Roku came in above analyst estimates on the top line for the first quarter of 2023, as it gained 1.6 million active streaming accounts in the period — also above Wall Street expectations. But the company told investors that the macroeconomic environment was still “challenged” in the quarter.
The company posted Q1 sales of $741 million, up 1%, and a net loss of $193.6 million, or $1.38 per share. On average, Wall Street analysts were expecting Roku to post Q1 of $708.49 million and a net loss of $1.37 per share.
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Revenue in Roku’s Platform segment declined 1%, to $635 million. The company generates Platform revenue through ad sales, the distribution of streaming services, the distribution of FAST channels, Roku Pay, and its media and entertainment promotional capabilities. “The macro environment remained challenged in Q1,” the company said in its shareholder letter. “While ad spend on the Roku platform in verticals including financial services and M&E remained pressured, verticals such as travel and health and wellness improved.”
Roku had 71.6 million active streaming accounts as of the end of Q1, up from 70 million at the end of 2022. The net gain of 1.6 million topped analyst consensus estimates that Roku would add 1.14 million new accounts in Q1. Total hours streamed on Roku’s platforms hit 25.1 billion in the first three months of 2023, up 20% year over year (and up from 23.9 billion in Q4). That translated into 3.9 streaming hours per active account per day — a record high, according to the company.
Operating costs increased 42% in Q1, to $550 million. As its costs have climbed, Roku has made two rounds of layoffs in the last six months: It announced the elimination of 200 jobs in November 2022 and then said it would lay off another 200 employees in late March.
The company issued a note of caution in discussing its outlook: “Similar to our viewpoint during our last earnings call, we expect macro uncertainties to persist throughout 2023. Consumers remain pressured by inflation and recessionary fears, and thus discretionary spend is likely to remain muted.” Roku expects Q2 revenue to be about $770 million (vs. $764.4 million in the year-earlier period), along with total gross profit of roughly $335 million and adjusted EBITDA of negative $75 million.
“Given our ongoing work to reaccelerate revenue growth and improve operational efficiencies, we are committed to delivering positive adjusted EBITDA for full year 2024,” Roku said in the shareholder letter.
On Wednesday, Roku announced a new partnership with online shopping service Instacart, under which they will help consumer-packaged goods (CPG) advertisers measure whether consumers are purchasing products on Instacart after seeing an ad on the Roku platform.
Last fall, the company hiredCharlie Collier, former CEO of Fox Entertainment,as president of the newly established Roku Media division, as it looks to bulk up originals and acquired content on the ad-supported Roku Channel.
In another executive hire, Roku said Amazon veteran and former Stitch Fix CFO Dan Jedda will join the company as chief financial officer effective May 1. He succeeds departing CFO Steve Louden.
On March 10, Roku disclosed that the company held about 26% of the its cash and cash equivalents at the failed Silicon Valley Bank,representing $487 million. The FDIC took over the assets of SVB and said “all depositors of the institution will be made whole.” Subsequently, on March 26, the FDIC entered into a purchase and assumption agreement for all SVB deposits with First Citizens Bank.
