Okta is reducing its headcount by 7% on Thursday.
The ID verification company told Business Insider it was a "necessary" decision to ensure profitable growth.
CEO Todd McKinnon told employees in a memo sent at 5:30 a.m. PT that the company is laying off around 400 employees. He told them in the memo shared with BI that workers will find out by email, 15 minutes after receiving the memo, if they will be impacted.
Okta cut 300 full-time employees from its workforce last February, an SEC filing showed. The company told Business Insider its latest global head count is 5,913 employees before Thursday's reductions.
McKinnon told staff in a memo announcing the cuts last year that it had grown too quickly and over-hired. He added that the layoffs were part of a restructuring plan that it undertook in 2023.
He said, "We entered fiscal 2023 with a growth plan based on the demand we experienced in the prior year," he said.
He then added, "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."
In this year's layoffs announcement, McKinnon said its costs were still too high and that it needed to be "mindful" of its overall spend.
The layoffs are the latest in a wave of job cuts sweeping the tech industry. Okta follows companies like Amazon, Google, and SAP slashing roles last month.
Read the memo sent by McKinnon 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
