Netflix disclosed that it took a $70 million charge for severance costs in the second quarter, as the company adjusts its operating model for slower top-line growth.
Netflix made several rounds of layoffs in the second quarter. On June 23, the company said it laid off 300 employees, as first reported by Variety. That came after it let go about 150 staffers in May and in April laid off about 25 employees in its marketing group, including many on its Tudum fan-focused content team.
The company announced the restructuring charge as part of releasing Q2 2022 results on Tuesday. Netflix subscriber losses came in lower than forecast, with the streamer shedding 970,000 net customers in the period compared with its previous guidance of a loss of 2 million.
“We’ve adjusted our cost structure for our current rate of revenue growth,” the company said in its letter to shareholders.
In addition to the $70 million in severance costs, Netflix took an $80 million non-cash impairment charge for “certain real estate leases primarily related to rightsizing our office footprint.”
On the Q2 earnings interview, Netflix CFO Spencer Neumann said the company does not expect to incur additional restructuring costs through the remainder of 2022. It’s aiming for operating margins of 19%-20% for the year, he said.
Excluding those items totaling $150 million and the foreign-exchange impact of the stronger U.S. dollar in the quarter, operating profit and operating margin were “slightly ahead of our guidance forecast,” the company said.
In the U.S. and Canada, Netflix revenue and average member per member (ARM) both increased 10% year over year, excluding the impact of foreign exchange. The company lost 1.3 million subs in the UCAN region but Netflix said that retention improved over the course of the quarter and “while churn remains slightly elevated, it is now back near pre-price change levels.”