ROKU INC
For the period ended Dec 31, 2023. Filed Feb 16, 2024.
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FY2023 · Filed Feb 16, 2024
Contents
17. Restructuring
- RESTRUCTURING CHARGES
The Company began efforts to reduce its operating expense growth rate due to economic conditions in the fourth quarter of fiscal 2022. The Company recorded employee termination expenses, and an impairment charge related to abandoned technology assets during the year ended December 31, 2022.
During the year ended December 31, 2023, the Company implemented additional measures including consolidating its office space utilization, performing a strategic review of its content portfolio, reducing outside services expenses, and slowing its year-over-year headcount expense growth rate through a workforce reduction and limiting new hires, among other measures. As a result of these measures, the Company recorded restructuring charges associated with employee termination expenses consisting primarily of severance payments, employee benefits contributions, payroll taxes and related costs, impairment charges related to decisions to sub-lease and cease the use of certain office facilities and related property and equipment, and impairment charges related to removing select licensed and produced content from The Roku Channel.
The restructuring charges for the years ended December 31, 2023 and 2022 are recorded as follows (in thousands):
| Year Ended December 31, 2023 · Year Ended December 31, 2022 | |||||||
|---|---|---|---|---|---|---|---|
| Employee Terminations | Facilities Exit Costs | Asset Impairment Charges | Total | Employee Terminations | Asset Impairment Charges | Total | |
| Cost of revenue, platform | $1,164 | $1 | $65,867 | $67,032 | $— | $— | $— |
| Cost of revenue, devices | 524 | 6 | 2,793 | 3,323 | — | — | — |
| Research and development | 31,160 | 1,320 | 78,011 | 110,491 | 12,092 | 7,500 | 19,592 |
| Sales and marketing | 29,786 | 517 | 83,411 | 113,714 | 10,904 | — | 10,904 |
| General and administrative | 20,531 | 1,683 | 39,320 | 61,534 | 7,644 | — | 7,644 |
| Total restructuring charges | $83,165 | $3,527 | $269,402 | $356,094 | $30,640 | $7,500 | $38,140 |
The asset impairment charges for the year ended December 31, 2023 include $131.6 million of operating lease right-of-use assets impairment, $72.3 million of property and equipment impairment, and $65.5 million of content assets impairment. The asset impairment charge for the year ended December 31, 2022 includes a $7.5 million impairment charge related to abandoned technology assets.
A reconciliation of the beginning and ending balance of employee termination restructuring charges and facility exit costs, which are included in Accrued liabilities in the consolidated balance sheets, is as follows (in thousands):
| Year Ended December 31, 2023 · Year Ended December 31, 2022 | |||||
|---|---|---|---|---|---|
| Employee Terminations | Facilities Exit Costs | Total | Employee Terminations | Total | |
| Beginning balance | $22,093 | $— | $22,093 | $— | $— |
| Add: Restructuring charges incurred | 83,165 | 3,527 | 86,692 | 30,640 | 30,640 |
| Less: Payments made | (92,597) | (2,329) | (94,926) | (8,547) | (8,547) |
| Ending balance | $12,661 | $1,198 | $13,859 | $22,093 | $22,093 |
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