Reeling Roku cuts content and staff

In a wave of cost-cutting moves, Roku has initiated another round of layoffs and will take an impairment charge up to $65 million amid a decision to remove select content from its streaming platform.

Roku disclosed in an SEC filing that it plans to lay off about 10% of its workforce – north of 300 employees – a move that is expected to be substantially completed by the end of Q4 2023. Roku had about 3,600 employees at the end of 2022.

This marks Roku's third layoff within a year that, when combined, has impacted more than 700 jobs. Roku cut about 200 employees, or 6% of its workforce, in March of this year, and let go of roughly 200 additional jobs, or about 5% of its workforce at the time, back in November 2022.

Figure 1:



Roku shares were up nearly 8% today after the company announced a wave of cost-cutting moves.


(Source: Richard Levine/Alamy Stock Photo)

Roku also intends to slow down its year-over-year headcount expense growth rate by "limiting new hires."

Tied in, Roku said it is "performing a strategic review of its content portfolio" that will result in the removal of select existing licensed and produced content from its streaming platform. Roku didn't elaborate on what specific content will be removed from its platform. But the company said the decision will result in an impairment charge in a preliminary range of $55 million to $65 million, stressing that it "does not expect any material cash expenditures" due to the content-related impairment charge.

Among other cost-cutting moves, Roku also disclosed that it is consolidating some of its office space and reducing its use of outside services, moves that will contribute to a separate impairment charge in the range of $160 million to $200 million.

Shares rise on cost-cutting plan

Roku shares were up nearly 8% in Wednesday morning trading following Roku's disclosure.

Excluding restructuring and impairment charges outlined today, Roku said it expects total net revenues for Q3 2023 in the range of $835 million to $875 million and adjusted EBITDA in the range of -$40 million to -$20 million. Roku's prior outlook for Q3 foresaw revenues of $815 million and adjusted EBITDA of -$50 million.

Roku posted Q2 2023 revenues of $847 million, up 11%, and a net loss of -$107.59 million. About $744 million of Roku's Q2 revenues came from a Platform unit that includes elements such as advertising and operating system licensing revenues. Roku added 1.9 million active accounts in the period, ending Q2 with 73.5 million. Roku's average revenues per user (ARPU) declined 7%, to $40.67, in Q2.

Among other recent strategic moves, Roku has begun to design and build its own connected TVs powered by the Roku OS, believing the decision will help the company accelerate product and feature development. Roku also expanded into the smart home arena nearly a year ago with a lineup of products, including connected cameras and lights and video doorbells, that are integrated with Roku's platform.

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