In a significant corporate shakeup, Okta, Inc., a major player in identity management, has announced a plan to let go of about 400 employees, trimming 7% of its workforce. As revealed in an employee message and backed up by a securities filing, this decision aims to cut costs and drive the company toward more profitable growth. Okta is not alone, as it joins a list of tech firms scaling back their workforce early this year, with the tech industry seeing nearly 24,000 job cuts in January, based on information from CNBC.
CEO Todd McKinnon, in a statement obtained by CNBC, explained the decision as driven by a need for greater efficiency at Okta. High costs were cited as the culprit necessitating this cost-cutting move, despite the firm reaffirming its financial guidance for the latter part of the fiscal year. As Okta prepares to relay its fourth-quarter fiscal results by late February, the company's shares, responding to the layoff announcement, increased by around 3.6% in premarket trading.
The layoffs signal a tough period for the tech sector, which has been grappling with a trend of job reductions amid stock price fluctuations. Okta maintains a positive outlook on its financial performance despite trimming its staff. Details from a securities filing shared by The U.S. Securities and Exchange Commission reveal that Okta expects to take on restructuring charges of around $24 million in the fourth quarter of fiscal 2024 because of the layoffs.
Furthermore, McKinnon's message to employees emphasized the strategic nature of workforce reduction. Among the efforts to support the affected individuals, McKinnon stated, "Impacted employees in the U.S. will receive transition support that includes additional time on payroll, the March RSU vest (if eligible), cash severance, extended healthcare coverage, job placement resources, and support for anyone on a company-sponsored visa."
