Okta to cut 400 jobs as part of commitment to profitable growth, stock rallies



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Shares of Okta Inc. rallied Thursday, after the identity-software company said it would lay off about 7% of its workforce as part of a restructuring aimed at improving efficiencies and profitability.

The company disclosed in an 8-K filing with the Securities and Exchange Commission that the restructuring involves cutting 400 full-time jobs.

That will result in restructuring charges of $24 million in the fiscal fourth quarter for employee severance and benefits costs, which will mostly be paid in the first quarter. The fourth quarter ended in January.

The stock
OKTA,
+2.86%
climbed 1.9% in morning trading, after falling 8.7% in January.

Separately, the company affirmed the financial guidance for the fourth quarter it provided when it reported third-quarter results on Nov. 29. Okta said then that it expects adjusted earnings per share of 50 cents to 51 cents and revenue of $585 million to $587 million, which compares with the current FactSet consensus for EPS of 51 cents and revenue of $587.2 million.

“[T]he company announced to its employees a restructuring plan intended to improve operating efficiencies and strengthen the Company’s commitment to profitable growth,” the company said in the 8-K.

The company has reported total net losses of $119 million for the first three quarters of the current fiscal year, after recording a loss of $815 million for the fiscal year through Jan. 31, 2023.

The stock has run up 20.3% over the past three months through Wednesday and has gained 8.5% over the past 12 months. In comparison, the S&P 500 index
SPX,
+0.49%
has gained 17.6% over the past year.



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