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
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
has gained 17.6% over the past year.

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