Okta CEO Todd McKinnon
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Publicly-traded identity management company Okta is acquiring one of its leading challengers, Seattle area-based startup Auth0, in an all-stock deal valued at $6.5 billion, the companies announced on Wednesday.
The transaction will provide Auth0 with a fixed number of Okta shares at a price of $276.21 each, the companies said. Shares of Okta had opened Wednesday at $256 per share and were trading down more than 6% after-hours.
In an interview, Okta CEO Todd McKinnon said the move was part of the company’s push to be one of the “five or six primary clouds” that customers to which customers will turn as market leaders, citing Microsoft, Salesforce and Zoom as other contenders for such status.
“For us, identity has to rise up to be one of those primary clouds, and if it doesn’t it will just be kind of subsumed into other clouds and Okta won’t reach its potential,” McKinnon said.
Primarily a business tool for companies to help track and manage their employees’ identities and credentials when using work apps, Okta gains in Auth0 a service that focused more on how businesses interact with their customers, McKinnon claimed, with an eye to the developer community.
In other words, while Okta sells from the top down, to chief information officers or technical leaders, Auth0 has built its business from the bottoms-up.
At Auth0, cofounder and CEO Eugenio Pace said the two businesses “agree on a vision” for that identity cloud of the future, or what Pace calls an “identity operating system.” In a common refrain for high-growth tech startups that join larger rivals, Pace noted that Okta was at least several years ahead of Auth0 in scale; joining forces, he insisted, would move forward Auth0’s roadmap by five to ten years.
“What’s exciting to me is that these companies are compatible, identity is not a division, a part of another group or a necessary evil. This is all we do. So together, we have this opportunity to move the needle in terms of what we can offer our customers,” Pace said.
Auth0 was most recently valued at about $1.9 billion by private investors in July 2020. The deal is subject to regulatory approval but expected to close in the first half of the year.
Forbes spoke to Okta CEO Todd McKinnon and Auth0 CEO Eugenio Pace about the news. This story is developing and will be updated with more information.
