Okta prices its IPO and hopes to hit a $2 billion valuation


Okta Todd McKinnon


Okta CEO Todd McKinnon

The second big enterprise tech IPO of the year, Okta, has released a price range for the 11 million shares it plans to soon sell on the public market: $13-$15 per share. If the offering ends up at the midpoint of that range, the company will raise nearly $160 million and be valued at about $2 billion.

As a startup, Okta raised around $230 million in VC funding and was valued at $1.2 billion. It was the first cloud startup in Andreessen Horowitz's portfolio (and the VC firm still holds a 19.6% stake). It also raised funding from firms like Sequoia Capital (which holds a 21.2% pre-IPO stake), Greylock (16.9%), Khosla Ventures (8.1%).

There's reason to believe public market investors will like Okta, just like they liked the first enterprise tech IPO this year, MuleSoft.


Okta is a cloud service that helps companies manage their employees' passwords for about 5,000 other cloud services. Okta has also expanded into security services, like securing corporate laptops and managing passwords for mobile app developers.

Okta was founded in 2009 and the founders were early employees of Salesforce. Okta CEO Todd McKinnon was the senior vice president of engineering at Salesforce and Okta COO Freddy Kerrest was an early sales and biz dev guy for Salesforce. (Kerrest once described his job interview with Salesforce CEO Marc Benioff as the "weirdest 7 minutes of my career.") They didn't leave Salesforce with Benioff's blessing, or his financial backing, despite the fact that he tends to invest in a lot of startups, including those launched by his former employees.

Indeed, in 2013, Salesforce launched a competitor to Okta, Salesforce Identity. Microsoft has also been both competing and partnering with Okta. Last year Microsoft even booted Okta out from sponsoring one of its conferences (though after Business Insider reported on that decision, Microsoft changed its mind and gave Okta back its sponsorship spot).


Competition from big guns hasn't stopped Okta. It counts more than 3,100 companies as customers including Century Fox, Adobe, LinkedIn, MassMutual, MGM Resorts and Twilio. (Business Insider is also an Okta customer.) And its partners include Amazon Web Services, Box, Google Cloud, Microsoft, NetSuite, SAP, ServiceNow and Workday, it says.

Here are some of the key highlights of Okta's recent business performance:

  • Revenue of $160 million in fiscal 2017, up from about $86 million in 2016.
  • Gross profit (before sales, admin and R&D expenses) of about $104 million in 2017, up from about $50 million in 2016.
  • Net loss narrowing, from about $84 million in 2017, compared to $76 million in 2016.
  • In the ramp up to the IPO, Okta cranked up its sales and marketing to about $119 million in 2017 from about $78 million in 2016.

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