Netflix has pink-slipped about 150 staffers, mostly in the U.S., as it works to rein in costs with its top-line growth having slowed down.
The cuts come across departments and are driven by the need to reduce expenses rather than the performance of individual employees, according to the company. The layoffs represent roughly 2% of Netflix’s U.S. workforce.
“As we explained [in reporting Q1] earnings, our slowing revenue growth means we are also having to slow our cost growth as a company,” a Netflix rep said in an emailed statement. “So sadly, we are letting around 150 employees go today, mostly U.S.-based. 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.”
In addition to the layoff of 150 full-time employees, Netflix is eliminating about 70 part-time jobs in its animation studio and is also cutting freelance roles in its social media and publishing group. Variety exclusively reported that Netflix has axed several animated projects, including “Wings of Fire” from executive producer Ava DuVernay; “Antiracist Baby,” a series aimed at preschoolers; and “With Kind Regards From Kindergarten.”
“A number of agency contractors have also been impacted by the news announced this morning,” the Netflix spokesperson said. “We are grateful for their contributions to Netflix.”
Netflix surprised Wall Street in the first quarter of 2022, reporting a net loss of 200,000 streaming customers — its first decline in more than a decade. And the company said it expects to drop 2 million more subscribers in Q2. The subscriber miss and weak guidance led to the biggest-ever one-day drop in Netflix’s market cap, as the company lost $54 billion in value on April 20. The stock is down 68% year-to-date.
The job cuts Tuesday come after Netflix laid off about 25 employees in its marketing group last month, including many on its Tudum fan-focused content team.
As of Dec. 31, 2021, Netflix reporting having about 11,300 full-time employees globally, of which 76% (around 8,600) were located in the U.S. and Canada.
For Q1, Netflix posted revenue of $7.87 billion, which fell shy of Wall Street consensus estimates of $7.93 billion. That was up 9.8% from the year-earlier period, when the company’s 24% revenue growth was boosted by pandemic-driven gains. For the second quarter of 2021, Netflix forecast $8.05 billion in revenue, which would be up 9.7% year-over-year.
On Netflix’s Q1 earnings interview with analysts, asked about cost cuts, CFO Spencer Neumann said the company would be “responsible in terms of how we manage the business.”
“During this period of slower revenue growth, we’re going to protect our operating margins,” Neumann said, reiterating the company’s goal of maintaining an operating margin of around 20% for full-year 2022. As a result, “we’re pulling back on some of our spend growth across both content and non-content spend, but still growing our spend and still investing aggressively into that long-term opportunity.”
Last week, Netflix updated its famous corporate-culture memo, as first reported by Variety. Among the changes was this new entry in the document’s “Valued Behaviors” section: “You spend our members’ money wisely.”
Source: Variety.com
