Okta Goes Public In First Big Cybersecurity IPO Of The Year

In the first big cybersecurity IPO of the year, Okta has officially hit the public market on Friday, looking to raise $187 million at a $1.5 billion valuation.

Okta announced late Thursday that it would price its 11,000,000 shares of common stock at $17 per share, above the company's earlier expectations of between $13 and $15 per share. Okta will now trade on the NASDAQ as "OKTA." The company's shares jumped more than 35 percent in its first few hours of trading, up to around $23 per share.

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Today is an exciting day for , but it's just the beginning

The launch comes after months of IPO rumors, denials and even reports that the San Francisco, Calif.-based company was seeking a buyer last year. Okta's platform focuses on identity and access management for cloud applications, but the startup has also expanded into mobile device management, two-factor authentication, and application development and API security.

Okta has been a high-flier in the security market, landing $75 million in venture capital funding in September 2015 at a $1.2 billion valuation. The company has raised $228.5 million to date.

In its S-1 filing last month, Okta said it would put the proceeds of the IPO towards "working capital and other general corporate purposes," including customer growth, customer relationships, expanding internationally, expanding integrations, product development, and leveraging data and analytics. Okta said it might also use the IPO funds for acquisitions, building on the company's March acquisition of Stormpath.

Okta also revealed mounting losses in its S-1 filing, with losses of $76.3 million in 2016 and $59.1 million in 2015. Sales were $85.9 million in 2016, up 109 percent from $41 million in 2015. Okta reported Okta said it expects those losses to continue, saying "we have a history of losses, and we expect to incur losses for the foreseeable future."

Mathew Shuster, regional vice president at San Ramon, Calif.-based Kovarus, said the IPO is "significant," both for Okta and for its partners.

"The technology has been up to the task for customers for years, but when bigger enterprises are making a strategic decision on this sort of thing, they like to see stability. I think the IPO helps Okta, along with its recent growth, get the financial and operational stability that is required for them to make it big," Shuster said.

Shuster said that statement of stability is of particular importance for a company like Okta, which acts as a neutral platform at the center of an enterprise's application ecosystem and is a strategic purchasing decision for a company. He said customers look for a vendor like Okta to have long-term stability as a company before purchasing. The IPO also puts to rest questions of an acquisition, which he said will lead to even further stability for customers.

Shuster said he expects Kovarus's business to continue growing with Okta, especially as more customers move their workloads to the cloud and look for single sign-on and identity and access management solutions.

"They have been growing like wildfire. Our business with them has been growing with them each year since we started the partnership … It's good to see them catching on and really growing," Shuster said. "I think the business with them will only continue to grow."

The IPO is the first cybersecurity IPO of the year and the second enterprise software company to go public, following on the heels of the March IPO of MuleSoft, a company that offers integration software for applications, data, and services.

Other companies have filed for IPOs, or been rumored to, but have not followed through to the public market. Optiv Security filed for an IPO in November 2016, Dell SecureWorks filed in April 2016, and Blue Coat Systems filed in June 2016. Optiv and Blue Coat were acquired instead of going public, the former by private equity firm KKR and the latter by Symantec. Carbon Black and LogRhythm are two other enterprise security companies that are reportedly looking to go public.