Roku has announced that due to the broader business and economic uncertainties arising from the Covid-19 pandemic, it is providing its shareholders with a brief update regarding certain estimated operating metrics and financial results for the first quarter 2020, and discussing certain business trends, in advance of its May 7th earnings call. The company also withdrew its full-year 2020 financial outlook due to economic uncertainties arising from the pandemic.
Roku estimates 39.8 million Active Accounts as of March 31st 2020, a net increase of nearly 3 million since December 31st 2019. Roku also expects first quarter Streaming Hours will be 13.2 billion, a 49 per cent year-over-year increase.
In early Q1, Roku completed the rollout of its “Are you still watching” feature which exits video playback after long periods of user inactivity. As previously noted, the roll out of this feature will moderate streaming hour growth; however, beginning in late Q1 Roku started to see the effects of large numbers of people “sheltering at home.” For Roku, this has resulted in an acceleration in new account growth and an increase in viewing.
For the three months ended March 31st, Roku expects revenue to be slightly higher and other metrics generally in-line with prior outlook:
|Estimated Results ($ in millions)||Q1 2020E|
|Total net revenue||$307 – $317|
|Total gross profit||$139 – $144|
|Net income (loss)||($60) – ($55)|
|Adjusted EBITDA1,2||($23) – ($18)|
|1||Adjusted EBITDA is a non-GAAP financial measure.|
|2||Q1 2020E reconciling items between net loss and non-GAAP adjusted EBITDA consist of stock-based compensation of approximately $30 million, depreciation and amortization and other net adjustments of approximately $8 million.|
“While we believe that our offerings to consumers, content providers and advertisers will enable our Company to deliver value in these uncertain times, the wider business and consumer impacts, as well as the duration of the pandemic, are unclear and thus we are withdrawing our prior 2020 outlook,” said Steve Louden, Roku’s Chief Financial Officer.
Roku ended the first quarter with an estimated $587 million of cash, cash equivalents, restricted cash and short-term investments. This includes a $70 million draw-down from its revolving credit facility. “We decided it was prudent to draw down our credit facility in light of current financial market conditions,” said Louden.
“Consumers are turning to Roku now more than ever. As the leading TV streaming platform in the US, Roku is proud to provide easy access to live news, free movies and TV, great paid content, and helpful programming for individuals and families who are sheltering at home,” said Anthony Wood, Roku’s Chief Executive Officer. “We have been working closely with advertisers to help update their plans to reflect new viewing patterns and adjust their overall marketing mix which has been affected by social distancing. While we expect some marketers to pause or reduce ad investments in the near term, we believe that the targeted and measurable TV ads and unique sponsorship capabilities that Roku offers are highly beneficial to brands today.”
Roku will release first quarter 2020 financial results and key operating metrics on May 7th following the close of market.