FILE PHOTO: The Roku company logo is displayed on a building in Austin, Texas, U.S., October 25, 2021. REUTERS/Mike Blake
(Reuters) - Roku on Wednesday trimmed its adjusted operating loss forecast for the third quarter and said it would lay off 10% of its staff as well as cut down on some office space, sending the company's shares 12% higher.
Roku also raised its quarterly revenue forecast, a sign that advertising spending was continuing to improve thanks to cooling inflation and hopes of a pause in interest rate hikes.
The streaming device maker, which has its own ad-supported channel, in February said it aims to turn a profit in 2024 as it strives to drastically cut costs.
Roku, which faces pressure from larger streaming firms, had laid off about 400 employees in two cycles since November. It had about 3,600 full-time employees as of December.
The San Jose, California-based company now expects adjusted core loss in the range of $40 million to $20 million for the quarter ending September, compared with its earlier forecast of $50 million.
Roku forecast total net revenue to be between $835 million and $875 million, higher than its previous projection of $815 million.
Roku also said it would consolidate offices, reduce expenses on outside services and review its content portfolio.
It expects to take on $160 million to $200 million in impairment charges related to the closure of some offices and $55 million to $65 million related to removing select licensed and produced content from Roku-operated services on its TV streaming platform.
Roku would also take a $45 million to $65 million charge in connection with the workforce reduction, expected to be completed by this year end.
At least six brokerages raised their price targets on Roku after the restructuring announcement, according LSEG data.
"When the cyclical nature of advertising turns more positive ... it (Roku) will have a better cost structure to drive scale once the macro environment turns more favorable," said analysts at William Blair.
(Reporting by Yuvraj Malik in Bengaluru; Additional reporting by Akash Sriram Editing by Savio D'Souza, Shilpi Majumdar and Maju Samuel)
