Okta cofounders Frederic Kerrest and CEO Todd McKinnon, top right, sign the agreement to acquire Auth0 with Chief Cofounders Eugenio Pace, bottom left, and Matias Woloski.
Okta
Public trade identity management company Okta is acquiring one of its main rivals, Seattle-based startup Auth0, in a $ 6.5 billion full-value deal, the companies announced Wednesday.
The deal will give Auth0 a fixed number of Okta shares at a price of $ 276.21 per head, the companies said. Shares of Okta closed Wednesday at $ 241 per share, giving it a market capitalization of $ 31 billion. But shares traded down more than 11% after hours as Okta also reported quarterly earnings of $ 234.7 million, up 40% year-on-year, on non-GAAP net income of $ 8 million Wednesday.
In an interview, Okta CEO Todd McKinnon said the move was part of the company’s drive to be one of the “five or six key clouds” that customers will turn to as market leaders, announcing Microsoft, Salesforce and Zoom as other competitors for such status.
“For us, identity must rise to be one of those key clouds, and if it doesn’t, it will just be like some other cloud and Okta will not reach its full potential,” McKinnon said.
Typically a business tool for companies to help track and manage the identities and credentials of their employees when using work apps, Okta is getting in Auth0 a service that was ‘focus more on how businesses interact with their customers,’ said McKinnon, with a focus on the developer community.
In other words, while Okta sells from the top down, to top information officers or technical executives, Auth0 has taken its business from the shops.
At Auth0, cofounder and CEO Eugenio Pace said the two businesses “agree on a vision” for that future identity cloud, or what Pace calls an “identity operating system.” In a common rejection for a high-tech tech startup that comes with bigger competitors, Pace noted that Okta was at least several years ahead of the Auth0 scale; coming together, he demanded, he moved forward the Auth0 roadmap by five to ten years.
“What interests me is that these companies are compatible, not a separate identity, part of another organization or a necessary evil. This is what we do. So together, we have this opportunity to move the needle in what we can offer our customers, ”said Pace.
Auth0 joins a business that reported $ 835 million in revenue for its most recent fiscal year and forecast revenue of $ 1.08 billion to $ 1.09 billion for fiscal 2022. Auth0, meanwhile, is expected to reach a revenue run rate (12-month forecast based on the most recent month’s pace) of more than $ 200 million by the end of years, McKinnon said.
Forbes they first heard rumors that Auth0 was up for sale several weeks ago, with two stores saying Okta had emerged as their preferred buyer. But the deal did not close abruptly, as Auth0 considered other options, including other potential customers or continuing on the path to an IPO. One Auth0 investor who requested anonymity stated that they hoped the company would pursue a public offering instead, given its potential and the recent favorable valuations of the stock market. on public cloud computing stock.
Founded in 2013, Auth0 had raised over $ 330 million from venture capital investors who had recently valued the company at approximately $ 1.9 billion in July 2020. Among well-known investors Bessemer Venture Partners, Trinity Ventures, Meritech Capital, Sapphire Ventures and Salesforce Ventures. The company appeared at No. 19 on the Cloud 100 list of the leading private cloud companies in September.
Anti-trust concerns also delayed the process, a source said Forbes prior to the publication of a contract. The construction, although approved by both boards, is subject to regulatory approval but is expected to close in the first half of the year, the companies said.
Asked what he could say to employees and supporters who might hope that Auth0 would test the public markets as an independent company, Pace said the result was “miraculous” for the stakeholders. all. “Of course I don’t see this as a way out for Auth0,” he said. “We’re just scratching the surface of what we do.”
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