SAN JOSE, Calif.—Roku reported solid first quarter results, generally beating Wall Street estimates despite a challenging economic climate for Q1 2023, with its active accounts growing to 71.6M, up 17%, and its users streaming some 25.1 billion hours of content during Q1, 2023, up 20% from a year earlier.
The company also reported that in the U.S., its active accounts are approaching half of all broadband households, which was producing “significant engagement and growing monetization opportunities.”
In addition, in Q1, the Roku operating system (OS) was once again the #1 selling smart TV OS in the U.S., achieving a record-high 43% of TV unit share, which was more than the next three largest TV operating systems combined, Roku said, citing data from Circana). We achieved YoY share gains across the full range of TV screen sizes, particularly in the larger-screen segment.
Other key results for Q1 2023 included:
- Total net revenue was $741 million, up 1% year over year (YoY)
- Platform revenue was $635 million, down 1% YoY
- Gross profit was $338 million, down 7% YoY
- Active Accounts were 71.6 million, a net increase of 1.6 million Active Accounts from Q4 2022
- Streaming Hours were 25.1 billion, up 4.2 billion hours YoY
- Average Revenue Per User (ARPU) was $40.67 (trailing 12-month basis), down 5% YoY
- The Roku operating system was the #1 selling smart TV OS in the U.S. with 43% TV unit share.
Despite the generally healthy results, the company continues to lose money, reporting an adjusted EBITDA loss of $69.1 million.
The company also noted in a letter to shareholders that “the macro environment remained challenged in Q1 with the total U.S. advertising market down 7.4% YoY. Ad spend decline was even more pronounced on traditional TV at 12.7% YoY, and traditional TV ad scatter was down 20% YoY (according to SMI). 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.”
It also cautioned that “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. Accordingly, we expect the advertising market in Q2 to look much the same as it did in Q1, with ad spend from certain verticals improving (travel and health and wellness), while others remain pressured (M&E and financial services). Against this backdrop, our outlook for Q2 is for total net revenue of roughly $770 million, total gross profit of roughly $335 million, and Adjusted EBITDA of negative $75 million.”
But the company remained “committed to delivering positive Adjusted EBITDA for full year 2024.”
