Roku: Management Searches for a Path to Profitability With Further Cost Reductions

Roku will make additional cuts to adjust its cost structure, including its third round of layoffs in less than a year. The cuts will also include office space consolidation, a review of its content portfolio, and reduced use of outside service. As a result, Roku expects to incur impairment and restructuring charges ranging from $260 million to $330 million with the vast majority recorded in the third quarter. The company also issued more detailed third-quarter revenue guidance of $835 million to $875 million, implying year-over-year growth of 10%-15%. We are raising our fair value estimate to $75 from $70 to account for improved operating leverage in 2024 and beyond.