EXCLUSIVE: Layoffs are underway at Netflix today. About 150 positions out of the streamer’s 11,000 workforce are being eliminated. They are largely based in the U.S., a number of them in the executive ranks, including in original content, I hear.
“As we explained on earnings, our slowing revenue growth means we are also having to slow our cost growth as a company. So sadly, we are letting around 150 employees go today, mostly US-based,” a Netflix spokesperson said in a statement to Deadline. “These changes are primarily driven by business needs rather than individual performance, which makes them especially tough as none of us want to say goodbye to such great colleagues. We’re working hard to support them through this very difficult transition”.
The staff reductions had been expected. Netflix’s stock has fallen sharply after the streamer reported last month that its global subscriber base declined by 200,000 in Q1 from where the company ended 2021, the first drop in more than a decade.
The Street also had expected more from the streaming giant in term of revenue, with a consensus among analysts calling for $7.93 billion. Netflix reported $7.868 billion in revenue in Q1, up less than 10% from a year ago, with earnings per share falling 6% from a year ago to $3.53.
“Our revenue growth has slowed considerably as our results and forecast below show,” the company said in its quarterly letter to shareholders. “Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally. However, our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds.”
On the Netflix earnings call, Netflix CFO Spence Neumann hinted at cost-cutting measures in the coming months.
“…presumably, for the next 18, 24 months, call it the next 2 years, we’re kind of operating to roughly that operating margin, which does mean that we’re pulling back on some of our spend growth across both content and noncontent spend, but still growing our spend and still investing aggressively into that long-term opportunity,” he said. “We’re trying to be smart about it and prudent in terms of pulling back on some of that spend growth to reflect the realities of the revenue growth of the business.”