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Identity management company Okta said on Thursday in a message to employees that it would lay off 400 employees, about 7% of the company’s headcount. The firm also reaffirmed its fourth quarter and full-year guidance in a securities filing.

CEO Todd McKinnon said in his message that the “reality is that costs are still too high.”

Read McKinnon’s full message below.

Hi Everyone,

After a thoughtful FY25 business planning process, the leadership team and I have made the difficult decision to implement a workforce reduction impacting about 7% of our company, or approximately 400 people.

If you work in the U.S., you will receive an email in the next 15 minutes notifying you if your role is impacted or not. If your role is impacted, your leadership will schedule a meeting today to discuss next steps. For employees outside the U.S. who have been identified as impacted or at risk, the notification process may be different based on local laws and practices.

I know this is difficult news, and I’d like to provide some context on how we reached this decision.

In order to grow profitably, we need to run the business with greater efficiency. While we’ve taken steps in the right direction, the reality is that costs are still too high. We need to be mindful of our overall spend so we can continue to invest in the areas, products, and routes to market with the most opportunity. To capture our massive potential and build an iconic company, we must be thoughtful about where we place our bets. This action is a proactive measure to help set the company up for long-term success.

To the impacted employees, I am deeply sorry and we thank you for your many contributions. We are committed to supporting you during this transition and providing all possible resources to help you through this time. 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. Outside of the U.S., our processes and severance will align with local laws and practices, including consultations with potentially affected employees, where appropriate, before any decisions are confirmed.

Our priority today is managing this transition as respectfully as possible. As we navigate these changes, remember that Okta is critical infrastructure for 18,800 organizations around the world. We’re looking forward to the work ahead with Okta in the right position to extend our leadership position and execute our vision to free everyone to safely use any technology.

Todd

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