Roku to lay off 10% of workforce, stock jumps

Roku said it will lay off 10% of its workforce, or about 360 people, as the streaming software company looks to slash expenses.

In a regulatory filing Wednesday, the company said the cost-cutting measures aim to bring down its year-over-year operating expense growth rate.

The company added that it expects adjusted third-quarter revenue of between $835 million and $875 million, up from a prior forecast of $815 million. In addition, Roku raised its third-quarter guidance for adjusted EBITDA to a range of negative $40 million to negative $20 million compared to a prior estimate of negative $50 million.

Shares of the San Jose, California-based company rose 10% in early morning trading before giving up some of those gains.

The layoffs are part of an array of cost-cutting actions the company will take. Other actions include consolidating office space, slowing the pace of new hiring and reducing outside services expenses.

Roku expects impairment and restructuring charges in the third quarter of up to $330 million, including a range of $160 million to $200 million related to office facilities, and $45 million to $65 million related to the job cuts.

Moreover, Roku said it expects an impairment charge of $55 million to $65 million related to the removal of select existing licensed and produced content on its TV streaming platform, as part of a “strategic review of its content portfolio.” 

Roku anticipates the layoffs will be mostly complete by the end of its fiscal fourth quarter. The company had 3,600 full-time workers as of December 2022, according to FactSet.

This is Roku’s third round of layoffs over the past year as it scales back after a period of investment. The company cut about 200 employees in March and another 200 employees in November.

On CNBC’s “Squawk on the Street,” Jim Cramer said the layoffs and other cost-cutting measures should help the company pivot toward profitability and attract additional investors.