Roku Slashes Workforce by 10%, Limits Hiring Amid Cost-Cutting Measures

Roku Inc. plans to reduce its personnel by around 10%, equivalent to 360 workers, as part of a strategic move to stop a string of quarterly losses. The prominent streaming platform also intends to restrict new hires to meet its cost-cutting goals.

Roku's workforce reduction was in response to its updated financial forecast. This move follows Roku's altered financial forecast. Roku now expects third-quarter 2023 sales of $835 million to $875 million, up from a projection of $815 million in July. Investor confidence boosted Roku's shares by 8% to $90.48 in early trading.

To support these changes, Roku intends to pay $45 million to $65 million in restructuring fees, mostly for severance and benefits. The third fiscal quarter should see the most charge.

Roku has already eliminated three rounds of positions in less than a year. The firm laid off 200 workers in November 2022 and 200 in March 2023. By the end of 2022, Roku had around 3,600 full-time employees in 14 countries. Along with the layoffs, Roku has also announced intentions to cut down the number of new hires, according to a report from Variety.

Surging Expenses, Low Advertising Revenue

Also scheduled for the third quarter of 2023 by Roku are impairment costs with an initial range of $160 million to $200 million. These fees are associated with the closure of certain office locations and the withdrawal of a few licensed and produced works from the company's TV streaming platform. Notably, no major monetary outlays are anticipated from these charges, according to the California-based company.

Following a period of rising operational expenditures, Roku has taken cost-cutting initiatives. Operating expenses grew 8% to $504 million in the second quarter of 2023, following 42% and 71% rises in the first and fourth periods.

After reporting a $107.6 million loss in July, the company acknowledged the dismal television advertising market performance. While advertising is undergoing recovery, Roku voiced confidence in its potential to accelerate growth.

Overall US advertising spending remained flat due to macroeconomic concerns, according to Roku executives. The WGA and SAG-AFTRA strikes have significantly hampered media and entertainment promotional spending in Q3 of 2023.

Other Tech Firms Announced Workforce Slash

Roku's cost-cutting follows tech industry traditions of layoffs following an employment surge during the COVID-19 pandemic.

In August, TechCrunch reported that Twiga announced laying off 283 employees, or 33% of its workforce, while SecureWorks declared its second layoffs of the year, impacting 15% of its employees or 300 workers.

Microsoft said in July it would lay off additional workers one week into its 2023 fiscal year. The round of layoffs comes after the 10,000 announced in January. In the same month, Crunchbase announced its release of 52 workers.

In the early part of June, podcast giant Spotify said it would slash its workforce by 2% or 200 people. The decision comes after a wave of layoffs in the company in the previous months.