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Okta CEO says it’s a ‘good environment’ for an IPO as tech firm starts trading on the Nasdaq
It was an "inevitable" step for Okta (NASDAQ: OKTA) to go public in what is a "good environment" for technology initial public offerings, the chief executive of the identity management firm told CNBC on Friday.
Okta is raising $187 million in an IPO on the Nasdaq Friday, valuing the company at $1.5 billion. Okta priced its shares at $17 apiece, on the upper end of the range and begins trading when the markets open on Friday.
The company specializes in identity management software. As companies scale, some employees will need access to certain applications in the cloud while others won't do. So Okta manages who gets access to what with the aim of preventing security breaches.
The company has so far raised $228.5 million in venture funding, according to Crunchbase data, and Okta CEO Todd McKinnon said it was the right time for the company to go public.
"We started out to build a large important technology company and this is inevitably a step along the way for companies that have that goal," McKinnon told CNBC Friday.
"The first time you take venture funding, going public is inevitable
and we felt the timing was right and this was a good environment," he added.
The firm's entrance onto the public market continues the trend of tech companies carrying out an IPO after a slow 2016. Snap Inc (NYSE: SNAP), the biggest tech IPO this year, popped on its debut in March , but has since had a roller-coaster ride and its shares are trading below the price when it first hit the markets. There appears to be a strong pipeline of companies too. Last month, Cloudera filed for an IPO .
But Okta could face competition from established players such as Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN) Web Services (AWS). Okta's CEO said, however, that the company can work with all of these cloud providers.
"One of the key insights that we had is that it's really about connecting these clouds together, so it's connecting Amazon to Microsoft, to Salesforce (NYSE: CRM), to Workday, and our value proposition really is that we sit in the middle of it all and we know about all the applications and we can securely connect our customers and the users to any cloud," McKinnon said.
Okta's revenue in the year ended January 2017 jumped 87 percent to $160.3 million. The company spent almost $120 million on sales and marketing in the year, leading to a net loss of $83.5 million.
Sequoia Capital is Okta's biggest investor with a 19 percent stake after the offering, followed by Andreessen Horowitz at 17 percent, Greylock Partners at 15 percent and Khosla Ventures at 7.1 percent. McKinnon owns 9.1 percent.
Goldman Sachs, JPMorgan and Allen & Company are acting as joint book-running managers for the offering. Pacific Crest Securities, a division of KeyBanc Capital Markets, Canaccord Genuity and JMP Securities are acting as co-managers.
- CNBC's Ari Levy contributed to this report.
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