Okta To Acquire Red-Hot Identity Vendor Auth0 For $6.5B

Okta has agreed to buy rising star Auth0 for $6.5 billion to address a broader set of identity use cases regardless of audience or user.

The San Francisco-based identity provider said Bellevue, Wash.-based Auth0 will operate as an independent business unit inside Okta, with both platforms integrated together over time. The monster deal will give organizations greater choice in selecting the identity tool for their unique needs, according to the company.

“Combining Auth0’s developer-centric identity solution with the Okta Identity Cloud will drive tremendous value for both current and future customers,” Okta CEO Todd McKinnon said in a statement. “Okta’s and Auth0’s shared vision for the identity market … will accelerate our innovation, opening up new ways for our customers to leverage identity to meet their business needs.”

[Related: Cybersecurity Firm Auth0 Raises $120M In Salesforce-Led Funding]

Okta’s stock plummeted $32.22 (13.36 percent) to $209 per share in after-hours trading Wednesday, which is the lowest the company’s stock has traded since Nov. 3, 2020. The all-stock transaction is based on an Okta share price of $276.21 per share. This is one of the biggest cybersecurity acquisitions of all-time, behind only Broadcom’s $10.7 billion buy of Symantec and Intel’s $7.6 billion purchase of McAfee.

Auth0 was founded in 2013, employs 905 people, and has raised $332.3 million in eight rounds of outside funding. The company in July closed a $120 million Series F round led by Salesforce Ventures on a valuation of $1.92 billion, or less than a third of Auth0’s acquisition price just eight months later. Auth0 has grown its headcount by 31 percent over the past year, with the most robust hiring coming in sales.

“Okta and Auth0 have an incredible opportunity to build the identity platform of the future,” Auth0 CEO Eugenio Pace said in a statement. “Together, we can offer our customers workforce and customer identity solutions with exceptional speed, simplicity, security, reliability and scalability.”

The company said the deal will accelerate its growth in the $55 billion identity market. Okta and Auth0’s identity platforms are robust enough to serve the world’s largest organizations and flexible enough to address identity use case, according to the company.

An identity platform has become one of the most critical technology investments an organization will make, a trend that Okta said has accelerated due to COVID-19 as companies of all sizes have needed to shift to delivering engaging customer experiences online. Clients are leveraging identity to streamline processes, reduce costs, maintain high levels of security, and improve customer experiences, Okta said.

“In an increasingly digital world, identity is the unifying means by which we use technology – both at work and in our personal lives,” McKinnon said in his statement. “With so much at sake for businesses today, it’s critical that we deliver trusted customer-facing identity solutions … We are thrilled to join forces with Auth0, as they are ideal allies in building identity for the internet and establishing identity as a primary cloud.”

Auth0 CEO Eugenio Pace told CRN in July that the company was looking to establish a direct presence in emerging markets like India, Southeast Asia, the Nordics and Central Europe rather than serving customers in those countries like offices in London, Tokyo or Sydney. Auth0 was primarily looking to hire for sales, marketing and customer success roles in the regions where it didn’t have a physical presence.

“When we have a direct presence in those regions, we do better and move faster,” Pace told CRN in July, noting that Auth0 already conducts half its business outside the Americas. “For everything that’s customer oriented, we like to be as close to the customer as possible.”