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

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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 bottom line.

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.

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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.

Meanwhile, revenue in Roku’s player segment fell 19%, to $86.8 million. The company said “ongoing supply-chain disruptions contributed to increased U.S. TV prices” in the quarter. Streaming player unit sales “remained above 2019 (pre-COVID) levels” but were down 12% year-over-year, according to Roku.

Roku shares were 1.5% higher 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.

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%.

During the first quarter, the company’s Roku Channel was a top 5 channel on our platform in the U.S. by active account reach and — for the first time — by streaming-hour engagement. Roku noted that it recently closed an output deal with Lionsgate for upcoming theatrical releases through 2024 and launched Discovery+ as a premium subscription partner on the Roku Channel.

Roku also called out its first in-person upfront event, set for May 3 in New York as part of the IAB’s NewFronts, where it will showcase new originals including “Honest Renovations,” a home renovation series hosted by Jessica Alba and Lizzy Mathis; “To Paris for Love: A Rom Com” produced in partnership with Reese Witherspoon’s Hello Sunshine and Zoë Saldaña’s Cinestar Pictures; and “WEIRD: The ‘Weird Al’ Yankovic Story,” starring Daniel Radcliffe as the legendary parody recording artist.

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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