In an SEC filing, Roku, a prominent player in TV streaming, has revealed plans to reduce its workforce by approximately 10%, affecting over 300 employees. This move is part of the company's strategy to rein in its operating expenses, which have been expanding rapidly. Roku's announcement follows a year of dramatic layoffs affecting hundreds of thousands of workers across the tech industry.
As of the close of 2022, Roku reported having around 3,600 full-time employees spread across 14 countries. However, this isn't the first time the company has resorted to layoffs. In March, Roku trimmed approximately 200 jobs.
In addition to the current round of layoffs, Roku has outlined further cost-cutting measures. These include consolidating office space utilization, conducting a strategic evaluation of its content portfolio, and reducing expenses related to external services. The company has also decided to restrict new hires moving forward.
As a consequence of these layoffs, Roku anticipates incurring severance and benefits costs ranging from $45 million to $65 million in the current quarter. Moreover, the company expects to register an impairment charge of $55 million to $65 million due to changes in its content portfolio, and another impairment charge of $160 million to $200 million as it plans to discontinue the use of certain office facilities.
Roku's revenue ecosystem is primarily driven by advertising. Beyond its streaming devices and licensing revenue from Roku-licensed devices, the company operates The Roku Channel, a streaming service that aggregates various types of content. This includes ad-supported content, Roku Originals, live ad-supported TV channels, and third-party premium streaming services.
Notably, advertising represents a substantial portion of Roku's revenue. In the second quarter of 2023, platform revenue, derived from digital ads and content distribution revenue shares, accounted for the majority of the company's total revenue, reaching $744 million out of $847 million.
While Roku's revenue continues to grow, the company reported a net loss of $108 million in Q2 2023. The journey to profitability appears to be an ongoing one for Roku, as it does not anticipate reaching profitability in the current quarter.
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