Okta, a prominent identity provider, has announced its plan to lay off 400 employees, amounting to 7% of its workforce. This move comes as the second round of layoffs within the span of 12 months for the San Francisco-based company. The restructuring is expected to cost the company $24 million in employee severance and extended benefits costs, according to a regulatory filing.
In an email addressed to employees, Okta CEO Todd McKinnon stated that the layoffs are necessary to ensure “greater efficiency” within the company. The CEO cited the need to reduce costs, despite the company’s stock being up nearly 1.8% as of midday trading.
This recent round of layoffs follows a similar move in February 2023, when the company let go of 300 employees, representing 5% of its workforce. At the time, the company attributed the decision to “overhire for the macroeconomic reality we’re in today.”
The announcement of these layoffs comes amid a series of embarrassing security incidents that Okta has faced in recent years. In September 2023, the company suffered a significant breach in which hackers gained access to details for all users of its primary customer support system, including usernames and contact information. This incident followed a security breach in March 2022, when a member of the teenage-led extortion group Lapsus$ accessed Okta servers for five days through the compromised account of a third-party customer support engineer.
In response to these incidents, Okta announced a 90-day pause on product development and internal projects in November in order to bolster its security architecture. Despite these measures, the company appears to be taking further steps to streamline its operations and reduce costs through the recent layoffs.
The layoffs at Okta coincide with a broader trend of downsizing within the cybersecurity market. Email security vendor Proofpoint also recently announced a reduction in force, while other cybersecurity companies such as OneTrust, Rapid7, and Sophos have also implemented significant layoffs in recent years due to economic uncertainty and investor demands for profitability over growth.
Overall, the decision to lay off 400 employees is significant for Okta and raises questions about the company’s future direction. With reporting from Information Security Media Group’s Michael Novinson in Massachusetts, the cybersecurity community will be closely monitoring how Okta navigates this restructuring and addresses its security challenges moving forward.