Streaming device maker Roku has announced that it will be laying off 200 employees, or around 6% of its workforce, as part of a cost-cutting measure. This is the second round of layoffs for the company, after it laid off 200 U.S. employees back in November due to the economic slowdown and softening of advertising revenue for streaming platforms. The move comes as part of a larger plan to lower year-over-year operating expense growth and prioritize projects with higher returns.
Focus on Strategic Priorities
According to a statement from Roku, the layoffs will allow the company to focus on key strategic priorities to drive future growth and enhance its leadership position in the industry. As part of the restructuring plan, certain office space that Roku no longer occupies will be “exited and subleased,” which should help lower operating expenses.
One-Time Charges Expected
The restructuring will result in one-time charges of $30 to $35 million related to severance costs, notice pay, and employee benefit contributions. The majority of these charges are expected to be incurred in the first quarter of this year. Headcount reductions are also expected to be “substantially complete” by the end of Q2 2023.
Poor Financial Performance
Roku’s poor financial performance has led to a plummeting of its stock in 2022. Operating losses had widened to $249.9 million in Q4 2022 from $147 million in the prior quarter, while revenues missed Wall Street expectations. The company beat its own revenue expectations with net revenue totaling $867.1 million for Q4 2022 and announced having 70 million active accounts globally.
Growing Operating Expenses
Operating expenses have also been rising rapidly, increasing by 71% in Q4. To address this trend, Roku is implementing cost-cutting measures, including the layoffs and exiting certain office space.
Amazon Veteran Joins Management
Roku also announced that it has hired Dan Jedda, a 15-year veteran of Amazon and former CFO of Stitch Fix, as its new chief financial officer effective May 1. Jedda will replace Steve Louden who is departing the company.
A Common Strategy in the Tech Industry
It’s worth noting that Roku is not the only tech company that has been doling out its headcount reductions over a period of many months. Other companies like Amazon, Meta, and others have done the same thing. This strategy allows them to minimize negative press and attention while still achieving their cost-cutting goals.
Overall, Roku’s latest restructuring plan will help the company focus on key strategic priorities and drive future growth. The layoffs along with other cost-cutting measures will drastically lower operational expenses and bring it to a better financial standing.
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