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Roku misses targets and withdraws full-year revenue growth estimate
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Significantly lower-than-expected results at Roku have caused shockwaves among its investors as the company warns of “recessionary fears.”
The company’s Q2 2022 net revenue rose by over 18% to US$764.4 million, but this was much lower than analyst estimates of US$805.2 million. Also concerning for Roku is a decrease of 200 million viewing hours from last quarter to 20.7 billion hours.
The Platform segment – which includes Roku’s advertising business and its streaming operations – saw revenues increase by 26% to US$673 million. This was also lower than expectations, with the company attributing this to the decision of “many marketers [who] abruptly curtailed or paused advertising spend in the ad scatter market during the latter half of Q2.”
The loss-leading Player segment (which houses sales of Roku CTV devices and smart speakers) was at US$91 million, falling 19% year-over-year. The segment’s operating loss was at US$22 million, up from US$6.7 million in Q2 20221.
Despite beating expectations by adding 1.8 million users to a total of 63.1 million active accounts, the two headline-grabbing figures – along with difficulties in the ad business – sent Roku’s shares down by more than 25%.
As a result of current economic uncertainties, Roku said that it is withdrawing its full-year revenue growth estimate of 35%. It expects Q3 revenue to grow 3% year-over-year to US$700 million with profits of around US$325 million, an adjusted loss of US$75 million and a net loss of US$190 million.
In his letter to investors, Roku CEO Anthony Wood surmised: “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.”
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