Okta CEO Todd McKinnon on Friday defended his company’s move to acquire Auth0, urging rival company to provide additional funding to the identity and access management industry.
Okta shares are down 10% since announcing the $ 6.5 billion stock deal after closing Wednesday. The sales figure represents more than a fifth of Okta’s market cap and a base price to the $ 1.92 billion valuation Auth0 received after a funding round last summer.
“This is a company that is on its way to going public and, as you know, public markets value public companies in some way,” McKinnon told CNBC’s Jim Cramer.
He appeared on “Mad Money” alongside Eugenio Pace, head of Auth0.
“If you look at how we value it, it’s becoming good for us,” McKinnon said. “We’ve paid several on slightly lower incomes than us, but in the same place ball. “
Auth0 is an identity management platform for app developers based in Bellevue, Washington. It will compete with Okta, a $ 28 billion San Francisco-based cybersecurity apparel. Okta provides security tools to authenticate users, such as password authorization, access to online networks.
Auth0 will act as an independent arm inside Okta when the deal closes at the end of July.
When asked about the need for a reseller to have another identity when Okta already has its own offers, McKinnon said the link up would give his company a better way to go after customer identities and access management.
He explained that the $ 30 billion employee identity market makes up 75% of Okta’s revenue, while the $ 25 billion messenger identity market makes up 25% of its revenue. -into. Okta will focus more on pre-built, pre-installed solutions while Auth0 puts more focus on purpose-built app developers, he said.
Auth0 is “a product that is much more flexible and spacious and that goes down to a point and bites what the developer needs to do, which is why the two solutions together are so robust, “McKinnon said. “They provide great consumer choice and great flexibility and value and are truly consolidating that $ 25 billion [total addressable market]. “
Shares of Okta fell 4.54% to $ 215.96 on Friday. The company on Wednesday reported fourth-quarter earnings of $ 234.7 million, a 40% increase from a year ago. It showed a net loss of $ 75.8 million, down from a loss of $ 50.5 million in the fourth year ago.