Roku Q2: Revenue growth slows
July 29, 2022
Streaming TV platform and device specialist Roku has reported Q2 2022 financial results that show revenue and gross profit growth have slowed, with the company noting that there was a significant slowdown in TV advertising spend as a result of the macro-economic environment, which put pressure on its platform revenue growth.
In its Letter to Shareholders, Roku said: “Consumers began to moderate discretionary spend, and advertisers significantly curtailed spend in the ad scatter market (TV ads bought during the quarter). We expect these challenges to continue in the near term as economic concerns pressure markets worldwide. In response, we took steps in Q2 to significantly slow both operating expense and headcount growth. While our revenue and gross profit growth have slowed, we continue to win advertising share and grow active accounts. We remain confident in our industry leadership in TV streaming, the size of the opportunity in front of us, and our unique assets, including the Roku TV OS, The Roku Channel, and our ad platform.”
“We are in an economic environment defined by recessionary fears, inflationary pressures, rising interest rates, and ongoing supply chain disruptions. For the second half of the year, we are forecasting that advertising spend, particularly in the scatter market, will continue to be negatively impacted. We also believe that consumer discretionary spend will continue to moderate, pressuring both Roku TV and Roku player sales.”
“Taking these factors into consideration, our Q3 outlook is for total net revenue to increase approximately 3 per cent year over year to $700 million. We anticipate total gross profit of roughly $325 million, and adjusted EBITDA of negative $75 million. Finally, given the uncertainties and volatility in the macro environment, we are withdrawing our full-year revenue growth rate estimate. We will remain focused on growing our market leadership by further advancing our technology and brand, and continuing to execute our strategy.”
“Looking ahead, both our competitive positioning and balance sheet are strong, and we remain focused on the significant and long-term opportunity in TV streaming. We believe Roku’s value proposition for viewers, content partners, and advertisers is unmatched, and we are confident in our strategy and growth potential. During downturns, both consumers and advertisers seek even more value for every dollar spent. We offer consumers low-cost devices and access to thousands of hours of free on-demand entertainment and hundreds of free linear channels on The Roku Channel alone. And with our innovative ad platform built for TV streaming, we offer advertisers measurable and superior ROI. We are focused on and continue to invest in a future where all TV and all TV ads are streamed.”
Q2 2022 Key Results
- Total net revenue grew 18 per cent year over year (YoY) to $764 million
- Platform revenue increased 26 per cent YoY to $673 million
- Gross profit was up 5 per cent YoY to $355 million
- Roku added 1.8 million incremental active accounts to reach 63.1 million
- Streaming hours were 20.7 billion hours, a decrease of 0.2 billion hours from last quarter
- Average Revenue Per User (ARPU) grew to $44.10 (trailing 12-month basis), up 21 per cent YoY
- Roku surpassed a milestone with $1 billion in Upfront commitments