Roku ends Q3 with 56.4m active accounts

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Roku has reported that total net revenue grew 51 per cent year-on-year to $680 million (€588.1m) in the third quarter. ARPU surpassed the milestone of $40 (trailing 12month basis) and grew nearly 50 per cent yearoveryear.

In a letter to shareholders, the company said:

As the global shift to TV streaming continues, our performance demonstrates the strength of our business fundamentals and the momentum of our platform monetisation. We are making significant progress with traditional TV advertisers, while also expanding our total addressable market to digitalfirst advertisers. Despite the ongoing headwinds created by the global supply chain disruptions, Roku remains well positioned as a result of our scale, brand, technology, and relentless focus on the TV streaming experience.

We grew active accounts by 1.3 million, ending the third quarter with 56.4 million, which was driven by sales of our streaming players and Roku TV models. We believe that the slowdown in active account growth rate this quarter was, in large part, attributable to global supply chain disruptions that have impacted the US TV market. Specifically, overall US TV sales in Q3 fell below pre-Covid 2019 levels. Some of our Roku TV OEM partners were hit particularly hard with inventory challenges, which negatively impacted their unit sales figures and market share in Q3.

While Roku player unit sales were down year-over-year in Q3 2021 (following the extraordinary demand spike we saw in Q3 2020), unit sales were above pre-Covid Q3 2019 levels. Our player unit costs were impacted by the supply chain disruptions. However, we chose to insulate our consumers from these increased costs to prioritise account growth, resulting in Player gross margin decreasing to -15 per cent. We view this Player gross margin erosion as temporary, and we continue to take action to maximise our manufacturing flexibility, including active sourcing strategies and adapting our software and re-designing for more readily available chips and components.

Roku’s streaming hours in Q3 totaled 18 billion, a 21 per cent increase year-over-year. Streaming hours per active account per day were 3.5 hours, consistent with Q2 2021 and slightly higher than Q3 2019. According to Nielsen, we continue to outperform the viewing hour growth rates of both traditional TV and other TV streaming platforms.

On the subject of The Roku Channel, the letter added: With The Roku Channel, we have a flywheel of content that grows engagement, which accelerates advertising revenue, which then enables more investment in content. In Q3, The Roku Channel grew in both reach and engagement: it was a top five channel on the platform by active account reach, and streaming hours more than doubled year-over-year.

Roku added that its Q4 outlook is for strong growth with total net revenue of $893 million at the midpoint (up
37 per cent year-over-year), and total gross profit of $385 million at the midpoint (up 26 per cent year-over-
year).


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