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Roku said that the company’s decision of lay-offs come as it plans to cutdown on expenses and eventually focus on growth.
In a regulatory filing on Wednesday, September 6, streaming giant Roku Inc (NASDAQ: ROKU) stated that it would lay off 10% of its workforce which is nearly 360 people. The development comes as the streaming software company looks to cut down on its expenses.
Roku said that the cost-cutting measures aim to bring down the company’s year-over-year operating expense growth rate. The company also stated that it anticipates adjusted third-quarter revenue to fall within the range of $835 million to $875 million, marking an increase from its previous projection of $815 million. Furthermore, Roku has adjusted its third-quarter guidance for adjusted EBITDA, revising it to a range of negative $40 million to negative $20 million, as opposed to the previous estimate of negative $50 million.
Following the development on Wednesday, and with positive Q3 guidance, the ROKU share price surged by 3% closing in on $86.19 yesterday. Since the beginning of 2023, the ROKU stock price is already up by more than 112% making it one of the top-performing stocks on Nasdaq.
Besides, the streaming company also reported a stellar set of numbers during the second quarter. Roku reported an 11% increase in revenue, reaching $847.2 million, surpassing the analysts’ forecast of $774.5 million as per FactSet. The company also posted a loss of 76 cents per share, which was better than the anticipated $1.26 per share by analysts. This Q2 loss is an improvement from the 82 cents per share loss reported in the same period in 2022.
Roku has now exceeded 73 million active accounts, marking a growth of over 16% compared to the 63.1 million accounts recorded a year ago.
Roku’s Cost-Cutting Measures
Roku is implementing a series of cost-saving measures, including layoffs, to streamline its operations. These actions involve consolidating office spaces, slowing down new hiring, and reducing external service expenses. In the third quarter, Roku anticipates incurring impairment and restructuring charges of up to $330 million. This includes an estimated $160 million to $200 million associated with office facilities and $45 million to $65 million linked to job reductions.
Additionally, Roku expects to record an impairment charge of $55 million to $65 million related to the removal of certain licensed and produced content on its TV streaming platform, as part of a broader “strategic review of its content portfolio.” The layoffs are projected to be largely completed by the end of the fiscal fourth quarter. As of December 2022, Roku had 3,600 full-time employees, according to FactSet.
These workforce reductions mark Roku’s third round of layoffs in the past year, reflecting its shift toward cost-saving measures after a period of significant investment. Previously, the company had cut approximately 200 employees in March and another 200 employees in November.