Okta CEO Todd McKinnon on Friday defended his company’s bid to acquire Auth0, calling the rival company a complementary asset to its identity and access management business.
Okta shares have fallen 10 percent since announcing the $ 6.5 billion total transaction after Wednesday’s close. The sales figure represents more than a fifth of Okta’s market cap and a $ 1.92 billion premium that Auth0 received after a round of financing last summer.
“This is a company that is on track to go public, and as you know, public markets value public companies in a certain way,” McKinnon told CNBC’s Jim Cramer.
He appeared on “Mad Money” with Eugenio Pace, the executive director of Auth0.
“If you look at how we evaluate it, it grows for us,” McKinnon added. “Actually, we paid a multiple income a little below ours, but in the same stadium.”
Auth0 is an identity management platform for application developers based in Bellevue, Washington. It competes with Okta, a $ 28 billion cybersecurity suit based in San Francisco. Okta provides security tools for user authentication, such as authorizing passwords, accessing online networks.
Auth0 will function as an independent arm within Okta when the transaction closes at the end of 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 go after the customer’s identity and access management.
He explained that the $ 30 billion labor identity market accounts for 75% of Okta’s revenue, while the $ 25 billion customer identity market represents 25% of revenue. Okta focuses more on preconfigured, preconfigured solutions, while Auth0 focuses more on specially designed application developers, he added.
Auth0 is “a much more flexible and extensible product that does exactly what the developer needs to do and that’s why the two solutions together are so compelling,” McKinnon said. “It offers customers a wide range of flexibility and great value and truly solidifies the $ 25 billion [total addressable market]. “
Okta shares fell 4.54% to $ 215.96 on Friday. The company reported revenue of $ 234.7 million in the fourth quarter on Wednesday, up 40 percent from a year ago. It showed a net loss of $ 75.8 million, down from a loss of $ 50.5 million last quarter.