Okta CEO Todd McKinnon on Friday defended his company’s move to acquire Auth0, calling the rival company a complementary asset to its identity and access management business.
Okta shares have fallen 10% since announcing the $ 6.5 billion share transaction after Wednesday’s close. Sales figures account for more than a fifth of Okta’s market cap and a $ 1.92 billion valuation premium that Auth0 received after a round of funding last summer.
“This is a company that is on its way to becoming public and, as you know, public markets value public companies in a certain way,” McKinnon told Jim Cramer of CNBC.
He appeared in “Mad Money” alongside Eugenio Pace, the chief executive of Auth0.
“If you look at how we value it, it’s growth that increases us,” McKinnon added. “In fact, we paid a multiple for income slightly lower than ours, but at the same stage.”
Auth0 is an identity management platform for application developers based in Bellevue, Washington. Compete with Okta, a $ 28 billion San Francisco-based cybersecurity facility. Okta provides security tools to authenticate users, such as password authorizations, to access online networks.
Auth0 will function as an independent arm in Okta when the transaction closes in late July.
When asked about the need to acquire another identity provider when Okta already has its own offerings, McKinnon said the link would give his company a better way to track customer identity and customer management. accesses.
He explained that the $ 30 billion labor identity market accounts for 75% of Okta’s revenue, while the $ 25 billion customer identity market accounts for 25% of revenue. Okta focuses more on preconfigured and preconfigured solutions, while Auth0 focuses more on application-specific developers, he added.
Auth0 is “a much more flexible and extensible product, which does exactly what the developer needs to do, and that’s why the two solutions together are so compelling,” McKinnon said. “They give customers a great choice, great flexibility and great value and really solidify that $ 25 billion [total addressable market]. “
Shares of Okta fell 4.54% to $ 215.96 on Friday. The company reported fourth-quarter revenue of $ 234.7 million on Wednesday, 40 percent more than a year ago. It showed a net loss of $ 75.8 million, compared to a loss of $ 50.5 million in the previous year’s quarter.