Roku Cuts 300 Jobs and Removes Streaming Content to Cut Costs
Roku appears to be significantly reducing its spending. According to Variety, the company is letting go of 300 employees, which accounts for ten percent of its workforce. Additionally, Roku is implementing various cost-cutting measures such as eliminating streaming content, consolidating office space, and reducing expenses related to external services. The objective is to achieve a significant decrease in the rate of operating expense growth compared to the previous year.
The company hasn’t announced what content it plans to remove from its various streaming platforms, and whether those cuts will come from third-party providers or internal projects like the recently released Weird Al biopic. Roku is so serious about these cuts that it is willing to pay $65 million in impairment charges after removing this content, according to an SEC filing. In addition, the company plans to distribute more than $45 million to $65 million to severance workers and up to $200 million for giving up office space.
The stock market, as usual, loved the layoffs and the austerity measures that come with them, and Roku’s stock jumped nine percent on the news before settling for a more modest gain of around four percent. At the time of writing, the share price is still volatile.
This is Roku’s third round of layoffs in less than a year. In November, it laid off 200 workers, and another 200 were laid off in March this year. That’s a total of 700 pink slips, which represents about 25 percent of the entire workforce. As expected, the company also announced that it is holding back on new hires for the time being.
After this round of restructuring and related impairment charges, Roku expects third-quarter net sales to be between $835 million and $875 million, with adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of negative $20 million, down from negative $40. million. However, even Roku acknowledges that these numbers are uncertain, noting in a Q2 letter to shareholders that “the macro environment continued to create uncertainty” given the ongoing WGA and SAG-AFTRA strikes.
