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ROKU's Q1 Loss Narrower Than Expected, Revenues Increase Y/Y
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Roku (ROKU - Free Report) reported first-quarter 2023 loss of $1.38 per share, narrower than the Zacks Consensus Estimate of a loss of $1.44. The company had reported earnings of 19 cents per share in the year-ago quarter.
Revenues increased 1% from the year-ago quarter’s level to $741 million and beat the consensus mark by 4.14%. Growth of The Roku Channel’s active accounts and streaming hours drove first-quarter performance.
Active account net adds were 1.6 million in the first quarter, taking the total active accounts to 71.6 million globally, reflecting greater engagement and more monetization opportunities.
Roku has become the No. 1 TV streaming platform by hours streamed in the United States, Canada and Mexico. Globally, users streamed a record of 25.1 billion hours in the first quarter, up 4.2 billion hours from the prior-year quarter.
The average revenue per user declined 5% from the prior-year quarter’s levels to $40.67 (on a trailing 12-month basis).
For the fifth consecutive quarter, The Roku Channel was among the top five channels by both active account reach and streaming hour engagement on the Roku platform in the United States. The Roku Channel’s active accounts are approaching half of all broadband households in the United States.
Platform revenues (85.6% of revenues) decreased 1.4% year over year to $634.6 million through advertising sales, the distribution of streaming services and FAST channels, Roku Pay and Media & Entertainment promotional capabilities.
Macroeconomic challenges continued to pressure consumers and advertisers in first-quarter. The total U.S. ad market weakened throughout the quarter, declining 7.4% year over year. Ad spend decline was even more on tradition tv with 12.7% year over year and ad scatter was down 20% year over year (according to SMI).
Player revenues (14.4% of revenues) rose 18.2% from the year-ago quarter’s level to $106.4 million.
In the first quarter, Roku operating system (OS) was once again the #1 selling smart TV OS in the United States. It achieved a record-high 43% of TV unit share, which was more than the next three largest TV operating systems combined (according to Circana). The company achieved year-over-year share gains across the full range of TV screen sizes, particularly in the larger-screen segment.
Roku OS was the #1 selling smart TV OS in Mexico, for the second consecutive quarter. Roku TV program expanded in Germany with its third OEM partner, Coocaa. The program keeps expanding with 20 licensed Roku TV partners globally.
Roku was recognized as the Most Innovative Company for 2023 by Fast Company for its work in both hardware and software. This includes content partnership for The Roku Channel and Roku Voice Remote Pro.
Roku recently announced partnership with Instacart. It will help consumer packaged goods advertisers to make TV advertisement more efficient and relevant to users.
Operating Details
Gross margin, as a percentage of total revenues, contracted 420 basis points from the year-ago quarter’s level to 45.6%.
Operating expenses increased 41.7% year over year to $550.1 million. As a percentage of total revenues, the metric expanded to 74.2% from 52.9% in the year-ago quarter.
Research & development, sales & marketing, and general & administrative expenses grew 34.2%, 59.7% and 23.5% on a year-over-year basis to $220.1 million, $233.9 million and $96.1 million, respectively.
In the first quarter, negative adjusted EBITDA was $69.1 million compared with positive adjusted EBITDA of $57.6 million in the year-ago quarter.
Operating loss was $212.5 million in the reported quarter compared with operating loss of $23.5 million in the year-ago quarter.
Balance Sheet
As of Mar 31, 2023, cash and cash equivalents were $1.63 billion compared with $1.96 billion as of Dec 31, 2022.
As of Mar 31, 2023, Roku had total debt of $63.3 million compared with $79.9 million on Dec 31, 2022.
Guidance
For second-quarter 2023, Roku expects total net revenues of $770 million, total gross profit of roughly $335 million and adjusted EBITDA of negative $75 million.
Cable One, Cinemark and Flowserve are scheduled to report the quarterly results on May 4, May 5 and May 1, respectively.
The Zacks Consensus Estimate for CABO’s first-quarter 2023 earnings is pegged at $14.40 per share, up from $14.29 per share over the past 30 days.
The Zacks Consensus Estimate for CNK’s first-quarter 2023 losses is pegged at 28 cents per share, up from a loss of 33 cents per share over the past 30 days.
The Zacks Consensus Estimate for FLS’ first-quarter 2023 earnings is pegged at 26 cents per share, which has remained unchanged over the past 30 days.
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ROKU's Q1 Loss Narrower Than Expected, Revenues Increase Y/Y
Roku (ROKU - Free Report) reported first-quarter 2023 loss of $1.38 per share, narrower than the Zacks Consensus Estimate of a loss of $1.44. The company had reported earnings of 19 cents per share in the year-ago quarter.
