Roku Hits Q1 Streaming Slowdown, Gains Just 1.1 Million User Accounts

Streaming platform Roku saw revenue and user growth cool down in the first three months of 2022, as the company missed Wall Street expectations on the top and bottom lines.

The company reported 61.3 million active accounts for the first quarter, up 14% year over year and a sequential gain of 1.1 million. That’s compared with 35% account growth in Q1 2021, when it netted 2.4 million accounts. Total hours streamed by Roku users in Q1 was 20.9 billion, also up 14%, versus a 49% uptick a year earlier.

Roku cited “the end of government stimulus payments that served to temporarily drive discretionary consumer spend in Q1 2021” for the slowdown in streaming accounts.

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Total revenue was $734 million, up 28%, and Roku swung to a net loss of $26.3 million (a loss of 19 cents per share) versus net income of $75.8 million in the year-ago quarter. On average, Wall Street analysts predicted Roku Q1 revenue reaching $718.1 million and a loss of 18 cents per share, according to financial data provider Refinitiv.

Roku’s platform revenue, which encompasses advertising and content revenue-sharing deals, was $647 million in Q1, up 39% — but marking a deceleration from the pandemic-fueled 101% growth in the year-earlier period.

Roku’s shares were up more than 8% in after-hours trading, after closing up 8.1% in the regular session. Year to date, the stock is down about 60%.

“We have delivered solid performance in a challenging operating environment and expect that we will continue to navigate through macro headwinds, including inflationary pressures, geopolitical conflict, and supply-chain disruptions,” Roku said in its quarterly letter to shareholders.

In the near term, we expect these disruptions will continue to pressure our player gross margin and industry-wide TV unit sales, and have the potential to reduce or delay ad spend in certain verticals. We believe that these near-term headwinds are dwarfed by the long-term opportunities in the secular shift to TV streaming and TV OS consolidation. We believe the enormous value we deliver to consumers, content owners, and advertisers will continue to drive our growth both in Q2 and for the full year.

The company’s earnings report comes after Netflix posted a net loss of 200,000 subscribers for Q1 — the streamer’s first decline in more than a decade. Roku had ended 2021 with 60.1 million active streaming accounts, up 17% year over year and an increase of 3.7 million for Q4.

For Q2, Roku said it expects total net revenue to increase approximately 25% year-over-year, to $805 million. It forecast gross profit of roughly $395 million and breakeven adjusted EBITDA. For the full year, the company continues to expect total net revenue growth to be 35%.

In addition to traditional rivals like Google, Amazon and Apple, Roku will face a new competitor in the years ahead: Cable giants Comcast and Charter Communications this week announced a new 50-50 joint venture to create a national U.S. streaming platform, based on Comcast’s Xfinity Flex streaming device.

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