Okta Inc. (NASDAQ:OKTA) shares rose 1.8% in premarket trading on Monday after the identity security specialist announced the launch of a $1 billion share repurchase program.
The authorization, which takes effect immediately, signals management’s confidence in Okta’s outlook and its view that the company’s stock does not fully reflect underlying value, according to a statement.
Okta, which refers to itself as “the leading independent identity partner,” said the buybacks will be funded using existing cash resources as well as cash generated from operations. The program does not have a set end date and gives the company flexibility to repurchase shares either on the open market or through privately negotiated deals.
Decisions on the timing and size of repurchases will be made at Okta’s discretion, taking into account market conditions and business priorities. The company noted that any open-market purchases will be conducted in line with applicable federal securities regulations, including the pricing and volume guidelines set out in Rule 10b-18 under the Securities Exchange Act.
Okta also said it may use Rule 10b5-1 trading plans to carry out buybacks under the authorization. The program can be adjusted, paused or ended at any time by the board of directors.
Management added that Okta’s scale, strong balance sheet and capacity to generate steady free cash flow allow it to return capital to shareholders while continuing to invest in long-term growth initiatives.