• Insight Bite

    CLEAR, EXPERT, INFORMED SECTOR FOCUSED NEWS.

Okta buys big in IAM SaaS

Amidst widespread remote working and growing numbers of cyber-attacks around the globe, enterprises are moving beyond the firewalls of legacy identity systems to use cloud-based apps for access control.

Two of the biggest players in this market, Okta and Auth0, are now joining forces. Okta will buy Auth0 in a colossal $6.5bn bet aimed at wiping out its immediate rival and extending its own platform.

The bulk of Okta’s revenue derives from workforce identity; managing access permissions across employees logging in from remote locations. Auth0, on the other hand, is focused on customer identity; managing customer access across apps and web portals. Both the customer and workforce identity markets are valued at between $20-30bn each.

Though Auth0 will continue to operate independently, the platform will be integrated over time, allowing Okta to deliver a complete package of identity solutions to organizations, and effectively doubling its market reach.

“Together, we will shape the future of identity on the internet” said Todd McKinnon, chief executive of Auth0 in a blog post. “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.”

McKinnon was previously a vice president at the prolifically acquisitive Salesforce, which was also rumoured to be interested in buying Auth0. Now, he is taking the deal off the table by following Salesforce’s own strategy of making big acquisitions to boost internal growth.

At $6.5bn, the purchase is not only large for a company of Okta’s size, but is also one of the biggest cybersecurity acquisitions ever. And if it can be pulled off, the acquisition could help Okta contend with the biggest players in cloud identity.

Microsoft, Salesforce and Google are all promoting their own offerings in this market, which is expected to rise in the coming decade to join collaboration, CRM, infrastructure, and ERP as one of the key enterprise clouds.

“Okta have taken advantage of their strong valuation (12m ave of 38x LTM, 29x NTM) to fund an all paper deal for fellow IAM specialist Auth0. The deal marks the first $bn+ software deal in March and the second biggest of the year to date. Why are Okta buying? Complementary proposition (customer identity – with a focus on developer-first capabilities), further market access to a $55bn IAM market at a price (32.5x ARR) that is still accretive on a look forward basis.”

Richard Baker | Managing Partner

About Us

TECHNOLOGY IS A TEAM GAME.

It’s our people who make the difference. We began as a partnership between experienced industry enthusiasts with a vision: a personal approach to the challenges of business growth and exit. Acuity Advisors has since grown into a leading name in tech advisory.

Read More

SUBSCRIBE TO NEWS UPDATES

  • Enter the letters and/or numbers shown