Okta, an ID verification company, announced plans to lay off 400 employees, constituting approximately 7% of its workforce, while reaffirming its fourth-quarter financial projections and full-year guidance in a securities filing.
Okta's First Wave of Tech Layoffs in 2024
Okta is the latest tech company to reduce its workforce in the early weeks of 2024, when nearly 24,000 tech workers are losing their jobs despite experiencing an increase in stock prices.
Okta's Last Reported Layoff in February 2023
The company had its most recent round of layoffs in February 2023, affecting around 300 employees. McKinnon mentioned that excessive hiring had resulted in unsustainable staffing levels at that time.
Okta's Layoff Notification Through a Memo
McKinnon informed employees in a memo at 5:30 a.m. PT that approximately 400 employees would be laid off, explaining that the decision was essential for the San Francisco-based company to achieve profitable growth, adding employees affected worldwide to receive an email within the next 15 minutes to learn if their roles are impacted.
Affected U.S. employees will receive support, including extended time on payroll, March RSU vest (if eligible), cash severance, extended healthcare coverage, job placement resources, and assistance for those on company-sponsored visas. For employees outside the U.S., the process and severance will adhere to local laws and practices, including consultations with potentially affected employees before making final decisions.
Okta's Financial Standing in the Industry Despite the Layoffs
The company informed Business Insider that its global headcount was 5,913 employees before Thursday's layoffs. Despite having over 18,000 customers, Okta reported better-than-expected quarterly earnings in November, with a 21% increase in revenue to $584 million.
Okta Taking Measures to Ensure Long-Term Success
McKinnon emphasized the need for the company to be more "thoughtful" in its investments to ensure long-term success, adding, "While we've taken steps in the right direction, the reality is that costs are still too high," McKinnon said in the email.
McKinnon informed staff that the company had expanded too rapidly and hired excessively, mentioning that the layoffs were part of a restructuring plan implemented in 2023 with a growth plan aligned with the demand from the previous year. In his statement, he acknowledged, "This led us to overhire for the macroeconomic reality we're in today. In addition, in the first half of fiscal 2023, we faced our own execution challenges."
McKinnon mentioned that the company's costs were still too high, emphasizing the need to be mindful of overall spending in this year's layoffs announcement.
Okta's layoffs are part of a broader trend of job cuts in the tech industry, where companies like Amazon, Google, and SAP also reduced their workforce last month. Recent layoffs also occurred shortly after Proofpoint, a cybersecurity giant, confirmed to TechCrunch that it was cutting about 6% of its global workforce, which amounts to 280 employees.
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