Advanced Television

Roku hits 60m subs

February 18, 2022

By Chris Forrester

Roku has reported that it reached 60.1 million active users in the period to December 31st 2021. Streaming usage grew between Q3 and Q4 from 18 billion hours to 19.5 billion hours. However, revenues were below expectations.

Roku blamed the disappointing revenue numbers on shortages in kit. The company said supply chain issues were continuing and the company saw little improvement during 2022.

CFO Steve Louden declined to confirm a recent report that Roku is exploring a plan to manufacture its own TVs but described the Roku TV development programme as being “very successful”, adding that “we’re very happy with the progress we’ve had over the last five years on that programme”.

Roku is now forecasting first quarter 2022 revenues of $720 million.

A report from analysts at Berenberg Bank said that the Q4 performances across most of the SVoD platforms were either weaker on subscriber growth or indicated higher investments going into 2022 – pushing out the profitability timetable.

“Roku, while primarily an advertising video on demand (AVoD) platform, reflects a similar trend. On a longer horizon, we believe Roku stands to benefit from the broader shift toward streaming (from linear/broadcast television), an opportunity from the smart TV penetration gap in international markets, and the transfer of advertising dollars to connected TV from linear TV,” stated the bank.

“However, the Q4 results continued to demonstrate pressure on revenue growth driven by a) component shortages, b) an inflationary pricing environment for TVs, and c) softer advertising, particularly from auto and consumer packaged goods. The overall gross margin remained under pressure, driven by negative Player margins, as the company continues to absorb additional costs driven by a) component shortages and b) logistical costs,” added the bank’s report.

“The outlook for Q1 came in below Street expectations and the full-year outlook provided during the conference call demonstrated focus on increasing investment levels. The top-line growth outlook for 2022 was softer versus consensus. While increased investments indicate a delay to the margin accretion timetable and demands more patient capital, we believe it also demonstrates confidence in the long-term growth potential,” concluded Berenberg.

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