Roku Layoffs to Impact 10% of Staff, Q3 Financial Estimates Send Stock Flying High
Key takeaways
- Roku has confirmed it’s laying off 10% of its total workforce
- The streaming software company will also make other moves like cutting down on office space and slowing down hiring
- Roku shares were up 3% on Wednesday as the company also revealed higher Q3 financial estimates
Streaming software company Roku is making some big changes to its business. The company confirmed it was slashing 10% of its workforce in a bit to save on costs. Wall Street liked the sound of that but loved the third-quarter projections Roku filed as well, and the stock was soaring. Here’s what you need to know.
What’s happening with Roku?
Roku has confirmed it’s laying off 10% of its workforce, affecting around 360 people. The move was confirmed in a regulatory filing, which said the layoffs were a cost-cutting measure to bring down Roku’s operating expenses. There’s no word yet on which departments might be affected.
The company anticipates the layoffs will be completed by the end of the fiscal fourth quarter. It’s the third time the business has laid off staff in a year after it fired 200 employees in March and another 200 back in November 2022.
Roku’s layoffs will also be paired with other cost-cutting measures like paring back office space and ending leases, slowing new hiring and reducing external consultant and services expenses.
Roku’s also stepping back from some streaming licenses. The company anticipates an impairment charge of $55 million to $65 million related to removing existing content from its TV streaming platform.
How did Wall Street react?
As investors digested the news, Roku’s share price closed 3% higher on Wednesday. The stock has climbed 112.5% since the start of the year.
The filing also held details of Roku’s projected financials for Q3. The company now expects its adjusted revenue to be between $835 million and $875 million, up from a previous estimate of $815 million.
Roku also raised its third-quarter adjusted EBITDA guidance. The business now anticipates a range of negative $40 million to negative $20 million, another improvement from the previously estimated negative $50 million.
The bottom line
It’s a tough break for Roku employees as the tech industry continues to be hammered by high interest rates and inflation, both of which have persisted longer than initially expected. Nonetheless, investors were happy enough to see the cost-saving changes introduced for the company’s long-term health.
