Okta buys security rival Auth0 for $ 6.5 billion, stock drops

Okta, whose cloud-based software allows office workers to access all of their apps through a secure online service, said on Wednesday it was spending $ 6.5 billion to acquire rival Auth0.

Okta shares plunged about 13% in extended trading after the announcement. The all-stock deal is equivalent to around 21% of Okta’s market cap at Wednesday’s close. Okta said he expects the deal to close by the end of July.

With more and more large companies relying on cloud-based applications, Okta has seen its revenue increase since its IPO in 2017. The company said in its earnings release on Wednesday that fourth-quarter revenue has been reported on Wednesday. had jumped 40% to $ 234.7 million. His net loss extended to $ 75.8 million, from $ 50.4 million a year earlier.

Auth0 last raised private capital in July at a valuation of $ 1.92 billion. Salesforce Ventures led the round, tripling more than its money in eight months.

Okta co-founder and CEO Todd McKinnon was previously Vice President of Salesforce, working under Marc Benioff for more than five years. McKinnon now takes a page from Benioff’s playbook, paying for acquisitions while still focusing on organic growth.

Salesforce has been the biggest buyer of software in recent years, agreeing in December to buy Slack for $ 27.7 billion. Previously, Salesforce bought Tableau for $ 15.3 billion in 2019 and MuleSoft for $ 6.5 billion a year earlier.

McKinnon wrote in a blog post that Auth0 will continue to operate independently. He said Eugenio Pace, CEO of Auth0 for years, calling him “an enthusiastic ally in establishing identity as the main cloud”.

“Eugenio and I have dedicated our careers to identity because we know that selecting an identity platform is one of the most critical technology investments an organization can make.” McKinnon wrote.

This is the latest news. Please refresh for updates.

LOOK: Salesforce’s $ 27.7 billion Slack deal