Okta to Acquire Identity Tech Startup Auth0 for $6.5B

The company also released Q4 and FY2021 financials, reporting double-digit increases for total and subscription revenue.

Okta, a tech company specializing in online identity security, is purchasing identity management startup Auth0 for $6.5 billion in an all-stock deal, reports Forbes. The goal of the acquisition is to join the identity platforms of the two companies to enhance the Okta Identity Cloud and provide additional value to their customers, including accelerating innovation in the identity management space. Auth0 will operate as a separate business unit under the Okta umbrella. The transaction is subject to customary closing conditions and regulatory approvals. The deal is expected to close during Okta’s second quarter of fiscal year 2022 which ends July 31, 2021.

Shaping the future of identity

“Okta’s vision is to safely enable everyone to use any technology. To achieve this ambitious mission, we’ve been investing heavily in customer identity — enabling organizations to build secure customer experiences — and transitioning from delivering products to building a true platform to address every identity use case,” said Todd McKinnon, Okta CEO and co-founder, in the March 3 announcement.

“Today, we’re taking a significant step forward — I’d go so far to call it a ‘leap’ — to enhance the Okta Identity Cloud. We announced our agreement to join forces with Auth0, a leading identity platform for developers,” McKinnon added. “Together, we will shape the future of identity on the internet. I’m thrilled by the choice, flexibility, and value we’ll offer customers: Okta and Auth0 address a broad set of identity use cases, and our identity platforms are robust and extensible enough to serve the world’s largest organizations and most innovative developers.”

Shared vision and values

In the announcement, McKinnon also discussed that he and Auth0 CEO and co-founder Eugenio Pace share both a vision and core values that make the companies a good fit. In terms of vision, McKinnon said he and Pace want identity to be one of several primary clouds, along with infrastructure, collaboration and CRM. The companies’ shared values include caring about their customers, delivering value, innovation, transparency and empowering their teams. Partnering with Auth0 will make the pair an online identity management powerhouse.

“Okta and Auth0 share the same vision for the identity market, and we know that we will achieve it faster together,” McKinnon said.

About Auth0

Launched in 2013 by Pace and Matias Woloski, Auth0 offers customers a platform to authenticate, authorize and secure access for applications, devices and users. Last July, the tech startup raised $120 million in Series F funding. The funding round was led by Salesforce Ventures and included DTCP, Bessemer Venture Partners, Sapphire Ventures, Meritech Capital, World Innovation Lab, Trinity Ventures, Telstra Ventures, and K9 Ventures as additional investors. At the time, the company was valued at $1.92 billion with total capital raised at more than $330 million.

About Okta

Started in 2009 with McKinnon and co-founder Frederic Kerrest, Okta employs more than 3,000 workers around the world. They have more than 10,000 customers and 7,000 integrations. Okta is a trusted platform to help companies safely and securely sign in, authorize and manage users within their networks.

Okta offers a range of identity products and solutions (e.g., single sign-on, multi-factor authentication, universal directory, lifecycle management, etc.) which are priced as a subscription. Customers pay per user per month. Add-ons and enterprise pricing is also available.

Q4 and FY2021 results

On Wednesday, Okta also released its financials for the period ended January 31, 2021. For the fourth quarter of fiscal year 2021, Okta reported total revenue of $234.7 million, a 40% increase year-over-year. Subscription revenue was $225.4 million of total revenue, an increase of 42% year-over-year. For the full fiscal year 2021, Okta had total revenue of $835.4 million, a 43% increase year-over-year. Subscription revenue was $796.6 million, a 44% increase year-over-year.

Insider Take

This acquisition will most likely be one of the largest acquisitions of the year. Twelve years after its launch, Okta is in growth mode, and it is acquiring Auth0 to take the company to the next level. Though Auth0 will initially be operated as a separate business unit, Okta will benefit from Auth0’s expertise which will allow the company to offer more products and solutions to their customers. This is an exciting opportunity for the tech companies.