Revenues increased 1% from the year-ago quarter’s level to $741 million and beat the consensus mark by 4.14%. Growth of The Roku Channel’s active accounts and streaming hours drove first-quarter performance.
Active account net adds were 1.6 million in the first quarter, taking the total active accounts to 71.6 million globally, reflecting greater engagement and more monetization opportunities.
Roku has become the No. 1 TV streaming platform by hours streamed in the United States, Canada and Mexico. Globally, users streamed a record of 25.1 billion hours in the first quarter, up 4.2 billion hours from the prior-year quarter.
The average revenue per user declined 5% from the prior-year quarter’s levels to $40.67 (on a trailing 12-month basis).
For the fifth consecutive quarter, The Roku Channel was among the top five channels by both active account reach and streaming hour engagement on the Roku platform in the United States. The Roku Channel’s active accounts are approaching half of all broadband households in the United States.
Roku, Inc. Price, Consensus and EPS Surprise
Roku, Inc. price-consensus-eps-surprise-chart | Roku, Inc. Quote
Quarter Details
Platform revenues (85.6% of revenues) decreased 1.4% year over year to $634.6 million through advertising sales, the distribution of streaming services and FAST channels, Roku Pay and Media & Entertainment promotional capabilities.
Macroeconomic challenges continued to pressure consumers and advertisers in first-quarter. The total U.S. ad market weakened throughout the quarter, declining 7.4% year over year. Ad spend decline was even more on tradition tv with 12.7% year over year and ad scatter was down 20% year over year (according to SMI).
Player revenues (14.4% of revenues) rose 18.2% from the year-ago quarter’s level to $106.4 million.
In the first quarter, Roku operating system (OS) was once again the #1 selling smart TV OS in the United States. It achieved a record-high 43% of TV unit share, which was more than the next three largest TV operating systems combined (according to Circana). The company achieved year-over-year share gains across the full range of TV screen sizes, particularly in the larger-screen segment.
Roku OS was the #1 selling smart TV OS in Mexico, for the second consecutive quarter. Roku TV program expanded in Germany with its third OEM partner, Coocaa. The program keeps expanding with 20 licensed Roku TV partners globally.
Roku was recognized as the Most Innovative Company for 2023 by Fast Company for its work in both hardware and software. This includes content partnership for The Roku Channel and Roku Voice Remote Pro.
Roku recently announced partnership with Instacart. It will help consumer packaged goods advertisers to make TV advertisement more efficient and relevant to users.
Operating Details
Gross margin, as a percentage of total revenues, contracted 420 basis points from the year-ago quarter’s level to 45.6%.
Operating expenses increased 41.7% year over year to $550.1 million. As a percentage of total revenues, the metric expanded to 74.2% from 52.9% in the year-ago quarter.
Research & development, sales & marketing, and general & administrative expenses grew 34.2%, 59.7% and 23.5% on a year-over-year basis to $220.1 million, $233.9 million and $96.1 million, respectively.
In the first quarter, negative adjusted EBITDA was $69.1 million compared with positive adjusted EBITDA of $57.6 million in the year-ago quarter.
Operating loss was $212.5 million in the reported quarter compared with operating loss of $23.5 million in the year-ago quarter.
Balance Sheet
As of Mar 31, 2023, cash and cash equivalents were $1.63 billion compared with $1.96 billion as of Dec 31, 2022.
As of Mar 31, 2023, Roku had total debt of $63.3 million compared with $79.9 million on Dec 31, 2022.
Guidance
For second-quarter 2023, Roku expects total net revenues of $770 million, total gross profit of roughly $335 million and adjusted EBITDA of negative $75 million.
Zacks Rank & Stocks to Consider
Roku currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Consumer Discretionary sector are Cable One (CABO - Free Report) , Cinemark (CNK - Free Report) and Flowserve (FLS - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cable One, Cinemark and Flowserve are scheduled to report the quarterly results on May 4, May 5 and May 1, respectively.
The Zacks Consensus Estimate for CABO’s first-quarter 2023 earnings is pegged at $14.40 per share, up from $14.29 per share over the past 30 days.
The Zacks Consensus Estimate for CNK’s first-quarter 2023 losses is pegged at 28 cents per share, up from a loss of 33 cents per share over the past 30 days.
The Zacks Consensus Estimate for FLS’ first-quarter 2023 earnings is pegged at 26 cents per share, which has remained unchanged over the past 30 days.