Netflix cuts 1,000 jobs, its biggest layoff since 2022, while profit keeps rising

Netflix is carrying out its deepest round of layoffs since the subscriber scare that once shook the company, and the memo announcing it reads like a results statement. Co-chief executives Ted Sarandos and Greg Peters told staff that the business is “strong and growing” and on track for its full-year forecast, then added that delivering on that plan means being “disciplined about where we prioritize our people and resources.”

That combination is what matters outside the company. The last time Netflix shed staff, it was losing subscribers and had to shrink. This time it is profitable and still growing, and it is cutting anyway, mostly in the teams that build the app, write the contracts and run hiring rather than in the shows people pay for. Subscribers are unlikely to notice a different service. White-collar workers in entertainment and tech will notice the message: a healthy company no longer waits for a bad quarter before it trims headcount.

The cuts cover about 1,000 positions worldwide, roughly 6% of a workforce of about 16,000 full-time employees at the end of last year, according to the company’s annual filing. The Wall Street Journal first reported the layoffs, and CBS News and NBC News later saw the internal email. Most of the jobs are in product, technology, legal and human resources, though the content side was not spared. TheWrap reported that several directors and managers in the original-series team lost their jobs, including executives who worked on Stranger Things and Griselda.

The numbers explain the pressure better than the memo does. In the second quarter Netflix earned $3.4 billion on revenue of nearly $12.6 billion, with profit up 9% and revenue up 13% on a year earlier. Viewing is the part that has stalled. Members watched more than 97 billion hours in the first half of the year, only 2% more than a year before, according to the company’s letter to shareholders. Sarandos admitted the gap at Bloomberg’s media conference last month: “Overall, we’re not growing as fast as I want us to, and we’re working on making that move faster.”

The layoffs also land in a smaller industry. Netflix bid for the studios and streaming business of Warner Bros. Discovery and lost. It said in February that it would not raise its offer, and Paramount Skydance has since completed its roughly $110 billion takeover of Warner Bros. Discovery. Disney has cut hundreds of jobs this year under chief executive Josh D’Amaro, NBC News reported, and Skydance is widely expected to shrink staff across the combined company. For writers, producers and engineers in Los Angeles, there are fewer big buyers, and each of them is getting leaner.

The savings are modest against that backdrop. A thousand salaries will not change the arithmetic of a company that spends billions a year on programming, and the memo promises to keep investing “aggressively in high-impact areas” as Netflix pushes into advertising, live events and games. Investors have not bought the growth story so far. The shares traded just below $70 on Wednesday, nearly 43% lower than a year earlier. Cutting legal and HR staff makes Netflix cheaper to run, but it does not answer the question Sarandos raised himself, which is how to get people to watch more.

Netflix reports third-quarter results on October 20, less than a week after the cuts, and the shareholder letter will show whether flat viewing has started to reach revenue. The company has not said how the cuts split between countries. At the end of last year about 10,900 of its full-time staff worked in the US and Canada, and it last made substantial cuts in 2022, when it eliminated hundreds of positions after its first quarterly subscriber decline in more than a decade.

For the people leaving, the hardest line in the memo is the first one: the business, it says, is strong and growing.

Tags: Netflix, Warner Bros. Discovery, streaming, layoffs, Greg Peters, Ted Sarandos