The move, coupled with a weaker-than-expected outlook, sent shares lower in after-hours trading.
At last check, Okta shares were off 11% at $215.70. They closed the regular Wednesday trading session down 6.9% at $241.22.
"Organizations everywhere are rapidly leveraging identity to streamline processes, reduce costs, maintain the highest levels of security, and improve customer experiences," Okta said in a statement.
"Okta and Auth0’s comprehensive, complementary identity platforms are robust enough to serve the world’s largest organizations and flexible enough to address every identity use case," the company added.
Under the terms, Okta will acquire Auth0 "based on a fixed number of Okta shares and an Okta share price of $276.21." Both companies boards have approved the terms.
The transaction is subject to conditions including regulatory clearances. The companies expect to close the deal in Okta’s fiscal second quarter ending July 31.
Separately, Okta reported a wider loss for the fourth quarter ended Jan. 31.
The loss was 58 cents a share against 42 cents in the year-earlier quarter. Shares outstanding rose 7.1% to 130.1 million.
On an adjusted basis, Okta earned 6 cents a share. Revenue rose 40% to $234.7 million from $167.3 million.
A survey of analysts by FactSet was looking for a GAAP loss of 53 cents a share, or an adjusted loss of a penny a share, on revenue of $221.8 million.
The "secular tailwinds that have propelled our business over the past several years will continue into our fiscal year 2022, and we plan to invest appropriately to capitalize on the opportunity and further strengthen our competitive positioning," Chief Financial Officer Bill Losch said in a statement.
For the fiscal first quarter Okta sees an adjusted loss of 20 cents to 21 cents a share on revenue ranging $237 million to $239 million.
The FactSet consensus estimates are an adjusted loss of 6 cents a share on revenue of $237.3 million.
And for fiscal 2022, the company pegs the adjusted per-share loss at 44 cents to 49 cents on revenue of $1.08 billion to $1.09 billion.
FactSet's survey calls an adjusted loss of 2 cents a share on revenue of $1.07 billion.