Roku to Lay Off 300 Employees as it Tries to Cut Costs amid Revenue Slowdown

Roku to Lay Off 300 Employees as it Tries to Cut Costs amid Revenue Slowdown
Via Variety

(San Jose) – Video streaming giant Roku announced today that it will lay off over 300 employees, accounting for approximately 10% of its workforce, as part of an ongoing effort to cut costs and streamline operations amid a slowdown in revenue growth.

The layoffs, which are expected to be completed by the end of Q4 2023, come just months after Roku cut around 400 jobs across November and March. With today’s announcement, Roku has now eliminated over 10% of its workforce in 2022 alone.

In a statement, Roku CEO Anthony Wood said the layoffs are “necessary to ensure Roku continues delivering best-in-class products and an exceptional TV streaming experience, while progressing towards profitability.”

Why is Roku Cutting Jobs?

Roku has seen its business impacted by declining ad spending and economic uncertainty this year. In its Q2 earnings report, Roku reported revenue rose only 18% year-over-year to $764 million, the slowest rate of growth in the company’s history as a public firm. It also posted a net loss of $112 million.

High inflation has led advertisers to pull back on marketing budgets, denting Roku’s core advertising business. Meanwhile, Roku is also struggling with increased competition from other streaming devices and smart TV platforms.

In an effort to cut costs and stem losses, Roku said it will also consolidate office space, limit new hiring, cut unprofitable content, and reduce other operating expenses by $50-$65 million through the layoffs. Roku expects these measures will help it achieve profitability next year.

Employee Reactions

Roku employees took to LinkedIn to share their feelings about the layoffs. Jenifer Beaston, a software engineer at Roku, wrote “Today was tough as many colleagues found out their jobs are being eliminated. Wishing all the very best to those impacted.”

Senior product manager Brian Duckett tweeted “Saddened by today’s news. Roku will be a little less bright without these amazing teammates.”

Roku Workers United, an employee advocacy group, issued a statement saying “We’re deeply concerned about the human impact of these layoffs and hope Roku does right by each employee it’s forcing out.” The group plans to monitor how Roku handles exiting benefits for laid off staff.

What’s Next for Roku?

Following the layoff announcement, Roku stock jumped over 5% as Wall Street saw the job cuts positively. Analyst Daniel Ives of Wedbush said “This is a necessary strategic move that should help Roku navigate the rough waters of a potential recession.”

However, challenges remain for Roku to return to growth. Competition in the streaming device market remains intense with Amazon Fire TV, Apple TV and Google Chromecast. And uncertainty around the economy could continue pressuring Roku’s advertising business in the coming quarters.

Roku will need to carefully manage costs while also delivering new product features and content deals to keep users engaged on its platform. How quickly it can stabilize revenues and achieve profitability will be key to regaining investor confidence over the long term. The layoffs are an indication Roku is taking aggressive action, but the road ahead in this challenging climate remains long.

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