Roku shares surge on job cut plans, Q3 revenue forecast boost
Roku (ROKU) - Get Free Report shares surged higher Wednesday after the streaming service hub and connected TV maker unveiled plans to slash around 10% of its workforce while boosting its current-quarter revenue outlook.
In a Securities and Exchange Commission filing published early Wednesday, Roku said that it will "implement additional measures to continue to bring down its year-over-year operating expense growth rate" by cutting around 10% of it workforce, slowing its near-term hiring, consolidating office space and cutting services expenses.
The group had around 3,600 employees over 14 countries at the end of the last year, according to its annual report.
Roku also said it expects third quarter revenues in the region of $835 million to $875 million, well ahead of its late July projection of $815 million, based on a second quarter subscriber base of 73.5 million accounts.
Roku said the cost-cutting moves would likely result in a 'workforce reduction charge' of between $45 million and $65 million to its current quarter earnings, but expects the cuts to be completed by the end of the year.
Its overall Q3 impairment, Roku said, would likely be in the range of $160 million to $200 million 'related to ceasing to use certain office facilities and an impairment charge in a preliminary estimated range of $55 million to$65 million related to removing select existing licensed and produced content from Company-operated services on its TV streaming platform."
Roku shares were marked 8.6% higher in pre-market trading immediately following details of its cost-cutting and job reductions to indicate an opening bell price of $90.97 each. That would extend the stock's six-month gain to around 43%.
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