Making sense of the $6.5B Okta-Auth0 deal – TechCrunch

When Okta Announced That It was getting auth0 For $ 6.5 billion yesterday, the deal raised eyebrows. Ultimately, this is a sufficient amount for an identity and access management (IAM) company to purchase another, similar entity. But the deal eventually brings together two companies who come to recognition from different sides of the market – and as such a beautiful identity can be the beginning of a friendship.

The deal eventually brings together two companies who come to recognition from different sides of the market – and as such a beautiful identity can be the beginning of a friendship.

At a simple level, Octa distributes identity and access management (IAM) to companies that provide single-sign-on access to employees in a variety of cloud services using the service – Gmail, Salesforce, Slack, and Workday.

During this, Authentic 0 Is a developer tool that provides coders with easy API access on single-sign-on functionality. With only a few lines of code, the developer can distribute IAM tooling without having to build it himself. This is a similar value proposition that Twilio offers for communication or for payment.

The thing about IAM is that it is not exciting, but it is necessary. This may explain why such a large number of dollars are being exchanged. As Auth0 co-founder and CEO Eugenio Pace Told Jack Whitaker of TechCrunch In 2019, “Nobody cares about certification, but everyone needs it.”

Bringing the two companies together is a comprehensive approach for IAM that covers the back end and the front end. We are going to see why this deal matters from the point of view of an identity market, and if it was worth the substantial price that Okta paid to acquire it.

Halt! who goes there?

When you think about identity and access management, it is about making sure that you say who you are, and that you have the right to enter and access a set of applications. It is therefore an important part of the security strategy of any company.

Gartner found that IAM was a $ 12 billion business in 2021 with an estimated increase of more than $ 13.5 billion last year. To let you know where Okta and Authentic 0 fit in, Okta closed FY2021 with more than $ 800 million in revenue. Meanwhile Auth0 is projected to close this year with $ 200 million in annual recurring revenue.

Identity and access management market number from Gartner.

Image Credit: Gartner

According to the top players in this market Gartner’s November 2020 Magic Quadrant Market analysis in that order are Ping Identity, Microsoft and Octa. Meanwhile Gartner listed Auth0 as the main challenger in its market grid.

Michael Kelly, Gartner analyst, told TechCrunch that both Okta and Austru are gaining something from the deal.

“For Okta, while they have a very good product, they have a marketing muscle and adoption rate that is not available to small vendors like Auth0. When having [IAM] Interacting with customers, Okta is almost always on the short list. Alto will immediately benefit from being associated with the larger Okta brand, and similarly Okta will now have credibility in deals that involve a heavily developer-focused buyer, ”Kelly told me.

Okta co-founder and CEO Todd McKinnon said he was enthusiastic about the deal because of the identification of the complementary nature of the two companies. “How a developer interacts with the service, and the flexibility they need is different from how the CIO wants it to work.” [identity]. So by giving customers this choice and support, it’s really compelling, ”McKinnon explained.