Auth0, the billion-dollar Seattle area startup that is a leader in identity authentication software, is being acquired by Okta, another industry leader, the companies announced on Wednesday. The all-share deal is valued at approximately $ 6.5 billion – one of the largest acquisitions by a technology company in Seattle.
Auth0 was co-founded in 2013 by Eugenio Pace, who previously ran Microsoft’s standards and practices group, and Matias Woloski, software engineer who remains the company’s CTO. Both come from Argentina, and Auth0 has built a team of more than 850 people through a distributed approach with workers spread across the world.
The startup raised a $ 120 million spin in July on a $ 1.9 billion valuation, becoming a rare Seattle unicorn. This increase in valuation from $ 1.9 billion to $ 6.5 billion in just eight months is impressive, but not everyone is thinking that Auth0 should have sold anytime soon.
funny market dynamics in reaction to this news:
public investors: Okta paid too much! ????
private investors: Auth0 shouldn’t have sold! ???? https://t.co/R5TSHmelKa– Alex Konrad (@alexrkonrad) March 3, 2021
Still, the deal is a huge unexpected gain for the company’s founders and early investors, including Pacific Northwest companies, Founders’ Co-op and Portland Seed Fund. And it’s a big payoff in the Seattle startup scene – almost tripling the $ 2.25 billion that EMC paid for Isilon, a Seattle data storage company in 2010.
“We started Auth0 seven years ago,” said Pace last year at the GeekWire Awards, after Auth0 won the Deal of the Year award. “Sometimes it feels like seven minutes and sometimes it feels like 70 years. But it was a great journey. “
GeekWire heard rumors about a move for Auth0 a few weeks ago, but it was not possible to confirm the news. Forbes, which released the story today, noted that the deal was slow to close because Auth0 was considering other options, including an IPO and other possible suitors.
Auth0 will continue to operate as an independent company within Okta.
Okta, based in San Francisco, has a market capitalization of US $ 31 billion, with 2,800 employees worldwide. The company’s shares fell more than 13% in after-hours trading.
Okta released its fourth quarter earnings on Wednesday, with revenue growing 40% to $ 234.7 million and net losses growing to $ 75.8 million, compared to $ 50.4 million.
“Okta and Auth0 have an incredible opportunity to build the identity platform of the future,” said Pace in a press release.
Auth0 is currently ranked No. 4 on GeekWire 200, our index of leading Pacific Northwest startups. However, as is usual with an acquisition or IPO, Auth0 will now be moved off the list.
“We think it’s fantastic validation of their ‘first developer’ approach to business software, and the Seattle startup ecosystem more generally,” Chris DeVore, Co-op managing partner of the founders, told GeekWire. “We are excited about the founders and have already seen the indirect effects of the entrepreneurial culture that they built when two of our most recent investments (Fusebit and Zerowall) were founded by alumni of Auth0.”
Salesforce Ventures led Auth0’s $ 120 million Series F round in July. The financing followed a $ 103 million round in May 2019. The total funding so far for the 8-year-old company is more than $ 330 million.
Other Auth0 investors include DTCP, Bessemer Venture Partners, Sapphire Ventures, Meritech Capital, World Innovation Lab, Trinity Ventures, Telstra Ventures and K9 Ventures. The first investor and first board member of Auth0, Sunil Nagaraj, who at the time of the business was working for Bessemer, writes about the early days of the startup on this blog congratulating the founding team for the acquisition.
“You will not find another person on Earth who is more concerned with understanding someone and communicating something clearly than Auth0 CEO Eugenio Pace,” wrote Nagaraj.
Auth0 combines existing login and identity verification options in a few lines of code that developers can quickly add to their applications. Its platform includes services such as single sign-on, two-factor authentication, passwordless login features and the ability to detect password breaches.
The pandemic has put the spotlight on security technology companies with accelerated adoption of digital services. Pace told GeekWire last year that the demand for Auth0 services was “massive”, as companies increasingly connect with customers in the cloud.
Auth0 processes more than 4.5 billion login transactions per month.
“I am excited about the choice, flexibility and value we will offer customers: Okta and Auth0 address a wide range of identity use cases, and our identity platforms are robust and extensible enough to serve the world’s largest organizations and developers more innovative, ”Todd McKinnon, CEO and co-founder of Okta, wrote in a blog post.
Previously on GeekWire: Working Geek: Eugenio Pace’s journey from a failed startup to Auth0 CEO with $ 110 million in funding
John Cook and Taylor Soper of GeekWire contributed to this report.