Video-streaming service provider Roku has announced plans to further downsize its workforce by 6% which is around 200 of its employees.
The proposed layoffs are part of Roku’s restructuring plan to lower the company’s year-over-year operating expense growth and prioritize projects that the company believes will have a higher return on investment. The layoff is coming after the tech company had initially laid off 200 U.S. employees in November last year, citing uncertain economic conditions.
Roku, which had about 3,600 full-time employees as of December 31, 2022, expects to incur charges of between $30 million and $35 million related to the restructuring. The huge sum of money incurred is mostly due to payments for notice pay, severance packages, charges for office facilities, and employee benefit contributions.
The majority of the restructuring charges will be incurred in the first quarter of fiscal 2023, while the job cuts will be completed by the end of the second quarter (Q2). The company added that it will exit and sublease, or cease the use of certain office facilities that it currently does not occupy.
The company’s revenue stood essentially unchanged over the last three months of 2022 compared with the same period a year ago, according to an earnings report released last month. Shares of Roku ticked up about 1.5% in early trading on Thursday.
Meanwhile, in its message shared to shareholders in February this year, Roku disclosed that despite a difficult macro environment in 2022, the company made excellent progress building on its platform, brand, and industry leadership with the addition of nearly 10 million net new active accounts, ending the year with 70 million active accounts globally.
In 2022, the company platform revenue grew through increased advertising sales, the distribution of streaming services, the distribution of FAST channels, Roku Pay, and our Media & Entertainment (M&E) promotional capabilities. It also disclosed that it drove strong Streaming Hour growth and delivered 20% YoY Platform revenue growth for the full year.
While Roku continued to benefit from the shift of advertisers from traditional TV to TV streaming, that was largely offset in fourth quarter Q4 by the pullback in overall ad spend. It is interesting to note that the tech company has been expressing concerns about financial difficulties for a while, as in the second quarter of last year, it lamented the decline in the sales of its streaming boxes, which has affected other aspects of its business.
Importantly, the tech company plans to continue to improve its operating expense profile to better manage through the challenging macro environment, while building on the platform’s monetization and engagement tools and partnerships.
Roku has been diversifying into different areas offering an expanded range of hardware, growing its advertising business, and producing original content. Unfortunately, it has not been enough to navigate the uncertain economy.
Through a combination of operating expense control and revenue growth, Roku is committed to a path that delivers positive adjusted EBITDA for the full year 2024.
