Okta is continuing its headcount reduction, which will affect about 400 full-time employees or about 7% of its total workforce. The move follows the identity management company's decision to cut 5% of its global workforce last February.

The announcement follows a “thoughtful FY25 business-planning process,” according to Okta CEO Todd McKinnon's message to employees. “In order to grow profitably, we need to run the business with greater efficiency,” McKinnon wrote. “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,” he added.

According to Okta’s recent Securities and Exchange Commission (SEC) filing, the latest round of layoffs comes as part of the company's broader restructuring plan “intended to improve operating efficiencies and strengthen the company’s commitment to profitable growth.”

Okta estimated approximately $24 million in restructuring charges in the fourth quarter of fiscal 2024 for future cash employee severance and benefits costs, expected to be paid in the first quarter of fiscal 2025.

The company currently serves 18,800 organizations around the world, according to McKinnon.

Okta laid off 300 employees in 2023 This is the second time within a year that Okta has had to make tough decisions regarding its workforce.

On Feb. 2, 2023, the company announced it was reducing its global workforce by 5%, or about 300 employees, citing overhiring due to anticipated demand that did not materialize as expected, as well as execution challenges in the first half of fiscal year 2023.

“We entered fiscal 2023 with a growth plan based on the demand we experienced in the prior year. This led us to overhire for the macroeconomic reality we’re in today. In addition, in the first half of FY23, we faced our own execution challenges. I wish I had responded sooner, but we’re doing the best we can today to adjust to this reality,” McKinnon wrote to Okta employees then.

He committed to operating the business in a way that enables Okta to execute through any market condition. “You’ll see us continue to focus on scale and efficiency, apply greater overall financial discipline, and continue to invest in our two clouds to further extend our position as the digital identity leader for all use cases.”