Okta (NASDAQ:OKTA) is a San Fransisco-based company that provides identity solutions for enterprises, small and medium-sized businesses, universities, non-profits, and government agencies in the United States and around the world. This week, the company revealed that it would lay off roughly 7% of its workforce as part of a restructuring aimed at bolstering efficiency and its profitability. The layoffs were disclosed in an 8-K filing with the Securities and Exchange Commission (SEC).
Companies that offer enterprise security have attracted considerable attention as the threat of cyber attacks have grown in frequency, severity, and sophistication in the 2020s. Private and public organizations are exposed to substantial risk in the digital world, which is why these entities are investing a lot in cyber security. McKinsey & Company recently suggested that damage from cyberattacks will amount to about $10.5 trillion annually by 2025 – up 300% compared to 2015 levels.
Meanwhile, organizations around the world spent roughly $150 billion on cyber security in 2021. That was up 12.4% year over year. In the third quarter (Q3) of fiscal 2023, Okta delivered revenue growth of 21% while subscription revenue increased 22% compared to Q3 FY2022. Meanwhile, the company delivered record operating cash flow of $156 million and record free cash flow of $150 million.
The layoffs it pursued will result in restructuring charges of $24 million in the fourth quarter of fiscal 2023. Investors can expect to see its final batch of fiscal 2023 earnings in March.
