Roku to lay off 6% more
Roku said it will lay off another 200 employees, or about 6% of its workforce. Roku is making the move amid a restructuring plan focused on reducing operating expenses and prioritizing projects that the company believes will have a higher return on investment.
Roku didn't elaborate which projects will be prioritized in its SEC filing outlining the restructuring plan. A Roku official told Light Reading that the company is not sharing specifics at this time.
Meanwhile, the company has been focusing in certain areas, including its decision to design and make its own family of smart TVs and to launch a new lineup of smart home devices that work with Roku's software platform.
Roku, which temporarily got caught up in the recent collapse of Silicon Valley Bank, said it expects to incur non-recurring charges of $30 million to $35 million as a result of the restructuring, with the majority of its restructuring charges to hit in the first quarter of 2023. The company said it will also exit and sublease – or cease use – of certain office facilities that Roku does not currently occupy.
Roku shares were down $1.81 (2.83%) to $62.10 each in Thursday morning trading.
Similar layoff in November
This round of layoffs follows a similar one Roku executed in November 2022 that impacted 200 jobs, or about 5% of its workforce at the time. Roku blamed that layoff on tough overall economic conditions coupled with a slowing advertising market.
Roku's Q4 2022 Platform revenues, which include advertising, content and OS licensing, rose 5% to $731.3 million. Roku noted then that "[i]nflation and macro-economic uncertainty continued to pressure consumers and advertisers in Q4." That played a role in causing the total US ad market to decline 12% year-over-year in December 2022, following decreases of 2% in October and 6% in November, the company said.
Roku expects Q1 2023 revenues to drop 20% sequentially, to $700 million, due to downward consumer and advertising trends.
Roku added 4.6 million active accounts in Q4 2022, ending the year with about 70 million. Streaming hours climbed 23% to 23.9 billion in the quarter, and ARPU (average revenue per unit) rose 2% to $41.68.
Meanwhile, some analysts believe Roku's targeted goal of break-even adjusted EBITDA for full-year 2024 is unrealistic. "In our model, given the rising competition in TV operating systems, hardware, and advertising sales from better resourced players, we have trouble getting to that breakeven scenario," Michael Nathanson, analyst with MoffettNathanson (a unit of SVB Securities), said in a research note issued after Roku's Q4 2022 results.
- Roku to lay off 200 US employees as consumer and ad spending wanes
- Roku breaks into the smart home game as platform battle expands
- Roku starts to design and make its own smart TVs
- Roku taps Fox exec as president of media (press release)
- Roku downgraded to 'Sell' over revenue growth worries
— Jeff Baumgartner, Senior Editor, Light Reading