based on unobservable inputs that are supported by little or no market activity.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present information about financial assets that were measured at fair value on a recurring basis using the above input categories:
 As of January 31, 2023
 Level 1
Level 2 
Level 3Total
(dollars in millions)
Assets:    
Cash equivalents:    
Money market funds$133 $— $— $133 
Total cash equivalents133 — — 133 
Short-term investments:
U.S. treasury securities— 2,185 — 2,185 
Corporate debt securities— 131 — 131 
Total short-term investments— 2,316 — 2,316 
Total cash equivalents and short-term investments$133 $2,316 $— $2,449 

 As of January 31, 2022
 Level 1
Level 2 
Level 3Total
(dollars in millions)
Assets:    
Cash equivalents:    
Money market funds$152 $— $— $152 
Total cash equivalents152 — — 152 
Short-term investments:
U.S. treasury securities— 1,913 — 1,913 
Corporate debt securities— 329 — 329 
Total short-term investments— 2,242 — 2,242 
Total cash equivalents and short-term investments$152 $2,242 $— $2,394 
The carrying amounts of certain financial instruments, including cash held in banks, accounts receivable and accounts payable approximate fair value due to their short-term maturities and are excluded from the fair value tables above.
Fair Value Measurements of Other Financial Instruments
The following table presents the principal amounts and estimated fair values of financial instruments that are not recorded at fair value on the consolidated balance sheets:
As of January 31, 2023
Principal Amount
Estimated
Fair Value 
(dollars in millions)
2025 convertible senior notes$1,060 $933 
2026 convertible senior notes$1,150 $981 
The Notes are recorded at face value less unamortized debt issuance costs (See Note 9 for additional details). The estimated fair values of the Notes, which are Level 2 financial instruments, were determined based on the quoted bid prices of the Notes in an over-the-counter market on the last trading day of the reporting period.
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Historical Timeline

Fiscal YearFiled
2023Mar 3, 2023Showing above
2022Mar 7, 2022
2021Mar 4, 2021
2020Mar 6, 2020
2019Mar 14, 2019
2018Mar 12, 2018

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

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