In a recent message to its employees, identity management company Okta revealed plans to lay off 400 staff members, constituting roughly 7% of its workforce. The decision, according to CEO Todd McKinnon, is attributed to the necessity of addressing high operational costs. Despite the restructuring, Okta has reaffirmed its fourth-quarter and full-year guidance in a securities filing.
Key Points:
- Layoffs Announced: Identity management company Okta is set to lay off 400 employees, constituting around 7% of its workforce.
- Cost Management: CEO Todd McKinnon attributes the decision to the need for addressing high operational costs, stating that the “reality is that costs are still too high.”
- Financial Guidance Reaffirmed: Despite the layoffs, Okta has reaffirmed its fourth-quarter and full-year financial guidance in a recent securities filing.
- Positive Market Response: Okta’s shares experienced a 3.6% rise in premarket trading following the announcement.
- Industry Trend: Okta joins a trend in the tech industry, with various companies trimming headcount in the opening weeks of 2024. Nearly 24,000 tech workers lost their jobs in January, despite overall stock price growth in the sector.
- Strategic Investment: McKinnon emphasizes the need for a more “thoughtful” approach to investments, focusing on achieving long-term success for the company.
- Prior Restructuring: Okta had previously undergone a round of layoffs in February 2023, affecting about 300 employees. McKinnon acknowledged that prior overhiring had led to unsustainable staffing levels during that restructuring.
The stock market responded positively to the news, reflecting a strategic move by Okta to optimize its operations and align resources with long-term goals.