Roku continues to grow platform business as device sales falter

Roku has praised the performance of its AVOD service as the company continues to grow its platform business.

Announcing its Q1 2022 results, Roku said that revenues at the platform unit grew 39% year-over-year to US$365 million. This unit houses the company’s AVOD service, The Roku Channel, which earlier this week secured a major content output deal with Lionsgate.

The AVOD was a top 5 channel on the Roku platform in the US by Active Account reach and, for the first time, by Streaming Hour engagement.

Roku added 1.1 million incremental Active Accounts to reach 61.3 million by the end of Q1. This is up 14% year-over-year. Streaming hours also grew significantly, with users consuming 20.8 billion hours of streamed content in Q1 – up from 19.5 billion at the end of 2022.

Both of these factors contribute to an increasing ARPU – up 34% year-over-year to US$42.91 in Q1.

However in his note to investors, CEO Anthony Wood explained that “ongoing supply chain disruptions” and “the end of government stimulus payments that served to temporarily drive discretionary consumer spend” led to muted device sales. Streaming device sales were down by 12% year-over-year, though this is still a higher total than pre-pandemic. 

Roku CEO, Anthony Wood

It’s a slightly better outlook for Roku OS as a smart TV operating system, which remained as the top-selling TV OS in the US and second in Mexico. Player revenues stood at US$86.8 million, down from the predictably busy holiday season figures of US$161.7 million for Q4 2021.

Wood concluded: “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. 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.”